Apotex Inc. v. Canada (Minister of Health), 2004 FC 43

Date: 20040114

Docket: T-78-03

Citation: 2004 FC 43

Ottawa, Ontario, this 14^th day of January, 2004

Present:           The Honourable Mr. Justice Russell                          

BETWEEN:

                                                                       APOTEX INC.

                                                                                                                                                       Applicant

                                                                                 and

                                                            MINISTER OF HEALTH

                Respondent

                                               REASONS FOR ORDER AND ORDER

[1]                 This is a motion to set aside in part the order of Madam Prothonotary Aronovitch dated September 24, 2003, that dismissed Merck Frosst's motion under Rule 104(1)(b) of the Federal Court Rules 1998 for leave to be added as a party respondent or, in the alternative, leave to intervene in the within application.

BACKGROUND

A.         Application in Court File no. T-2280-00

[2]                 On or about August 29, 1990, Merck Frosst received a Notice of Compliance ("NOC") from the Minister of Health ("Minister") for its simvastatin tablets.

[3]                 Pursuant to s. 4(1) of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, as amended ("NOC Regulations"), Merck Frosst, as a "first person" and with the consent of the patentee, Merck & Co., Inc., filed a Form IV listing Canadian Patent No. 1,199,322 ("322 Patent") for inclusion on the Patent Register maintained by the Minister in respect of the drug, simvastatin. The '322 Patent includes claims for the medicine simvastatin prepared by the methods and processes claimed therein.

[4]                 By letter dated October 23, 2000, Apotex Inc. ("Apotex") served upon Merck Frosst a Notice of Allegation pursuant to s. 5 of the NOC Regulations ("Apotex NOA"). The Apotex NOA stated that Apotex had filed with Health Canada an Abbreviated New Drug Submission ("ANDS") for Apo-simvastatin tablets containing the medicine simvastatin in strengths of 5 mg, 10 mg, 20 mg, 40 mg and 80 mg for oral administration.

[5]                 The Apotex NOA further alleged that Apo-simvastatin tablets would not infringe the claims of the '322 Patent as such tablets would be made pursuant to a non-infringing process.

[6]                 By Notice of Application dated December 7, 2000, and pursuant to s. 6(1) of the NOC Regulations, Merck Frosst commenced an application in Court File No. T-2280-00 seeking an order prohibiting the Minister from issuing a Notice of Compliance to Apotex for its Apo-simvastatin tablets until after the expiry of the '322 Patent.

[7]                 On November 18, 2002, Rouleau J. released Reasons for Order in which he dismissed Merck Frosst's application in Court File No. T-2280-00.

B.         Damages - Section 8 of the Regulations

[8]                 Section 8 of the NOC Regulations provides that a "first person" may be liable for "loss suffered" by a generic or "second person" as the result of the initiation of an application pursuant to s. 6(1) as follows:

"8. (1) If an application made under subsection 6(1) is withdrawn or discontinued by the first person or is dismissed by the court hearing the application or if an order preventing the Minister from issuing a notice of compliance, made pursuant to that subsection, is reversed on appeal, the first person is liable to the second person for any loss suffered during the period

(a) beginning on the date, as certified by the Minister, on which a notice of compliance would have been issued in the absence of these Regulations, unless the court is satisfied on the evidence that another date is more appropriate; and

(b) ending on the date of the withdrawal, the discontinuance, the dismissal or the reversal."

C.         The Within Application - Court File No. T-78-03

Chronology of Events Leading to Application

[9]                 On June 1, 2001, Apotex submitted an Abbreviated New Drug Submission (the "First Apotex ANDS") to the Minister seeking regulatory approval for its Apo-simvastatin tablets. The submission contained the results of a bio-equivalence study comparing Apo-simvastatin (and its metabolite) with the Merck Frosst simvastatin tablets marketed under the trade-mark, ZOCOR.

[10]            In response to the First Apotex ANDS, the Minister issued a Notice of Non-Compliance dated October 4, 2001 (the "NON") stating that the First Apotex ANDS did not comply with the requirements of s. C.08.002 of the Food and Drug Regulations as follows:

Based on the statistical analysis of the simvastatin date, the comparative bio-availability study conducted under fasted conditions does not meet the applicable assessment criteria for this type of drug product, as outlined above and in Guideline A ... Therefore it cannot be concluded that the test [Apo-simvastatin] and reference products [ZOCOR®] are bioequivalent.                                                         

[11]            From the time of the issuance of the NON on October 4, 2001, until early December 2002, Apotex wrote a number of letters to the Minister arguing that the NON had been issued in error and requesting that the Minister issue an NOC for Apo-simvastatin without delay.

[12]            During that period, Apotex and the Minister engaged in several forms of dispute resolution, including an exchange of correspondence, non-binding mediation, and "First and Second Level Appeals" as set out in a Therapeutics Products Directorate Policy entitled "Management of Drug Submissions" (the "Policy").

[13]            By correspondence dated November 22, 2002, the Minister confirmed that Apotex would provide further bio-equivalence data in a second ANDS to the Therapeutic Products Directorate and that the new data in this subsequent submission would be reviewed upon receipt (the "Second Apotex ANDS").

Notice of Compliance for Apo-simvastatin

[14]            On December 20, 2002, Apotex received a Notice of Compliance from the Minister for its Apo-simvastatin tablets in 5 mg, 10 mg, 20 mg, 40 mg and 80 mg formats for use as a lipid metabolism regulator. This NOC was issued on the basis of the subsequent data submitted in the Second Apotex ANDS.

Nature of the Application

[15]            On January 17, 2003, Apotex initiated the within application seeking, inter alia, to review the conduct of the Minister in processing the First Apotex ANDS for Apo-simvastatin. In particular, Apotex is seeking an order requiring the Minister to "reconsider the refusal to approve the Apo-Simvastatin submission," and, in the alternative, an order requiring the Minister to re-engage the First and Second Level appeals contemplated by the Policy.

[16]            Apotex seeks such orders despite the fact that the Minister issued an NOC for Apo-simvastatin on December 20, 2002.

D.         September 24, 2003 Order of Madam Prothonotary Aronovitch

[17]            By Order dated September 24, 2003, Madam Prothonotary Aronovitch dismissed Merck Frosst's motion seeking party / intervener status on the basis that third parties such as Merck Frosst are not "directly" affected by the review and approval of a generic drug submission or ANDS by the Minister.

[18]            In so holding, Prothonotary Aronovitch made the following findings:

Apotex does concede that the outcome of the proceeding may eventually lead to an approval date for Apotex' submission that may enable Apotex, at a later stage, to initiate a damages action against Merck pursuant to section 8 of the Notice of Compliance Regulations (the "NOC Regulations").

. . .

I am mindful that following the outcome of this proceeding, Merck may well at some point be adversely affected as suggested. Indeed Apotex' potential suit against Merck is specifically, directly and repeatedly invoked, by Apotex, in substantiating the prejudice caused to it by the Minister's issuance of a Notice of Non-compliance ("NON").

[19]            Merck Frosst submits that Prothonotary Aronovitch erred in finding that the interests of Merck Frosst were not "directly" affected by the relief sought by Apotex in the within application in light of the following:

a)          Apotex's sole purpose in seeking to review the Minister's issuance of a NON in response to the First Apotex ANDS is to secure an earlier date of approval for Apo-simvastatin; and

b)          The sole reason for securing an earlier date of approval for Apo-simvastatin is to allow Apotex to initiate a multi-million dollar lawsuit against Merck Frosst pursuant to section 8 of the Patented Medicines (Notice of Compliance) Regulations.

ANALYSIS

[20]            Merck Frosst says that Prothonotary Aronovitch erred in law when she concluded that Merck Frosst did not meet the criteria for intervener status.

[21]            While Prothonotary Aronovitch's decision was discretionary, Merck Frosst says it was based upon a wrong principle and was, thus, "clearly wrong" within the meaning of the well-known test established in Canada v. Aqua Gem Investments Limited, [1993] 2 F.C. 425 (F.C.A.).

[22]            Having decided that Merck Frosst met all of the criteria to intervene in the proceeding, Prothonotary Aronovitch still refused to allow Merck Frosst to do so because she concluded that innovative pharmaceutical companies in the ordinary course do not have any more standing or right to speak to the date of approval than they do to the merits or science of the submissions made to the Minister pursuant to the Food and Drug Regulations.

[23]            In deciding as she did, Merck Frosst says that Prothonotary Aronovitch confused the test for intervention with the test for granting party status.

[24]            The test for intervention is set out in Rule 109(2)(b) of the Federal Court Rules, 1998, and Merck Frosst says it requires the aspiring intervener to show that its participation "will assist in the determination of a factual or legal issue related to the proceeding."

[25]            Merck Frosst says that Apotex's application is not "in the ordinary course" because Apotex has already received an NOC for, and sells, Apo-simvastatin. Hence, Apotex's sole purpose in the proceeding with the Minister is to secure a basis to sue Merck Frosst under s. 8 of the Regulations. This is a "legal issue related to the proceedings" that will affect Merck Frosst's legal interests.

[26]            In order to distinguish itself from the line of cases in which this Court and the Federal Court of Appeal have held that parties in the position of Merck Frosst are not directly affected by the Minister's decision made pursuant to the Food and Drug Regulations and, therefore, should have no status in the proceedings (see, for example, Pfizer Canada Inc. v. Minister of National Health and Welfare et al. (1986), 12 C.P.R. (3d) 438; Merck Frosst Canada Inc. v. Canada (Minister of Health) (1997), 80 C.P.R. (3d) 550 (F.C.T.D.), aff'd (1999) 3 (C.P.R.) 4^th 286 (F.C.A.); Glaxo Canada Inc. v. Minister of National Health and Welfare et al. (1987), 18 C.P.R. (3d) 206 (F.C.T.D.), aff'd (1990), 31 C.P.R. (3d) 29 (F.C.A.).) Merck Frosst advances the following arguments that require consideration:

a.              Apotex's sole purpose in the proceedings is to secure a basis to sue Merck Frosst under s. 8 of PM (NOC) Regulations so that Merck Frosst's interests under s. 8 become a legal issue "related to the proceedings" within the meaning of Rule 109(2)(b).

b.              The purpose of Merck Frosst's intervention is not to speak to matters that are in dispute in the proceedings between Apotex and the Minister, but to speak to issues (i.e. section 8 damages) that are related to the outcome of those proceedings;

c.              The test for whether Merck Frosst should be granted intervener status is not whether it will be directly affected by the order but whether it has an interest in the outcome of the proceedings and whether its rights will be seriously affected by the outcome.

[27]            In Apotex Inc. v. Canada (Minister of Health) (2000), 4 C.P.R. (4^th) 421, McGillis J. comprehensively reviewed the matters to be considered upon a motion to grant intervener status and concluded that the fundamental question to be determined is whether the participation of the proposed intervener will assist the Court in determining a factual or legal issue.

[28]            In my view, then, in deciding whether the proposed intervener satisfies the criteria, it is crucially important to determine what the factual and legal issues are in the proceedings in question.

[29]            In the case of the proceedings between Apotex and the Minister, the only issues raised are concerned with health and safety in relation to Apotex's product and the application of the Food and Drug Regulations and the Minister's Guidelines. Section 8 damages are not an issue.

[30]            Even if I were to accept that Apotex's sole purpose in the proceedings with the Minister was to secure a basis for a possible s. 8 damages claim, this does not change the matters that are at issue between Apotex and the Minister. In my opinion, Apotex's motives are irrelevant to the question of what is at issue in the proceedings in question. Legal proceedings may be prompted by a variety of motives that are not at issue in the proceedings themselves.

[31]            So the simple answer to Merck Frosst's arguments is, in my opinion, that whatever it may wish to say about damages will not "assist the determination of a factual or legal issue related to the proceedings" in this instance.

[32]            Merck Frosst has enumerated the factors that should be taken into account in assessing whether to permit a proposed intervention as set out in cases such as Canadian Union of Public Employees (Airline Division) v. Canadian Airlines International Ltd., [2000] F.C.J. No. 220 (F.C.A.) at para. 8, Eli Lilly Canada Inc. v. Canada (Minister of Health) (2001), 10 C.P.R. 4^th 310 at 314 (F.C.T.D.) aff'd (2001) 11 C.P.R. (4^th) 486 (F.C.A.), Maurice v. Canada (Minister of Indian Affairs and Northern Development), [2000] F.C.J. No. 208 at paras. 12 and 17 (T.D.), and Abbott v. Canada (T.D.), [2000] F.C.J. No. 474 (Prothonotary) at paras. 5 and 14.

[33]            These factors include the following:

(a)         Is the proposed intervener directly affected by the outcome?

(b)         Will the intervener bring a different perspective to the litigation from that of the parties that will assist the Court in the determination of the issues?

(c)         Will the position of the proposed intervener be adequately defended by one of the parties to the case?

(d)         What is the status of the case in terms of the procedural and substantive developments?

[34]            Most of these issues are also listed by Noël J. in Canadian Union of Public Employees (Airline Division), supra, a case cited by Merck Frosst. But, as Noël J. makes clear in his judgment at para. 9, in addition to these factors the central purpose of Rule 109(2)(b) of the Federal Court Rules, 1998, also has to be kept in mind, and it must also be shown how the intervention "will assist the determination of a factual or legal issue related to the proceeding." [My emphasis].

[35]            Merck Frosst wishes to provide a perspective on potential s. 8 damages issues and these issues are not before the Minister in the proceedings initiated by Apotex in this case. Where intervention is allowed in the cases cited by Merck Frosst, in my opinion, it is because the proposed intervener satisfies the conditions of intervention cited by Merck Frosst on a factual or legal issue related to the proceedings in question. In Abbott v. Canada, [2000] 3 F.C. 482, for instance, Prothonotary Hargrave granted Canadian Pacific Hotels Corporation ("CP") the right to intervene in a class action involving leases in Riding Mountain National Park in Manitoba. The issue in the action in that case was whether the plaintiff's leases contained, or should contain, a perpetual renewal clause. The Crown's argument that perpetual renewal clauses were null and void alarmed CP because of the resorts that is operates on national park land in Banff and Lake Louise under leases containing perpetual renewal clauses. Prothonotary Hargrave granted intervener status to CP because he held that CP satisfied him that it had an interest in the outcome of the dispute, its rights would be seriously affected by the outcome of the litigation and it would bring a different perspective to the proceedings. Also important in that decision was the fact that CP had no litigation of its own in which to present its case and the Crown was, in effect, forcing an interest on CP because of the terms of its leases.

[36]            The situation in Abbott, supra, was very different from the present application where Merck Frosst will have an opportunity to address damages if any damage claim is initiated by Apotex and where Merck Frosst has no perspective to bring to the issues that are before the Minister.

[37]            Merck Frosst's interests may well become engaged at some time in the future in the context of a s. 8 action for damages. If and when that action occurs, Merck Frosst will be able to raise any concerns it has regarding the proceedings and the factors that have given rise to the proceedings and how quantum should be dealt with.

[38]            But the fact that a decision by the Minister in favour of Apotex under the Food and Drug Regulations may eventually permit Apotex to initiate a s. 8 damages claim against Merck Frosst does not mean that damages become an aspect of the factual or legal issues that will be addressed by the Minister in the proceedings that have been initiated by Apotex. If this were the case, s. 8 damages would be an issue in many such proceedings where the Minister is called upon to review and consider abbreviated new drug submissions made by generic manufacturers. "Affected by the outcome" is not the same as showing how "participation will assist the determination of a factual or legal issue related to the proceedings," which is the fundamental consideration under Rule 109 of the Federal Court Rules, 1998.

[39]            As I read the Order of Prothonotary Aronovitch, this is pretty well the approach she takes to Merck Frosst's request for intervener status and I find that, in so doing, she has not based her decision upon a wrong principle or upon a misapprehension of the facts.

ORDER

THE COURT HEREBY ORDERS THAT:

1.         The motion is dismissed.

2.         Apotex shall have the costs of this motion payable immediately and irrespective of the cause.

"James Russell"

                                                                                                                             J.F.C.