Teva Canada Innovation has sought judicial review, in Federal
Court, of the PMPRB's most recent decision
regarding Teva's drug COPAXONE, used to treat multiple
sclerosis. The decision to be reviewed is actually the second
determination made by the Board in relation to COPAXONE. In order
to understand the significance of Teva's new application, it is
useful to recall the Board's original decision.
A Board Panel made the initial decision in 2008 and found that
COPAXONE had been excessively priced, despite the fact that
COPAXONE was the lowest-priced medicine in its therapeutic class.
The Board's finding of excessive pricing was based on the rate
at which the price of COPAXONE increased from year to year.
Specifically, from its first sale in 2004, the price of COPAXONE
increased from $36.00 to $43.28 by 2010, an increase of $7.20 or
20% in total, during a period when the average annual increase in
the Consumer Price Index was 1.8% per year. Even though COPAXONE
remained the lowest priced medicine in its therapeutic class
throughout the period under review, the Board held that the
year-over-year price increases fell outside the Board's
guidelines and determined that COPAXONE had been excessively
priced.
Teva sought judicial review of this initial decision and was
successful. The Federal Court quashed the Board's decision and
ordered the Board to reconsider the matter.
The Federal Court held that the Board failed to give serious
consideration to all the factors in section 85(1). Section
85(1) requires the Board to consider several factors when assessing
whether the price of a medicine is excessive. This section requires
the Board to consider the following factors: (a) the prices at
which the medicine has been sold in the relevant market; (b) the
prices at which other medicines in the same therapeutic class have
been sold in the relevant market; (c) the prices at which the
medicine and other medicines in the same therapeutic class have
been sold in countries other than Canada; (d) changes in the
Consumer Price Index; and (e) other prescribed factors. The
Board had based its decision entirely upon s. 85(1)(d) and the CPI
adjustment methodology set out in the Board's Guidelines. The
Court held that the Board only paid lip service to the other
factors and ordered the Board to reconsider the matter, this time
giving proper consideration to all the s. 85(1) factors. The Board
the reconsidered the matter and released its second decision dated
February 23, 2012.
In the redetermination decision, the Board expanded its analysis
of the section 85(1) factors and directly addressed the fact that
COPAXONE was the lowest priced medicine in its therapeutic class.
However, despite this expanded analysis, the Board's decision
again rested solely on the CPI factor set out in s. 85(1)(d). The
Board's view was that this factor serves to protect Canadian
consumers from "sudden and significant" price increases
and this factor is determinative in the case of COPAXONE.
Ultimately, the Board arrived at a finding of excessive pricing and
ordered Teva to repay excess revenues in a greater amount than in
the previous decision.
Teva has now sought judicial review in Federal Court of the
Board's second decision. Teva's application seeks a further
redetermination and a directed verdict requiring that the
allegations against Teva be dismissed.
The primary ground for Teva's application is that the Board
failed to follow the direction of the Federal Court and again
focused on a single factor, the CPI. Teva argues that Board
has essentially rewritten section 85(1) to be an absolute bar on
price increases that exceed yearly increases in the CPI. Teva
claims that this hard limit was proposed and rejected by Parliament
when the section was drafted. Teva's overarching position in
its application is that the Board's jurisdiction is limited to
regulating price levels rather than price
increases.
This case will be an interesting one to watch, given the
deference given to this Board in recent decisions. The facts in
this case (especially the fact that COPAXONE's price was the
lowest in its class) present an ideal setting to test the
Board's CPI adjustment methodology (for the second time).
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.
Specific Questions relating to this article should be addressed directly to the author.
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