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15 May 2017
On February 27 2017 the Ontario Superior Court of Justice dismissed a motion for summary judgment brought by Abbott Laboratories and Takeda Pharmaceuticals, the defendants in an action for damages brought by Apotex under Section 8 of the Patented Medicines (Notice of Compliance) Regulations (PMNOC Regulations).(1)
In the underlying Section 8 action, Apotex claimed damages for delay in issuance of its notice of compliance for Apo-Lansoprazole – its generic lansoprazole product (Abbott's Prevacid) – due to prohibition applications commenced by Abbott and Takeda. Apotex alleged that it would have received its notice of compliance in April 2007, but for the applications under the PMNOC Regulations.
This is the second summary judgment motion brought by the defendants in this action. In 2013 the court granted partial summary judgment and dismissed Apotex's claim for unjust enrichment in Apotex Inc v Abbott Laboratories Ltd(2) (for further details please see "Ontario court rejects claim for unjust enrichment").
In the present motion, Abbott and Takeda sought summary judgment on the basis that Apo-Lansoprazole "could not" and "would not" have been approved as of its patent hold date (April 2007), because it did not comply with the applicable regulatory requirements under the Food and Drugs Act or the Food and Drug Regulations.
The applicants' position arose from the somewhat unusual regulatory approval history for Apo-Lansoprazole. Apotex initially filed its abbreviated new drug submission (ANDS) for Apo-Lansoprazole on February 2 2006. Shortly after this, Abbott and Takeda – joined as the patentee – commenced applications under PMNOC Regulations to prohibit the minister from issuing a notice of compliance. In April 2007 while the applications were pending, Health Canada determined that Apo-Lansoprazole was approvable and issued a patent hold letter.
However, in December 2007 Health Canada changed its position and revoked the patent hold status on the basis that the bioequivalence study in Apotex's ANDS (a low-calorie, low-fat fed study) was inadequate. Under the Health Canada guidance documents at the time, a high-calorie, high-fat fed study was preferred to establish bioavailability compared to the reference product. Subsequently, a notice of non-compliance-withdrawal was issued. Apotex and Health Canada continued to engage in this regulatory issue until June 2009 when a notice of compliance was ultimately issued (by then, the prohibition applications had been settled between the parties).
On this factual basis, Abbott and Takeda, in separate submissions, argued that Apotex was not entitled to damages under Section 8 of the PMNOC Regulations because Health Canada could not and would not have issued a notice of compliance for Apo-Lansoprazole in the hypothetical world due to the alleged non-compliance with regulatory requirements.
Both parties put forward evidence on the motion. The applicants compelled testimony from a Health Canada representative, while Apotex put forward expert evidence on the regulatory approval process. Both witnesses were cross-examined. On the basis of this evidentiary record the court made several important findings of fact and law relevant to the motion as well as the underlying action.
After extensively summarising the evidence, the court found that Health Canada would have issued the notice of compliance to Apo-Lansoprazole in April 2007 in the absence of the PMNOC Regulations. As for Abbott and Takeda's contention that Apo-Lansoprazole was not legally approvable, the court held that the Food and Drug Regulations gave wide discretion to the minister. Health Canada's guidance documents, although indicative of the minister's preferences, did not create a legal requirement for approval of a drug.
The court therefore found the applicants' position on summary judgment to be "without factual or legal foundation or merit, based on the unrefuted evidence".
The court also addressed a second argument raised by Abbott and Takeda: Apotex was not entitled to Section 8 damages because the patent hold letter was based on a "mistake", thereby rendering it void ab initio. The argument was based on a decision of the Federal Court of Appeal in Apotex Inc v Canada (Health),(3) where the court dismissed Apotex's judicial review of the minister's decision not to issue a notice of compliance to Apotex for its omeprazole magnesium tablets. In that case, the court also held that Apotex could not bring a Section 8 action because Apotex had no vested right to a notice of compliance.
The Ontario Superior Court distinguished the Apotex Inc v Canada (Health) decision, including on the basis that a judicial review differed from a Section 8 action and that neither Abbott nor Takeda had standing to challenge Health Canada's drug approval process for Apo-Lansoprazole. The court noted that notwithstanding the linkage between the Patent Act and the Food and Drugs Act, the patentee could not inject itself into Health Canada's determination of safety and efficacy. In any event, the court also found that the patent hold letter for Apo-Lansoprazole was not revoked for safety and efficacy reasons, but because Apotex did not file the exact 'high-fat' study required by the guidance documents.
The court's legal conclusion was that, as a corollary to the Apotex Inc v Canada (Health) decision, if approval for the generic drug was ultimately granted on the same basis as the initial filing, there could still be a Section 8 claim despite the minister's intervening change in position. In this case, the final approval was granted on the basis that the original studies submitted by Apotex did indeed establish bioequivalence – as eventually accepted by an expert panel convened by Health Canada.
Based on the above findings, the court dismissed the motion for summary judgment. However, the court went further – under the powers conferred by Rule 20 of the Ontario Rules of Civil Procedure, the court made a dispositive finding that Apotex was entitled to a Section 8 damages claim, leaving the only "genuine issue" for trial to be the quantum of damages – the defendants' counterclaim for patent infringement was also left to be determined. Further, the defendants were precluded from revisiting the issue of Health Canada's conduct, although the question of whether Health Canada's revised decision in December 2007 would have affected the quantum of sales was left open.
Finally, based on the court's factual findings and the legal conclusion in Apotex Inc v Canada (Health), the court also held that Abbott and Takeda could no longer argue the issue of Apotex's misconduct vis-à-vis Health Canada as a consideration under Subsection 8(5) of the PMNOC Regulations.
This decision is significant to patentees and innovative drug companies facing a Section 8 claim, particularly in the Ontario Superior Court. First, the decision illustrates the importance of motions for summary judgment and the associated risk of dispositive findings. Second, the decision adds to the growing jurisprudence on the relationship between Health Canada's regulatory approval process and Section 8 of the PMNOC Regulations.
For further information on this topic please contact Kevin Siu at Smart & Biggar/Fetherstonhaugh by telephone (+1 416 593 5514) or email (email@example.com). The Smart & Biggar/Fetherstonhaugh website can be accessed at www.smart-biggar.ca.
(1) Apotex Inc v Abbott Laboratories Ltd, 2017 ONSC 1348.
(3) Apotex Inc v Canada (Health), 2012 FCA 322.
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