Canada: Pharma in brief - Canada: Federal Court Holds That Apotex Is Entitled To Section 8 Damages In Respect Of Omeprazole [LOSEC®]

Case: Apotex Inc. v. AstraZeneca Canada Inc.

Drug: Omeprazole (LOSEC)

Nature of case: Section 8 of the PM(NOC) Regulations – validity and liability issues

Date of decision: May 11, 2012

Overview

On May 11, 2012, the Federal Court issued a decision in a case brought by Apotex Inc. ("Apotex") against AstraZeneca Canada Inc. ("AstraZeneca") pursuant to section 8 of the Patented Medicines (Notice of Compliance) Regulations (the "Regulations"). Apotex claimed damages allegedly sustained while it was prevented from marketing its generic omeprazole product as a result of prohibition proceedings initiated by AstraZeneca.

In this decision, the Court considered Apotex's entitlement to damages and the viability of defences put forward by AstraZeneca. Of note, this is the first reported decision of a hearing in which the Court conducted a "hot tubbing" examination of expert witnesses.

This case gives guidance to future section 8 cases consistent with the recent Ramipril section 8 decisions.¹ In particular: (i) the first person has an evidentiary burden with respect to any facts intended to reduce or limit the second person's damages; and (ii) events that actually took place are the best indication of what would have happened in the "but for" world, unless there is a compelling reason to conclude otherwise.

Ultimately, the Court held that Apotex was entitled to compensation pursuant to section 8 of the Regulations and that none of the defences put forward by AstraZeneca should reduce or eliminate that entitlement. A reference will be held to determine the quantum of damages owed to Apotex.

Summary of findings

Validity of section 8 of the Regulations

AstraZeneca argued that Apotex should not be entitled to a remedy, as section 8 is invalid for a host of reasons. The Court rejected each of these arguments. The Court relied on a prior decision of the Federal Court of Appeal in Alendronate² and held that section 8 is validly delegated legislation. The Court also held that section is not inconsistent with Canada's obligations under NAFTA or TRIPS and that international treaties cannot be relied upon to import an "abuse" requirement into section 8 of the Regulations.

Pending infringement action as a defence

The Court held that Apotex was a "second person" for the purposes of this proceeding, as it fell strictly within the scope of section 8 and because AstraZeneca treated it like a second person by commencing a prohibition application. The Court then considered whether an allegation of infringement in a pending proceeding is a valid defence to section 8 liability. The Court relied on recent U.K. and Canadian jurisprudence and held that a pending infringement action cannot defeat section 8 liability; however, the Court suggested that in the event that a Court finds infringement in the pending action, the Court could take this into account in determining the amount of compensation owing.

Factual findings in the "but for" world

AstraZeneca argued that Apotex would not have been in a position to sell Apo-Omeprazole in the relevant period, as Apotex was only permitted to manufacture omeprazole at its non-commercial scale site.

The Court held Apotex was not prevented by Health Canada from manufacturing omeprazole at its larger site in the "real world". As such, there was no reason to think that this would not have been the case in the "but for" world. In any event, the Court found that the smaller site had reasonable capacity to manufacture the product at some level of commercial scale.

Relevant period and duty to mitigate

AstraZeneca argued that the period of liability under section 8 should be shortened, as Apotex delayed in serving its Notice of Allegation while it was negotiating the applicability of the Regulations with Health Canada. The Court held that Apotex acted reasonably and that there was no delay in serving a Notice of Allegation. Finding no delay, the Court also rejected AstraZeneca's argument that Apotex failed to mitigate its damages.

Discretion under subsection 8(5)

In light of AstraZeneca's failure to establish defences related to infringement, capacity, delay, and mitigation, the Court held that it would not permit those issues to be considered as a matter of judicial discretion under subsection 8(5) of the Regulations.

Links to decision:

Apotex Inc. v. Astrazeneca Canada Inc., 2012 FC 559

Footnotes

1 Sanofi-Aventis v. Teva Canada Limited, 2012 FC 552; Apotex Inc. v. Sanofi-Aventis, 2012 FC 553.

2 Apotex Inc. v. Merck & Co, 2009 FCA 187; rev'g 2008 FC 1185, leave to appeal to SCC refused [2009] SCCA No 347.

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