Canada: Pharmacapsules @ Gowlings: October 27, 2010

Last Updated: November 7 2010

Edited by Jennifer Wilkie and Isabel Raasch


  • Generic Drugs Substantially More Expensive In Canada Than In the U.S>
  • Cancer Society Calls For National Catastrophic Drug Insurance Program
  • Manitoba Sets Aside Half-Million Funding For Possible MS "Liberation" Treatment
  • Recent Cases
  • Upcoming Events
  • Upcoming Trials and Appeals of Interest
  • Recent Resources of Interest on the Gowlings Website

Generic Drugs Substantially More Expensive In Canada Than In the U.S.
By Adrian Howard

The Fraser Institute has updated their study of the 100 most commonly prescribed brand-name drugs and the 100 most commonly prescribed generic drugs in Canada.  They concluded that Canadian retail prices for generic prescription drugs in 2008 were 90 percent higher on average than retail prices in the United States for identical drugs.  This compares with an average of 112 percent in 2007 and 115 percent in 2006.

Of the 64 generic drugs in Canada that were directly comparable to the U.S., 43 were more expensive in Canada, while 21 were more expensive in the U.S.  However, for the generic drugs that were more expensive in Canada, prices were an average of 153 percent higher than in the United States. 

Retail prices for generics in Canada were 73 percent the price of the brand-name originator drug, compared with just 17 percent of the brand-name equivalents in the U.S. 

A variety of federal and provincial public policies are identified as contributing to inflated prices for generic drugs in Canada.  Combined with exclusive distribution rights and fixed reimbursement rates, there is a lack of competition between generics driving down the price as there is in the United States.  The authors suggest that switching to policies that introduce competitive market dynamics will act to regulate the prices of generic drugs at comparable levels.

For more information, please see the following link:

Cancer Society Calls For National Catastrophic Drug Insurance Program
By Livia Aumand

The Canadian Cancer Society is calling for a federally-funded national catastrophic drug insurance program, as reported by CTV News on September 29, 2010.  This is in response to concerns that there are disparities between provinces, insurers, and between individual Canadians, who may or may not have access to affordable drug insurance.  The Cancer Society also relied on a recent survey, which suggested that, once informed of the average costs for newer cancer drugs, 58 percent of Canadians felt that the costs would have a "major" negative impact on their finances.  The survey also revealed that 74 percent of Canadians would support a federally-funded national catastrophic drug insurance program that paid for the full cost of prescription drugs.  Of the 74 percent, 31 percent were willing to pay higher taxes and 28 percent would accept government service reductions in areas other than health care, in order to fund such a program.

For more information, please see the following links:

Manitoba Sets Aside Half-Million Funding For Possible MS "Liberation" Treatment
By Viktor Haramina

The Manitoba Government has allocated $500,000 for possible future trials of the "liberation" treatment for Multiple Sclerosis ("MS").  The treatment, developed by Italian doctor Paolo Zamboni, is intended to relieve a narrow-vein condition known as Chronic Cerebrospinal Venous Insufficiency (CCSVI) by unblocking veins with a balloon angioplasty procedure.

The Saskatchewan Government has also pledged it would pay for "liberation" clinical trials if scientific evidence shows the process could significantly help patients.  Other provinces like Nova Scotia said it would follow suit.  Quebec is also considering funding national trials along with the government of Newfoundland and Labrador.

For more information, please see the following links:

Recent Cases
By Scott Foster

Eli Lilly Canada Inc. v. Apotex Inc. (2010 FCA 240)
Appeal and cross appeal dismissed, cefaclor, September 22, 20102010

This was an appeal of the decision of Madame Justice Gauthier (in the Federal Court) who had found that although Lilly met its burden to prove that Apotex infringed eight Lilly process patents related to the manufacture of the antibiotic cefaclor for material imported before June 3, 1998, Lilly failed to do so for the cefaclor imported into Canada after June 3, 1998.  Apotex cross-appealed on the Judge's application of the "Saccharin Doctrine".   

The Federal Court of Appeal (the "FCA") dismissed the appeal as it decided that the issue on appeal was essentially factual: whether Apotex' manufacturer had changed from using a patented to a non-patented process when it made the intermediate compound needed to supply Apotex with the bulk cefaclor imported after June 3, 1998.  The FCA decided that the Judge had sufficient basis for her conclusions and that no palpable and overriding error was apparent from the Judge's findings as to fact.  The FCA found that the Judge was not wrong in law in not excluding the testimony of a witness from Apotex' manufacturer (Lupin) which Lilly objected to under rule 248 of the Federal Rules because on discovery, an officer of Apotex had stated that he had no knowledge of the process actually used by Lupin, when in fact, unknown to Lilly, Lupin had written a letter in 2000 to Mr. Ivor Hughes as Apotex' lawyer advising him that it was willing to cooperate in the litigation

The FCA noted that although the Judge exercised her discretion when she accepted late tendered evidence of Apotex, the FCA should not be taken to condone Apotex' unexplained failure to provide timely responses to questions, to correct erroneous responses, and to produce documents in a timely fashion and that it should never be considered good practice for a party to fail to comply with the rules of discovery.

The FCA also dismissed the cross-appeal and confirmed that the "Saccharin doctrine" – i.e., the doctrine whereby the importation of a product made abroad via an patented process constitutes "use" and therefore infringement of the Canadian process patent-  which has been settled law in Canada for over a hundred years and was endorsed by the Supreme Court in Monsanto v. Schmeiser (2004), is still good law.  The FCA also rejected Apotex' alternative argument that the Saccharin doctrine should not apply where the patented process was for an "intermediate" product (as was the case for the patents in suit) if a "material change" is made to the product of the process prior to importation and instead referred to the present law applied by the Trial Judge which requires only that the patented process play an "important part" in the manufacture of the imported product.   

Apotex Inc. v. Shire Canada Inc. (2010 FC 1001)
Appeal of Prothonotary's decision denying, in part, permission to amend statement of defence, modafinil, October 8, 2010

Shire appealed the Order of Prothonotary Tabib denying it permission to amend, in part, its Statement of Defence.  For a summary of that decision, see the September 2010 edition of this newsletter.  Mr. Justice Pinard in the Federal Court dismissed Shire's appeal after hearing the matter de novo. He held that the proposed defence was deficient and that no reasonable cause of action or defence was raised by Shire.

Apotex Inc. v. Pfizer Ireland Pharmaceuticals (2010 FC 968)
Appeal of Prothonotary's decision denying permission to amend statement of defence, sildenafil citrate, September 28, 2010

Apotex appealed an Order of Prothonotary Aalto dismissing a motion to strike parts of Pfizer's Statement of Defence relating to res judicata, estoppel (issue and collateral), comity and abuse of process.  For a summary of the Prothonotary's decision, see the July 2010 edition of this newsletter.  Apotex had been unsuccessful in challenging Pfizer's patent in PMNOC proceedings and had commenced an action to invalidate the patent.  Part of Pfizer's defence was that the earlier PMNOC proceedings should have a limiting effect on Apotex's action and the evidence that Apotex was entitled to put forward.  Mr. Justice Hughes heard the appeal de novo and dismissed the appeal.  Pfizer agreed to strike its defence in respect of the res judicata grounds in light of certain jurisprudence but submitted that the grounds of estoppel (issue and collateral), comity and abuse of process should remain.  The Judge agreed, deciding that these issues had not been squarely raised previously and should not be struck at the interlocutory stage. 

Eli Lilly Canada inc. v. Apotex Inc. (2010 FC 952)
Motion to set aside a prohibition Order in PMNOC proceedings, Olanzapine, September 24, 2010

Apotex brought a motion to set aside an Order from 2007 granting Eli Lilly's applications for a prohibition Order in PMNOC proceedings.  The Order was confirmed by the Federal Court of Appeal in 2008.  Apotex brought the motion because it was seeking a dismissal of Eli Lilly's applications in order permit it to claim damages pursuant to section 8 of the PMNOC Regulations.  Section 8 requires an innovator's application to be "withdrawn, discontinued or dismissed" before a generic can claim damages.  Madame Justice Gauthier dismissed Apotex's motion.  Referring to case law she held that a prohibition order naturally expires at the same time that the patent expires.  This includes when a patent is declared to be invalid in impeachment proceedings.  Expiry does not trigger section 8 damages as the patent is not deemed to be withdrawn, discontinued or dismissed.  So, if an innovator prevails in prohibition proceedings, section 8 does not provide redress to a generic even if the generic is later successful and impeaches the patent in litigation.  

Merck-Frosst-Schering Pharma GP v. Canada (Health) (2010 FC 933)
PMNOC proceedings, Ezetimibe, September 17, 2010

Merck-Frosst ("Merck") applied for an order prohibiting the Minister of Health from issuing a Notice of Compliance to Teva for its generic version of Ezetimibe.  Teva's Notice of Allegation alleged that claim 21 of Merck's patent (the '149 patent) was obvious in light of an earlier prior art patent filed by Merck (the '007 patent). 

Mr. Justice Phelan held that the obviousness allegation was unjustified.  He did not accept the evidence of Teva's expert: that a person of ordinary skill in the art would look at the '007 patent and immediately, without any ingenuity, undertake a multistep development process and arrive at the disclosure of the '149 patent.  The Judge found Teva's multistep process to require a significant degree of ingenuity and inventiveness.  He also considered it likely that the multistep process was created as a result of a hindsight analysis and that it did not reflect the realities of commercial drug development.  The Judge was particularly influenced by the amount of time, money and effort Merck spent in developing the Ezetimibe compound (which was covered by claim 21 of the '149 patent) and contrasted this to the relatively simple and straightforward hypothetical process proposed by Teva. 

Epicept Corporation v. Canada (Health) (2010 FC 956)
Judicial review of Minister's decision that CEPLENE is not an "innovative drug" for the purposes of data protection, CEPLENE, September 24, 2010

The Minister of Health refused to grant data exclusivity to data from Epicept's phase I and phase II clinical trials because CEPLENE is not an "innovative drug".  CEPLENE includes the active ingredient histamine dihydrochloride for use in remission therapy in acute myeloid leukemia. CEPLENE was approved as a new drug and received a Notice of Compliance.  The Minister refused to grant data protection because the active ingredient had been previously approved in another drug in Canada.  This decision was important for Epicept as its relevant patent expires in 2010. 

Epicept challenged the decision by way of judicial review.  The Court upheld the Minister's interpretation of an "innovative drug" under the data protection provisions and refused to grant data exclusivity to Epicept.  The Court held that an "innovative drug" is a new drug whose active ingredient has not been previously approved. 

Novopharm Limited v. Pfizer Canada inc. (2010 FCA 242)
Appeal of PMNOC proceedings decision, Sildenafil, September 24, 2010

Novopharm appealed the decision of the Federal Court to grant an order of prohibition to Pfizer in respect of Novopharm's generic version of VIAGRA. The Federal Court of Appeal (the "FCA") dismissed the appeal.  Claim 7 of Pfizer's patent covered sildenafil, the active ingredient in VIAGRA.  Two grounds of appeal were raised by Novopharm: insufficiency and inutility.  The FCA held that the trial judge was correct to limit the "invention" at issue in this case to that disclosed in claim 7 rather than the patent as a whole.  This was because claim 7 constituted its own invention.  In respect of the insufficiency allegations, as claim 7 clearly stated the formula for sildenafil the FCA held it to be sufficient.  The FCA also confirmed that the "best mode" requirements of section 27(3)(c) of the Patents Act only applies to patents covering machines.  In respect of the inutility allegations, the FCA reaffirmed that proof of utility does not need to be included in the patent and that evidence beyond the patent can and will be necessary. 

Novopharm Limited v. Eli Lilly and Company (2010 FC 915)
Successful impeachment action, STRATTERA, September 14, 2010

An impeachment action was brought by Novopharm in respect of a patent for STRATTERA alleging obviousness, anticipation, utility and improper selection.  Novopharm failed on obviousness, anticipation and improper selection, but the Court found in their favour on utility.

The patent claimed the new use (i.e. second medical use) of atomoxetine for treating ADHD.  In respect of the obviousness attack, Mr. Justice Barnes found that it was not self-evident that it would work and Novopharm's witnesses applied hindsight.  Furthermore, any testing that would be required to demonstrate the efficacy of the drug would be more than routine.  Even a high level of motivation to take a particular step cannot transform a possible solution into an obvious one. 

In respect of anticipation, the Court rejected two instances of alleged anticipatory disclosure. First, a conversation that took place between an inventor and one of the Novopharm witnesses 18 years ago was rejected due to inconsistencies between the witness' testimony in court and a report the witness wrote soon after the meeting.  Second, a discussion between the inventor and a hospital representative regarding engaging the hospital in research with atomoxetine was also rejected as it did not put the inventive idea into the public domain - these types of discussions are presumed to be in confidence.

In respect of the utility attack, the Court found that the promise of the patent is that atomoxetine is clinically useful for treating ADHD.  The Court held that a pilot study conducted on behalf of Eli Lilly at the time had a number of methodological limitations and did not demonstrate utility.  When assessing utility according to the sound prediction route, the Court held that the failure to include or disclose the findings of the study in the patent meant that the test for sound prediction was not satisfied.

Upcoming Events

November 4-5, 2010, Toronto, The Canadian Institute 9th Annual Forum on Pharma Patents

Gowlings speakers attending: Dr. John Norman (co-chair) and Anthony G. Creber

Upcoming Trials and Appeals of Interest

November 8, 2010, 25 days, Federal Court, Toronto:

Apotex Inc. v. Glaxo Group Ltd And Glaxosmithkline Inc. (T-428-01)
Patent Infringement Trial - Cefuroxime Axetil

November 10, 2010, Supreme Court, Ottawa:

Celgene Corporation v. Attorney General of Canada (33579)
Health law – Drugs – Patent Act, s. 80(1)(b) – Patented Medicine Prices Review Board's decision holding that Board had jurisdiction to require Celgene Corporation to provide information about the pricing of the drug Thalomid – Board decision set aside on appeal – Federal Court of Appeal upheld Board's decision – Whether the majority decision of the Federal Court of Appeal conflicts with jurisprudence of this Court, the Federal Court of Appeal and Exchequer Court – Whether the Federal Court of Appeal ignored the international comity-based presumption against the extraterritorial application of domestic law – Whether the decision of the Federal Court of Appeal wrongly extends the jurisdiction of an important Canadian regulator to sales made in the US, contrary to its enabling legislation – Whether the Federal Court of Appeal erred by ignoring Parliament's wording of the Patent Act, and inserting its own and whether the majority changed "in any market in Canada" to "into any market in Canada" – Whether the appeal court erred in obiter and extended the Board's jurisdiction by also ruling on jurisdiction over price regulation when this case involved jurisdiction over disclosure of data – Whether this case has wide implications for other foreign suppliers of medicines.

November 12, 2010, Supreme Court, Ottawa:

Merck Frosst Canada Ltd. v. Minister of Health (33290 and 33320)
Access to information - Exemptions - Third party information - Food and drugs - Confidentiality of scientific information concerning new drugs - Interpretation of statutes and regulations - Information provided to Health Canada protected for five years - Competitor requesting access to departmental information within that time - Whether access exemption for department's third party information applies to scientific information provided by manufacturer of new drug - Whether third party innovator manufacturer bears burden of proving that access exemption must apply - Whether department may disclose certain third party information without notice - Food and Drug Regulations, C.R.C., c. 870, ss. C.08.002(1), (2), (3) and C.08.004.1(2), (3), (4) - Access to Information Act, R.S.C. 1985, c. A-1, ss. 20, 25, 27.

November 29, 2010, 4 days, Federal Court, Toronto:

AstraZeneca Canada Inc. v. Cobalt Pharmaceuticals Inc.
Patented Medicines (Notice of Compliance) Regulations, rosuvastatin

December 6, 2010, 4 days, Federal Court, Ottawa:

Hoffmann-LaRoche Limited v. Apotex Inc. (T-1165-09)
Patented Medicines (Notice of Compliance) Regulations, mycophenolate mofetil

Recent Resources of Interest on the Gowlings Website:

Webinar – Canadian Patent Rules Amendments: What You Need to Know
October 18, 2010.  Presented by James Longwell (Gowlings), Konrad Sechley (Gowlings) and Jennifer Wilkie (Gowlings)
available at:

Webinar – Subsequent Entry Biologics: Are We Ready?
August 23, 2010, John Norman (Gowlings), Philip Schwab (BIOTECanada)
available at: (downloadable slide presentation)

Past Issues of Pharmacapsules are available at:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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