COURT FILE NO.: 530/07
DATE: 20071109
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
PHARMASCIENCE INC., RATIOPHARM INC., COBALT PHARMACEUTICALS INC., RANBAXY PHARMACEUTICALS CANADA INC., SANDOZ CANADA INC., GENPHARM INC. and NOVOPHARM LIMITED
Applicants
- and -
MINISTER OF HEALTH AND LONG-TERM CARE (ONTARIO), EXECUTIVE OFFICER OF THE ONTARIO PUBLIC DRUG PROGRAMS, LIEUTENANT GOVERNOR IN COUNCIL and ATTORNEY GENERAL OF ONTARIO
Respondents
Carol Hitchman and Robert Shapiro, for the Applicants
Lise Favreau, James Kendik and Erin Rizok for the Respondents, Executive Officer, Minister of Health and Long-Term Care, Attorney General for Ontario
Nando De Luca, Joseph Cosentino, for Apotex
HEARD at Toronto: November 9, 2007
GANS J.: (Orally)
INTRODUCTION
[1] I preface my judgment by first observing, as I did at the close of argument yesterday that I am indebted to all counsel for the assistance with which I was provided over the past two days. The written work product and the oral advocacy from all counsel was exemplary, having regard to the short time frame within which each had to operate and, literally, function and the complexity of the subject matter. In some respects, it was of more than modest assistance that all counsel are familiar with the legislative and factual matrix within which their respective clients function.
[2] Regrettably, coming to these issues for the first time as I do, I doubt that I can do justice or capture most, if not all, of the information, if not the attendant nuances, that was thrown my way, albeit with some rapidity, during the course of argument, having regard as well to the time I had available to me for pre-hearing preparation.
DECISION
[3] Having regard to the exigencies of time in respect of the preparation and release of my decision, I do not intend to repeat the facts leading up to the launching of this "urgent" application for judicial review. Nor do I intend to reiterate or expand upon the details of the regime, namely the Ontario Drug Programs ("ODP"), within which the parties function on a daily basis. Much of that has been set out in multitudinous judgments of the Divisional Court, the Court of Appeal, the Federal Court – all levels, and the Supreme Court of Canada. Suffice it to say, and for ease of reference, I incorporate the Facts portion of the factum of the first named Respondents, which collectively, I describe as the "Ministry".
[4] Simply put, the Applicants, a group of seven generic drug manufacturers, seek to review the decision of the Ministry, in the person of the Executive Officer of the ODP (the "EO"), by which she has designated certain products of the intervenor, Apotex Inc. ("Apotex"), namely Apo-Lisinopril, (the "Product") a benefit under the Ontario Drug Benefit Formulary/Comparative Drug Index ("Formulary"), effective as of November 9, 2007 ("October Formulary Update"). The Applicants challenge both the substance of the decision and the manner in which it was made and seek, inter alia, an order quashing the decision of the E.O. or, alternatively an order compelling the E.O. to list all the "comparable" products of the Applicants in the October Formulary Update.
[5] Before but briefly analyzing the matters in issue, I indicated to counsel that even if I decide this matter in favour of the Applicants, I will not grant the alternative relief sought, notwithstanding the decision of Rosenberg J. in Apotex Inc. v. Ontario (Attorney General), [1984] O.J. No. 3272, and list comparable product of the Applicants together with the Apo-Lisinopril in the October Formulary Update. In my view, while the facts of the matter then before Rosenberg J. may have demanded such relief, I am not persuaded, absent compelling evidence that the final step in the approval process is but a mere formality that I should venture into an area which demands the technical expertise of the Ministry, the Executive Officer and her staff.
APPLICANTS' POSITION
[6] The essence of the challenge mounted by the Applicants was rooted in two arguments, the first of which formed the initial corner stone of the application at the time of its launch, while the second, it is argued, became apparent when the Ministry filed its response material and the correspondence between it and Apotex was received as exhibits. Both arguments, to a greater or lesser extent, turn on the interpretation of certain sections of the Ontario Drug Benefit Act, R.S.O. 1990, Chapter O-10 (ODBA) and the regulations passed thereunder, Ontario Regulation 201/96. I was directed, to some extent, to several sections of the Drug Interchangeability and Dispensing Fee Act, R.S.O. 1990, c.P-23 ("DIDFA") and the companion regulations, R.R.O. 1990, Regulation 935, principally as an aid to interpretation.
[7] The section of the ODBA regulations, which give rise to the matters in issue, section 12(1)(e) provides as follows:
(1) A strength and dosage form of a drug shall not be designated as a listed product unless the manufacturer of the drug product submits to the Executive Officer…
(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. (emphasis added)
[8] Putting the matter simply, it is the position of the Applicants that Apotex could not have met the supply pre-condition as at the date of its application for its Product to be designated, namely, on October 3rd, 2007. Apotex was otherwise bound by an injunction issued out of the Federal Court, trial and appellate divisions, and could not, legally, have had Product in hand or the capability of making such Product until, effectively, the expiration of the injunction, which coincided with the expiration of certain patent rights in favour of the originator of the subject medication, namely, Merck & Co., or on the 16th of October, 2007, at the earliest. If Apotex did have Product on hand or access to same over which it could exercise control, then it would be in breach of the aforesaid injunction, from which breach it should not now be able to benefit.
[9] It was the Applicants' position on the first arm of its argument that the E.O. was incorrect in her interpretation of ODBA, the enabling legislation, in failing to follow or adhere to the plain meaning of the legislation that mandated compliance on a present as opposed to a prospective basis. This position is underscored by the Ministry's own published guidelines and directives, which speak to a "current" ability to supply product and not one that can be accomplished in the future. Indeed, Ms. Hitchman, counsel for the Applicants, suggested that this "temporal" position was pointedly underscored in correspondence exchanged between Apotex and the Ministry in the first part of October by which the Ministry, apparently, was attempting to have Apotex conform to the former's guidelines in respect of the delivery of an "assurance" letter that it was demanding be tweaked.
[10] The Applicants argue that the E.O. and her staff failed to adhere to its own protocol of transparency, if not the stated and judicially pronounced duty of fairness, in providing Apotex with one if not more chances to put itself on side with the designation application by permitting it to file material of not only a prospective import, but, material beyond the accepted if not pre-mandated time for filing. To this end, the Applicants argue that the Ministry by promulgating certain guidelines which were distributed to the industry that specify timelines for making application to have a drug added as interchangeable under DIDFA and as a benefit under OBDA is obliged to impose the same time limits therein specified on all manufactures. The Applicants assert that the Ministry did not hold Apotex to the same standard to which they believed they were subjected both by operation of statute and by practice, acted manifestly unfairly, preferentially and unlawfully.
[11] The Applicants further argue with some force, if not validity, that had they known that the Ministry, contrary to past practice and directives, was inclined to receive prospective assurances and representations, they each of them would have applied to have their own products designated as a benefit in early October even though none of them had a Notice of Compliance ("NOC") issued by Health Canada in hand in respect of their own formulae, a clear and undisputed condition precedent to the designation under s.12(1)(e) of the ODBA regulations. This change in the ministerial position, the Applicants argue, gives rise to the principle and consequences of "legitimate expectation" that essentially provides that the Ministry is obliged to follow past practices, unless notice is given to all those affected that the rules of the game are proposed to be changed, a doctrine expanded upon by Binnie J. in Mt. Sinai Hospital Centre v. Quebec (Minister of Health and Social Services) (2000), 2001 SCC 41, 200 D.L.R. (4th) 193 and McLachlin CJC in Baker v. Canada (Minister of Citizenship and Immigration) 1999 699 (SCC), [1999] S.C.J. No. 39 at 40.
RESPONDENTS' POSITION
[12] Ms. Favreau, on behalf of the Ministry acknowledged from the get-go that the Ministry did treat Apotex differently from the Applicants in the manner in which the former's application for product designation was processed; that the Executive Officer was, however, justified in so doing; but, in any event the treatment did not create an unfairness or an uneven playing field in the circumstances of this case.
[13] While not specifically adopting the above argument advanced by the Ministry, Apotex took the position that it did not obtain a competitive advantage as a result of any alleged preferential treatment received during the course of the current application process for registration under the October Formulary Update. Indeed, it was its position that whatever advantage it now enjoys came at great expense to it, in terms of time, effort and energy, if not legal fees, by insuring that it had a pre-existing and subsisting NOC in place as at the beginning of October, as a result of which Apo-Lisinopril was properly designated as an interchangeable drug to the Merck drug at the moment that the latter's patent expired. In other words, it was Apotex's position that it was the only generic manufacturer that could practically and legally apply for a "benefit" designation in an otherwise timely fashion.
[14] Apotex further argues that the E.O.'s interpretation of the operative section of the ODBA regulations was correct and in fact is the only interpretation that makes both economic and practical sense when one has regard to the legislative context in which the applicable section should be interpreted. Alternatively, its position is supported even if one were to employ the literal or plain meaning test, which test has fallen into some measure of disrepute, as it were.
[15] I do not intend to repeat the argument of the Ministry in detail but wish to make the following factual observations, which apply equally to the arguments of both Respondents:
(a) Apotex's product was already listed as interchangeable on the Formulary, whereas the applicants' products were not listed on the Formulary as interchangeable;
(b) Apotex's product had previously been listed as a benefit on the Formulary up to April 2007, whereas the applicants' products had never been listed as benefits on the Formulary;
(c) Apotex held a valid NOC, whereas the applicants did not hold a valid NOC;
(d) Apotex made its submission for listing Apo-Lisinopril as a benefit on the Formulary by the October 3, 2007 deadline, whereas the applicants did not.
[16] Whether Apotex provided evidence satisfactory to the E.O. that it had the physical ability to supply Apo-Lisinopril to meet the anticipated demand for the product is the $64 question, which in this case, I have no doubt, probably translates to a $64 million question.
[17] I preface this part of the endorsement by observing that I do not agree with the Ministry's position that the standard of review of the Executive Officer's interpretation of the applicable section of the ODBA is one of patent unreasonability or, alternatively, reasonableness, simpliciter. In my opinion, the cases upon which Ms. Favreau relied were not apt to the circumstances of the interpretation which the Ministry was called upon to make. The interpretation called into play in this case did not involve a question of fact or a mixed question of fact and law, which of necessity would call upon the expertise of the Executive Officer or her staff. It was simply a matter of statutory interpretation, which in my view engages the correctness standard. (See the decision of the S.C.C. in AstraZeneca Canada Inc. v. Canada (Minister of Health), 2006 SCC 49, [2006] 2 S.C.R. 560 at para. 25).
[18] That being said, I have concluded, but not lightly, that her interpretation of the words "…is able to supply the product…" "…to meet the anticipated demand for the product…" was correct. In that respect, I am in agreement with the Respondents' argument, particularly the argument advanced by Mr. De Luca, that the words and phrases mean and are intended to mean that a manufacturer must supply evidence, as part of the application process, in form satisfactory to the Ministry, that it has the capability to supply product that will fill the anticipated demand for the product as at the effective date of designation, which, by definition, is some almost five weeks out from the date of the application. Accordingly, the Ministry will therefore engage in a prospective assessment of the manufacturer's capabilities and not one which speaks to whether or not the manufacturer has sufficient inventory on hand at the moment of the application.
[19] While I was initially of the view that the previously heralded literal meaning test militated against such a conclusion, I am not now so persuaded after a consideration of the dictionary definitions of the word "able" furnished me by Mr. De Luca. Furthermore, I do not share Ms. Hitchman's view that the Ministerial Guidelines undercut this conclusion, although I agree with her that the letter template prepared by and called for by the Ministry is more than a little confusing on its face. That being said, I agree with the Respondents' counsel that the template while perhaps the cause of confusion, cannot be said to trump the Regulations.
[20] Moreover, I agree with counsel that regard must be had to the enabling legislation in its entirety, with the operative section being read in context in order to fully appreciate and garner the intent of the legislature. To this end, the judgment of Laskin J.A. in Kerr v. Danier Leather, (2005), 2005 46630 (ON CA), 77 O.R. (3d) 321 at paragraph 81 et seq. is most instructive. In this respect, as Mr. De Luca and Ms. Favreau argued, the time period that is relevant to the issue of supply is not necessarily the date of the application, but, the date when the pharmacies are actually called upon to fill the prescriptions with the designated product, which is some four weeks, at least, down the road.
[21] This conclusion does not, regrettably, end the matter as I am nevertheless called upon to determine: (a) whether Apotex was given an unfair advantage in being able to correct any perceived deficiencies subsequent to the submission date; and (b) whether the Applicants were prejudiced by this conduct or by the interpretation of the Regulations of which they say they were unaware.
[22] In my view, each question is to be answered in the negative.
[23] In the first place, from my review of the evidence, and notwithstanding what information other manufacturers might have been asked for in respect of other applications, it is ludicrous to suggest that the deficiencies in applications are not and have not been discussed, if not tweaked, or massaged, after the time for filing and before the EO signs off on an application, which I was told takes place some three weeks into the process. Indeed, the letter the EO sent to the Canadian Generic Pharmaceutical Association at the end of September speaks to this very issue and more than suggests that correspondence, if not dialogue, routinely occurs between members of the association and the Ministry as part of the process. In fact, as I read the letter, the EO was suggesting that she intended to limit such exchanges in future – namely in respect of updates occurring after November 1st - and limit the discourse to but two exceptions, neither of which appeared relevant to the matters in issue. This letter also underscores, in my view, the fact that the EO is apparently live to the notion that she cannot unilaterally change the rules of the game without giving interested parties notice of her intention, which she purports to do in, at least, this letter. I would also observe that this situation does not appear to be unique in this sector as the Ministry in recent years apparently changed the rules in respect of the delivery of applications that contained prospective NOC's as part of the application process, a matter about which the Applicants presumably wish had never taken place.
[24] Furthermore, the Ministry guidelines make it clear that the EO and her staff can ask for additional information and material in support or to clarify an application if the need arises, a discretion, if exercised, can only inure to the benefit of the applicants in other situations.
[25] In the circumstances of this case, the exchanges between Apotex and the Ministry filed in evidence, while initially giving me some pause, cannot be characterized, at least on the evidence to which I was directed during argument, as anything but "business as usual". Furthermore, I am not persuaded that this activity resulted in the creation of a preference in favour of Apotex or is one about which the Applicants can now be heard to complain.
[26] The rub for the Applicants, in my view, stems not from the application process per se, but from the fact that Apotex had a pre-existing NOC for the Product and because it never lost its designation as an interchangeable product. Whether the Ministry was correct in not delisting Apotex is not a matter upon which I was called to rule, even though there was more than a trifling amount of paper and "lawyers letters" devoted to the subject. I now agree with the Respondents that had the Applicants wanted to create a more even playing field for the October Formulary Update it behoved them to bring the matter to a head by court action or otherwise since the threats of litigation, apparently, went unanswered.
[27] In the final analysis, however, I am of the view, to trot out a final sports analogy, that the Applicants are caught by the "No harm, No foul" doctrine. They, none of them, could have made application for designation under the October Formulary Update. Apotex was the only player that could. Hence, the Ministry, as part of its mandate to insure that the public drug system met the needs of Ontarians, as patients, consumers and taxpayers, was obliged to ensure that an interchangeable ACE inhibitor was available as soon as was practicably possible.
[28] The application is therefore dismissed.
[29] I have endorsed the Record"For reasons read in Court this day, the application is dismissed. Costs of the Respondent Ministry to be paid by the Applicants fixed at $10,000, inclusive of GST and disbursements. The costs of the Respondent Apotex, payable by the Applicants, fixed at $4,000, inclusive of GST and disbursements. All costs are payable within 30 days."
GANS J.
Date of Reasons for Judgment: November 9, 2007
Date of Release: November 9, 2007
COURT FILE NO.: 530/07
DATE: 20071109
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
PHARMASCIENCE INC., RATIOPHARM INC., COBALT PHARMACEUTICALS INC., RANBAXY PHARMACEUTICALS CANADA INC., SANDOZ CANADA INC., GENPHARM INC. and NOVOPHARM LIMITED
Applicants
- and -
MINISTER OF HEALTH AND LONG-TERM CARE (ONTARIO), EXECUTIVE OFFICER OF THE ONTARIO PUBLIC DRUG PROGRAMS, LIEUTENANT GOVERNOR IN COUNCIL and ATTORNEY GENERAL OF ONTARIO
Respondents
ORAL REASONS FOR JUDGMENT
GANS J.
Date of Reasons for Judgment: November 9, 2007
Date of Release: November 9, 2007