A recent decision of the Federal Court of Appeal represents a blow to generic pharmaceutical companies in their quest to seek compensation for the period of time that they were precluded from entering the market with a generic version of a drug as a result of an invalid patent and lengthy proceedings under the Patented Medicines (Notice of Compliance) Regulations (NOC Regulations).

In this case, although Pfizer was successful in thwarting ratiopharm’s initial attempt to invalidate Canadian Patent No. 1,321,393 (the ‘393 Patent) under the regime of the NOC Regulations, ratiopharm was subsequently successful in a second “kick at the can” by invalidating the ‘393 Patent in an impeachment action (as reported in a previous post), which allowed ratiopharm to market its generic version of Pfizer’s drug NORVASC (amlodipine besylate).

However, being the quagmire that is Canadian pharmaceutical patent practice, even though it had been finally established that ratiopharm had been kept off the market by an invalid patent, ratiopharm was required to bring a motion to set aside the Court’s order from the earlier NOC proceedings in order for it to be entitled to seek compensation pursuant to section 8 of the NOC Regulations for the losses incurred during the time it was held off the market because of Pfizer’s application under the NOC Regulations.

In this respect, ratiopharm argued that the initial order under the NOC Regulations should be set aside and that it should be entitled to compensation because the order was obtained by fraud. Specifically, because the trial judge in the impeachment action found that Pfizer had wilfully made material allegations that were untrue in respect of the ‘393 Patent, ratiopharm pleaded that the earlier order under the NOC Regulations should be vacated.

The Federal Court of Appeal found, however, that for the order to be set aside, the fraud must have been committed in the proceedings in which the earlier order was rendered. In this respect, ratiopharm did not file a record of the proceedings which could establish that the original panel of judges was the victim of a fraud. In fact, no perjured evidence and no forged documents were filed in the NOC proceedings. As a result, there was nothing to indicate an intention to mislead in the context of the NOC proceedings, and therefore nothing to show that the earlier order was induced by misrepresentations later found in the impeachment action. The earlier order could therefore not be vacated on the basis of fraud.

Furthermore, where fraud has not been established, the Court reiterated that a subsequent finding of invalidity does not provide a sufficient basis for setting aside an earlier order that would open up a party to a section 8 remedy:

"Section 8 was not intended to provide redress where the innovator prevailed in the prohibition proceeding, even if the generic was later successful in patent litigation.

We’ll report in a later post if ratiopharm has decided to appeal this decision to the Supreme Court of Canada.