Supreme Court of Canada Rules on Data Protection for Drug Innovators

On February 3, 2012, the Supreme Court of Canada released its long-awaited decision in Merck Frosst Canada Ltd. v. Canada (Health), the culmination of over a decade of litigation between Merck and the Minister of Health. The litigation arose out of two requests under the Access to Information Act1 (Act) for information contained in drug submissions for Singulair, a drug that treats asthma.


Summary of the Decision

The majority decision, written by Justice Cromwell, sets out with rigorous clarity a number of overriding principles governing the Minister’s duties in disclosing, or exempting from disclosure, information in response to access requests. The majority held that there is a "high threshold" to trigger the right of an institution to disclose information without notice to a third party, which is only available in clear cases. The Court clarified that a third party’s burden of showing why disclosure should not be made is to be discharged on the civil standard of a balance of probabilities, not a higher standard, as suggested by the Federal Court of Appeal.

As regards exemptions from disclosure, the Court clarified the meaning of "trade secrets," which are exempt from disclosure under the Act, and explained when publicly available information, such as scientific publications, can be considered to be exempt from disclosure (e.g., if a third party has made confidential statements relating to the evaluation of the reliability of a study). The Court affirmed that for the third party to qualify for the exemption from disclosure, it must demonstrate "a reasonable expectation of probable harm," not the unduly onerous standard imposed by the Minister that the financial loss or the prejudice to a third party’s competitive position must be "immediate" and "clear."


Background

Before the Supreme Court ruling, there had been five hearings and re-hearings by the Federal Court. The main points of contention were as follows:

  1. Must an institution give notice to a third party every time it discloses information in response to an access request?
  2. What is the standard of proof to be met by the third party in order to justify non-disclosure?
  3. What are the standards for engaging the exemption from disclosure for confidential information, under section 20 of the Act?

The Supreme Court also considered the standard of review to be applied by appellate courts and whether it is appropriate to substitute their decisions for those of the reviewing judge.


Obligation to Give Notice

This issue was argued as a result of the Minister’s decision to release certain information contained in Merck’s drug submissions, without first seeking representations from Merck. The Supreme Court rejected Merck’s contention that certain documents (such as drug submissions) give rise to an "automatic" right to receive notice before disclosure. However, the Court held that there is a "fairly low threshold" to trigger the obligation to give notice, and a corresponding "high threshold" to trigger the right to disclose without notice, noting that the institutional head may only disclose without notice in clear cases, where there is no reason to believe that the record would contain information protected by section 20 of the Act. The Court also clarified that notice is absolutely required if an institutional head intends to disclose exempted material to serve the public interest (section 20(6)) or intends to disclose severed material (section 25).


Standard of Proof

The Court affirmed the well-established principle that, in the context of a judicial review proceeding, a third party bears the burden of showing why disclosure should not be made. The Court clarified that the burden is to be discharged on the civil standard of a balance of probabilities and found that the Federal Court of Appeal had erroneously imposed a higher burden, requiring the third party to meet a "high threshold" or discharge a "heavy burden" in justifying an exemption.


Standards for Triggering Exemptions from Disclosure

The Court held that the exemption for trade secrets provided in section 20(1)(a) of the Act should be understood as applying to "a plan or process, tool, mechanism or compound" that possesses each of the four characteristics2 set forth in Health Canada’s operational guidelines relating to the Act. The Court rejected Merck’s argument that a broader definition was required in light of Canada’s obligations under international agreements such as TRIPS and NAFTA.

As regards the exemption for confidential information provided in section 20(1)(b) of the Act, the Court considered the approach for compilations of scientific studies, each of which was published individually, not as a body or in the precise configuration included in Merck’s drug submissions. Merck argued that both the manner in which the information is presented and the fact that Merck listed a particular study or relied on it in a particular way is confidential scientific or technical information and, therefore, exempt from disclosure under the Act.

The Court held that, as a general matter, the formatting and structure of submissions whose general contents are defined by publicly available guidelines (such as drug submissions) are not confidential information. As for lists of studies, the Court’s view was that the simple reference to a publicly available study or a description of its contents is generally not confidential information. According to the Court, knowledge both of the existence of the study and of its contents will generally be obtainable by a member of the public, albeit with more effort, through independent study.

Importantly, the Court did leave open the possibility that a reference to a study could constitute confidential information, depending on the facts in a particular case. Furthermore, the Court held that express or implicit statements relating to the evaluation of the reliability of a study will generally meet the definition of confidential information. Neither of these holdings were, ultimately, helpful for Merck because it had failed to present evidence showing that the information proposed to be disclosed showed its assessment or evaluation of the listed studies. Furthermore, Merck’s reliance on specific studies was public information as shown by the Product Monograph and other published documents.


Standard of Review


This was this issue that divided the Supreme Court in its decision. The majority held that appellate courts are entitled to substitute their decisions for those of the courts below. The minority held that interference is only appropriate in circumstances where the reviewing judge had made a palpable and overriding error. The minority was particularly concerned with the possibility of errors by an appellate court when conducting an evidentiary review at first instance.


Implications

There are several "take aways" from this decision.

  1. Third parties and institutions will have to carefully scrutinize the manner in which documents subject to requests for access are reviewed and assessed.
  2. Third parties that receive notice of an access request will want to ensure that their submissions claiming exemptions are targeted and that sufficient evidence is led to ensure that exemptions are properly applied.
  3. The comments of the minority argue for appellate courts to show greater deference to the reviewing judge at the earlier factual stages of review; if these comments are heeded, third parties should neither wait nor hope for appellate intervention in access to information matters. The time to deal with access requests is at the evidentiary stage.


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1 Section 20 of the Act creates certain exceptions to the release of information, including trade secrets of a third party (section 20(1)(a)); financial, commercial, scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party (section 20(1)(b)); and information whose disclosure could reasonably be expected to result in material financial loss or gain to, or could reasonably be expected to prejudice the competitive position of, a third party (section 20(1)(c)).

2The information must be secret in an absolute or relative sense (is known only by one or a relatively small number of persons); the possessor of the information must demonstrate that he has acted with the intention to treat the information as secret; the information must be capable of industrial or commercial application; and the possessor must have an interest (e.g., an economic interest) worthy of legal protection.

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