On December 22 2017 the Ontario Superior Court of Justice held that Apotex was entitled to C$11,303,131.80, plus pre-judgment interest, for losses resulting from delays in the US Food and Drug Administration's (FDA's) approval of Apotex's amoxicillin-clavulanic acid and levodopa-carbidopa products, which had been caused by contractual breaches and negligence on the part of MDS Pharma Services (Apotex Inc v Nordion (Canada) Inc, 2017 ONSC 1323). Apotex had contracted MDS, a full-service pharmaceutical contract research organisation, to carry out bioequivalence studies that were included in Apotex's US regulatory submissions for the aforementioned products. Due to MDS's failure to comply with the US regulatory framework for conducting such studies, Apotex had been unable to rely on the MDS studies and was forced to repeat them, thus delaying US market entry.
In 1999 Apotex and MDS entered into a master laboratory services agreement (MLSA) that generally governed their relationship in relation to laboratory research studies. Subsequently, in 2003 and 2004, they entered into three separate project agreements that dealt with specific bioequivalence studies for the drugs in question.
Over a number of years, the FDA cited numerous compliance issues at MDS, including concerns that its bioanalytical methods could not accurately measure concentrations of an active pharmaceutical ingredient. In 2005 MDS engaged in a five-year review to address these issues, but in 2006 the FDA issued a letter concluding that systemic failures rendered the review incapable of distinguishing between valid and invalid study data. On January 10 2007 the FDA informed Apotex that it had to take certain steps in relation to submissions that relied on MDS studies conducted between 2000 and 2004. Apotex ultimately repeated the affected studies and modified its FDA submissions accordingly.
The court found that as a result of its issues with the FDA, MDS had breached Section 8.1 of the MLSA, which provided that in conducting its projects for Apotex, MDS would comply with all applicable government regulatory requirements and industry standards and practices. MDS had suffered serious compliance failures and should have foreseen the effect that this would have on its customers, including Apotex. The court accepted Apotex's evidence that the levodopa-carbidopa and amoxicillin-clavulanic studies had had to be repeated.
The court further granted Apotex's concurrent claim in negligence. As a result of the close relationship between Apotex and MDS in respect of the studies, Apotex had been owed a duty of care, which was breached by MDS's failure to abide by FDA regulations. The damage suffered by Apotex was a reasonably foreseeable consequence of the breach.
The court allowed Apotex's claim for the cost of the repeat studies (approximately C$3 million) and approximately C$600,000 and C$7.7 million for lost profits from the delay in the US launch of levodopa-carbidopa and amoxicillin-clavulanic, respectively (less than the C$27 million sought). The court made findings as to the date on which Apotex would have launched without MDS's contractual breach and negligence and assessed:
- lost profits;
- Apotex's estimated market share; and
For further information on this topic please contact Abigail Smith at Smart & Biggar/Fetherstonhaugh by telephone (+1 416 593 5514) or email (email@example.com). The Smart & Biggar website can be accessed at www.smart-biggar.ca.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.