Galderma Successful in Judicial Review of PMPRB Decision on Differin

On November 9, the Federal Court issued its ruling on the judicial review of a decision by the Patented Medicine Prices Review Board (PMPRB) regarding the drug product Differin (adapalene), marketed by Galderma Canada Inc (Galderma).¹ The Court reaffirmed the correct approach to determining whether PMPRB has jurisdiction over the price of a drug and, in particular, whether an invention "pertains" to a medicine.

What You Need To Know

• In determining whether PMPRB has jurisdiction over the price of a medicine, the question is whether the invention described in a patent is intended or capable of being used for that medicine. The PMPRB erred in its analysis by neglecting to determine the invention of the patent in question.
• The Court reaffirmed that while a high level review of the "face of the patent" is the proper analysis, the correct approach is to read the patent as a whole to determine the invention. The Court emphasized it would be unreasonable to fail to review the patent's claims and description in ascertaining the scope of the invention. Put differently, the court reiterated the importance of reviewing a patent holistically.
• Importantly, the Court noted that, within the relevant context of standard of review, significant deference will be paid to the Board's decisions, but the decision of whether a patented invention pertains to a medicine is not a discretionary exercise.
• The Court affirmed the appropriate standard of review for each of the three questions raised by the decision:
• Matters of natural justice or procedural fairness: correctness standard;
• PMPRB decision on whether an invention "pertains" to a patent: reasonableness standard; and
• PMPRB's interpretation of general terms in the Patent Act or principles of general patent law: correctness standard.
• The Court found it was unreasonable for PMPRB to conclude that a separate invention to a higher concentration, extended release technology was "capable" of being used for the original lower concentration, immediate release formulation of adapalene and quashed the Board's decision on its rule.

Background

The facts of this case relate to two medicines, Differin (a formulation of adapalene in a concentration of 0.1%) and Differin XP (a sustained release 0.3% formulation). Patents on Differin had been duly reported to the PMPRB Staff. They expired in 2009. A different patent had been reported in respect of Differin XP, which expired in 2016. The issue was whether the later patent (to the 0.3% formulation) should have been reported in the post-2009 period for Differin (presumably because, although Differin XP was still under price control, Differin was no longer under the price control jurisdiction of the Board.)

Despite not having taken any steps, in respect of Galderma's alleged failure to report the later patent against Differin, for seven years, The Board staff alleged Galderma had failed to provide the pricing and sales information in relation to the medicines Differin and Differin XP as required by "patentees" under the Act. After a hearing was conducted, the Board concluded the later patent pertained to the medicine Differin and ought to have been reported, meaning that from post-2009 to 2016, Differin would have been under price control.

Analysis

On judicial review, Phelan J. held that PMPRB made two critical errors in its decision.

First, the Court found errors in the Board's approach to determine whether the later patent pertained to the earlier medicine. The Board noted that the jurisprudence allowed it to assert jurisdiction where the "merest slender thread" of pertinence could be found between a patent and a medicine and argued that this was a matter of deference. The Court ruled, rightly, that the focus of the analysis on whether a patent "pertains" should be a determination of whether the invention in the patent pertains to the medicine. While the Court noted that the Board is entitled to deference on the scope of the word "pertains", that deference applied (on the reasonableness standard) only as the Board asks the right question and "does not stretch the application of 'pertains' such that it strays into constitutionally impermissible grounds"—those grounds being limited to an "invention" that pertains to a medicine.

The court observed that since the PMPRB had used the terms "patent" and "invention" interchangeably in its decision, it was not clear to the Court that the Board was aware that these terms, often used synonymously as a form of short hand, were different under the scheme of the Act with important and distinct meanings.

The court ruled the PMPRB did not identify the invention in the later patent and failed to consider whether the 0.3% extended release formulation disclosed in the later patent was intended or capable of being used for the original 0.1% Differin medicine. Thus, PMPRB wrongly focused on considerations other than the actual invention disclosed in the patent.

Second, while the court agreed with PMPRB that the proper analysis is to review the "face of the patent" when deciding whether an invention pertains to a medicine, this facial review requires that patent be reviewed as a whole. This would include the claims, description, and scope of the invention. The court found that PMPRB failed to review the later patent "holistically" and therefore erred in concluding that the later patent covered more than the 0.3% extended release formulation based on the whole patent, and particularly its claims.

Taken together, it was unreasonable for PMPRB to conclude that on its face the later patent pertained to Differin.

Implication

This decision effectively adds significant meaning to jurisprudence and shows that, while the "merest slender thread" of nexus between a patent and a medicine will be required, the analysis must be based on the language of the statute.

While the Board Staff in this, and other cases, has taken the position that a patent containing the active ingredient of a medicine may pertain to the medicine even if it covers a different formulation or dosage format, that practice will have to be reconsidered in light of this decision. In a very clear decision, Phelan J. has clarified that the focus of the analysis has to be whether the invention of the patent pertains to the medicine. This elevates the threshold required in establishing a nexus and in, this case, snapped the thread of pertinence relied on by the Board.

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¹ See: https://decisia.lexum.com/fc-cf/decisions/en/item/300798/index.do