Patent on Differin XP gives PMPRB pricing jurisdiction over Differin: Federal Court

On January 11, 2024, the Federal Court dismissed an application for judicial review of the Patented Medicine Prices Review Board’s (PMPRB) redetermination regarding the drug product Differin (adapalene), marketed by Galderma Canada Inc. (Galderma). This marks Galderma’s second application for judicial review challenging the PMPRB’s jurisdiction over the pricing of Differin, in a series of proceedings that commenced in 2016¹.

What you need to know

• The Federal Court’s decision endorses the PMPRB’s expanded view of its jurisdiction to consider the pricing of medicines whose formulation is not recited in the claims of a Canadian patent.
• As a result of the judicial review relating to PMPRB’s original decision on Differin, the Federal Court of Appeal (FCA) returned the first judicial review to PMPRB for redetermination, with guidance from the FCA regarding the proper interpretation of the patented invention for the purpose of determining whether PMPRB’s jurisdiction is triggered. The PMPRB, in its redetermination, concluded again that it had jurisdiction over Differin.
• In determining whether the PMPRB has jurisdiction over the price of a medicine, the Federal Court reaffirmed the following:
  • the fundamental question is whether a patented invention is intended or capable of being used for the medicine, as per subsection 79(2) of the Patent Act, not whether there is the merest slender thread of a connection;
  • there is a presumption that the mere existence of a relevant patent (one that pertains to a medicine) confers market power by distorting the competitive process, such that there is no need for the PMPRB to demonstrate actual market distortion or opportunity for a patentee to prove the contrary; and
  • the PMPRB is not required to go beyond the face of a patent in its assessment of jurisdiction.
• The Federal Court found it was reasonable for the PMPRB to redetermine that there is a clear rational connection between the original lower concentration, immediate-release formulation and the higher concentration, extended-release formulation of the same active ingredient, such that a patent to the formulation of Differin XP is “capable of” being used for the (otherwise) off-patent Differin.
• Galderma can appeal the decision to the FCA within 30 days of January 11, 2024.

Background

Galderma held Canadian patents on two of its dermatological medicines, Differin (0.1% adapalene) and Differin XP (0.3% adapalene, sustained release). Patents for Differin expired in 2009. The single Canadian patent for Differin XP expired in 2016. Seven years after the Differin patent’s expiry, the PMPRB asserted that the patent reported in respect of Differin XP was capable of being used for Differin and alleged that Galderma had failed to provide pricing and sales information as required under the Patent Act from 2009 to 2016. In other words, the PMPRB was of the view that Differin should have been under PMPRB jurisdiction/price control by virtue of the Differin XP patent.

Galderma sought judicial review of PMPRB’s decision and, in 2017, the Federal Court ruled, in a decision widely hailed by the pharmaceutical industry, that the PMPRB did not have jurisdiction over Differin after 2009. The Federal Court indicated that, because the PMPRB did not explain how the Canadian patent claiming 0.3% adapalene could be used for a medicine with 0.1% adapalene, its decision was unreasonable. That decision was appealed by the PMPRB, and in 2019, the FCA granted the appeal, but agreed with the lower court’s approach to patent review and that the PMPRB had erred in its assessment of the patented invention. The FCA remitted the matter to the PMPRB for redetermination, on the narrow issue of whether the patented invention (use of a 0.3% adapalene formulation in treating dermatological conditions) was capable of being used for Differin, in view of any clinical similarities between the two medicines.

In 2020, the PMPRB determined, again, that it had jurisdiction over Differin. Galderma, again, sought judicial review of the PMPRB’s redetermination decision.

Analysis and implications

In this judicial review decision, the Federal Court summarized the principles for determining whether the PMPRB has jurisdiction over the price of a medicine as follows:

• in assessing a potentially relevant patent, the fundamental question is whether the patented invention is intended or capable of being used for the medicine, as per subsection 79(2) of the Patent Act, not whether there is the “merest slender thread of a connection” (a term used in prior decisions);
• there is a presumption that the mere existence of a patent that pertains to a medicine confers market power by distorting the competitive process (i.e., competitors are dissuaded from entering the marketplace), such that there is no need for PMPRB to demonstrate actual market distortion or opportunity for a patentee to prove the contrary; and
• the PMPRB is not required to go beyond the face of a patent in its assessment of the patented invention and in determining whether a patent is intended or capable of being used for the off-patent medicine².

The PMPRB’s redetermination was based on the narrow issue of clinical similarities between the patented invention, Differin XP, and the off-patent medicine, Differin. For the PMPRB to exercise its price regulatory authority, there must be a rational connection between the invention described in a patent and the medicine in question.

The Federal Court found the PMPRB’s conclusion that the patented invention pertains to Differin to be reasonable, on the basis that the patented invention and the off-patent medicine have a shared product monograph, the same medicinal ingredient, similar clinical effects, comparable side effects, and similar indication. Further, the Federal Court noted that the patent included a discussion of both the 0.1% and the 0.3% adapalene formulations. The Court acknowledged that the patented invention and Differin are not interchangeable, and that the patented invention acts more rapidly and produces a greater therapeutic effect. However, the Court did not address why it was reasonable for PMPRB to overlook these clinical differences in the determination of whether the patented invention pertains to Differin.

On the FCA’s question of what kind of clinical similarities would support a finding that the patented invention is capable of being used for that medicine, the answer appears to be: medicinal ingredient, indication, side effects, and product monograph. The way clinical similarities were assessed and used to support the PMPRB’s redetermination in this case effectively overrides the FCA’s previous guidance and redefines the “medicine” as the medicinal ingredient rather than the commercial preparation. In short, it would appear that the question the FCA posed in sending the matter back to the PMPRB for redetermination created enough of an opportunity for the PMPRB to reach the same conclusion as it had done at first instance. Frankly, the outcome seems to be at odds with the legal conclusion flowing from the first judicial review and the FCA decision.

What is not explicitly addressed in the decision, but is key to answering the overarching question of PMPRB jurisdiction, is how the patented invention is capable of being used for the medicine—that is, how can a “use of a 0.3% adapalene formulation in treating dermatological conditions” be used for a 0.1% adapalene formulation? The FCA previously clarified that the “medicine” is the commercial preparation, not the medicinal ingredient. As such, simply sharing the same medicinal ingredient would not seem sufficient for a finding of a rational connection between a patented invention and a medicine. For an industry in which product/formulation improvements often contain the same medicinal ingredient as the original product, have similar indications as the original ingredient, and often share the same product monograph due to regulatory considerations, the practical outcome of this decision is that an original product could be captured under PMPRB jurisdiction, even though the patented invention is directed specifically to the improvement.

This decision lowers the threshold required to be met by the PMPRB in establishing a connection between a patented invention and a commercialized medicine. If a manufacturer obtains a patent for a new dosage form, new formulation, or new combination medicine based on an active ingredient used in an older off-patent medicine, the PMPRB may re-assert jurisdiction over the off-patent medicine.

What’s next

This may not be the last time we hear about this case. Galderma has 30 days to appeal this decision. We will see whether there will be another chapter written in this long-running saga.