Generic Damages in Life Sciences Patent Litigation: Strategic Considerations

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  1. 1. Generic Damages in LifeSciences Patent Litigation: Strategic ConsiderationsChristopher C. Van BarrKiernan A. Murphy
  2. 2. PresentersChristopher Van BarrPartner (Ottawa)613-786-8675christopher.vanbarr@gowlings.comKiernan MurphyAssociate (Ottawa)613-786-0273Kiernan.murphy@gowlings.com 2
  3. 3. Outline Brief background Recent developments regarding the scope of thesection 8 cause of action Recent developments regarding quantification ofgeneric damages Strategic considerations relating to genericdamages proceedings3
  4. 4. Brief Background:Regulatory Approval, the PMNOC Regulations and Section 8 Damages 4
  5. 5. Drug regulatory approval process Innovator Files new drug submission (NDS) Obtains notice of compliance (NOC) Submits patent list of eligible patents in respect of drug to Minister of Health for inclusion on patent register Generic Files abbreviated new drug submission (ANDS) referencing innovator drug demonstrate bioequivalence to innovator drug Market entry but subject to PMNOC Regulations 5
  6. 6. Patented Medicines (Notice of Compliance) Regulations PM(NOC) Regulations linkage regulations that replacedcompulsory licensing in 1993 Minister of Health maintains Patent Register on whichinnovators list relevant patents against drugs Generic must address listed patents by providing Noticeof Allegation and Detailed Statement Allegations include patent invalidity, non-infringement, etc 6
  7. 7. Patented Medicines (Notice of Compliance) Regulations Innovator may commence an application to prohibit theMinister from issuing a NOC within 45 days of receivingNOA Minister is temporarily prohibited from issuing the NOC (statutory stay) If generic allegations are justified, application isdismissed Minister may then issue NOC if approvable 7
  8. 8. Patented Medicines (Notice of Compliance) Regulations Merck v Apotex, 2009 FCA 187 The PM(NOC) Regulations had to be construed having regard tothe Patent Act read as a whole and the balance which it seeks tocreate between the effective enforcement of patent rightsthrough the use of the PM(NOC) Regulations (subsection55.2(4)) and the timely entry of lower price generic drugsthrough the use of the early working exception (subsection55.2(1)) (Biolyse, supra, para. 50). 8
  9. 9. Section 8 of the PMNOC Regulations8. (1) If an application made under subsection 6(1) is withdrawn or discontinued bythe first person or is dismissed by the court hearing the application or if anorder preventing the Minister from issuing a notice of compliance, madepursuant to that subsection, is reversed on appeal, the first person is liable tothe second person for any loss suffered during the period (a) beginning on the date, as certified by the Minister, on which a notice ofcompliance would have been issued in the absence of these Regulations, unlessthe court concludes that(i) the certified date was, by the operation of An Act to amend the Patent Act andthe Food and Drugs Act (The Jean Chrtien Pledge to Africa), chapter 23 ofthe Statutes of Canada, 2004, earlier than it would otherwise have been andtherefore a date later than the certified date is more appropriate, or(ii) a date other than the certified date is more appropriate; and (b) ending on the date of the withdrawal, the discontinuance, the dismissal or thereversal.(5) In assessing the amount of compensation the court shall take into account allmatters that it considers relevant to the assessment of the amount, includingany conduct of the first or second person which contributed to delay thedisposition of the application under subsection 6(1). 9
  10. 10. Validity of Section 8Section 8 Damages Challenges to s.8 by Innovators have been unsuccessful Merck v Apotex, 2009 FCA 187 not ultra vires Patent Act - falls within s.55.2(4) the Act is within the authority of Parliament pursuant to section91(22) of the Constitution Act, 1867 Court has jurisdiction to hear s.8 cases Apotex v AstraZeneca, 2012 FC 559; Sanofi v Apotex,2012 FC 551 Not unconstitutional for vagueness or harshness Not invalid delegated legislation Not invalid in the face of TRIPS and NAFTA10
  11. 11. Scope of Section 8 Damages Claims 11
  12. 12. Lost Future Profits are Not Available to Generics FCA held that generics lost future profits cannot beclaimed under s.8 (Apotex v Merck 2009) Damages are constrained by s. 8. The Governor in Council could have extended the measure of the losses to include those caused [as opposed to suffered] during the period, regardless of when they are suffered. However, it did not do that. Trial decision was the first decision on the merits fors.8 Trial judge had awarded lost future profits, considering them to be an issue of quantity and not injury12
  13. 13. Disgorgement of Innovator Profits Generic claims to Innovator profits Generic argue that Innovators charge more than generics and therefore obtain larger profits Because of that difference in profits (), it may be still beneficial to trigger the statutory stay even if payment of generic losses must be made Disgorgement of profit is therefore a necessary disincentive to triggering the statutory stay13
  14. 14. Evolution of Section 8Section 8 1993 : 8(1) The first person is liable to the second person for alldamages suffered by the second person 8(2) by way of damages or profits as the circumstancesrequire 1998 : 8(1) the first person is liable to the second person forany loss suffered 8(4) by way of damages or profits as circumstancesrequire 2006:8(1) the first person is liable to the second person forany loss suffered 8(4) by way of damages as circumstances require.RIAS: Government believes arguments re accounting ofprofits should no longer be open to generics invoking section 8 14
  15. 15. Not Entitled to Innovator Profits at Federal Court Innovator profits are not available as a measure ofdamages under s. 8 (Apotex v Merck 2009 FC/FCA) Apotex argued that inclusion of the word profits in subsection 4 could not be redundant with the word damages, and thus must refer to Mercks profits S.8(4) has since been amended to remove the wordprofits S. 8 compensated for having been kept off the market The reasonable interpretation was that the generic canseek only its own lost profit as a measure of its damages Subsequent lower court decisions came to similarconclusions15
  16. 16. Not Entitled to Innovator Profits at Federal CourtApotex v Eli Lilly, 2011 FCA No jurisdiction to award profits for causes of actionarising from section 8 including claims for equitable reliefarising from same facts Parliament considered this issue and removed the reference in s.8 to profits What about causes of action independent of facts givingrise to the operation of s.8? None was alleged in that case 16
  17. 17. Entitlement to Innovator Profits in Provincial CourtProvincial Courts Prior to Lilly, Generics moved the s.8 damages battle toprovincial courts to claim other remedies including equitableclaims such as unjust enrichment Reason: Provincial Superior courts are courts of inherentjurisdiction and do not require statutory grants of jurisdiction Ex. Courts of Justice Act, RSO 1990, c C-43, s 96(1) 17
  18. 18. Provincial Courts : The New BattlefieldApotex v Abbott 2010 ONSC (lansoprazole) Whitaker J.s Decision Motion to Strike unjust enrichment/disgorgement ofprofits Whitaker J. held that it was not plain and obvious thatthe PMNOC Regulations constituted a complete code None of the cases concerned the ousting of all common law causes of action or remedies Law is still muddy; in its infancy 18
  19. 19. Provincial Courts : The New BattlefieldApotex v Abbott 2010 ONSC (lansoprazole) Whitaker J.s Decision Enrichment and deprivation were pled Only issue concerned the juristic reasons branch of the test Disposition of law has been understood to mean enrichment and deprivation required by law Held - Abbott was not required to invoke the PMNOC Regulation for some purpose other than to protect the patents Would require an examination of all the circumstances Not plain and obvious that the claim would fail 19
  20. 20. Provincial Courts : The New BattlefieldApotex v Abbott, Takeda 2011 ONDivCt (lansoprazole) Leave to appeal Whitaker J. Decision (Swinton J) No decisions on whether unmeritorious commencement of NOC proceedings can give rise to a claim in unjust enrichment Not plain and obvious that reliance on permissive law constitutes a juristic reason Not plain and obvious that PMNOC Regulations are a complete code and that unjust enrichment would undermine its purpose20
  21. 21. Provincial Courts : The New BattlefieldApotex v Eli Lilly, 2012 ONSC (atomoxetine)Justice MacDonald : Motion to strike Law in respect of claims pursuant to s 8 is not fully settled Not plain and obvious that PM(NOC) Regulations limit claims or only remedies which s.8 provides are available21
  22. 22. Provincial Courts : The New BattlefieldThe Pending Decisions: Apotex v Abbott, Takeda ONSC(lansoprazole) Motion for summary judgement (Quigley J) Focus on Apotex pleadings wrongful invocation of the PMNOC Regulations Settlement Agreement Defendants argued that Apotex v Eli Lilly 2012 FCgoverned ie. no independent cause of action exists 22
  23. 23. Provincial Courts : The New BattlefieldThe Pending Decisions: Apotex v Abbott, TakedaONSC (lansoprazole) Plaintiff: pleadings re. wrongful invocation and SettlementAgreement supported unjust enrichment However: no further material facts presented, ex. regarding wrongful invocation, intent of the parties Apotex declined opportunity to conduct examinations for discovery Decision expected in early 2013 23
  24. 24. Provincial Courts : The New BattlefieldThe Pending Decisions: Apotex v Eli Lilly ONDivCt(atomoxetine) Leave to appeal MacDonald J decision (Ducharme J) Defendants argue that motions judge considered thewrong