Canada: Pharma In Brief - Canada: Federal Court Releases Decisions In Ramipril Section 8 Cases

Case: Apotex Inc. v. Sanofi-Aventis (T-1357-09); Sanofi-Aventis v. Teva Canada Limited (T-1161-07)

Drug: ALTACE® (ramipril)

Nature of case: Section 8 of the PM(NOC) Regulations – validity and quantification of damages

Date of decision: May 23, 2012


On May 23, 2012, the Federal Court released its public reasons in three companion decisions, all written by Madam Justice Snider, in respect of litigation brought separately by Teva Canada Limited ("Teva") and Apotex Inc. ("Apotex") against Sanofi-Aventis and related companies ("Sanofi") pursuant to section 8 of the Patented Medicines (Notice of Compliance) Regulations (the "Regulations"). The claims concerned damages sustained by Teva and Apotex while they were prevented from marketing their generic ramipril products as a result of ultimately unsuccessful prohibition proceedings initiated by Sanofi.

The first decision, 2012 FC 551, concerned the validity of section 8 of the Regulations. The second two decisions, 2012 FC 552 (the "Teva Action") and 2012 FC 553 (the "Apotex Action") considered the quantification of Teva's and Apotex's damages. These are the first cases to proceed to a decision on issues of quantification under section 8.

Validity of section 8

The Court held that section 8 of the Regulations is enabled by the Patent Act and rejected each of Sanofi's invalidity arguments. The Court noted that the Alendronate1 decision, in which the Federal Court of Appeal considered the validity of section 8 of the Regulations on constitutional and jurisdictional grounds, provided strong direction to the Court in this case.

The Court held that many of Sanofi's arguments relating to the breadth of s. 8 did not arise. On this basis, the Court dismissed Sanofi's arguments that section 8 is overbroad because: (i) it imposes liability prior to the commencement of a prohibition proceeding; (ii) it imposes liability for a period after the issuance of an NOC; (iii) it does not allow a court to consider generic competition and imposes liability for sales made for unapproved indications; and (iv) it permits recovery where the marketing of the generic version would constitute patent infringement. With respect to the infringement argument, the Court also pointed out that this issue was decided by the Federal Court of Appeal in Alendronate. The Court also held that section 8 is not contrary to Canada's obligations under NAFTA or TRIPS.

The quantification decisions

The Teva and Apotex Actions both involved complex background facts and procedural histories. These complex backgrounds gave rise to highly fact specific determinations. Nonetheless, these decisions will provide useful guidance in future section 8 cases.

Some of the major issues that were in dispute are summarised briefly below.

Relevant time frame

In both cases, the parties disagreed on when the period of liability should begin and end. The Court noted that the language of section 8 provides discretion with respect to the commencement date, but not with respect to the end date.

Teva Action

The Court held that the liability period cannot begin before the statutory stay is imposed by the Regulations even where the generic product has been certified as "approvable" by Health Canada. In so doing, the Court rejected Teva's argument that section 8 calls for a determination of what would have happened in the complete absence of the Regulations. The purpose of section 8 is to compensate for losses as a result of the statutory stay.

Based on this holding, the Court considered it highly relevant that Teva indicated in its regulatory submission that it would wait until the expiry of one of the patents listed in respect of ramipril to obtain its NOC. Given this "business decision" the Court held that the appropriate commencement date for the purposes of section 8 liability was the date of expiry of the patent.

Apotex Action

The parties disagreed on both the start and end dates of the liability period.

The Court held that the period of liability began on the date Apotex's ramipril product was approvable. The Court rejected Sanoi's argument that the liability period should commence later than the approvability date on the basis that while it had been unsuccessful in obtaining a prohibition order based on a later Notice of Allegation filed by Apotex, it had obtained a prohibition order based on an earlier Notice of Allegation. The Court held that the dismissal of a later prohibition proceeding in respect of the same patent essentially "trumped" the existing prohibition order and the Minister would not have been prevented from issuing the NOC following the dismissal of the later proceeding.

The Court held that the period of liability in this case ended on the day on which Apotex received its NOC for its ramipril product. In so doing, the Court rejected Apotex's argument that the delay period should run until the last prohibition proceeding was formally dismissed, which in the unique circumstances of this case took place after the date on which Apotex obtained its NOC. Based on the compensatory nature of section 8, the Court held that the outstanding prohibition proceeding, which had been rendered moot by the Minister's prior decision that Apotex was not required to address certain patents, was "effectively dismissed" on the date Apotex received its NOC. Therefore, Apotex could not collect damages for the period in which it had its NOC notwithstanding the fact that the final prohibition proceeding had not been formally dismissed.

Relevant Market

In determining what each generic manufacturer's market would have been, the Court held that it was entitled to consider generic competition, including the effect of any so called authorized generics. That said, the Court rejected Sanofi's argument that the Court should necessarily construct a single "but for" world applicable to all the ramipril section 8 proceedings. Instead, the Court held that each case should be determined on its own facts and evidence.
In respect of the burden of establishing the competitive generic market, the Court held that while Teva and Apotex had the ultimate legal burden of proving their losses, that did not mean that they needed to call every other generic manufacture to establish that they would not have entered the ramipril market. Rather, once Teva and Apotex proved their losses, Sanofi had an evidentiary burden with respect to the presence of other generics in the market.

In both actions, the Court held that Apotex and Teva, respectively, had the regulatory ability, capacity, and motivation to enter the ramipril market during the liability period. Sanofi also established that it would have introduced an authorized generic into the market following generic entry. Expert evidence was relied on in order to assess the relative market shares. In the Apotex Action, the court determined that Apotex would have held 100% of the generic market for a period, 70% of the generic market following the entrance of an authorized generic, and 50% of the market following the entrance of Teva.

In the Teva Action, the Court held that all three of Teva, Apotex and an authorized generic would have entered the market at the same time, and would have split the generic market evenly.

Trade-spend (rebates)

The issue of the appropriate rebate levels were raised in both cases. Unfortunately, the final values arrived at by the Court, and the values suggested by each party were redacted. It is therefore difficult to determine precisely how the Court arrived at its determination with respect to rebates. However, the Court clearly stated that rebates and other trade allowances or discounts should be deducted from revenue when calculating net profits.

The "double ramp up" and other future losses

In both actions, Apotex and Teva argued that since they suffered a ramp-up period in the actual world, they should not also be required to suffer a ramp-up period in the "but for" world.

The Court held that the generic manufacturers' attempt to avoid a second ramp-up was in effect a claim for losses suffered outside of the relevant period and was not compensable under section 8. Similarly, while Teva attempted to frame its "lost business value" as occurring within the relevant period by using a valuation date within the period, the Court agreed with the characterisation that these were nonetheless losses suffered outside of the period and therefore were not recoverable.


The Court referred the matter back to the parties in order to determine the final actual amount owed by Sanofi to each of Teva and Apotex in accordance with its findings.

Links to decisions:

Sanofi-Aventis v. Teva Canada Limited, 2012 FC 551 (Validity)

Sanofi-Aventis v. Teva Canada Limited, 2012 FC 552 (Teva Action)

Apotex Inc. v. Sanofi-Aventis, 2012 FC 553 (Apotex Action)


1 Apotex Inc. v. Merck & Co, 2009 FCA 187; rev'g 2008 FC 1185, leave to appeal to SCC refused [2009] SCCA No 347.

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