Alexion Pharmaceuticals v Canada FCA Dismisses Appeal Aimed at Constitutionality of PMPRB Provisions

The Federal Court of Appeal's decision in Alexion Pharmaceuticals Inc. v. Canada (Attorney General), 2017 FCA 241 has significant implications for patentees before the Patented Medicine Prices Review Board (PMPRB) and for all litigants seeking judicial review of administrative decisions.

In the context of proceedings before the PMPRB, Alexion had brought an application for judicial review. It sought a declaration that the relevant sections of the Patent Act are ultra vires—or beyond the constitutional authority of—Parliament, because they are essentially a regulatory scheme over drug prices, and therefore improperly intrude into provincial jurisdiction over property and civil rights. The lower courts summarily dismissed Alexion's application, relying on previous decisions of the Court of Appeal that had determined that the relevant provisions are within Parliament's jurisdiction over patents. The Court of Appeal agreed with the lower courts. In addition to dismissing the appeal on its merits, the Court also held that, since the constitutionality of the relevant provisions had not been raised before the PMPRB at first instance, they were not properly before the Court on judicial review.

What You Need To Know

• The Federal Court of Appeal's decision in Canada (Attorney General) v. Sandoz Canada Inc. remains binding authority for the proposition that the Patent Act's patented medicines drug pricing regime remains constitutional and binding on drug manufacturers.¹
• A party seeking judicial review of a federal administrative tribunal on jurisdictional or constitutional grounds should raise all arguments that the tribunal has the jurisdiction to hear. After the tribunal decides the issue, the party can then bring the application for judicial review in Federal Court.

Procedural Background

Sections 83 to 86 of the Patent Act provide the PMPRB with authority to make remedial orders where it concludes that a patentee is selling a drug at an excessive price. Various courts have previously considered the constitutionality of these provisions. In both Manitoba Society of Seniors Inc. v. Canada (Attorney General) and in Sandoz, manufacturers argued that the pricing provisions (in previous versions of the Patent Act) established a scheme of price regulation, and therefore both exceeded federal authority in relation to patents and intruded on provincial jurisdiction in relation to property and civil rights.² In each case these arguments were rejected. The courts held that the provisions were in pith and substance related to patents and as such were valid federal legislation.

Alexion Pharmaceuticals Inc. was a party to a proceeding before the PMPRB relating to the price of its drug Soliris. It brought an application for judicial review in the Federal Court seeking a declaration that the relevant sections of the Patent Act are a pricing scheme that oversteps provincial authority over property and civil rights under the Constitution Act, 1867. The Attorney General brought a motion to dismiss the application on the basis that the Federal Court of Appeal's 2015 decision in Sandoz was binding authority and therefore the application had no chance of success. That motion was successful before the prothonotary and Alexion's appeal to the Federal Court was dismissed.

The Decision

The Federal Court of Appeal dismissed Alexion's appeal in Alexion Pharmaceuticals Inc. v. Canada (Attorney General), 2017 FCA 241. Writing for the Court, Justice Laskin held that Sandoz was binding authority on the constitutionality of the relevant provisions of the Patent Act. Although Alexion attempted to distinguish Sandoz on a variety of grounds—including that Sandoz had not squarely addressed the constitutionality of these provisions and that this case had a fuller factual record on which to determine the issue—these arguments were rejected.

In addition, although neither the Attorney General nor the courts below raised this issue, the Court of Appeal dismissed the appeal on the sole ground that Alexion had failed to abide by the "normal rule" that "parties to an administrative proceeding may proceed to the court system only after all adequate remedial recourses in the administrative process have been exhausted."³ The Court emphasized that the rule exists in the interests of justice (for example, to avoid multiplicity of proceedings and to give the Court the perspective of the administrative decision-maker) and that the Court itself is entitled to raise it on its own motion. In this case, since Alexion had failed to raise the constitutionality of the provisions before the PMPRB, it was not entitled to raise them on a judicial review application.

Is the Door Closed on the Constitutionality of the PMPRB?

Although the issue has been before the courts a number of times, Alexion may not be the final word. While Justice Laskin decided that Sandoz was binding, he noted several arguments that might have been available to Alexion. These include whether the Court should depart from the Sandoz decision, or whether the Court should exercise its discretion to permit Alexion to develop a record for possible consideration by the Supreme Court of Canada. Additional grounds may also become available with the amendments to the PMPRB’s regulations, which are scheduled to come into force January 1, 2019.

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¹ 2015 FCA 249 (Sandoz).

² Constitution Act, 1867, sections 91(22) and 92(13); (1991), 77 D.L.R. (4th) 48535 C.P.R. (3d) 66 (Man. Q.B.), affirmed (1992), 96 D.L.R. (4th) 606, 45 C.P.R. (3d) 194 (Man. C.A.).

³ Alexion at para. 47