The Federal Court of Appeal (FCA) has confirmed that the Patented Medicine Prices Review Board (PMPRB or Board) does not have jurisdiction over the prices of unpatented medicines. In doing so, the FCA overturned decisions of the PMPRB and the Federal Court (FC) finding that a patent can pertain to a medicine based on “clinical similarities” to the invention—even if the patent does not actually encompass the medicine.

Background

This case has a long history before the PMPRB and the Courts. It concerns Canadian Patent No. 2,478,237 (the 237 Patent), which relates to the use of adapalene to treat dermatological disorders. The patentee, Galderma Canada Inc. (Galderma), markets two adapalene products in Canada:

• Differin^®, which contains 0.1% adapalene (DIFFERIN).
• Differin XP^TM, which contains a higher concentration of adapalene: 0.3% (DIFFERIN XP).

There is no dispute that the 237 Patent pertains to DIFFERIN XP. The PMPRB took the position that the 237 Patent also pertains to DIFFERIN, and that Galderma had failed to report the required sales and financial information in respect of this product from January 1, 2010 until the 237 Patent expired on March 14, 2016. Galderma argued that the 237 Patent is not intended or capable of being used for DIFFERIN—a 0.1% adapalene formulation—because on its face, the patent is specific to 0.3% adapalene formulations (such as DIFFERIN XP).

As we reported, the FCA overturned the Board’s first decision against Galderma in 2019 and returned the matter to the PMPRB for redetermination on the basis that the invention of the 237 Patent is the use of a 0.3% concentration of adapalene for the treatment of dermatological disorders. The FCA also held that the PMPRB should be allowed to address “what kind of clinical similarities would support a finding that the invention of a patent was intended or capable of being used” for a specific medicine.

On redetermination in 2020, the Board concluded that the 237 Patent pertains to clinical similarities between DIFFERIN and DIFFERIN XP (see our summary of that decision here), leading to this second application for judicial review. As we reported, the FC found the PMPRB’s redetermination decision to be reasonable in January 2024, leading to this further appeal.

No jurisdiction over unpatented medicines based on “clinical similarities”

On appeal, the FCA focused on the statutory and constitutional limitations of the PMPRB’s power.

The Court confirmed long-standing jurisprudence holding that the PMPRB has no jurisdiction over the prices of unpatented medicines. Although the statutory test for determining whether a patent pertains to a medicine asks whether the “the invention is intended or capable of being used for medicine or for the preparation or production of medicine,” this cannot be interpreted to expand the PMPRB’s jurisdiction into the regulation of unpatented medicine prices.

On the facts of this case, the FCA found that there was only one available outcome: DIFFERIN is not a patented medicine. As stated by the Court:

The invention in the ’237 Patent, the use of the 0.3% concentration of adapalene, cannot (in the words of subsection 79(2)) be “intended or capable of being used” for Differin or for “the preparation or production” of Differin, because Differin does not embody that use at all.

In reaching this conclusion, the FCA did not explicitly address the issue of “clinical similarities.” However, by finding the Board exceeded its jurisdiction the Court has effectively rejected the Board’s interpretation of “clinical similarities” as a basis for finding that a patent pertains to a medicine:

Nowhere does the Patent Act say that the Board can regulate an unpatented medicine just because a patented medicine might be used in its place or because it shares some unpatented properties of the patented medicine (here, the unpatented ingredient adapalene).

Having found that there was only one available outcome on the facts of this case—regardless of the standard of review applied—the FCA declined to once again return the matter to the PMPRB for redetermination. Instead, the FCA made the decision that the FC ought to have made and struck down the PMPRB’s decision.