CASE: Pfizer Canada Inc. v. Attorney General of Canada (T-1442-08) Rx&D et al. v. Attorney General of Canada (T-1447-08)

NATURE OF CASE: Judicial Review of a Decision of the Patented Medicine Prices Review Board

SUCCESSFUL PARTY: Pfizer Canada Inc. and Rx&D et al.

DATE OF DECISION: July 10, 2009

SUMMARY:

On July 10, 2009, Mactavish J. of the Federal Court of Canada (the “Court”) allowed the judicial review applications of Pfizer Canada Inc. and Canada’s Research-Based Pharmaceutical Companies et al. (“Rx&D”) and set aside the August 18, 2008 Communiqué of the Patented Medicine Prices Review Board (the “PMPRB”). The Court found that subsections 4(1)(f)(i) and 4(4) of the Patented Medicines Regulations (the “Regulations”) do not authorize the PMPRB to require reporting of payments made to third parties by patentees in the calculation of the average price from sales of patented medicines, including payments made to provinces under expenditure limitation agreements. Ogilvy Renault LLP represented Pfizer Canada Inc.

On August 18, 2008 the PMPRB released a decision in a Stakeholder Communiqué (the “Communiqué”) that required patentees to report “rebates (including rebates/payments to third parties), discounts, free goods, free services, gifts and other benefits of a like nature” in the calculation of the average price from sales of patented medicines. Pfizer Canada Inc. and Rx&D sought judicial review of this decision and asserted that, as the jurisdiction of the PMPRB is limited to the factory-gate sales of patented medicines, transactions involving third-parties are beyond the jurisdiction of the PMPRB. The PMPRB was granted leave to intervene in the applications.

Pursuant to subsections 4(1)(f)(i) of the Regulations, the reporting requirements imposed on patentees are limited to the average price per package at which the medicine was sold by the patentee to each class of customer. Justice Mactavish determined, as a matter of statutory interpretation, that patentees do not “sell” patented medicines to third parties since third parties do not take title to or pay for patented medicines nor are they ever in possession of such medicine. Furthermore, Justice Mactavish found that third parties are not “customers” of the patentees since they are not parties to the factory-gate transaction. In the context of expenditure limitation agreements with the provinces, the role of the province is analogous to a public insurer for the cost of drugs for eligible patients. Justice Mactavish considered this interpretation to be consistent with the constitutional limitation of the PMPRB’s factory-gate jurisdiction.

The Respondent and the PMPRB argued that payments pursuant to expenditure limitation agreements with the provinces are within the meaning of the word “rebates” in subsection 4(4) of the Regulations. Justice Mactavish dismissed this argument and held that a rebate “refers to the return of a portion of money actually paid.” Rebates cannot be paid to a third party to a sales transaction. Furthermore, such payments do not relate to patented medicines “sold” by a patentee to their “customer”.

LINK TO DECISION:

The decision has not yet been posted. The citation will be 2009 FC 719.