Standing Committee on Health releases report and recommendations on National Pharmacare

On April 18, 2018 the Standing Committee on Health tabled its report on national pharmacare entitled Pharmacare Now: Prescription Medicine Coverage for All Canadians.

The Committee believes that the best way to move forward in establishing a universal single payer public prescription drug coverage program is by expanding the Canada Health Act to include prescription drugs dispensed outside of hospitals as an insured service.  The Act establishes criteria and conditions for insured health services that must be met by provinces to receive payments from the federal government.  Federal government funding will be increased, although the Committee believes that the program should be cost-shared between federal, provincial and territorial governments.

In addition to amending the Act, the recommendations include:

  • Expanding the mandate of the Canadian Agency for Drugs and Technologies in Health (“CADTH”) to include maintaining the national formulary, as well as increasing its capacity to undertake therapeutic reviews of high cost specialty drugs, oncology drugs and drugs for rare diseases.
  • Developing a transparent decision-making framework for price negotiations for pharmaceutical drugs undertaken by the pan-Canadian Pharmaceutical Alliance and designating it as the common agent for the bulk buying of pharmaceuticals.
  • Amending the Patent Act to require manufacturers to reduce prices after 15 years if no generic substitute is available.
  • Investigating the market practices of the pharmaceutical sector, including those of patented and generic drug manufacturers, wholesalers and retail pharmacies, to identify opportunities to reduce prices.

As we reported, the government has also created an Advisory Council on the Implementation of National Pharmacare, which is expected to provide a report in 2019.

Links:

Pharmacare Now: Prescription Medicine Coverage for All Canadians

 

Apotex request to re-open validity of esomeprazole patent denied

The Federal Court dismissed Apotex’s motion to re-open the validity phase of the patent infringement action relating to esomeprazole (AstraZeneca’s NEXIUM®). Apotex had moved to re-open validity to allow the Court to adjudicate the issue of “overpromising” in light of the Supreme Court of Canada’s decision in AstraZeneca Canada Inc v Apotex Inc, 2017 SCC 36 , which related to the same patent.

As we reported, the only issue before the SCC was utility. The court allowed AstraZeneca’s appeal and struck down the Promise Doctrine as an error of law. After the SCC released its decision, Apotex brought a motion to the SCC to have the issue of “overpromising” remanded to the Federal Court and the issues of anticipation and obviousness remanded to the Federal Court of Appeal (reported here). Apotex’s motion was dismissed by the SCC without reasons.

In this decision, Justice Locke found that the validity of the patent in issue had been finally decided by the SCC, and there were no other validity issues to debate, including any question of “overpromising.” He reasoned that any confusion as to the SCC’s intent concerning the patent’s validity was resolved when Apotex’s motion to the SCC was dismissed. While the SCC decision does refer to the Patent Act treating “the mischief of overpromising in multiple ways,” Justice Locke was unwilling to infer that this meant this patent could be invalid on other grounds without the SCC having expressly said so. As we reported, he followed a similar line of reasoning in his decision to deny Apotex’s section 8 claim relating to esomeprazole.

Justice Locke also granted AstraZeneca’s motion for a declaration that Apotex infringed the patent, and directed that quantification be by way of reference. He left the decision of whether AstraZeneca was entitled to elect an accounting of Apotex’s profits to be decided in the reference.

Apotex has appealed the decision.

Link: AstraZeneca Aktiebolag et al v Apotex Inc, 2018 FC 185

 

ONCA upholds dismissal of summary judgment in lansoprazole s. 8 case

As we reported, Abbott Laboratories Limited, Takeda Pharmaceuticals Company Limited and Takeda Pharmaceuticals America Inc. sought dismissal of Apotex’s action for s. 8 damages in the Ontario Superior Court by summary judgment. The Ontario Court of Appeal (ONCA) affirmed the lower court’s finding that a real-world notice of non-compliance – withdrawal (NON-W) issued by Health Canada did not operate to void the patent hold letter ab initio. The ONCA held it was open to the motions judge to accept “essentially unrefuted” expert evidence that in the hypothetical but-for world Health Canada would have issued Apotex its Notice of Compliance as of its patent hold date and that Health Canada would not have suspended or revoked the Notice of Compliance in the absence of exceptional circumstances.

The Court of Appeal found no palpable and overriding error in the judge’s decision, as there was evidence that supported the judge’s conclusions.

NON-W Could Impact Quantum of Damages

The motions judge invited evidence at trial on whether the NON-W would interrupt Apotex’s sales in the but-for world, and the ONCA agreed it will be open to the trial judge to consider the relevance of Apotex’s real-world NON-W on the quantum of damages.

Link:

Apotex Inc v Abbott Laboratories Limited, 2018 ONCA 332

 

Coulda, woulda, shoulda – Federal Court finds Apotex would not have used non-infringing alternatives in perindopril case

On redetermination of an accounting of profits, the Federal Court (FC) rejected Apotex’s claim that the profits awarded to Servier due to Apotex’s manufacture and sale of infringing perindopril should be reduced based on alleged non-infringing alternatives (NIAs).

Background

In 2008, the FC found that Servier’s patent claiming perindopril was valid and infringed by Apotex, and subsequently ordered Apotex to pay a combined total of $CAD 61 million plus interest, representing Apotex’s profits from its Canadian and export sales. Among other things, the trial judge rejected Apotex’s defence that it could and would have sold non-infringing perindopril (sourced from jurisdictions where there were no patents for perindopril) to its foreign affiliates in the UK and Australia.

As we reported, on appeal the Federal Court of Appeal (FCA) held that the trial judge erred by rejecting the relevance of an existing NIA at law.  However, the FCA found no errors in the trial judge’s conclusion that Apotex failed, on the evidence, to establish it could and would have obtained the required quantity of non-infringing perindopril at the relevant time from all but three of its proposed foreign suppliers: Ipca, Intas and Signa.

The FCA held that the trial judge erred by not explaining why she rejected the evidence related to those three foreign suppliers, and remitted the following issues back to the judge: (1) whether Apotex could and would have obtained sufficient quantities of non-infringing perindopril from those three suppliers, and if so, (2) whether Apotex could have and would have used non-infringing perindopril to replace the sales it made in the real world to its affiliates in the UK and Australia.

Legal test for NIA defence

When considering the effect of a defendant marketing a non-infringing alternative in the hypothetical world, courts must answer two questions:

(1) could the infringer have sold the non-infringing alternative?

(2) would the infringer actually have sold the non-infringing alternative?

“Could”

The trial judge rejected Apotex’s contention that three proposed unaffiliated third-party suppliers (located in India and Mexico) could have made sufficient quantities of non-infringing perindopril during the infringement period (2006-2008).

The judge found that, as the proposed suppliers did not make commercial quantities of perindopril prior to or during the infringement period in the real world, the complexity of effecting the required technology transfers and obtaining the necessary regulatory approvals would have contributed to a delay in Apotex coming to market. As a result, Apotex could not have started to replace its real-world sales to its UK and Australia affiliates until a year after its real-world sales actually began.

“Would”

The trial judge noted that the intentions, motivations and preferences of the infringing party in the real world are instructive in drawing inferences as to what it would have done in the hypothetical world.

The trial judge found that, although Apotex could have used non-infringing perindopril sourced from its proposed third-party suppliers one year into the infringement period, the evidence suggested it would not have done so.    Rather, drawing inferences from Apotex’s conduct and motivations in the real world, including its admitted preference to manufacture products at its “own sites,” the trial judge held that Apotex would not likely have used the proposed unaffiliated third parties to manufacture perindopril for its foreign markets.  The court held that Apotex would likely have done in the hypothetical world exactly what it did in the real world, which was to wait until its Indian affiliates were ready and then transfer the technology and commercial production to them.

Norton Rose Fulbright Canada LLP represented Servier at both the liability and quantification stages and on appeal.

Links:

Redetermination – Les Laboratoires Servier et al v Apotex inc et al, 2018 FC 346

Accounting of profits – 2015 FC 721; 2017 FCA 23

Validity and infringement – 2008 FC 825; 2009 FCA 222

Top 10 Updates on Canadian Market Access, Exclusivity and Pricing Issues

Norton Rose Fulbright Canada LLP recently published an article on the “Top 10 Updates on Canadian Market Access, Exclusivity and Pricing Issues” for the Food and Drug Law Institute’s March/April 2018 issue of Update Magazine. The article contains an overview of some of the most pertinent changes in market access, exclusivity and pricing that have occurred over the past year that will impact stakeholders operating in the Canadian pharmaceutical industry.

A link to the article can be found here. The article is reproduced with permission of the Food and Drug Law Institute’s Update Magazine.

Ontario delays implementation of regulations under the Health Sector Payment Transparency Act

Although there has been no public announcement, we understand that the Ontario government has indicated it will not be proceeding with the final approval of regulations developed under the Health Sector Payment Transparency Act (“HSPTA”) before the upcoming election.  Rather, these regulations will be revisited in the fall of 2018.

As we reported, Ontario passed the HSPTA as part of Bill 160 in December 2017.  It will require reporting certain financial relationships in Ontario’s healthcare system to the government. As we also reported, draft regulations were published for consultation in February 2018.  The deadline for consultation was April 6, 2018, and this deadline has not been extended.

The draft regulations contained an implementation timeline that would require reporting of transactions that occurred in the 2019 calendar year.  It is expected that when the regulations are revisited this timeline will be delayed.

Change in utility law not a factor in s. 8 damages

The Federal Court of Appeal (FCA) has refused to apply the “special circumstances” exception to issue estoppel in view of a change in law arising from the rejection of the “promise doctrine” in AstraZeneca Canada Inc v Apotex Inc, 2017 SCC 36 (NEXIUM, reported here). Noting any injustice to Lilly is “entirely commercial in nature” as well as a concern of Teva being ‟twice vexed,” the court rejected Lilly’s argument that the NEXIUM decision should be considered as a factor in determining damages pursuant to section 8 of the Regulations.

Background

Teva sought damages from Eli Lilly Canada Inc. pursuant to section 8 of the Regulations, as compensation for having been prevented from coming to market in 2006-2007 with a generic version of ZYPREXA® (olanzapine). As we reported, the Federal Court considered the established parameters to calculate Teva’s damages for being delayed from entering the olanzapine market, clarified evidentiary issues on fact witnesses and hearsay, and rejected Teva’s argument that its damages should include a pipefill adjustment.

The FCA upheld the Federal Court on the evidentiary issues but overturned on the issues of pipefill.

Issue Estoppel

On appeal, Lilly argued the FCA ought to consider the Supreme Court’s decision in NEXIUM, which changed the state of the law for patent utility. Lilly argued the sole basis on which Teva succeeded in the prohibition proceedings that gave rise to section 8 liability was a finding of inutility, and in light of the subsequent NEXIUM decision the court should consider the change in law as a factor in assessing section 8 damages.

The FCA applied the doctrine of issue estoppel, finding it would not be appropriate to allow a collateral attack on the findings of invalidity of the patent given that the issue had already been decided. The court noted a change in the law did not trigger the “special circumstance” exception to issue estoppel, and found there was no basis to exercise its discretion to bar the application of issue estoppel in this case.  Given the real-world impact of “entirely commercial” high-stakes litigation, the special circumstance exception warrants further clarity from the courts.

The Court of Appeal refused to follow the Supreme Court of the United Kingdom’s reasoning in Virgin Atlantic Airways Limited v Zodiac Seats UK Limited, [2013] UKSC 46, [2014] 1 A.C. 160, which did consider a change in law in its assessment of damages, and noted its reasoning is consistent with a recent Ontario Superior Court  decision in litigation relating to ramipril, reported here.

Fact Witnesses Speaking to the Construction of the But-For World

In the underlying decision, the Federal Court addressed the admissibility of evidence on actions fact witnesses would have taken in the but-for world. It held that fact witnesses could be asked about what they did in the real world, and whether they knew of any reason why they would have acted differently in the but-for world. However, opinion evidence from a fact witness about what it would have done in the hypothetical but-for world was inadmissible.

The FCA found it was an error for the Federal Court not to consider factual testimony about what would have happened in the but-for world. It clarified that appropriately positioned fact witnesses can testify not only about their conduct in the real world, but about their own conduct and that of their businesses in the but-for world.

Pipefill Sales Recoverable

In quantifying Teva’s damages, the Federal Court found that pipefill sales do not represent lost sales incurred during the liability period because those units would not be sold to end consumers until after the end of the liability period.

The Court of Appeal found this to be an error, noting section 8 damages are intended  to compensate the generic manufacturer for sales it actually would have made during the period. Since the manufacturer would have made sales into its distribution pipeline during the relevant period, it is immaterial that the units might not be sold to end-users until after the end of the liability period.

Link:

Eli Lilly Canada Inc v Teva Canada Limited, 2018 FCA 53

 

CETA Tracker: Update on CSPs

As we reported, on September 21, 2017 the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act and accompanying regulations came into force. The legislation provided key reforms to the Patent Act affecting the pharmaceutical industry, including up to two years of patent term restoration for patented pharmaceuticals under the Certificate of Supplementary Protection Regulations (CSP).

The protection given under a CSP is intended to “partly compensate for time spent in research and obtaining marketing authorization.” A CSP provides “patent-like rights” that take effect after patent expiry, and is subject to the “same limitations and exceptions” as the patent. Like a patent, a CSP is subject to the jurisdiction of the Patented Medicine Prices Review Board and can be listed on the Patent Register, as well as on the CSP Register.

CSPs are now available for patents relating to drugs with a notice of compliance issued on or after September 21, 2017, provided all other eligibility requirements are met.

The fee for filing a CSP application has increased to $9192 on April 1, 2018.

Health Canada’s online Register of Certificates of Supplementary Protection and Applications indicates that the first CSP has issued in relation to TrumenbaTM, a meningococcal group B vaccine. The CSP is also now listed on the Patent Register.

Health Canada releases a cost-benefit analysis survey for labelling changes of natural health products as part of the self-care product framework

Health Canada is conducting a cost-benefit analysis survey to gather information about the impact of its  proposed changes to the labels of Natural Health Products (NHPs). Interested stakeholders have until May 30, 2018, to complete the survey and provide any other comments.

As we reported,  Health Canada is changing the way it regulates non-prescription drugs, natural health products and cosmetics, referred to as “self-care products.” As part of this process, Health Canada has proposed to change the labelling requirements for NHPs. These changes, which will be made by way of amendments to the Natural Health Products Regulations, include:

  • a facts table to standardize the format for certain information (Product Facts Table);
  • modernized contact information for problem reporting and asking questions; and
  • the use of comprehensible and readable language (including use of plain language attributes such as simple sentences, information presented in simple bullets, short lists, contrast, font style and size) on all NHP labels.

These new requirements would be in addition to the information already required to be on the product, which are set out in Part 5 of the Natural Health Products Regulations.

Health Canada is proposing a coming-into-force period of one year for new licencees. NHPs that are marketed  prior to the coming into force could continue to be sold without meeting the new requirements for an additional four years following the coming into force.

The cost-benefit analysis survey can be submitted to Health Canada by mail or e-mail to the addresses included in the survey.

Health Canada will be responding to questions on the survey from 1:30 p.m. to 3 p.m. (EST) on April 4, 2018, and 10:30 a.m. to 12 p.m. (EST) on April 6, 2018, either via teleconference or webinar. If you are interested, please e-mail selfcareproducts-produitsautosoins@hc-sc.gc.ca and indicate your preferred date.

Link:

Cost-Benefit Analysis Survey for Improved Labelling for Natural Health Products in English and French

 

Section 8 liability offset by patent infringement in esomeprazole case

The Federal Court denied Apotex’s section 8 claim relating to esomeprazole on the basis that its product would have infringed a valid AstraZeneca patent. This aligns with a previous decision of the court that placed significant weight on patent infringement in the context of section 8 damages (reported here). There was no dispute that Apotex’s Apo-esomeprazole product infringed, and the court’s interpretation of the Supreme Court of Canada’s (SCC) decision in AstraZeneca Canada Inc v Apotex Inc, 2017 SCC 36 that the same patent was valid was central to the decision.

Background

As we reported, in 2010 Apotex successfully defended a prohibition application relating to esomeprazole. After Apotex launched its Apo-esomeprazole product, AstraZeneca sued Apotex for patent infringement and Apotex sued AstraZeneca for section 8 damages.

In the infringement action, the Federal Court found that AstraZeneca’s patent was novel and not obvious, but lacked utility. The Federal Court of Appeal upheld the decision on utility, but the SCC reversed, holding that the patent was not invalid for lack of utility.

Considerations on Patent Infringement

In the section 8 action, AstraZeneca sought to rely on the SCC decision to disentitle Apotex to damages either because (i) no damage had arisen (a requirement of subsection 8(1) of the Regulations) or (ii) the court should exercise its discretion under subsection 8(5) to prevent recovery for sales that would necessarily infringe the patent.

The court concluded it was preferable to consider patent infringement in the but-for world under subsection 8(5) rather than subsection 8(1). However, the court did not preclude the possibility that patent infringement would be a consideration under subsection 8(1).

Disentitlement Pursuant to Subsection 8(5)

The court also concluded AstraZeneca’s section 8 liability was completely offset by Apotex’s infringement of the patent. It determined that the SCC decision effectively found the patent to be, and to always have been, valid. Accordingly, to allow Apotex to recover damages would be to provide compensation for profits that it never could have rightly made.

Apotex argued: (i) the change in the law brought about by the SCC decision was not foreseeable; (ii) AstraZeneca had started several prohibition applications, which were all discontinued or dismissed; and (iii) the regime imposed by the Regulations would be unbalanced if section 8 liability could be offset by a subsequent finding of infringement. Apotex noted a generic is not entitled to damages under section 8 if it loses prohibition proceedings but subsequently succeeds in an infringement action, since section 8 liability is tied to the prohibition proceedings. The court found that patent infringement outweighed all of these factors.

What Happens in the Real World Happens in the But-For World

Apotex also attempted to defend against AstraZeneca’s reliance on the SCC decision by alleging events in the but-for world would have unfolded differently than they did in the real world. Apotex asserted there was no evidence AstraZeneca would have sued Apotex for patent infringement; the parties would not have settled the matter before a trial; the SCC would have granted leave to appeal or the SCC would have decided such an appeal the same way.

AstraZeneca disputed the relevance of hypothetical infringement actions in the but-for world, and led no positive evidence on the issue.

The Federal Court held on the facts that what happened in the real world would have occurred in the but-for world, albeit six months earlier. Apotex would have been found to have infringed a valid patent in the but-for world. Notably, however, the court explained that its complete offset of section 8 liability under subsection 8(5) was independent of how the promise doctrine would have evolved in the but-for world.

Apotex has appealed the decision.

Link:

Apotex Inc v AstraZeneca Canada Inc, 2018 FC 181

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