On January 20, 2011, the Supreme Court of Canada decided the first case brought before it concerning the jurisdiction of the Patented Medicine Prices Review Board (“PMPRB”), Canada’s federal pricing regulator for patented medicines. The Court decided that the PMPRB does have the jurisdiction to seek sales and pricing data from a patentee, even if the "sales" that occurred, from a commercial law perspective, were sales that occurred in another country and did not occur in Canada.

By way of background, this matter initially arose when the PMPRB sought reports of data in respect of the THALOMID product. Celgene, the patentee, challenged the jurisdiction of the Board to seek the data in respect of medicines, which were sold under Canada’s special access regime (SAP) for pharmaceuticals, given that the locus of the sale was the U.S. and not Canada, given that the Board held that it had jurisdiction to require the reporting of prices for the product. However, the Federal Court disagreed with the Board, and held that it did not have jurisdiction to require disclosure of pricing data relating to these sales as they were not sales in Canada. The sales were for product shipped “Free on Board” New Jersey, making the locus of sale the U.S. from a commercial perspective (see our earlier report on the Federal Court decision, released March 17, 2009).

The Federal Court’s decision was appealed, and the Federal Court of Appeal overturned the decision on December 23, 2009. The Supreme Court agreed with the Federal Court of Appeal that the Board has jurisdiction, finding that "sold" may have a commercial law meaning in some statutory contexts, "but that does not mean that the Board misinterpreted the words “sold” and “selling” in the context of ss. 80(1)(b), 83(1) and 85. In rejecting the technical commercial law definition, the Board was guided by the consumer protection goals of its mandate, concluding that Celgene’s approach would undercut these objectives by preventing the Board from protecting Canadian purchasers of Thalomid and other foreign-sold SAP patented medicines. The Board’s interpretive choice is supported by the legislative history..."

Justice Abella wrote, "In my view, therefore, the legislative context and the consumer protection purpose of ss. 80(1)(b), 83(1) and 85 of the Patent Act support the Board’s conclusion that, based on the language of those provisions, it has authority over Celgene’s sales of Thalomid to Canadians through the SAP."

The Court also addressed the issue of standard of review, even though neither party took issue with the finding of the Court of Appeal that the standard of review of the Board's decision was "correctness". The Supreme Court disagreed, holding, "This specialized tribunal is interpreting its enabling legislation. Deference will usually be accorded in these circumstances: see Dunsmuir, at paras. 54 and 59; Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339, at para. 44; and Nolan v. Kerry (Canada) Inc., 2009 SCC 39, [2009] 2 S.C.R. 678. Only if the Board’s decision is unreasonable will it be set aside. And to be unreasonable, as this Court said in Dunsmuir, the decision must be said to fall outside “a range of possible, acceptable outcomes which are defensible in respect of the facts and law” (para. 47). Far from falling outside this range, I see the Board’s decision as unassailable under either standard of review."

The Federal Court of Appeal decision can be found at: http://decisions.fca-caf.gc.ca/en/2009/2009fca378/2009fca378.html

The Supreme Court decision can be found at: http://scc.lexum.umontreal.ca/en/2011/2011scc1/2011scc1.html