Merck Frosst Canada Inc. v. Minister of National Health and Welfare, docket T-304-96

     T-304-96

BETWEEN:

     MERCK FROSST CANADA INC. and

     MERCK & CO. INC.,

     Applicants

     - and -

     THE MINISTER OF NATIONAL HEALTH AND WELFARE

     and THE ATTORNEY GENERAL FOR CANADA

     Respondents

     - and -

     APOTEX INC. and NOVOPHARM LIMITED

     Intervenors

     T-306-96

AND:

     MERCK FROSST CANADA INC. and

     MERCK & CO INC.

     Applicants

     - and -

     THE MINISTER OF NATIONAL HEALTH AND WELFARE

     and THE ATTORNEY GENERAL FOR CANADA

     Respondents

     - and -

     APOTEX INC. and NOVOPHARM LIMITED

     Intervenors

     T-386-96

AND:

     GLAXO WELLCOME INC. and

     THE WELLCOME FOUNDATION LIMITED

     Applicants

     - and -

     THE MINISTER OF NATIONAL HEALTH AND WELFARE

     and THE ATTORNEY GENERAL FOR CANADA

     Respondents

     - and -

     APOTEX INC. and NOVOPHARM LIMITED

     Intervenors

     REASONS FOR ORDERS

MacKAY J.:

     These are applications by Novopharm Limited and Apotex Inc., both generic drug manufacturers, for an order adding them as parties respondent to, or in the alternative granting leave for them to intervene in, three applications for judicial review. The applications for judicial review are brought by Merck Frosst Canada Inc. and Merck and Co. Inc. in file T-304-96 with relation to the patent list for the drug simvastatin, by the same Merck companies in file T-306-96 in relation to the patent list for the drug ivermectin, and by Glaxo Wellcome Inc. and the Wellcome Foundation Limited in relation to the patent lists for the drugs acyclovir and interferon alpha-n1. The applicants for judicial review are pharmaceutical companies with patents or licenses concerning the drugs in question for which they respectively hold notices of compliance ("NOCs"), authorizing sale of the drugs in Canada.

     In relation to the two applications by the Merck companies, motions for interim injunctions were heard on February 12, 1996 and these were dismissed by my colleague Mr. Justice Pinard. The Merck applicants have filed notices of appeal of that decision in respect of both applications for interim injunctions. The Glaxo application for judicial review was filed after the decision dismissing the application for an interim injunction in the other two files. In all three files orders are sought to prohibit the Minister of National Health and Welfare from removing certain patents from the patent list filed under the Patented Medicines (Notice of Compliance) Regulations (the "Regulations"). Also sought, expressly in the Glaxo application and implicitly as other relief in the two Merck applications, are orders requiring that if certain patents were removed from the patent list by the Minister they should now be restored to the patent lists.

     The issue in each of the applications for judicial review is the same. It is, whether the Minister has power to remove process patents from patent lists submitted by patentees under the Regulations in view of the decision in Deprenyl Research v. Apotex Inc. (1995), 60 C.P.R. (3d) 501 (F.C.A.). In that case the Court of Appeal upheld the decision of Jerome A.C.J. (at (1994), 55 C.P.R. (3d) 171; 77 F.T.R. 62), that s. 2 of the Regulations, in defining "the claim for the medicine itself", words used in s. 4 to describe patents to be included on a patent list, does not include a claim for a particular process used in production of a medicine. In the words of Strayer J.A. for the Court of Appeal, with reference to process claims, "the plain language of s. 2 of the Regulations does not extend the protection of those Regulations to such claims".

     Following that decision, the respondent Minister of Health and Welfare is reported to have caused an audit to be made of the patent lists filed under the Regulations. Thereafter, he is reported to have written to patentees advising that he proposed, subject to considering any comments they might have, to remove process patents from the patent lists. It is said that of some 722 patents listed at June 20, 1995, some 169 were process patents, 24 medicines were identified as having only process patents listed, and 15 other products would have an earlier market entry date for competitors if process patents were removed from the lists filed under the Regulations. Following that audit some, but apparently not all, process patents were removed from the lists before these proceedings were commenced by applications for judicial review, and for interim injunctions.

     Application records in all three proceedings were filed by mid-May, 1996 and a joint application of all parties was made for hearing of the three applications at the same time, since they are said to raise the same issues. A joint hearing date was set for Montreal for two days commencing April 1, 1997.

     Apotex and Novopharm only learned of the applications for judicial review in October 1996. They then gave notice they would seek to be added as parties to the proceedings and asked to be notified of any further developments in relation to these matters. Their joint motions to be added as parties, or in the alternative as intervenors, were filed November 25, 1996 for return on December 2, but then adjourned by agreement to permit cross-examination on affidavits, if desired, and subsequently the matter was set down for hearing on January 21, 1997.

     In argument counsel for Novopharm and Apotex together, and counsel representing all the applicants for judicial review together, differed in their submissions on three key factors to be considered in dealing with the applications by Apotex and Novopharm to participate in the three proceedings. Those factors are the interests of the two generic companies that may be affected by the outcome of the applications for judicial review, the divergence from, or similarity between their interests as generic companies and those of the respondent Minister, and whether there would be prejudice to the applicants for judicial review, or to the proceedings, if the applications to participate, as parties respondent, or alternatively as intervenors, were granted.

     Much of the arguments of counsel concerned the application of Rule 1716(2) of the Federal Court Rules, C.R.C. 1978, c.663 as amended, whereby, in an action, the Court "may order any person, who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the action may be effectively and completely determined..., to be added as a party".

     By analogy with that rule and acting under Rule 5, the so-called "gap rule", the Court on appropriate occasions has ordered parties added as respondents in proceedings for judicial review, in particular before amendment of the Rules in 1992 which provided, for the first time, rules particularly directed to the process for judicial review under s.18.1 of the Federal Court Act, R.S.C. 1985, c.F-7 as amended. See, e.g. Molson Breweries v. Canada (Registrar of Trade Marks) (1991), 38 C.P.R. (3d) 286, 48 F.T.R. 267 where Mr. Justice Dubé found the applicant to be added as a respondent, John Labatt Limited, had a direct interest in proceedings to set aside the Registrar's decision made in opposition proceedings in which the Molson and Labatt companies had been active opponents.

     The same principles have been applied in adding a party respondent to a judicial review application since 1992 and the introduction of the procedure for judicial review in the Court's 1600 Rules. Thus, in Apotex Inc. v. Canada (Attorney General) (1993), 48 C.P.R. (3d) 54; 62 F.T.R. 135 Madame Justice McGillis granted the applicants' motion to be parties respondent, having found they had a direct interest in the issue raised by an application for judicial review. That application sought an order to require the Minister to issue an NOC to Apotex to authorize sale of its generic drug that was comparable to a patented product, for which there was an existing NOC, owned by the applicants to be added as parties, the Merck companies. In Apotex Inc. v. Canada (Attorney General) et al. (1994), 79 F.T.R. 235, Madame Justice Simpson ordered the addition of parties respondent, and also an intervenor, in proceedings for judicial review in which Apotex sought, inter alia, an order declaring the Regulations to be ultra vires. There the issue was broad, i.e., the validity of the Regulations, a matter of great interest to the parties added as respondents, the Merck companies and Eli Lilly Canada Inc., which, moreover, were found to have interests directly affected by allegations of less than scrupulous dealings in affidavits before the Court. Parties there added as intervenors sought that status and their proposed evidence, from perspectives different from those of the parties, was considered appropriate and likely to be helpful in the proceedings before the Court.

     With the introduction of the 1600 Rules, relating to judicial review, effective in 1992, provision was expressly made for intervenors and for certain parties in judicial review proceedings. The new rules provided the following:

1602 (3) Any interested person who is adverse in interest to the applicant in the proceedings before the federal board, commission or other tribunal shall be named as a respondent in the notice of motion.

1611 (1) Any person who wishes to intervene in the hearing of an application for judicial review...must file a notice of application for leave to intervene and serve a copy on all the parties.

...

(3) The Court may grant leave to intervene in the hearing of an application for judicial review upon such terms and conditions as it considers just and may give directions on the procedure for and extent of the intervention, the submission and service of documents and other matters relevant to the interventions.

     As I understand it, the essential difference in the standing of a party respondent when compared with that of an intervenor is that the former is deemed to have an interest adverse to that of the applicant which is a legal interest to be directly affected by the decision of the tribunal or officer that is subject to review. Moreover, a party may exercise all the rights of a party in the proceedings, including the right to appeal the decision that is made when the matter is heard, while an intervenor essentially has the right to participate within the limits the Court may impose and has no right to appeal except by leave of the Court.

     Here the applications for judicial review raise a narrow issue concerning the interpretation of the Regulations in light of the decision of the Court of Appeal in Deprenyl, supra.

     The applicants for judicial review urge that the applicants have no particular interest in that issue and no interest different from that of the respondent Minister of Health, no interest different from any other generic drug company, and the Attorney General represents the public interest in proper interpretation of the Regulations. While counsel for the respondent Minister and the Attorney General took no position in regard to the application by Apotex and Novopharm, he made clear that the matter of interpretation of the statute and the Minister's authority under the Regulations will be dealt with earnestly at the hearing.

     In my opinion, the applicants here, Novopharm and Apotex, do not have a particular interest such as that recognized by McGillis J. in her decision, supra. Apotex is said to have an application for an NOC before the Minister of National Health and Welfare for acyclovir, one of the drugs for which the patent list is in question by the proceedings in T-386-96. The patent list for that drug includes patents other than process patents so an immediate entry to market by grant of an NOC to Apotex for acyclovir is unlikely. Neither Apotex nor Novopharm have made application for an NOC for any of the other drug products concerned in these proceedings. In my view, they cannot be considered as parties who "ought to have been joined" or whose presence before the Court is necessary to ensure all matters will be determined, as Rule 1716(2) provides. Moreover, the issue is narrower than that in the proceedings to which Simpson J. added respondents, and there is no affidavit evidence before me, as there was before her, that makes allegations which would, in fairness, warrant a full opportunity for the proposed respondents to address. In this case I am not persuaded that Apotex and Novopharm should be named as respondents.

     Nevertheless, in my opinion, they do have legal interests, that transcend mere commercial interests, and these will be affected by the decision of the Minister that is here raised by the proceedings for judicial review. Those interests are their rights to make application for an NOC and to have that considered on its merits without the application of processes established by the Regulations, unless the patent claims, listed under the Regulations by patent holders, are within those described by the regulations to be protected. The Minister's refusal to approve an application for an NOC under the Regulations is authorized only in circumstances where an existing NOC relates to a drug that is subject to a patent that is within those to be protected under the regulatory scheme. The interests of Apotex and Novopharm will be affected, in terms of the time at which their rights may be exercised, if process patents are maintained on the patent lists.

     In ICN Pharmaceuticals, Inc. v. Canada (Patented Medicines Prices Review Board) (1996), 68 C.P.R. (3d) 417 at 424 (F.C.A.), Mr. Justice Robertson, describing the Regulations, said:

...it is apparent that the Regulations seek to achieve two competing objectives. One is to extend full protection to patentees in thwarting the ability of generic manufacturers to introduce medicines which might infringe their patents. The other is to limit that protection to a narrow class of medicines.

The "thwarting" of the ability of generic drug producers to introduce medicines clearly affects their legal right to proceed to market their products, if safety requirements are met, subject only to the risk of facing legal action if those products are considered to infringe patent rights.

     It is true that the interests of the proposed intervenors are no different in essence from the interests of other generic drug marketers, but others have not made application to participate in the proceedings. Moreover, as their evidence indicates, they are active companies in proceedings in this Court under the Regulations, with Apotex involved in some 48, and Novopharm in some 25, of about 106 proceedings of this nature.

     In addition, I am satisfied that the interests of the proposed participants are different from those of the Minister and of the Attorney General, and that they can bring to the hearing evidence of the effects upon their interests of one or another interpretation of the Regulations in a way that the respondent Ministers cannot. At the same time their evidence and argument should be directed to their interests, not to any perception they may have of the public interest, for they do not have status to represent that interest, and the Attorney General for Canada does in this matter. Their views on pricing policies, or the effects of one interpretation or another on drug prices, are not matters within the scope of evidence and argument they may adduce at the hearing, since, in my view, that is not relevant to the issue raised by the applications for judicial review, which concerns construction of the Regulations, and does not concern drug prices or pricing policies.

     For the proposed participants it is urged that they would provide evidence of the number of patents and patent lists, and thus of drug products that may be affected if the Minister's plan to remove process patents from patent lists is completed. That evidence and additional material would come primarily from the Minister's own records, provided in response to the requests of the applicants for judicial review under the Court's Rules but not included in the application records filed by those applicants. The record filed on behalf of the respondents is said to be without affidavit or other evidence at this stage, consisting only of a memorandum of fact and law, or of argument. The proposed participants say there is other evidence in the records filed by the Minister with the Court in response to the request of the applicants for judicial review. In my opinion, those records are before the Court and argument may be directed to documentary evidence from the Minister's own records filed with the Court whether or not that evidence is included in application records already filed by the parties to the judicial review proceedings. In addition, of course, the proposed participants can bring before the Court evidence and argument about the effects upon their interests of one or another interpretation of the Regulations.

     I find there will be no prejudice to the position of the applicants for judicial review, or that of the Minister, if Apotex and Novopharm are permitted to intervene in the hearing of these applications. In my view, standing as intervenors is appropriate for them in this case because their legal interests are affected by the interpretation to be determined for the Regulations, and because their situation and their perspective is different from that of the respondent Minister who could only speak of the interests of generic companies by hearsay. Provided their admission to the proceedings at this stage does not in itself result in postponement or delay, I do not accept that any prejudice is caused to the original parties or to these proceedings.

     Standing as Intervenors was thus granted, on terms. As reflected in the Order issued January 28, 1997 after opportunity for the parties to comment on the formal order drafted to reflect the terms directed orally at conclusion of the hearing, those terms provide that Novopharm and Apotex are admitted as intervenors; that they shall together submit one application record and be represented by the same counsel, as they were in the case of this application to participate. Their evidence to be adduced by affidavit shall be limited to the effects of one or another interpretation of the Regulations upon their interests directly affected and it shall not extend to include the public interest since they are not considered to have standing to represent that interest. Further, the Order directs, in effect, that the record before the Court shall include application records now filed or to be filed and the documents filed by the Minister from his records, and argument may be based upon any material in that total record before the Court. A schedule is fixed by the Order, for filing of documents to facilitate the hearing, set for April 1 and 2, 1997.

     The Order specifically grants the intervenors a right to appeal from the determination of the application for judicial review. In my opinion, that is appropriate in light of their interests and moreover, there can be no expectation at this stage that the respondent Minister will have any vital interest or motivation to prosecute an appeal, or to do so with the same vigour as the intervening parties may do.

     The Orders issued are on terms consistent with these Reasons. Three similar Orders were issued, dated January 29, 1997, one for each of Court files T-304-96, T-306-96 and T-386-96. I direct that a copy of these Reasons be filed on each of those files.

     _____________________________________

     JUDGE

OTTAWA, Ontario

February 7, 1997.