On August 1, 2012, the Board held that the generic manufacturer Sandoz Canada Inc. is a "patentee" and thus falls within the Board's jurisdiction for reporting purposes. Sandoz was therefore ordered to file information relating to five medicines: Sandoz Cyclosporine, - Famciclovir, - Azithromycin, - Estradiol and - Terbinafine. As reported in the July 2011 and September 2011 issues of Rx IP Update, the Board had previously found that another generic manufacturer, ratiopharm Inc., was a "patentee" (a judicial review application is pending in Court File No. T-1252-11). However, the Board noted the present case differs as there are no express licence or distribution agreements between Sandoz and a patentee that could entitle Sandoz to the benefit of or to exercise rights in relation to a patent.
First, the Board held that Sandoz is entitled to a benefit or rights in relation to patents as Sandoz is entitled to sell the medicine without being sued for infringement. Sandoz is not the holder of the patents at issue. However, Sandoz is a wholly owned subsidiary of Novartis Canada Inc., which is a wholly owned subsidiary of Novartis AG, the holder of the patents, either directly or through other subsidiaries that it owns or controls. On the evidence, the Board held that the business model of Novartis AG is to use its Sandoz Division to market, whenever possible, generic medicines that are protected from competition by the existence of Novartis AG patents. The Board emphasized that Sandoz is not a patentee merely by being a subsidiary of a patent holder.
Second, the Board held that the patents in question pertain to medicines sold in Canada by Sandoz. Sandoz had argued that the patents did not pertain to the medicines in question as no monopoly was created by the patents, the patents were not used, or not used for the medicine, and the medicines did not infringe the patent. The Board rejected these arguments on the basis of ICN Pharmaceuticals Inc v Canada (Patented Medicine Prices Review Board),  1 F.C. 32 (C.A.). The Board held that ICN had established that the connection between the invention and the medicine can be one of the "merest slender thread"; a given patent need not be demonstrated to provide monopoly control over the production or marketing of the particular dosage or delivery form of the medicine in question.
Finally, the Board rejected Sandoz's argument that the Board's regulation over the pricing of generic pharmaceutical products was unconstitutional as being a matter extending beyond Parliament's authority over patents.
Sandoz has brought an application for judicial review (Court File No. T-1616-12).