Biolyse Pharma Corp. v. Bristol-Myers Squibb Co., 2003 FCA 180

Date: 20030407

Docket: A-697-02

Citation: 2003 FCA 180

CORAM:        STRAYER J.A.

NADON J.A.

EVANS J.A.

BETWEEN:

BIOLYSE PHARMA CORPORATION

Appellant (Respondent)

and

BRISTOL-MYERS SQUIBB COMPANY and

BRISTOL-MYERS SQUIBB CANADA INC.

Respondents (Applicants)

and

THE ATTORNEY GENERAL OF CANADA

Respondent (Respondent)

                                             Heard at Toronto, Ontario, on March 19, 2003.

                                     Judgment delivered at Ottawa, Ontario, on April 7, 2003.

REASONS FOR JUDGMENT BY:                                                                                    EVANS J.A.

CONCURRED IN BY:                                                                                                     STRAYER J.A.

                                                                                                                                               NADON J.A.

                                                                                                                                            Date: 20030407

                                                                                                                                        Docket: A-697-02

                                                                                                                              Citation: 2003 FCA 180

CORAM:        STRAYER J.A.

NADON J.A.

EVANS J.A.

BETWEEN:

BIOLYSE PHARMA CORPORATION

Appellant (Respondent)

and

BRISTOL-MYERS SQUIBB COMPANY and

BRISTOL-MYERS SQUIBB CANADA INC.

Respondents (Applicants)

and

THE ATTORNEY GENERAL OF CANADA

Respondent (Respondent)

                                                        REASONS FOR JUDGMENT

EVANS J.A.                             

A.        INTRODUCTION

[1]                 This an appeal from a decision of Blanchard J. in which he granted an application for judicial review by Bristol-Myers Squibb Company and Bristol-Myers Squibb Canada Inc. ("BMS"), issued a declaration that Biolyse had not complied with section 5 of the Patented Medicine (Notice of Compliance) Regulations, SOR/93-133 ("the Regulations"), and set aside a Notice of Compliance ("NOC") issued by the Minister of Health to Biolyse Pharma Corporation ("Biolyse") in respect of its drug, "PACLITAXEL for injection (6mg/ml)". Blanchard J. held that Biolyse was required to serve a notice of allegation ("NOA") when it made its new drug submission ("NDS") in respect of PACLITAXEL for injection. Since it failed to do so the Minister erred in law in issuing a NOC to Biolyse for PACLITAXEL for injection.

[2]                 Biolyse appeals from the decision of the Applications Judge, which is reported as Bristol-Myers Squibb Co. v. Canada (Attorney General), 2002 FCT 1205. The principal question to be decided in this appeal is whether subsection 5(1.1) of the Regulations, which was added in 1999 by SOR 99/379, applies to Biolyse's NDS for PACLITAXEL by injection so as to require Biolyse to serve a NOA. If it does, the Minister issued the NOC in breach of paragraph 7(1)(b) of the Regulations since Biolyse served no NOA and the Court may set aside the NOC on an application for judicial review brought under section 18.1 of the Federal Court Act, R.S.C. 1985, c. F-7. The Attorney General is named as a respondent but supports the position taken by Biolyse on the interpretation of subsection 5(1.1).

[3]                 Counsel for Biolyse also argues in the alternative that, if he loses on the substantive issue, the Court ought not to quash the NOC in the exercise of its remedial discretion.Counsel for the Attorney General takes no position on this issue.

B.        FACTUAL BACKGROUND

[4]                 BMS holds two Canadian patents (2,086,874 and 2,132,936) in respect of its drug TAXOL which do not expire until 2013 and 2014 respectively. These patents are included on the patent list that has been submitted with respect to TAXOL. NOCs were also issued to BMS in respect of TAXOL, which has subsequently been marketed in Canada.

[5]                 Biolyse's PACLITAXEL for injection differs from BMS's TAXOL in one respect. Although both drugs contain paclitaxel as their active ingredient, the paclitaxel in Biolyse's drug comes from the leaves and twigs of one species of yew, while that in BMS's drug is obtained from the bark of another species of yew.

[6]                 Because of the different botanical sources of the paclitaxel, Biolyse was required by the Therapeutic Products Directorate of Health Canada to seek regulatory approval for PACLITAXEL for injection by making a new drug submission ("NDS") pursuant to the Food and Drug Regulations, C.R.C. 1976, c. 870, subsection C08.002(2), rather than by an abbreviated new drug submission ("ANDS") pursuant to subsection C.08.002.1(2).

[7]                 If Biolyse had made an ANDS it could have proved the safety and efficacy of PACLITAXEL for injection by comparing it to TAXOL in order to demonstrate that they are bioequivalent on the basis of their pharmaceutical characteristics. Since Biolyse could not seek approval for its drug on the basis of an ANDS, it was not granted a declaration of bioequivalence when the NOC was issued in respect of PACLITAXEL for injection, with the result that it will not be listed in some provincial formularies as interchangeable with TAXOL.

[8]                 The NDS for PACLITAXEL for injection contains many references to and comparisons with TAXOL, but not for the purpose of establishing bioequivalence on the basis of their pharmaceutical characteristics. For example, the quality of PACLITAXEL for injection was compared with that of TAXOL and the level of purity of the paclitaxel in the two products was almost identical. In addition, the results of the relatively small number of clinical trials of PACLITAXEL for injection were compared with those from the more extensive clinical trials of TAXOL, which are in the public domain. The results were the same. As a result of using data about TAXOL, Biolyse was able to file a much shorter NDS for PACLITAXEL for injection than most such submissions: 17 volumes as compared to the 300 or more that are commonly filed as a NDS.

[9]                 PACLITAXEL for injection and TAXOL are identical in all material respects other than the botanical source of their active ingredient, paclitaxel. Thus, for example, the paclitaxel in both drugs is identical; both drugs are approved for the treatment of the same cancers; they are administered in comparable strengths and dosage and by the same route; and their formulation is identical.

D.        LEGISLATIVE FRAMEWORK

[10]            The following provisions of section 5 of the Regulations are relevant to the determination of the question before us.

Patented Medicine (Notice of Compliance) Regulations, SOR/93-133

D.        ISSUES AND ANALYSIS

Issue 1: Does subsection 5(1.1) apply to the NDS submitted by Biolyse?

[11]            The principal issue in dispute is whether subsection 5(1.1) applies to the facts of this case. In particular, the dispute is whether the subsection is limited to situations where a second person has filed an ANDS and applied for approval of its drug by comparing it to a first person's drug in order to establish bioequivalence on the basis of pharmaceutical characteristics. If the words in subsection 5(1.1) are given their ordinary meaning, without any consideration of statutory context or legislative history, it is conceded that the subsection is not so limited and that it applies to Biolyse's NDS in respect of PACLITAXEL for injection.

[12]            The starting point for statutory interpretation in Canada is the following familiar extract from Driedger,Construction of Statutes, 2^nd edn. (Toronto: Butterworths, 1983) at 87:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

[13]            This holistic approach to the interpretation of legislation, including, as here, subordinate legislation, requires a court to attribute the meaning that provides the best fit with both the text and the context of the provision in question. Neither can be ignored, although the clearer the "ordinary meaning" of the text, the more compelling the contextual considerations must be in order to warrant a different reading of it, especially when that involves adding words to those used by the legislator.

The text of subsection 5(1.1)

[14]            It will be convenient if I reproduce again the text of this subsection.

[15]            The facts of this case satisfy each of the elements of the subsection, if its words are given their ordinary meaning without consideration of legislative purpose and the context of the statutory scheme. First, Blanchard J. found that subsection 5(1) does not apply and this finding has not been challenged. Second, Biolyse "has filed a submission for a notice of compliance". "Submission" means a NDS, ANDS, or a supplement to either: Merck & Co. v. Canada (Attorney General), (1999) 176 F.T.R. 21 at para. 59 ("Merck"). Here, Biolyse filed a NDS in respect of PACLITAXEL for injection. Third, Biolyse "filed [a NDS] in respect of a drug that contains a medicine found in another drug". The medicine paclitaxel is found in PACLITAXEL for injection and in TAXOL._ Fourth, that other drug, TAXOL, "has been marketed in Canada pursuant to a notice of compliance issued to a first person in respect of which a patent list has been submitted". Fifth, Biolyse's PACLITAXEL for injection "has the same route of administration and a comparable strength and dosage form" as TAXOL.

[16]            Hence, in the circumstances of this case, if subsection 5(1.1) is to be interpreted by giving its language its ordinary, grammatical meaning, Biolyse had to make an allegation in its submission pursuant to paragraph 5(1.1)(b) and, until Biolyse complied, the Minister was prohibited by paragraph 7(1)(b) from issuing a NOC in respect of PACLITAXEL for injection.

The context of subsection 5(1.1)

[17]            The appellant and the Attorney General stress that the provision must be interpreted contextually: it should be interpreted in a manner that gives effect to the legislative purpose for which it was enacted, as evidenced, in particular, by Regulatory Impact Analysis Statements ("RIAS").

[18]            Consideration of the legislative intent in enacting the 1999 amendments makes it clear, it is said, that subsection 5(1.1) should be read more narrowly than its ordinary meaning would indicate. It should only apply when subsection 5(1) does not apply but when a second person has still applied for regulatory approval to market a drug by filing an ANDS and has compared its drug with or made reference to the drug of a first person for the purpose of establishing its bioequivalence to the second person's drug on the basis of pharmaceutical and, where relevant, their bioavailability characteristics. Since the route of administration of the drugs in the present case is by injection, bioavailability is not relevant.

[19]            Counsel for the appellant and the Attorney General submit that subsection 5(1.1) was added in 1999 to fill an apparent gap in the previous provision identified by the Merck litigation. It was argued in that case that the version of subsection 5(1) then in force did not apply to a situation where a third person compared the bioequivalence of its generic drug to a second person's generic drug, even though that second person had applied for a NOC by comparing the bioequivalence of its drug to that of a first person's drug. If this argument had been accepted, the third person would not have had to file a NOA, and would have been entitled to a NOC on satisfying the Minister that its drug was bioequivalent to the second person's, even though the second person had been required to file a NOA, and was thus liable to prohibition proceedings to prevent the issue of a NOC.

[20]            In fact, this interpretation of subsection 5(1) was rejected by the Trial Division in a decision rendered after the Regulations were amended. It was held that an indirect comparison with a first person's drug was sufficient to trigger the obligation to file a NOA. An appeal from this decision was dismissed: Merck & Co. v. Nu-Pharm Inc. (2000), 5 C.P.R. (4^th) 138 (F.C.A.).

[21]            The RIAS issued with the 1999 amendments stated that "... the amendments are designed to reaffirm the application of the existing Regulations ..." and that "... the present amendments do not reflect any change in policy." Moreover, the purpose of the amendments was said to be to "clarify the law and reaffirm the application of the Regulations".

[22]            Counsel also relied on a policy document issued by Health Canada in May 2000, Guidance for Industry: Patented Medicine (Notice of Compliance) Regulations, as further support for the argument that subsection 5(1.1) was only intended to apply when a second person submitted an ANDS and compared its drug, directly or indirectly, with a first person's drug in order to demonstrate their bioequivalence. The Guidance states: "In a drug submission where there is a demonstration of bioequivalence and therefore reliance on a previously approved drug, the T[herapeutic] P[roducts] P[rogram] [of Health Canada] will apply the test described in subsection 5(1.1)."

[23]            Counsel argued that the limited purpose of the 1999 amendments is apparent in the text of subsection 5(1.1). He pointed to the fact that subsection 5(1.1) requires that the first person's drug must have been "marketed in Canada pursuant to a notice of compliance issued to a first person", and that the second person's drug must be of a "comparable strength and dosage" and have "the same route of administration" as the first person's. He argued that these limitations only make sense on the assumption that the second person has submitted an ANDS in order to establish bioequivalence with the first person's drug.

[24]            Counsel stressed that the word "comparable" in subsection 5(1.1) is a reference to the comparisons made to establish bioequivalence in an ANDS filed pursuant to subsections C008.002.1(1) and (2) of the Food and Drug Regulations. Thus, the RIAS issued with the 1999 amendments stated: "In this context 'comparable' is intended to operate as it does within the context of the drug approval process." Accordingly, counsel submitted, 'comparable' in subsection 5(1.1) should be understood to mean "on the basis of a comparison to establish bioequivalence made for the purpose of obtaining a NOC by making an ANDS in accordance with the Food and Drug Regulations." In addition, counsel argued, if the respondents' interpretation is correct, subsection 5(1) is redundant.

[25]            There is no doubt much to be said for the view that subsection 5(1.1) was introduced in response to the situation in Merck. Indeed, Blanchard J. (at para. 48) found that this was the reason for the amendment. However, counsel for the respondents suggested that the "Merck problem" was not confined to the specific facts of that case. Rather, the situation in Merck was part of a wider problem. The problem was that generic drug companies were attempting to avoid triggering section 5 by submitting documents that took the form of a NDS, but in reality were disguised ANDSs because they relied heavily on data generated in connection with a drug that was approved, but without making a comparison to demonstrate bioequivalence.

[26]            This, counsel for BMS suggested, is precisely what Biolyse was seeking to do here: its submission was in reality a hybrid. Thus, for example, Biolyse was able to "piggy-back" on BMS's work, admittedly in the public domain, by comparing the results of the clinical trials that Biolyse had conducted for PACLITAXEL for injection with those conducted by BMS in connection with TAXOL in order to prove the drug's safety and efficacy. Biolyse thereby saved itself considerable time and expense in assembling the proof needed to establish the safety and efficacy of its product, and was thus able to file a short NDS.

[27]            In addition, counsel for BMS submitted, the ordinary meaning of subsection 5(1.1) is consistent with the overall purpose of that part of the statutory scheme not directed to issues relating to health and efficacy, namely, the provision to patent holders of more effective remedies against infringement.

[28]            As for the evidence of legislative intention in the RIAS issued with the 1999 amendments, counsel for BMS says that it nowhere states that new subsection 5(1.1) only applies where there has been the kind of reference to or comparison with another drug as alleged by the appellants. Moreover, the RIAS recognizes that litigation may be brought to test the scope of the amendments and "submissions filed with the Minister of Health that may be covered by subsection 5(1.1) may also entail litigation."

[29]            In this regard, counsel noted that, during consultations about the amendments with the association representing "innovator" pharmaceutical companies, Industry Canada officials expressed a concern that subsection 5(1.1) would apply to a "stand-alone" NDS, as a result of which the association believed that subsection 5(1.1) was intended to apply to a "full-blown" NDS that fell within the terms of the new subsection.

[30]            In response to Biolyse's argument that the 1999 amendments were not intended to expand the situations in which it was necessary to file a NOA, counsel for BMS suggested that the version of subsection 5(1) in force prior to the 1999 amendments might well have covered the facts of the present case. Unlike the 1999 version of the Regulations, the previous version of subsection 5(1) did not expressly stipulate that the comparison with the first person's drug had to be for the purpose of establishing bioequivalence. Hence, it is not clear that BMS's interpretation of 5(1.1) expands the range of situations where a NOA is required.

[31]            In the final analysis, counsel for BMS rested his case on the ordinary meaning of subsection 5(1.1). He pointed out that the appellant's interpretation not only requires the addition of words, but also requires that the words, "filed a submission", be interpreted to mean, "filed an abbreviated new drug submission", even though, in the context of the Regulations, "submission" was said in Merck (at para. 59) to mean a new drug submission, an abbreviated new drug submission and a submission supplementing each kind. As for the argument based on the word "comparable", counsel suggested that, "of similar effect", was a more obvious meaning than that suggested by the appellant, and that the limitations on the scope of subsection 5(1.1) were intended to focus it on situations where patent infringement was most likely. Finally, he noted that the appellant's interpretation of subsection 5(1.1) would make subsection 5(1) redundant.     

Conclusion

[32]            Having considered the words of subsection 5(1.1) in their "grammatical and ordinary sense", as well as in "their entire context" (namely, "the object" and "scheme" of the Regulations), I am not persuaded that subsection 5(1.1) may be interpreted in the manner urged by Biolyse and the Attorney General. To give effect to their suggested interpretation requires the addition of words to a provision that, even when considered within the context of the statutory scheme, is neither ambiguous nor incoherent. Certainly, additional words are not grammatically required to make the subsection intelligible. The interpretation advocated by Biolyse and the Attorney General also requires a very strained interpretation of the word "comparable" and that the word "submission" be given a narrower meaning than it was held to have in the pre-1999 version of subsection 5(1).

[33]            Moreover, the "plain meaning" of subsection 5(1.1) is consistent with the overall purpose of the Regulations, namely, to graft more effective patent protection onto the regime for the approval of new drugs on the basis of their safety and efficacy. Nor am I satisfied on the basis of the material before us that the purpose of the 1999 amendments was necessarily as narrow as Biolyse and the Attorney General maintain. In my opinion, the policy that they relied on in support of their interpretation is not sufficiently clear and compelling to permit reconstructive surgery to a statutory text which speaks quite clearly.

[34]            Nor, for the reasons advanced on behalf of BMS, do the particular words in subsection 5(1.1) on which counsel for Biolyse relied, as indicative of a legislative intention to restrict the provision to ANDSs, justify interpreting the provision in a manner that is incompatible with the ordinary meaning of its language, even when read in context. I should also add that neither view of the meaning of subsection 5(1.1) satisfactorily resolves the structural relationship between subsections 5(1) and (1.1).

[35]            What the appellants are urging on the Court seems to me to cross the imprecise but nonetheless real line that divides judicial interpretation from legislative redrafting. If the purpose of the Governor in Council in amending the Regulations in 1999 was as Biolyse and the Attorney General contend, the appropriate remedy is to amend the Regulations again so that they properly express it.

Issue 2:           Did the Applications Judge err in quashing the NOC?

[36]            Counsel for Biolyse argued that, even if Blanchard J. did not err in finding that Biolyse was obliged to file a NOA and that the failure to serve a copy on BMS invalidated the NOC, the Court should have exercised its discretion not to quash the NOC.

[37]            He rested his argument on several considerations: the fact that the only remedy provided by the Regulations is the grant of an order prohibiting the issue of a NOC; the availability to BMS of other remedies, namely an action for patent infringement and a declaration that Biolyse failed to comply with section 5 by not filing a NOA; Biolyse's good faith consultation with Health Canada on the kind of new drug submission that it should file; and the serious financial consequences to Biolyse of losing its NOC.

[38]            The exercise of discretion to grant or withhold relief to an applicant for judicial review is primarily the province of the Applications Judge. Absent an error of principle, a misapprehension of the facts, or an otherwise unreasonable determination, an appellate court should not interfere with the Applications Judge's exercise of discretion. However, since Blanchard J. did not expressly address the remedial issue, it is appropriate that I say something about it here.

[39]            The normal remedy when administrative action is taken in breach of a statutory duty is for the reviewing court, when so requested, to set it aside. In my opinion, the considerations relied on by Biolyse are insufficient, both individually and collectively, to justify a refusal to set aside the NOC issued by the Minister to Biolyse.

[40]            First, although a NOC cannot be quashed under the special statutory regime created by the Regulations (Pfizer Canada Inc. v. Nu-Pharm Inc.; Pfizer Inc. v. Apotex Inc. (2001), 11 C.P.R. (4th) 245 (F.C.A.)), the general judicial review jurisdiction conferred on the Federal Court by sections 18 and 18.1 of the Federal Court Act is applicable to administrative action taken, or not taken, by the Minister under the Regulations.

[41]            Thus, while the Regulations govern prohibition proceedings instituted under section 6 of the Regulations, an application for judicial review may be made under section 18.1 to quash a NOC on the ground that it was issued in contravention of the Regulations: Syntex (U.S.A.) L.L.C. v. Canada (Minister of Health) (2002), 20 C.P.R. (4th) 29 (F.C.A.). Nonetheless, as Syntex also makes clear, the Court will normally not grant relief on an application for judicial review under section 18.1 when the applicant could have sought an order of prohibition under the Regulations. However, where, as here, an applicant had no opportunity to proceed under section 6, the Court's exercise of its judicial review jurisdiction under section 18.1 to grant the relief sought by BMS is not constrained by the existence of the special regime created by the Regulations.

[42]            Second, the right of BMS to institute proceedings for patent infringement against Biolyse does not constitute a basis for a refusal to quash the NOC. The rationale for the Regulations is to provide more effective protection for patentees than is available through private law proceedings. Hence, it can hardly be said that the Court should decline to quash a NOC issued by the Minister in breach of the Regulations because BMS's right to sue for patent infringement after Biolyse's drug has been on the market is an adequate alternative remedy. Nor is the declaration granted to BMS that Biolyse failed to comply with section 5 an adequate remedy since it does not prevent the possible infringement of BMS's patents for TAXOL by Biolyse's marketing PACLITAXEL for injection.

[43]            Third, I see nothing in the conduct of the officials of either Health Canada or BMS that makes it inappropriate to grant the relief requested by BMS. Nor do I regard the financial loss to Biolyse as a result of quashing the NOC as sufficient to engage the Court's discretion. It is, of course, open to Biolyse to file and serve a NOA and to defend any prohibition proceedings brought by BMS under section 6.

[44]            Accordingly, I cannot conclude that Blanchard J. made any error in the exercise of his remedial discretion.

E.        CONCLUSIONS

[45]            For these reasons, I would dismiss the appeal with one set of costs payable to BMS by Biolyse and the Attorney General.

                                                                                        "John M. Evans"             

                                                                                                              J.A.                      

"I agree

     B.L. Strayer J.A."

"I agree

      Marc Nadon J.A."

FEDERAL COURT OF CANADA

APPEAL DIVISION

Names of Counsel and Solicitors of Record

DOCKET:                                                                 A-697-02

STYLE OF CAUSE:                    Biolyse Pharma Corporation v. Bristol-Myers Squibb Company and Bristol-Myers Squibb Canada Inc. and The Attorney General of Canada

DATE OF HEARING:                                            March 19, 2003

PLACE OF HEARING:                                        Toronto, Ontario

REASONS FOR JUDGMENT BY: Evans J.A.        

CONCURRED IN BY:                                           Strayer J.A.

Nadon J.A.

DATED:                                                                     April 7, 2003

APPEARANCES BY:

Mr. Douglas Deeth

Mr. Gordon Jepson                                                    For the Appellant

Mr. Anthony Creber

Mr. Patrick Smith                                                        For the Respondent

Mr. Frederick Woyiwada                                           For the Respondent

SOLICITORS OF RECORD:

Mr. Douglas Deeth

Deeth Williams Walls LLP

Toronto, Ontario                                                         For the Applicant

Mr. Anthony Creber

Gowling Lafleur Henderson LLP

Ottawa, Ontario                                                          For the Respondent

Frederick Woyiwada

c/o Department of Justice

Ottawa, Ontario                                                         For the Respondent