Canada, as in other jurisdictions, links drug marketing approval
with patent rights. Innovative drug manufacturers may list relevant
patents against their drugs. Such listing may then trigger a
temporary, but automatic, stay of regulatory approval for other
manufacturers' generic versions of these drugs. A
consequence of delaying generic market entry is that innovators are
subject to potential liability for the generic's damages
where the statutory stay was unwarranted. In order to quantify
these generic damages, the Court will create a "hypothetical
world" in which the generic manufacturer was not prevented
from entering the market.
Late in 2012, almost 20 years after this linkage scheme was
first put in place, the Federal Court issued its first judgement
quantifying generic damages. On November 2, 2012, the Federal Court
awarded Apotex Inc. $215,529,129 in damages against Sanofi-Aventis
in connection with Apotex's attempts to market a generic
version of Sanofi's drug ALTACE (ramipril). This judgement,
which follows the judgment on liability (2012 FC 553,
"Sanofi"), along with two other decisions issued
in 2012, introduces some measure of predictability into the
mechanics of calculating generic damages.
The Federal Court, for example, confirmed in Sanofi
that the potential presence of competing generics as well as
authorized generics in the hypothetical world may serve to decrease
generic damages in appropriate circumstances. The Federal Court
also clarified that it falls to the innovator to establish the
presence and impact of such generics in the hypothetical world.
With respect to authorized generics, the Federal Court in
Sanofi specifically considered and rejected the argument
that the relevantregulations (ie. the Patented Medicines
(Notice of Compliance) Regulations or "PM(NOC)
Regulations") precluded the presence of an authorized
generic in the hypothetical world. Factors the Federal Court
considered in determining whether and when the authorized generic
would have entered the hypothetical market included (a) the
innovator's real-world actions after genericization, (b)
the factors the innovator considered when assessing the
desirability of launching an authorized generic, such as the
importance of the drug to the innovator, and (c) the steps taken or
contemplated by the innovator regarding such a launch prior to the
commencement of an application.
Sanofi did, however, introduce some uncertainty
regarding the hypothetical world in which authorized generics would
operate. Specifically, the Federal Court held that Sanofi would
have been "caught off guard" by Apotex's market
entry because Apotex would not have had to provide Sanofi with
Notices of Allegations addressing the patents listed against ALTACE
in accordance with the PM(NOC) Regulations. Such a
conclusion could only be arrived at if the hypothetical world of
generic damages existed in the absence of the PM(NOC)
On the other hand, in the same decision, the Court considered
the impact of competing generics in a hypothetical world which
clearly included the operation of the PM(NOC)
Regulations. For example, while Teva Limited was in a position
to receive regulatory approval well before the relevant period in
Sanofi, the Court found that the PM(NOC)
Regulations would have continued to prevent Teva from
obtaining its approval in the hypothetical world. As such,
Sanofi includes an internal contradiction as to whether
the hypothetical world includes the PM(NOC)
Certainly, the Federal Court of Appeal in Merck Frosst
Canada & Co. v Apotex Inc. (2011 FCA 329) appeared to
conclude that the operation of the PM(NOC) Regulations
should be included. In particular, the Court of Appeal framed the
essential question as follows: What would have happened if the
generic had not brought an application for prohibition? The
question itself assumes the PM(NOC) Regulations exist, but
were not triggered. As such, while in specific cases an innovator
may indeed be caught off guard, this should not, it is submitted,
be an inevitable result in the hypothetical world as the Federal
Court may have suggested in Sanofi.
While this ambiguity awaits resolution, prudent innovators may
wish to give very early consideration to the question of whether an
authorized generic is appropriate in the circumstances. If inclined
to launch an authorized generic, an innovator should appropriately
document the decision and proposed actions.
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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