Court of Appeal for Ontario

Date: April 5, 2018

Docket: C63578 and C63585

Judges: Strathy C.J.O., Juriansz and Huscroft JJ.A.

Between

Apotex Inc. Plaintiff (Respondent)

and

Abbott Laboratories Limited, Takeda Pharmaceuticals Company Limited and Takeda Pharmaceuticals America Inc. Defendants (Appellants)

AND BETWEEN

Abbott Laboratories Limited, Takeda Pharmaceuticals Company Limited and Takeda Pharmaceuticals America Inc. Plaintiffs by counterclaim (Appellants)

and

Apotex Inc. Defendant by counterclaim (Respondent)

Counsel

Steven G. Mason and David A. Tait for the appellant Abbott Laboratories Ltd.

Christopher C. Van Barr and Kiernan Murphy for the appellant Takeda parties

Andrew R. Brodkin and Michael A. Wilson, for the respondent

Heard: December 6, 2017

On appeal from: the order of Justice Michael G. Quigley of the Superior Court of Justice, dated June 5, 2017, with reasons reported at 2017 ONSC 1348.

Huscroft J.A.:

Overview

[1] This is the second appeal arising out of an action brought by Apotex against Abbott and Takeda, concerning the patented medicine Prevacid® and Apotex's generic drug Apo-lansoprazole.

[2] Apotex's action alleged losses caused by Abbott and Takeda arising out of steps they took to deny Apo-lansoprazole access to the market. Abbott and Takeda were granted partial summary judgment dismissing Apotex's unjust enrichment claim, and that decision was upheld by this court: Apotex Inc. v. Abbott Laboratories, Limited, 2013 ONCA 555.

[3] Apotex's claim for damages continued. Apotex's claimed damages for sales of Apo-lansoprazole that were lost during the period in which the drug could not be sold because of proceedings taken by Abbott and Takeda under s. 6 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (NOC Regulations). Those proceedings resulted in a stay of Apotex's application for approval to sell the drug, and so precluded its sale.

[4] Abbott and Takeda brought a motion for summary judgment seeking to have Apotex's damages claim dismissed. That motion was dismissed. The motion judge concluded that, but for the proceedings taken by Abbott and Takeda, Apotex would have received approval from the Minister of Health to sell Apo-lansoprazole on April 17, 2007, and was therefore entitled to damages. The quantum of damages was left for determination at trial.

[5] Abbott and Takeda appeal from the motion judge's order dismissing their motion for summary judgment.

[6] I would dismiss the appeal for the reasons that follow.

Background

[7] Apotex developed Apo-lansoprazole, a generic version of Abbott and Takeda's drug, Prevacid®, and sought approval to sell its drug in Canada. It was required to obtain a Notice of Compliance (NOC) from the Minister of Health in order to do so, and to this end it filed an Abbreviated New Drug Submission (ANDS).

[8] The Food and Drug Regulations, C.R.C., c. 870, C.08.002.1 (1)(b) require that generic drugs must be "bioequivalent with the Canadian reference product, based on the pharmaceutical and, where the Minister considers it necessary, bioavailability characteristics".

[9] Apotex submitted its ANDS for Apo-lansoprazole on February 2, 2006. It included two studies showing that it was the bioequivalent of Prevacid®: one study was conducted with participants eating a low-fat meal before taking the drug, and the other conducted with the participants fasting. Apotex served a Notice of Allegation (NOA) asserting that patents held by Abbott and Takeda were invalid or would not be infringed. In response, Abbott and Takeda commenced an application under s. 6 of NOC Regulations, which triggered an automatic stay prohibiting the Minister from approving Apotex's NOC for 24 months, while the ANDS was under review.

[10] In April 2007, a Health Canada clinical evaluator, Dr. Tam, concluded that the standards for bioequivalence had been met and recommended that a NOC be issued for the ANDS. On April 17, 2007, Apotex was advised by Dr. Sharma, the Acting Director General of the Therapeutic Products Directorate within Health Canada, that the review was complete and that, in accordance with the s. 6 procedure, the ANDS was placed on "patent hold". This meant that Apo-lansoprazole would have been approved but for commencement of the s. 6 proceedings by Abbott and Takeda.

[11] Later that year, on December 4, 2007, Health Canada informed Apotex that it no longer considered Apo-lansoprazole approvable and requested justification for the choice of a low-fat meal in the Apotex study, as opposed to a high-fat meal. On January 17, 2008 Apotex replied, arguing that it was clinically irrelevant to demonstrate bioequivalence with a high-fat meal because Prevacid® was itself therapeutically ineffective in these circumstances. Health Canada reiterated its request for a high-fat study on August 1, 2008, and Apotex sent the results of such a study on August 6, 2008. The study revealed that Apo-lansoprazole was not bioequivalent in these circumstances.

[12] Health Canada sent Apotex a Notice of Non-Compliance – Withdrawal on March 6, 2009, reiterating that bioequivalence under both fasting and high-fat meal conditions was required. The ANDS for Apo-lansoprazole was considered withdrawn at that time, without prejudice to refilling.

[13] Apotex invoked Health Canada's reconsideration process, pursuant to which a panel of experts reviewed the notice of non-compliance decision. On May 7, 2009, the panel recommended that Apo-lansoprazole be considered bioequivalent on the basis of the fasting and low-fat meal studies. As a result, on May 28, 2009 Health Canada rescinded the Notice of Non-Compliance – Withdrawal. The NOC for Apo-lansoprazole was issued in June, 2009.

[14] On their motion for summary judgment, Abbott and Takeda asserted that discovery revealed that Apotex could not receive and would not have received regulatory approval for Apo-lansoprazole in April 2007, because Apotex's submission to Health Canada did not comply with the regulatory rules in place at the time. They argued that, in light of this new information, Apotex's claim for damages was without foundation because it was predicated upon its regulatory submission for Apo-lansoprazole being approved, in the absence of the s. 6 proceedings, in April 2007.

The Motion Judge's Decision

[15] The principal issue, as framed by the motion judge, was whether Apo-lansoprazole "could not and would not" have been approved in April 2007. If it could not or would not have been approved, Apotex could not claim damages under s. 8 of the Patent Act. If, however, it could or would have been approved but for the s. 6 proceedings, then a trial would be required to determine the amount of damages due.

[16] Abbott and Takeda's core argument on the motion was that Dr. Sharma erred in issuing the Patent Hold letter. They submitted that absent this mistake, no NOC could have, would have, or should have been issued until final approval in June, 2009, following expiry of the two-year statutory stay period under s. 6. Thus, s. 8 damages could not have accrued to Apotex.

[17] In a comprehensive 52-page judgment, the motion judge – who case-managed the litigation since 2011 – found that, but for Abbott and Takeda's s. 6 proceeding, Apotex could and would have received a NOC on April 17, 2007. Dr. Sharma's correspondence showed that Health Canada had completed its review of Apotex's ANDS and found it to be satisfactory and approvable, and would have issued a NOC for Apo-lansoprazole absent the s. 6 proceedings.

[18] The motion judge noted that the Food and Drug Regulations do not require any particular type of comparative study to demonstrate that a new drug is the pharmaceutical equivalent of the Canadian reference drug. Furthermore, the Minister's discretion to approve drugs is wide: the regulation requires that the ANDS include sufficient information and material to enable the Minister to make the required assessment of safety and effectiveness, and the Minister's discretion cannot lawfully be fettered by policy statements and/or guidance documents: Apotex Inc. v. Canada (Attorney General) (1993), 59 F.T.R. 85. Although the Health Canada Guidance Document reflects the Minister's preferences for the content of submissions, and in particular a high-fat meal test, it does not have the force of law and explicitly says so. It cannot preclude the Minister from reviewing a submission on the basis of its scientific merits. There was no evidence to support Abbott and Takeda's theory that a high-fat study was required.

[19] Accordingly, the motion judge concluded that there was no legal requirement that Apotex submit a high-fat study. Dr. Tam and the expert review panel were satisfied that bioequivalence had been established and it was open to Health Canada to approve Apo-lansoprazole for sale.

Discussion

[20] Abbott argues that the original approval of Apo-lansoprazole was based on a mistake. Approval was not granted until June 2, 2009, when Apotex's submission was approved in a different form.

[21] Abbott submits that the motion judge made two palpable and overriding errors. First, the motion judge erred in concluding that the high-fat study played no part in the final review process. Second, the motion judge erred in concluding that because the ANDS was ultimately approved in the same form, the June 2, 2009 approval confirmed the April 17, 2007 approval.

[22] Takeda argues that the motion judge erred in three ways. First, the motion judge erred in finding that Apotex's April 2007 submission was sufficient and that Apo-lansoprazole could be approved without a high-fat study. Second, the motion judge erred in conflating Apotex's product and submission; the safety and effectiveness of Apo-lansoprazole in 2007 was irrelevant because Apotex's submission was not sufficient to allow the Minister to determine whether it was. Third, the motion judge erred by substituting his determination as to the sufficiency of Apotex's submission for that of the Minister.

[23] All of these arguments are variations on a theme: the motion judge erred concerning the significance of the high-fat study to the Minister's decision.

[24] In my view the motion judge made no error, much less a palpable and overriding error, in concluding that Apotex would have received a NOC for Apo-lansoprazole on April 17, 2007, if the s. 6 proceedings had not been commenced by the appellants. On the contrary, there was ample evidence to support the motion judge's decision. I highlight the evidence of Dr. Craig Simon (Associate Director of BPS) and Ms. Suzanne Picard in this regard.

[25] Dr. Simon's evidence established that Health Canada accepted Dr. Tam's qualifications to conduct the bioequivalence assessments and make recommendations in his capacity as Acting Manager of the Bioequivalence assessment group. Dr. Simon testified unequivocally that Apotex would have received its NOC on April 16, 17, or 18, 2007, if s. 6 proceedings had not been instituted. This evidence was not challenged by Abbott and Takeda and, as the motion judge observed, there was no evidence to the contrary.

[26] Ms. Picard, an expert retained by Apotex, prepared a lengthy and detailed affidavit in support of Apotex's position and was cross-examined on it. Her evidence was that Apotex would have been granted an NOC on or about April 17, 2007 and that, if any concern had arisen about the bioequivalence of a low-fat study, the NOC would not have been suspended or revoked because there were no exceptional circumstances justifying such a decision: Health Canada never questioned the safety of Apo-lansoprazole. The motion judge found that Ms. Picard's evidence was "essentially unrefuted".

[27] There is no basis to conclude that the Minister's subsequent determination had the effect of voiding the initial Patent Hold letter or rendering it void ab initio. It did not purport to revoke the earlier determination and did not have that effect. Nor can it be said that the initial approval was granted in error, such that a later date must be picked for the start of damages. I agree with the respondent that the Minister's subsequent determination could be relevant only to the quantum of damages Apotex may have suffered, and that is an issue for trial.

[28] Finally, the motion judge did not err in concluding that there was no legal requirement to follow Health Canada's Guidance Document. It could not preclude the Minister from exercising her discretion to review a submission on the basis of its scientific merits, and there was no evidence, expert or otherwise, to support Abbott and Takeda's position that a high-fat study was scientifically required.

Conclusion

[29] I would dismiss the appeal.

[30] If the parties are unable to agree on costs, they may make written submissions. The respondent shall deliver its submissions within 15 days and the appellants shall deliver their submissions within 15 days of receipt of the respondent's submissions. The submissions shall not exceed 5 pages in length, excluding the costs outline.

Released: April 5, 2018 ("G.R.S.")

"Grant Huscroft J.A."

"I agree. G.R. Strathy C.J.O."

"I agree. R.G. Juriansz J.A."