DRUG: Thalidomide (THALOMID®)

Nature of Case: Appeal from a Decision of the Patented Medicine Prices Review Board

Successful Party: Canada (Attorney General)

Date of Decision: January 20, 2011


On January 20, 2011, the Supreme Court of Canada dismissed an appeal by Celgene Corporation ("Celgene") and held that the Patented Medicine Prices Review Board ("Board") has jurisdiction to regulate the price of patented medicines that are sold into Canada pursuant to the Health Canada Special Access Program as part of its "consumer protection" mandate. This is the first Supreme Court of Canada decision to consider the jurisdiction of the Board since it was created by Parliament in 1987.

Thalomid is sold by Celgene pursuant to the Health Canada Special Access Program ("SAP"). The medicine is packed in Celgene's facilities in the United States and shipped Free on Board ("FOB") to Canadian doctors upon request. Celgene prepares an invoice in New Jersey, mails it to Canada, and directs that payment be made in U.S. dollars and couriered or mailed to Celgene in New Jersey. Celgene does not have a Notice of Compliance for Thalomid.

In 2006, Celgene obtained a Canadian patent in relation to Thalomid. The Board subsequently advised Celgene that in view of this patent, it had jurisdiction to request pricing information about its sales pursuant to the SAP. Celgene provided some pricing information, but eventually stopped doing so on the basis that, under commercial law principles, the medicine was "sold" in New Jersey and was outside the Board's authority under s. 80(1)(b) of the Patent Act, which extended only to medicines "sold ... in Canada". The Board brought a motion for production of documents. While it was acknowledged that New Jersey is the locus of sale for commercial law purposes, the Board held that the Patent Act confers jurisdiction over sales of patented medicines "in any market in Canada", including those that are regulated by Canadian law, delivered and used in Canada, or paid for by Canadians. Since the SAP is a Canadian law, the Board held that Celgene's sales under this programme were subject to its jurisdiction.

The Board's decision was overturned by the Federal Court. The judge held that although Thalomid is supplied to Canadians, it is sold in the United States, not Canada, and cannot fall within the words "sold in any market in Canada". The Board therefore had no jurisdiction to order either the Thalomid pricing information or a price reduction. A majority of the Federal Court of Appeal disagreed with this finding and held that because the language "sold in any market in Canada" was open to different interpretations, one should be chosen which best implemented the consumer protection objectives of the price-regulation provisions of the Patent Act. If the provisions were interpreted in a way that exempted Celgene's Thalomid sales through the SAP, Evans JA held that Canadians would be deprived of the price protection that underlay the enactment of those provisions.

The Supreme Court of Canada granted Celgene leave to appeal and defined the relevant issue in the following way: Should the concept of "sold in any market in Canada" in the relevant provisions of the Patent Act be interpreted strictly in accordance with commercial law principles, or should this definition be responsive to the surrounding legislative context and purpose. The Court adopted the latter interpretation.

The Supreme Court held that the Board is responsible for monitoring and regulating the prices of patented medicines pursuant to the Patent Act. Abella J., writing for a unanimous Court, acknowledged that the words "sold (or selling) in any market in Canada" may lend themselves to different interpretations, including in other parts of the Patent Act. However, this does not mean that the Board misinterpreted the words "sold" and "selling" in the context of ss. 80(1)(b), 83(1) and 85. Rather, the Court held that the Board was guided by the consumer protection goals of its mandate, and that a commercial law interpretation would undercut Parliament's objectives by preventing the Board from protecting Canadian purchasers of Thalomid and other foreign-sold SAP patented medicines.

The Board's interpretive choice was also supported by the legislative history, including 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." In order to comply with this mandate, the Court held that sales "in any market in Canada" should be interpreted to "include sales of medicines that are regulated by the public laws of Canada, that will be delivered in Canada, to be dispensed in Canada, and where, in particular, the cost of the medicine will be borne by Canadians - patients or taxpayers, as the case may be". The Court held that a strict commercial law interpretation of "sold" in s. 80(1)(b) would give the Board authority over sales which, while technically made "in Canada", are destined for other countries. Abella J. held that 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 noted in closing that deference will usually be accorded to a specialized tribunal (like the Board) is the interpretation of its enabling legislation. Decisions will only be set aside if the Board's decision is unreasonable. To be unreasonable, the decision must be said to fall outside "a range of possible, acceptable outcomes which are defensible in respect of the facts and law".