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23 December 2024

Novel Biosimilar Anti-Trust Complaint Involving Janssen's STELARA (Ustekinumab) Dismissed By The Canadian Competition Tribunal

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In a recently released decision, the Competition Tribunal (the "Tribunal") provided reasons for dismissing JAMP Pharma Corporation's ("JAMP") application...
Canada Antitrust/Competition Law

In a recently released decision, the Competition Tribunal (the "Tribunal") provided reasons for dismissing JAMP Pharma Corporation's ("JAMP") application for leave to bring an abuse of dominance case against Janssen Inc. ("Janssen"). As we previously reported, JAMP, a Canadian generic/biosimilar pharmaceutical company, alleged that Janssen engaged in numerous anti-competitive acts to prevent competitors from launching biosimilar products to its ustekinumab drug product (known as STELARA).

This marks the first leave application under the Competition Act's (the "Act") abuse of dominance provisions to be determined by the Tribunal since the 2022 amendments allowed private parties to seek leave to bring such applications. As summarized below, JAMP's complaint failed due to a lack of "cogent" evidence to support its allegations. However, the Tribunal's observations may provide guidance to future applicants to better ground more novel anti-trust complaints. In Canada's competitive pharmaceutical market, JAMP's complaint underscores the need for commercial teams to seek proper legal advice on their market strategies prior to deploying them.

The decision also provides valuable insight with respect to the Tribunal's interpretation of leave applications, specifically in the context of abuse of dominance cases.

The Parties' Arguments

In brief, JAMP's application characterized Janssen as the dominant (and previously the only) supplier in Canada of biologic drugs that contain ustekinumab as an active ingredient, used to treat certain inflammatory autoimmune diseases. JAMP alleged that Janssen engaged in a practice of anti-competitive acts intended to prevent or delay entry and expansion in the market for the supply of ustekinumab biologics by JAMP and other potential competitors that supply biosimilars. In particular, JAMP claimed that Janssen engaged in "sham" litigation to dissuade the entry of biosimilars, gamed the regulatory system, developed a fighting brand (known as FINLIUS) to create confusion and uncertainty in the market and delay switching, and engaged in predatory pricing, among other anti-competitive acts. In so doing, JAMP claimed that Janssen also lessened competition substantially in the market for the supply of ustekinumab in Canada. JAMP sought extensive remedies, including broad prohibition orders and a large administrative monetary penalty.

Janssen countered that its conduct did not amount to a violation of the Act's abuse of dominance provision. Janssen argued that, in any event, JAMP could not meet the leave test as it could not demonstrate that its entire business was directly and substantially affected; rather, any alleged misconduct would have only affected a segment of its business (i.e., its biosimilar to STELARA). JAMP's reply submission argued that the leave test did not require an applicant to show that the entirety of its business was affected, but even where only part of its business was directly and substantially affected, an applicant could meet this component of the leave test. As detailed further below, this interpretative issue was settled by the Tribunal.

Tribunal Denies Application for Leave

The Tribunal's task was to determine whether it had reason to believe that (i) Janssen's alleged conduct could be subject to an order under the Act's abuse of dominance provisions; and (ii) JAMP was directly and substantially affected in its business by the impugned misconduct.

The Tribunal concluded that JAMP did not adduce sufficient cogent evidence to give rise to a bona fide belief that an order could be made under the Act. In particular:

  • No "gaming" of the regulatory system and "sham" litigation: JAMP alleged that Janssen "gamed" the system by listing an additional patent on the register, knowing that it would allegedly disincentive a biosimilar from launching a competitor drug. JAMP alleged that Janssen knew Health Canada was "very unlikely" to list the patent, and following a negative decision, pursued "sham" judicial review proceedings in the Federal Court and Federal Court of Appeal to have the patent listed knowing that those proceedings were unlikely to succeed. The Tribunal found that JAMP did not show that Janssen's JR litigation was without foundation (or "doomed to fail" as JAMP claimed), and had "no substantive merit on an objective basis". Nor did JAMP provide any evidence that the alleged "sham" litigation or misuse of the regulatory system had a negative exclusionary effect by delaying JAMP's entry into the market, or an adverse effect on competition in the same manner.
  • No improper "Fighting Brand": Fighting brands are typically understood to be introduced at low prices and marketed aggressively to restrict competition, so that the main brand can continue selling at high prices. The Tribunal found no cogent and credible evidence suggesting that Janssen's FINLIUS drug was a "fighting brand" because JAMP presented no argument to suggest that it was forced out of the market by FINLIUS.
  • No predatory pricing: Anti-competitive pricing can refer to selling drugs at a price lower than the acquisition cost for the purpose of disciplining or eliminating a competitor. The Tribunal found there was insufficient credible and cogent evidence to indicate that Janssen engaged in predatory pricing. While the decision is heavily redacted, it appears JAMP alleged that Janssen supplied patients with free STELARA temporarily until they could be prescribed FINLIUS. Janssen responded by arguing that some patients received free medication on a "compassionate" basis, and such practice was not anti-competitive but rather "pro-social". The Tribunal observed there was no evidence to suggest Janssen's free supply of STELARA changed with the introduction of biosimilars.
  • No anti-competitive communications with physicians, insurers, patients: JAMP argued that Janssen's patient support program caused uncertainty and delayed competition by (i) sending communications to physicians that were "intentionally vague" about the existence of biosimilar options; (ii) telling "half-truths" to physicians (e.g., advising physicians there was no need to take any steps to move patients off STELARA to a biosimilar); and (iii) engaging in "insurance discovery" of new patients to steer them towards a Janssen product. The Tribunal ultimately held JAMP's evidence was "very thin". It was mostly based on alleged omissions by Janssen and vague statements. The Tribunal observed there was no evidence from any prescribing physician that they were misled, as alleged by JAMP.
  • No Lessening of Competition: The Tribunal concluded that there was insufficient evidence before it to raise a bona fide belief that Janssen's conduct could have the effect of substantially lessening or preventing competition in the ustekinumab market. JAMP did not adduce any evidence to quantify substantial effects in the broader market, focusing only on its alleged loss of profits. Moreover, the Tribunal found that the entry of biosimilars was determined by a regulatory process rather than Janssen's conduct.

Given these findings, the Tribunal concluded that JAMP's evidence did not give rise to a bona fide belief that it was directly and substantially affected in its business by any misconduct. This decision is consistent with a long history of the Competition Tribunal carefully scrutinizing proposed private applications alleging violations of the Act. However, the Tribunal's observations about the deficiencies of JAMP's evidence may provide guidance to spur future applicants to launch more novel complaints. In Canada's competitive pharmaceutical market, JAMP's complaint underscores the need for commercial teams to seek proper legal advice on their market strategies prior to deploying them.

In the course of its reasons, the Tribunal established that the leave test for abuse of dominance claims does not require that an applicant be directly and substantially affected in its entire business. Even where only part of an applicant's business is directly and substantially affected by the abuse of a dominant position, leave may be granted.

Unlike leave applications raised under the Act's refusal to deal (section 75) and exclusive dealing, tied selling, and market restriction (section 77) provisions, the Tribunal found that the abuse of dominance provision does not require proof that an affected competitor or potential competitor (in a product market over which a respondent has control) be affected in the entirety of that competitor's business. As such, while leave to bring an application under sections 75 and 77 can only be granted where the applicant's entire business is affected, an application under the abuse of dominance provision may be granted where an applicant is directly and substantially affected in something less than its entire business.

This distinction will be done away with once the new leave test comes into effect in June 2025, which expressly provides that for refusal to deal (section 75), price maintenance (section 76), exclusive dealing, tied selling and market restriction (section 77), abuse of dominance (section 79), and civil collaborations (section 90.1), leave may be granted even if only part of an applicant's business is affected, or if the Tribunal determines it is in the "public interest" to grant leave.

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