Update from the PMPRB

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Update from the PMPRB Update from the PMPRB Isabel Jaen Raasch General Counsel and Director, Legal Services Branch Patented Medicine Prices Review Board 1. Background and organizational structure of PMPRB 2. Recent legal developments 3. Update on cases pending before Board 4. Guidelines Modernization 5. Expression of Interest Process – Potential outside counsel to Board Staff 2 1. Background and organizational structure of PMPRB 3 Background Mandate and Purpose of the PMPRB PMPRB is an independent and autonomous quasi-judicial body and federal consumer protection agency tasked with ensuring that patentees do not abuse their patent rights by charging consumers excessive prices during the statutory monopoly period. Although part of the Health Portfolio, because of its quasi-judicial responsibilities, the PMPRB carries out its mandate at arm’s length from the Minister of Health and of Health Canada. The PMPRB has a two-part regulatory and reporting mandate: • Ensure the prices at which patented medicines are sold are not excessive (Patent Act, ss 80-88) • Report on pharmaceutical trends of medicines and R&D spending (Patent Act, ss 89-90, 100) 4 Organizational Structure Chairperson Members (3) Vice-chairperson Director General Counsel Executive Director Board Secretariat, Communications & Strategic Planning Director Director Director Policy & Economic Analysis Regulatory Affairs & Outreach Corporate Services The PMPRB is composed of approximately 70 Board Staff, who are public servants responsible for carrying out the organization’s day to day work, and up to 5 Board members. Members are Governor-in-Council appointees who serve as hearing panel members in the event of a dispute between Board Staff and a patentee over the price of a patented medicine. Currently, over 1250 patented medicines are under PMPRB jurisdiction. 5 Reporting functions . Reports on research and development (R&D) spending by patentees (Patent Act, s 89) . Annual Reports from the Board (Patent Act, s 100) on its activities Include information on pricing trends in the pharmaceutical industry and certain regulatory matters before the Board . Reports as a result of inquiries (Patent Act, s 90) – not limited to patented medicines E.g., National Prescription Drug Utilization Information System (NPDUIS) initiative established by the federal, provincial and territorial (F/P/T) Ministers of Health in 2001 • Partnership with Canadian Institute for Health Information • PMPRB conducts critical analyses of price, utilization and cost trends for patented and non- patented prescription drugs • Reports are independent from regulatory function and do not represent the views of Board Members 6 Regulatory functions . Patentees statutorily required to file with PMPRB information related to patented medicines (Patent Act, s 80-82). Board Staff may undertake review of the filings. Guidance as to how this review may be performed appears in the Compendium of Guidelines and Policies of the PMPRB. If Board Staff determines that there is a concern with the price of a patented drug product, the patentee is offered the opportunity to voluntarily lower its price and/or refund its excess revenues (debt due to Her Majesty) through a Voluntary Compliance Undertaking (VCU). If the matter cannot be resolved, it is forwarded to the Chairperson for determination of whether the matter should proceed to a hearing. 7 Hearings . If Chairperson of Board decides that it is in the public interest to hold a hearing re excessive pricing, then Chairperson will issue Notice of Hearing and appoint a panel of Board members to preside at hearing (Patent Act, s 83) . Chairperson may also decide to issue Notice of Hearing if there is an allegation that a patentee has failed to file pricing information related to a patented medicine (Patent Act, s 81) “Until a matter is brought before the Board at a public hearing, no Board member is involved in, or aware of, the results of the staff investigation other than the Chairperson in his/her management capacity as Chief Executive Officer of the Board.” Hoechst Marion Roussel Canada Inc v Canada (AG), 2004 FC 489 8 Hearings “The issue of actual excessive pricing is a matter to be resolved at the public hearing, when all interested parties are given the opportunity to lead evidence, cross-examine and make submissions. […] the issuance of the notice of hearing does not represent the Board’s conclusion on the issue, but rather constitutes an allegation that is sufficiently substantiated to justify a hearing on the merits.” Hoechst Marion Roussel Canada Inc v Canada (AG), 2005 FC 1552 “In conducting hearings with respect to the price of a patented medicine, the Board's staff is segregated from the Board. The Board's staff, through its own counsel, adduces evidence, tests evidence of other parties, and makes submissions on procedural, jurisdictional, legal, and substantive issues arising during the course of the proceeding.” ICN Pharmaceuticals Inc. v. Canada, [1997] 1 FC 32, citing Genentech Canada Inc (Re) (1992),44 CPR (3d) 317 (PMPRB) 9 Hearings Hearing Process: . Not a review of the investigation or of the application of the Guidelines. Hearing panel is not involved in investigations and cannot be bound by Guidelines. Procedure is similar to civil case: pleadings, fact and expert evidence, motions, written and oral submissions. There is no discovery and the hearing panel is not strictly bound by evidence rules. Hearing Panel hears matter in a full or abbreviated hearing. Hearing outcome: . Board may issue Order requiring patentee to reduce price and/or refund excessive revenues . Board may also issue Order requiring patentee to provide Board with pricing information . Board’s decisions are open to judicial review by the Federal Court 10 2. Recent legal developments – Federal Court . Canada (AG) v Sandoz Canada Inc, 2015 FCA 249, rev’g 2014 FC 501 & 2014 FC 502 . Alexion Pharmaceuticals Inc. v. Canada (AG), 2016 FC 716 11 Canada (AG) v Sandoz Canada Inc, 2015 FCA 249 [Sandoz FCA] . Confirms PMPRB jurisdiction over all patentees, including those who operate in the “generic” market . FCA decision relates to two matters: • Judicial review of Board decision finding that Sandoz was a “patentee” and obliging Sandoz to file pricing information related to patented medicines • Judicial review of Board decisions re ratiopharm (now Teva): – Obliging ratiopharm to file pricing information related to patented medicines for which ratiopharm had licences to sell in Canada (“Failure to file” decision) – Obliging ratiopharm to pay excess revenues with respect to ratio-salbutamol HFA (“Excessive pricing” decision) 12 Sandoz FCA Sandoz: • Patents at issue not owned by Sandoz Canada Inc. • Sandoz Canada Inc. is a wholly-owned subsidiary of Novartis Canada Inc., who is a wholly-owned subsidiary of Novartis AG • Novartis AG is patent owner of several patents – either directly or through subsidiaries • Novartis AG mandates and authorizes Sandoz Canada Inc. to sell medicines to which patents held directly or indirectly by Novartis AG pertain Issues: • Is Sandoz a “patentee” within the meaning of subsection 79(1) and, thus, within Board’s jurisdiction? • Are the PMPRB’s enabling provisions (ss 79-103 of the Patent Act) constitutional? 13 Sandoz FCA Sandoz – Board decision • The Board held that, consistent with its consumer protection mandate, Sandoz was a “patentee” within meaning of subsection 79(1) • Sandoz was entitled to sell medicines without being sued for infringement and thus was entitled to benefit of, and to exercise rights in relation to, the patents • Legislation is constitutional 14 Sandoz FCA Sandoz – FC decision (2014 FC 501) • Held that Board’s finding that Sandoz was a “patentee” was unreasonable based primarily on the following findings: – Board’s jurisdiction should be limited to patent holders – Federal government has no jurisdiction to regulate price of generic medicines – Board’s jurisdiction limited to “factory-gate” pricing • Legislation is constitutional, when “properly interpreted” 15 Sandoz FCA ratiopharm: • Excessive pricing decision: – ratiopharm sold an authorized generic version of GSK’s Ventolin HFA (ratio- salbutamol HFA) pursuant to licensing/supply agreements Issues: • Are the PMPRB’s enabling provisions (ss 79-103 of the Patent Act) constitutional? • Is ratiopharm a “patentee” within the meaning of subsection 79(1) and, thus, within Board’s jurisdiction? • Is the price at which ratiopharm sold ratio-salbutamol HFA in Canada excessive? 16 Sandoz FCA ratiopharm: • Failure-to-file decision: – Ratiopharm did not own patents but was licenced to sell patented medicine • Some licence agreements stipulated that patent owner was retaining IP rights • Some licences were exclusive, some non-exclusive • Some licences did not expressly grant a licence under the patent that pertained to the medicine • Some licences were sub-licences granted by other generic companies Issue: Is ratiopharm a “patentee” within the meaning of subsection 79(1) and, thus, within Board’s jurisdiction? 17 Sandoz FCA ratiopharm – Board decisions: • Excessive pricing decision: – Board held that the case law affirmed that its mandate and purpose are constitutional – Board held that ratiopharm was a “person entitled to exercise any rights” in relation to the patent, and thus was a “patentee” within the meaning of subsection 79(1) – Board found that excessive revenues should be calculated on basis of Board’s Guidelines and later ordered ratiopharm to pay back excessive revenues • Failure-to-file decision: – Board
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