Canada: Apotex Succeeds In Getting A NOC Despite Itself

A recent Federal Court decision highlighted the differences in prohibition proceedings under the Patented Medicines (Notice of Compliance) Regulations (the NOC Regulations) and impeachment actions under the Patent Act. It is yet another example of how every case is to be determined on the specific evidence adduced before the Court.

In Eli Lilly Canada Inc. v. Apotex Inc, the Court dismissed Eli Lilly's application under the NOC Regulations for an order prohibiting the Minister of Health (the Minister) from issuing a notice of compliance (NOC) to Apotex in respect of the medicine atomoxetine until after the expiry of the '735 Patent. However, the dismissal was based on mootness alone, as the Court would have allowed the application had it not invalidated the '735 Patent entirely in a related impeachment action brought by Novopharm.

Proceedings under the NOC Regulations vs. Actions under the Patent Act

In Canada, in order for a generic manufacturer to get approval to market a generic version of an existing drug product, it must file an abbreviated new drug submission (ANDS) with Health Canada demonstrating that its product is bioequivalent to the innovator's previously approved drug product. If the Minister of Health (the Minister) is satisfied with the submission, she must issue a NOC allowing the generic drug to be marketed, but only if the generic manufacturer has first "jumped the hurdles" of the NOC Regulations. In particular, the Minister is prohibited from issuing a NOC to a generic manufacturer, even if it has satisfied Health Canada as to the safety and efficacy of its drug, until the generic has addressed all of the patents listed against the innovator's drug product under the NOC Regulations. With respect to each patent listed on this "patent register", the generic must either accept that a NOC will not issue for its drug until the patent expires, or, if it seeks to enter the market before the patent expires, it must allege that the patent is not valid or that no product, use, dosage form or formulation claim of the patent will be infringed by the making, constructing, using or selling of its generic drug. Such allegations must be contained in a notice of allegation (NOA), which is served on the innovator, and includes a detailed statement of the legal and factual basis for the allegations. NOAs are required to be very detailed and are often well over 100 pages in length.

The innovator may apply to a Court within 45 days after being served with a NOA for an Order prohibiting the Minister from issuing a NOC until after the expiration of the patent(s) that are the subject of the NOA. This effectively freezes Ministerial action for 24 months unless the application is disposed of by the Court earlier. Such applications are supposed to be summary in nature, as they proceed by way of affidavits and out-of-court cross-examinations, and hearings occur by way of lawyers presenting the evidence to a single judge of the Court. The innovator has the burden of proving that each of the generic's allegations of invalidity and non-infringement are not justified on a balance of probabilities. If the innovator does not meet its burden, the application is dismissed and the Minister is free to issue a NOC to the generic for its drug product. If the innovator successfully argues that the generic's allegations are not justified, then the Minister is prohibited from issuing a NOC until the latest expiry date of the patents at issue.

What is particularly interesting about this procedure is that (because of the supposed "summary nature" of such applications) the innovator's remedies under the NOC Regulations are in addition to its usual remedies for patent infringement under the Patent Act. In other words, a final decision on an application under the NOC Regulations does not prevent a subsequent action for infringement under the Patent Act, and the doctrine of res judicata does not apply. Thus, the innovator is free (if its application was dismissed under the NOC Regulations) to effectively re-litigate the patent(s) at issue, meaning that the innovator gets a second "kick at the can" regarding the issues of infringement and validity. Similarly, a generic is free to commence an action under the Patent Act seeking impeachment of the patent(s) and/or a declaration of non-infringement even if the prohibition application was allowed.

Unlike applications under the NOC Regulations, final determinations as to validity of a patent in the course of an action under the Patent Act are in rem, meaning the decision is applicable to the patent itself rather than just the parties in the litigation. Moreover, unlike applications under the NOC Regulations, actions under the Patent Act are subject to the full array of legal procedures, including documentary and oral discovery, expert reports, and live fact and expert witnesses before the Court. This generally means that much more significant evidence is placed before the Court in the trial of an action.

Novopharm's action against Eli Lilly to impeach the '735 Patent

As previously reported in our blog post of October 19, Novopharm was successful in impeaching the '735 Patent, which claimed the use of the medicine atomoxetine for treating attention deficit hyperactivity disorder (ADHD) in three of its manifestations among all age groups (children, adolescents and adults). In particular, the judge accepted the evidence of Novopharm's experts going to the significant limitations of a study relied upon by Eli Lilly to establish utility. The study's most critical shortcomings were related to its small sample size, the potential for imperfect patient blinding, and the limited study duration. The Court found that the study's reported results failed to demonstrate the critical utility of atomoxetine to treat ADHD in adults or children, and that utility had therefore not been demonstrated. Moreover, the Court found that the alleged invention in the '735 Patent was also not soundly predicted on the basis that the patent failed to disclose reference to the findings in the study in the patent disclosure.

Although the two cases were heard back-to-back by the same Federal Court judge, the decision in Novopharm's action was released before a decision was rendered in the Apotex application (discussed below).

Eli Lilly's application against Apotex under the NOC Regulations

Apotex had alleged in its NOA that the disclosure of the '735 Patent failed to provide any information, data or test results purporting to show that the administration of atomoxetine was safe and effective in the sense that treatment of ADHD would result. Apotex further alleged that the first clinical trials or experiments assessing the safety and efficacy of atomoxetine for treating ADHD were not conducted until after the filing of the priority application. As a result, Apotex asserted that any results or data obtained from those trials could not have formed a sufficient factual basis or sound line of reasoning upon which a sound prediction could be made of the safety and efficacy of atomoxetine for treating ADHD. Alternatively, if the trials were sufficient for these purposes, Apotex alleged that Eli Lilly failed to disclose the results and data from those trials and experiments in the '735 Patent. Eli Lilly answered the NOA with a notice of application that alleged that it had established by virtue of studies that atomoxetine was useful for the treatment of ADHD (i.e. that it had demonstrated utility).

When it came to presenting evidence, Apotex only framed its case around the issue of sound prediction and failed to provide any evidence contesting Eli Lilly's assertions of demonstrated utility. Eli Lilly responded by producing the study report that was the subject of the Novopharm action. Apotex elected not to challenge this evidence on matters of substance. In particular, Apotex chose not to seek to file reply evidence or to cross-examine Eli Lilly's witnesses to challenge the study's reliability or sufficiency. The only evidence that Apotex put forward in response to the study was that the study and its data were not referenced in the '735 Patent. Apotex asserted that this was enough to put the issue of utility into play

The Court, however, disagreed.

Where a patentee relies on demonstrated utility, its disclosure obligation is limited to the provision of a full description of the invention and the means to work it. It is only where the patentee relies upon a sound prediction of utility that it is required to disclose in the patent both the factual data on which the prediction is based and the line of reasoning to support it. Therefore, because Eli Lilly was relying upon an assertion of demonstrated utility, it was under no obligation to disclose the study or its findings in the '735 Patent. As a result, Apotex's evidence, which simply pointed to the absence of proper disclosure in the '735 Patent, was not even capable of rebutting the statutory presumption of validity. As stated by the Court:

I am accordingly bound on this record to reject Apotex's allegation of inutility because it has failed to satisfy its initial evidentiary burden ... For this issue, the statutory presumption of validity prevails.

This is, of course, a surprising result in the face of my earlier finding in Novopharm Limited v. Eli Lilly and Company, 2010 FC 915, that the MGH Study was not sufficient to demonstrate utility. But in that case the issue was addressed by the parties on the strength of considerable evidence that went to the merits of the MGH Study. Here, Apotex took a different approach and elected not to meet Lilly's assertion of demonstrated utility head-on. In the result, its allegation of inutility fails.

In the result, the Court would have allowed Eli Lilly's application to prohibit the Minister from issuing a NOC to Apotex since Apotex's allegations were not justified. However, because of the intervening determination that the '735 Patent was invalid in the Novopharm action (an in rem decision), Eli Lilly's application against Apotex was dismissed on the basis of mootness. Apotex was therefore still able to receive a NOC to market its generic version of atomoxetine.

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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