Teva Canada Innovation has sought judicial review, in Federal Court, of the PMPRB’s most recent decision regarding Teva’s drug COPAXONE, used to treat multiple sclerosis. The decision to be reviewed is actually the second determination made by the Board in relation to COPAXONE. In order to understand the significance of Teva’s new application, it is useful to recall the Board’s original decision.
A Board Panel made the initial decision in 2008 and found that COPAXONE had been excessively priced, despite the fact that COPAXONE was the lowest-priced medicine in its therapeutic class. The Board’s finding of excessive pricing was based on the rate at which the price of COPAXONE increased from year to year. Specifically, from its first sale in 2004, the price of COPAXONE increased from $36.00 to $43.28 by 2010, an increase of $7.20 or 20% in total, during a period when the average annual increase in the Consumer Price Index was 1.8% per year. Even though COPAXONE remained the lowest priced medicine in its therapeutic class throughout the period under review, the Board held that the year-over-year price increases fell outside the Board’s guidelines and determined that COPAXONE had been excessively priced.
Teva sought judicial review of this initial decision and was successful. The Federal Court quashed the Board’s decision and ordered the Board to reconsider the matter.
The Federal Court held that the Board failed to give serious consideration to all the factors in section 85(1). Section 85(1) requires the Board to consider several factors when assessing whether the price of a medicine is excessive. This section requires the Board to consider the following factors: (a) the prices at which the medicine has been sold in the relevant market; (b) the prices at which other medicines in the same therapeutic class have been sold in the relevant market; (c) the prices at which the medicine and other medicines in the same therapeutic class have been sold in countries other than Canada; (d) changes in the Consumer Price Index; and (e) other prescribed factors. The Board had based its decision entirely upon s. 85(1)(d) and the CPI adjustment methodology set out in the Board’s Guidelines. The Court held that the Board only paid lip service to the other factors and ordered the Board to reconsider the matter, this time giving proper consideration to all the s. 85(1) factors. The Board the reconsidered the matter and released its second decision dated February 23, 2012.
In the redetermination decision, the Board expanded its analysis of the section 85(1) factors and directly addressed the fact that COPAXONE was the lowest priced medicine in its therapeutic class. However, despite this expanded analysis, the Board’s decision again rested solely on the CPI factor set out in s. 85(1)(d). The Board’s view was that this factor serves to protect Canadian consumers from “sudden and significant” price increases and this factor is determinative in the case of COPAXONE. Ultimately, the Board arrived at a finding of excessive pricing and ordered Teva to repay excess revenues in a greater amount than in the previous decision.
Teva has now sought judicial review in Federal Court of the Board’s second decision. Teva’s application seeks a further redetermination and a directed verdict requiring that the allegations against Teva be dismissed.
The primary ground for Teva’s application is that the Board failed to follow the direction of the Federal Court and again focused on a single factor, the CPI. Teva argues that Board has essentially rewritten section 85(1) to be an absolute bar on price increases that exceed yearly increases in the CPI. Teva claims that this hard limit was proposed and rejected by Parliament when the section was drafted. Teva’s overarching position in its application is that the Board’s jurisdiction is limited to regulating price levels rather than price increases.
This case will be an interesting one to watch, given the deference given to this Board in recent decisions. The facts in this case (especially the fact that COPAXONE’s price was the lowest in its class) present an ideal setting to test the Board’s CPI adjustment methodology (for the second time).
The first Board decision may be found at: http://www.pmprb-cepmb.gc.ca/CMFiles/Hearings%20and%20Decisions/Decisions%20and%20Orders/COPAXONE_Merits-Reasons_-_D2-_Feb_25_0838KCU-3102008-2953.pdf
The Federal Court decision may be found at: http://decisions.fct-cf.gc.ca/en/2009/2009fc1155/2009fc1155.html
The redetermination decision may be found at: http://www.pmprb-cepmb.gc.ca/english/View.asp?x=1611&mp=254