Canada: Pharmacapsules @ Gowlings - July 16, 2010

Last Updated: July 28 2010

Edited by Jennifer Wilkie and Isabel Raasch


  • EU Decides Functionality Critical for Infringement of Gene Patents
  • New Health Canada Adverse Event Form for Consumers
  • Amendments to Ontario Regulations made under the Ontario Drug Benefit Act and The Drug Interchangeability and Dispensing Fee Act
  • The 2009 PMPRB Annual Report is Released
  • Recent Cases

EU Decides Functionality Critical for Infringement of Gene Patents
By: Michel O'Hara

The Court of Justice of the European Union ruled on July 6, 2010 that soy meal imported from Argentina produced from Roundup Ready® soybeans does not infringe a Monsanto gene patent since the gene in question in the soy meal cannot perform its function, as is required by Article 9 of Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions.

That is, EU patents for DNA sequences can only be infringed when the DNA sequence in question in the allegedly infringing product performs its function as described in the patent.

Monsanto does not have patent protection for Roundup Ready® soybeans in Argentina and approximately 95% of the soybeans grown there are from Roundup Ready® seeds. Argentina has been exporting soy meal around the world and Monsanto has attempted to block imports into Europe since 2005. While Monsanto and the Argentinean importation companies signed a settlement agreement on June 11, the District Court of the Hague had referred this question to the European Court of Justice and they issued a decision nonetheless.

Monsanto claims that this decision is very limited since there is no question that the gene is functional in whole soybeans. However, this could have very interesting implications for other biotech products.

For more information, please see the following link:

New Health Canada Adverse Event Form for Consumers
By: Marc Richard

In an effort to facilitate reporting of adverse drug and health product reactions by consumers, Health Canada has launched a new "Consumer Side Effect Reporting Form". As part of Health Canada's MedEffect Canada initiative, the form will be available on the MedEffect Canada website along with the existing forms for voluntary reporting by Health Care professionals and mandatory reporting by industry. MedEffect Canada provides access to and collects safety information about marketed health products.

For more information, please see the following link:

Amendments to Ontario Regulations made under the Ontario Drug Benefit Act and The Drug Interchangeability and Dispensing Fee Act
By: Viktor Haramina

On July 1, 2010, amendments to Ontario's drug regulations came into effect reducing the price of most generic drugs by at least 50 per cent and eliminating so-called "professional allowances" paid by generic drug manufacturers to pharmacies. Instead, the province has increased dispensing fees for pharmacists and over the next three years, will pay pharmacies directly for important clinical pharmacy services they provide in order to transition the changes.

The changes to the drug system were needed since Ontario realized it has been paying some of the highest prices for generic drugs in the world. In some cases, up to 22 times the price for common generic medications. The government found that high generic drug prices were largely a result of misused professional allowance payments. In 2009, generic drug manufacturers paid $750 million in professional allowances to pharmacies to have them buy and stock generic prescription drug products.

Professional allowances were supposed to be used by pharmacies to support direct patient care such as the pharmacists' private counselling, patient information materials, aids for complicated medication regimens, diabetes management clinics and other public health services.

Instead, the Ontario government found that generic drug manufacturers, wholesalers and pharmacies were abusing professional allowance payments. In 2009, pharmacies themselves reported that approximately 70 per cent of these payments went toward fringe benefits, bonuses, overhead costs and boosting profits.

The province even commenced legal action when audits uncovered that pharmacies were purchasing a greater amount of generic drugs than required, collecting professional allowances on the full amount, and then returning unused amounts to the wholesaler, who then re-sold the returned drug products thereby triggering a second professional allowance payment. This 'resale' scheme enabled professional allowances to be collected multiple times.

As a result, generic drug prices will be reduced to no more than 25 per cent of the cost of the original brand name medication.

Please also see our previous comment on the Guidelines when they were posted:

The 2009 PMPRB Annual Report is Released
By: Melissa Binns

On June 16, 2010, the Minister of Health tabled before Parliament the 2009 Patented Medicine Prices Review Board (PMPRB) Annual Report. The Report which outlines sales and price trends of patented drugs in Canada notes:

  • Sales of patented drug products increased by 2.8% in 2009; however, this is part of a trend in recent years of declining growth in sales
  • The share of patented drug products as a percentage of total sales continued to decline from 64.7% in 2008 to 62.4% in 2009; and
  • The prices of patented drug products sold by patentees rose by 0.3% from 2008 and similarly the Consumer Price Index also rose 0.3%.

By comparison, prices of individual drugs in Canada are lower than the median of international prices. In 2009, Canadian prices ranked third of seven comparator countries; average prices were higher in Germany and much higher in the U.S.

With respect to research and development (R&D), the Report's highlights include

  • Patentees reported total R&D expenditures of $1.2 billion in 2009, a decline of 2.9% over 2008;
  • Members of Canada's Research-Based Pharmaceutical Companies (Rx&D) accounted for 89.1% of all reported R&D expenditures in 2009; and
  • In 2009, 81 new patented drug products for human use were introduced.

The full report is available online at:

Recent Cases
By: Scott Foster

AstraZeneca v. Apotex, PMNOC Regulations decision, esomeprazole, June 30, 2010

The court dismissed AstraZeneca's application AstraZeneca for an order prohibiting the issuance of a Notice of Compliance ("NOC") to Apotex on the grounds that the allegation of invalidity was justified insofar as the assertions of lack of utility/sound prediction and obviousness, but not justified regarding an assertion of anticipation. By the time of the hearing, only one claim was in issue (claim 8).

In respect of utility, the court decided that patent claim to a highly pure enantiomer of esomeprazole promised to provide an improved therapeutic profile. Further, the court determined that as the molecule of claim 8 was not new, it was incumbent upon AstraZeneca to provide evidence for a utility of that claim. The court then found that there was no evidence in the patent to support the position that such a pure concentration of esomeprazole would provide an improved therapeutic profile. In considering sound prediction, the court found that there was no factual basis nor an articuable line of reasoning for inferring such a result.

Having, thus, found with respect to sound prediction, the Court went on to hold that the claim was obvious as there was a means and motivation to make an enantiomer with such high level of purity to obtain an improved therapeutic profile.

The full text of the decision can be found at: Reasons for Judgment dated June 30 2010.pdf

Apotex v Syntex and Roche, dismissal of appeal concerning section 8 of PMNOC Regulations, naproxen, June 10, 2010

Apotex had sued Roche for damages pursuant to s. 8 of the PMNOC Regulations. Although Apotex had failed in the PMNOC proceedings in its allegation of non-infringement of Roche's patent, in a subsequent action the Apotex product was held to non-infringing and the relevant claims of the patent to be invalid. Apotex was seeking damages on the proposition that even though Roche prevailed in the prohibition proceeding, as Apotex was later successful in patent litigation it was entitled to damages under s. 8.

The trial court had held that the 1993 version of s. 8 of the PMNOC Regulations applied and that it was not triggered by the events in the action because the Roche patent had not "expired" within the meaning of s. 8.

Apotex's appeal to the Federal Court of Appeal was dismissed. The Federal Court of Appeal held that although s. 8 of the 1993 version of the Regulations is particularly obscure in its meaning, the Judge correctly interpreted s. 8 in the context of the unique facts before him. The FCA held that s. 8 was not intended to provide redress where an innovator prevailed in the prohibition proceeding but the generic was later successful in patent litigation. The FCA decided that a generic cannot reach back and apply the finding of invalidity in the action so as to argue that the innovator's patent had 'expired' within the meaning of s. 8 of the 1993 version of the PMNOC Regulations.

The full text of the decision can be found at:

Novopharm v. The Minister of Health, motion for a confidentiality order in a judicial review application of decision of Minister of Health, drug name confidential, May 26, 2010

The Minister decided that before a NOC could be issued to Novopharm, Novopharm must address a specific patent on the Patent Register. Novopharm sought judicial review of that decision and at the same time requested a confidentiality order protecting the identity of two drugs and two patents contained within its ANDS. Novopharm's position in the substantive case is that two patents (designated "X" and "Y" by Novopharm) were added to the Patent Register after Novopharm had purchased the Canadian Reference Products against which they were listed and after Novopharm had completed its clinical studies. The two Novopharm drugs (designated "A" and "B" by Novopharm) were, Novopharm said, developed prior to patents X and Y being on the Patent Register.

By its motion, Novopharm was seeking an order keeping confidential details of its ANDS for drugs "A" and "B" and also the identity of patents "X" and "Y". Novopharm wanted this information to be kept confidential from its competitors. In particular, Novopharm wished to keep the information confidential from the innovator / patentee to preclude it from intervening in the application for judicial review. The Court first decided the ANDS is confidential between Novopharm and the Minister of Health and the innovator is not involved in the Minister of Health's decision. The innovator would only have standing if the Minister's decision is overturned on judicial review and a NOC is issued to Novopharm.. Second, the Court granted the confidentiality order.

The Minister of Health appealed from the Order of the Court, however, before the appeal could be heard, Novopharm discontinued its application.

The full text of the decision can be found at:

Janssen-Ortho v. Apotex, recusal by the Judge, levofloxacin, June 14, 2010; motion to dismiss granted, levofloxacin, June 29, 2010

In a PMNOC case, Justice Shore granted an order of prohibition against Apotex in respect of its levofloxacin until patent expiry. On appeal, the majority of the Federal Court of Appeal allowed Apotex's appeal, set aside the Judge's decision and remitted the matter back to him for redetermination. Shore J. subsequently recused himself (i.e. withdrew) from the redetermination on the basis that he would have to find the same way and thereby either deviate from: (i) deference to the Federal Court of Appeal; or (ii) from his judicial responsibility of independent analysis.

Subsequently, Apotex brought a motion to dismiss the proceeding on the grounds of mootness due to the expiry of the patent at issue. Justice Hughes considered whether there was any s. 8 implications, and noted that s. 8(1) may apply where the proceedings are "dismissed by the court hearing the application" but not if the proceedings are dismissed by a court other than the court hearing the application. Further, the Court noted that whether to "hear" an application was a matter of discretion. In the circumstances, the Court ordered the dismissal without a hearing.

The full text of the decision on recusal can be found at:

The full text of the decision on the dismissal can be found at:

Apotex v. Pfizer, motion to strike part of a defence pertaining to res judicata, sildenafil citrate, June 11, 2010

Apotex applied to impeach Pfizer's patent for Viagra and Pfizer defended alleging, in part, res judicata. Apotex applied to have that particular defence struck from the pleadings. Apotex had previously sought, and failed, to challenge Pfizer's patent for sildenafil citrate in PMNOC proceedings. In the current impeachment action, Apotex raised seven allegations of invalidity; all but one of which were raised in Apotex's NOA in the earlier PMNOC proceedings. In response, Pfizer pleaded res judicata, issue estoppel, collateral estoppel, comity and abusive process in support of its position that Apotex should be precluded from fully contesting the validity of the Pfizer patent.

The Prothonotary held that although the PMNOC proceedings are summary proceedings, they are often intensely litigated. The main difference between them and a full impeachment action is usually only that they lack a full trial and live witnesses. The Prothonotary declined to strike the relevant part of Pfizer's Defence. He concluded that the plea ought not to be struck as it is open to the trial Judge to decide if res judicata principles can be applied to some or all of the evidence. In support of this decision, he referred to an earlier case in the Federal Court where the Judge therein held that the history of PMNOC Proceedings between parties and the determinations of the courts in those proceedings may have some relevance in the subsequent Federal Court action.

The Prothonotary considered that there had been extensive earlier, unsuccessful, litigation commenced by Apotex in respect of the same patent and decided that to the extent that evidence from prior proceedings is identical to the evidence led in this case, res judicata may render the proceedings moot or previously decided and that may have some relevance but not necessarily be determinative of the issue on which that evidence is led. The Prothonotary also noted that at least it may go to the issue of costs. Finally, the Prothonotary concluded that while the PMNOC Regulations are designed to be a summary process which is the rationale for not strictly applying the res judicata doctrine to subsequent impeachment proceedings, parties ought not to have endless "kicks at the can" and use up more and more judicial resources because they do not like the prior result and are sufficiently well healed to pursue more and more litigation.

The full text of this decision can be found at:

Pfizer v. Novopharm, appeal of decision of Prothonotary to deny Novopharm's motion for confidentiality in PMNOC Regulations case, pregabalin, June 21, 2010

Novopharm served a NOA on Pfizer which it had unilaterally designated confidential. Novopharm then brought a motion to have the NOA sealed in the Court record to try and keep the NOA confidential from other generic drug manufacturers - some of whom were already seeking a NOC and some of whom might subsequently seek a NOC for their own pregabalin product based upon the information in Novopharm's NOA. As described in the May 2010 edition of this newsletter, the Prothonotary rejected Novopharm's motion.

Novopharm appealed but Justice Crampton dismissed the motion. He highlighted the importance of the rule that court proceedings should be open and subject to public scrutiny and noted that there is a particularly strong public interest in transparency and openness with respect to: (i) allegations contained in an NOA; (ii) the basis for those allegations; and (iii) the proceedings involving those allegations. This is because a patent confers a monopoly on the patent holder for the life of the patent. He also referred to the cross-examination evidence of Novopharm's general counsel which he said demonstrated a serious question as to whether Novopharm had a reasonable expectation that its NOA would be kept confidential.

The full text of this decision can be found at:

Pfizer v ratiopharm, PMNOC Regulations decision, sildenafil citrate, June 8, 2010

The Court dismissed an application for an order of prohibition under the PMNOC Regulations, wherein ratiopharm sought a generic version of the drug Revatio containing sildenafil citrate (the active ingredient in Viagra) until after the expiry of a Pfizer patent. ratiopharm alleged that the Pfizer patent was invalid for lack of utility (sound prediction) and obviousness.

The Court held that Pfizer had failed to prove that ratiopharm's allegations were unjustified with respect to the invalidity for lack of sound prediction and for obviousness in view of the prior art and dismissed the application. The Court held that all the experts agreed that a particular study disclosed in the Pfizer patent did not soundly predict that sildenafil will treat pulmonary hypertension. Given that the study failed to assess the effect of sildenafil on chronic obstructive pulmonary disease and congestive heart failure patients, this deprived the patent from disclosing a factual basis (the first step of the Apotex v Wellcome test) to soundly predict the efficacy of sildenafil upon such patients. The Court concluded that the problem likely arose because Pfizer did not wait for the results of the study before it filed its patent application.

With respect to obviousness, the Court applied the "obvious to try" test and concluded that in light of prior art case studies and data from sheep, it was self-evident or plain that there was fair expectation of success that sildenafil would treat pulmonary hypertension. It was therefore obvious to try to use sildenafil to treat pulmonary hypertension.

The full text of this decision can be found at:

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