Generic Drug Manufacturers Not Off the Hook: Federal Court of Appeal

Two decisions heard concurrently by the Federal Court of Appeal have confirmed the jurisdiction of the Patented Medicine Prices Review Board (PMPRB) over generic drug manufacturers that enter into explicit or implicit licensing arrangements with Canadian patent owners.¹ The decisions also confirmed the constitutional validity of the PMPRB price control regime over patent owners and over non-owner entities, like authorized generic manufacturers, who benefit from rights granted under the Patent Act.

What You Need To Know

• The PMPRB is a federal body that regulates the price of patented medicines. A manufacturer that owns or in-licenses a patent that pertains to a drug sold in Canada must report the price of its product at launch, and then report sales every six months for the duration of patent protection.
• In essence, the Federal Court of Appeal found that licensed or otherwise authorized generics are subject to the PMPRB regime on the basis that they are entitled to the benefit of, or to exercise rights in relation to, the relevant patents, despite being non-owners.
• This decision is a reversal of an earlier ruling from the Federal Court, which held that while the PMPRB provisions are constitutional, they did not extend to generic drug manufacturers, aside from generic companies that own patents. On a broad reading of the decision below, it could be said that the PMPRB regime might not apply once a product was genericized, meaning that both the generic and innovator manufacturers could cease being subject to price control.
• The matter now returns to the Federal Court to assess the technical points of quantum of excessive pricing and relationship of the patents to the products in issue.

The generic manufacturers in question, ratiopharm (now Teva) and Sandoz, had argued that the patents in question did not give de facto exclusivity to the two manufacturers, and that therefore the jurisdictional (and constitutional) requirement of a "patent pertaining" to their products did not exist. The Court of Appeal disagreed, holding that a "factual monopoly" is not relevant to whether there is a "statutory monopoly." This means that a classic self-infringement analysis is not the test of whether a patent "pertains" to a medicine. This ruling continues the "merest slender thread of relevance" theme in Federal Court of Appeal jurisprudence which first appeared in the ICN decision.²

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¹ Canada (Attorney General) v. Sandoz Canada Inc., 2015 FCA 249; See: http://www.canlii.org/en/ca/fca/doc/2015/2015fca249/2015fca249.html.

² ICN Pharmaceuticals, Inc. v. Canada (Staff of the Patented Medicine Prices Review Board), [1997] 1 FCR 32, 1996; See: http://www.canlii.org/en/ca/fca/doc/1996/1996canlii4089/1996canlii4089.html?resultIndex=1#