Apotex Inc. v. Her Majesty the Queen, 2014 FC 1087

Drug: trazodone

In 1988, Apotex Inc. (“Apotex”) filed a submission for approval of its trazodone product with Health Canada. The Apotex product was ultimately approved in 1995, at which time two other generic companies already had approval in respect of their trazodone products. Apotex commenced the within action for damages, including punitive damages, on the basis of claims such as negligence, breach of a contract in the form of a settlement agreement, misfeasance in public office and misrepresentation.

The issue in dispute related to Apotex’ use of a United States Reference Product for the purposes of its submission, and not a Canadian Reference Product. The Court noted that Health Canada wanted a Canadian Reference Product unless the United States Reference Product could be “conclusively proven to be identical”, which the Court noted was almost impossible to establish. The parties reached a settlement in 1990 after Apotex commenced a judicial review proceeding, leading to a Settlement Agreement.

The Court found that Apotex proved misfeasance in public office, and negligence. The Court found that the allegations relating to misrepresentation are part of the misfeasance and negligence claims. The Court found breach of the Settlement Agreement but also found that the claim for breach of contract was barred by a limitation period.

The Court determined the date upon which Apotex’ damages began to accrue. The Court used the date of the Settlement Agreement as the date that Health Canada should have reviewed Apotex’ submission and added one year to obtain the date that Apotex should have received its NOC. The Court noted that Apotex had demonstrated that it may have suffered damages in the nature of lost sales and loss of the ability to be the first or second generic in the marketplace, but held that Apotex was required to mitigate its damages. In particular, the Court found that the termination date for damages should be one year later, namely 1992, the date an NOC would have been received if Apotex had taken steps to mitigate its damages. The Court declined to award punitive damages. The value of the damages was bifurcated and will thus be determined in a separate proceeding. The Court indicated that a trial would be more expedient in this regard.