ARTICLE
30 November 2022

Federal Court Rejects Trial Of Common Issues And Allows Pleadings Amendment Re: Supply Disruptions In Abiraterone Acetate Amended Section 8 Actions

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Smart & Biggar

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The Federal Court of Appeal upheld the invalidity of the 422 patent on appeal.
Canada Food, Drugs, Healthcare, Life Sciences
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As previously reported, the Federal Court found Janssen's Canadian Patent No. 2,661,422 ("422 patent") – which relates to treatment of prostate cancer in humans by co-administration of abiraterone acetate (marketed by Janssen as ZYTIGA) and prednisone – invalid in actions under the Patented Medicines (Notice of Compliance) Regulations (Regulations) against Apotex, Dr. Reddy's, and Pharmascience. The Federal Court of Appeal upheld the invalidity of the 422 patent on appeal.

In three separate actions, Apotex, Dr. Reddy's, and Pharmascience seek damages from Janssen pursuant to amended section 8 of the Regulations for their lost sales of abiraterone acetate. Dr. Reddy's and Apotex's actions are scheduled to be tried consecutively in June 2023 which would be the first trial in actions under amended section 8 of the Regulations. The Pharmascience trial has not yet been scheduled. On October 27, 2022, Justice Southcott decided three motions addressing procedural issues in these proceedings.

Court dismisses Janssen's motion for common issues to be heard together

The Court dismissed Janssen's motion that evidence on issues common to the three actions should be heard together: Apotex Inc v Janssen Inc, 2022 FC 1473.

The Court disagreed with Janssen that the level of commonality between issues was sufficient. Each case requires the construction of a separate "but-for world" with different parameters (e.g., relevant time period and product dosages, as Dr. Reddy's sells only the 250 mg product whereas Apotex and Pharmascience sell both 250 mg and 500 mg products). Additionally, evidence may differ between the separate but-for worlds as to what third-party generic manufacturers would have done in the abiraterone acetate market.

Next, the Court weighed the prejudice asserted by each party. Janssen asserted that, absent a common hearing, it would (a) need to call evidence from five non-parties across multiple actions, (b) face different burdens to prove the plaintiffs' activities in each trial, (c) incur expenses for the testimony of Janssen's witnesses three separate times, and (d) face the risk of inconsistent factual findings.

Justice Southcott found that the following categories of prejudice asserted by the plaintiffs "militate strongly" against a common hearing, and "outweigh the prejudice advanced by Janssen":

  • Adverse witnesses may be cross-examined by all plaintiffs, each with their own unique interests, with the potential for an adverse impact on an individual plaintiff's approach to the litigation.
  • Testimony regarding three different but-for worlds in one hearing would be "potentially confusing for both witnesses and the Court".
  • Pharmascience would be required to participate and be bound by a common issues trial 17 months earlier than the potential trial date (not yet scheduled) being discussed in that case.

Considering the foregoing factors and Rule 105(a) of the Federal Courts Rules, Justice Southcott found that a common hearing "would not achieve the most efficient resolution of the matters in issue in the section 8 actions."

Court grants Janssen's motion to amend Statement of Defence re: Apotex's capacity to supply market

In the Apotex action, the Court granted Janssen's motion for leave to amend its Statement of Defence: Apotex Inc v Janssen Inc, 2022 FC 1477. Janssen sought to particularize its pleading that Apotex did not have the ability and/or capacity to supply the market by adding reference to supply disruptions in the U.S. and Canadian markets experienced by Apotex in the real world.

The Court found that the proposed amendments particularize real questions in controversy in Janssen's existing pleading "surrounding alleged real-world events that have the potential to affect Apotex's damages in the but-for world." Though Janssen sought to plead real-world events that occurred after Apotex received approval, these events potentially affect the damages calculation as Apotex seeks damages beyond this approval date. While Apotex asserted that information produced on discovery dispels the proposed pleadings, Justice Southcott determined that the Court should not assess on a pleadings motion whether the amendment is consistent with this other evidence. Accordingly, Janssen's proposed amendments have a reasonable prospect of success; establishing these facts and their relevance are issues for trial.

The Court found that the interests of justice support allowing the amendments. While the motion was heard less than nine months before trial, there was no basis to conclude that the trial date would be lost, or that Janssen deliberately and strategically delayed pursuit of the amendments.

Court allows Janssen's appeal of refusals motion decision

In a third motion, the Court also allowed Janssen's appeal from an order of Associate Judge Milczynski that did not compel Apotex to answer certain discovery questions. Justice Southcott ordered Apotex to answer questions relating to Apotex's U.S. activities that were also the subject of Janssen's motion to amend: Apotex Inc v Janssen Inc, 2022 FC 1476.

Should you have any questions, please do not hesitate to contact a member of the Pharmaceutical Litigation Group.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

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