The legal battleground in the pharmaceutical industry in Canada has traditionally been fought between brand and generic manufacturers. However, Low v Pfizer Canada Inc., an ongoing proceeding in British Columbia, could bring an additional competitor into the fray—the consumer. In this proceeding, the plaintiff, Britton Low, seeks to certify a class action proceeding against Pfizer Canada Inc., the manufacturer of the prescription drug Viagra®. Mr. Low, a consumer of Viagra®, claims that Pfizer wrongfully profited from the sale of the product as its market exclusivity was premised on an improperly obtained patent. The British Columbia Court of Appeal dismissed the action, but the matter has now been brought before the Supreme Court of Canada (case no. 36848).

Background - Supreme Court invalidates Sildenafil Patent

The facts underlying the proceeding relate to previous patent litigation in respect of the patent covering the active pharmaceutical ingredient in Viagra®, sildenafil. Following a complex set of proceedings, the sildenafil patent was invalidated by the Federal Court in 2013. The invalidation followed a decision of the Supreme Court of Canada, in relation to the same patent, but in the context of the pharmaceutical regulatory regime.1 The Supreme Court held that Pfizer did not meet its disclosure obligations under the Patent Act as it failed to properly disclosure the invention of the sildenafil patent. The outcome of this decision was to permit Teva Canada Ltd., a generic manufacturer, to enter the market with its own version of sildenafil.

Under the pharmaceutical regulatory scheme, the sildenafil patent provided Pfizer with market exclusivity. But for this patent, generic manufacturers could have entered the market six years prior. Mr. Low, as a consumer of Viagra®, argued that he was deprived of a generic alternative to Viagra® during this time and was overcharged as a result. He therefore sought to certify the proceeding based on three causes of action: 1) unlawful interference with economic relations, 2) waiver of tort, and 3) unjust enrichment.

BC Courts Weigh in on “Completeness” of Patent Regime

At the Superior Court of British Columbia, Smith J held that it was not “plain and obvious” that Low’s claim could not succeed.2 The focus of the decision was the “completeness” of the applicable legislative scheme governing the marketing of pharmaceuticals, in particular the Patent Act and the Patented Medicines (Notice of Compliance) Regulations. The rights and remedies available under the current patent scheme expressly concern brand and generic parties, however there is no provision concerning the rights and remedies of consumers. As a result, the Court held that as it related to the plaintiff, the legislation was not a complete code and did not serve as a complete bar to the an action. The Court allowed the proceeding to proceed based in unlawful interference with economic relations and unjust enrichment.

On appeal, the focus of the case again centered on the completeness of the legislative code.3 Pfizer argued that the patent scheme is a complete code as to the rights and remedies of patent holders and generic drug manufacturers. Based on this, it must be presumed that Parliament chose not to create a right of action for consumers arising directly out of a breach of the Patent Act. Mr. Low on the other hand argued that his claim was rooted in the common law, and as such, the “complete code” argument did not apply.

The Court of Appeal disagreed, holding that the current patent scheme is a complete code. Given the absence of any consumer rights in the patent scheme, it was implicit that Parliament did not intend common law rights to exist in parallel to the statutory enforcement scheme available to generics. Nevertheless, in the event the statutory scheme is not complete, Mr. Low’s claim for unjust enrichment was based in the non-existent tort of breach of statute. With respect to unlawful interference with economic relations, Mr. Low failed to plead the necessary fact to satisfy the tort. In particular, there was no unlawful act committed against a third party for failing to meet its disclosure obligations under the Patent Act.

Supreme Court to consider leave application

Mr. Low recently sought leave to appeal to the Supreme Court of Canada. While no decision has yet been rendered regarding leave, the consequences of any decision will be significant. It is not uncommon in pharmaceutical litigation for a patent to be invalidated. Where this occurs under the regulatory scheme, the brand manufacturer is liable to the generic manufacturer for all damages relating to the period the generic was prevented from entering the market by reason of the patent. Fortunately, for brand manufacturers, while they face exposure for damages, profits earned during this period are shielded. Should Low ultimately permit consumers to claim against these profits, brand manufacturers face serious exposure to financial losses and legal costs from consumer based class action proceedings. The outcome of the appeal to the Supreme Court of Canada is sure to be followed by many in the intellectual property and class action litigation bars.

A version of this article was published by LexisNexis in The Lawyers Weekly, 6 May 2016