On February 27, 2017, the Ontario Superior Court of Justice (2017 ONSC 1348) dismissed a motion for summary judgment brought by Abbott Laboratories and Takeda Pharmaceuticals, the defendants in an action for damages brought by Apotex under section 8 of the Patented Medicines (Notice of Compliance) Regulations (PMNOC Regulations).

In the underlying section 8 action, Apotex claims damages for delay in issuance of its notice of compliance (NOC) for Apo-Lansoprazole, its generic lansoprazole product (Abbott’s PREVACID), due to prohibition applications commenced by Abbott and Takeda. Apotex alleges that it would have received its NOC in April 2007 but for the applications under the PMNOC Regulations.

This is the second summary judgment motion brought by the defendants in this action. In a 2013 decision, the Court granted partial summary judgment and dismissed Apotex’s claim for unjust enrichment: Apotex Inc v Abbott Laboratories Ltd, 2013 ONSC 356, aff’d 2013 ONCA 555 (previously reported here).

In the present motion, Abbott and Takeda (the applicants) sought summary judgment on the basis that Apo-Lansoprazole “could not” and “would not” have been approved as of its patent hold date (April 2007) because it did not comply with the applicable regulatory requirements under the Food and Drugs Act or the Food and Drug Regulations.

Regulatory approval background of Apo-Lansoprazole – The applicants’ position arose from the somewhat unusual regulatory approval history for Apo-Lansoprazole. Apotex initially filed its abbreviated new drug submission (ANDS) for Apo-Lansoprazole on February 2, 2006. Shortly thereafter, Abbott and Takeda (joined as the patentee) commenced applications under the PMNOC Regulations to prohibit the Minister from issuing an NOC. In April 2007, while the applications were pending, Health Canada determined that Apo-Lansoprazole was approvable and issued a patent hold letter.

However, in December 2007, Health Canada changed its position and revoked the patent hold status on the basis that the bioequivalence study in Apotex’s ANDS (a low-calorie, low-fat fed study) was not adequate. Under the Health Canada Guidance Documents at the time, a high-calorie, high-fat fed study was preferred to establish bioavailability compared to the reference product. Subsequently, a Notice of Non-compliance – Withdrawal (NON-W) was issued. Apotex and Health Canada continued to engage in this regulatory issue until June 2009, when an NOC was ultimately issued (by then, the prohibition applications had been settled between the parties).

Abbott and Takeda’s position on summary judgment motion – On this factual basis, Abbott and Takeda, in separate submissions, argued that Apotex was not entitled to damages under section 8 of the PMNOC Regulations because Health Canada could not and would not have issued an NOC for Apo-Lansoprazole in the hypothetical world due to the alleged non-compliance with regulatory requirements.

Both parties put forward evidence on the motion. The applicants compelled testimony from a Health Canada representative, while Apotex put forward expert evidence on the regulatory approval process. Both witnesses were cross-examined. On the basis of this evidentiary record the Court made several important findings of fact and law relevant to the motion as well as the underlying action.

Factual and legal findings by the Court on approvability of Apo-Lansoprazole – After extensively summarizing the evidence, the Court found that Health Canada would have issued the NOC to Apo-Lansoprazole in April 2007 absent the PMNOC Regulations. As for Abbott and Takeda’s contention that Apo-Lansoprazole was not legally approvable, the Court held that the Food and Drug Regulations gave wide discretion to the Minister. Health Canada’s Guidance Documents, although indicative of the Minister’s preferences, did not create a legal requirement for approval of a drug.

The Court therefore found the applicants’ position on summary judgment to be “without factual or legal foundation or merit, based on the unrefuted evidence”.

Legal argument on lack of entitlement dismissed – The Court also addressed a second argument raised by Abbott and Takeda, that Apotex was not entitled to section 8 damages because the patent hold letter was based on a “mistake”, thereby rendering it void ab initio. The argument was based on a decision of the Federal Court of Appeal (FCA), Apotex Inc v Canada (Health), 2012 FCA 322 (Omeprazole FCA), where the Court dismissed Apotex’s judicial review of the Minister’s decision not to issue an NOC to Apotex for its omeprazole magnesium tablets. In that case, the FCA also held that Apotex could not bring a section 8 action because Apotex had no vested right to an NOC.

The Ontario Superior Court distinguished the Omeprazole FCA decision, including on the basis that a judicial review differed from a section 8 action and that neither Abbott nor Takeda had standing to challenge Health Canada’s drug approval process for Apo-Lansoprazole. The Court noted that notwithstanding the linkage between the Patent Act and the Food and Drugs Act, the patentee could not inject itself into Health Canada’s determination of safety and efficacy. In any event, the Court also found that the patent hold letter for Apo-Lansoprazole was not revoked for safety and efficacy reasons, but because Apotex did not file the exact “high-fat” study required by the Guidance Documents.

The Court’s legal conclusion was that, as a corollary to the Omeprazole FCA decision, if approval for the generic drug was ultimately granted on the same basis as the initial filing, there could still be a section 8 claim despite the Minister’s intervening change in position. In this case, the final approval was granted on the basis that the original studies submitted by Apotex did indeed establish bioequivalence (as eventually accepted by an expert panel convened by Health Canada).

Consequences of the applicants’ summary judgment motion and narrowing of issues for trial – Based on the above findings, the Court dismissed the motion for summary judgment. However, the Court went further: under the powers conferred by Rule 20 of the Ontario Rules of Civil Procedure, the Court made a dispositive finding that Apotex is entitled to a section 8 damages claim, leaving the only “genuine issue” for trial to be the quantum of damages (the defendants’ counterclaim for patent infringement was also left to be determined). Further, the defendants were precluded from revisiting the issue of Health Canada’s conduct, although the question of whether Health Canada’s revised decision in December 2007 would have impacted the quantum of sales was left open.

Finally, based on the Court’s factual findings and the legal conclusion in Omeprazole FCA, the Court also held that Abbott and Takeda could no longer argue the issue of Apotex’s misconduct vis-à-vis Health Canada as a consideration under sub-section 8(5) of the PMNOC Regulations.

Impact of decision – This decision is significant to patentees and innovative drug companies facing a section 8 claim, particularly in the Ontario Superior Court. First, the decision illustrates the importance of motions for summary judgment and the associated risk of dispositive findings. Second, the decision also adds to the growing jurisprudence on the relationship between Health Canada’s regulatory approval process and section 8 of the PMNOC Regulations.