Apotex Inc. v. Ontario (Minister of Health), 2002 CanLII 39020 (ON CA)

Court File and Parties

DATE: 20020213
DOCKET: C36098

COURT OF APPEAL FOR ONTARIO

CARTHY, WEILER AND AUSTIN JJ.A.

B E T W E E N:

APOTEX INC. Appellant (Applicant)

H. Radomski, E. Hore and J. Perrin for the appellant

Howard Goldblatt for the intervener Ontario Pharmacists Association

• and -

MINISTER OF HEALTH, LIEUTENANT GOVERNOR IN COUNCIL, and ATTORNEY GENERAL OF ONTARIO Respondents (Respondents)

Dennis W. Brown, Q.C. for the respondent the Attorney General of Ontario

Martin W. Mason and Jennifer Wilkie for the respondent Pfizer Canada Inc.

A N D B E T W E E N:

PFIZER CANADA INC. Respondent (Applicant)

• and -

MINISTER OF HEALTH, LIEUTENANT GOVERNOR IN COUNCIL, AND ATTORNEY GENERAL OF ONTARIO Respondents (Respondents)

• and -

APOTEX, INC. Appellant (Respondent)

Heard: January 8 and 9, 2002

On appeal from the judgment of Justice John G.J. O’Driscoll dated December 20, 2000.

Reasons for Decision

CARTHY J.A.:

[1]

Background

The statutory and regulatory framework lying behind this appeal is complex but the conflict between the parties can be understood without reference to the legislative details. Pfizer Canada Inc. (Pfizer) sells a drug product called Zoloft licensed by the Minister of Health (Health Canada) for treatment of depression, obsessive compulsive disorder, and panic disorder. Its patent for the first application, depression, has expired and its patent for the second two uses has some time to run. Apotex Inc. (Apotex) wishes to take advantage of the opening provided by the expired patent and, with that in mind, has developed a generic product called Apo-Sertraline, which, to the satisfaction of Health Canada, is the therapeutic equivalent of Zoloft. Sertraline is one of many drugs that cannot be legally sold without a Notice of Compliance (NOC) from Health Canada. Pfizer holds a NOC for the three above-named applications. Since Health Canada guides itself by existing patents in granting NOCs, the one issued to Apotex was restricted to a single use – the treatment of depression.

2Moving to the provincial level of control, we find legislation and regulations governing the interchangeability of drugs dispensed in pharmacies. The Ontario Ministry of Health (Health Ontario) issues to pharmacists a Formulary of interchangeable drugs and their prices. The pharmacist must substitute the lowest price interchangeable drug in the Formulary for any other listed drug unless the prescription denotes “no substitution”. The lowest priced drug also sets the amount of reimbursement to the pharmacist if the drug is dispensed to selected categories of customers such as senior citizens.

3Apotex sought provincial approval to including Apo-Sertraline on the Formulary as interchangeable with Zoloft and without reference to limitations on its use. It was placed on the Formulary but with an asterisk limiting its use to treatment for depression. This is apparently the only drug on the Formulary with a limited use designation. This limitation has markedly reduced the expected sales of Apo-Sertraline because prescriptions do not normally contain any indication by the doctor of the diagnosis and pharmacists are left uncertain as to their legal position both in dispensing and obtaining reimbursements. In most cases it is impractical to contact doctors in a timely manner for further information.

4It is against this backdrop that Apotex applied to the Divisional Court for judicial review, claiming that the Minister and the Lieutenant Governor in Council exceeded their jurisdiction in giving consideration to the use of the drug rather than, as directed by the relevant legislation, to the interchangeability of one product for another.

5Pfizer applied for a declaration supporting the validity of the limited designation or, in the alternative, that Apo-Sertraline should not be designated interchangeable for any purpose. The Ontario Pharmacists Association gained intervener status and took a position supporting Apotex. O’Driscoll J. heard both applications as a single judge of the Divisional Court dealing with a matter of urgency. For reasons found at (2000), 10 C.P.R. (4th) 166, he determined that the Minister and the Lieutenant Governor in Council acted within their jurisdiction in determining that Apo-Sertraline should be interchangeable with Zoloft only for the treatment of depression. Orders were made on those terms in both applications and Apotex appeals by way of leave granted by this court.

[6]

Statutory and Regulatory Framework

There are a variety of federal and provincial statutory provisions and regulations that relate to the process of approving of drugs for sale, all of which are referred to in the reasons of O’Driscoll J. I shall confine my references to the core provisions bearing directly on the jurisdictional issues raised by the appeals.

7Sertraline drugs are among those the sale of which is prohibited under the Food and Drugs Act, R.S.C. 1985, c. F.27. The regulations under that Act permit advertising and sales if, after submission, a NOC is issued. Apo-Sertraline met all the requirements for being deemed interchangeable with Zoloft and received a limited NOC only because the regulations require Health Canada to protect existing patent rights, in this case, Pfizer’s patents covering use of Zoloft for obsessive-compulsive disorder and panic disorder.

8Apotex takes no issue with Health Canada’s NOC limiting Apo-Sertraline to sales for use as an anti-depressant. Its argument is with the provincial authorities whose jurisdiction does not extend to protecting patent rights and whose proper concern should be directed to safety and cost saving in the provision of therapeutic drugs. The Apotex argument continues to the effect that its product has been proven to be interchangeable with Zoloft for all purposes and that it has no intention to sell the drug to pharmacies as anything more than an anti-depressant. Patent protection, it is argued, should not be allowed to drive the narrower provincial concern and jurisdiction.

9The operative provision of the Drug Interchangeability and Dispensing Fee Act, R.S.O. 1990, c. P.23 (DIDFA) is s. 14(1), which reads:

14. (1) The Lieutenant Governor in Council may make regulations,

(a) prescribing conditions to be met by products or by manufacturers of products in order to be designated as interchangeable with other products;

(b) designating a product as interchangeable with one or more other products where the Lieutenant Governor in Council considers it advisable in the public interest to do so, but a product shall not be designated as interchangeable with another product if,

(i) it does not contain a drug or drugs in the same amounts of the same active ingredients in the same dosage form as the other product, or

(ii) the product or its manufacturer has not met the conditions described in clause (a);

(c) prescribing conditions to be met for a product to continue to be designated as interchangeable;

(d) prescribing circumstances in which persons may charge more than their usual and customary dispensing fees.

10The regulations passed pursuant to this power include conditions that must be met by an applicant to the Minister for ultimate inclusion in the Formulary. Section 6(1) of Regulation 935 reads, in part:

6. (1) It is a condition for each strength and dosage form of a drug product to be designated as interchangeable with other products that the manufacturer of the drug product submit to the Minister,

(a) evidence that Health Canada has approved the product for sale in Canada, a copy of the product’s drug notification form issued by Health Canada and, subject to subsection (2), a copy of the product monograph approved by Health Canada;

(d) the proposed drug benefit price of the product;

(e) evidence that the manufacturer is able to supply the product at the proposed drug benefit price in a quantity sufficient to meet the anticipated demand for the product;

11The Ministry reviews the application and makes a recommendation to the Lieutenant Governor in Council for a regulation designating a product as interchangeable.

12The appellant’s argument is that the DIDFA focuses entirely on the interchangeability of equivalent products, and it is an excess of jurisdiction to restrict the designation by reference to use. It is said that the province is enforcing Health Canada and Patent regulations under the guise of administering a statute devoted to containing the cost of drug products. Other arguments were put as to fairness, arbitrariness, and consideration of irrelevant matters, but they all come back to whether there was jurisdiction to limit the designation to accord with the federal NOC.

13I agree with O’Driscoll J. that there was clear jurisdiction.

14The condition set out in s. 6(1)(a) of the regulation provides that the product must be approved for sale in Canada. Apo-Sertraline started off as a drug which, without approval, it would have been illegal to offer for sale in Canada. NOC gave it no more than legality for sale for a single use – depression. It is not a question of enforcing patents. Nor is it a question of equivalence for therapeutic use for three disorders. If this drug is sold to treat obsessive-complusive disorder or panic disorder it is an illegal sale and a breach of the federal Food and Drug Act. In my view it falls well within the purpose and ambit of the DIDFA to assure that the Formulary for interchangeable drugs lists only those drugs that are legal to sell and identifies those drugs that are of limited legality. The appellant did not seek to strike down the condition found in s. 6(1)(a) and simply argued that its product was approved for sale by Health Canada and thus met the terms of the condition. I cannot accept that narrow and overly literal reading of the condition. Health Canada’s NOC is the indicator of legality for sale in s. 6(1)(a), and it makes no sense to read the condition as compelling the Minister to ignore a limiting feature to legality for sale.

15O’Driscoll J. also relied on condition 6(1)(d-1) [now 6(1)(d) and (e)] to support his conclusions. I do not find it necessary to go beyond condition 6(1)(a). O’Driscoll J. applied a test of reasonableness to his review of the acts of the Minister and Lieutenant Governor in Council. In my view it is not necessary to debate that issue. On a standard of correctness there is sufficient authority under the statute and regulations to justify the change to the Formulary and the indication of limitation of uses.

16The present legislative format is not satisfactory; pharmacists are uncertain and at risk of selling an illegal drug. Further, the existing situation deprives patients of the lower cost generic if pharmacists hold back because of uncertainty. The province loses money if senior citizens and others entitled to drug benefits receive the higher cost drug, and the pharmacist is reimbursed on that basis. The problem may be isolated but is not small. Evidence before the court suggests $22 million annual sales of these drugs and that 88% is for treatment of depression. A solution should be found but this court cannot provide it.

[17]

Disposition and Costs

The appeal should be dismissed with costs of Pfizer and the Ministry to be paid by Apotex. Under the new rules, effective January 1, 2002, this court must fix the costs. The respondents shall submit bills of costs on the partial indemnity scale, citing hours of preparation and other information provided in the rules, and the appellant shall have 7 days to respond thereto.