On November 12, 2009, Justice Hughes of the Federal Court allowed two judicial review applications of Teva Neuroscience G.P.-S.E.N.C. in respect of two decisions made by the Patented Medicine Prices Review Board ("PMPRB"). In its decisions, the PMPRB decided that Teva had priced its medicine Copaxone excessively and that a payment of approximately 2.4 million should be made as a result. Justice Hughes quashed both decisions on the basis that the PMPRB acted unreasonably and outside its mandate under the Patent Act by focusing on the application of one factor to the exclusion of the others.
Justice Hughes in reaching his decision addressed a number of issues and made a number of particularly notable comments. In discussing the origin and nature of the PMPRB, Justice Hughes reviewed the legislation and authorities which addressed the non-binding nature of the PMPRB's Compendium of Guidelines, Policies and Procedure ("Guidelines") and added that they do not have the force of law and are "at best" soft law. Justice Hughes emphasized that primary attention must be paid to the Patent Act and Regulations, which must prevail in cases of conflict with the PMPRB's Guidelines.
In addressing the issue of the Consumer Price Index ("CPI") increases, which was considered the central issue before the PMPRB, Justice Hughes questioned the reasoning applied by the Board in making a finding of excess pricing based on the factors set out in section 85(1) of the Patent Act. Justice Hughes noted that the Guidelines appeared to provide for conclusive presumptions of excessive pricing in two situations; when price increases exceeded the Board's CPI Adjustment methodology and when a medicine was priced higher in Canada than in any of the seven comparator countries. However, Justice Hughes held that no such presumptions are provided for in the Patent Act, each factor in section 85 is to be given reasonable consideration and no factor can be ignored, nor can one factor be given dominance such that the others are essentially irrelevant. Justice Hughes placed significant emphasis on how the PMPRB failed to demonstrate clearly what consideration, if any, was given to the other factors and how focus was placed exclusively on the CPI issue. Indeed, attention was even drawn to the how the PMPRB did not give any consideration to the fact that Copaxone had been priced significantly lower than its competitive products.
Justice Hughes was also critical of the PMPRB's calculation of excess revenues. The court held that the figure was unintelligible as no basis was provided for arriving at it in the Board's reasons. Comment was also made that counsel for each party as well as the court remained puzzled as to how this figure was calculated.
In the result, Justice Hughes ordered that the matters be returned for redetermination by a differently constituted Board, if available and that this Board reconsider the matters. The court also cautioned that the reconstituted Board should not merely pay "lip service" to these matters and return the same result.
The Board panel that heard the Copaxone matter was composed of the Chair, Vice-Chair and one other Member. There are two sitting members who did not participate and under Board practice, as well as under its draft rules of procedure, a two member panel is sufficient.
On an issue not engaged in the case before him, Justice Hughes indicated the decision of Shire Biochem Inc. v. Canada (Attorney General) 2007 FC 1316, appears to authorize the PMPRB to require a patentee to file information before a patent had issued, once a patent was laid open to the public. Should the matter arise in the future this will require further consideration. In the Shire decision the Court held that it is not until the patent was granted that a patentee is considered a patentee, retroactively, from the date the patent application is laid open. While the Shire decision did not squarely address the issue of when the PMPRB may require information, it is a reasonable interpretation of Shire that the PMPRB can only require information once a patent has issued. This would be consistent with the earlier decision in Hoechst Marion Roussel Canada Inc. v. Canada (Attorney General) 2005 FC 1552, where the Court held that prior to the issuance of a patent the Board is without jurisdiction during the laid open application period.
The decision may be found at: http://www.gowlings.com/resources/enewsletters/drugpricingreimbursement/pdfs/TevaDecision.pdf