Federal Court of Canada Holds Parts of the Recent Amendments to the Patented Medicines Regulations Ultra Vires the Patent Act

On June 29, 2020, the Federal Court of Canada (the Court) issued its decision in Innovative Medicines Canada v Canada (Attorney General), 2020 FC 725, challenging the validity of certain provisions of the Regulations Amending the Patented Medicines Regulations (Additional Factors and Information Reporting Requirements) SOR/2019-298 (the Amendments) set to come into force on January 1, 2021. The Amendments provide the Patented Medicine Prices Review Board (the PMPRB) with new regulatory tools and information reporting authority to regulate the prices that patentees charge for patented medicines and protect Canadian consumers from excessive pricing.

The applicants, Innovative Medicines Canada and several Canadian innovative pharmaceutical companies, brought a judicial review application challenging the following provisions:

1. Subsection 3(4) of the Amendments requiring patentees to use a new price calculation that includes discounts, rebates or other benefits provided to third parties (e.g. public and private insurers) when reporting medicine prices and revenue information to the PMPRB;
2. Section 4 of the Amendments setting out new mandatory economic factors for PMPRB’s consideration when determining whether the price of a patented medicine is excessive and requiring patentees to report related information; and
3. Section 6 and the Schedule to the Amendments changing the list of price comparator countries.

The Court applied a reasonableness standard of review in considering the exercise of the Governor in Council’s regulation-making authority under the Patent Act. The Court found that the new price calculation contemplated in subsection 3(4) is invalid, void and of no force and effect as it is ultra vires the Patent Act. Accordingly, the existing price calculation will continue to apply such that patentees are only required to report information on price adjustments for the first point of sale. The remaining two sections of the Amendments were found to be reasonable and valid.

In light of this decision, the current consultation on the PMPRB draft guidelines (previously reported by the E-TIPS® Newsletter here) is extended to August 4, 2020.

Summary By: Anna Troshchynsky