Memorial of Claimants Apotex Holdings Inc. and Apotex Inc

Public Version – Not USG Classified IN THE ARBITRATION UNDER CHAPTER ELEVEN OF THE NAFTA AND THE ICSID ARBITRATION (ADDITIONAL FACILITY) RULES APOTEX HOLDINGS INC. AND APOTEX INC., Claimants, -and- THE GOVERNMENT OF THE UNITED STATES OF AMERICA, Respondent. ICSID CASE No. ARB(AF)/12/1 MEMORIAL OF CLAIMANTS APOTEX HOLDINGS INC. AND APOTEX INC. ARBITRAL TRIBUNAL: V.V. Veeder J. William Rowley John R. Crook July 30, 2012 Attorneys for Claimants Apotex Holdings Inc. and Apotex Inc. CONFIDENTIAL Paris 8419260.1 CONTENTS GLOSSARY OF TERMS ...................................................................................................... IV INTRODUCTION ..................................................................................................................... 2 STATEMENT OF THE FACTS ............................................................................................. 6 I. THE PARTIES ............................................................................................................ 6 A. The Claimants and the Enterprise ................................................................. 6 1. Claimant Apotex Holdings ............................................................................ 6 2. Claimant Apotex-Canada .............................................................................. 7 3. The Enterprise Apotex-US ............................................................................ 7 B. The Respondent ............................................................................................. 8 II. THE BUSINESS OF GENERIC PHARMACEUTICAL PRODUCERS ................................... 8 III. THE APOTEX GROUP .............................................................................................. 1 0 A. Apotex Holdings .......................................................................................... 1 0 1. The Enterprise: Apotex-US ........................................................................ 11 2. Apotex Holdings' Other Investments in the USA ....................................... 13 B. Apotex-Canada ............................................................................................ 13 IV. THE REGULATORY FRAMEWORK ........................................................................... 21 A. Inspections and Current Good Manufacturing Practices ........................... 21 B. FDA Form 483 ............................................................................................ 24 c. Warning Letters ........................................................................................... 25 D. RefUsal ofAdmission and Import Alerts ...................................................... 27 1. Detention, Physical Examination and Refusal of Admission...................... 27 2. Detention Without Physical Examination and Import Alerts ...................... 28 E. Judicial Actions ........................................................................................... 34 1. Seizure ......................................................................................................... 34 2. Injunctions ................................................................................................... 35 3. Criminal Actions ......................................................................................... 38 V. FDA's AND HEALTH CANADA'S INSPECTIONS OF SIGNET AND ETOBICOKE PRIOR T02008 .................................................................................................................. 39 VI. FDA's INSPECTIONS OF APOTEX'S FACILITIES IN 2008 AND 2009 ........................ .42 A. The Etobicoke Inspection ........................................................................... .42 B. FDA's Enforcement Strategy....................................................................... 43 C. The Etobicoke Warning Letter ................................................................... .44 (i) Paris 8419260.1 D. The Signet Inspection ................................................................................. .46 E. Communications with FDA Immediately After the Signet Inspection ........ .49 VII. THE IMPORT ALERT ............................................................................................... 53 VIII. HEALTH CANADA'S FINDINGS AND DECISIONS OF THIRD-COUNTRY AGENCIES AFTER THE IMPOSITION OF THE IMPORT ALERT ..................................................... 58 A. Health Canada's Inspection in the Fall 2009 ............................................. 58 B. Actions of Other Pharmaceutical Regulatory Agencies .............................. 59 IX. FDA's DELAY IN LIFTING THE IMPORT ALERT AND APPROVING ANDAS ............. 61 A. Apotex-Canada 's Remediation Plan and the September 2009 Meeting ..... 61 B. The Signet Warning Letter .......................................................................... 64 c. The March 2010 Meeting with FDA ............................................................ 66 D. FDA's Refusal to Resume Shipping of Certified Drugs .............................. 69 E. FDA's Refusal to Expedite Re-Inspection ................................................... 71 F. TheRe-Inspection ofEtobicoke and Signet from January 24 to February 11,2011 ....................................................................................................... 75 G. FDA's Delay in Lifting the Import Alert ..................................................... 76 1. Etobicoke ..................................................................................................... 76 2. Signet ........................................................................................................... 77 H. FDA 's Delay in Approving Pending ANDAs .............................................. 78 X. THE EFFECT OF THE MEASURE ON APOTEX ........................................................... 80 XI. FDA'S TREATMENT OF COMPARABLE INVESTORS AND INVESTMENTS .................. 84 A. Baxter International and Baxter Healthcare ............................................... 85 B. Hospira ........................................................................................................ 88 C. Perrigo and L. Perrigo ................................................................................ 89 D. Sandoz and Novartis .................................................................................... 91 E. Teva Pharmaceutical Industries and Teva Parenteral Medicines .............. 94 STATEMENT OF THE LAW ............................................................................................... 96 I. THE TRIBUNAL HAS JURISDICTION TO DECIDE THESE CLAIMS .............................. 96 A. The Tribunal Has Jurisdiction over the Parties .......................................... 96 1. Apotex Holdings Is an Investor. .................................................................. 97 2. Apotex-Canada Is an Investor ..................................................................... 98 3. The Tribunal Has Jurisdiction over the United States ................................. 98 B. The Tribunal Has Jurisdiction over the Subject-Matter ofthe Dispute ...... 99 (ii) Paris 8419260.1 1. Apotex-US Is an Investment of Apotex Holdings ....................................... 99 2. Marketing Authorizations Are Investments of Apotex-Canada .................. 99 3. The Import Alert Is a Measure Relating to Investors and Investments ..... 118 C. The Dispute Meets the Temporal Requirements ofthe NAFTA ................ 121 II. THE US BREACHED ARTICLES 1102 AND 1103 BY ACCORDING APOTEX LESS FAVORABLE TREATMENT ..................................................................................... 123 A. The Legal Standard ofArticles 1102 and 1103 ......................................... 123 1. "Like Circumstances" ................................................................................ 126 2. Less Favorable Treatment ......................................................................... 129 B. The United States Accorded Apotex Less Favorable Treatment than Comparators in Like Circumstance .......................................................... 131 1. The Record Establishes Multiple Comparators in Like Circumstances .... 131 2. The Record Establishes That Apotex Received Less Favorable Treatment Than the Comparators ............................................................................... 133 III. THE IMPORT ALERT DENIED APOTEX FAIR AND EQUITABLE TREATMENT ........... 134 A. The Import Alert Breached NAFTA Article 1105(1) ................................. 134 1. International Law Requires Due Process in Administrative Decision- Making Concerning Specific Persons ....................................................... 135 2. Subsequent State Practice Confirms and Develops This International Obligation .................................................................................................. 139 3. The United States Denied Apotex Due Process ........................................ 144 B. The Import Alert Breached Article II ofthe US- Jamaica BIT ................ 146 IV. APOTEX Is ENTITLED TO DAMAGES ..................................................................... 149 A. Damages Resulting From Breach ofthe National Treatment and MFN Standards ................................................................................................... 153 1. Loss ofNew Business Opportunities I Lost Profits .................................. 155 2. Out-of-Pocket Losses ...............................................................................

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