Bristol-Myers Squibb Co. v. Canada (Attorney General)

Bristol-Myers Squibb Co. v. Canada (Attorney General)
Collection
Supreme Court Judgments
Date
2005-05-19
Neutral citation
2005 SCC 26
Report
[2005] 1 SCR 533
Case number
29823
Judges
McLachlin, Beverley; Major, John C.; Bastarache, Michel; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise
On appeal from
Federal Court of Appeal
Subjects
Intellectual property
Notes
SCC Case Information: 29823
Decision Content
SUPREME COURT OF CANADA
Citation: Bristol‑Myers Squibb Co. v. Canada (Attorney General), [2005] 1 S.C.R. 533, 2005 SCC 26
Date: 20050519
Docket: 29823
Between:
Biolyse Pharma Corporation
Appellant
v.
Bristol-Myers Squibb Company, Bristol-Myers Squibb
Canada Inc., and Attorney General of Canada
Respondents
‑ and ‑
Canadian Generic Pharmaceutical Association,
Pfizer Canada Inc.
Interveners
Coram: McLachlin C.J. and Major, Bastarache, Binnie, LeBel, Deschamps, Fish, Abella and Charron JJ.
Reasons for Judgment:
(paras. 1 to 71)
Dissenting reasons:
(paras. 72 to 193)
Binnie J. (McLachlin C.J. and LeBel, Deschamps, Fish and Abella JJ. concurring)
Bastarache J. (Major and Charron JJ. concurring)
______________________________
Bristol‑Myers Squibb Co. v. Canada (Attorney General), [2005] 1 S.C.R. 533, 2005 SCC 26
Biolyse Pharma Corporation Appellant
v.
Bristol‑Myers Squibb Company, Bristol‑Myers Squibb
Canada Inc. and Attorney General of Canada Respondents
and
Canadian Generic Pharmaceutical Association and
Pfizer Canada Inc. Interveners
Indexed as: Bristol‑Myers Squibb Co. v. Canada (Attorney General)
Neutral citation: 2005 SCC 26.
File No.: 29823.
2004: November 5; 2005: May 19.
Present: McLachlin C.J. and Major, Bastarache, Binnie, LeBel, Deschamps, Fish, Abella and Charron JJ.
on appeal from the federal court of appeal
Patents — Patented medicines — Notice of compliance — Whether new drug submission falls within scope of s. 5(1.1) of Patented Medicines (Notice of Compliance) Regulations, SOR/93‑133.
In the 1970s, information that the bark of the Pacific yew contained paclitaxel, an anticarcinogenic component, was discovered by the National Cancer Institute, a government‑funded organization in the United States, and put into the public domain. There were practical concerns that insufficient quantities could be made available for large scale pharmaceutical production, however, as the yew bushes died when stripped of their bark. In the 1980s the respondent BMS companies developed a drug containing paclitaxel, later marketed as Taxol. In the course of that work it obtained several Canadian patents covering new formulations and methods of administration of the medicine. None of the patents covered paclitaxel itself.
Working independently of BMS, the appellant, Biolyse, discovered that paclitaxel could be extracted from a different species of yew without killing it, and applied to the Minister of Health for a notice of compliance (“NOC”) in order to market its product. The Minister required Biolyse to submit a New Drug Submission (“NDS”) rather than an Abbreviated New Drug Submission (“ANDS”) because its different botanical source and its claims for new and different uses for the medicine prevented any reliance on BMS’s Taxol as a Canadian reference product. Biolyse prepared and submitted independent clinical studies. The Minister approved the safety and efficacy of the Biolyse product as a new drug and issued Biolyse a NOC in 2001. BMS sought to quash this NOC on the basis that its issuance depended on a finding of bioequivalence to the BMS product.
After repealing the former compulsory licencing system, Parliament wished to facilitate early market entry by generic manufacturers immediately after the expiry of a patent, by eliminating the usual regulatory lag of two years or so before a generic manufacturer could obtain an NOC. However, in order to prevent abuse of these “early working” and “stockpiling” exceptions by the generic companies the government also enacted the Patented Medicines (Notice of Compliance) Regulations (“NOC Regulations”). Under the NOC Regulations, a patent owner may submit a patent list in respect of any drug that contains a “medicine”. If another manufacturer subsequently applies for a NOC for the same drug this “second person” may allege that the patent list filed by the “first person” is not a proper bar. After being served with a Notice of Allegation, the innovator may apply for an order prohibiting the Minister from issuing a NOC until all of the listed patents have expired. This application for prohibition triggers a 24‑month statutory freeze on the issuance of a NOC.
On an application for judicial review, the motions judge found that Biolyse had neither applied for nor obtained regulatory approval on the basis of bioequivalence. He ruled that Biolyse was caught by s. 5(1.1) of the NOC Regulations however, because both the Biolyse and the BMS products contained paclitaxel, even though neither BMS nor Biolyse had any patent claim to paclitaxel. He quashed the NOC. The Federal Court of Appeal upheld that decision.
Held (Major, Bastarache and Charron JJ. dissenting): The appeal should be allowed.
Per McLachlin C.J. and Binnie, LeBel, Deschamps, Fish and Abella JJ.: The Minister was entitled to issue the NOC to Biolyse on the basis of its NDS without subjecting it to the statutory freeze. An interpretation of the NOC Regulations that confers on BMS a monopoly merely by demonstrating the presence of a public domain medicine like paclitaxel in its product would provide no value to the public in exchange for the monopoly BMS seeks. When the NOC Regulations are considered in their proper context, and in particular in light of the wording of the statutory power that authorized them, the NOC Regulations do not have the sweeping effect contended for by BMS. [4] [69]
Parliament enacted the legislation in question in order to protect the rights of patentees by preventing generic manufacturers from marketing “copy‑cat drugs” until the expiry of all relevant patents. Under the NOC Regulations the court hearing the prohibition application has no discretion to lift the stay even if it thinks the innovator’s case for interim relief is weak. Nor does the court have a discretion to leave the contending parties to their remedies under the Patent Act . The “second person’s” application for a NOC simply goes into deep‑freeze until the statutory procedures have played themselves out. [24] [45-46]
Section 5(1.1) of the NOC Regulations does not apply to innovative drugs. It should be confined to applications for generic copies of patented drugs in the circumstances contemplated by the regulator, namely, where a manufacturer makes a submission for an NOC for a drug which it purports to copy from another generic but in fact copies from the innovator company that has filed the patent list. Furthermore, since Biolyse did not rely on bioequivalence, its product did not fall within the scope of s. 5(1) of the NOC Regulations either. The product was properly treated as an innovator drug, rather than a copy‑cat drug, and neither ss. 5(1) nor 5(1.1) had any application. [69]
Applying the modern approach to statutory interpretation, the word “submission” in s. 5(1.1) cannot be isolated from this context and from the scope of the regulation making power in s. 55.2(4) of the Patent Act , which permits a generic manufacturer to work the patented invention within the 20‑year period (“the early working exception”) to the extent necessary to obtain a NOC at the time the patent(s) expired and to “stockpile” generic product towards the end of the 20‑year period to await lawful market entry. The grammatical and ordinary sense of the words and the precise scope of the word “submission” in s. 5(1.1) must be given a purposive interpretation within this context. Secondly, in analyzing the more specific schemes of the Patent Act and the Minister’s regulation‑making power, it is apparent that the NOC Regulations are directed to persons who are making use of the “patented invention” which is not necessarily co‑extensive with the patented drug or the patented claims. BMS has no patent on paclitaxel and the mere fact paclitaxel is found in the Biolyse product does not mean that Biolyse took advantage of BMS inventions for the purpose of “early working” a generic copy or “stockpiling” in anticipation of the expiry of the BMS patents. Moreover, the limiting words of s. 55.2(4) do not disturb the usual requirement that regulations must fall within the regulation making power. The “plain meaning” adopted by the Federal Court of Appeal in this case would suggest that s. 5(1.1) is ultra vires the very specific authority given by s. 55.2(4) . Finally, the internal structure of the NOC Regulations supports a narrower interpretation. The word “submission” is also used in s. 4(1) , which provides the template upon which s. 5(1.1) is modelled, and s. 4(1) has been held not to apply to all submissions. Any other interpretation of s. 4(1) would allow innovator companies to sidestep the time limits applicable to patent lists by the simple expedient of making corporate or technical changes to their filing by way of what is called a supplementary NDS. In this context, the courts have found that an unqualified and unrestricted interpretation of the word “submission” would be destructive of regulatory intent. [11] [41-61] [67]
The interpretation of s. 5(1.1) accepted by the courts below would lead to an absurd result. The “medicine” in the drug to which the patent list relates need not itself be patented, or indeed, owe anything to the ingenuity of the “first” person. So long as such “medicine” shows up as a component, however minor, in the chemical composition of the drug to which the patent list relates, the “second person” (including an innovator who is seeking to manufacture a new and useful drug) will be barred from proceeding to market by the automatic statutory freeze, and this bar will continue for so long as the patent list holder can evergreen its product by resort to patentable improvements to other components or additions. This would stifle competition and innovation in the pharmaceutical industry and produce a result at odds with what the regulator was trying to achieve. [66]
Per Major, Bastarache and Charron JJ. (dissenting): The Minister was not entitled to issue the NOC to Biolyse. Where, as here, s. 5 of the NOC Regulations applies to a drug manufacturer, a NOC cannot be issued by the Minister under s. 7 unless the manufacturer makes a submission and serves a Notice of Allegation (“NOA”) on the originating, innovator manufacturing company, to advise the latter that it is seeking approval of a drug containing a medicine found in the innovator company’s already approved drug. [74]
The ordinary and grammatical meaning of s. 5(1.1) is unambiguous and clearly indicates that Biolyse’s submission for a NOC falls within the purview of that provision. First, s. 5(1) did not apply to the current situation because Biolyse did not make reference to Taxol for the purpose of demonstrating bioequivalence. Second, Biolyse filed a submission for a NOC and it is settled law that “a submission for a notice of compliance” in s. 5(1.1) includes a NDS and an ANDS, as well as a supplement to either of these submissions. Third, s. 5(1.1) was triggered because Biolyse’s Paclitaxel contained the same medicine, employed the same route of administration and had a comparable strength and dosage form as Taxol, a drug already marketed in Canada pursuant to a NOC issued to BMS and in respect of which a patent list had been submitted. The term “medicine” in s. 5(1.1) is not limited to patented medicines. Biolyse therefore had to make an allegation in its submission pursuant to s. 5(1.1)(b) and, until it complied, the Minister was prohibited by s. 7(1)(b) from issuing a NOC in respect of Paclitaxel for injection. This legislative scheme cannot work without its main tool: the NOA. The ability to circumvent the NOA would render the patent list an empty shell. [107-121]
Furthermore, regarding the broader and external contexts of s. 5(1.1), the NOC Regulations, the regulation‑making power set out in s. 55.2 of the Patent Act and the legislative history of s. 5(1.1), all support the ordinary and grammatical meaning of that provision. This meaning is consistent with the purpose of the NOC Regulations and s. 55.2 , which is to protect the rights of patent holders. Section 5(1.1) is also a proper exercise of regulatory power conferred under s. 55.2(4) of the Act as it strives to stop a second entry manufacturer from circumventing the NOC Regulations by forcing it to address the question of infringement. Lastly, the evolution of s. 5(1.1) demonstrates how the government was active in its efforts to transform and broaden the provision. [152-153] [159]
Section 5(1.1) cannot reasonably be restricted to an ANDS. Such an attempt to restrict the circumstances under which a NOA must be sent cannot possibly be in accordance with the purpose of the NOC Regulations and s. 55.2 of the Patent Act . Moreover, if s. 5(1.1) required a demonstration of bioequivalence, it would never be invoked because, where a comparison is made to demonstrate bioequivalence, the provisions of s. 5(1) apply. Accordingly, an interpretation that renders a section redundant should be rejected in favour of one that is consistent with s. 5 as a whole. [151] [179]
Cases Cited
By Binnie J.
Applied: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42; distinguished: Nu‑Pharm Inc. v. Canada (Attorney General), [1999] 1 F.C. 620; considered: Monsanto Canada Inc. v. Schmeiser, [2004] 1 S.C.R. 902, 2004 SCC 34; Bristol‑Myers Squibb Canada Inc. v. Canada (Attorney General) (2001), 10 C.P.R. (4th) 318, aff’d (2002), 16 C.P.R. (4th) 425, 2002 FCA 32; Ferring Inc. v. Canada (Attorney General) (2003), 26 C.P.R. (4th) 155, 2003 FCA 274; Toba Pharma Inc. v. Canada (Attorney General) (2002), 21 C.P.R. (4th) 232, 2002 FCT 927; AstraZeneca Canada Inc. v. Canada (Minister of Health) (2004), 36 C.P.R. (4th) 58, 2004 FC 736; Merck & Co. v. Canada (Attorney General) (1999), 176 F.T.R. 21, aff’d (2000), 5 C.P.R. (4th) 138; referred to: Whirlpool Corp. v. Camco Inc., [2000] 2 S.C.R. 1067, 2000 SCC 67; Free World Trust v. Électro Santé Inc., [2000] 2 S.C.R. 1024, 2000 SCC 66; Apotex Inc. v. Canada (Attorney General), [1994] 1 F.C. 742, aff’d [1994] 3 S.C.R. 1100; Imperial Chemical Industries PLC v. Novopharm Ltd. (1991), 35 C.P.R. (3d) 137; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193; Francis v. Baker, [1999] 3 S.C.R. 250.
By Bastarache J. (dissenting)
Merck & Co. v. Canada (Attorney General) (1999), 176 F.T.R. 21, aff’d (2000), 5 C.P.R. (4th) 138, leave to appeal denied, [2000] 1 S.C.R. xvii; Nu‑Pharm Inc. v. Canada (Attorney General) (1998), 80 C.P.R. (3d) 74; Syntex (U.S.A.) L.L.C. v. Canada (Minister of Health) (2002), 20 C.P.R. (4th) 29, 2002 FCA 289; Canadian Pacific Ltd. v. Matsqui Indian Band, [1995] 1 S.C.R. 3; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982; Pfizer Canada Inc. v. Minister of National Health and Welfare (1986), 12 C.P.R. (3d) 438; Reference re: Patented Medicines (Notice of Compliance) Regulations, SOR/93‑133, s. 7 (1999), 3 C.P.R. (4th) 77; Eli Lilly Canada Inc. v. Canada (Minister of Health), [2003] 3 F.C. 140, 2003 FCA 24; Novopharm Ltd. v. Canada (Minister of National Health and Welfare), [1998] 3 F.C. 50; Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42; H.L. v. Canada (Attorney General), [2005] 1 S.C.R. 401, 2005 SCC 25; Marche v. Halifax Insurance Co., [2005] 1 S.C.R. 47, 2005 SCC 6; Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45, 2002 SCC 76; Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84, 2002 SCC 3; Francis v. Baker, [1999] 3 S.C.R. 250; United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), [2004] 1 S.C.R. 485, 2004 SCC 19; Spar Aerospace Ltd. v. American Mobile Satellite Corp., [2002] 4 S.C.R. 205, 2002 SCC 78; R. v. McDonald (2002), 209 N.S.R. (2d) 283; Canadian Pacific Air Lines Ltd. v. Canadian Air Line Pilots Assn., [1993] 3 S.C.R. 724; Apotex Inc. v. Canada (Minister of Health) (1999), 87 C.P.R. (3d) 271; Bristol‑Myers Squibb Canada Inc. v. Canada (Attorney General) (2001), 10 C.P.R. (4th) 318, aff’d (2002), 16 C.P.R. (4th) 425, 2002 FCA 32; Toba Pharma Inc. v. Canada (Attorney General) (2002), 21 C.P.R. (4th) 232, 2002 FCT 927; Ferring Inc. v. Canada (Attorney General) (2003), 26 C.P.R. (4th) 155, 2003 FCA 274; AstraZeneca Canada Inc. v. Canada (Minister of Health) (2004), 36 C.P.R. (4th) 58, 2004 FC 736; GlaxoSmithKline Inc. v. Canada (Attorney General), (2004), 38 C.P.R. (4th) 27, 2004 FC 1302; Gerber Garment Technology Inc. v. Lectra Systems Ltd., [1997] R.P.C. 443; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1998), 84 C.P.R. (3d) 492, aff’d (2000), 8 C.P.R. (4th) 48; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1994), 55 C.P.R. (3d) 302; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193; Merck Frosst Canada Inc. v. Apotex Inc., [1997] 2 F.C. 561; Willick v. Willick, [1994] 3 S.C.R. 670; R. v. Ulybel Enterprises Ltd., [2001] 2 S.C.R. 867, 2001 SCC 56; RJR‑MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311; Friesen v. Canada, [1995] 3 S.C.R. 103; Bayer Inc. v. Canada (Attorney General) (1999), 87 C.P.R. (3d) 293; Eli Lilly & Co. v. Novopharm Ltd., [1998] 2 S.C.R. 129; R. v. McIntosh, [1995] 1 S.C.R. 686; R. v. Hinchey, [1996] 3 S.C.R. 1128; R. v. Proulx, [2000] 1 S.C.R. 61, 2000 SCC 5; Degelder Construction Co. v. Dancorp Developments Ltd., [1998] 3 S.C.R. 90; Zeitel v. Ellscheid, [1994] 2 S.C.R. 142; David Bull Laboratories (Canada) Inc. v. Pharmacia Inc., [1995] 1 F.C. 588.
Statutes and Regulations Cited
Federal Courts Act, R.S.C. 1985, c. F‑7, s. 18.1 .
Food and Drug Regulations, C.R.C. 1978, c. 870 [am. SOR/95‑411], ss. C.08.001, C.08.002, C.08.002.1, C.08.003, C.08.004(1).
Food and Drugs Act, R.S.C. 1985, c. F‑27 .
Interpretation Act, R.S.C. 1985, c. I‑21, ss. 2(1) “enactment”, 3(1), 12.
Patent Act, R.S.C. 1985, c. P‑4, ss. 39(4) , (5) , (14) , 54(1) , 55 , 55.2 [am. 2001, c. 10, s. 2(1)], 60(1), (2), 65, 66.
Patent Act Amendment Act, 1992, S.C. 1993, c. 2.
Patented Medicines (Notice of Compliance) Regulations, SOR/93‑133 [am. SOR/99-379], ss. 2 “claim for the medicine itself”, “claim for the use of the medicine”, “first person”, “medicine”, “notice of compliance”, 3(1), 4(1), (2), (4), (6), 5(1), (1.1), (2), (3), 6, 7, 8, Regulatory Impact Analysis Statement.
Treaties and Other International Instruments
Agreement on Trade‑Related Aspects of Intellectual Property Rights, 1869 U.N.T.S. 299 (being Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization, 1867 U.N.T.S. 3), signed April 15, 1994.
North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, Can. T.S. 1994 No. 2, art. 1709(10).
Authors Cited
Barrigar, Robert H. Canadian Patent Act annotated, 2nd ed. Aurora, Ont.: Canada Law Book, 1994 (loose‑leaf updated November 2004).
Canada. Health Canada, Therapeutic Products Programme. Guidance for Industry — Patented Medicines (Notice of Compliance) Regulations. Ottawa: The Department, May 10, 2000.
Côté, Pierre‑André. The Interpretation of Legislation in Canada, 3rd ed. Scarborough, Ont.: Carswell, 2000.
Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.
Fox, Harold G. The Canadian Law and Practice Relating to Letters Patent for Inventions, 4th ed. Toronto: Carswell, 1969.
Garland, Steven B., and Jeremy E. Want. “The Canadian Patent System: An Appropriate Balance Between the Rights of the Public and the Patentee” (1999), 16 C.I.P.R. 43.
Grenier, François M., et Catherine Lemay. “Le règlement sur les médicaments brevetés (avis de conformité)” (2003), 20 C.I.P.R. 51.
Henderson, Gordon F., ed. Patent Law of Canada. Scarborough, Ont.: Carswell, 1994.
Hore, Edward. “The Notice of Compliance Regulations Under the Patent Act : The First Two Years” (1995), 12 C.I.P.R. 207.
Hughes, Roger T., and John H. Woodley. Hughes and Woodley on Patents, loose‑leaf ed. Toronto: Butterworths, 1984 (loose‑leaf updated October 2004, Issue 60).
Kernochan, John M. “Statutory Interpretation: An Outline of Method” (1976), 3 Dal. L.J. 333.
Orlhac, Thierry. “The New Canadian Pharmaceutical Compulsory Licensing Provisions or How to Jump Out of the Frying Pan and Into the Fire” (1990), 6 C.I.P.R. 276, www.robic.ca/publications/pdf/167E‑TO.pdf.
Smith, Margaret. Patent Protection for Pharmaceutical Products (BP‑354E). Background Paper. Library of Parliament, Research Branch, Law and Government Division. Ottawa: November 1993.
Smith, Margaret. Patent Protection for Pharmaceutical Products in Canada — Chronology of Significant Events (PRB 99‑46E). Library of Parliament, Research Branch, Law and Government Division. Ottawa: March 30, 2000.
Sullivan, Ruth. Sullivan and Driedger on the Construction of Statutes, 4th ed. Markham, Ont.: Butterworths, 2002.
Takach, George Francis. Patents: A Canadian compendium of law and practice. Edmonton: Juriliber, 1993.
Wilcox, Peter R., and Daphne C. Ripley. “The Patented Medicines (Notice of Compliance) Regulations” (2000), 16 C.I.P.R. 429.
World Trade Organization. Report of the panel, Canada — Patent Protection of Pharmaceutical Products, complaint by the European Communities and their member States, WTO Doc. WT/DS114/R, March 17, 2000.
APPEAL from a judgment of the Federal Court of Appeal (Strayer, Nadon and Evans JJ.A.), [2003] 4 F.C. 505, 226 D.L.R. (4th) 138, 303 N.R. 63, 24 C.P.R. (4th) 417, [2003] F.C.J. No. 566 (QL), 2003 FCA 180, upholding a decision of Blanchard J. (2002), 224 F.T.R. 236, 22 C.P.R. (4th) 345, [2002] F.C.J. No. 1638 (QL), 2002 FCT 1205, granting an application for judicial review and setting aside a notice of compliance issued by the Minister of Health in respect of a drug. Appeal allowed, Major, Bastarache and Charron JJ. dissenting.
Andrew J. Roman, for the appellant.
Anthony G. Creber and Patrick S. Smith, for the respondents Bristol‑Myers Squibb Company and Bristol‑Myers Squibb Canada Inc.
No one appeared for the respondent the Attorney General of Canada.
Written submission only by Edward Hore, for the intervener the Canadian Generic Pharmaceutical Association.
John Terry and Conor McCourt, for the intervener Pfizer Canada Inc.
The judgment of McLachlin C.J. and Binnie, LeBel, Deschamps, Fish and Abella JJ. was delivered by
1 Binnie J. _ Our Court has often spoken of “the balance struck under the Patent Act ” in which the public gives an inventor the right to prevent anybody else from using his or her invention for a period of 20 years in exchange for disclosure of what has been invented. As a general rule, if the patent holder obtains a monopoly for something which does not fulfil the statutory requirements of novelty, ingenuity and utility, then the public is short-changed. See Whirlpool Corp. v. Camco Inc., [2000] 2 S.C.R. 1067, 2000 SCC 67, and Free World Trust v. Électro Santé Inc., [2000] 2 S.C.R. 1024, 2000 SCC 66.
2 In the present appeal, the Court is required to consider this “balance” in the much-litigated field of patented medicines, where Parliament is concerned not only with the balance between inventors and potential users, but between the protection of intellectual property on the one hand and, on the other hand, the desire to reduce health care costs while being fair to those whose ingenuity brought the drugs into existence in the first place.
3 The drug in dispute contains a cancer-fighting medicine called paclitaxel. Paclitaxel was discovered by the National Cancer Institute in the United States, not the respondents Bristol-Myers Squibb Company and Bristol-Myers Squibb Canada Inc. (collectively “BMS”), but BMS has three subsisting patents related to its formulation and administration. The appellant, Biolyse Pharma Corporation (“Biolyse”), argues that the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (“NOC Regulations”), must be taken to refer to patented medicines, and points out that BMS can have no patent on paclitaxel itself. There is an unchallenged finding of fact by the motions judge that approval of the Biolyse product was not based on bioequivalence with the BMS product, but on its own clinical studies and “what was known to scientists in the public realm about paclitaxel” ((2002), 224 F.T.R. 236, 2002 FCT 1205, at para. 40 (emphasis added)).
4 Nevertheless, BMS says that a literal application of the words in s. 5(1.1) of the NOC Regulations entitles it to the statutory injunction under s. 7 to keep a Biolyse product containing paclitaxel off the market despite the clear indication that an application of s. 5(1.1) would put the NOC Regulations in conflict with the terms of the regulation-making power under which they were issued. BMS contends that under the NOC Regulations the mere presence of the public domain medicine paclitaxel in the Biolyse formulation is enough. (Although there are other similarities between the Biolyse product and the BMS product, the only common component relevant to the NOC Regulations is the medicine paclitaxel.) The Federal Court of Appeal accepted this argument but in my opinion, with respect, it erred in doing so ([2003] 4 F.C. 505, 2003 FCA 180). An interpretation of the NOC Regulations that confers on BMS a monopoly merely by demonstrating the presence of a public domain medicine like paclitaxel in its product provides no value to the public in exchange for the monopoly BMS seeks. When the NOC Regulations are considered in their proper context, and in particular in light of the wording of s. 55.2(4) of the Patent Act, R.S.C. 1985, c. P-4 , that authorized them, the NOC Regulations do not have the sweeping effect contended for by BMS. I would therefore allow the appeal.
I. Introduction
5 Before addressing the specific issues raised by the appeal, it is useful to set out the regulatory context in which the dispute arises.
A. Innovator Drug Companies and Generic Drug Companies
6 Over the years, Canada has developed a major sector of “generic drug” manufacturers described as companies that generally manufacture and distribute “drugs which were researched, developed and first brought to market by ‘innovator’ companies” (Apotex Inc. v. Canada (Attorney General), [1994] 1 F.C. 742 (C.A.), at p. 751, aff’d [1994] 3 S.C.R. 1100). They produce what is sometimes known in the trade as “copy-cat” drugs.
7 The success of the generic drug manufacturers has been a source of grievance to owners of patents for pharmaceutical medicines, who view monopoly profits conferred by patents as essential to recoup the cost of their research program as well as to earn a profit on their investment. Generic drug manufacturers, who generally do not have significant research costs in relation to a drug first brought to market by an innovator company, need only turn a profit on their manufacturing and distribution facilities. Generic drugs can therefore be sold at a discount to “brand name” products in the market place, at considerable savings to the public and at considerable cost to the profits of the innovator drug companies.
8 Until 1993 the Minister of Health was not directly concerned with patent issues. Indeed, Parliament’s policy since 1923 had been to favour health cost savings over the protection of intellectual property by making available to generic manufacturers a scheme of compulsory licencing of an “invention intended or capable of being used for medicine or for the preparation or production of medicine” under s. 39(4) of the Patent Act . The compulsory licencing scheme gathered momentum after 1969 when it was extended to imported drugs. A compulsory licence could invariably be obtained from the Commissioner of Patents, and a notice of compliance (“NOC”) from the Minister of Health, providing the generic manufacturer could establish pharmaceutical equivalence of its product with the innovator drug (“the Canadian reference product”). In determining the terms of the licence and amount of royalty payable, the Commissioner of Patents was required to “have regard to the desirability of making the medicine available to the public at the lowest possible price consistent with giving to the patentee due reward for the research leading to the invention and for such other factors as may be prescribed” (s. 39(5) ). The royalty payable to the patent owner was generally fixed at 4 percent to 5 percent of the net selling price of the drug in posological form, or 15 percent of the net selling price of the drug in bulk (T. Orlhac, “The New Canadian Pharmaceutical Compulsory Licensing Provisions on How to Jump Out of the Frying Pan and Into the Fire” (1990), 6 C.I.P.R. 276; G. F. Takach, Patents: A Canadian compendium of law and practice (1993), at p. 119; and see Imperial Chemical Industries PLC v. Novopharm Ltd. (1991), 35 C.P.R. (3d) 137 (F.C.A.), at pp. 139-40). Linking licence fees to the cost of the “research leading to the invention” did not cover the cost of massive research programs required by the innovators to produce the few “winners” from the many false starts and failed research projects that never came to market.
9 Section 39(14) of the Patent Act simply required the Commissioner of Patents to notify the Department of National Health and Welfare of all compulsory licence applications.
10 In a reversal of policy, Parliament in 1993 repealed the compulsory licence provisions of the Patent Act by what became known as Bill C-91 (S.C. 1993, c. 2) and extinguished all compulsory licences issued on or after December 20, 1991. In part, these changes flowed from international obligations accepted by Canada under the Agreement on Trade-Related Aspects of Intellectual Property Rights, 1869 U.N.T.S. 299 (“TRIPS”). More immediately, perhaps, it was thought that Canada’s compulsory licensing system would be declared incompatible with Canada’s obligations under the North American Free Trade Agreement, Can. T.S. 1994 No. 2, in particular art. 1709(10), signed at the end of 1992.
11 However, having agreed to respect the 20-year monopoly granted by patents, Parliament wished to facilitate the entry of competition immediately thereafter. It acted to eliminate the usual regulatory lag of two years or more after expiry of a patent for the generic manufacturer to do the work necessary to obtain a NOC. Parliament did so by introducing an exemption from the owner’s patent rights under which the generic manufacturers could work the patented invention within the 20-year period (“the early working exception”) to the extent necessary to obtain a NOC at the time the patent(s) expired (s. 55.2(1)) and to “stockpile” generic product towards the end of the 20-year period to await lawful market entry (s. 55.2(2)). In order to prevent abuse of the “early working” and “stockpiling” exceptions to patent protection, the government enacted the NOC Regulations that are at issue in this appeal.
12 The patent owner’s remedies under the NOC Regulations are in addition to all of the usual remedies for patent infringement under the Patent Act .
B. The Regulatory Approval Procedure
13 The Food and Drugs Act, R.S.C. 1985, c. F-27 , sets up a regulatory structure to ensure that before drugs are allowed on the Canadian market they meet rigorous health and safety requirements. Regulatory approval culminates in the issuance of a NOC by the Minister on the advice of his officials in the Therapeutic Products Program (“TPP”) of the federal Department of Health.
14 The Food and Drug Regulations, C.R.C. 1978, c. 870 (“FDA Regulations”), and departmental policies require drug manufacturers to submit different types of new drug submission for different purposes. The two principal forms of submission are the New Drug Submission (“NDS”), filed by an innovative drug manufacturer for a new drug product, and the Abbreviated New Drug Submission, filed by a generic manufacturer that claims its product is the “pharmaceutical equivalent” of a previously approved “Canadian reference product” (s. C.08.002.1(1)(a)).
15 A pharmaceutical company proposing to market a new drug in Canada must include in its NDS a description of the benefits claimed, the adverse reactions experienced, the chemical composition of the ingredients and the methods of manufacture and purification in sufficient detail to enable the Minister to assess the safety and effectiveness of the new drug as therein specified. The Minister and his departmental officials then proceed to examine the material, possibly require further studies, pose questions, and generally conduct a wide-ranging inquiry, all of which may consume several years.
16 A “new drug” is defined in s. C.08.001 of the FDA Regulations as a drug which contains a substance which “has not been sold as a drug in Canada for sufficient time and in sufficient quantity to establish in Canada the safety and effectiveness of that substance for use as a drug”.
17 Eventually the Minister, if so satisfied, “shall” issue a NOC (s. C.08.004(1)). The Minister must also be satisfied with the proposed arrangements of manufacture, quality control and so forth (s. C.08.002). The new drug may then go to market.
18 The health issues and patent issues are now linked because the Minister is prohibited from issuing a NOC even if satisfied of the safety and efficacy of a drug until potential patent issues are addressed under the NOC Regulations (s. 7(1)).
C. The NOC Regulations
19 Under the NOC Regulations, a patent owner may submit to the Minister a patent list in respect of any drug that contains a “medicine”, defined in s. 2 of the NOC Regulations as
a substance intended or capable of being used for the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or the symptoms thereof.
(The party filing the patent list is called the “first person”.) Paclitaxel is a medicine. As stated, it was given to the public domain by the U.S. National Cancer Institute.
20 If another manufacturer subsequently applies for a NOC for the same drug, this “second person” has two options.
(i) It may state in its application that it accepts that the NOC will not issue until the patent(s) expires or
(ii) it may allege that by reference to a number of listed grounds, the patent list filed by the “first” person provides no obstacle because, contrary to the assertions in the patent list, the first person is not in fact the owner or exclusive licensee in Canada of the drug, or that the patent(s) have expired, are invalid, or that the applicant would not infringe any claim “for the medicine itself and no claim for the use of the medicine” (s. 5(1)(b)).
21 The NOC Regulations do not use the term “generic manufacturer”, but a manufacturer that obtains a NOC on the basis of pharmaceutical equivalence to a “Canadian reference product” can conveniently be called by that name.
22 Generally speaking, the “second person” intends to manufacture and distribute a “copy-cat” version of the active medicinal ingredient. If it copies the approved product, it can rely on the safety and efficacy data and the clinical studies submitted by the “innovator” first person. Such reliance reduces the amount of required supporting data and the approval time, and the shortened submission is therefore known as an Abbreviated New Drug Submission (“ANDS”).
23 The innovator that filed the patent list may, within 45 days after being served with a Notice of Allegation, apply to the Federal Court for an order prohibiting the Minister from issuing a NOC until all of the listed patents have expired. Commencement of the application for prohibition automatically triggers a 24-month statutory freeze that stops the Minister from issuing a NOC unless within that period the prohibition application is finally disposed of by the court (see ss. 7(1)(e) and 7(4) of the NOC Regulations). In practice the prohibition proceedings can easily drag on beyond the initial 24-month period.
24 It is important to note that under this procedure, the court hearing the prohibition application has no discretion to lift the stay even if it thinks the innovator’s case for interim relief is weak. Nor does the court have a discretion to leave the contending parties to their remedies under the Patent Act . The “second person”’s application for a NOC simply goes into deep-freeze until the statutory procedures have played themselves out. For these reasons, Iacobucci J. described the regime as “draconian” in Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193, at para. 33.
II. Facts
25 By 1970, the National Cancer Institute had discovered that the bark of the Pacific yew (taxus brevifolia) possessed anticarcinogenic properties. Research was carried forward funded by the U.S. government and in 1971 the active component (paclitaxel) was isolated. Because it was sourced in a slow-growing bush that died when stripped of its bark, there was concern that manufacturers would not be able to obtain sufficient quantities of the raw material for large-scale pharmaceutical production. Nevertheless, by 1979 the National Cancer Institute had not only identified the mechanism of paclitaxel’s therapeutic action as an antitumour drug, but further screening identified some highly desirable uses, particularly for the treatment of refractory ovarian cancer.
26 BMS was brought into the picture by the U.S. National Cancer Institute to undertake clinical trials of paclitaxel in the 1980s. This work eventually earned BMS a number of Canadian patents, none of which cover paclitaxel itself (being a medicine put into the public domain by the National Cancer Institute). As stated, the BMS patents cover new and useful formulations and methods of administration, and its product Taxol is presently approved for the treatment of breast, ovarian and non-small-cell lung cancer.
27 The abstracts appearing in the Patent Register with respect to Taxol state in part as follows:
Patent 2,086,874
Paclitaxel dosages of about 135 mg/m2 or greater are administered via infusions of less than 6 hours duration; the method makes it possible to provide paclitaxel infusions on an out-patient basis to patients who do not otherwise require hospitalization. . . .
Patent 2,132,936
A stabilized pharmaceutical composition containing paclitaxel, teniposide, camptothecin or other antineoplastic agent susceptible to degradation during storage is produced using a solvent system containing a low carboxylate anion content. . . .
(Canadian Intellectual Property Office, Canadian Patents Database, CA 2086874 and CA 2132936)
It is thus claimed in these patents that the inventions render the product more stable, and it will not degrade as easily, thereby extending its shelf life. These patents expire in 2013 and 2014 respectively. The third patent abstract reads as follows:
Patent 2,189,916
This invention provides for novel dose regimen of paclitaxel to treat Kaposi’s sarcoma.
(Canadian Intellectual Property Office, Canadian Patents Database, CA 2189916)
It is common ground that Biolyse’s product is not tested or approved for treatment of Kaposi’s sarcoma. The Biolyse product is directed towards breast and lung cancer.
28 In the 1980s, Biolyse became interested in the National Cancer Institute work on paclitaxel and, recognizing the supply shortage problem, it began research on alternative sour