Apotex Inc. v. Astrazeneca Canada Inc.

Apotex Inc. v. Astrazeneca Canada Inc.
Court (s) Database
Federal Court Decisions
Date
2012-05-11
Neutral citation
2012 FC 559
File numbers
T-2300-05
Decision Content
Federal Court
Cour fédérale
20120511
Docket: T-2300-05
Citation: 2012 FC 559
Ottawa, Ontario, May 11, 2012
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
APOTEX INC.
Plaintiff
and
ASTRAZENECA CANADA INC.
Defendant
REASONS FOR JUDGMENT AND JUDGMENT
[1] This is an action for the recovery of loss under the provisions of section 8 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (NOC Regulations). There has been a Reference ordered. Therefore this part of the proceeding is limited to addressing certain issues only with a Reference to follow if needed.
[2] The Plaintiff Apotex Inc. is an Ontario corporation and claims to be the largest Canadian-owned pharmaceutical manufacturer. It carries on business largely as a manufacturer and distributor of generic drugs; that is, copies of drugs made and developed by others. The Defendant AstraZeneca Canada Inc. is an Ontario corporation carrying on business in Canada as a distributor of drugs. These drugs include those developed by associated AstraZeneca corporations outside Canada. In the parlance of the trade, Apotex is a “generic” and AstraZeneca is a “brand” or “innovator”.
[3] The claim made by Apotex under section 8 of the NOC Regulations arises from the dismissal of an application for prohibition brought in this Court by AstraZeneca and a related company against Apotex under the provisions of those Regulations. That application, identified as T-2311-01, was commenced by a Notice of Application filed by AstraZeneca and a related company on December 31, 2001. By an Order dated 30th of December 2003, Justice O’Keefe dismissed that application. He provided reasons on the 2nd of March 2004, cited as 2004 FC 313. That decision is final.
[4] In general, the application T-2311-01 dealt with a drug known as omeprazole, sold by AstraZeneca in Canada under the brand name LOSEC and Canadian Patent No. 2,133,762 (the '762 patent) listed by AstraZeneca with the Minister of Health under the provisions of the NOC Regulations.
[5] The trial was divided into two parts. The first was an evidentiary part with argument addressing certain of the issues. The second part took place a few weeks later with argument directed to AstraZeneca’s challenges to the validity of section 8. This second part, on consent of all parties, was argued in common before me and Justice Snider who was seized with many of the same validity challenges in proceedings before her in cases numbered T-1161-07 and T-1357-09.
THE EVIDENCE
[6] The evidentiary portion of the trial of this action took place over five (5) days. In all, four (4) fact witnesses were called; two (2) for each party and, two (2) expert witnesses were called, one for each of Apotex and AstraZeneca. These experts were examined in a “hot tubbing” format after each had been examined and cross-examined by Counsel in the usual way. In addition, the parties filed an agreement stipulating that certain documents could be put in evidence without formal proof, without, however, any concession as to the truth of the contents of those documents.
[7] The Plaintiff Apotex provided the evidence of the following persons in its case in chief:
1. Dr. Bernard Sherman, a fact witness. He is the founder and Chairman of Apotex. He testified as to the efforts made by Apotex to obtain regulatory approval in Canada to make and sell its generic version (Apo-omeprazole) of AstraZeneca’s omeprazole drug, LOSEC, in 20 mg capsule format. He testified as to events prior to, during and subsequent to receiving approval. He also testified as to manufacturing facilities of Apotex at sites known as Signet and Torpharm, and the capacity of those facilities to manufacture this generic drug. I accept his evidence as credible.
2. Mr. Gordon Fahner, a fact witness. He is Vice President, business operations and finance, of Apotex. He provided particularization as to the ability of Apotex to manufacture the generic omeprazole drug at its Signet and Torpharm facilities. He provided data which he derived from Apotex business records kept in a computerized system known as SAP. I accept his evidence as credible.
3. Ms. Sue Wehner, an expert witness. She provided two reports marked as exhibits P-12 and P-13. After cross-examination as to her qualifications, Counsel for AstraZeneca agreed that Ms. Wehner could be qualified as an expert in the manner proposed by Apotex as follows:
Expert in regulatory affairs relating to the pharmaceutical industry, including the preparation and management of submissions to Health Canada, including new and abbreviated new drug submissions, supplemental new drug submissions and notifiable change submissions.
I accept her evidence as credible.
[8] In addition, Apotex tendered portions of AstraZeneca’s discovery and documents referred to; exhibits P-24 and P-25, and a bundle of documents submitted pursuant to the Agreement of Documents, exhibit P-23.
[9] The Defendant AstraZeneca provided the evidence of the following persons in its defence:
1. Dr. Sheila Garven, an expert witness. She provided a report marked as Exhibit D-26. After cross-examination as to qualifications, Counsel for Apotex agreed that she could be qualified as an expert on the basis of paragraph 18 of her report, modified as follows:
. . .
…as an expert in Canadian regulatory practice (“regulatory practice”) (…) including regulatory practice as it relates to the filing of new drug submissions, supplemental new drug submissions and notifiable change submissions.
I accept her evidence as credible.
2. Dr. Alison Ingham, a fact witness. She appeared pursuant to a subpoena from AstraZeneca. She is a senior advisor with the Bureau of Pharmaceutical Sciences at the Therapeutic Products Directorate of Health Canada. She testified generally as to certain practices at Health Canada relating to evaluation of new and abbreviated drug submissions and notifiable changes. I accept her evidence as credible.
3. Harvey Wasiuta, a fact witness. He testified pursuant to a subpoena from AstraZeneca. He is Director of Access to Information and Privacy for Health Canada. He is ultimately responsible for responses given by Health Canada to requests for Access to Information made to Health Canada. He testified as to the general practices of Health Canada in respect of Access to Information (ATI) requests and gave specific evidence as to requests made, including by AstraZeneca, as to files relating to Apotex’s omeprazole submissions to Health Canada. I accept his evidence as credible.
[10] At the end of the testimony of Ms Wehner and Dr Garven I conducted a “hot tubbing” examination in which each of them took the stand at the same time, remaining under oath. They answered questions put to them by me and responded to the answers given by each other. At the end of this process, each Counsel was invited to put follow-up questions to these witnesses. I will repeat part of the dialogue at the beginning (page 773) and at the end of the “hot tubbing” session (pages 779 - 780):
JUSTICE HUGHES: Where are you different, if at all, Ms. Wehner?
MS. WEHNER: I think the primary difference is the interpretation of whether a notifiable change is part of the regulations or apart from the regulations. I think it really boils down to that.
JUSTICE HUGHES: Dr. Garven, where do you say the two of you are apart?
MS. GARVEN: From a regulatory practice perspective I believe that the difference is whether a notifiable change is required or not and would require approval from Health Canada prior to implementing the change
. . .
JUSTICE HUGHES: They would carry on manufacturing any way?
MS. GARVEN: From a regulatory perspective I would say they shouldn’t be manufacturing for sale until they received that letter of no objection.
JUSTICE HUGHES: Anything to add to that, Ms. Wehner?
MS. WEHNER: This is a bit of an unusual situation but, in my experience, Health Canada would tend to work with the company in order to expedite the change, especially in this situation there would be a lengthy patent hold. It may be a moot point. I’ve seen Health Canada on a number of occasions working in close association with the companies to work things out.
JUSTICE HUGHES: Dr. Garven, what do you say about that?
MS. GARVEN: They do tend to work with the companies to work things out, but they would want it worked out in the sense that they would have to file that notifiable change and get the letter of no objection.
JUSTICE HUGHES: Have we then discussed the areas in which you were apart? Any other areas you were significantly apart?
MS. WEHNER: I don’t believe so.
MS. GARVEN: No, I don’t believe so either.
[11] AstraZeneca filed as part of its evidence a bundle of documents submitted pursuant to the agreement as to documents, exhibit D-37, and read-ins and related documents from its discovery of Apotex exhibits D-38, D-39 and D-40. Additionally, Counsel for Apotex agreed to certain stipulations respecting the '762 patent (transcript page 872).
[12] In reply, Apotex filed certain other materials arising out of answers that it gave to certain undertakings made during discovery, exhibit P-41 as did AstraZeneca, exhibit D-42. It called no further witnesses.
[13] I have made a separate Order dated March 29, 2012 respecting the confidentiality of certain portions of the transcripts of evidence and certain trial exhibits.
ANSWERS GIVEN ON DISCOVERY
[14] During Apotex’s examination for discovery conducted by AstraZeneca, Apotex, by its Counsel, undertook to provide answers to certain questions. Among these questions was Question 858, as follows:
To advise why Apotex was seeking approval to have Apo-omeprazole manufactured at the Etobicoke site.
[15] On June 7, 2011, Counsel provided the following answer:
The technology for the manufacture of Apo-Omeprazole on a commercial scale was not available at the Signet site during the specified time period. The notifiable change for the Etobicoke site was approved in August, 2004.
[16] On March 5, 2012 (two weeks before the trial began) Counsel for Apotex provided the following corrected answer:
Apotex corrects and replaces the preceding answer as follows. The Signet plant was capable of manufacturing Apo-Omeprazole capsules for commercial sale. It had the requisite technology. However, there was greater capacity to produce Apo-Omeprazole capsules at the Torpharm facility.
[17] AstraZeneca, as part of its case in defence, filed only the first or “uncorrected” answer. In reply Apotex filed the corrected answer, plus portions of its further discovery conducted by AstraZeneca “without prejudice” subsequent to the delivery of the corrected answer and before the trial began.
[18] AstraZeneca argues that Apotex is attempting to withdraw an admission upon which AstraZeneca was relying in conducting its case and should not be permitted to do so. Apotex argues that Rule 245 of the Federal Courts Rules, SOR/98-106 obliges it to correct inaccurate or deficient answers given on discovery. Rule 248 would also preclude it from leading evidence on the point at trial if the answer were not corrected. Further, Apotex argues, AstraZeneca had further discovery and the opportunity to cross-examine the relevant witnesses, Dr. Sherman and Mr. Fahner, at trial.
[19] To resolve the issue as to whether the “corrected” answer is admissible and whether the evidence of Dr. Sherman and Mr. Fahner, which contradicts the earlier, uncorrected, answer, is admissible, I will start with considering the distinction between “formal” and “informal” admissions. Sopinka et al, The Law of Evidence in Canada, 3rd ed (Markham: LexisNexis, 2009) at 1263, discusses formal admissions which are made for the purpose of dispensing with proof at trial and are conclusive as to the matters admitted. The authors illustrate the manner in which formal admissions may be made in Canadian proceedings at section 19.2 of this book, which I repeat:
§19.2 A formal admission may be made: (1) by a statement in the pleadings or by failure to deliver pleadings, (2) by an agreed statement of facts filed at the trial, (3) by an oral statement made by counsel at trial, or even counsel’s silence in the face of statements made to the trial judge by the opposing counsel with the intention that the statements be relied on by the judge, (4) by a letter written by a party’s solicitor prior to trial; or (5) by a reply or failure to reply to a request to admit facts. A formal admission of fact, as distinct from an admission of law, cannot be withdrawn except with leave of the court or the consent of the party in whose favour it was made. An admission relating solely to a question of law, on the other hand, may be withdrawn at any time, even in the Court of Appeal. Leave to withdraw an admission should not be granted, however, unless: (1) the admission was made clearly without authority, by mistake or under duress; (2) there exists a triable issue concerning the admitted fact; and (3) there will be no prejudice to the party in whose favour it was made. An inadvertent statement of fact by counsel in opening may be withdrawn if retracted before it has been acted upon. The discretion of the court ought to be warily exercised and usually on terms.
[20] It appears that this Court has extended the categories of the means by which “formal” admissions are made to certain kinds of admissions made by Counsel on discovery, as is illustrated by the decision of Justice Tremblay-Lamer in Archambault v Ministre du Revenu National, [1998] FCJ No 635, 189 FTR 37 (aff’d without discussion on the point: 264 NR 171 ). The reported reasons do not repeat what was actually said during the discovery, but what was said appears to have been said expressly for the purpose of trial if we take paragraph 6 of the reasons, which refer to another case, as being illustrative. At paragraph 5, Tremblay-Lamer J. states that, absent consent of the opposite party, a “formal” or “judicial” admission cannot be withdrawn without leave of the Court:
5 The case law is clear on the question of withdrawing admissions: a party may not withdraw a "formal admission" (or "judicial admission") without first obtaining leave of the Court or consent of the adverse party.
[21] On the other hand, this Court has treated answers on discovery as “informal” admissions which can be qualified, enlarged upon or even contradicted upon notice to the opposite party. Prothonotary Lafreniere in Apotex Inc v Wellcome Foundation Ltd, [2009] FCJ No 177, 343 FTR 41 wrote at paragraph 37:
37 Although the answers provided by GSK's representative during examination for discovery are considered informal admissions, they can be qualified, enlarged upon, or even contradicted upon notice to the opposing party. The correction of inaccurate or deficient answers is specifically contemplated by Rule 245 which provides that a person who was examined for discovery and who discovers that the answer to a question in the examination is no longer correct or complete must provide the corrected or completed information in writing without delay.
[22] The Ontario Court of Appeal in Marchand v Public General Hospital Society of Chatham, [2000] OJ No 4428, 51 OR (3d) 97 dealt precisely with the issue of correction of an answer given on discovery where the correction was made during the trial itself. The Court distinguished between answers given on discovery and “formal” admissions. Discovery answers could be corrected, leaving the impact of the correction to be determined by the trial judge. The entire discussion on the point in the decision written by the Court at paragraphs 70 to 86 is instructive. I repeat only paragraphs 77 and 80:
77 First, Dr. Asher's original discovery answer was not a formal admission. As such, it was always open to him to explain his discovery answer in his testimony. In Sopinka, Lederman and Bryant, The Law of Evidence in Canada, 3rd ed. (Toronto: Butterworths, 1999) at 1051-53, the authors distinguish between formal and informal admissions. A formal admission is conclusive as to the matter admitted, and cannot be withdrawn except by leave of the court or the consent of the party in whose favour it was made. The Law of Evidence states at 1051-52 that a formal admission may be made in the following ways:
1) by a statement in the pleadings or by failure to deliver pleadings;
2) by an agreed statement of facts filed at the trial;
3) by an oral statement made by counsel at trial, or even counsel's silence in the face of statements made to the trial judge by opposing counsel with the intention that the statements be relied on by the judge;
4) by a letter written by a party's solicitor prior to trial; or
5) by a reply or failure to reply to a request to admit facts.
In contrast, an informal admission does not bind the party making it, if it is overcome by other evidence. That is, a party making an informal admission may later lead evidence to reveal the circumstances under which the admission was made in order to reduce its prejudicial effect.
. . .
80 Holmested and Watson, supra, describe at 31 Subsection 25 the obligation under rule 31.09 as an ongoing duty to correct and complete the answers given. In general, parties are entitled to correct their discovery answers. The impact of corrections is a matter to be decided by the trial judge, who is entitled to examine both the original and the amended answers: See Machado v. Pratt & Whitney Canada Inc. (1993), 17 C.P.C. (3d) 340 (Ont. Master); Capital Distributing Company v. Blakey (1997), 33 O.R. (3d) 58 (Gen. Div).
[23] In the present case, Apotex “corrected” an earlier answer in respect of a critical fact. AstraZeneca had further discovery. Two Apotex witnesses testified on the point at trial and were cross-examined. AstraZeneca led no evidence of its own in respect of this fact. I will accept the corrected answer into evidence and weigh it along with the evidence of Dr. Sherman and Mr. Fahner.
THE ISSUES
[24] The principal issues are first whether Apotex is entitled to claim for loss under section 8 of the NOC Regulations and, if so, over what period and to what extent; and, second, is section 8 of the NOC Regulations valid legislation.
[25] Counsel for the parties have filed with the Court a document entitled “Joint List of Issues for Trial” setting out more specifically the issues that they wish the Court to address. All parties consented to this List. At trial, that List was amended and certain issues removed as a result of discussions between Counsel. As amended, that List of Issues is as follows:
1. Is section 8 of the Patented Medicines (Notice of Compliance) Regulations (the “PM (NOC) Regulations”) invalid and of no force and effect as being:
a. Unconstitutionally vague and ambiguous;
b. Draconian, harsh and punitive;
c. Invalid delegated legislation; and
d. Inconsistent with and contrary to NAFTA and TRIPS?
2. Has Apotex satisfied the conditions for engaging section 8 of the PM (NOC) Regulations, including that it is a “second person” within the meaning of section 8 of the PM (NOC) Regulations, or has Apotex failed to satisfy any relevant condition insofar as such failure has been expressly pleaded by AstraZeneca(It is noted that paragraphs 58 and 59 of the Defence have been dropped by AstraZeneca and that party now agrees that the Minister did certify that a Notice of Compliance would have been issued to Apotex on January 3, 2002 were it not for the proceedings T-2311-01).
3. Does section 8 of the PM (NOC) Regulations require a second person to establish abuse by the first person to comply with TRIPS and NAFTA and is the remedy so limited?
4. (Omitted)
5. Whether the alleged infringement of the '693 Patent is relevant in law, including whether it is relevant as a defence, to the section 8 claim of Apotex (including possible set-off of damages) (and if so, see para. 4 of Order of October 4, 2011)?
6. Whether Apotex was in a position to market Apo-Omeprazole in the period January 3, 2002 to January 27, 2004, including any impact of Apotex’s alleged lack of approvability to manufacture for sale at a commercial manufacturing site?
7. Whether the start date for any liability should be forward dated by reason of Apotex’s alleged delay in serving a Notice of Allegation and/or Apotex’s alleged lack of approvability to manufacture for sale at a commercial manufacturing site?
8. (Omitted)
9. Whether Apotex was under a duty to mitigate, and if so, whether Apotex failed to mitigate?
10. (Omitted)
11. (Omitted)
12. Whether, any of the subject of items 5-7 and 9-11 are relevant factors to consider pursuant to section 8(5)?
REFERENCE ORDER AND PRE-TRIAL ORDER OCTOBER 4, 2011
[26] The present trial dealt with only certain aspects of the disputes between the parties. There has been an Order in this action dated February 20, 2008 directing that a Reference be held, after the disposition of the matters presently before me, to deal with the quantification of damages and other matters. As it turns out, many of the matters dealt with in that Order are no longer relevant. The relevant parts of that Order which remain, as agreed upon by Counsel at the trial before me, are:
THIS COURT ORDERS THAT:
1. Pursuant to Rule 107 of the Federal Courts Rules, this matter shall proceed to trial without requiring the parties to adduce evidence at trial, or to conduct discoveries, or make production on any issue of fact relating solely to:
(a) the quantum of any damages suffered by Apotex Inc. (“Apotex”) as a consequence of any delay in issuance to Apotex of a Notice of Compliance (“NOC”) for Apo-Omeprazole 20mg capsules by reason of the Patented Medicines (Notice of Compliance) Regulations (“Regulations”);
. . .
2. Subject to paragraph 3, a hearing under Rules 107 and/or 153 shall be conducted following trial, if it appears that any of the issues set out in paragraph 1 above require determination, including necessary documentary and oral discovery.
. . .
4. Any party may apply to the Court at any time, on notice to all other parties, for an order varying this Order.
5. In the event of disagreement among the parties as to the interpretation of this Order, which the parties have been unable to resolve by negotiation, any party may apply to the Court, on notice to all other parties for: (a) a case conference to discuss the disagreement with the case manager with a view to resolution of the disagreement; or (b) an order or direction of the Court in respect of the subject of the disagreement.
6. There shall be no costs of the motion save as to the costs of the attendance on February 14, 2008, including disbursements associated with said attendance only, which shall be to the Moving Parties in the cause.
[27] By way of example, as discussed with Counsel at trial, if I were to determine that Apotex could manufacture the product at issue in commercial quantities at one or other of its sites, I need not, at this time, make an apportionment as to which site could produce how much.
[28] Further, following a pre-trial conference, I issued an Order dated October 4, 2011. That Order made reference to another action in this Court, T-1409-04, in which AstraZeneca is suing Apotex for infringement of Canadian Patent No. 1,292,693 (the ‘693 patent, which is not the same patent as the ‘762 patent at issue here). Presently, that action is set down to be heard in April 2014. Paragraph 4 of my Order directs that, if I find that AstraZeneca’s defences in this action respecting infringement are viable in law, then Judgment in this action shall be reserved until final disposition of action T-1409-04. Paragraph 4 of my Order states:
4. The trial in T-2300-05 will be heard on all issues and if the Court finds the defences raised in paragraph 60 of the Sixth Amended Statement of Defence and Counterclaim (Infringement Defences) are viable in law, then any Judgment in T-2300-05 finding liability will be reserved until the final disposition of T-1409-04, and in the event that Apotex is found to infringe a valid patent in T-1409-04, the parties will be given the opportunity to make further submissions to the Court as to the applicability and impact, if any, of the findings of infringement from T-1409-04 in the within action. The foregoing is without prejudice to Apotex’s ability to proceed with a reference following the initial finding of liability in T-2300-05 or the ability of AstraZeneca to bring a motion to stay the Judgment in T-2300-05 or any subsequent appeal.
[29] As discussed with Counsel at trial, if I find that AstraZeneca’s defence as to infringement is not viable, there is no prohibition against giving Judgment in the present action right away.
BURDEN OF PROOF
[30] This action is based on section 8 of the NOC Regulations. The Federal Court of Appeal in Apotex Inc v Merck & Co Inc, 2011 FCA 364 has clearly set out the elements of a claim for loss under that section. It requires that (1) an application for prohibition be dismissed; (2) that a second person has suffered loss from a date certified by the Minister or another date found by the Court to be appropriate, and ending on the date of dismissal. The Court may determine in its discretion whether, and to what extent, a second person’s claim for compensation should be reduced or eliminated.
[31] AstraZeneca argues that Apotex bears the burden of proof in respect of all those elements. I accept that Apotex has a burden in some respects but not others.
[32] Sopinka et al, supra provides a lengthy discussion as to allocation of burdens at sections 3.61 to 3.96. It cites the decision of the Supreme Court of Canada in Rainbow Industrial Caterers v CNR Co, [1991] 3 SCR 3 (QL) as modern authority on the point. That decision relates to facts similar to those at issue here in that the plaintiff claimed that it had been induced into entering into a contract with the defendant by misrepresentations of the defendant and had thereby suffered loss. The defendant argued that in the “hypothetical situation” where the plaintiff would have entered into a contract on different terms, the plaintiff was required to bear the burden of negating all the speculative hypotheses that the defendant put forward. The majority of the Court disagreed. The defendant bears the burden of proving its hypothesis. Justice Sopinka for the majority wrote at paragraphs 23 and 24:
Once the loss occasioned by the transaction is established, the plaintiff has discharged the burden of proof with respect to damages. A defendant who alleges that a plaintiff would have entered into a transaction on different terms sets up a new issue. It is an issue that requires the court to speculate as to what would have happened in a hypothetical situation. It is an area in which it is usually impossible to adduce concrete evidence. In the absence of evidence to support a finding on this issue, should the plaintiff or defendant bear the risk of non-persuasion? Must the plaintiff negate all speculative hypotheses about his position if the defendant had not committed a tort or must the tortfeasor who sets up this hypothetical situation establish it?
Although the legal burden generally rests with the plaintiff, it is not immutable. See National Trust Co. v. Wong Aviation Ltd., [1969] S.C.R. 481, and Snell v. Farrell, [1990] 2 S.C.R. 311. Valid policy reasons will be sufficient to reverse the ordinary incidence of proof. In my opinion, there is good reason for such reversal in this kind of case. The plaintiff is the innocent victim of a misrepresentation which has induced a change of position. It is just that the plaintiff should be entitled to say “but for the tortuous conduct of the defendant, I would not have changed my position”. A tortfeasor who says “Yes, but you would have assumed a position other than the status quo ante”, and thereby asks a court to find a transaction whose terms are hypothetical and speculative, should bear the burden of displacing the plaintiff’s assertion of the status quo ante.
[33] Thus, Apotex has the burden of proving the elements of its claim and AstraZeneca has the burden of proving those matters which it raises in arguing that no claim exists or that the claim should be reduced or eliminated.
[34] In stating that a party has the burden of proof, that burden is a two-fold burden. The first burden is to put sufficient evidence in the record such that the issue is “in play”. The second burden is that of proving, in this case, on a balance of probabilities, that the issue is to be resolved in favour of the party asserting or challenging the issue. In this respect, I refer again to Sopinka et al, supra, at sections 3.6 and 3.7:
§3.6 As noted, the term “burden of proof” is ambiguous and it has sometimes been used to mean that there is evidence of a fact, while on other occasions it has been used to mean that a fact has been proved by the evidence. Since the term is applied without discriminating in which sense the term is being used, it is difficult to determine which burden a party has satisfied in a particular case.
§3.7 The term “evidential burden” means that a party has the responsibility to insure that there is sufficient evidence of the existence or non-existence of a fact or of an issue on the record to pass the threshold test for that particular fact or issue. As Lord Devlin explained in Jayasena v. R., to satisfy an evidential burden a party is not required to prove anything:
Their Lordships do not understand what is meant by the phrase “evidential burden of proof”…It is doubtless permissible to describe the requirement as a burden, and it may be convenient to call it an evidential burden. But it is confusing to call it a burden of proof. Further, it is misleading to call it a burden of proof, whether described as legal or evidential or by any other adjective, when it can be discharged by the production of evidence that falls short of proof. The essence of the appellant’s case is that he has not got to provide any sort of proof that he was acting in private defence. So it is a misnomer to call whatever it is that he has to provide a burden of proof…[emphasis added]
In contrast, the term “persuasive (legal) burden” means that a party has an obligation to prove or disprove a fact or issue to the criminal or civil standard. The failure to convince the trier of fact to the appropriate standard means that party will lose on that issue. Because the evidential burden and the persuasive burden will on occasion be distributed between the parties, it is essential that the issues to be tried, and the underlying facts in support of the issues, be clearly identified.
[35] In brief, it may be said that the party who has led sufficient evidence to put an issue “in play”, must, to succeed on that issue, put in sufficient evidence so that on the balance of probabilities, the relevant facts are accepted by the Court as having been proved. Thus Apotex must put in play and subsequently prove on the balance of probabilities the facts that it needs to establish its case for compensation. AstraZeneca must put in play and subsequently prove those facts that it asserts disqualifies Apotex or reduces or negates Apotex’s claim for compensation.
FACTUAL BACKGROUND
[36] Omeprazole is the active ingredient in the drug sold by AstraZeneca in Canada under the brand name LOSEC and by a related company in the United States under the brand name PRILOSEC. The drug is sold in varying strengths including 20 mg and 40 mg, and in capsule form and tablet form. Here we are concerned with a capsule form containing 20 mg of the drug. In this form, the omeprazole itself is mixed with other materials, called excipients, and formed into very small pellets. These pellets are coated then placed into capsules. For our purposes, therefore, the manufacture of the 20 mg capsule consists of three steps; pellet forming, pellet coating, and encapsulation.
[37] In the 1990s, AstraZeneca was selling omeprazole in Canada in forms including 20 mg LOSEC capsules. At some point in the late 1990’s or early 2000’s, AstraZeneca switched from the capsule form to the tablet form, at least for the 20mg strength. However, a related company continued to sell the 20 mg drug in capsule form in the United States under the PRILOSEC name. There is a suggestion that AstraZeneca may have made the 20 mg product available again in Canada in the capsule form, but I find on the record before me that there is no evidence to support that suggestion.
[38] In 1994, Apotex made an application to Health Canada for approval to sell a generic version of AstraZeneca’s 20 mg LOSEC capsules in Canada. At that time, Apotex had a manufacturing facility located at Signet Drive in Weston, a suburb of Toronto, which Apotex indicated would be the site of the plant to be used to manufacture this drug. This site is variously referred to in the evidence as Weston or Apotex or Signet. I will call it Signet. Subsequently, Apotex developed or acquired another manufacturing facility located a few kilometres away from Signet, in Etobicoke, another suburb of Toronto. That site is variously referred to in the evidence as Etobicoke or Torpharm. I will call it Torpharm. I find, on the uncontradicted evidence of each of Dr. Sherman and Mr. Fahner, and giving due weight to the answers given on discovery as previously discussed, that each of the Signet and Torpharm sites were capable of manufacturing the 20 mg omeprazole capsule in commercial quantities. I find that the entire manufacturing could take place at one site or the other, or partially at one and partially at the other; for instance, pellet forming and coating could take place at Torpharm, and encapsulation at Signet. These findings apply throughout any period that may be relevant here.
SEEKING, OBTAINING AND MAINTINING APPROVAL TO SELL A DRUG IN CANADA
[39] The Minister of Health, particularly through a department known as Health Canada, is responsible for regulating the manufacture, distribution and sale of drugs in Canada. The Minister grants approval to do so by issuing a Notice of Compliance (NOC) to the party seeking such approval.
[40] Such approval may be sought by a party in one of two ways. One is by filing a New Drug Submission (NDS), which requires a party to provide a great deal of information as to the safety and efficacy of the drug in question. The other is by filing an Abbreviated New Drug Submission (ANDS), which requires first that some other person has already been granted an NOC for the drug; and second, that the party seeking approval need not provide the voluminous material otherwise required in respect of safety and efficacy, provided that it can make certain satisfactory comparisons to the drug already approved. The ANDS procedure is one followed by many “generic” drug companies.
[41] In filing an NDS or an ANDS, the party seeking approval must provide certain information to Health Canada, including that as set out in subsection C.08.002 (2)(d) of the Food and Drug Regulations, CRC c 870, as amended (FDA Regulations):
(2) A new drug submission shall contain sufficient information and material to enable the Minister to assess the safety and effectiveness of the new drug, including the following:
. . .
(d) a description of the plant and equipment to be used in the manufacture, preparation and packaging of the new drug;
(2) La présentation de drogue nouvelle doit contenir suffisamment de renseignements et de matériel pour permettre au ministre d’évaluer l’innocuité et l’efficacité de la drogue nouvelle, notamment :
. . .
d) la description des installations et de l’équipement à utiliser pour la fabrication, la préparation et l’emballage de la drogue nouvelle;
[42] At trial, there was discussion as to the precise meaning of “plant and equipment” and whether it is the equivalent of the “site” of manufacture. For instance, if there is more than one “site” that uses substantially the same machinery and procedures for making a drug, can each site be considered the same “plant and equipment”? I do not need to resolve this debate other than to say that it gives rise to a reasonable debate.
[43] I now turn to the circumstances which arise after an NOC has been given to a party and that party makes changes after the grant. Subsection C.08.003(1) of the FDA Regulations provides that if there are “significantly different” changes made to, among other things as defined in subsection (2)(d), “plant and equipment”, then the party must seek and obtain a “supplement” to its NDS or ANDS. That supplement is called a Supplementary New Drug Submission (SNDS) or “Supplementary Abbreviated New Drug Submission (SANDS), as the case may be. I repeat the relevant portions of subsections (1), (2) and (3):
(1) Despite section C.08.002, no person shall sell a new drug in respect of which a notice of compliance has been issued to the manufacturer of that new drug and has not been suspended under section C.08.006, if any of the matters specified in subsection (2) are significantly different from the information or material contained in the new drug submission, extraordinary use new drug submission, abbreviated new drug submission or abbreviated extraordinary use new drug submission, unless
(a) the manufacturer of the new drug has filed with the Minister a supplement to that submission;
(b) the Minister has issued a notice of compliance to the manufacturer of the new drug in respect of the supplement;
(c) the notice of compliance in respect of the supplement has not been suspended pursuant to section C.08.006; and
(d) the manufacturer of the new drug has submitted to the Minister specimens of the final version of any label, including any package insert, product brochure and file card, intended for use in connection with the new drug, where a change with respect to any of the matters specified in subsection (2) is made that would require a change to the label.
(2) The matters specified for the purposes of subsection (1), in relation to the new drug, are the following:
[…]
(d) the plant and equipment used in manufacturing, preparation and packaging the new drug;
[…]
(3) A supplement to a submission referred to in subsection (1), with respect to the matters that are significantly different from those contained in the submission, shall contain sufficient information and material to enable the Minister to assess the safety and effectiveness of the new drug in relation to those matters.
[…]
[44] Apart from the provisions as set out in section C.08.003 of the FDA Regulations, there are no other provisions dealing with changes. However, Health Canada has, through a series of “Guidelines”, introduced a procedure known as NC or Notifiable Change. This procedure has been the subject not only of “Guidelines”, but also draft guidelines and policies originating from Health Canada. In publishing its guidelines, Health Canada is careful to point out that:
Guidance documents are administrative instruments not having the force of law, and, as such, allow for flexibility in approach.
[45] Justice Evans of the Federal Court of Appeal in Thamotharem v Canada (Minister of Manpower and Immigration), 2007 FCA 198, [2008] 1 FCR 385, at paragraphs 58 to 60, wrote about guidelines. They are “soft law” techniques forming part of the continuum of legal rules and discretion and, although not legally binding, they may validly influence a decision-maker’s conduct. He wrote:
58 Legal rules and discretion do not inhabit different universes, but are arrayed along a continuum. In our system of law and government, the exercise of even the broadest grant of statutory discretion which may adversely affect individuals is never absolute and beyond legal control: Roncarelli v. Duplessis, [1959] S.C.R. 121 at 140. (per Rand J.). Conversely, few, if any, legal rules admit of no ele