The past year has seen significant evolution in the Canadian law
of generic pharmaceutical damages claims under section 8 of the
Patented Medicines (Notice of Compliance) Regulations. Such claims
are calculated by considering the generic manufacturer's loss
in a hypothetical world where it starts selling without the alleged
delay occasioned by the regulations. Recent s.8 damages decisions
have highlighted the highly factual and circumstance-specific
nature of this calculation. However, these recent decisions also
shed some light on how the Court will attempt to quantify generic
damages claims going forward.
Most notable among these decisions, the Federal Court of Appeal
issued on March 14, 2014 its highly anticipated
decisions1 concerning generic damages claims by Teva and
Apotex. Those claims followed prohibition proceedings involving
Apotex and Teva related to generic versions of ramipril, marketed
by Sanofi as ALTACE®. The Court of Appeal grappled with the
unique facts presented by the appeals and ultimately dismissed all
innovator appeals and all but one the generics' appeals. The
successful appeal varied a trial judgment to exclude a generic
competitor from Apotex's hypothetical market and thus increase
Apotex's claim. The ramipril liability appeals were not without
controversy, and both were issued with lengthy dissenting
The Court of Appeal majority held that both generic claimants
and generic competitors are subject to the regulations in the
hypothetical world, except for the sole purpose of determining the
start date of the period of liability. Majority and dissenting
reasons on this issue recognized that this approach could serve to
inflate each generic claimant's hypothetical market share thus
providing a potential windfall to the generics beyond the loss they
suffered during the period of liability.
However, having held generic claimants to be subject to the
regulations, the Court of Appeal held that generics would send
Notices of Allegation to address patents listed against the drugs
they sought to copy. Innovators would thus have notice of the
generic claimants impending hypothetical market entry. The Court of
Appeal therefore largely did away with the notion that innovators
would be taken by surprise by a generic launch in the usual
circumstances, a notion applied recently for example in the Federal
Court's pantoprazole decision.2 In effectively
rejecting this notion, the Court of Appeal may have facilitated the
hypothetical market entry of innovators' authorized
This decision may be contrasted with the recent venlafaxine
decision,3 which was rendered without the benefit of the
ramipril liability appeals. In that case, a unique fact was that
the innovator lost the benefit of any notice because the generic
claimant waited until after it was approvable to issue its Notice
of Allegation. Further, the potential competing generics suffered
unrelated impediments to their own market entry. The unique factual
circumstances therefore conspired to prevent the innovator from
capitalizing on the notice the Court of Appeal later held that
innovators would usually receive in the hypothetical world.
In the ramipril liability appeals, the Court of Appeal also
refused to discount the reduction in revenues for
"ramp-up" in the hypothetical world on the basis that the
generic claimant would also have suffered a ramp-up reduction in
the real world. "Ramp-up" refers to the period of time
that it takes a drug manufacturer to penetrate the market to its
full potential. In reducing damages due to the hypothetical
ramp-up, the Court of Appeal again rejected the contrary conclusion
in the pantoprazole decision.
The Court of Appeal was not, however, required to address the
Federal Court's refusal in the pantoprazole decision to reduce
damages because the generic allegedly breached an undertaking in
its NOA in an underlying prohibition proceeding. In that case, the
Court held that a bare pleading in a NOA does not constitute an
enforceable undertaking and ultimately found that, notwithstanding
the generic's clear statements in its NOA, no undertaking was
actually provided. In so doing, the Court simultaneously elevated
the evidentiary requirement to establish an undertaking, and also
weakened the notice function of the NOA by suggesting that
statements therein regarding future generic behaviour may not be
relied on unless the word "undertaking" is used.
1 Teva Canada Limited v Sanofi-Aventis et al, 2014 FCA 67
and Apotex Inc v Sanofi-Aventis et al, 2014 FCA 68 (March 14, 2014)
[the "ramipril Liability Appeals"]; Teva Canada
Limited v Sanofi-Aventis et al, 2014 FCA 66; Teva Canada Limited v
Sanofi-Aventis et al, 2014 FCA 69
2 Apotex Inc v Takeda Canada Inc, 2013 FC
3 Teva Canada Limited v. Pfizer Canada Inc., 2014 FC
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