The Federal Court, in a July 12, 2011 decision, in the case of Sanofi Pasteur Limited v. Attorney General of Canada 2011 FC 859 (T-83-10) (“Sanofi”), declared a decision of the Patented Medicines Price Review Board (“Board”) to be null and void, and required the Board to return amounts paid by Sanofi pursuant to the Board’s order, and directing the matter back for reconsideration.
Sanofi had challenged, by way of judicial review, the Board’s decision on the remedy it directed in respect of a finding of excessive pricing for the period 2002 to 2006 in respect of the medicines PENTACEL and QUADRACEL. The Board had ordered Sanofi to offset its revenues earned. The decision of the Board (amended March 1, 2010) can be found at: http://www.pmprb-cepmb.gc.ca/cmfiles/Quadracel-Pentacel-Merits-Reasons-D5-Amended-March-1-2010.pdf). Notably, there was a difference in the “remedy” ordered by the Board in the original and amended reasons. In the December 2009 reasons (in original paragraph 84, specifically noted in the Court’s review) the Board recognized that the most appropriate remedy “given the stability of the customer base for Quadracel and Pentacel” was for Sanofi to reduce the price to a level to offset excessive revenues earned. However, the Board amended the reasons in March 2010, and the reference in the “remedy” to the stability of Sanofi’s customer base was removed. In its case before the Court, Sanofi claimed that its lower prices in the years following 2006 should be taken into account as offset for the excess revenues found to have been earned.
The Court considered a number of issues, including whether the Board had erred by imposing a “penalty” on Sanofi, or had fettered its discretion in an absolute reliance on its Guidelines. The Court answered these questions in the negative. Sanofi also claimed that the Board ignored the evidence and the particular circumstances of the case and had made findings that were based on pure speculation. The Court agreed with Sanofi and held that the Board’s decision did not meet the level of transparency, intelligibility and justification required by the “reasonableness” standard.
Specifically, the Court had difficulties with the Board’s position on the issue of offsetting the revenues earned, and noted in particular the following questions at paragraphs 68 and 69, in referencing the Board’s original reasons:
What did the Board mean when it said that “the later reduction in prices cannot be presumed, or even expected, to remedy the potential harm done […] this is true whether or not the customer base remained the same throughout the two periods […]”? Could this really be intended to deal with this particular case when one considers that in its original paragraph 84, the Board decided that it was appropriate to remedy the harm done in this case through a price reduction because the customer base remained essentially the same?
When it notes, in the last two sentences of para 55, “because the effect of excessive prices on the purchasing decisions made by the customer base will likely be a matter for speculation only”, was the Board making a finding based on the evidence it heard or was it making a general statement? If the former, was this conclusion reached because of the lack of credibility of a particular witness or was it because the probative value of the evidence produced was simply insufficient?
The decision was unclear as to whether the Board thought that any remedial action by a patentee, outside of a Voluntary Compliance Undertaking and without a prior Board Order, should be disregarded. The Court could not decipher on what basis the Board discarded the patentee’s argument that it had already compensated for its excessive revenues.
As such, the Court found that it was not in a position to exercise its duty to review the Board’s decision and to determine whether it was in the range of possible and acceptable outcomes. The Board’s decision, therefore, did not meet the reasonableness standard and was set aside, and remitted back to the Board for reconsideration.
The Federal Court decision can be found at: http://decisions.fct-cf.gc.ca/en/2011/2011fc859/2011fc859.html