Sanofi-Aventis Canada Inc. et al. v. Teva Canada Ltd., (2012) 410 F.T.R. 1 (FC)

• Judge: Snider, J.
• Court: Federal Court (Canada)
• Case Date: May 23, 2012
• Jurisdiction: Canada (Federal)
• Citations: (2012), 410 F.T.R. 1 (FC);2012 FC 552

Sanofi-Aventis Can. Inc. v. Teva Can. (2012), 410 F.T.R. 1 (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. MY.054

Sanofi-Aventis Canada Inc., Schering Corporation and Sanofi-Aventis Deutschland GmbH (plaintiffs) v. Teva Canada Limited (defendant)

Teva Canada Limited (plaintiff by counterclaim) v. Sanofi-Aventis Canada Inc., Schering Corporation and Sanofi-Aventis Deutschland GmbH (defendants by counterclaim)

(T-1161-07; 2012 FC 552; 2012 CF 552)

Indexed As: Sanofi-Aventis Canada Inc. et al. v. Teva Canada Ltd.

Federal Court

Snider, J.

May 23, 2012.

Summary:

Sanofi-Aventis Canada Inc. owned patent rights to a brand-name version of ramipril (ALTACE), a drug used mainly to treat hypertension. Teva Canada Ltd., wished to market a generic verison of ramipril, but there were delays in obtaining a Notice of Compliance (NOC) from 2003 to 2007 because Sanofi had filed an application for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations. Teva claimed that Sanofi was liable for the loss it suffered during the period from 2003 to 2007 under s. 8 of the Regulations (i.e., because it was kept off the market for a period of time by the actions of Sanofi that were ultimately found to be unsustainable). Sanofi commenced an action, claiming that s. 8 of the Regulations was invalid. The validity issue was argued separately.

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 Teva was entitled to damages under s. 8, but disputed many elements of Teva's claim.

The Federal Court dealt with the issues accordingly. The court concluded that the relevant period of delay ran from December 13, 2005 to April 27, 2007, and that Teva was entitled to damages under s. 8 of the Regulations for that delay. For purposes of calculating damages, the court determined the size of the ramipril market (611,122,083 capsules) and the size of the generic market (374,092.845 capsules) during the relevant period. The court determined that Teva would have entered the market simultaneously with an authorized generic and Apotex Inc., with each participant sharing the generic market equally. As a result, Teva's Lost Volumes would have been 147,092,478 capsules. The court also ruled on a number of issues respecting the calculation of Teva's net lost profits. While the court was unable to finalize a quantum of damages, the court expressed the hope that Sanofi and Teva could quickly agree on a final amount to be paid by Sanofi to Teva based on the court's reasons for judgment. Pre-judgment interest was to be calculated from December 13, 2005, at the rate in effect under the Courts of Justice Act as at that date.

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 328 to 332.

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 26.

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 8 to 60, 113 to 123, 183 and 184 - The court also discussed the burden of proof under s. 8 - See paragraphs 132 to 142.

Food and Drug Control - Topic 1102

Drugs - New and innovative drugs - Legislation, re - The Federal Court looked to the Regulatory Impact Assessment Statement in interpreting s. 8 of the Patented Medicines (Notice of Compliance) Regulations - See paragraphs 54 and 55.

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 - Teva'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 - Teva 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 Teva. 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 Teva would have captured if it had been able to sell its generic ramipril" - See paragraph 5.

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 - Teva wished to market a generic verison of ramipril, but there were delays in obtaining a Notice of Compliance (NOC) from July 18, 2003, to April 27, 2007 (relevant period), because Sanofi had filed an application for a prohibition order and obtained a statutory stay under the Patented Medicines (Notice of Compliance) Regulations - Teva claimed that Sanofi was liable for the loss it suffered during the relevant period (Regulations, s. 8) - An issue arose as to the commencement and end dates for the period of liability under s. 8 - The Federal Court interpreted s. 8, holding that the relevant period for determining liability could not start before the date upon which the statutory stay provided for in s. 6 of the Regulations commenced - Therefore, on the particular facts of this case, a more appropriate commencement date was December 13, 2005 (i.e., the date the patent was set to expire) - The liability period was therefore December 13, 2005 to April 27, 2007 - See paragraphs 6 and 36 to 76.

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 - Teva'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 - Teva 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 December 13, 2005 to April 27, 2007 - The court then proceeded to assess the size of the total ramipril market during that hypothetical period, including the size of the generic market and Teva's share of that market (i.e., Teva's lost volumes) - The court stated that in assessing damages under s. 8, generic competition had to be considered - Therefore, regard should be had to the possibility of multiple market entrants during the relevant period, leading to a result, on the facts of this case, that it was more likely than not, that both Apotex Inc. (Apotex) and a generic manufacturer sanctioned by Sanofi (known as an authorized generic) would have entered the generic ramipril market on or about December 13, 2005 - See paragraphs 6 and 77 to 224.

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 - Teva'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 - Teva claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court held that in assessing damages under s. 8, generic competition had to be considered - As to burden of proof under s. 8, the court stated: "... the proper approach is the following: Once Teva has led prima facie evidence of its losses, the evidential burden shifts to Sanofi to adduce evidence in response. Sanofi cannot simply allege that other generics would have entered the market without leading evidence in support of such assertions. In this case, Teva does not, at least initially, bear the burden of disproving the hypothetical sales of third party generics. However, Teva, at all times, bears the legal burden of proving its losses, and the evidence adduced by Teva must ultimately be weighed against any evidence adduced by Sanofi establishing sales by third party generics. To the extent that Sanofi succeeds in discharging its evidential burden by proving third party sales, Teva must address that evidence in order to discharge its legal burden" - See paragraphs 132 to 141.

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 - Teva'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 - Teva claimed against Sanofi for the losses it suffered because of the delay (Regulations, s. 8) - The Federal Court held that in assessing damages under s. 8, generic competition had to be considered, including competition by an "authorized generic" or "AG" - The court explained that those terms referred to a drug that was manufactured by an innovative drug company (i.e., Sanofi), 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 172 to 175.

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 - Teva 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 - Teva 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 December 13, 2005 to April 27, 2007 - The court stated that in assessing Teva's damages, no regard should be had to: (a) "lost business value" calculated as of the final day of the relevant period and based on future lost profits to Teva; or (b) "duplicate ramp-up adjustment" - See paragraphs 6 and 225 to 254.

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 - Teva 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 - Teva 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 December 13, 2005 to April 27, 2007 - The court stated that in calculating Teva's damages the appropriate level of "trade spend" had to be deducted from Teva's profits as an expense - Trade spend encompassed allowances provided to pharmacists and the distribution allowance paid to wholesalers - The calculation of damages also had to take into account the cost of materials used to produce the generic version of ramipril during the relevant period - See paragraphs 269 to 282.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order - Compensation by first person - Section 8(1)(a) of the Patented Medicines (Notice of Compliance) Regulations provided that when an application for a prohibition order was withdrawn or discontinued by the first person or dismissed by the court the first person (innovator) was liable to the second person (generic) for any loss suffered during the period "(a) beginning on the date, as certified by the Minister, on which a notice of compliance would have been issued in the absence of these Regulations, unless the court concludes that ..." another date was more appropriate - A generic drug company (second person) argued that the phrase "in the absence of these Regulations" meant that all aspects of s. 8 damages, and in particular the start date for calculating damages, should be determined without regard to the regulations - The Federal Court rejected that interpretation - The court stated that the phrase "in the absence of these Regulations" referred to the absence of the s. 6 prohibition order, not to the absence of the Regulations generally - See paragraphs 45 to 53.

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 - Teva 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 - Teva 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 December 13, 2005 to April 27, 2007 - The court calculated Teva's damages for the relevant period and awarded prejudgment interest calculated from December 13, 2005 at the rate in effect under the Courts of Justice Act at that date - See paragraph 295 to 300.

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 - Teva 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 - Teva 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 "... Teva 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 different set of facts that warrants 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 301 to 322.

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 5009

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

Statutes - Topic 1660

Interpretation - Extrinsic aids - Legislative history - Regulatory Impact Analysis Statements - [See third Food and Drug Control - Topic 1102 ].

Words and Phrases

In the absence of these Regulations - The Federal Court discussed the meaning of this phrase as it appeared in s. 8(1)(a) of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 - See paragraphs 46 to 53.

Cases Noticed:

Apotex Inc. v. Merck & Co. et al. (2011), 425 N.R. 279; 2011 FCA 329, refd to. [para. 5].

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].

Abbott Laboratories Ltd. et al. v. Canada (Minister of Health) et al., [2007] F.T.R. Uned. 973; 57 C.P.R.(4th) 450; 2007 FC 622, refd to. [para. 45].

Apotex Inc. v. Merck & Co. and Merck Frosst Canada Inc., [1994] 1 F.C. 742; 162 N.R. 177 (F.C.A.), refd to. [para. 45].

Aventis Pharma Inc. et al. v. Apotex Inc. et al. (2005), 281 F.T.R. 233; 2005 FC 1381, refd to. [para. 68].

Sanofi-Aventis Inc. et al. v. Laboratoire Riva Inc. et al. (2007), 315 F.T.R. 59; 2007 FC 532, refd to. [para. 69].

Apotex Inc. v. Syntex Pharmaceuticals International Ltd. et al., [2006] 3 F.C.R. 318; 345 N.R. 293; 2005 FCA 424, refd to. [para. 116].

Merck Frosst Canada Inc. et al. v. Apotex Inc., [1997] 2 F.C. 561; 208 N.R. 388 (F.C.A.), refd to. [para. 116].

Apotex Inc. v. Merck & Co. et al. (2011), 430 N.R. 74; 2011 FCA 364, refd to. [para. 116].

Apotex Inc. v. Eli Lilly Canada Inc. (2011), 426 N.R. 173; 2011 FCA 358, refd to. [para. 120].

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. 122].

Watson, Laidlaw & Co. Ltd. v. Pott, Cassels, and Williamson (1914), 31 R.P.C. 104 (H.L.), refd to. [para. 128].

Eli Lilly & Co. et al. v. Apotex Inc. (2009), 351 F.T.R. 1; 2009 FC 991, affd. (2010), 409 N.R. 173; 2010 FCA 240, refd to. [para. 135].

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. 136].

Ontario Equitable Life and Accident Insurance Co. v. Baker, [1926] S.C.R. 297, refd to. [para. 137].

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. 138].

Algonquin Mercantile Corp. v. Dart Industries Canada Ltd., [1988] 2 F.C. 305; 79 N.R. 305 (F.C.A.), refd to. [para. 140].

R. v. Mohan, [1994] 2 S.C.R. 9; 166 N.R. 245; 71 O.A.C. 241, refd to. [para. 234].

R. v. J.-L.J., [2000] 2 S.C.R. 600; 261 N.R. 111, refd to. [para. 234].

Halford et al v. Seed Hawk Inc. et al., [2003] F.T.R. Uned. 95; 24 C.P.R.(4th) 220; 2003 FCT 141, refd to. [para. 235].

Mason (V.K.) Construction Ltd. v. Bank of Nova Scotia and Courtot Investments Ltd., [1985] 1 S.C.R. 271; 58 N.R. 195; 8 O.A.C. 381, refd to. [para. 293].

Seaboard Life Insurance Co. v. Bank of Montreal et al. (2002), 166 B.C.A.C. 64; 271 W.A.C. 64; 2002 BCCA 192, refd to. [para. 293].

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. 257].

Counsel:

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

Jonathan Stainsby, Mark Davis, Ben Wallwork and Bill Mayo, for the defendant/plaintiff by counterclaim.

Solicitors of Record:

Smart & Biggar, Toronto, Ontario, for the plaintiffs/defendants by counterclaim;

Heenan Blaikie LLP, Toronto, Ontario, for the defendant/plaintiff by counterclaim.

This matter was heard in Toronto, Ontario, on January 16-20, 23-27, 30 and 31, and February 1, 2 and 6, 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.