Date: 20090407
Dockets: T-459-07
T-712-08
Citation: 2009 FC 244
Ottawa, Ontario, April 7, 2009
PRESENT: The Honourable Madam Justice Mactavish
BETWEEN:
Docket:
T-459-07
CANADIAN PHARMACEUTICAL TECHNOLOGIES
INTERNATIONAL (C.P.T.) INC.
Applicant
and
THE
ATTORNEY GENERAL OF CANADA
Respondent
AND
BETWEEN:
Docket:
T-712-08
CANADIAN
PHARMACEUTICAL TECHNOLOGIES INT’L
Applicant
and
THE ATTORNEY
GENERAL OF CANADA
Respondent
PUBLIC REASONS FOR JUDGMENT
AND JUDGMENT
(Confidential Reasons for
Judgment and Judgment issued March 26, 2009)
[1]
Canadian Pharmaceutical Technologies International (C.P.T.) Inc. seeks
judicial review of what it says are two decisions made by a Senior Health
Canada official which determined that CPTI’s “Vancopak” product was properly classified
as a “drug in dosage form”, and was thus subject to the provisions of the Food
and Drugs Act, R.S.C. 1985, c. F-27, and the Food and Drug Regulations,
C.R.C. 1978, c. 870.
[2]
CPTI asserts that it was denied procedural fairness in the process
followed by Health Canada in arriving at a final decision in this matter. CPTI
also says that Health Canada acted in a discriminatory fashion by singling out
its Vancopak product for scrutiny, when other companies are selling similar
products without interference by Health Canada. Finally, CPTI claims that
Health Canada made numerous errors in determining that Vancopak was indeed a
“drug in dosage form” and was therefore subject to the Food and Drugs Act
and Regulations.
[3]
For the reasons that follow, I have concluded that CPTI was not denied
procedural fairness in the redetermination process. I am also satisfied that
CPTI has not been the victim of unlawful discrimination in the regulatory
process, and that the conclusion that Vancopak is a “drug in dosage form” for
the purpose of the Food and Drug Regulations was one that was reasonably
open to the Health Canada official on the record before him. As a consequence,
CPTI’s applications for judicial review will be dismissed.
Background
[4]
“Vancopak” is the trade name used by CPTI for its vancomycin
hydrochloride product. Vancomycin hydrochloride is an antibiotic used in the
treatment of severe or life-threatening infections such as staphylococcal
enterocolitis, or the antibiotic-associated pseudomembraneous colitis produced
by the C. difficile bacteria.
[5]
CPTI’s Vancopak product consists of 5g of vancomycin hydrochloride
powder in fixed, pre-measured, standardized package units. The powder is
contained in a 100 ml graduated plastic bottle designed to facilitate the
reconstitution of the vancomycin hydrochloride powder into a solution suitable
for ingestion by patients.
[6]
CPTI purchases vancomycin hydrochloride in bulk from a company known as
Baralex Inc., which imports the product in 5kg factory sealed containers from a
pharmaceutical factory in China. A second company called Valeo Pharma Inc. carries
out all of the remaining steps required to produce Vancopak on behalf of CPTI.
These steps include storage, handling, weighing, repackaging
the vancomycin hydrochloride powder in 5g portions in bottles, labelling
and distribution activities.
[7]
CPTI sells its Vancopak product to pharmacies and hospitals in Canada.
No sales of Vancopak are made directly to consumers.
[8]
Because a vancomycin hydrochloride solution is not stable over the long
term, the product is sold to pharmacists in powder form, and is only
reconstituted at the time that it is actually being dispensed to the patient.
When a patient seeks to fill a prescription for Vancopak at a pharmacy, a
pharmacist will add water to the powder to reconstitute it as a solution. CPTI
says that pharmacists will also always add excipients such as sweeteners and
stabilisers to the solution prior to providing it to the patient.
[9]
In early 2005, Health Canada received information from a third party
that CPTI was selling vancomycin hydrochloride without a Drug Identification
Number (or “DIN”). After making enquiries, Health Canada informed CPTI of its
view that Vancopak was subject to regulation under the Food and Drug Regulations.
According to Health Canada, Vancopak was both a “new drug” and a “drug in
dosage form”, with the result that the product required a DIN, and was
otherwise subject to the federal drug regulatory process.
[10]
CPTI’s position was that its vancomycin hydrochloride product was not a
“drug in dosage form” as contemplated by the Regulations, and thus did not
require a DIN before it could be sold in Canada. According to CPTI, its
product (which was then marketed under the “Vancomysol” trade name) was merely
what the company calls an “active pharmaceutical ingredient” (or “API”),
intended for use in compounding by licensed pharmacists, in accordance with a
prescription.
[11]
In an effort to address some of Health Canada’s concerns, CPTI changed
the name of the product from “Vancomysol” to “Vancopak”, and altered the
wording on its labelling from stating that the product was “for extemporaneous
use” to saying that it was "FOR Rx COMPOUNDING”.
[12]
Not satisfied with CPTI’s changes, on September 16, 2005, Health Canada
rendered a formal classification decision which identified Vancopak as a new “drug
in dosage form”, and not merely an “active pharmaceutical ingredient” for use
in compounding, as had been argued by CPTI.
[13]
The result of Health Canada’s decision was that CPTI would be required
to obtain a DIN for its Vancopak product, if the company wished to continue
marketing the product in Canada. In order to obtain a DIN, CPTI would have
first had to file a New Drug Submission with Health Canada, and would then have
had to go through the associated rigorous regulatory process.
[14]
Instead, CPTI sought judicial review of Health Canada’s September 16,
2005 decision, alleging, amongst other things, that it had been denied
procedural fairness in the process leading up to the classification decision.
Justice Kelen’s Decision
[15]
In a June 2006 decision, Justice Kelen determined that Health Canada had
breached the duty of fairness owed to CPTI in its conduct of the classification
proceeding: see Canadian Pharmaceutical Technologies International (C.P.T.)
Inc. v. Canada (Attorney General), 2006 FC 708 (“CPTI #1”).
[16]
In particular, Justice Kelen found that Health Canada had failed to
advise CPTI of the case that it had to meet, namely the reasons why it was that
Health Canada believed Vancopak required a DIN. In Justice Kelen’s view, CPTI
had also been denied the opportunity to fully respond to the position taken by
Health Canada before Health Canada made its final classification decision: see
CPTI #1, at paras. 19 to 24.
[17]
Justice Kelen rejected CPTI’s allegation that Health Canada was
discriminating against it because other companies in Canada were selling
vancomycin hydrochloride to pharmacists without having first been required to
obtain a DIN. Justice Kelen observed that there had been an inquiry or
complaint made against CPTI in this case. It was for this reason that Health
Canada had investigated the company, and had made the decision under review. In
Justice Kelen’s view, this did not amount to discriminatory conduct on the part
of CPTI: CPTI #1, at para. 29.
[18]
Given that Justice Kelen concluded that Health Canada had breached its
duty of fairness, and not provided CPTI with the opportunity of responding with
evidence to the position taken by Health Canada, he did not go on to consider whether
Health Canada’s finding that Vancopak was a “drug in dosage form” had been made
in error: CPTI #1, at para. 25.
[19]
By way of remedy, Justice Kelen set aside Health Canada’s September 16,
2005 decision, remitting the matter “to an appropriate senior Health Canada
official in Ottawa” for reconsideration upon the following terms:
i) The
senior Health Canada official in Ottawa will not have been involved with the
decision under review, but has expertise with respect to the compliance of
health products under the Food and Drugs Act and Regulations;
(ii) The
applicant [CPTI] is provided with an opportunity of providing the new
decision-maker with evidence in response to the concerns raised by Health
Canada in the letter dated September 16, 2005 and in the documents which
constitute the record of decision, which were made known to the applicant as
part of this Court process; and
(iii) The
applicant will be provided with an opportunity to know any further concerns
which Health Canada may have with respect to the additional evidence which may
be submitted by the applicant, and provided with an opportunity to respond
before the new Health Canada official makes a decision in this case.
Events Occurring after Justice Kelen’s Decision was
Rendered
[20]
In an effort to comply with the Order of Justice Kelen, responsibility
for the Health Canada redetermination was assigned to Dr. David Clapin. Dr.
Clapin was the Branch Science Advisor in the Office of Science and Risk
Management at Health Canada’s Health Products and Food Branch.
[21]
By letter dated August 23, 2006, Dr. Clapin wrote to the President of
CPTI, advising that he had been assigned to carry out the reconsideration of
Vancopak’s regulatory status. Dr. Clapin went on to state that:
In order to
facilitate the redetermination of the regulatory status of Vancopak, I propose
the following course of action:
1.
The responsible officers of Health Canada will provide [CPTI] and myself
with a written statement outlining what they believe to be the main issues
involved in the matter, and their position on those issues;
2.
[CPTI] will then be given 30 calendar days in which to provide me with
its position in writing on the issues identified by Health Canada, as described
above, and to identify and comment on any other issue it feels is relevant to
the decision.
3.
After having had the opportunity to review the submitted material, a
meeting will be held between representatives of the original Health Canada
decision-maker(s), [CPTI] and myself in order to give both of the original
parties a better opportunity to clarify their respective positions, and so that
I can ensure that I fully understand each party’s interpretation of the
evidence.
4.
Following the meeting, I will arrive at a decision regarding the status
of the product Vancopak which will be provided to both [CPTI] and the
responsible officers of Health Canada in writing.
5.
At the outset, the material I will have for review will consist of the
challenged Health Canada decision letter of September 16, 2005 and the [sic] all
of the material included with Health Canada’s record of decision provided to
the Federal Court. Should I wish to review additional documents or evidence,
both parties will be notified.
[22]
CPTI acknowledges that the first two steps of the process described in
Dr. Clapin’s August 23, 2006 letter were followed. However, CPTI takes issue
with what occurred after CPTI provided Dr. Clapin with its written submissions
outlining the company’s position on the issues identified by Health Canada.
[23]
That is, prior to the meeting contemplated by the third numbered
paragraph of Dr. Clapin’s letter actually taking place, Dr. Clapin sent CPTI a
document entitled “Preliminary Regulatory Position”, under cover of a letter
dated February 13, 2007.
[24]
It is CPTI’s contention that Dr. Clapin’s “Preliminary Regulatory
Position” document was in fact a determination by Dr. Clapin that Vancopak was
a “drug in dosage form”, was sold to pharmacists in a form that is “ready for
use by the consumer”, and was thus subject to the regulatory process.
[25]
CPTI immediately advised Dr. Clapin in writing of its concern that in
proceeding in this fashion, Dr. Clapin had violated CPTI’s right to procedural
fairness in the redetermination process by prejudging the issues before him.
Shortly thereafter, CPTI commenced an application for judicial review with
respect to Dr. Clapin’s February 13, 2007 “decision” (file T-459-07). This is
one of the two applications for judicial review currently before this Court.
[26]
CPTI asked Dr. Clapin not to proceed further with the redetermination
process until such time as CPTI’s application for judicial review could be
heard and decided. Dr. Clapin declined to put matters on hold, advising CPTI
that the redetermination process would continue. Dr. Clapin then asked CPTI to
provide him with a written response to his “Preliminary Regulatory Position”,
noting that if no response was received from the company, a final decision on
the reclassification issue would be made without further input from CPTI.
[27]
CPTI again advised Dr. Clapin of its view that the rendering of his
“Preliminary Regulatory Position” violated CPTI’s right to procedural fairness
in the redetermination process. CPTI further asserted that it had a legitimate
expectation as to how the redetermination process would unfold, based on Dr.
Clapin’s own description of the process in his August 23, 2006 letter.
[28]
CPTI also advised Dr. Clapin that his “Preliminary Regulatory Position”
contained factual and other errors, and raised new issues that fell outside
those originally identified by Health Canada as matters of concern.
Nevertheless, CPTI agreed to continue with the redetermination process, on a
“without prejudice” basis, while simultaneously seeking relief in this Court
with respect to the “Preliminary Regulatory Position”.
[29]
On July 5, 2007, a meeting was convened by Dr. Clapin with
representatives of both Health Canada and CPTI, at which time both sides
provided Dr. Clapin with oral submissions with respect to the matters in
issue. Following this meeting, CPTI provided Dr. Clapin with further written
submissions, identifying, in detail, what it says were the legal and factual
errors undermining Dr. Clapin’s analysis and conclusions with respect to the
regulatory status of Vancopak.
[30]
On April 4, 2008, Dr. Clapin released a decision dated February 27,
2008, regarding the regulatory status of Vancopak. Taking into account the
nature of Vancopak itself, the activities and steps performed on it to
transform the product to its end use, and the nature of the controls exercised
over the product by CPTI, Dr. Clapin concluded that Vancopak was a “drug in
dosage form” and that it was sold to hospitals and pharmacies in a form that
was ready for use by consumers.
[31]
CPTI then sought judicial review with respect to Dr. Clapin’s February
27, 2008 decision. Prothonotary Aronovitch subsequently ordered that CPTI’s two
applications for judicial review be consolidated, with the result that the two
matters were heard together. These reasons pertain to both applications.
Issues
[32]
CPTI's applications for judicial review raise the following issues:
1. Has CPTI been denied
procedural fairness in the redetermination process?
2. Has Health Canada
discriminated against CPTI? and
3. Did Dr. Clapin err in
determining that Vancopak is a “drug in dosage form”?
[33]
In addition, the Court must determine the appropriate standard of review
to be applied with respect to each of the issues.
Standard of Review
[34]
CPTI’s first issue involves a question of procedural fairness, and the
parties agree that the standard of review to be applied to this aspect of Dr.
Clapin’s decision is that of correctness. I agree that no deference is owed to the
views of Dr. Clapin in this regard, and that it is up to this Court to form its
own opinion as to the fairness of the process leading up to Dr. Clapin’s final
decision: see Dunsmuir v. New Brunswick, 2008 SCC 9, and Canada (Minister of Citizenship and Immigration) v. Khosa, 2009 SCC 12, at para. 43.
[35]
As will be explained below, I am of the view that Dr. Clapin’s finding
that Health Canada had not discriminated against CPTI was correct. As a result,
it is not necessary to identify the appropriate standard of review with respect
to this issue.
[36]
The final issue is whether Dr. Clapin erred in his determination that
Vancopak was a “drug in dosage form” for the purposes of the Food and Drug
Regulations, as opposed to an “active pharmaceutical ingredient” for use by
pharmacists in compounding.
[37]
It is not always necessary for the Court to perform its own
standard of review analysis in determining the applicable standard of review in
a given case, and regard may be had to existing jurisprudence: see Dunsmuir, at para. 57.
[38]
It is clear from the jurisprudence of the Federal Court of Appeal that to
the extent that the decision under review turned on Dr. Clapin’s interpretation
of the Food and Drugs Act and the Food and Drug Regulations, the
decision is reviewable against the standard of correctness: see Abbott
Laboratories Limited v. Canada (Attorney General), 2008 FCA 354.
[39]
However, there does not appear to be any real issue in this case as to
the proper interpretation of the Act or the Regulations. The real debate
between the parties is largely a factual one. That is, where the parties
disagree is as to whether the facts relating to Vancopak’s production make it a
drug which is in a form that is “ready for use by the consumer without
requiring further manufacturing”. As Justice Kelen noted in CPTI #1, this
is a question of mixed law and fact, and primarily one of fact. As a consequence,
deference is owed to Health Canada's classification determinations: see CPTI
#1, at para. 17.
[40]
Justice Kelen found that Health Canada has
greater expertise than the Court with respect to the classification,
manufacture and safe sale of drugs. According to Justice Kelen, determining
whether a product should be classified as a ‘drug in dosage form’ “requires the
exercise of judgment derived from special expertise in respect of basic and
applied medical science. The line that divides drugs that are in ‘dosage form’
from those that require further ‘manufacturing’ is, in accordance with
Parliament's intent, one that is best demarcated by regulators with expertise
in drug regulation”: CPTI #1, at para. 13.
[41]
Justice Kelen also observed that there is no privative
clause or statutory right of appeal in the legislation with respect to Health Canada's product
classification decisions: see CPTI #1, at para. 12. Moreover,
the purpose of the Food and Drugs Act and Regulations was “to regulate
the manufacture, distribution, use and sale of drugs to protect the health and
safety of the Canadian public”. Justice Kelen went on to observe that the
overriding purpose of the Regulations in issue here was to ensure the safety
and efficacy of drugs sold in Canada. Given that Health Canada's product
classification decisions were “administrative and polycentric in nature” and given
that such decisions “protect the public's safety as gatekeeper to the
pharmaceutical market”, Justice Kelen found that the main purpose of the scheme
was to protect the public interest. This factor favoured great deference being
owed to classification decisions: see CPTI #1, at para. 15.
[42]
In this case, while Dr. Clapin may not have been involved in
classification decisions on a regular basis, as the Branch Science Advisor in
the Office of Science and Risk Management at Health Canada’s Health Products
and Food Branch he was clearly a senior Health Canada official with expertise
with respect to the compliance of health products under the Food and Drugs
Act and Regulations.
[43]
Finally, Justice Kelen did not accept CPTI’s argument that the questions
of fact or mixed fact and law in issue in this case went to the jurisdiction of
Health Canada under the Act, and should therefore be reviewed on a standard of
correctness: see CPTI #1, at para. 17.
[44]
Taking all of these factors into consideration, I am of the view that
Dr. Clapin’s determination that Vancopak was a “drug in dosage form” for the
purposes of the Food and Drugs Act and Regulations is one that should be
reviewed against the standard of reasonableness.
[45]
In reviewing a decision against the reasonableness standard,
the Court must consider the justification, transparency and intelligibility of
the decision-making process, and whether the decision falls within a range of
possible acceptable outcomes which are defensible in light of the facts and the
law: see Dunsmuir at para. 47.
Has CPTI been Denied Procedural Fairness in the Redetermination
Process?
[46]
The crux of CPTI’s argument in relation to this issue is that Dr.
Clapin’s February 13, 2007
“Preliminary Regulatory Position” was not a preliminary assessment at all.
Rather, CPTI submits that in rendering his February 13, 2007 decision, Dr.
Clapin effectively arrived at a final determination of the classification
issue, prior to allowing CPTI the opportunity to be heard in person.
[47]
Although an oral hearing did take place after the February 13, 2007
‘decision’ was rendered, CPTI contends that Dr. Clapin’s mind was effectively
made up upon the issuance of his “Preliminary Regulatory Position”. This, the
company says, is evidenced by a comparison of the preliminary and final
decisions.
[48]
CPTI further submits that Dr. Clapin fettered his discretion by
indicating in his “Preliminary Regulatory Position” that he would only amend
the February 13, 2007 ‘decision’ “if it can be demonstrated by CPTI that an
aspect of the discussion is factually in error in a way that invalidates the
analysis”.
[49]
According to CPTI, it was intrinsically unfair to have had Dr. Clapin prejudge
the outcome of the regulatory assessment. His strongly-held, pre-determined
views resulted in CPTI being denied a fair or meaningful hearing before an
unbiased decision-maker. Moreover, CPTI says that the process followed by Dr.
Clapin was contrary to that described in his August 23, 2006 letter, and thus
contrary to the legitimate expectations of CPTI as to the process that would be
followed in the redetermination process.
[50]
In determining whether the redetermination process followed by Dr.
Clapin in this case was unfair to CPTI, it is first necessary to ascertain the
content of the duty of fairness owed by Dr. Clapin to CPTI, having regard to
all of the circumstances of this case.
[51]
An administrative decision classifying a substance as a “drug in dosage
form” for the purposes of the Food and Drugs Act and Regulations is
clearly one that affects CPTI’s interests. As such, the duty of fairness is
engaged: see Cardinal v. Kent Institution, [1985] 2 S.C.R. 643.
[52]
The content of the duty of fairness is variable, however, and the extent
of a decision-maker’s obligations in this regard will depend upon the statutory
context under which the decision was taken, as well as the nature of the rights
affected: see Baker v. Canada (Minister of Citizenship and
Immigration), [1999] 2 S.C.R. 817, at paras. 21 and 22.
[53]
At paragraphs 23 to 27 of Baker, the Supreme Court identified the
following non-exhaustive list of factors to be considered in ascertaining just
how much procedural fairness is required in a given case:
(1) the
nature of the decision being made and the process followed in making it;
(2) the
nature of the statutory scheme and the “terms of the statute pursuant to which
the body operates”;
(3) the
importance of the decision to the individual or individuals affected;
(4) the
legitimate expectations of the person challenging the decision;
(5) the
choices of procedure made by the agency itself.
[54]
In this case, what is at issue is a regulatory decision arrived at
through a non-adjudicative process. Although CPTI has repeatedly referred to
the July 5, 2007 meeting between Dr. Clapin, representatives of Health Canada
and representatives of CPTI as a “hearing”, a review of the record confirms
that what occurred was not an adjudicative-type hearing, but really more of an
informal discussion, with each side explaining why they believed their position
should be accepted.
[55]
It is also worth noting that while Justice Kelen was of the view that
CPTI was entitled to respond to Health Canada’s concerns in relation to the
classification question, he did not suggest that a formal hearing was required
in the redetermination process.
[56]
Moreover, neither the Food and Drugs Act nor the Regulations prescribe
a procedure to be followed in arriving at decisions such as the one at issue in
this case, meaning that those charged with making classification decisions will
ordinarily be the masters of their own procedures.
[57]
While the regulatory classification of Vancopak is of undoubted
importance to CPTI, the company’s interest in this matter is purely economic.
At the hearing of these applications, CPTI argued that its Vancopak product was
the company’s only product, and that the very existence of the company was in
jeopardy as a result of Dr. Clapin’s decision. However, counsel for the
company could not identify any evidence in the record that would support this
contention, when invited to do so by the Court.
[58]
Thus the first, second, third and fifth of the Baker factors all
suggest that the regulatory classification process would fall towards the less
demanding end of the fairness spectrum. Indeed, such a conclusion is
consistent with the decision of Justice Kelen sending this matter back for
redetermination.
[59]
That is, Justice Kelen’s order suggests that only the most basic elements
of procedural fairness were owed to CPTI by Health Canada, namely, the right to
know the case that it had to meet, and the opportunity to respond to that case.
[60]
Insofar as the fourth Baker factor is concerned, CPTI submits
that in light of the redetermination process established by Dr. Clapin’s August
23, 2006 letter, it had the legitimate expectation that no decision would be
arrived at by Dr. Clapin until such time as the company was given an
opportunity to be heard in person. By arriving at a final decision prior to
the July 5, 2007 meeting, CPTI says that Dr. Clapin breached the duty of
procedural fairness owed to the company.
[61]
It should be noted that CPTI’s legitimate expectation argument is
premised upon Dr. Clapin’s February 13, 2007 “Preliminary Regulatory Position”
amounting to a final decision. As will be discussed further on in these
reasons, I am not persuaded that this was so.
The Effect of Dr. Clapin’s February 13, 2007 “Preliminary
Regulatory Position”
[62]
As noted above, CPTI says that a review of Dr. Clapin’s “Preliminary
Regulatory Position” demonstrates that he had really made up his mind on the
classification issue by this point in the process.
[63]
That is, the company says that Dr. Clapin had effectively arrived at a
final decision, prior to allowing CPTI the opportunity to be heard in person.
The result of this was that CPTI was denied a meaningful opportunity to respond
to Dr. Clapin’s concerns through the procedural steps occurring after that
date, including, in particular, the July 5, 2007 meeting.
[64]
In contrast, the respondent contends that the release of the February
13, 2007 “Preliminary Regulatory Position” document was nothing more than an
attempt on Dr. Clapin’s part to focus the parties’ subsequent submissions on
the issues which, in his view, were critical to the classification issue, and
to provide both sides with a full opportunity to respond.
[65]
Having carefully reviewed both Dr. Clapin’s February 13, 2007
“Preliminary Regulatory Position” and his February 27, 2008 decision regarding
the regulatory status of Vancopak, I am of the view that Dr. Clapin had not
prejudged the issue when he released the February 13, 2007 document, and that
he kept an open mind with respect to the key issues before him until such time
as he rendered his final decision in this matter.
[66]
Indeed, I am satisfied that the “Preliminary Regulatory Position”
document was nothing more than a good faith attempt on Dr. Clapin’s part to
comply with Justice Kelen’s order that CPTI be given notice of Health Canada’s
concerns and an opportunity to respond to those concerns.
[67]
Such a view is consistent with the wording of the February 13, 2007 document
itself, along with the covering letter that was provided with it.
[68]
Dr. Clapin’s February 13, 2007 letter to counsel for CPTI enclosing a
copy of his “Preliminary Regulatory Position” advises that he had completed his
review of the material that had been provided by both CPTI and Health Canada
with respect to the classification of Vancopak, and that he had come to a preliminary
position on the issue. Dr. Clapin then stated that “At this point, I think
it appropriate to seek further input from the parties involved in order to
ensure that each party has a full opportunity to advance their position, and to
respond to any new issues raised in my preliminary assessment of the
classification issue”.
[69]
Dr. Clapin goes on in his letter to refer to the meeting of the parties
that he had proposed in his August 23, 2006 letter, describing such a meeting
as “a final opportunity for the parties involved to define their positions on
the classification issue”. He explains that he was providing his preliminary
assessment of the issues to the parties “in order to focus the discussion” at such
a meeting.
[70]
Dr. Clapin then says that he would be prepared to dispense with a
meeting, if CPTI were of the view that it could properly provide its input in
writing, stating that he “would review any further material you wish to provide
before coming to a final decision on the classification issue”.
[71]
Thus Dr. Clapin’s letter makes it quite clear that his February 13, 2007
“Preliminary Regulatory Position” did not finally decide anything, and that he
remained open to receiving and considering any further submissions that CPTI
wished to make.
[72]
A review of the “Preliminary Regulatory Position” document leads to a
similar conclusion. Indeed, the title of the document itself indicates that it
was intended as a preliminary assessment of the issues, rather than any kind of
final decision.
[73]
Such a view is borne out by a review of the very first paragraph of the
document, which describes its purpose as being to “present a preliminary
regulatory position for the resolution of the issue involving the product
Vancopak, manufactured by [CPTI]”.
[74]
Paragraph 1.3 of the “Preliminary Regulatory Position” goes on to state
that “CPTI will be given the opportunity to comment and provide any evidence
which they feel may invalidate an aspect of this preliminary regulatory
position”, noting that “Health Canada will amend this document, if needed,
prior to issuing a final decision, if it can be demonstrated by CPTI that an
aspect of the decision is factually in error in a way that invalidates the
analysis”.
[75]
After a lengthy discussion of the parties’ respective positions, Dr.
Clapin then sets out his own “Preliminary Regulatory Position”. He commences
his analysis by stating at paragraph 5.2 that:
The following
paragraphs describe a general principle, and two associated criteria, which could
be used to determine whether or not Vancopak is a ‘drug in dosage form’ for
the purposes of regulation. These statements are a preliminary regulatory
position provided by a senior Health Canada official [D. Clapin] who has
not been involved with the decision reviewed by the Honourable Mr. Justice
Kelen [Docket: T-1603-05], but who has expertise with respect to the
compliance of health products under the Food and Drugs Act and
Regulations. These statements should not be taken to be a final regulatory
ruling by Health Canada, until such time as the manufacturer, CPTI, and other
authorities in Health Canada, have been given an opportunity to rebut the
principle and criteria described below. [emphasis added]
[76]
Thus Dr. Clapin indicates that he has identified a general principle and
two associated criteria that could be used to determine whether or not
Vancopak is a “drug in dosage form”. He does not suggest that this principle
and these criteria would necessarily be used in answering the question
before him.
[77]
CPTI has taken particular issue with Dr. Clapin’s statement in paragraph
1.3 of the “Preliminary Regulatory Position” that “Health Canada will amend
this document, if needed, prior to issuing a final decision, if it can be
demonstrated by CPTI that an aspect of the decision is factually in error in a
way that invalidates the analysis”. According to CPTI, this statement
demonstrates that Dr. Clapin fettered his own discretion by indicating that he
would only amend the February 13, 2007 ‘decision’ if CPTI could show that he
had made a factual error in his analysis.
[78]
However, when one reviews the portion of paragraph 5.2 of Dr. Clapin’s
“Preliminary Regulatory Position” cited above, it becomes clear that Dr. Clapin
was in fact open to receiving submissions from CPTI, not just in relation to
the accuracy of the factual underpinnings of his decision, but also in relation
to the principles and criteria to be applied by him in determining whether
Vancopak was in fact a “drug in dosage form”.
[79]
Dr. Clapin then proceeds to discuss the principle and criteria which he
suggests could be used to determine whether or not Vancopak is a “drug in dosage
form” for the purposes of the regulations. In the course of this discussion he
flags what he describes as a “key concern” with the position of CPTI, namely
that pharmacists would not know if an error had been made in the manufacture of
Vancopak before providing the substance to their clients.
[80]
Dr. Clapin concludes his analysis by stating that “my initial view
is that the product Vancopak has intrinsic physical characteristics that
indicate that it is a ‘drug in dosage form’ and further it is sold to
pharmacists in a form which is “ready for use by the consumer” [emphasis
added].
[81]
In light of the clear wording of Dr. Clapin’s “Preliminary Regulatory
Position”, I cannot accept CPTI’s submission that Dr. Clapin’s mind was
effectively made up on the classification issue by February 13, 2007, nor do I
think that it can reasonably be inferred that Dr. Clapin approached the task of
arriving at a final decision in this regard with a closed mind.
[82]
This view is further confirmed by a review of Dr. Clapin’s February 27,
2008 final regulatory decision, which discloses that CPTI’s subsequent
submissions were indeed carefully considered by Dr. Clapin. Indeed, paragraph
1.3 of the decision notes that the rationale provided in the “Preliminary
Regulatory Position” for concluding that Vancopak was a “drug in dosage form”
had been amended after giving “careful, substantive consideration” to CPTI’s
subsequent submissions.
[83]
Moreover, although Dr. Clapin’s conclusion that Vancopak was indeed a
“drug in dosage form” remained unchanged, there are several references to
CPTI’s intervening submissions in his final decision, and changes were made to
the analysis in order to take these submissions into account.
[84]
By way of example, a chart illustrating the steps to be taken in the
manufacturing and dispensing of Vancopak was modified after the release of the
“Preliminary Regulatory Position” in order to reflect CPTI’s subsequent input
(see paragraph 6.3 and Figure 1of Dr. Clapin’s final decision versus Figure 1
of the “Preliminary Regulatory Position”).
[85]
In addition, the text in the final decision has been substantially
re-worked in comparison to that appearing in the earlier document, and there are
differences in the analysis between Dr. Clapin’s “Preliminary Regulatory
Position” and that appearing in his final decision.
[86]
As a consequence, I am not persuaded that the circumstances leading up
to the release of Dr. Clapin’s February 27, 2008 decision regarding the
regulatory status of Vancopak, including the release of his “Preliminary
Regulatory Position”, supports the conclusion that Dr. Clapin had prejudged the
issue, or that he fettered his ability to evaluate CPTI’s subsequent
submissions with an open mind. I am therefore not satisfied that CPTI was
denied procedural fairness in the redetermination process.
Has Health Canada Discriminated Against
CPTI?
[87]
CPTI alleges that Health Canada is discriminating against it, because other
companies in Canada are selling vancomycin hydrochloride products to
pharmacists without being required by Health Canada to obtain a DIN. According
to the company, it is only its Vancopak product that is being subjected to regulatory
scrutiny, with the result that CPTI has been treated in a manner inconsistent
with the Act and the Regulations in respect of a legal issue over which
Health Canada exercises no discretionary power.
[88]
Citing the decision of this Court in Carpenter Fishing Corp. v.
Canada, [1997] 1 F.C. 874 (T.D.), and that of the High Court of Justice in
Ontario in Apotex Inc. v. Attorney General for Ontario et al. (1984), 47
O.R. (2d) 176 at p. 183, CPTI says that this amounts to unlawful discrimination
on the part of Health Canada.
[89]
The discrimination issue was argued before Justice Kelen, who noted that
there had been an inquiry or complaint made against CPTI, and that it was for
this reason that Health Canada had investigated CPTI and had arrived at the
decision that was in issue before him: see CPTI #1, at para. 29.
[90]
According to Justice Kelen, the fact that Health Canada had investigated
an inquiry or complaint in relation to CPTI’s Vancopak product did not mean
that CPTI had been the victim of discrimination: see CPTI #1, at para.
29.
[91]
CPTI has acknowledged that no additional evidence with respect to the
discrimination issue was put before Dr. Clapin in the context of the
redetermination process, and that the record in relation to this issue is
identical to the one that was before Justice Kelen.
[92]
This issue has already been decided against CPTI. Justice Kelen’s
decision was not appealed, and as such is final. Given that the question
before me involves the same issue and the same parties, CPTI is arguably
precluded from relitigating the discrimination issue by operation of the
doctrine of issue estoppel: see Danyluk v. Ainsworth Technologies Inc.,
2001 SCC 44, at para. 25.
[93]
However, in light of the fact that this argument was not advanced by
Health Canada, I do not intend to dispose of the discrimination issue on this
basis.
[94]
In relation to CPTI’s discrimination argument, Dr. Clapin indicated that
Health Canada had provided its rationale for concluding that Vancopak was a
“drug in dosage form”, and that if there are other products on the market that
are similar to Vancopak, which are not compliant with the Food and Drug
Regulations, Health Canada will engage in appropriate compliance and
enforcement activities, as warranted.
[95]
The evidence relied upon by CPTI to support its discrimination argument
is extremely weak. CPTI has provided information from the catalogues of
competitors who also sell 5g packages of vancomycin hydrochloride. There is
little evidence before the Court as to the regulatory status of the competitor
companies, and no indication as to whether or not Health Canada is also seeking
to regulate these products. Indeed, there is no evidence before the Court that
CPTI actually stands on the same regulatory footing as these other companies.
[96]
In contrast, in the Apotex decision cited by CPTI, there was
clear evidence before the Court in that case that another company had been
treated differently by Health Canada, as a deadline had been strictly enforced
for one company, and not for another.
[97]
Furthermore, the Carpenter decision observes that in order for
there to be wrongful discrimination in a regulatory process, the conduct in
question must be intended to favour or hurt one individual, without regard to
the public interest: see Carpenter at para. 28, rev’d on other grounds
by [1998] 2 F.C. 548.
[98]
No such motivation on the part of Health Canada has been demonstrated in
this case, and it appears that Health Canada’s concern has been the safety of
drugs consumed by the Canadian public, which is clearly of public interest.
[99]
Finally, in the context of proceedings under the Patented Medicines
(Notice of Compliance) Regulations, S.O.R./93-133, this Court has held in Reddy-Cheminor
Inc. v. Canada (Attorney General), 2003 FCT 542 and Pharmascience Inc.
v. Canada (Attorney General), 2007 FC 1323, that while consistency in the
regulatory process is an admirable objective, it cannot be paramount over the
proper consideration of individual circumstances: see Reddy-Cheminor at
para. 35, and Pharmascience at para. 45.
[100] In
these circumstances, I am satisfied that Dr. Clapin was correct in finding that
there had been no discriminatory treatment of CPTI by Health Canada.
Did Dr. Clapin Err in Determining that Vancopak is a “Drug
in Dosage Form”?
[101] Subsection
2(a) of the Food and Drugs Act defines the term “drug” as including “any
substance or mixture of substances manufactured, sold or represented for use in
… the diagnosis, treatment, mitigation or prevention of a disease, disorder or
abnormal physical state, or its symptoms, in human beings or animals”.
[102] CPTI
argues that its Vancopak product is not a “drug” within the meaning of the
Regulations, but is instead an “active pharmaceutical ingredient”. CPTI says
that Dr. Clapin erred in failing to distinguish between an “active
pharmaceutical ingredient”, such as Vancopak, which is sold to pharmacists for
use as a raw chemical in compounding drugs, and “ready to use” substances sold
as “drugs” directly for use by patients.
[103] According
to CPTI, Parliament must be deemed to have been aware of the existence of APIs
such as Vancopak, as well as their use by pharmacists. If Parliament had
intended APIs to have been covered by the Regulations, CPTI says that it would
have used language that included them. To interpret the term “drug” to include
raw chemicals such as APIs would, in CPTI’s submission, be to ignore
Parliament’s clear intent.
[104] I
do not accept CPTI’s submissions in this regard. The statutory definition of
“drug” is very broad, encompassing as it does any “substance” that is “manufactured,
sold or represented for use in … the diagnosis, treatment, mitigation or
prevention of a disease, disorder or abnormal physical state, or its symptoms,
in human beings or animals”.
[105] Vancomycin
hydrochloride is unquestionably a “substance”. Moreover, CPTI’s Vancopak
product is “manufactured, sold or represented for use in … the diagnosis,
treatment, mitigation or prevention of a disease, disorder or abnormal physical
state, or its symptoms, in human beings”. As such, it is clear from a plain
reading of the statute, that Dr. Clapin was correct in finding that Vancopak is
a “drug” within the meaning of the Food and Drugs Act.
[106] Whether
Vancopak is a “new drug” subject to the Food and Drug Regulations
requiring a DIN in order to be sold in Canada depends on whether it is a “drug
in dosage form”. If Vancopak is not a “drug in dosage form”, but is rather a
drug to be compounded by a pharmacist pursuant to a prescription, it is not
subject to the Food and Drug Regulations, but is instead subject to
provincial legislation governing pharmacists: see CPTI #1, at para. 26.
[107] Indeed,
as Justice Kelen noted in his decision, Parliament has not yet legislated with
respect to the oversight of active pharmaceutical ingredients used in
compounding see CPTI #1, at para. 27. While he was of the view that
there was an urgent need for Canada to regulate drugs sold as active
pharmaceutical ingredients, Justice Kelen did not make any determination as to
whether Vancopak was in fact a “drug in dosage form”.
[108] The
question, then, is whether Dr. Clapin’s finding that Vancopak is a “drug in
dosage form” for the purposes of the Food and Drug Regulations is one
that was reasonably open to him on the record before him.
[109] Section C.01.005.(3) of the Regulations defines a “drug
in dosage form” as being “a drug in a form in which it is ready for use by the
consumer without requiring any further manufacturing” or “… une
drogue prête pour la consommation sans autre transformation”.
[110]
Dr. Clapin erred, CPTI says, in concluding that
Vancopak is sold “in a form in which it is ready for use by the consumer
without requiring any further manufacturing”, given that neither CPTI nor pharmacists ever sell Vancopak to consumers in its
powder form.
[111] CPTI
argues that the addition of sweeteners, stabilizers, and other excipients to
the pre-measured vancomycin hydrochloride powder sold as Vancopak amounts to a
further manufacturing step, transforming a raw chemical into a drug suitable
for use. According to CPTI, in concluding that Vancopak was a “drug in dosage
form”, Dr. Clapin erred by focussing his analysis on the agent carrying out the
transformative activity, rather than the nature of the process itself.
[112] Thus,
the essential question is whether the steps taken by pharmacists before CPTI’s
Vancopak product is provided to patients amount to further “manufacturing” or “transformation”
of the product. In concluding that Vancopak was a “drug in dosage form”, Dr.
Clapin had regard to the nature of the Vancopak product, the actions of CPTI in
manufacturing Vancopak, and what it is that pharmacists do with the product
before it is dispensed to patients.
[113] CPTI
has conceded that its vancomycin hydrochloride powder could theoretically be at
least partially dissolved in sterile water, and consumed by patients in that
form. Dr. Clapin notes that reconstitution in water is not an activity that is
reserved to either drug manufacturers or pharmacists. Some non-prescription
drugs are sold in pre-packaged powder form, and are reconstituted after
purchase by consumers themselves. Dr. Clapin observes that these products are
clearly “drugs in dosage form”.
[114] However,
CPTI says that the reconstitution of Vancopak in water alone would not happen
in practice, as the resulting solution would not be palatable. In order to
make the solution palatable, ingredients such as sugars and flavouring would
have to be added by a pharmacist. Other ingredients could also be added to
assist in stabilizing the solution and inhibiting bacterial or fungal growth.
[115] In
answer to a question from the Court, counsel for CPTI acknowledged that the
steps carried out by a pharmacist prior to dispensing a reconstituted Vancopak
solution would not make the resulting vancomycin hydrochloride solution any
more effective in curing infections. However, CPTI says that these
intermediate steps would assist in ensuring that the product could in fact be
administered to patients.
[116] Noting
that neither “manufacturing” nor “compounding” were defined terms in either the
Food and Drug Act or in the Regulations, Dr. Clapin observed that some
steps involving drugs, such as packaging, could be considered to be either
“manufacturing” or “compounding”, depending on who was carrying out the
activity.
[117] As
a consequence, Dr. Clapin was of the view that while “it is the nature of the
intervention by the pharmacists that provides a means of distinguishing between
…compounding…and… manufacturing” (February 27, 2008 decision at paragraph 8.3),
one could not look only at the nature of the activity in order to determine
whether the activity in question was “manufacturing” or “compounding”.
Consideration also had to be given to the identity of the person carrying out
the activity.
[118] Dr.
Clapin then carefully examined the steps followed by CPTI in manufacturing its
Vancopak product, and by pharmacists in dispensing the drug. Insofar as the
steps taken by CPTI were concerned, Dr. Clapin observed that it is CPTI that
measures the vancomycin hydrochloride powder, repackaging it in containers
suitable for the reconstitution of the pre-measured amount. The amount of
vancomycin hydrochloride and the size of the containers sold by CPTI correspond
to the needs of pharmacists, physicians and patients for many prescription
situations.
[119] Dr.
Clapin observed that this activity determines the amount of drug substance
anticipated to be dispensed to individual patients. According to Dr. Clapin,
it was this activity by CPTI that changed the status of the vancomycin
hydrochloride “from being a raw input ‘active medicinal ingredient’ into a
‘drug in dosage form’”, ready for use as a starting material for compounding by
pharmacists, and ready for use by patients without any further manufacturing
steps by either pharmacists or consumers: February 27, 2008 decision at
paragraph 6.6.
[120] In
Dr. Clapin’s view, the fact that pharmacists must follow directions for use
supplied by the manufacturer does not mean that Vancopak is not a “drug in
dosage form” at the time that it is sold to pharmacists. Even though the
product does not yield a single dose solution, it was clear to Dr. Clapin that
the product was sold in a format that specifically permitted a specific,
pre-measured, pre-packaged quantity to be dispensed for a course of treatment.
[121] Dr.
Clapin identified the degree of control exercised by manufacturers and
pharmacists respectively over the dosage of the drug substance ultimately
administered to the patient as key to his analysis. In his view, if, through
the design of the product, a manufacturer exercises a significant degree of
control over the final quantity of the drug administered to the patient according
to a prescription, then the product will be a “drug in dosage form”: February
27, 2008 decision at paragraphs 9.2 and 9.3.
[122] In
this case, a unit of Vancopak contains a pre-measured amount of drug substance
which corresponds to a standard dosage of the vancomycin hydrochloride normally
administered to the patient. As such, it is CPTI’s actions that determine the
amount of drug substance received by the patient. The intervening actions of
pharmacists in adding excipients or diluents to the drug do not change the fact
that the total, delivered dosage from the unit of product has been determined
by the manufacturer: February 27, 2008 decision at paragraphs 9.4 to 9.7.
[123] Dr.
Clapin also observed that if an error were made in the manufacture of Vancopak,
pharmacists would not be aware of the fact due to the nature of the product,
with the result that consumers could be at risk of injury: February 27, 2008
decision at paragraph 9.8. It is true that pharmacists would be entitled to
rely on the drug’s United States Pharmacopoeia (or “USP”) certification with
respect to the drug’s quality and purity, but this certification would not
provide any assurance to pharmacists with respect to other aspects of the
product’s safety, such as the accuracy of the weighing of the vancomycin
hydrochloride powder by CPTI.
[124] As
a consequence, Dr. Clapin concluded that Vancopak “has intrinsic physical
characteristics that indicate that it is a ‘drug in dosage form’”: February 27,
2008 decision at paragraph 9.9.
[125] Dr.
Clapin also observed that no other regulatory framework provides an equivalent
level of protection to that provided by the Food and Drugs Act and
Regulations in relation to the manufacture of products that are “drugs in
dosage form”.
[126] CPTI
argues that Dr. Clapin effectively “stood the drug regulatory regime on its
head”, by concluding that Vancopak had to be a “drug in dosage form”, as it
would otherwise not be regulated. CPTI points out that Justice Kelen has
already noted that there is in fact a gap in the regulatory scheme.
[127]
I do not think that a fair reading of Dr. Clapin’s decision
supports such a conclusion. Dr. Clapin interpreted the Regulations in a
purposive manner, in order to give effect to the object of the regulatory
regime as described in Bristol-Myers Squibb Co. v.
Canada (Attorney General) (2002),
22 C.P.R. (4th) 345 (F.C.T.D.), namely to “protect public health by
assuring a certain level of safety and efficacy for drugs”: at para. 24. While
the Court’s comments in Bristol-Myers Squibb relate to the PM(NOC)
Regulations, the Food and Drugs Act and Regulations fulfill a
comparable purpose.
[128] CPTI
argues that the regulatory definition of a “drug in dosage form” precludes the
intervention of a third party prior to the product being distributed to
patients. In fact, the Regulations preclude further manufacturing by a
third party, but do not necessarily preclude lesser forms of
intervention.
[129] Dr.
Clapin considered the nature of the intervention by pharmacists in adding
sterile water, sweeteners and stabilizers to the Vancopak powder to amount to
very simple steps, which do not materially alter the fact that the total dosage
of vancomycin hydrochloride from a unit of Vancopak has been determined by CPTI
through its manufacturing process. This conclusion involves fact-finding on
the part of Dr. Clapin, and a level of familiarity with the drug formulation,
pharmaceutical manufacturing and compounding processes which the Court does not
share, and as such should be accorded considerable deference.
[130] CPTI
has not demonstrated that this conclusion was one that was not reasonably open
to Dr. Clapin on the evidence before him.
[131] Moreover,
no additional medicinal ingredients are being added to the Vancopak powder by
pharmacists, and there is no suggestion that anything done to the Vancopak
powder by pharmacists affects the therapeutic effect of the drug.
[132] The
English version of the Regulations specifies that in order to be a “drug in
dosage form”, the drug in question must be ready for use by the consumer, and
must not require any further “manufacturing”. In contrast, the French version
of the Regulations requires that the drug not require a further
“transformation”. CPTI argues that “transformation” has a broader meaning than
“manufacturing”, and more aptly captures the common meaning of the term.
[133] There
are two difficulties with this argument.
[134]
Firstly, under the “shared meaning” rule of statutory
interpretation, where the English and French versions of legislation do not say
the same thing, a meaning that is common to both ought to be adopted: see Ruth Sullivan, Sullivan on the Construction of Statutes,
5th ed. (Markham: LexisNexis, 2008) at p. 100.
That is, an interpretation reconciling the two
versions is to be favoured, because it is assumed that this better reflects the
work of a rational legislature: see Pierre-André Côté, The Interpretation of
Legislation in Canada, 3rd ed., (Scarborough: Carswell Thomson Professional
Publishing, 2000), at pp. 323-324 & 349.
[135] Thus,
to the extent that “transformation” has a broader meaning than “manufacturing”,
it is the narrower, shared meaning of the term that is to be preferred.
[136] The
second difficulty with CPTI’s argument flows from its contention that the mere addition
of water to a powder, “transforming” the substance from a powder to a solution,
amounts to a further manufacturing step. If this were so, then pre-packaged,
over-the-counter medications such as Bromo-Seltzer would not be considered to
be “drugs in dosage form”, as the consumer has to add water to the
Bromo-Seltzer powder before consuming the product. CPTI has, however, conceded
that products such as Bromo-Seltzer are indeed “drugs in dosage form”.
[137]
For these reasons, I am satisfied that Dr. Clapin’s conclusion
that CPTI’s Vancopak product was a “drug in dosage form”, requiring a DIN
before it could be sold in Canada falls within a range of
possible acceptable outcomes which are defensible in light of the facts and the
law.
Conclusion
[138]
For the foregoing reasons, both of CPTI’s
applications for judicial review are dismissed, with costs.
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