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PMPRB prevails in obtaining financial disclosure

Justice Fothergill dismissed Galderma’s judicial review application of the Patented Medicine Prices Review Board’s redetermination decision concluding Galderma’s Patent pertained to its medicine Differin, and ordering Galderma to file the prescribed sales and financial information for Differin for the period between January 1, 2010 and March 14, 2016.

Galderma Canada Inc. sells the dermatological medicine, Differin and Differin XP containing adapalene. Two patents were listed for Differin, Canadian Patent Nos. 1,226,646 and 1,312,075, the latest expiring in 2009. Galderma provided sales and price information to the Board for Differin from January 1996 until December 2009 (the period of the first two patents) as was required under s. 80 of the Patent Act. Galderma had a third patent covering its Differin XL product, Canadian Patent No. 2,478,237, which lapsed in March 2016.

Board Decision #1 and Judicial Review #1

On December 19, 2016, the Board determined the 237 Patent was capable of being “used for” Differin, within the meaning of s. 79(2) of the Patent Act and ordered Galderma to provide further pricing information for Differin. Section 79(2) was enacted as part of the Patent Act’s patented or protected medicines legislation to protect consumers from inflated pricing of patented medicines. It reads as follows:

79(2) For the purposes of subsection (1) and sections 80 to 101, 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.

In November 2017 Justice Phelan quashed the Board’s decision (2017 FC 1023) because the Board did “not explain how the 237 Patent for 0.3% adapalene can be used for a medicine with 0.1% adapalene.” The decision was appealed and the Federal Court of Appeal remitted the matter to the Board for redetermination in 2019 FCA 196, asking the Board to consider the proper question when considering whether an invention “pertains to a medicine” under s. 79(2): “whether the invention is intended or capable of being used for the medicine.”

The Redetermination

During the hearing for the redetermination, Galderma argued that the difference in concentrations of Differin and Differin XL produced differences in effectiveness, tolerance, and side effects. Despite this, the Board determined the 237 Patent was capable of being used for the medicine Differin because the product monographs were nearly identical and often referred to both Differin and Differin XL as a single drug albeit different dosage forms of the same medicine. The only differences were slightly higher efficacy and a greater incidence of adverse reactions from Differin XL use which the Board found was normal consequences of the dose-response relationship.

On May 7, 2020, the Board issued its redetermination concluding again that the 237 Patent pertains to Differin and ordering the filing of the sales and financial information for Differin between January 1, 2010 and March 14, 2016. Galderma again sought judicial review.

Judicial Review #2

On judicial review of the redetermination, Galderma argued the Board’s decision was procedurally unfair because the Board improperly based its decision on material facts that were not included in its originating Notice of Application (although raised in argument before the Board). However, because this procedural unfairness allegation was not raised before the Board, Galderma was precluded from raising it for the first time on judicial review.

The Board’s decision was subject to the standard of reasonableness. In determining whether the decision was reasonable, Justice Forthergill found the following three points could be gleaned from previous s. 79(2) decisions:

  1.  “The fundamental question is whether the invention is intended or capable of being used for the medicine, not whether there is the merest slender thread of a connection.”
  2. “…there is a presumption that [a patent’s] mere existence confers market power by distorting the competitive process and competitors are dissuaded from entering the marketplace. There is no need for Board Staff to demonstrate actual market distortion, and no opportunity for a patentee to prove the contrary.”
  3. “A finding that, on its face, the patent is intended or capable of being used for the off-patent medicine is sufficient to establish the Board’s jurisdiction.”

He concluded there was no evidence before the Board of any market distortion, but the mere existence of the 237 Patent that pertained to Differin gave rise to a presumption of market power due to distortion of the competitive process. The Board’s conclusions that Differin and Differin XL are the same medicine albeit different concentrations, have shared product monographs, and produced similar clinical effects and similar side effects supported the conclusion that the 237 Patent pertained to Differin under s. 79(2). Thus, the Board’s decision was reasonable and the application for judicial review was dismissed.

The full decision can be read here.