Dockets:
A-192-12
Citation: 2014 FCA 69
CORAM:
SHARLOW J.A.
DAWSON J.A.
MAINVILLE J.A.
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BETWEEN:
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SANOFI-AVENTIS CANADA INC.,
and SANOFI-AVENTIS DEUTSCHLAND GmbH
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Appellants
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and
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TEVA CANADA LIMITED
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Respondent
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REASONS
FOR JUDGMENT
MAINVILLE J.A.
[1]
These reasons concern an appeal brought by Sanofi-Aventis Canada Inc. and
Sanofi-Aventis Deutschland GmbH (“Sanofi”) from a judgment of Snider J. of the
Federal Court (“Trial Judge”) dated May 11, 2012 and issued for reasons whose
neutral citation is 2012 FC 551 and publicly released on May 23, 2012 (the
“Validity Judgment”) which dismissed Sanofis’s submissions with respect to the
validity, applicability or operability of section 8 of the Patented
Medicines (Notice of Compliance) Regulations, SOR/93-133 (“NOC
Regulations”).
[2]
The Trial Judge issued another judgment concurrently with the Validity
Judgment, the reasons for which are cited as 2012 FC 552 (the “Teva
Liability Judgment (FC)”). That judgment ordered Sanofi to compensate Teva
pursuant to section 8 of the NOC Regulations for its net lost profits with
respect to capsules of Teva-ramipril during the period commencing December 13,
2005 and ending April 27, 2007.
[3]
In similar proceedings involving Sanofi and Apotex Inc. (“Apotex”) the
Trial Judge also issued on the same day a judgment, the reasons for which are
cited as 2012 FC 553 (the “Apotex Liability Judgment (FC)”), which also
ordered Sanofi to compensate Apotex pursuant to section 8 of the NOC
Regulations for its net lost profits in respect to capsules of Apo-ramipril
during the period commencing April 26, 2004 and ending December 12, 2006.
[4]
The Teva Liability Judgment (FC) and the Apotex Liability
Judgment (FC) have been appealed to our Court. These appeals have resulted
in judgments issued concurrently with these reasons and cited as 2014 FCA 67
(the “Teva Liabily Judgment (FCA)”) and 2014 FCA 68 (the “Apotex
Liability Judgment (FCA)”).
General Background
[5]
For the purposes of this appeal, it is sufficient to note that Teva and
Apotex sell generic versions of ramipril in Canada. Ramipril is a drug mainly used
to treat hypertension but also has other medical uses. Sanofi asserts patent
rights to this drug and to some of its uses. It has for many years held a
patent monopoly over this drug which it sold in Canada under the brand name
ALTACE.
[6]
To market a drug in Canada, a regulatory approval known as a notice of
compliance (“NOC”) must first be obtained under the terms of the Food and
Drug Regulations, C.R.C., c. 870. Teva and Apotex could have received their
NOCs earlier from the Minister of Health to market their generic versions of
ramipril in Canada. However, they were delayed as a result of Sanofi applying
for various orders under subsection 6(1) of the NOC Regulations, thus prohibiting
the Minister from issuing the NOCs on the ground of its alleged patent rights.
[7]
By virtue of section 8 of the NOC Regulations, the dismissal of Sanofi’s
applications under subsection 6(1) gave Teva and Apotex the right to assert claims
against Sanofi for losses suffered for the delay as determined in accordance
with the NOC Regulations. Teva and Apotex both took the view that they
were entitled to such compensation and, after long trials, the Trial Judge
agreed. Except with respect to some issues, our Court has largely confirmed the
Trial Judge’s decisions ordering Sanofi to compensate both Teva and Apotex.
[8]
In the proceedings before the Federal Court involving both Teva and
Apotex, Sanofi challenged the validity of section 8 of the NOC Regulations.
The validity issues were essentially identical to those raised in another Federal
Court case (Apotex Inc. v. AstraZeneca Canada Inc. Federal Court file
T-2300-05), heard by Hughes J. With the agreement of all parties involved, the
validity issues were argued simultaneously before both the Trial Judge and Hughes
J., leading to the Validity Judgment by the Trial Judge and to a separate
judgment by Hughes J. in which the validity issues were dealt with.
[9]
Hughes J. rendered his decision in Apotex Inc. v. AstraZeneca Canada
Inc., 2012 FC 559, 410 F.T.R. 168 rejecting all challenges to the validity
of the NOC Regulations. He relied notably on Merck Frosst Canada Ltd.
v. Apotex Inc., 2009 FCA 187, 76 C.P.R. (4th) 1 (“Alendronate”).
The judgment of Hughes J. was appealed on a number of grounds, but not on the
question of the validity of the NOC Regulations. The appeal was
dismissed on March 11, 2013 (2013 FCA 77).
Reasons of the Trial Judge
[10]
In light of the limited issue raised by Sanofi in this appeal, it is not
necessary to summarize in any great detail the reasons of the Trial Judge. It suffices
to note that the validity issues raised by Sanofi were a moving target in the
Federal Court, with claims of constitutional invalidity being raised and later
abandoned, and numerous other claims being either abandoned, modified or unsuccessfully
pursued by this litigant.
[11]
The Trial Judge found that she need not address Sanofi’s submissions
involving the validity issues with respect to (a) the start and end dates of
the liability period under section 8 of the NOC Regulations (Reasons at
paras. 32, 33 and 41), (b) competition and causation (Reasons at paras. 44 and 45),
and (c) patent infringement (Reasons at para. 49).
[12]
With respect to Sanofi’s claims concerning the inconsistency of section
8 of the NOC Regulations with the Agreement on Trade-Related Aspects
of Intellectual Property Rights and the North American Free Trade
Agreement, the Trial Judge essentially relied on paragraphs 102 to 119 of the
reasons of Hughes J. in Apotex Inc. v. AstraZeneca Canada Inc., cited
above: Trial Judge’s Reasons at paras. 53 to 55.
[13]
Finally, with respect to Sanofi’s claims concerning the invalidity of
the recovery of compensation under section 8 of the NOC Regulations for
so-called “unapproved” indications, the Trial Judge found that Sanofi’s
submissions were not supported by a proper factual record: Trial Judge’s
Reasons at para. 47.
The Issue in Appeal
[14]
Sanofi appeals to this Court solely on the question of whether section 8
of the NOC Regulations can validly allow compensation to be paid to a
generic drug manufacturer for lost sales attributable to so-called “unapproved”
indications, such as the HOPE indications referred to below.
Analysis
[15]
Ramipril is a drug that is mainly used to treat hypertension, but whose
medical use has expanded over the years to include heart related health issues
following a “Heart Outcomes Prevention Evaluation” (“HOPE”) study published in
the year 2000 which found that “[t]reatment with ramipril reduced the rates of
death, myocardial infarction, stroke, coronary revascularization, cardiac arrest,
and heart failure as well as the risk of complications related to diabetes and
of diabetes itself”: HOPE study at p. 150 as cited in the Teva Liability
Judgment (FC) at para. 307 and in the Apotex Liability Judgment (FC)
at para. 277. The term “HOPE indications” has come to be associated with the
patient profiles from the HOPE study where vascular protection was
demonstrated: Ibid.
[16]
The initial Canadian patent for ramipril was Patent No. 1,187,087 issued
May 14, 1985 and which expired May 14, 2002, after 17 years of patent monopoly
as the Patent Act, R.S.C. 1985, c. P-4 then provided. With the pending
expiration of this initial patent, many generic drug manufacturers, including
Teva and Apotex, became interested in marketing their own generic versions of
ramipril. The Trial Judge found that “Sanofi, in efforts to extend patent
protection for ramipril, proceeded to obtain a further series of patents and
protect those patents through listing on the Patent Register”: Teva
Liability Judgment (FC) at para. 30 and Apotex Liability Judgment (FC)
at para. 26. Sanofi described these efforts as “Altace Lifecycle Management”,
while the generic manufacturers referred to these efforts as “evergreening”: Ibid.
A considerable amount of litigation under the NOC Regulations ensued
with respect to these subsequent patents.
[17]
Two of these patents are of particular relevance for the purposes of
this appeal: Canadian Patent number 2,382,549 (the ‘549 Patent) issued March
15, 2005 concerning the use of ramipril in the prevention of cardiovascular
events, and Canadian Patent number 2,382,387 (the ‘387 Patent) concerning the
use of ramipril in the prevention of stroke, diabetes and congestive heart
failure. The ‘549 Patent and the ‘387 Patent are referred to as the HOPE
patents, and both these patents were registered by Sanofi on the patent list
maintained under the NOC Regulations with respect to ramipril.
[18]
The Trial Judge found that, in the hypothetical markets she constructed
to determine the compensation owed respectively to Teva and Apotex under
section 8 of the NOC Regulations, both Teva and Apotex would not have
included in their product monographs for their respective generic versions of
ramipril reference to anything other than hypertension, but that nevertheless,
some sales of those generic drugs would have related to HOPE indications: Teva
Liability Judgment (FC) at paras. 302 and 310 and Apotex Liability
Judgment (FC) at paras. 280 and 281.
[19]
The Trial Judge refused to discard these sales from the calculation of Teva’s
and Apotex’s section 8 compensation on the grounds that (a) generic products
are not promoted for specific uses, but rather sold as drug products; (b)
off-label prescribing and substitution commonly take place and there appears to
be nothing illegal about this practice; (c) in the real market, Sanofi has not
opposed the listing of Teva’s or Apotex’s generic version of ramipril as fully
interchangeable with its own product ALTACE; and (d) the fact that Sanofi could
have commenced an action for patent infringement with respect to the HOPE
patents but had not done so: Teva Liability Judgment (FC) at para. 312
and Apotex Liability Judgment (FC) at para. 283.
[20]
The Trial Judge concluded that in each of the hypothetical markets, Teva
and Apotex would have been able to make sales for HOPE indications during the
relevant periods without any serious objection from Sanofi, and that
consequently Teva’s and Apotex’s losses with respect to such sales should be taken
into account in determining the compensation owed to them under section 8 of
the NOC Regulations: Teva Liability Judgment (FC) at paras. 319
to 322 and Apotex Liability Judgment (FC) at paras. 292 and 293.
[21]
The Trial Judge however added that a generic drug manufacturer may not always
recover monetary compensation for unapproved indications, noting that another
section 8 claim could provide a clear defence in the
pleadings and a different set of facts that would warrant, pursuant to
subsection 8(5) of the NOC Regulations, a different finding or a
downward adjustment to the generic drug manufacturer’s compensation: Teva
Liability Judgment (FC) at para. 322 and Apotex Liability Judgment (FC)
at para. 295.
[22]
These conclusions were confirmed by this Court in both the Teva
Liability Judgment (FCA) and the Apotex Liability Judgment (FCA),
principally because, in the real market, Sanofi had taken no measure to enforce
its HOPE patents. Consequently, if Sanofi is not enforcing its HOPE patents in
the real market, and is allowing the sale of generic versions of ramipril for
HOPE indications without any serious opposition, there is no reason to find
that the situation would be different in the hypothetical markets involving
Teva and Sanofi.
[23]
Sanofi nevertheless submits that, as a matter of jurisdiction, section 8
of the NOC Regulations cannot allow compensation to be paid to generic
drug manufacturers with respect to sales for unauthorized indications such as
the HOPE indications. It refers to no authority to support its submission. Sanofi
essentially argues that since section 6 of the NOC Regulations only gives
an innovator drug manufacturer the right to apply for a prohibition order with
respect to a listed patent where that patent is worked on by the generic drug
manufacturer for the purposes of securing its NOC, the generic drug
manufacturer’s right to compensation under section 8 of the Regulations should
therefore be limited to the lost sales arising from the uses identified in the
patent which the generic drug manufacturer must deal with under the
Regulations: Sanofi’s Memorandum at para. 30.
[24]
With respect, Sanofi’s submission is a misguided attempt to transform a
factual issue into a question of jurisdiction. Moreover, its position is
completely at odds with the decision of this Court in Alendronate which
confirmed the validity of the NOC Regulations.
[25]
It is important to place Sanofi’s submissions in context. Sanofi listed
the HOPE patents on the patent list maintained with respect to ramipril under
section 4 of the NOC Regulations with the clear objective of forcing generic
drug manufacturers, such as Teva and Apotex, to deal as “second persons” with
those patents under the machinery of those Regulations. Moreover, Sanofi
availed itself of subsection 6(1) of the NOC Regulations to initiate
prohibition proceedings involving both Teva and Apotex with respect to the HOPE
patents, thus obtaining the benefit of the statutory stay provided under those
Regulations.
[26]
The purpose of section 8 of the NOC Regulations is precisely to
ensure that when an innovator drug manufacturer reaps the benefits of those
Regulations by initiating unfounded prohibition proceedings, the generic drug
manufacturer can then seek appropriate compensation for having been impeded
from entering the market earlier as a result of those proceedings.
[27]
As found by the Trial Judge, compensation under section 8 of the NOC
Regulations for sales related to unauthorized indications may be precluded
if the facts so justify. However, in the case of Sanofi, the facts did not
justify such preclusion for the reasons set out by the Trial Judge in the Teva
Liability Judgment (FC) and in the Apotex Liability Judgment (FC) and
referred to above.
[28]
In the case of both Teva and Sanofi, the Trial Judge simply determined
as a matter of fact that “any loss suffered during the period” as
referred to in subsection 8(1) of the NOC Regulations (emphasis added),
included the sales related to the HOPE indications. She reached that conclusion
by “taking into account all matters that [the court] considers relevant
to the assessment of the amount” of compensation, as she was entitled to do
under subsection. 8(5) of the NOC Regulations (emphasis added).
[29]
In Alendronate, this Court found the NOC Regulations to be
valid, including its subsections 8(1) and 8(5) on which the Trial Judge relied
to reach her conclusions. In my view, Alendronate is a complete answer
to Sanofi’s validity submissions, once these submissions are placed in their
proper context.
Conclusion
[30]
I would therefore dismiss this appeal, with costs in favour of Teva.
"Robert M. Mainville"
“I agree.
Karen Sharlow J.A.”
“I agree.
Eleanor R. Dawson J.A.”
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