The Federal Court has released another decision on the quantification of damages under section 8 of the Patented Medicines (Notice of Compliance) Regulations ("Regulations"). In Apotex Inc v Merck Canada Inc, 2012 FC 1235 (alendronate, FOSAMAX), Justice Hughes provides directions regarding the calculation of Apotex's claim. The accounting experts have been instructed to collaborate on a final calculation as to the amount of compensation.

The decision follows an earlier ruling by Justice Hughes in the same action that addressed the validity of the Regulations and the scope of remedies available to Apotex under section 8 (2008 FC 1185, varied in part 2009 FCA 187, leave to appeal refused [2009] S.C.C.A. No. 347).

The decision largely follows the analytical framework used by Justice Snider in the recent ramipril quantification decisions (sanofi-aventis Canada Inc v Teva Canada Limited, 2012 FC 552, and Apotex Inc v sanofi-aventis, 2012 FC 553). The principal issues considered by the Court included:

  • Overall size of the alendronate market in the relevant period. The parties agreed that market size in the "but for" period is the quantity actually sold by Merck during that time (when Merck was the sole entrant).
  • Generic market share. The parties agreed that the generic share of the market in the "but for" world would have been the share occupied by the generics in the subsequent real world period.
  • Apotex's market share. The Court considered when Apotex and subsequent generics would have entered the market. The Court found that Apotex and Novopharm had the capacity and motivation to enter the "but for" market but that a third generic, Cobalt, would have waited for patent expiry. The Court then made findings on listing dates for each generic's product on the various provincial formularies.
  • Price. The Court accepted that generic product would have been priced at 70% during the period when Apotex was the sole generic entrant and 63% when the generic market was shared. The Court rejected suggestions by Apotex that it would have secured a higher price during the exclusivity period.
  • Availability of a second ramp-up. The second ramp-up period relates to lost sales incurred by Apotex following actual product launch in comparison to sales Apotex would have made had it entered the market on its approvability date. In the ramipril section 8 cases, Justice Snider rejected compensation for such losses as they occur after the relevant period (i.e. after the date the NOC proceeding was dismissed). Justice Hughes applied the principle of judicial comity and followed Justice Snider's disposition of the issue.
  • Deductions. The parties agreed on a number of deductions but differed on rebates and free goods. On rebates, the Court made separate findings for the periods of generic exclusivity and generic competition, though the actual figures were redacted from the public version of the judgment. The rebate rate for the exclusivity period was based on rates offered by Apotex on other proxy products. The rebate rate for the competitive world was based on what Apotex did in the real world when it entered the alendronate market. On free goods, no further deductions were allowed on the basis that rebate percentages already had taken such goods into account.

The Federal Court has now decided three cases on the quantification of damages under section 8. While additional cases remain pending, significant efficiencies in the disposition of such proceedings can be expected as the courts (and ultimately the appellate courts) clarify the relevant principles.