Ramipril section 8 damages – distinct “but for” worlds for each generic
The Federal Court recently decided several cases dealing with section 8 of the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”). The first decision (2012 FC 551) concerned Sanofi’s defence that section 8 of the Regulations was not valid, the second and third decisions addressed section 8 claims made by Teva (2012 FC 552) and Apotex (2012 FC 553), respectively, against Sanofi in respect of ramipril. The hearing of third section 8 case involving ramipril brought by another generic, Laboratoire Riva, has yet to take place.
Briefly, when a prohibition application under the Regulations is withdrawn, discontinued, dismissed by the Court or reversed on appeal, section 8 of the Regulations makes the brand pharmaceutical company (referred to as a “first person) liable for any loss suffered by the generic company (referred to as the “second person”) during the “Relevant Period”. The Relevant Period is defined as:
a) beginning on the date that the generic’s drug submission would have been issued in the absence of the Regulations, unless the Court considers another date more appropriate; and
b) ending on the date of the withdrawal, discontinuance, dismissal or reversal of the prohibition proceeding.
Section 8 of the Regulations is valid
In the first decision, Justice Snider confirmed that the general validity of section 8 of the Regulations has been determined by the Court of Appeal in Alendronate and that any question not explicitly addressed by the Court of Appeal must be considered in a manner that is consistent with the teachings of Alendronate. Justice Snider also concluded that she did not have to decide many of the other alleged bases of invalidity of section 8 because these issues did not arise on the facts of either the Apotex action or Teva action. Finally, Justice Snider adopted the reasons of Justice Hughes in the recent esomeprazole section 8 decision (2012 FC 559) that section 8 was not invalid as being contrary to Canada’s obligations under NAFTA or TRIPS.
Ramipril Background
Both Reasons for Judgment provide a detailed overview of the history of the various prohibition proceedings against Apotex and Teva. One significant difference between Apotex’s and Teva’s litigation was in respect of the Canadian Patent No 1,246,457, which expired December 13, 2005. Teva elected to await the expiry of the ‘457 patent, whereas Apotex had separately challenged the ‘457 patent on both non-infringement and invalidity grounds. While Apotex’s non-infringement allegation failed (2005 FC 1381), Apotex’s allegation of invalidity was later successful (2005 FC 1504).
The “but for” worlds
In both matters, Justice Snider weighed complicated economic expert evidence seeking to model and quantify the generic’s damages in the hypothetical “but for” world wherein Sanofi had not instituted prohibition proceedings against Teva and Apotex. Justice Snider rejected Sanofi’s submission that the Court should construct a single “but for” world to account for all generics, including authorized generics (AGs), and instead held that the assessment of damages should be made on the facts of each case. Justice Snider held that Sanofi’s single “but for” universe had a significant flaw in that it cannot account for situations, like the one before her, where the Relevant Period is different for different generics. Sanofi had argued that separate “but for” worlds could provide generics with a windfall and could expose Sanofi to liability greatly exceeding the damages had all three section 8 cases been joined. The Court further noted that if Sanofi’s total liability in the seperately decided cases exceeded the bounds of rationality, Sanofi could urge the Court to consider an adjustment under s. 8(5) of the Regulations. While there may be cases where a single “but for” world accounting for all generics may have some merit, this was not one those situations.
While Justice Snider was not able to finalize a quantum of damages in either proceeding, the decisions analyse and clarify some of the considerations that may be relevant in calculating damages available under section 8. Some of these considerations and the Court’s holdings are highlighted in the chart below:
|
Teva |
Apotex |
|
| ANDS submission date | December 24, 2001 | July 31, 2003 |
| “Patent Hold” date | October 14, 2003 | April 26, 2004 |
| Relevant Period Start Date | December 13, 2005 (expiry of ‘457 patent )
|
April 26, 2004 (patent hold date) |
| Relevant Period End Date | April 27, 2007 (Teva’s approval date) | December 12, 2006 (Apotex’s approval date)Health Canada’s decision that Apotex need not address the later-listed HOPE patents for which Apotex was not seeking approval does not make Apotex’s status as a second person against these patent void ab initio. |
| Generic Market Participants during Relevant Period | Teva, Apotex and AG would have all entered the generic ramipril market on or about December 13, 2005. | Apotex, AG (for some of the Relevant Period), Teva (for a lesser part of the Relevant Period). |
| Lost Business Value | Is a claim to future profits and, following the Court of Appeal in Alendronate, is not a recoverable loss under section 8.
|
N/A |
| Duplicate ramp up adjustment |
|
|
| Overall ramipril Market during the Relevant Period | 611 Million pills | Court preferred the evidence of Apotex’s expert, but actual size of the total ramipril market not provided in public reasons. |
| Overall Generic Market during the Relevant Period | 374 Million pills | Court preferred the evidence of Apotex’s expert, but actual size of the generic ramipril market not provided in public reasons.Court accepted that the generic market would not be materially impacted by the number of generic entrants or the timing of their entry. |
| Burden of establishing other generic in “but for” market | Once the generic has led prima facie evidence of its loss, the evidential burden shifts to Sanofi to show that other generics would have entered the market. Once Sanofi discharges this evidential burden, generic must address that evidence in order to discharge its legal burden. | |
| Share of generic market in “but for” world | Must account for presence of any competition that would have existed in the generic market, including any AG | |
| Date of Sanofi’s AG Launch in “but for” world | On or about December 13, 2005 | By July 26, 2004(3 months after Apotex’s surprise launch) |
| Generic Market Share during the Relevant Period | Teva: 33%Apotex: 33%AG: 33% | April 26, 2004 to July 26, 2004Apotex: 100%July 26, 2004 to August 1, 2006
Apotex: 70% AG: 30% August 1, 2006 to December 12, 2006 Apotex: 50% (Teva + AG): 50% |
| Number of pills relevant generic would have sold during the Relevant Period | 147,092,476 | Number not provided in public reasons |
| Pricing | $0.56/unit + upward adjustment to account for higher Quebec formulary pricing during Relevant Period | April 26, 2004 to July 26, 200470% of ALTACE listed priceJuly 26, 2004 to December 12, 2006
65% of ALTACE listed price |
| Trade Spend & API price | Redacted | Redacted |
| Lost profits on other products | Disallowed – no concrete and measurable evidence | N/A |
| Lost Indirect profit | Unrecoverable – alleged losses speculative and too remote | N/A |
| Pre-judgment interest | From start of Relevant Period (December 13, 2005 ) to date of judgment (May 11, 2012).At the rate in effect under the Courts of Justice Act on December 13, 2005 | N/A |
| Reduction if Damages for off-label indications | Not in this case, but this not to say that a generic may always recover for unapproved indications.
|
|
| Plant Capacity adjustment | N/A | Court directed the parties to determine whether there would be a need for additional machinery or added cost (for example, shift premiums) |
A copy of the Public Reasons for Judgement upholding the validity of Section 8 of the Regulations and in the Apotex ramipril matter may be found on Alan Macek’s IPPractice website here and here.
A copy of the Reasons for Judgement in the omeprazole matter decided by Justice Hughes may also found on Alan Macek’s IPPractice website here.
A copy of the Public Reasons in the Teva proceeding may be found here. Teva has appealed Justice Snider’s Judgment (A-147-12).
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