In the first of two similar decisions, the Federal Court has found that Sandoz Canada is not under the jurisdiction of the PMPRB because Sandoz does not hold any patents and no monopolies. Sandoz is the wholly-owned subsidiary of Novartis Canada Inc., which is itself a subsidiary of Novartis AG. Novartis AG owns patents relating to some of the medicines that sparked the PMPRB’s concerns. The PMPRB was aware that Novartis AG authorizes Sandoz to sell generic versions of those medicines.
Accordingly, the PMPRB argued it had jurisdiction over Sandoz because of sections 2 and 79(1) of the Patent Act. It was submitted that section 79(1) provides that a patentee includes any other person who is entitled to exercise any rights in relation to that patent. According to the PMPRB, Sandoz is effectively controlled by its parent companies as they authorize Sandoz to enter the market, making Sandoz a patentee.
In finding the PMPRB’s decision to be unreasonable, the Court said that the PMPRB’s jurisdiction was restricted to reviewing prices charged by patent holders to determine whether those prices are excessive. Further, the Court found that while the federal government can regulate patents of invention, it has no overall jurisdiction to regulate the price of generic versions of patented medicines because the legislation is not aimed at protecting consumers from high drug prices generally.
In the second related decision, the Federal Court has found that Ratiopharm is not a patentee and therefore not subject to the jurisdiction of the PMPRB. Ratiopharm sells ratio HFA, the generic equivalent of a product manufactured by GlaxoSmithKline Inc. (GSK). Ratiopharm sold their product to pharmacies after having purchased it under contract from GSK. The two products competed in the Canadian market, and GSK retained all rights to its product.
The PMPRB submitted that the agreement between Ratiopharm and GSK gave Ratiopharm the right to sell and set the prices for ratio HFA. Without that agreement, the PMPRB argued that Ratiopharm would have violated GSK’s patent, and so in that sense, Ratiopharm was entitled to “exercise… rights in relation to that patent”, which brought it within the definition of a “patentee” in section 79(1) of the Patent Act. The PMPRB said that ratio HFA was being sold at an excessive price and that Ratiopharm must pay damages of $65.9 million.
The Federal Court followed the same reasoning as in the Sandoz decision, concluding the PMPRB did not have jurisdiction over generic companies who do not own patents and the governing legislation is not aimed at protecting consumers from high prices generally.