Federal Court Limits PMPRB Jurisdiction Over Generics And Restricts Concept Of “Patentee”

On 27 May 2014, the Federal Court released noteworthy decisions in two related applications for judicial review of decisions of the Patented Medicine Prices Review Board (PMPRB): Sandoz Canada Inc v Canada (AG), 2014 FC 501 [Sandoz] and ratiopharm Inc v Canada (AG), 2014 FC 502 [ratiopharm]. Both cases deal with the jurisdiction of the PMPRB to regulate the price of a patented drug sold by an authorized generic: (i) in Sandoz, where the authorized generic (Sandoz) is a subsidiary of an innovator (Novartis); and (ii) in ratiopharm, where the generic (ratiopharm, now Teva Canada Inc) is authorized pursuant to an agreement with the patent owner (GlaxoSmithKline). Established in 1987 under the federal Patent Act, the PMPRB is an administrative body given the task of regulating patented drug prices in Canada. Though the regulation of unpatented drug prices falls under provincial jurisdiction (see eg Katz Group Canada Inc v Ontario (Health and Long-Term Care), 2013 SCC 64, para 3), the PMPRB is authorized to regulate the prices of patented medicines federally through the federal jurisdiction over patents of invention, ostensibly as a check on excessive leverage of patent monopolies over medicines to the detriment of Canadians. The PMPRB pursues this aim by exercising its authority over “patentees”, defined in the relevant section of the Patent Act as: “[...] the person [...] entitled to the benefit of the patent for that invention and includes, where any other person is entitled to exercise any rights in relation to that patent [...], that person [...]” (Patent Act, s. 79(1)) The PMPRB found that it had the authority to regulate Sandoz and ratiopharm drug pricing since, despite being generic drug manufacturers, they met the definition of a “patentee” in these circumstances. By virtue of their authorization by patent owners to sell otherwise infringing medicines, they became entitled to exercise a right in relation to those patents (the right to sell) (see the PMPRB reasons and order relating to Sandoz; and the PMPRB reasons and order relating to ratiopharm). Justice O’Reilly of the Federal Court overruled the PMPRB’s decisions that Sandoz and ratiopharm fell within the scope of a “patentee” in the circumstances. In his view, the PMPRB’s conclusion was unreasonable for two main reasons: (i) Sandoz and ratiopharm were never themselves in a position of monopoly in respect of any medicine in question; and (ii) the definition of a “patentee” should require a monopoly or else the scope of the PMPRB’s authority under the federal Patent Act risks being exceeded. It is not entirely clear from the reasons whether the monopoly required in order attract PMPRB jurisdiction refers to a monopoly over patent rights or to a monopoly in the marketplace for a particular medicine. Notices of Appeal have been filed on behalf of the Attorney General for Canada in both cases. ETIPS® will keep its readers informed on updates as they develop. Summary by: John Lucas