The Federal Court of Appeal decision in Pfizer v. Canada (2016 FCA 248) upheld the Minister of Health’s interpretation that the 24-month stay for patent owners provided for in the PM (NOC) regulations was not available when two (2) companies sought permission (an NOC) to market generic drugs that had already been shown to be as safe and effective as patented drugs. On June 22, 2017, the Supreme Court of Canada denied leave to appeal. Going forward, it is going to be more difficult to seek judicial review of decisions of the Minister of Health under the PM (NOC) regulations if the regulations reasonably support the decision. The Court is not likely to substitute its interpretation unless the Minister’s interpretation is seen as unreasonable.

In its 2016 FCA 248 decision the Federal Court of Appeal had reversed an earlier Federal Court decision and held that reasonableness is the correct standard of review to be applied to decisions of the Minister of Health in the context of the PM (NOC) regulations. Applying the reasonableness standard, the FCA upheld the Minister’s interpretation of the PM (NOC) Regulations that s. 5 of the Regulations that require patents to be addressed and, thereby, allow for a 24 month stay if prohibition proceedings are taken should not be engaged when a drug submission for notice of compliance (NOC) is purely administrative (eg. name change).

The decision relates to two separate judicial reviews before the Federal Court, both brought by innovator pharmaceutical companies of the Minister’s decision to grant NOC’s to generic companies for drugs containing active ingredients patented by the innovator companies. On the one hand, Pfizer Inc (Pfizer) sought judicial review over the Minister’s decision to grant a NOC to Teva Pharmaceuticals (Teva) for a drug containing the active ingredient exemestane, a breast cancer drug sold and patented by Pfizer in Canada. Initially, a New Drug Submission (NDS) for exemestane was submitted by Generic Medical Partners Inc (GMP) in which GMP referenced Pfizer’s patented product and accordingly sent the innovator a Notice of Allegation (NOA) challenging its patent. Pfizer chose not to respond to the NOA since GMP did not sell any product in Canada; thus a NOC was granted to GMP. Teva through a licensing agreement with GMP became the Canadian distributor of the new exemestane product and filed a NDS seeking to change the brand name and the marketer without altering the content of the drug product. A NOC was granted to Teva. In a separate case, Celltrion Healthcare Co Ltd (Celltrion) applied for and obtained a NOC to market its subsequent entry biologic Inflectra, which referenced Janssen Inc (Janssen)’s product infliximab. Because Janssen had not yet received a patent at the time of Celltrion’s NDS, no NOA was sent and Celltrion did not address any patent issues. After Janssen’s patent covering infliximab was granted, Hopsira filed a NDS and obtained a NOC in the capacity of the Canadian distributor of inflectra as named by Celltrion in its earlier NDS.

In both instances, the Minister’s decision to issue NOC to the licensee generic company without requiring the generic company to address the innovator’s patent was under review. In analyzing Pfizer’s case, after an extensive review of case law pre- and post-Dunsmuir2, the Federal Court established the process to determine the appropriate standard of review. First, one must consider whether the standard of review for the particular issue has been satisfactorily settled in case law. Second, if it has not been settled, the following categories of issues attract a standard of correctness: (1) a constitutional question, (2) a question of general legal importance that is outside of the expertise of the decision-making body, (3) a determination of respective jurisdiction of two decision-making bodies, and (4) a true jurisdictional question. Conversely, if the issue involves a factual or a mixed fact and law determination or if it involves the exercise of a statutorily-conferred discretion or making a policy-based decision that the decision-maker is mandated to make, the standard should be reasonableness. Finally, the Federal court recognized that there is a presumption that the reasonableness standard applies whenever an administrative decision-maker interprets its constituent statute or a statute closely related to its function. However, the Federal Court notes that this presumption can still be rebutted through a contextual analysis using the relevant factors set out in Dunsmuir: existence of a privative clause, nature of the tribunal, nature of question at issue, and expertise of the tribunal2.

Applying this framework to the Pfizer case, the Federal Court had concluded that the appropriate standard of review should be correctness since although the presumption of reasonableness exists in the case of Minister of Health interpreting PM(NOC) Regulations, there is no privative clause in the Regulations, the wording of the Regulations did not afford the Minister any discretion on whether to issue a NOC and the ultimate power whether a NOC should issue resides with the Court. On the standard of correctness, the Federal Court found the Minister’s decision to be incorrect since allowing generic companies to not address relevant patents listed against their submissions, the Minister failed to achieve proper balance between the rights of innovators, generic companies and the public, a key purpose of the PMNOC Regulations.

While agreeing with the framework set out by the Federal Court in general, the Federal Court of Appeal arrived at a different conclusion and found that the presumption of reasonableness was not rebutted. According to the Federal Court of Appeal, the fact that PM(NOC) Regulations do not suggest deference does not point away from the reasonableness standard; the proper inquiry following the Supreme Court decision in Tervita should be whether the Regulations evidence Parliament’s intent that the decisions of the Minister interpreting the Regulation should be reviewed on a less deferential standard3. Unable to identify any indication to this effect in the PM(NOC) Regulations, the court of appeal concluded that the Minister’s interpretations should attract the standard of reasonableness, especially since the statute is very closely related to the Minister’s function.

In determining whether the Minister’s interpretation was reasonable, the Federal Court of Appeal looked to the Supreme Court decision in Biolyse, in which the Supreme Court interpreted the term “submission” in the then current version of s.5(1.1) of the Regulations by looking to “reciprocal provision” s.4(1) of the Regulations4. In Biolyse, the SCC concluded that submissions should be considered on an individual basis in order to determine whether it is a submission that triggers s. 4 or 5 of the PM(NOC) Regulations. Turning to Hoffmann-La Roche, the court of appeal noted that a NDS should be assessed by asking whether the changes reflected within give rise to a new or different basis for asserting that a particular product is infringing5. Thus, the Minister acted reasonably in deciding that the submissions were purely administrative in nature, did not submit any new data, and did not trigger s.5 procedures.