CASE: Canada (Attorney General) v. Celgene Corporation (A-177-09)

NATURE OF CASE: Jurisdiction of PMPRB under para 80(1)(b) Patent Act

DRUG: THALOMID (thalidomide)

SUCCESSFUL PARTY: Canada (Attorney General)

DATE OF DECISION: December 23, 2009


On December 23, 2009, the Federal Court of Appeal ("FCA") allowed the Attorney General's appeal from the decision of Campbell J. and restored the order of the Patented Medicine Prices Review Board ("Board"). In doing so, the FCA found that a patented medicine sold by an American company and shipped Free on Board ("F.O.B.") from the U.S.A. to Canada, pursuant to Health Canada's Special Access Programme ("SAP"), was "sold in any market in Canada" within the meaning of paragraph 80(1)(b) of the Patent Act ("Act") and was, therefore, subject to the jurisdiction of the Board.

Celgene Corporation ("Celgene") is the owner or licensee of several Canadian patents pertaining to THALOMID. Celgene does not have market authorization to market THALOMID in Canada. Rather, the sales of THALOMID are regulated by Health Canada’s SAP. At a physician's request, Health Canada authorizes Celgene, in the U.S.A., to package and ship THALOMID F.O.B. from its factory in New Jersey directly to a patient's Canadian physician. The Canadian physician is invoiced by and pays Celgene in U.S. dollars; payments are mailed to and paid to Celgene in New Jersey.

In January 2008, the Board required Celgene to submit pricing information since January 1995 to the Board, pursuant to sections 81 and 88 of the Act. Though the Board agreed that the principles of common law located the sale of THALOMID in New Jersey, it did not regard the location of the sale as determinative because the common law rules are concerned with resolving commercial/contractual disputes between seller and buyer. In contrast, the Board held that it is a public law institution regulating in the public interest the price that Canadians pay for patented medicines and accordingly had the jurisdiction.

In March 2009, Justice Campbell of the Federal Court reversed the Board's decision and held that a commercial meaning should be given to the words "sold in any market in Canada". Accordingly, on the basis of common law principles, the sale of THALOMID occurred in New Jersey and did not engage the jurisdiction of the Board.1

Justice Evans, for the majority of the FCA, allowed the appeal and restored the order of the Board. The question faced by the FCA was the correct interpretation of the phrase "sold in any market in Canada and elsewhere" and whether it ought to be given its ordinary meaning or interpreted through the statutory purpose and context of the Patent Act. The majority held that the phrase was ambiguous and can only be resolved by selecting the meaning which best implements the objectives of the legislation. The majority concluded that the price regulation provisions of the Patent Act are "protective consumer legislation" and therefore it would be "inconsistent with the legislative intent to interpret the Act in a manner that deprives patients in Canada of the protection of price regulation when the medicines that they need happen to be neither the subject of an NOC, nor available under the SAP from a manufacturer in Canada." Thus the FCA held that the statutory and regulatory contexts support the Board's interpretation of the phrase and accordingly the Board had jurisdiction over the SAP sale.

Justice Ryer wrote a strongly worded dissenting opinion in which he held that the approach espoused by the Supreme Court of Canada mandated reliance on the ordinary meaning of the words of the provision under consideration when those words are precise and unequivocal. To Justice Ryer, the legislation contemplated sales of the medicine in question occurring in Canada. Ryer J did not accept the decision of the majority that stretched the meaning of the phrase "sold in any market in Canada" beyond its ordinary meaning to mean "sold into any market in Canada". Furthermore, Ryer J. alluded to the difficulties that would arise given the majority’s emphasis on the location of the market rather than the location of sale. Finally, in contrast to the majority, Ryer J. stated he would not characterize the Patent Act as 'consumer protection legislation' -- a position that the Board itself appears to agree with.