Canada: Patented Medicines Prices Review Board Jurisdiction Is Limited By The Federal Court

On May 27, 2014, Justice O'Reilly of the Federal Court released two decisions relating to the jurisdiction of the Patented Medicines Prices Review Board (PMPRB) (Sandoz Canada Inc. v. Canada (AG), 2014 FC 501 and Ratiopharm Inc. v. Canada (AG), 2014 FC 502).

The PMPRB had held that the generic company Sandoz Canada Inc. was a "patentee" under the Patent Act by virtue of the fact that Sandoz is a wholly-owned subsidiary of Novartis AG, an innovator which authorizes Sandoz to sell generic versions of Novartis' drugs. With respect to ratiopharm inc. (now Teva Canada Limited), the PMPRB held that ratiopharm was a "patentee" since it was an authorized generic with respect GlaxoSmithKline Inc.'s anti-asthmatic product Ventolin HFA® (salbutamol HFA).

As a result of these findings, the PMPRB held that it had jurisdiction over both ratiopharm and Sandoz. With respect to Sandoz, the PMPRB held that it had reporting obligations for generic versions of certain drugs in respect of which Novartis owned patents. In the case of ratiopharm, the PMPRB found that it had reporting obligations with respect to ratiopharm's generic version of Ventolin HFA®. It further held that ratiopharm had been charging an excessive price for its product and thus had to pay over $65 million in damages.

Both Sandoz and ratiopharm applied to the Federal Court to judicially review the PMPRB's decisions. The parties' arguments in both cases were two-fold: (1) they were not subject to the PMPRB's jurisdiction as they were not "patentees" and (2) the PMPRB's pricing control powers were unconstitutional.

While the Court reviewed the PMPRB's decision with respect to whether Sandoz and ratiopharm were "patentees" using the deferential standard of reasonableness, it differed from the PMPRB and held that these companies were not subject to the PMPRB's jurisdiction. In doing so, the Court rejected the government's argument that these companies were "patentees" since they were entitled to the benefit of a patent and/or to exercise rights in relation to the patent. Instead, the Court held that since generic companies were not entitled to the principle benefit of a patent monopoly (the right to exclude others), they were not "patentees". However, the Court noted that a generic company could be "patentee" if it owned a patent relating to a drug.

Further, the Court noted that the federal government had no jurisdiction to regulate the prices of generic versions of patented medicines; this is a provincial responsibility. The PMPRB's jurisdiction thus had to be tied to patents and not to protecting consumers from high drug prices. Thus constitutionally, price control is not within the mandate of the PMPRB; its jurisdiction is limited to patents and abuse of the monopoly associated with patents. In this regard, the Court held:

That approach suggests that the definition of "patentee" should take into account the limitations on federal jurisdiction over the pricing of medicines and, therefore, should recognize that a patentee is the holder of the exclusive rights that inure to a patent holder. To expand the definition to include generic companies who neither hold patents nor enjoy monopolies would expose the legislation to an attack on constitutional grounds. In other words, if the legislation were interpreted as applying to, and giving the Board jurisdiction over, products sold by generic pharmaceutical companies, its constitutionality would be in doubt.

Generally speaking, generic companies either help create or join a competitive marketplace, which helps keep the costs of patented medicines down. Reviewing the prices charged by generic companies who hold no patents and no monopolies, on its face, appears to be beyond the Board's mandate.

The objectives the legislation sought to achieve do not include regulating the prices charged by companies who do not hold a monopoly. The constitutionality of the legislation depends on its close connection to patent protection and the potential undue exploitation of the concomitant monopolies. Generic companies, like Sandoz, do not generally hold monopolies and, in fact, do not normally operate in a market where any monopoly exists.

While these decisions could be read as limited in application only to generic companies, nothing in the legislation limits such application based on the type of company. Thus it is possible that this decision could be applied to other companies that no longer enjoy a monopoly in fact because the market has been genericized, even though a patent may still "pertain" to the company's product.

With respect to the constitutional issue, Sandoz and ratiopharm had argued that the PMPRB's pricing control functions were ultra vires since they encroached on the provincial constitutional power over property and civil rights. While the PMPRB's jurisdiction had been previously found to be constitutional in the Manitoba Court of Appeal's decision Manitoba Society of Seniors Inc v Canada (AG),1 this was prior to the PMPRB being awarded in 1993 the power to reduce the price of patented medicines and to require patentees to pay damages to the federal government.

The Court only briefly dealt with this issue. Without giving substantive reasons, it held that the awarding of the new powers did not enlarge the PMPRB's mandate or alter the basic purpose of the legislation, which had been previously held to be to: (a) increase patent protection for new medicines and (b) address the potential abuse of monopolies through excessive pricing by patent holders. Thus, the Court held that the pricing control powers did not exceed federal jurisdiction over patents.

Sandoz Canada Inc v Canada (AG), 2014 FC 501

Ratiopharm v Canada (AG), 2014 FC 502

Footnote

1 (1992), 96 DLR (4th) 606.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions