In September 2017 the Patented Medicine Prices Review Board (the board) decided that Alexion's Soliris (eculizumab) was sold at an excessive price.(1) The Federal Court dismissed Alexion's application for judicial review (for further details please see "Federal Court upholds PMPRB's pricing decision regarding Alexion's Soliris"). On 29 July 2021 the Federal Court of Appeal set aside the Federal Court's decision and remitted the matter to the board for redetermination. In doing so, the Federal Court of Appeal heavily criticised the board for its lack of transparency in departing from the guidelines and found that the board had misunderstood its mandate, which is directed at controlling patent abuse, not reasonable pricing, price-regulation or consumer protection at large.(2)
According to the board's guidelines, as a breakthrough drug, the highest price at introduction (the maximum average potential price) is the median price of the seven comparator countries listed in the Patented Medicines Regulations. The board, however, departed from the guidelines and decided for the first time that the appropriate benchmark was the lowest international price, which was the UK price. The panel therefore concluded that Alexion had sold Soliris at an excessive price from 2009 to 2015. The Federal Court decided that the board's decision was reasonable.
On appeal, the Federal Court of Appeal expressed concerns with both the adequacy of the board's reasons and the substantive reasonableness of its reasons.
According to the Federal Court of Appeal, the board had been required to start its analysis with the law – in this case, section 85 of the Patent Act, which empowers the board to determine "whether a medicine is being or has been sold at an excessive price in any market in Canada".
Alexion submitted to the board and the Federal Court of Appeal that the board's decision to require Soliris to be below the price in seven comparator countries was contrary to section 85 of the Patent Act, exalting this factor above all other factors set out in section 85 and effectively reading out the changes in the Consumer Price Index factor. The Federal Court of Appeal found that the board did not appear to have dealt with the submission and that its analysis had been merely conclusory. Absent explanation, the Federal Court of Appeal found that it was impossible for a reviewing court to know whether the board had "helped itself to a power it did not lawfully have". The Federal Court of Appeal continued, stating that:
By obfuscating, the Board has effectively put itself beyond review on this point, asking the Court to sign a blank cheque in its favour. But this Court does not sign blank cheques. Administrators cannot put themselves in a position where they are not accountable.
The Federal Court of Appeal held that a "more fundamental concern is that the Board has misunderstood the mandate Parliament has given to it under section 85", noting that judicial "authorities have stressed that the excessive pricing provisions in the Patent Act are directed at controlling patent abuse, not reasonable pricing, price-regulation or consumer protection at large". The board had disregarded these authorities in interpreting its mandate as relating to consumer protection at large and had therefore suggested that its mandate was to ensure reasonable pricing. The Federal Court of Appeal held that if the board had been of the view that "excessive" pricing referred to in section 85 of the Patent Act was not different from the "reasonable" pricing referred to in its decision, this merited an explanation. While acknowledging that Soliris is expensive, the Federal Court of Appeal noted that many such medicines that take decades to develop for ultra-rare conditions are expensive, but this "says nothing" about whether the price is excessive under section 85 of the Patent Act.
Given the circumstances of this case and the board's unprecedented departure from the guidelines, the Federal Court of Appeal stated that a coherent, relatively detailed explanation was called for; without which "the departure appears arbitrary and without regard to principles or laws". While the board referred to "unique circumstances" that justified its departure, it did not specify what those were, beyond two factors that did not logically support the departure. The board also did not justify its decision on the basis of section 85 of the Patent Act, including specifically its text, context or purpose.
The Federal Court of Appeal therefore quashed the board's decision and remitted it to the board for redetermination, directing it "to examine the evidence, interpret the legislation, fairly apply the legislation to the evidence and ensure that a reasoned explanation for its outcome can be discerned".
For further information on this topic please contact Katie Lee at Smart & Biggar by telephone (+1 416 593 5514) or email ([email protected]). The Smart & Biggar website can be accessed at www.smartbiggar.ca.
(1) For further information please click here.
(2) Alexion Pharmaceuticals Inc v Canada (Attorney General), 2021 FCA 157.