Date: 20000313
Docket: A-804-99
CORAM: ROBERTSON J.A.
ROTHSTEIN J.A.
SHARLOW J.A.
BETWEEN:
NU-PHARM INC.
Appellant
(Respondent)
- and -
MERCK & CO., INC. and
MERCK FROSST CANADA & CO.
Respondents
(Applicants)
- and -
THE MINISTER OF HEALTH
(Respondent)
(Respondent)
REASONS FOR JUDGMENT
SHARLOW J.A.
[1] This is the latest chapter in a long and intricate saga involving the efforts of two generic drug companies, Apotex Inc. and the appellant Nu-Pharm Inc., to manufacture and sell the medicine enalapril maleate in competition with the respondents Merck & Co. Inc. and Merck Frosst Canada & Co. (collectively referred to as "Merck"). Enalapril maleate is included in Canadian Patent No. 1,275,349, which is owned by Merck & Co. Inc. and licensed to Merck Frosst Canada & Co.
[2] Enalapril maleate is the medicinal ingredient in Merck"s product Vasotec, and is used to treat hypertension and certain heart conditions. In 1987, Merck obtained a notice of compliance for Vasotec. Merck has produced and sold Vasotec in Canada since that time.
[3] Enalapril maleate is also the medicinal ingredient in Apo-Enalapril, a drug produced by Apotex. In 1993, Apotex obtained a notice of compliance for Apo-Enalapril. However, the marketing of Apo-Enalapril by Apotex was held to be an infringement of Merck"s patent, except to the extent it was made with enalapril maleate acquired in circumstances that entitled Apotex to rely on section 56 of the Patent Act as it then read: Merck & Co. Inc. v. Apotex Inc. (1995), 60 C.P.R. (3d) 356 (F.C.A.), reversing in part (1994), 59 C.P.R. (3d) 133 (F.C.T.D.). The shelf-life for the Apo-Enalapril that was protected by section 56 has expired and it is no longer marketed.
[4] In February, 1999, the Minister of Health issued a notice of compliance that permits Nu-Pharm to sell enalapril maleate in the form of a drug called Nu-Enalapril. The validity of that notice of compliance is the issue in this case.
[5] To put the facts in context, it is necessary to understand certain aspects of the regulatory schemes against which they arose.
[6] By virtue of section C.08.002(1) of the Food and Drug Regulations, no one is permitted
to sell a new drug in Canada unless the Minister of Health issues a notice of compliance for the new drug under section C.08.004.
[7] The first step in obtaining a notice of compliance is to file a new drug submission or an abbreviated new drug submission (ANDS) containing specified information. A new drug submission must include evidence that establishes the safety and efficacy of the new drug, as well as information relating to the manufacturing process for the drug and other matters.
[8] In an ANDS, information as to the safety and efficacy of the new drug is not required to be included. Instead, the safety and efficacy of the new drug are inferred from its similarity to a "Canadian reference product" as defined in section C.08.001.1 of the Food and Drug Regulations , which reads as follows:
| [...] "Canadian reference product" means |
| (a) a drug in respect of which a notice of compliance is issued pursuant to section C.08.004 and which is marketed in Canada by the innovator of the drug, |
| (b) a drug, acceptable to the Minister, that can be used for the purpose of demonstrating bioequivalence on the basis of pharmaceutical and, where applicable, bioavailability characteristics, where a drug in respect of which a notice of compliance has been issued pursuant to section C.08.004 cannot be used for that purpose because it is no longer marketed in Canada, or |
| (c) a drug, acceptable to the Minister, that can be used for the purpose of demonstrating bioequivalence on the basis of pharmaceutical and, where applicable, bioavailability characteristics, in comparison to a drug referred to in paragraph (a). |
[9] Compliance with the Food and Drug Regulations is a necessary condition for issuance of a notice of compliance for a new drug, but it is not a sufficient condition. The requirements of the Patented Medicines (Notice of Compliance) Regulations must also be satisfied. Those regulations were introduced in 1993 when the compulsory licensing system for patented medicines was repealed. Their purpose is explained in the Regulatory Impact Analysis Statement, Canada Gazette Part II, Vol. 127, No. 6, page 1388:
| ...As a general rule, judicial remedies are sufficient to address patent infringement. However, with the enactment of Bill C-91 [S.C. 1993, c. 2] the government has created an exception to patent infringement allowing generic competitors to undertake any activities necessary to work up a submission to obtain regulatory approval of a product. This removes a patent right that might have otherwise been available to patentees to prevent generic competitors from obtaining such regulatory approval of their products. |
| These Regulations are needed to ensure that this new exception to patent infringement is not abused by generic drug applicants seeking to sell their product in Canada during the term of their competitor"s patent while nonetheless allowing generic competitors to undertake their regulatory approval work necessary to ensure they are in a position to market their products immediately after the expiry of any relevant patents. |
[10] The foundation of the Patented Medicines (Notice of Compliance) Regulations is a register of "patent lists" created and maintained by the Minister under Regulation 3. A person who obtains a notice of compliance for a drug that embodies a patented medicine, and who is the owner or exclusive licensee of the patent, or who has the consent of the owner, may file a patent list for that drug. A person who files a patent list for a drug is referred to as the "first person."
[11] An ANDS by definition involves a comparison with or reference to another drug. For that reason, anyone who files an ANDS that refers to a drug for which a patent list has been filed must comply with Regulation 5(1) of the Patented Medicines (Notice of Compliance) Regulations. The relevant parts of Regulation 5(1) read as follows (emphasis added):
| 5(1). Where a person files or has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make reference to, another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission with respect to each patent on the register in respect of the other drug, |
| (a) state that the person accepts that the notice of compliance will not issue until the patent expires; or |
| (b) allege that |
| [...] |
| (ii) the patent has expired, |
| (iii) the patent is not valid, or |
| (iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed. |
[12] A person who is required to comply with Regulation 5(1) is referred to as the "second person." By virtue of Regulation 5(3), a second person who makes one or more of the allegations referred to in Regulation 5(1)(b) must serve the first person with a notice of the allegations made and a detailed statement of the legal and factual basis for the allegations. That gives the first person an opportunity to consider whether it has grounds for attempting to stop the issuance of the notice of compliance for the new drug.
[13] Regulation 6 provides that the first person may, within 45 days of service of the information referred to in Regulation 5(3), apply to the court for an order prohibiting the issuance of the notice of compliance to the second person. That order must be made if the court finds that none of the allegations is justified.
[14] Pursuant to Regulation 7(1)(e), the day on which the Minister receives proof of the application for a prohibition order marks the commencement of a 24 month period during which the Minister is precluded from issuing the notice of compliance. This automatic statutory injunction may be terminated by any of the circumstances specified in Regulation 7, and may also be extended by consent or by court order. Under Regulation 7(4), dismissal of the application for prohibition puts an end to the statutory injunction.
[15] The issue in this case is whether Regulation 5(1) is engaged by the filing of an ANDS if the Canadian reference product it names is not the subject of a patent list, but the notice of compliance for that Canadian reference product was obtained by comparison to a drug that is the subject of a patent list.
[16] The facts are not in dispute and may be briefly stated. On September 11, 1997, Nu-Pharm filed an ANDS for Nu-Enalapril tablets. As indicated above, the medicinal ingredient in Nu-Enalapril is enalapril maleate.
[17] There were two enalapril maleate drugs that might have been considered a Canadian reference product for Nu-Enalapril. One possibility was Merck"s product, Vasotec. In 1993, Merck had filed patent lists for Vasotec in various strengths. The other possibility was Apotex"s product, Apo-Enalapril. There is no patent list for Apo-Enalapril because, of course, Apotex does not hold the patent for enalapril maleate. The notice of compliance for Apo-Enalapril was obtained by comparison to Vasotec.
[18] Nu-Pharm"s ANDS for Nu-Enalapril specifies only Apo-Enalapril as the Canadian reference product. Nu-Pharm takes the position that it had no obligation under Regulation 5(1) because it wished to compare Nu-Enalapril only to Apo-Enalapril, a drug for which there was no patent list.
[19] By naming only Apo-Enalapril as a Canadian reference product, Nu-Pharm no doubt hoped to obtain a notice of compliance for Nu-Enalapril while avoiding or at least deferring a clash with Merck over its patent rights to enalapril maleate. That strategy initially succeeded. On February 25, 1999, the Minister of Health issued a notice of compliance for Nu-Enalapril.
[20] Merck has commenced a patent infringement action against Nu-Pharm (File No. T-753-99). It applied for an interlocutory injunction but its application was dismissed on January 21, 2000.
[21] Merck also brought this application to quash the Minister"s decision to issue a notice of compliance for Nu-Enalapril. The basis of Merck"s application was that Nu-Pharm"s ANDS should have been treated as though it had expressly stated that Nu-Pharm wished to compare Nu-Enalapril with, or make reference to, Merck"s product Vasotec.
[22] If Merck"s position is correct, the Minister should not have issued a notice of compliance for Nu-Enalapril until Nu-Pharm complied with Regulation 5(1) by making one or more of the stipulated statements or allegations with respect to Merck"s patent for enalapril maleate and serving Merck with a detailed statement of legal and factual basis for any allegation of invalidity or non-infringement of that patent.
[23] In a decision dated November 23, 1999, the Motions Judge determined that Merck was correct and that the notice of compliance should not have been issued for Nu-Enalapril. Nu-Pharm now appeals that decision. The Motions Judge granted a stay of the judgment, which remains in effect until the disposition of the appeal.
[24] I agree with the decision of the Motions Judge, but for different reasons. In my view, this case cannot be distinguished from Nu-Pharm Inc. v. Canada (Attorney General) (1997), 73 C.P.R. (3d) 510 (F.C.T.D.), affirmed (1998), 80 C.P.R. (3d) 74 (F.C.A.), and the result should be the same.
[25] In Nu-Pharm v. Canada, Nu-Pharm had submitted two new drug submissions, one for Drug X and one for Drug Y, which were "cross-referenced" to an ANDS previously filed by another generic drug company, "Generic 1". The cross-referenced information consisted of tests that demonstrated that the drugs produced by Generic 1 were essentially the same as two other drugs manufactured by "Innovator 1" and "Innovator 2", for which patent lists had been filed.
[26] The Food and Drug Regulations do not recognize a "cross-referenced" new drug submission as a separate category. However, as a matter of practice, it is permissible for a new drug submission to rely on information and materials submitted with another person"s new drug submission, if that person consents.
[27] The Minister refused to issue notices of compliance for Drug X and Drug Y, taking the position that Nu-Pharm was required to comply with Regulation 5(1) with respect to the drugs that were the subject of the patent lists filed by Innovator 1 and Innovator 2.
[28] Nu-Pharm applied for an order compelling the notices of compliance to be issued, making the same argument it is making now. Richard J., as he then was, rejected Nu-Pharm"s argument because Nu-Pharm's submissions did in fact compare its drugs with, or make reference to, the drugs manufactured by Innovator 1 and Innovator 2. The Federal Court of Appeal affirmed this decision. McDonald J.A., speaking for the Court, said this at 78-9:
| [...] To allow Nu-Pharm to circumvent the requirements of the Regulations on the ground that it cross-referenced its New Drug Submissions to another Generic Drug Company (Generic 1) who had filed an abbreviated New Drug Submission relying on studies of the patentee (the first person) who submitted a patent list would thwart the purpose of the Patent Act. The purpose of the Patented Medicine Regulations was to protect the research and development initiatives of innovator pharmaceutical companies [...]. |
| [...] |
| [...] Nu-Pharm can not piggy-back its claim on the Generic Drug Company who relies on the tests of the patentee and then state it need not comply with the Act because the Generic Company did not issue a patent list. The fact remains that although it is one step removed, Nu-Pharm is relying on the tests and other work done by the patentees, whom the Generic Company relied on. While Nu-Pharm claims to be comparing its drug to Generic 1's, it, nonetheless, is, in essence, comparing it to that of the original patentee, because Generic 1 compared its drug to that of the patentee. It is a question of interpretation which requires the Court to construe the words in context so as to be consistent with the purpose of the Act. Thus, In our view, Nu-Pharm cannot circumvent the Regulations by cross-referencing its drug submission to a generic, which filed an Abbreviated Drug Submission. |
[29] Nu-Pharm explains this decision on the basis that to cross-reference material in another new drug submission is to incorporate that material by reference, which is substantially the same as including that material expressly. Nu-Pharm seeks to distinguish that situation from this one by arguing that its ANDS for Nu-Enalapril stands alone and does not incorporate by reference any information about Vasotec.
[30] I see no such distinction. To describe Nu-Pharm"s ANDS for Nu-Enalapril as "standing alone" is to distort the facts. Nu-Pharm"s actions belie its assertion that it does not wish to compare Nu-Enalapril to Vasotec or refer to Vasotec. Its ANDS for Nu-Enalapril, by using Apo-Enalapril as its Canadian reference product, invites comparison to Vasotec just as surely as if Vasotec were named, because the new drug submission for Apo-Enalapril used Vasotec as its Canadian reference product. In these circumstances, Nu-Pharm cannot deny that it wishes a comparison to be made between Nu-Enalapril and Vasotec. Nor can Nu-Pharm avoid the obligations of Regulation 5(1) by hiding its wish behind a form of ANDS that expressly names only Apo-Enalapril.
[31] Nu-Pharm argues that this conclusion contradicts the decision in Bayer Inc. v. Canada (Attorney General), (1999) 87 C.P.R. 293 (F.C.A.), affirming (1998), 84 C.P.R. (3d) 129 (F.C.T.D.). I do not agree.
[32] The Bayer case considered the meaning of section C.08.004.1 of the Food and Drug Regulations. That provision applies if (1) the innovator of a drug files a new drug submission for a drug that contains a chemical or biological substance not previously approved for sale in Canada as a drug, (2) a second drug manufacturer files a new drug submission for another drug, and (3), the Minister, in support of the second manufacturer"s submission, "relies on data contained in the information or material filed by the innovator." If all of these conditions are met, section C.08.004.1 precludes the Minister from issuing a notice of compliance to the second manufacturer until at least five years after issuing a notice of compliance to the innovator.
[33] The question was whether the Minister could be said to "rely on data contained in the information or material filed" by an innovator when it issues a notice of compliance to a generic drug manufacturer that simply uses the innovator"s drug as a Canadian reference product. The answer was no. Section C.08.004.1 could not be held to apply automatically in such circumstances because the similarity between the two drugs could be determined without actually referring to the innovator"s confidential information filed with the Minister. The court commented that to read section C.08.004.1 as applying to the kind of indirect or implicit reliance that may occur merely by virtue of a Canadian reference product being named in an ANDS would be to add the word "indirectly" or some other modifier to section C.08.004.1, which the court cannot do.
[34] Nu-Pharm argues that to require compliance with Regulation 5(1) in this case is to modify that regulation in exactly the way that was disapproved in Bayer. The argument is that the interpretation of Regulation 5(1) accepted by the Motions Judge effectively amends the phrase "wishes to compare that drug with, or make reference to, another drug" so that it reads "wishes to compare that drug directly or indirectly with, or make reference directly or indirectly to, another drug."
[35] The short answer to that argument is that Nu-Pharm is not seeking a indirect comparison to Vasotec. It is seeking a direct comparison to Vasotec although it disguises that fact by the form of its ANDS.
[36] Another answer is that it is always open to a court to give the words of a statute or regulation the broadest meaning or the narrowest meaning that its words can bear. The choice will depend on the application of the principle of statutory interpretation adopted by the Supreme Court of Canada in numerous recent cases, including Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27. That principle is encapsulated in the much quoted words of Elmer Driedger in Construction of Statutes (2nd ed., 1983) at 87:
| Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. |
[37] There is little to be gained by elaborating on this statement. It is enough to say that when it is properly applied, the resulting interpretation is consistent with both the words and the objective of the legislation. By that standard, the interpretation of Regulation 5(1) adopted by the Motions Judge in this case is correct.
[38] Nu-Pharm submits that this interpretation places an unreasonable burden on the Minister, who would be obliged to look behind each ANDS to see if there is a comparison to a drug that is not expressly named. I note that the Minister, though a party to this proceeding, did not appear. That is sufficient to reject this submission. But in any event it is contradicted by the evidence. The form of notice of compliance for Nu-Enalapril is a one page document that names Apo-Enalapril as its Canadian reference product. It should be a relatively simple matter to look at the notice of compliance issued for Apo-Enalapril, which would indicate that its Canadian reference product is Vasotec, and then to determine whether patent lists have been filed for Vasotec.
[39] Nu-Pharm also argues that this decision is inconsistent with Merck Frosst Canada Inc. v. Canada (1996), 71 C.P.R. (3d) 156 (F.C.T.D.). That case was referred to and distinguished in Nu-Pharm (cited above), and is similarly distinguishable from this case.
[40] Nu-Pharm argues that it is absurd to require it to comply with Regulation 5(1) in respect of its ANDS for Nu-Enalapril when the new drug submission filed by Apotex in respect of Apo-Enalapril did not trigger the same obligations. There is no absurdity. When Apotex filed its new drug submission for Apo-Enalapril, the Patented Medicines (Notice of Compliance) Regulations were not in force. However, those regulations were in force when Nu-Pharm filed its ANDS for Nu-Enalapril. It is not absurd to require Nu-Pharm to comply with them.
[41] Finally, Nu-Pharm submits that the Motions Judge should not have exercised her discretion to quash the Minister"s decision to grant the notice of compliance for Nu-Enalapril. I am not persuaded that there is any basis for interfering with her decision in that regard.
[42] This appeal should be dismissed with costs.
Karen R. Sharlow
J.A.
"I agree
Joseph T. Robertson J.A."
"I agree
Marshall Rothstein J.A."