Apotex Inc. v. Sanofi-Aventis et al., (2012) 410 F.T.R. 78 (FC)

• Judge: Snider, J.
• Court: Federal Court (Canada)
• Case Date: May 23, 2012
• Jurisdiction: Canada (Federal)
• Citations: (2012), 410 F.T.R. 78 (FC);2012 FC 553

Apotex Inc. v. Sanofi-Aventis (2012), 410 F.T.R. 78 (FC)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2012] F.T.R. TBEd. JN.008

Apotex Inc. (plaintiff) v. Sanofi-Aventis, Sanofi-Aventis Deutschland GmbH and Sanofi-Aventis Canada Inc. (defendants)

(T-1357-09; 2012 FC 553; 2012 CF 553)

Indexed As: Apotex Inc. v. Sanofi-Aventis et al.

Federal Court

Snider, J.

May 23, 2012.

Summary:

Apotex Inc. sold a generic version of ramipril (Apo-ramipril), a drug used mainly to treat hypertension. Sanofi-Aventis held patent rights to a brand-name version of ramipril (ALTACE). In spite of the fact that Apotex received certain regulatory approvals from Health Canada in 2004, it was unable to commence sales of Apo-ramipril until December 12, 2006, when it received its Notice of Compliance (NOC) pursuant to the Patented Medicines (Notice of Compliance) Regulations. In whole or in part, the delay was caused by the actions of Sanofi, which exercised its rights under the Regulations to a statutory stay of the issuance of a NOC to Apotex. Apotex commenced an action against Sanofi, claiming damages pursuant to s. 8 of the Regulations, for the loss it suffered during the period from April 26, 2004 to May 2, 2008. Sanofi raised issues respecting the validity of s. 8 which were considered in separate proceedings.

The Federal Court, in a decision reported (2012) 410 F.T.R. 145; 2012 FC 551, rejected Sanofi's arguments respecting the validity of s. 8. Sanofi acknowledged that if s. 8 was valid, then Apotex was entitled to damages under s. 8, but disputed certain elements of Apotex's claim, including: (a) the relevant dates for computing the loss; and (b) the various assumptions and projections built into the assessment of damages.

The Federal Court dealt with the issues accordingly. The court held that the relevant period for the purpose of determining Apotex's net lost profits commenced on April 26, 2004 (the patent hold date) and ended on December 12, 2006. The court ruled that the size of the ramipril market and the generic market during the relevant period should be quantified in accordance with the calculations of an economist produced by Apotex. The court held that Apotex's lost volumes should be calculated on the basis that Apotex would have entered the market as of April 26, 2004, an authorized generic would have entered on July 26, 2004 and Teva, a generic, would have entered on August 1, 2006. The court established Apotex's share of the generic market, based on when it, the AG and Teva entered the market (a. April 26, 2004 to July 26, 2004 (Period 1) - 100%; b. July 26, 2004 to August 1, 2006 (Period 2) - 70%; and c. August 1, 2006 to December 12, 2006 (Period 3) - 50%). Among other allowances considered by the court, a pipeline adjustment should be applied, resulting in an addition to the lost volumes of an additional two months of Apo-ramipril capsule sales for each capsule dosage strength. Pre-judgment and post-judgment interest were payable as outlined by the court. While the court was unable to finalize a quantum of damages, the court expressed the hope that Sanofi and Apotex could quickly agree on a final amount to be paid by Sanofi to Apotex based on the court's reasons for judgment.

Editor's Note: Portions of this judgment were redacted by the court and as indicated by the "[Redacted]" notation - see explanation in the Postscript, paragraphs 301 to 303.

Food and Drug Control - Topic 1102

Drugs - New and innovative drugs - Legislation, re - The Federal Court reviewed the statutory framework under the Patented Medicines (Notice of Compliance) Regulations - See paragraphs 13 to 36.

Food and Drug Control - Topic 1102

Drugs - New and innovative drugs - Legislation, re - Section 8 of the Patented Medicines (Notice of Compliance) Regulations, allowed a generic drug company (second person) to bring an action against an innovator (first person) for compensation for the period it was kept off the market as a result of the innovator's unsuccessful prohibition application - The Federal Court interpreted s. 8 - See paragraphs 13 to 36.

Food and Drug Control - Topic 1104

Drugs - New and innovative drugs - Notice of compliance - General - [See first Food and Drug Control - Topic 1102 ].

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court (Snider, J.) explained that "My overarching objective is to assess the amount of compensation to be awarded to Apotex. Following the teachings of the Court of Appeal in Apotex Inc. v. Merck & Co., 2011 FCA 329 ... this requires that I consider the hypothetical question: What would have happened if Sanofi had not brought an application for prohibition? In other words, I must construct a hypothetical, or 'but for', world during a defined period of time in the past in order to determine what share of the ramipril market Apotex would have captured if it had been able to sell its generic ramipril ..." - See paragraph 6.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc. wished to market a generic verison of ramipril, but there were delays in obtaining a Notice of Compliance (NOC) from 2004 to 2008, because Sanofi had filed an application for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed that Sanofi was liable for the loss it suffered during the delay (Regulations, s. 8) - An issue arose as to the commencement and end dates for the period of liability (i.e., relevant period) for purposes of s. 8 - The Federal Court considered a number of dates proposed by the parties, but in the result determined that the period of delay (relevant period) ran from April 26, 2004 (the patent hold date) to December 12, 2006 (the date of Apotex's NOC for ramipril) - See paragraphs 37 to 82.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court found that the period of delay (relevant period) ran from April 26, 2004 (patent hold date) to December 12, 2006 (the date of Apotex's NOC for ramipril) - The court then proceeded, for purposes of assessing damages, to estimate the size of the total ramipril market during the relevant period, the portion of the ramipril market that would have been acquired by generic manufacturers during the relevant period and the share of the generic market that would have accrued to Apotex - The assessment of Apotex's share of the generic market included an assessment of Apotex's lost volumes over the relevant period - See paragraphs 84 to 226.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court established the period of delay (i.e., the relevant period) - For the purposes of assessing damages, the court then proceeded to construct a hypothetical, or "but for", world during the relevant period in order to determine what share of the ramipril market Apotex would have captured if it had been able to sell its generic - Sanofi claimed that Apotex's share of the generic market should be assessed on the basis of one "but for" world because there could only be one "but for" world that should apply to all s. 8 claims for ramipril - The Federal Court rejected Sanofi's urging that the court establish one "but for" world that would apply in this case and in any others involving the genericization of ramipril - See paragraphs 124 to 139.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court established the period of delay (i.e., the relevant period) - For the purposes of assessing damages, the court then proceeded to determine Apotex's share of the generic market in a hypothetical, or "but for", world during the relevant period - The court determined the share based on the assumption that a generic, Teva, and an authorized generic (AG) would have come into the market in the hypothetical world within the relevant period - See paragraphs 151 to 203.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court established the period of delay (i.e., the relevant period) - For the purposes of assessing damages, the court then proceeded to determine Apotex's share of the generic market in a hypothetical, or "but for", world during the relevant period - The court rejected an argument by Apotex against the inclusion of an authorized generic (AG) in the hypothetical world, and in particular that s. 8 of the Regulations should be interpreted as precluding the presence of an AG - The court saw no reason to exclude the existence of an AG, where demonstrable on the facts, from the "but for" market - See paragraphs 173 to 180.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril (Apo-ramipril) were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court established the period of delay (i.e., the relevant period) - For the purposes of determining Apotex's lost volumes, the court allowed a "pipeline adjustment" for the time lag between Apotex making a sale and a pharmacist dispensing the Apo-ramipril capsules - That would result in an addition to the lost volumes of an additional two months of Apo-ramipril capsule sales for each capsule dosage strength - See paragraphs 221 to 226.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril (Apo-ramipril) were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court established that the period of delay (i.e., the relevant period) was from April 26, 2004 to December 12, 2006 - The court determined how Apotex's lost gross sales should be calculated and what deductions should be made from that quantum to arrive at Apotex's net lost profits - Those deductions included an allowance for trade spend (an amount paid to pharmacists to entice them to carry Apo-ramipril as a product) and the costs of materials, but not an amount for a second "ramp-up" - See paragraphs 7, 227 to 271.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril (Apo-ramipril) were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed that Sanofi was liable for the loss it suffered because of the delay (Regulations, s. 8) - Sanofi submitted that the "loss" referred to in s. 8 of the Regulations did not contemplate recovery by a second person (generic) for sales attributable to an unapproved indication or use, in this case the Heart Outcomes Prevention Evaluation study (HOPE study) - The Federal Court, on the facts of this case, concluded that "... Apotex is not precluded from recovering losses associated with the HOPE indications. That is not to say that a second person may always recover for unapproved indications. Another s. 8 claim may provide a clear defence in the pleadings and a different set of facts that would warrant a different finding or a downward adjustment to the second person's damages pursuant to s. 8(5) of the Regulations. But, not in this case" - See paragraphs 272 to 295.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - The Federal Court explained that the terms "authorized generic" or "AG" referred to a drug that was manufactured by an innovative drug company, but sold by a generic company under the generic's name - Authorized generic agreements allowed innovators to participate in both the brand and generic markets, as the innovator effectively could sell two distinct, but identical products - In a genericized market, the introduction of an AG permitted the brand company to recoup some of the market lost to generics - See paragraphs 170 and 171.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court established the period of delay (i.e., the relevant period) - For the purposes of assessing damages, the court then proceeded to construct a hypothetical, or "but for", world during the relevant period in order to determine what share of the ramipril market Apotex would have captured if it had been able to sell its generic - The court discussed who had the burden of proving whether any generic competitors or an authorized generic (AG) would have entered the hypothetical market - The court set out the proper approach to burden of proof in this context - See paragraphs 141 to 150.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc.'s attempts to market a generic verison of ramipril were delayed because Sanofi applied for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court found that the period of delay (relevant period) ran from April 26, 2004 to December 12, 2006 - The court stated that in assessing damages: "The court should have regard to the possibility of multiple market entrants during the relevant period, but is not required to establish a single 'but for' world that will apply to all possible s. 8 claims. On the facts of this case, it is more likely than not that a generic authorized by Sanofi (an authorized generic or AG) would have entered the generic market on July 26, 2004, with Teva Canada Limited [Teva] [i.e., another generic] following on August 1, 2006" - See paragraphs 7 and 128 to 203.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Sanofi-Aventis owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension - Apotex Inc. wished to market a generic verison of ramipril, but there were delays in obtaining a Notice of Compliance (NOC), because Sanofi had filed an application for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Apotex claimed that Sanofi was liable for the loss it suffered because of the delay (Regulations, s. 8) - The Federal Court found that the period of delay (relevant period) ran from April 26, 2004 to December 12, 2006, and set out the basis upon which damages were to be assessed - The court awarded: (1) pre-judgment interest, not compounded, calculated separately for each year since April 26, 2004 at the average annual bank rate established by the Bank of Canada at the minimum rate at which the Bank of Canada made short-term advances to the banks listed in Schedule 1 of the Bank Act; and (2) post-judgment interest, not compounded, at the rate of 5% established by the Interest Act - See paragraph 298.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - [See second Food and Drug Control - Topic 1102 ].

Interest - Topic 3506

Statutory interest - On judgments - Rate of interest - [See thirteenth Food and Drug Control - Topic 1108.2 ].

Interest - Topic 5009

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Calculation of (incl. rate) - [See thirteenth Food and Drug Control - Topic 1108.2 ].

Cases Noticed:

Apotex Inc. v. Merck & Co. et al. (2011), 425 N.R. 279; 2011 FCA 329, refd to. [para. 6].

Apotex Inc. v. Merck & Co. et al. (2008), 335 F.T.R. 255; 2008 FC 1185, revsd. in part [2010] 2 F.C.R. 389; 391 N.R. 336; 76 C.P.R.(4th) 1; 2009 FCA 187, leave to appeal denied (2010), 404 N.R. 396 (S.C.C.), refd to. [para. 13].

AstraZeneca Canada Inc. v. Canada (Minister of Health) et al., [2006] 2 S.C.R. 560; 354 N.R. 88; 2006 SCC 49, refd to. [para. 31].

Apotex Inc. v. Sanofi-Aventis Canada Inc., [2007] N.R. Uned. 2; 54 C.P.R.(4th) 402; 2007 FCA 7, refd to. [para. 32].

Apotex Inc. v. Canada (Minister of National Health and Welfare) et al. (1997), 129 F.T.R. 300; 72 C.P.R.(3d) 421 (T.D.), affd. (1997), 219 N.R. 151; 153 D.L.R.(4th) 68 (F.C.A.), leave to appeal refused (1998), 226 N.R. 400 (S.C.C.), refd to. [para. 53].

Apotex Inc. v. Merck & Co. Inc. et al. (2010), 363 F.T.R. 137; 82 C.P.R.(4th) 85; 2010 FC 287, refd to. [para. 53].

AB Hassle et al. v. Apotex Inc. et al. (2008), 384 N.R. 372; 2008 FCA 416, refd to. [para. 54].

Ferring Inc. v. Canada (Minister of Health) et al., [2008] 1 F.C.R. 19; 310 F.T.R. 185; 2007 FC 300, affd. (2007), 370 N.R. 263; 2007 FCA 276, refd to. [para. 68].

Watson, Laidlaw & Co. Ltd. v. Pott, Cassels, and Williamson (1914), 31 R.P.C. 104 (H.L.), refd to. [para. 137].

Hoffmann-La Roche Ltd. et al. v. Canada (Minister of National Health and Welfare) et al. (1996), 205 N.R. 331; 70 C.P.R.(3d) 206 (F.C.A.), refd to. [para. 144].

Ontario Equitable Life and Accident Insurance Co. v. Baker, [1926] S.C.R. 297, refd to. [para. 145].

Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al., [1991] 3 S.C.R. 3; 126 N.R. 354; 3 B.C.A.C. 1; 7 W.A.C. 1, refd to. [para. 146].

Les Laboratoires Servier et al. v. Apotex Inc. et al., [2008] EWHC 2347 (Ch.); [2008] All E.R.(D.) 79, revsd. [2010] E.W.C.A. Civ. 279; [2010] All E.R.(D.) 238, refd to. [para. 148].

Algonquin Mercantile Corp. v. Dart Industries Canada Ltd., [1988] 2 F.C. 305; 79 N.R. 305 (F.C.A.), refd to. [para. 148].

Statutes Noticed:

Patent Act Regulations (Can.), Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, sect. 8 [para. 25].

Patented Medicines (Notice of Compliance) Regulations - see Patent Act Regulations (Can.).

Transparent Drug System for Patients Act, S.O. 2006, c. 14, generally [para. 230].

Counsel:

Harry Radomski, Nando DeLuca, Jerry Topolski and Ben Hackett, for the plaintiff;

Gunars A. Gaikis, J. Sheldon Hamilton, Andrew Mandlsohn, Jordan D. Scopa, Jeremy E. Want and Daniel S. Davies, for the defendants.

Solicitors of Record:

Goodmans LLP, Toronto, Ontario, for the plaintiff;

Smart & Biggar, Toronto, Ontario, for the defendants.

This matter was heard in Toronto, Ontario, on February 13-15, 21-24, 28, 29 and March 1, 2, 7 and 8, 2012, before Snider, J., of the Federal Court, who delivered the following redacted decision on May 23, 2012. Confidential reasons for judgment had been released previously on May 11, 2012.