Ratiopharm Inc. v. Canada (Attorney General), (2014) 455 F.T.R. 241 (FC)

• Judge: O'Reilly, J.
• Court: Federal Court (Canada)
• Case Date: May 27, 2014
• Jurisdiction: Canada (Federal)
• Citations: (2014), 455 F.T.R. 241 (FC);2014 FC 502

Ratiopharm Inc. v. Can. (A.G.) (2014), 455 F.T.R. 241 (FC)

MLB headnote and full text

[French language version follows English language version]

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

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Temp. Cite: [2014] F.T.R. TBEd. MY.040

Ratiopharm Inc. (now Teva Canada Limited)

(applicant) v. Attorney General of Canada (respondent)

(T-1252-11; T-1058-11; T-1825-11; 2014 FC 502; 2014 CF 502)

Indexed As: Ratiopharm Inc. v. Canada (Attorney General)

Federal Court

O'Reilly, J.

May 27, 2014.

Summary:

Ratiopharm Inc. sold generic drugs in Canada, including ratio-salbutamol HFA ("ratio HFA"), the generic equivalent of Ventolin HFA, a product manufactured by GlaxoSmithKline Inc. (GSK). Ratiopharm sold ratio HFA to pharmacies after having purchased it under contract from GSK. The two products competed against one another and other similar products in the Canadian market. Under the contract with Ratiopharm, GSK retained all patent rights to its product. The Patented Medicines Prices Review Board found that Ratiopharm, by virtue of its contract with GSK, was a "patentee" under s. 79(1) of the Patent Act, R.S.C. 1985, which put its prices within the Board's jurisdiction. In two subsequent decisions, it found that Ratiopharm was obliged to provide the Board with information and documentation about its prices, was selling ratio HFA at an excessive price, and had to pay damages of $65,898,842.76. Ratiopharm sought judicial review of all three decisions.

The Federal Court allowed all three applications. Taking into account the federal-provincial division of powers, and interpreting the scope of the Act accordingly, Ratiopharm was not a "patentee". Therefore, the Board had no jurisdiction over its sales of ratio HFA.

Constitutional Law - Topic 6281

Federal jurisdiction (s. 91) - Patents of invention and discovery - General - Ratiopharm argued that amendments to the Patent Act relating to the Patented Medicines Prices Review Board's powers placed those provisions beyond federal jurisdiction over patents, encroaching on provincial jurisdiction over property and civil rights - They argued that the amendments "strengthened the Board's remedial and punitive powers" to offset the effect of abolishing the prior scheme of compulsory licensing - Their purpose was to enable the Board "to influence the pricing of patented medicines to much the same extent that the competition fostered by compulsory licensing used to influence it" - The Federal Court rejected the argument, holding that the amendments giving the Board the power to address the pricing of patented medicines more directly through monetary remedies and penalties did not alter the legislation's basic purpose or expand the Board's mandate - The Act's provisions dealing with patented medicines, properly interpreted, fell within federal jurisdiction over patents of invention and were constitutional - See paragraphs 28 to 30.

Constitutional Law - Topic 6281

Federal jurisdiction (s. 91) - Patents of invention and discovery - General - The Federal Court reviewed the constitutionality of the federal government's regulation over excessive pricing of patented medicine - The court held that the relevant provisions of the Patent Act were enacted out of concern that patent holders could take undue advantage of their monopolies to the detriment of Canadian consumers - The legislation aimed to ensure that patent holders could not take undue advantage of their monopolies and should be interpreted in keeping with that purpose - Accordingly, the Patented Medicines Prices Review Board should confine its role to reviewing prices charged by patent holders, who benefitted from a time-limited monopoly, to determine whether those prices were excessive - While the federal government could regulate patents of invention, it had no overall jurisdiction to regulate the price of generic versions of patented medicines - That responsibility fell squarely on the provinces - Further, federal jurisdiction in this area was generally understood to be confined to regulating the "factory-gate" prices of patented medicines - Factory-gate prices were those charged by patent holders to their first purchasers (i.e., those Ratiopharm paid for medicines, not the prices at which it sold them) - See paragraphs 15 to 18.

Constitutional Law - Topic 6281

Federal jurisdiction (s. 91) - Patents of invention and discovery - General - Ratiopharm sold generic drugs in Canada, including ratio-salbutamol HFA ("ratio HFA"), the generic equivalent of Ventolin HFA, a product manufactured by GlaxoSmithKline (GSK) - Ratiopharm sold ratio HFA to pharmacies after having purchased it under contract from GSK - The two products competed against one another and other similar products in the Canadian market - Under the contract with Ratiopharm, GSK retained all patent rights to its product - The Patented Medicines Prices Review Board found that Ratiopharm, by virtue of its contract with GSK, was a "patentee" under s. 79(1) of the Patent Act, R.S.C. 1985, which put its prices within the Board's jurisdiction - In two subsequent decisions, it found that Ratiopharm was obliged to provide the Board with information and documentation about its prices, was selling ratio HFA at an excessive price, and had to pay damages of $65,898,842.76 - Ratiopharm sought judicial review of all three decisions - The Federal Court allowed the applications - The court considered that the French version tied the definition of "patentee" more closely to the patent holder's rights - It was a narrower definition than in the English version, which included any person entitled to exercise any rights relating to a patent - The legislative objectives did not include regulating the prices charged by companies who did not hold a monopoly - The legislation's constitutionality depended on its close connection to patent protection and the potential undue exploitation of the concomitant monopolies - Generic companies, like Ratiopharm, did not generally hold monopolies and, in fact, did not normally operate in a market where any monopoly existed - Had the Board taken these factors and considerations into account, it could not reasonably have concluded that Ratiopharm was a "patentee" - Therefore, the Board had no jurisdiction over its sales of ratio HFA - See paragraphs 12 to 27.

Statutes - Topic 501

Interpretation - General principles - Purpose of legislation - Duty to promote object of statute - [See third Constitutional Law - Topic 6281 ].

Statutes - Topic 1806

Interpretation - Intrinsic aids - Bilingual statutes - Interpretation of one version by reference to the other - [See third Constitutional Law - Topic 6281 ].

Trade Regulation - Topic 8522

Price and wage regulation - Patented medicine - Jurisdiction or powers of board - [See third Constitutional Law - Topic 6281 ].

Trade Regulation - Topic 8524

Price and wage regulation - Patented medicine - Excessive pricing - [See all Constitutional Law - Topic 6281 ].

Trade Regulation - Topic 8528

Price and wage regulation - Patented medicine - Judicial review - Standard of review - Ratiopharm sold generic drugs in Canada, including ratio-salbutamol HFA ("ratio HFA"), the generic equivalent of Ventolin HFA, a product manufactured by GlaxoSmithKline (GSK) - Ratiopharm sold ratio HFA to pharmacies after having purchased it under contract from GSK - The two products competed against one another and other similar products in the Canadian market - Under the contract with Ratiopharm, GSK retained all patent rights to its product - The Patented Medicines Prices Review Board found that Ratiopharm, by virtue of its contract with GSK, was a "patentee" under s. 79(1) of the Patent Act, R.S.C. 1985, which put its prices within the Board's jurisdiction - In two subsequent decisions, it found that Ratiopharm was obliged to provide the Board with information and documentation about its prices, was selling ratio HFA at an excessive price, and had to pay damages of $65,898,842.76 - Ratiopharm sought judicial review of all three decisions - The Federal Court held that all of the Board's conclusions should be reviewed on a reasonableness standard - Its main conclusion related to the meaning of "patentee" as defined in the Patent Act, which was the principal enactment the Board had to interpret - The Board merited deference due to its particular familiarity with that statute - Therefore, a reasonableness standard applied - The same degree of deference did not apply to constitutional questions - There, as the parties agreed, the standard was correctness - See paragraphs 9 to 11.

Words and Phrases

Patentee - The Federal Court discussed the meaning of this word as found in s. 79(1) of the Patent Act, R.S.C. 1985, c. P-4 - See paragraphs 12 to 27.

Cases Noticed:

Celgene Corp. v. Canada (Attorney General), [2011] 1 S.C.R. 3; 410 N.R. 127; 2011 SCC 1, refd to. [para. 10].

Alberta Teachers' Association v. Information and Privacy Commissioner (Alta.) et al., [2011] 3 S.C.R. 654; 424 N.R. 70; 519 A.R. 1; 539 W.A.C. 1; 2011 SCC 61, refd to. [para. 10].

ICN Pharmaceuticals Inc. et al. v. Patented Medicine Prices Review Board et al. (1996), 108 F.T.R. 190 (T.D.), affd. [1997] 1 F.C. 32; 200 N.R. 376 (F.C.A.), refd to. [paras. 13, 29].

Shire Biochem Inc. v. Canada (Attorney General) (2007), 321 F.T.R. 126; 63 C.P.R.(4th) 342; 2007 FC 1316, refd to. [para. 15].

Sanofi Pasteur Ltd. v. Canada (Attorney General) (2011), 393 F.T.R. 294; 2011 FC 859, refd to. [para. 15].

Katz Group Canada Inc. v. Ontario (Minister of Health and Long-Term Care) - see Shoppers Drug Mart Inc. et al. v. Ontario (Minister of Health and Long-Term Care) et al.

Shoppers Drug Mart Inc. et al. v. Ontario (Minister of Health and Long-Term Care) et al., (2013), 451 N.R. 80; 312 O.A.C. 169; 2013 SCC 64, refd to. [para. 16].

Manitoba Society of Seniors Inc. v. Canada (Attorney General) (1991), 70 Man.R.(2d) 141; 77 D.L.R.(4th) 485 (Q.B.), affd. (1992), 81 Man.R.(2d) 159; 30 W.A.C. 159; 96 D.L.R.(4th) 606 (C.A.), folld. [para. 16].

Pfizer Canada Inc. v. Canada (Attorney General) (2009), 347 F.T.R. 196; 2009 FC 719, refd to. [para. 18].

Statutes Noticed:

Patent Act, R.S.C. 1985, c. P-4, sect. 79(1) [para. 2, Appendix].

Counsel:

Gavin MacKenzie and Neil Fineberg, for the applicant;

Robert MacKinnon and Craig Collins-Williams, for the respondent.

Solicitors of Record:

Davis LLP, Toronto, Ontario, for the applicant;

William F. Pentney, Deputy Attorney General of Canada, Toronto, Ontario, for the respondent.

This application was heard at Toronto, Ontario, on November 4-6, 2013, by O'Reilly, J., of the Federal Court, who delivered the following decision at Ottawa, Ontario, on May 27, 2014.