Galderma Canada Inc v Canada (Attorney General), 2017 FC 1023

The Patent Act gives the Patented Medicine Prices Review Board (the “PMPRB”) jurisdiction over a patent of an invention pertaining to a medicine, but this jurisdiction continues to be a contentious topic in Canada. This case is concerned with the scope of what constitutes “an invention pertaining to a medicine”.

Galderma Canada Inc. (“Galderma”) sought an application for judicial review of a PMPRB decision where the invention in Canadian Patent No. 2,478,237 (“the ‘237 Patent”) was found to pertain to the medicine Differin, containing 0.1% adapalene. [5] The Federal Court (“FC”) quashed the decision, reasoning that the PMPRB failed to apply the correct test: reviewing the ‘237 Patent as a whole and determining what the invention was. [40, 42, 44] As a result, Galderma was not required to report pricing information on Differin to the PMPRB in connection with the ‘237 Patent. [1]

Background

The Patent Act sets out the PMPRB’s jurisdiction in Section 79(2), which provides that “an invention pertains to a medicine if the invention is intended or capable of being used for medicine or for the preparation or production of medicine.” [13] Section 80 enables the PMPRB to collect information such as selling price and the cost of production from a patentee of an invention during the term of the patent. [13] The purpose of the PMPRB provisions is to protect consumers from excessive medical costs. [15]

Galderma manufactures drugs for dermatological conditions such as acne. [2] In particular, Differin contains 0.1% adapalene as the active ingredient and is described in Canadian Patent Nos. 1,266,646 and 1,312,075. [3] Galderma filed price information for Differin to the PMPRB up until 2009, by which time both patents had expired. In that same year, Galderma obtained another patent, the ‘237 Patent, for a more potent version of the acne medication, containing adapalene at a concentration of 0.3%, and marketed the new product under a similar tradename, Differin XP. [5] This case focuses on the ‘237 Patent, which expired in 2016. [5]

While the parties agreed that Differin and Differin XP are different medicines with distinct formulations and uses, [6] the PMPRB found that the ‘237 Patent pertained to Differin containing 0.1% adapalene, and therefore required Galderma to report sales and price information for an additional period, between 2010 and 2016. [8, 16] This was the decision under review.

PMPRB’s Decision was Ultra Vires

The FC stated that while the PMPRB is entitled to deference on the scope of “pertains to,” its jurisdiction to regulate drug prices is circumscribed by constitutional limits – matters must be sufficiently connected to the field of federal jurisdiction (i.e. patents). [36] The FC looked to Section 2 of the Patent Act and pointed out that an “invention” is not to be confused with a “patent” that describes the invention. [39] In this case, the FC found that the PMPRB appears to have intermingled the concept of an invention and that of a patent, and failed to determine what the invention in the ‘237 Patent was in conducting the analysis. [40] Further, the FC found that the PMPRB asked the wrong question; the inquiry should have been on whether the invention in the ‘237 Patent was intended or capable of being used for Differin, and not whether the ‘237 Patent could be used for Differin. [40-42]

The FC held that the ‘237 Patent did not pertain to Differin, which contains a lower concentration of the active ingredient. [6] The FC found there was no evidence showing that Differin XP (0.3% adapalene) was capable of being used for Differin (0.1% adapalene). [41] The FC rejected the assumption that mere dilution of Differin XP would have been sufficient to arrive at Differin capable of performing the same function because the assumption was not made on a factual basis. [41]

The FC found that the ‘237 Patent did not cover more than 0.3% adapalene, by relying on the principle from Whirlpool Corp v Camco, 2000 SCC 67: “what is not claimed is considered disclaimed”. [46] As such, the fact that the ‘237 Patent did not indicate that it exclusively pertains to 0.3% adapalene does not lead to an adverse inference. [44] The FC reasoned that the PMPRB failed to review the ‘237 Patent as a whole, which led it to the incorrect conclusion that the ‘237 Patent pertained to Differin, in addition to Differin XP. [44-46]

Commentary

Constitutionality of the PMPRB is an on-going debate between the PMPRB and drug manufacturers, and it has been challenged numerous times, albeit without success thus far. The two most prominent decisions came from the Federal Court of Appeal (“FCA”) – see the Sandoz and Alexion decisions. Notwithstanding, more claims can be expected, especially given that regulatory changes are coming into force in 2019.

In this case, the FC denied the PMPRB regulatory jurisdiction over Differin. The Attorney General of Canada has appealed the decision to the FCA.