Health Canada publishes updated guidance document on data protection

Health Canada has released an updated version of Guidance Document: Data Protection under C.08.004.1 of the Food and Drug Regulations. According to Health Canada, the guidance document has been updated to reflect judicial consideration of “innovative drug” and current administrative practices, including requirements for submissions relying on third-party data, protection for products containing an innovative drug, biosimilars, and the six-month extension for data related to pediatric populations.

Revisions to the guidance document

Definition of innovative drug. The updated guidance document relies on the definition of innovative drug contained in the Food and Drug Regulations, i.e. a drug that contains a medicinal ingredient not previously approved by the Minister and that is not a variation of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate or polymorph.

The guidance document sets out two requirements for data protection eligibility: (a) the drug must be a new chemical entity and (b) the data that supports the approval of the medicinal ingredient must have required considerable effort.

“Considerable effort” means that the approval is being sought on the basis of new and significant data (i.e. evidence to determine the safety, efficacy, properties and conditions of use of the drug, usually in the form of pivotal clinical trials).

The guidance document also states that where there is an “arguable variation” of a previously approved medicinal ingredient, but not a salt, ester, enantiomer, solvate or polymorph as specifically excluded from the definition of innovative drug in the Food and Drug Regulations, Health Canada will undertake an assessment of whether the variation is an innovative drug. Health Canada will then consider whether the data was generated with “considerable effort.”

Submissions relying on third-party data. The guidance document states that drugs reviewed on the basis of literature references, study reports of trials not conducted or sponsored by the applicant, books, consensus guidelines from professional bodies and/or market experience (i.e. third-party data) are not eligible for data protection. These amendments are likely being made further to Health Canada’s Guidance Document: Drug Submissions Relying on Third-Party Data, released in May 2015.

Drugs containing the same medicinal ingredient as an innovative drug. Where a drug contains one or more medicinal ingredients found in an innovative drug for which data protection is still in effect, the drug will benefit from the same period of data protection as the innovative drug. However, in order to benefit from the data protection term, there must be a relationship to the innovative drug. This does not apply to subsequent-entry drugs.

Biosimilars. The guidance document states that the six-year “no file” period prescribed by the Food and Drug Regulations (applicable to manufacturers seeking a notice of compliance on the basis of an indirect or direct comparison to an innovative drug) is intended to apply to biosimilar drugs. New drug submissions which are based on independent clinical trials and not on a comparison to an innovative drug are not captured by the six-year “no file” period.

Submissions that do not result in a subsequent-entry version of the innovative drug are not captured by the six-year “no file” period. For example, a submission for a drug indicated for use in combination with an innovative drug will not be prevented from filing.

Pediatric population extension. In order to be eligible for the additional six-month extension for drugs intended to treat pediatric populations, the innovator must provide the Minister with the description and results of clinical trials relating to the use of the innovative drug in pediatric populations in its first new drug submission or in any supplement to that submission filed within five years after the issuance of the first notice of compliance.

The clinical trials must be designed for the purpose of increasing knowledge of the use of the innovative drug in pediatric populations and this knowledge must provide a health benefit to the pediatric population.

Details of the study will be used to determine if the clinical trial was conducted for the purpose of increasing knowledge of use of the drug in pediatric populations. If the knowledge requirement is met, Health Canada will determine whether that knowledge is available to provide a health benefit. At minimum, the knowledge must be available to the public, e.g. through the approved labelling or Product Monograph.

Links:

Guidance Document: Data Protection under C.08.004.1 of the Food and Drug Regulations

 

Health Canada seeks feedback on proposed regulatory amendments to PMPRB pricing regime of patented medicines

On May 16, 2017, Health Canada published a consulting paper titled “Protecting Canadians from Excessive Drug Prices.”  The paper describes five proposed amendments to the Patented Medicines Regulations that are meant to help better assess whether the price of a patented drug is excessive.

Stakeholders can provide feedback on the proposed amendments by June 28, 2017.

Proposed amendments

Further to the PMPRB’s initial consultation on guidelines modernization (as reported here), the proposed amendments are meant to “provide the PMPRB with new regulatory tools and information to better protect Canadian consumers from excessive prices while reducing regulatory burden on patentees.”  Further consultations on the PMPRB guidelines will follow from the regulatory amendments.  The proposed regulatory amendments are as follows:

(1)  Introduce new “pricing factors.”  The current framework for assessing whether the price of a new patented drug is excessive is largely based on three factors: (1) the degree of therapeutic benefit of the drug relative to existing drugs on the market; (2) the price of that same drug in seven comparator countries (PMPRB7); and (3) the highest priced drug in Canada in the same therapeutic class.  Under the proposed amendments, three new factors would be added: (i) the pharmacoeconomic evaluation for the medicine; (ii) the size of the market for the medicine; and (iii) the gross domestic product in Canada.

(2)  Update the list of countries used for price comparison.  The proposed amendments suggest revising the list of comparator countries to those that are “more aligned with Canada economically and from a consumer protection standpoint.”  The proposed revised list would remove the United States and Switzerland from the list of comparator countries, and add Australia, Belgium, Japan, Netherlands, Norway, South Korea and Spain.      

(3) Formalize a move to a complaints-based system for generic drugs.  Under the proposed amendments, patentees of generic drugs (e.g., drugs that have obtained approval based on an ANDS), would only be required to report the identity and price information in the event of a complaint or at the board’s request (as reported here).

(4) Detail the new pricing information required from patentees. To facilitate the use of the “new pricing factors” by the board, patentees would be required to submit additional information to the board, where available, including: (i) a cost utility analysis by approved indication of the medicine; and (ii) information on the estimated market uptake of the medicine.

(5) Require patentees to provide rebates and discounts information.  To more accurately determine the true market price of a drug, the board proposes that patentees be required to report all indirect price reductions to the Board (e.g., promotions, rebates, discounts, refunds, free goods, free services, gifts or any other benefit).

Links:

Consulting Paper:  Protecting Canadians from Excessive Drug Prices – Consulting on Proposed Amendments to the Patented Medicines Regulations

Call for Feedback: Consulting on Proposed Amendments to the Patented Medicines Regulations

Federal Court releases new trial management guidelines for actions and discusses impact of proposed regulations

On April 28 the Federal Court issued a Notice to the Parties and the Profession containing new guidelines for the trial management of actions. Among other things, they set new deadlines for various pre-trial steps and for the filing of motions, provide guidance regarding the scheduling and agenda of trial management conferences and streamline the handling of expert witnesses. The guidelines follow the court’s previous recommendations from June 24, 2015 (reported here) to increase proportionality in complex litigation and streamline practice and procedure, and are intended to ensure the most efficient, expedient and proportionally fair use of trial time for actions. The guidelines are effective immediately and apply to all actions scheduled for five or more days in Federal Court.

Instrument:                          Trial Management Guidelines

       Date released:                      April 28, 2017

The new guidelines were discussed at the Canadian Bar Association’s 2017 IP Day Town Hall Meeting, held on May 11, 2017. At the Town Hall, the court also indicated it was preparing for the upcoming changes to the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations), that will result from implementation of the Comprehensive Economic and Trade Agreement between Canada and the European Union (see our report here for the latest on the implementation of CETA). As we reported, the new PM(NOC) Regulations will replace the current summary proceedings with full actions. Although the details of the new single-track regime have yet to be published, the Federal Court appears to be turning its mind to the challenges of hearing PM(NOC) proceedings as actions within the same 24-month stay period.

New guidelines

The Notice contains 21 guidelines. Some set new deadlines for pre-trial steps and the filing of motions as well as introduce various requirements. Others encourage, without strictly requiring, parties to collaborate on issues such as factual statements, documents filing and presenting evidence at trial. The new guidelines include:

  • Motions. No motion may be brought within 60 days of trial without leave of the case management judge or the trial judge. While motions may be necessary during trial, contested motions at trial are discouraged.
  • Trial management conference. Parties shall requisition a trial management conference to take place at least two months before trial, subject to an extension or abridgement of time granted by the trial judge and are to include in the requisition a proposed agenda and timing of any motions that may need to be brought before the court.
  • Experts. The guidelines include several recommendations for dealing with experts, including that any objections to expert reports must be made within 30 days of service and no later than 30 days before trial, expert reports to be relied on at trial must be submitted at least two weeks before trial, and by submitting the report of an expert to the court, the party is undertaking to call this expert at trial; examinations in chief of experts should be concise and limited to the key relevant issues.
  • Science primer. Parties are encouraged to prepare and deliver a joint primer on the relevant technology and scientific principles in advance of trial on a date determined by the trial judge.
  • Joint statements of issues and facts, book of documents. Parties are encouraged to submit a joint statement of issues two weeks before trial. Parties are also encouraged to submit an agreed statement of facts and book of documents, including admissions on authenticity, at least one week before trial.
  • Proposed trial schedule and list of witnesses. Parties shall submit a proposed schedule for trial proceedings at least two weeks before trial, with any disagreements regarding the schedule to be determined at the judge’s discretion. Parties shall exchange a brief description of the proposed areas of testimony of fact witnesses at least two weeks before trial and are encouraged to discuss the use of witness statements and fact stipulations where cross-examination is not necessary.
  • Compendia and written arguments. Parties shall provide to the trial judge compendia, in paper and electronic format, including only the relevant excerpts they will rely on at trial. Parties are encouraged to submit joint compendia. Absent a contrary direction, parties shall submit written arguments at the end of trial in electronic and paper format and are encouraged to keep the written arguments to no more than 50 pages.

Links:

Notice to the Parties and Profession (April 2017): Trial Management Guidelines

Notice to the Parties and the Profession (June 24, 2015): Case Management: Increased Proportionality in Complex Litigation before the Federal Court

CETA tracker: CETA Bill C-30 receives royal assent to implement pharmaceutical patent reform

It’s official – the Canadian government has approved the changes to Canada’s pharmaceutical patent regime. On May 16, 2017, Bill C-30 (the act intended to implement CETA into Canadian law) received royal assent, the final stage of the legislative process.

Treaty/Act:        CETA/Bill C-30 (An Act to implement the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States and to provide for certain other measures)

Date:                May 16, 2017 – Bill C-30 receives Royal Assent

What are the changes? As we reported, CETA and Bill C-30 provide key reforms to the Patent Act affecting the pharmaceutical industry, including:

  • Patent term restoration (i.e., certificates of supplementary protection or CSPs) capped at a maximum of two years for eligible patents covering eligible products; and
  • Replacement of the current summary proceedings under the Patented Medicines (Notice of Compliance) Regulations with full actions resulting in a final determination of patent infringement and validity. Equal access to effective appeal rights will also be provided.

When will the changes come into force? Section 138 of Bill C-30 provides that most of the act comes into force on a day to be fixed by order of the Governor in Council. Under CETA, Article 30.7 – “Entry into force and provisional application” – we anticipate that Canada may provisionally implement the changes as early as June 1, 2017. It is expected that CETA will enter into full force on July 1, 2017. The regulations accompanying these reforms are expected to be published shortly.

Are you CETA ready? Contact Norton Rose Fulbright with all your CETA questions.

Links

Bill C-30, Third Reading (House of Commons)

Text of the final Comprehensive Economic and Trade Agreement

Proposed regulations published on additional elements of Vanessa’s Law

On April 22, 2017, the Government of Canada published draft regulations Amending the Food and Drug Regulations (Vanessa’s Law) that provide details regarding the minister of health’s powers to require tests, assessments and studies of a drug post-market authorization. The draft regulations also set out additional reporting requirements for manufacturers based on the actions of foreign regulators.

Stakeholders can make representations concerning the draft regulations until June 27, 2017.

Overview

On November 6, 2014, the Protecting Canadians from Unsafe Drugs Act (also known as Vanessa’s Law) came into force and amended the Food and Drugs Act. The amendments provide Health Canada with additional powers to regulate the safety of drugs through a life cycle approach (i.e., an approach to regulate drugs by evaluation of safety both pre- and post-market). While most of the amendments came into force immediately, some required supporting regulations.

The draft regulations are expected to achieve three objectives: (1) support the coming into force of the new powers granted by Vanessa’s Law that allow the minister to require manufacturers to conduct tests, assessments and studies, and to establish standards for exercising these powers; (2) create a set of new foreign incident reporting rules to support post-market drug safety; and (3) eliminate the requirement to provide individual clinical case reports with a new drug submission.

Proposed regulations

(1) Tests, Assessments and Studies. The draft regulations are intended to define the scope of the minister’s powers under Vanessa’s Law to require an authorization holder to assess a drug post-market and order the authorization holder to conduct tests or studies of a drug post-market.

Under the draft regulations, to require an authorization holder to assess a drug under Vanessa’s Law, the minister must have reasonable grounds to believe that the benefits or risks of injury to health associated with the drug are significantly different than they were when the most recent authorization was issued. The draft regulations also provide that a summary of the results and any actions taken as a result of the examination would be made publicly available.

To require an authorization holder to conduct additional tests or studies of a drug under Vanessa’s Law, the minister must have reasonable grounds to believe there are significant uncertainties related to the benefits and harms associated with the drug, and the authorization holder must be unable to provide the minister with the information to manage those uncertainties. The minister must also consider whether there are less burdensome means to obtain the required information.

(2) Notifying Health Canada of Foreign Regulators’ Actions. The draft regulations require an authorization holder of a prescription drug (or a non-prescription drug administered by a practitioner) to report certain interactions with foreign regulatory authorities related to the safety of the drug. These include: (1) any risks communicated by a foreign regulatory authority; (2) labelling changes requested by or communicated to a foreign regulatory authority; and (3) recalls, reassessments, suspensions or revocations of authorization. The authorization holder must provide such information to the minister within 48 hours of receiving it or becoming aware of it.

(3) Clinical Case Reports. The draft regulations would repeal the requirement under section C.08.005.1(1)(a) of the Food and Drug Regulations to provide individual clinical case reports when a new drug submission is filed with the minister. Currently, Health Canada is the only major regulator that requires this information. In order to alleviate this burden, manufacturers will only be required to provide a summary of clinical case reports when filing an NDS. The minister may request access to the individual clinical case reports when necessary.

Link

Regulations Amending the Food and Drug Regulations (Vanessa’s Law)

CETA tracker: patent term restoration is coming soon to Canada – what you need to know now

Treaty/Act: CETA/Bill C-30 (An Act to implement the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States and to provide for certain other measures)

With Canada moving closer towards implementing the Comprehensive Economic and Trade Agreement (CETA), major reforms to Canada’s Patent Act are coming soon, including the availability of Certificates of Supplementary Protection (CSPs): a new form of patent protection (i.e., patent term restoration) for pharmaceuticals in Canada. A CSP may extend the patent term of eligible pharmaceutical products by up to two years.

While further details of the CSP regime will be prescribed by regulations, which have yet to be published, based on Bill C-30 the following considerations can inform preparedness:

  • CSP eligibility: To apply for a CSP for a pharmaceutical product, you must have: (1) an eligible medicinal ingredient that has obtained market authorization (i.e., an NOC); and (2) an eligible patent.
  • Your NOC must be the first market authorization for that medicinal ingredient: Only one CSP will be issued per medicinal ingredient.A first combination of medicinal ingredients can be eligible. Details of what constitutes the “same” medicinal ingredient, including prescribed variations that will not be eligible, will be determined in the regulations.
  • Your eligible NOC must be obtained after the law comes into effect: CSPs will not apply retroactively. Only eligible pharmaceutical products that receive market authorization on or after the day on which the law comes into effect will be CSP eligible.
  • Coordination of international drug submission filing is important to be CSP eligible in Canada: If a marketing authorization application for the same medicinal ingredient has already been submitted in another “benchmark” international jurisdiction (to be specified by regulation), the Canadian application for marketing authorization (i.e., NDS), must be filed within a specific period of time (to be specified by regulation) of the first international filing in order to be eligible for a CSP in Canada.
  • Your eligible patent does not need to be granted by the time you receive your NOC: Patent term restoration can be granted for an eligible patent issued after marketing authorization. The CSP application must be submitted within a time (to be specified by regulation) after patent grant. There can only be one eligible patent per medicinal ingredient. However, in the event of multiple competing CSP applications for the same market authorization, a priority/conflict regime will prioritize patents granted prior to NOC issuance over patents issued post-NOC.          

Are you CETA ready? Contact Norton Rose Fulbright with all your CETA questions.

Links

Bill-30, Third Reading (House of Commons)

Text of the final Comprehensive Economic and Trade Agreement

Supreme Court dismisses leave to appeal regarding test for obviousness-type double patenting in tadalafil s.6 case

Case: Apotex Inc v Eli Lilly Canada Inc, et al (SCC Docket 37368)

Drug: CIALIS® (tadalafil)

Nature of case: Application for leave to appeal decision upholding prohibition order granted pursuant to section 6 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (the Regulations)

Successful party: Eli Lilly Canada Inc. and ICOS Corporation (collectively Eli Lilly)

Date of decision: April 27, 2017

Summary

On April 27 the Supreme Court dismissed Apotex Inc.’s (Apotex) application for leave to appeal the Federal Court of Appeal (FCA) decision upholding the order prohibiting the minister of health from granting a notice of compliance to Apotex for its generic version of tadalafil under section 6 of the Regulations.

As we reported, the FCA dismissed Apotex’s appeal of the lower court’s decision on obviousness-type double patenting and insufficiency, and rejected Apotex’s argument that obviousness-type double patenting is assessed as of the publication date of the later patent. The FCA declined to specify the relevant date for this analysis, holding that “[t]his remains an open question.”

Eli Lilly was also successful in overcoming a double patenting attack in another s. 6 proceeding relating to the same patent against Mylan. Mylan also appealed and in that case the FCA declined to choose between the priority dates of the two patents, but did reject Mylan’s assertion of the publication date of the second patent as the appropriate date.

Links to decisions:

SCC Decision: Apotex Inc v Eli Lilly Canada Inc, Supreme Court of Canada – Judgments in Leave Applications (37368)

FCA Decision: Apotex Inc v Eli Lilly Canada Inc, 2016 FCA 267

Trial Decision: Eli Lilly Canada Inc v Apotex Inc, 2015 FC 875

Health Canada proposes regulations allowing importation of drugs not yet available in Canada for an urgent public health need

Health Canada has proposed regulations that will amend the Food and Drug Regulations to allow for importation of drugs that have not yet received regulatory approval from Health Canada. The new regulations will provide access to drugs that address an urgent public health need provided they have been approved in the United States, the European Union, or Switzerland. “Urgent public health need” is not a defined term in the regulations, but Health Canada identified treatment of opioid use disorder as a current example of an urgent need.

This scheme does not replace existing programs that provide access to drugs that have not received regulatory approval, such as the Special Access Programme or a Clinical Trial Application. Unlike those programs, the new regulations will only allow importation after a public health official notifies the minister of an urgent public health need for the drug.

While importation and sale of these drugs will be exempt from many aspects of the Food and Drug Regulations, certain reporting and record-keeping obligations will be imposed. Further, healthcare institutions will be required to report serious adverse events to Health Canada. This is the first time regulations have required adverse event reporting by healthcare institutions. The authority to do so comes from not-yet-in-force provisions of the Protecting Canadians from Unsafe Drugs Act [Vanessa’s Law].

The proposed regulations will not come into force until the necessary provisions in Vanessa’s Law are in force. In the meantime, Health Canada is taking preparatory steps, including developing guidance and canvasing public health officials to populate an initial list of drugs.

Link:

The proposed regulations and Regulatory Impact Analysis Statement can be found here.

Federal Court of Appeal revisits obviousness: guidance provided on “inventive concept” and “obvious to try” test

Case: Bristol-Myers Squibb Canada Co v Teva Canada Limited, 2017 FCA 76 (A-191-16), aff’g (for different reasons) 2016 FC 580 (Court File No. T-1364-14)

Drug: REYATAZ® (atazanavir bisulfate)

Nature of case: Appeal from application for prohibition order granted pursuant to section 6 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (the Regulations)

Successful party: Teva Canada Limited (Teva)

Date of decision: April 11, 2017

Summary

The Federal Court of Appeal has provided guidance on the meaning of “inventive concept.” In dismissing an appeal from the Federal Court’s finding that claims for the bisulfate salt of atazanavir were obvious, the Court of Appeal also provided guidance on the application of the leading Plavix decisions regarding this issue.

Background

Bristol-Myers Squibb Canada Co. markets atazanavir bisulfate in Canada under the name REYATAZ® for treating HIV. As we reported, following a successful prohibition application under the Regulations brought by Bristol-Myers Squibb Canada Co., Bristol-Myers Squibb Holdings Ireland, and Novartis AG (collectively, BMS), the minister of health was prohibited from issuing a notice of compliance for Teva’s proposed generic atazanavir product until the expiry of the compound patent that was at issue in the case.

This appeal concerns a second patent: Canadian Patent No. 2,317,736 (the Salt Patent). BMS’s application for the Salt Patent was dismissed on the basis of Teva’s obviousness allegation. BMS argued that the court below, having concluded that each of the elements of the inventive concept could not be predicted, was bound to apply the “obvious to try” test in its favour and reject Teva’s allegation. The Court of Appeal did not agree with the application judge’s reasons, but upheld the result and dismissed the appeal.

Theory: what is the test for obviousness after Plavix 1 and Plavix 2?

BMS framed the issue on appeal as a question of law regarding the proper application of the “obvious to try” test, which was introduced into Canadian law by the Supreme Court in Apotex Inc v SanofiSynthelabo Canada Inc., 2008 SCC 61 (Plavix 1). The Court of Appeal undertook a detailed review of the legal standard for obviousness both before and after Plavix 1, including its own findings in Sanofi-Aventis v Apotex Inc, 2013 FCA 186 (Plavix 2). Writing for the Court of Appeal, Pelletier J.A. cautioned against “a categorical approach to obviousness” as being inappropriate: Plavix 1 clearly indicates there is “no single or mandatory approach” to assessing obviousness. Justice Pelletier stated the governing authority remains Plavix 1; as a result, “One should be wary of seeing things in Plavix 2 that have no foundation in Plavix 1.” The court emphasized that while Plavix 1 provided a new structure for the obviousness analysis and recognized the usefulness of the “obvious to try” questions in some circumstances, the test should not be applied in a “rigid,” “acontextual” fashion. The obvious to try questions will not be appropriate in every case.

The Court of Appeal also addressed whether the “inventive concept,” also introduced by the Supreme Court in Plavix 1, was intended to change the definition of obviousness. Noting the obviousness analysis is directed to the difference between the prior art and a “second point,” the Court of Appeal asked: did the Supreme Court redefine the second point as it was understood to be prior to Plavix 1? Justice Pelletier was unwilling to find that the Supreme Court changed substantive law by implication to make inventiveness more or less likely. Instead, the Court of Appeal concluded that “‘inventive concept’ is not materially different from ‘the solution taught by the patent,’” which has often been treated as synonymous with “what is claimed” or simply “the invention.”

Application: wrong inventive concept, right result

The Court of Appeal held that the court below erred, but not in its application of the obvious to try factors as argued by BMS. Rather, the court erred in law in its identification of the inventive concept.

Justice Mactavish had held that the inventive concept was Type-I atazanavir bisulfate having three advantageous properties: improved bioavailability over atazanavir free base, crystallinity, and stability. It was uncontradicted that improved bioavailability was predictable but crystallinity and stability were not. Applying the “solution taught” definition of the inventive concept, the Court of Appeal disagreed that crystallinity and stability were part of the inventive concept. It concluded that the inventive concept was atazanavir bisulfate, a salt of atazanavir that is pharmaceutically acceptable because it has equal or better bioavailability than the atazanavir free base.

The Court of Appeal concluded there was no difference between the state of the art and the correctly defined inventive concept. There was thus no predicate for the question of whether the difference was obvious, ending the analysis.

The Court of Appeal also concluded that if there were a difference between the state of the art and the inventive concept, it could have been bridged without inventiveness because the skilled person would have expected to obtain a salt with improved bioavailability over the free base of atazanavir by conducting a salt screen. As a result, there was no need to consider the obvious to try factors. Further, the Court of Appeal held that if it were necessary to consider the obvious to try factors, the facts regarding the nature, extent, and amount of effort required to achieve the invention would have been dispositive. The remainder of the factors supported the same conclusion.

As a result, the appeal was dismissed.

Links:

This decision: Bristol-Myers Squibb Canada Co v Teva Canada Limited, 2017 FCA 76 

Underlying Federal Court decision: Bristol-Myers Squibb Canada Co v Teva Canada Limited, 2016 FC 580 (Pharma in Brief here)

FCA finds no failure to mitigate Apotex damages claim against Health Canada for delayed Apo-Trazodone NOC

Case: Apotex Inc v Her Majesty the Queen, 2017 FCA 73 (Court File No. A-553-14/A-554-14)

Drug: Apo-Trazodone

Nature of case: Appeal of action for damages in tort and breach of contract

Successful party: Apotex Inc. (in part)

Date of decision: April 6, 2017

Summary

The Federal Court of Appeal allowed Apotex’s appeal, in part, from the Federal Court decision that found Apotex was entitled to damages for misfeasance of public office and negligence, finding that Apotex was not required to mitigate its damages by providing Health Canada with evidence of bioavailability of Apo-Trazodone based on a comparison to a Canadian reference product. Apotex had a legitimate business interest in establishing in principle that using a foreign reference product was appropriate. Health Canada’s appeal and cross-appeal for errors related to the Federal Court’s findings of negligence, misfeasance of public office and breach of a settlement agreement were dismissed.

Background

Apotex filed a submission to Health Canada in January 1988 for approval to sell Apo-Trazodone based on a comparison to a US reference product. At that time, Health Canada’s policies on the ability to use a foreign reference product to obtain generic drug approval were unclear. Health Canada did not accept the Apo-Trazodone submission and required testing against a Canadian reference product.

In 1990, Health Canada informed Apotex it would not require a Canadian reference product if Apotex could provide evidence that the foreign product was identical to the Canadian product. Apotex refused, and brought an application to compel the minster to review its submission and issue an NOC. The parties reached a settlement and Apotex discontinued its application.

Pursuant to the settlement agreement, Apotex submitted further bioavailability data to establish equivalency between the US and Canadian reference products. Health Canada continued to refuse to issue the NOC, and Apotex brought a second application, which was dismissed in 1993. The Federal Court held that Health Canada’s actions were not ‟patently unreasonable,” but also concluded that Health Canada’s refusal to consider Apotex’s submission was an unlawful fettering of discretion. The court also held that Health Canada’s manner of dealing with Apotex was “maladroit, at times dissembling if not actually misleading,” but it was not acting “in bad faith or with malice.”

Following additional exchanges with Health Canada, and seven years after filing its original submission, Apotex received its NOC for Apo-Trazodone in February 1995.

Federal Court decision

As we reported, Apotex was successful in its action for damages against Health Canada for lost sales during the period when it should have received its NOC and for the lost ability to be the first generic in the Canadian market for a trazodone product. The Federal Court found that Apotex was entitled to damages for public misfeasance and negligence, but was required to mitigate its damages.

The Court of Appeal upheld the Federal Court on all issues except the finding that Apotex failed to mitigate its damages. The court also commented on whether Health Canada owed Apotex a duty of care outside of the settlement agreement.

Apotex entitled to specific performance to receive NOC based on foreign reference product

The Federal Court of Appeal found that the Federal Court erred in finding the onus of proof has no role to play in assessing mitigation, as the defendant must establish the plaintiff failed to make reasonable efforts to mitigate its losses. The Federal Court also erred in dictating a single reasonable course of action (i.e., using a Canadian reference standard) and failing to consider the reasonableness of Apotex’s actual course of conduct.

As a result of these errors, the Federal Court failed to review Apotex’s actions to determine whether Apotex made reasonable efforts to mitigate. The Court of Appeal therefore reviewed Apotex’ conduct, and held that Apotex had a legitimate interest in specific performance. Between September 1976 and 1995, Apotex could point to four instances when it had received an NOC using a foreign reference product. Apotex had a clear business interest in establishing that foreign reference products were acceptable as a matter of general principle. The Court of Appeal held that where a plaintiff has a substantial and legitimate interest in seeking specific performance of a defendant’s obligation, a failure to mitigate is justifiable, and Apotex’s choice to pursue litigation was therefore reasonable.

No duty of care owed outside of the settlement agreement

The Court of Appeal rejected Apotex’s claim that the Federal Court erred in failing to conduct an analysis of negligence outside of Health Canada’s liability arising from the settlement agreement, holding that as the Food and Drugs Act and Regulations are neutral on the existence of a prima facie duty of care and the legislation is directed to public health and safety through regulation of drug manufacturers, it is difficult to infer that Parliament intended Health Canada to owe a prima facie duty of care to drug manufacturers. Requiring Health Canada to be mindful of Apotex’s economic interests when exercising its discretion would place Health Canada in a position of conflict between its obligation to Apotex and its duty to the public.

Furthermore, the Court of Appeal found that prior to entering into the settlement agreement, there was not sufficient proximity to establish a duty of care as Apotex’s relationship with Health Canada was not distinct from Health Canada’s relationship with any other drug manufacturer. Entering into the settlement agreement established the requisite proximity for a duty of care to exist, and policy considerations arising from Health Canada’s role as a regulator did not negate this duty.

Link:

Apotex Inc v Her Majesty the Queen, 2017 FCA 73

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