Federal Court of Appeal’s ruling on the judicial review of PMPRB decision on Differin

On June 28, the Federal Court of Appeal (FCA) affirmed the lower court’s approach to patent review in determining whether the Patented Medicine Prices Review Board (PMPRB) has jurisdiction over the price of the drug product Differin (adapalene, 0.1% concentration), marketed by Galderma Canada Inc. (Galderma). The Attorney General had appealed to the FCA the lower court’s ruling on the judicial review of PMPRB’s decision for Differin.¹

What you need to know

• The matter is not yet concluded and has been returned to PMPRB for redetermination based on a proper understanding of the patented invention provided by the FCA.
• Agreeing with the lower court, the FCA noted that PMPRB failed to determine the invention of the patent in question. The only reasonable interpretation of the patent is that the invention relates exclusively to a 0.3% adapalene formulation. As such, PMPRB’s position that the patent does not relate exclusively to a 0.3% adapalene formulation is erroneous and unreasonable.
• The FCA clarified that the “medicine” in issue is the commercial preparation that was sold in Canada at the relevant time (i.e., Differin), not the active ingredient of Differin (i.e., adapalene).
• The FCA concluded that there is only “one reasonable interpretation of the patent” and directed PMPRB to re-assess its position on whether the patent pertains to the medicine based on that one reasonable interpretation.
• The test to determine whether a patent pertains to a medicine is set out in the Patent Act. The phrase “merest slender thread” cannot supplant the statutory definition of “pertain” as set out in the Patent Act.
• The test to determine whether an invention pertains to a medicine is whether the “invention is intended or capable of being used for medicine or for the preparation or production of medicine” as per subsection 79(2) of the Patent Act.
• The FCA’s review, on a reasonableness standard, focused on the decision of PMPRB rather than the decision of the lower court, and whether an invention pertains to a medicine.
• The FCA affirmed the lower court’s approach to patent review when determining whether PMPRB has jurisdiction over the price of a medicine. PMPRB must read the patent as a whole, but is not required to go “beyond the face of the patent”. The FCA concluded that PMPRB unreasonably limited its review to only selected portions of the patent.

Analysis

Affirming trial court’s approach to patent review

On appeal, the FCA agreed with the lower court in that PMPRB had erred in its assessment of the patented invention.

First, the FCA held it was unreasonable for PMPRB to limit its analysis to only selected portions of the patent. The FCA noted that to discharge PMPRB’s mandate of regulating the prices of patented medicines, it must have a sufficient understanding of the invention of a patent. While this does not require the review to go “beyond the face of the patent”, PMPRB must read the patent as a whole and not simply certain introductory phrases. The FCA found that PMPRB unreasonably limited its review to the abstract and an introductory paragraph in reaching its conclusion and failed to consider the critical parts of the patent (e.g., the claims).

Second, the FCA agreed with the lower court in that PMPRB did not determine the invention of the patent. Instead, it limited its reading to a cursory examination of whether the patent related exclusively to a 0.3% adapalene formulation. The FCA determined that there is only one reasonable interpretation of the invention of the patent, and therefore, decided to supply that interpretation without referring the question back to PMPRB. Upon reviewing various parts of the description, including the background of invention, the objective of the patent, various formulations and examples, and benefits of the invention, as well as the claims, the FCA concluded that the invention of the patent is a 0.3% adapalene formulation used in treating dermatological conditions such as common acne. As such, PMPRB’s finding that the patent does not relate exclusively to a 0.3% adapalene formulation is erroneous and unreasonable.

Clarifying the “medicine” and “pertain”

In determining whether the patent pertains to the medicine, Pelletier J.A., concurred by Dawson J.A. and Webb J.A., provided further clarification on what the “medicine” is and what “pertain” entails.

On appeal, the Attorney General argued that the medicine in issue is adapalene, not Differin, and further argued that this was the position taken by PMPRB. The FCA disagreed with this position and observed that PMPRB in its decision repeatedly referred to Differin, the commercial preparation, as the medicine to which the patent pertains, not adapalene, the active ingredient. The FCA reasoned that, in view of PMPRB’s mandate and to give rise to the question of excessive pricing, the medicine would have to be the commercial preparation that was sold in Canada at the relevant time. As such, it was reasonable for PMPRB to conclude in its decision that the medicine is Differin.

The FCA clarified that the test to determine whether an invention pertains to a medicine is set out at subsection 79(2) of the Patent Act. The question to ask is whether the “invention is intended or capable of being used for medicine or for the preparation or production of medicine”, not whether there is the “merest slender thread” of a connection. The FCA further clarified that the expression “merest slender of thread” was used in jurisprudence as a metaphor for the idea that the connection between an invention and a medicine may be tenuous, not a test designed to replace or substitute the statutory definition of “pertain”.

Taken together, if PMPRB’s decision rests solely on its erroneous and unreasonable conclusion that the patent does not relate exclusively to a 0.3% adapalene formulation, then its decision should be quashed. However, it was unclear to the FCA whether PMPRB’s decision may have been influenced by other factors that were referred to in PMPRB’s decision. The FCA observed that there had been evidence before PMPRB regarding clinical similarities between Differin and Differin XP. The question of what kind of clinical similarities would support a finding that the invention of a patent pertains to, or was intended or capable of being used for that medicine, remains to be answered. As such, the matter was returned to PMPRB for redetermination based on a proper understanding of the invention of the patent provided by the FCA.

Implication

The period under review by PMPRB was between January 2010 and March 2016. If Galderma’s patent had been maintained, the patent would have expired in March 2023. Instead, the patent lapsed when Galderma failed to pay the maintenance fees so PMPRB’s period under review ended March 2016.

This decision affirms the lower court’s approach to patent review and provides further clarification to jurisprudence in determining whether the invention of a patent pertains to a medicine. The decision shows that while the connection between an invention and a medicine may be tenuous, the “merest slender thread” is not a test designed to supplant the statutory test of “pertain.”

The FCA returned the matter to PMPRB and invited it to consider what clinical similarities between Differin and Differin XP would support a finding that a patented invention was intended or capable of being used for that medicine. It commented that PMPRB must complete its inquiry on the basis of a proper understanding of the invention of the patent (i.e., the one the FCA provided in its decision). Namely, that the invention is the use of 0.3% concentration of adapalene for the treatment of dermatological disorders. The FCA also determined that the medicine is the commercial formulation, rather than the active ingredient. This decision elevates the threshold required to be met by PMPRB in establishing a connection between a patented invention and a commercialized medicine.

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¹ For background, please read our report and discussion on the Federal Court’s ruling.