Canada: Pharmacapsules @ Gowlings - 1 August, 2008

Last Updated: August 4 2008

Edited by: Jennifer Wilkie and Chantal Saunders

  • Ontario Government to Introduce Tendering for Public Drug Programs

  • Strategic Risk Management for Biotechnology Companies

  • Proposed Allergen Labelling Requirements

  • PMPRB Issues First Notices of Hearing into Prices of Generic Drugs

  • Recent Cases

Ontario Government to Introduce Tendering for Public Drug Programs

By: Wayne Critchley

The Executive Officer of Ontario's Public Drug Programs (OPDP) has announced the implementation of a new initiative for "competitive agreements" for certain multiple-source drugs. The program is designed to obtain additional savings to the province on the prices of multiple-source drugs that are currently available on the Ontario Drug Benefit Formulary (ODB Formulary). In a Notice dated July 8, 2008, Executive Officer Helen Stevenson stated that the Ministry of Health and Long-Term Care has "high expectations for price reductions" as a result of this initiative.

The OPDP will issue its first Call for Applications for competitive agreements on July 25, 2008 for four drugs: enalapril, ranitidine, metformin and gabapentin.

Manufacturers will have until August 12 to submit applications and contracts may be awarded by late September. Initial contracts will be for two years beginning January 1, 2009, but could start as early as October 1, 2008.

For further discussion of this issue, please see:
The Drug Pricing and Reimbursement newsletter of July 10, 2008: HtmFiles/V2N10_20080710.en.html

In addition, please see:
The Executive Officer's Notice of July 8, 2008: exec_office_20080708.pdf

The OPDP's "Briefing for Stakeholders,": stakeholder_briefing.pdf

More details released in the form of Q's and A's: notices/exec_office_20080716.pdf

Strategic Risk Management for Biotechnology Companies

By: Michael Herman

Ernst & Young has released a report identifying the top 10 strategic risks facing biotechnology companies over the next 5 years. The report consolidates the views of leading industry analysts across various disciplines within the biotechnology sector.

The key risks identified in the report are pricing pressures and access, raising capital, strategic alliances, demonstrating value, product development and clinical trials, regulatory compliance, monitoring drug safety, protecting intellectual property, accessing talent and harnessing emerging markets.

The report defines strategic risk as one which could cause severe financial loss or fundamentally undermine the competitive position of a company. Interestingly, threats emerging from the general geopolitical and macro-economic environment are not viewed as significant to the biotechnology industry.

In what will no doubt cause some debate, Ernst & Young has ranked the strategic risks in order of priority. However, for individual biotech companies, the rankings are less meaningful than a general awareness and appreciation of the risks. In addition, the identified risks likely will not come as a surprise to participants in the biotechnology sector. However, it is important for companies to consider and address each of the risks at an early stage, increasing the odds that nasty surprises can be reduced and expensive directional changes avoided.

Although many of the challenges and issues apply to biotechnology companies wherever they reside, the report is understandably primarily focused on the U.S. market. For example, the report identifies pricing pressures as the number one risk due to the concern that price controls may be introduced in the U.S. In the BIOTECanada/PricewaterhouseCoopers Canadian Life Sciences Industry Forecast 2007, life sciences companies identified their key barriers to success as accessing capital, attracting and retaining key employees (particularly non-scientific managerial talent) and finding licensing or strategic partners. While Canadian biotechnology companies identify generating positive cash flow as an issue, they do not identify price controls per se which are already a feature of the Canadian regulatory system.

Biotechnology companies should be identifying and addressing their strategic risks as part of their overall objectives and plans. The Ernst & Young report serves as a welcome addition to what should be ongoing dialogue, discussion and debate within the biotechnology industry.

For a copy of the Ernst & Young Report, please see:

For a copy of the BIOTECanada/PricewaterhouseCoopers Canadian Life Sciences Industry Forecast 2007, please see:

Proposed Allergen Labelling Requirements

By: Lewis Retik

Health Canada recently proposed new labelling regulations for prepackaged foods which would provide additional labelling requirements specific to food allergens, gluten, and added sulphites. The proposed amendments are stated to be important to the health and quality of life of Canadian consumers with a food allergy, celiac disease or a sensitivity to sulphites. In particular, the regulatory impact analysis statement states that the enhanced labeling requirements will provide essential information to allow consumers to make an informed choice about prepackaged foods.

Under the proposed regulations, food allergens derived from any of the following foods would have to be identified on the product label: almonds, Brazil nuts, cashews, hazelnuts, macadamia nuts, pecans, pine nuts, pistachios or walnuts; peanuts; sesame seeds; wheat, kamut, spelt or triticale; eggs; milk; soybeans; crustaceans; shellfish; or fish. The gluten source would have to be indicated when the food contains any gluten protein from the grain of any of the following cereals or the grain of a hybridized strain produced from at least one of the following cereals: barley, oats, rye, triticale or wheat, including kamut or spelt. Sulphites, when either directly added to a food or when the total amount of sulphites present in the food is 10 PPM or more, would have to appear on the label. The proposed regulations would also require that the list of ingredients identify the specific sources of hydrolysed plant proteins, starches and modified starches, and lecithins.

For more information, please see:
New food labelling rules call for listing of allergens, gluten, sulphites

The proposed regulations are available at:

PMPRB Issues First Notices of Hearing into Prices of Generic Drugs

By: Wayne Critchley

In July 2008, the Patented Medicine Prices Review Board (PMPRB) announced that it has issued two Notices of Hearing with respect to the prices of generic drugs sold in Canada by Apotex Inc. and ratiopharm Inc. These are the first Notices of Hearing issued by the Board with respect to the price of generic drugs. In March, the Board had also commenced proceedings against Apotex to determine if Apotex is required to file price and sales information with the PMPRB with respect to drugs to which a patent may pertain.

Under the Patent Act, the PMPRB is mandated to ensure that the prices charged by patentees for patented medicines are not excessive. These cases involve generic versions of salbutamol sulphate, a bronchodilator medicine. The Statements of Allegations filed by Board Staff claim that they are patented medicines sold as "authorized generics" under licensing agreements with the patentees. It is alleged that both Apotex and ratiopharm began selling Apo-Salvent and ratio-Salbutamol in 2002 but failed to report them to the PMPRB until the fall of 2006. It is also alleged, based on publicly-available information, that the prices of both drugs increased in 2005 from $4.64 per inhaler to $7.73, contrary to the PMPRB's Guidelines.

The PMPRB has set down December 8, 2008 for the hearing with respect to Apo-Salvent and January 12, 2009 for the ratio-Salbutamol matter. The hearing into Apotex's filing obligations is scheduled for October 6, 2008.

For more information, please see:

Recent Cases

By: Beverley Moore

Sepracor v. Pharmascience; appeal of an interlocutory motion to strike a notice of appearance; June 27, 2008; desloratadine;

The Court of Appeal overturned the motions judge's decision striking the notice of appearance. The Court of Appeal held that a respondent who does not oppose an application is entitled to file a notice of appearance in a modified form to reflect their interest in the proceedings. In this case, the respondent patentee will thus be "fully able to represent its interest as befits someone who is intended to be bound by the result".

The Court of Appeal saw that there is little advantage to a person who has the rights and status of a party being required to seek the limited discretionary status of an intervener. Furthermore, the respondent patentee did not need to be added as an applicant. Any procedural fairness and orderliness issues could be dealt with by way of case management as they arise.

The full text of the decision can be found at:

Laboratoires Servier v. Apotex; merits of infringement proceeding; July 2, 2008; perindopril

The trial judge found the patent to be valid and infringed. The Court also dismissed the Competition Act counterclaim.

The Court found that Apotex directly infringed the patent. However, there was no inducement of infringement as the evidence indicated that title does not pass until the product is delivered in the destination country. The Court also found that the non-ADIR foreign plaintiffs did not have standing to bring a claim as the evidence did not show that they were licensed.

Apotex argued that the patent was invalid due to obviousness, utility, sound prediction, inventorship and missed conflict. On each of these issues, the Court found the patent to be valid.

Furthermore, Apotex alleged a conspiracy pursuant to the Competition Act. This alleged conspiracy stemmed from a settlement that arose from a conflict proceeding. The settlement happened prior to the grant of the patents. Thus, the Court found that there was no market power and no impairment of competition at that point. Furthermore, the rules and practices of the Federal Court allow for the settling of actions. Thus, the Court dismissed Apotex' claim under the Competition Act. The Court further found that Apotex was beyond the two-year limitation period in the Competition Act and thus was statute barred from bringing the claim.

The Court also granted the plaintiffs the ability to elect an accounting of profits instead of damages if they so choose. However, the Court declined to order compound interest. The Court and parties agreed it would be premature to make a determination regarding punitive or exemplary damages prior to the reference on damages.

The full text of the decision can be found at:

Nu-Pharm v. Canada (Minister of Health); appeal of summary judgment motion; July 3, 2008; enalapril

The Court of Appeal upheld a summary judgment decision dismissing Nu-Pharm's action on the basis that there was no genuine issue for trial.

In 1997, Nu-Pharm filed an ANDS comparing its drug NU-ENALAPRIL to APO-ENALAPRIL. The Federal Court granted a judicial review and allowed Health Canada to review Nu-Pharm's ANDS. When Nu-Pharm received its Notice of Compliance (NOC), Merck applied for an order quashing the NOC. This was granted in 1999 and upheld by the Court of Appeal. After the decision of the Court of Appeal, the Minister of Health wrote to the Provincial Drug Benefit Managers and advised that Nu-Pharm's NOC was no longer valid and NU-ENALAPRIL products could no longer be sold as it was contrary to the Food and Drug Regulations.

Nu-Pharm commenced a judicial review of this decision. Nu-Pharm also filed a Statement of Claim seeking damages from the Ministry of Health. Nu-Pharm then discontinued the judicial review and maintained only the damages action.

The Court found that the success of Nu-Pharm's action in damages is entirely dependent upon Nu-Pharm showing the unlawful character of the decision of the Ministry. If Nu-Pharm wishes to challenge that decision, it must do so by judicial review. It cannot by-pass the requirements of the Federal Court Act. The within action was found to be collateral attack or an indirect challenge to the decision.

The full text of the decision can be found at:

Eli Lilly v. Novopharm; appeal of scheduling order; July 16, 2008; olanzapine

In the Scheduling Order, the case management Prothonotary reversed the order of evidence with respect to invalidity. The Court also set a schedule for evidence. Novopharm appealed and the Court dismissed the appeal.

The Court held that scheduling matters are discretionary in nature and a Prothonotary's decision should be left undisturbed unless the questions are vital to the final issue of the case.

The Court held that reversing the order of evidence is explicitly contemplated by the Practice Direction of the Court. Thus, the Prothonotary had the jurisdiction to do so. Accordingly, there was no error of law and there was nothing clearly wrong in the exercise of the Prothonotary's discretion.

The full text of the decision can be found at:

Novopharm v. "Company X"; interlocutory motion to issue a Confidential Statement of Claim; July 4, 2008

The Court dismissed Novopharm's motion to maintain the Statement of Claim as confidential in the proceeding.

Initially, the Court refused to clear the court room as it is only in the rarest of circumstances where in camera hearings should be permitted.

Novopharm argued that it wished to protect its commercial interest in the development of its "X" product as the confidentiality of its business strategy is important and it would suffer prejudice if this is disclosed. Competitors could learn of the name of the defendant and the details of the patent and "catch up" with Novopharm to enter the market at the same time, causing Novopharm to lose generic exclusivity. It also tried to argue that it should be granted this exclusivity because it is proceeding by way of impeachment action instead of by way of proceeding under the PM(NOC) Regulations, thus it is seeking judicial economy.

The Court held that without having the benefit of the input of the defendant or the Minister of Health or the Attorney General or other potentially interested parties, the Court should be leery of granting a Confidentiality Order. Confidentiality Orders in both PM(NOC) proceedings and patent actions generally protect documents dealing with trade-secrets, drug formulations and the like. It is naďve to believe that the public has any interest in this information. However, in this case, the applicant is seeking to protect information that the public does have an interest in knowing: the parties that appear before the Court and the issues of the proceeding, including the name of the drug. Thus, the motion must be dismissed.

The full text of the decision can be found at:

Bayer Inc. v. The Minister of Health et al., judicial review of listing decision, July 10, 2008,

The Court upheld decisions of the Minister of Health to not list a patent in respect of submissions for two drugs on the basis that the patent claims were not claims to the dosage form nor did the SNDS represent a change in dosage form. The claims at issue related to a transdermal drug delivery device comprising, a carrier (patch), including a drug, a dessicant and a package containing the carrier and dessicant. The Court found that the invention was the product packaging that enhances the stability and performance of the drug, but that the claim was not in the Court's view a dosage form or novel delivery system in the sense intended by the PM(NOC) Regulations.

The full text of the decision can be found at:

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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