On January 20th the Supreme Court of Canada issued a decision which confirms the role of the Patented Medicine Prices Review Board (PMPRB) and the consumer protection purposes of ss. 80(1)(b), 83(1) and 85 of the Patent Act.
In Celgene Corp v. Canada (Attorney General) 2011 SCC 1, Justice Abella, writing for the full court, addressed the term “is being or has been sold in any market in Canada” and determined that ordinary commercial definitions of place of sale were not determinative of the jurisdiction of the PMPRB to decide if prices being charged for a patented medicine are excessive or not.
Celgene is a global biopharmacuetical manufacturer headquartered in New Jersey. In the United States, Celgene markets thalidomide under the brand name Thalomid. Celgene has not obtained a Notice of Compliance from Health Canada with respect to the drug. Rather, since 1995, all sales of the medicine in Canada have been made pursuant to the Special Access Programme of Health Canada (SAP). When a doctor in Canada orders Thalomid under the SAP, it is packed in Celgene’s U.S. facility and shipped FOB to Canada. The invoice is prepared by Celgene in the U.S. and mailed to Canada. Payment is made in U.S. dollars to Celgene in the U.S. No Canadian taxes are paid on the transaction, the medicine is never redistributed in Canada and any unused product must be returned to Celgene in the U.S.
Celgene argued before the PMPRB that under general commercial law principles the medicine was “sold” in New Jersey, not in Canada, and that the PMPRB had no jurisdiction because its authority under s. 80(1)(b) of the Patent Act extends only to medicines “sold in any market in Canada”. The PMPRB disagreed and concluded that it had authority over the sales of Thalomid through the SAP. The PMPRB concluded that, in order to comply with its mandate, sales “in any market in Canada” for the purposes of the relevant provisions, should be interpreted to include sales of medicines that are (a) regulated by the public laws of Canada, (b) will be delivered and dispensed in Canada, and (c) the cost of which will be borne by Canadians. All of these prerequisites were satisfied in the case of the sales of Thalomid to Canadians through the SAP.
Celgene sought judicial review before the Federal Court, which concluded that while the medicine is being sold to Canadians, it is being sold in the U. S., not in Canada. It found that the PMPRB did not have jurisdiction. However, the Federal Court of Appeal agreed with the PMPRB’s determination of its mandate and jurisdiction and allowed the appeal. The Court of Appeal focused on the words “sold in any market in Canada”. Because the language of the statute is capable of different interpretations, the one chosen should be the one that best implements the consumer protection objectives of the price-regulation provisions of the Patent Act. An interpretation which would exempt Thalomid sales through the SAP, would deprive Canadians of the price protections underlying the enactment of those provisions.
The Supreme Court agreed with the Court of Appeal. Because the provision is question is open to differing interpretations, it framed the question as being whether the one selected by the PMPRB was justified. It found that it was. The PMPRB was justified in rejecting the technical commercial law definition urged by Celgene for the reasons articulated by the Federal Court of Appeal and because that interpretive choice is supported by the legislative history and purpose of the PMPRB. “. . . the approach to its mandate that the PMPRB applied, one that took into paramount account its responsibility for ensuring that the monopoly that accompanies the granting of a patent is not abused to the financial detriment of Canadian patients and their insurers” was reasonable and justified.
The Court also affirmed that since the PMPRB is a specialized tribunal interpreting its enabling legislation, only if the PMPRB’s decision is unreasonable should it be set aside. To be unreasonable the Court reiterated its comments in Dunsmuir 1 that the decision must fall outside “a range of possible, acceptable outcomes which are defensible in respect of the facts and law”. Far from falling outside this range, the Court saw the PMPRB’s decision as unassailable under either a reasonableness or correctness standard of review.
The Court has affirmed the PMPRB’s long standing view that patentees are required to notify the PMPRB of an intention to sell a patented medicine in a new market in Canada and the date on which the patentee intends to offer the medicine for sale, and that this requirements includes investigational new drugs and drug products to be sold under the SAP.
The Court appears to have settled, for the time being, the debate between the pharmaceutical industry and the PMPRB as to whether the PMPRB has a consumer protection mandate in addition to an obligation to ensure that the prices of patented medicines are not excessive. In so doing, the Court relied on statements of Ministers of the Government of Canada at the time of the introduction in the House of Commons of legislation related to the PMPRB.
As for pharmaceutical industry, the case is likely to attract careful study by manufacturers and their counsel. Several recent decisions of the Federal Court has sided with manufacturers suggesting that the PMPRB has interpreted its jurisdiction too broadly. This decision will rebalance, to some extent, the debate over the extent of the PMPRB’s jurisdiction.