Teva Canada Limited v. Pfizer Canada Inc.

Teva Canada Limited v. Pfizer Canada Inc.
Court (s) Database
Federal Court Decisions
Date
2014-04-03
Neutral citation
2014 FC 248
File numbers
T-1844-07
Decision Content
Date: 20140403
Docket: T-1844-07
Citation: 2014 FC 248
Ottawa, Ontario, April 3, 2014
PRESENT: The Honourable Mr. Justice Zinn
BETWEEN:
TEVA CANADA LIMITED
Plaintiff
and
PFIZER CANADA INC.
Defendant
PUBLIC REASONS FOR JUDGMENT
(Confidential Reasons for Judgment released March 14, 2014)
[1] This is an action for damages under section 8 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 [the PMNOC Regulations].
[2] Teva Canada Limited is the corporate successor to the original plaintiff, ratiopharm inc. [Ratiopharm]. The Defendant, Pfizer Canada Inc. [Pfizer] is the corporate successor to the original defendants, Wyeth and Wyeth Canada [Wyeth].
[3] In 2010, Ratiopharm was sold to Novopharm Limited [Novopharm] which, shortly before the acquisition, changed its name to Teva Canada Limited. On August 10, 2010, Ratiopharm and Teva Canada Limited amalgamated under the name Teva Canada Limited [Teva], the current Plaintiff. Novopharm, prior to its purchase of Ratiopharm, plays a separate and independent role in the issues under consideration. As a result, the relevant facts are more easily understood if the names of the pharmaceutical companies in the 2005 to 2007 period are maintained throughout notwithstanding subsequent corporate changes. Accordingly, I shall refer to the relevant pharmaceutical companies as Ratiopharm, Novopharm and Wyeth.
[4] These reasons use the following headings for ease of reference:
Paragraph
The PMNOC Regime
5
Background to the Action
14
The Issues
25
The Evidence
29
What is the Relevant Period?
42
What is the size of the Overall Venlafaxine Market?
66
What is the size of the Generic Venlafaxine Market?
82
What is Ratiopharm’s Market Share?
89
(a) Would any other generics have entered the market during the Relevant Period and, if so, when would they have launched?
90
Novo-Venlafaxine
93
PMS-Venlafaxine
130
(b) At what date would Ratiopharm have launched and were there any impediments to it being able to supply the market?
144
(c) When would Ratiopharm and its generic competitors have been listed on the provincial formularies?
160
Ratiopharm formulary listing
161
Novopharm formulary listing
176
(d) Pipe-fill
186
What is the value of Ratiopharm’s Lost Sales in the Relevant Period?
191
(a) At what price would Ratiopharm have sold its product in each province?
192
(b) When does Ratiopharm’s price change from single-source to multi-source in each province?
195
(c) What would Ratiopharm’s trade-spend (or rebates or allowances expense) have been during the Relevant Period?
207
What is Ratiopharm’s single-source trade-spend rate?
208
What is Ratiopharm’s multi-source trade-spend rate?
222
When does Ratiopharm’s multi-source trade-spend rate take effect?
228
(d) What costs would Ratiopharm have incurred?
233
What deductions, if any, should the Court make under s. 8(5)?
235
(a) Did Ratiopharm’s validation and launch process contravene the Food and Drug Regulations? If so, what effect does this have?
236
(b) Should the Court not include ramp-up in the Relevant Period?
240
Interest
255
Costs
261
Conclusion and Summary
262
Postscript
264
The PMNOC Regime
[5] The PMNOC Regime in existence at the time relevant to this action, is fully explained by Justice Sharlow in Ratiopharm Inc v Wyeth, 2007 FCA 264, [2008] 1 FCR 447 at paras 3 to 36. Given the issues raised in this action, only a very brief recitation of the principles relevant to this action is required to provide a framework to the analysis that follows.
[6] In order to market a drug in Canada, a manufacturer must have received a notice of compliance [NOC] and a drug identification number [DIN] from the Minister of Health. If the drug is new, the innovator manufacturer submits a new drug submission [NDS] to the Minister with data sufficient to establish its safety and efficacy. Upon approval, the Minister issues the manufacturer a NOC which permits the drug to be marketed in Canada, and a DIN which attests that the product has passed a review of its formulation, labelling and instructions for use. After these issues, if the manufacturer wishes to effect any change, it must file a supplement to a new drug submission [SNDS], for which a separate NOC will be issued.
[7] Where a generic drug manufacturer seeks a NOC on the basis of a comparison between its drug and the innovator’s previously approved original drug, the generic manufacturer submits an abbreviated new drug submission [ANDS] demonstrating that the generic formulation is bioequivalent to the innovator’s drug by cross-referencing clinical trials regarding safety and effectiveness undertaken by the innovator. Through this process, a generic manufacturer is able to demonstrate the safety and effectiveness of its drug without having to undertake its own clinical trials.
[8] The PMNOC Regulations require the Minister to maintain a public register of patents pertaining to drugs for which a NOC has issued [the Patent Register]. The person who has filed a NDS or SNDS files a list of all the relevant patents pertaining to that specific submission or supplement, and these patents are then entered on the Patent Register. In order to be listed on the Patent Register, patents must satisfy the subject matter and relevance requirements in the PMNOC Regulations. Every patent on the Patent Register is specifically tied to a NDS or SNDS, and the corresponding NOC.
[9] When the generic drug manufacturer’s ANDS compares the generic drug to a brand or innovator drug and a patent is listed in respect of that innovator drug, the generic drug manufacturer is required by section 5 of the PMNOC Regulations to address that patent. It does so by stating either that it is not seeking the issuance of the NOC until the patent expires, or that the patent is not valid or will not be infringed by the making, using, or selling of the generic product. If it alleges that the patent is not valid or not infringed, then the generic drug manufacturer must serve the innovator with a notice of allegation [NOA] which is accompanied by a detailed statement of the factual and legal basis for the allegation.
[10] If the innovator wishes to challenge the allegation of invalidity or non-infringement in the NOA, it must apply to the Federal Court within 45 days for an order prohibiting the Minister from issuing a NOC for the generic product prior to the expiry of the patent(s) [the Prohibition Application] that are the subject of the NOA. The innovator is not required to take any action in response to a NOA; however, if a Prohibition Application is commenced, the Minister is automatically precluded from issuing a NOC to the generic manufacturer for a period of 24 months, or earlier if the Prohibition Application has been dismissed [the Statutory Stay].
[11] In addition to defending a Prohibition Application, a generic drug manufacturer may move under paragraph 6(5)(a) of the PMNOC Regulations for an order dismissing all or part of the Prohibition Application in respect of patents it alleges are not eligible for inclusion on the Patent Register. If the motion is successful, the Prohibition Application will be dismissed as it relates to the improperly listed patents. That is what occurred in this case.
[12] If a Prohibition Application is ultimately unsuccessful, discontinued, withdrawn or successfully appealed, section 8 of the PMNOC Regulations provides that the innovator is then liable to the generic manufacturer for “any loss suffered” by the generic manufacturer in the period defined by subsection 8(1). Such losses are limited to compensatory damages and do not extend to a disgorgement of the innovator’s profits. Losses suffered after the Prohibition Application is withdrawn, dismissed, discontinued, or reversed on appeal, are also not compensable.
[13] In determining the amount of compensation, the Court is to take into account “all matters it considers relevant” including any conduct of either party that contributed to delay the disposition of the Prohibition Application.
Background to the Action
[14] Wyeth marketed an extended release version of venlafaxine hydrochloride [Venlafaxine], under the trade name Effexor XR, under Canadian Patents 1,248,540 [the 540 Patent] and 2,199,778 [the 778 Patent]. Initially, only the 540 Patent (which covered the substance itself) was listed against Effexor XR, and it was to expire on January 10, 2006; however, on December 20, 2005, the 778 Patent (which covered the extended release formulation of Venlafaxine) was issued and was listed by Wyeth against Venlafaxine on December 23, 2005. Wyeth had applied for the 778 Patent in March 1997.
[15] In 2005, Ratiopharm wished to market its generic version of Venlafaxine - ratio-Venlafaxine XR [Ratio-Venlafaxine] - and filed an ANDS with the Minister of Health on February 24, 2005. By letter dated December 9, 2005, Health Canada informed Ratiopharm that it had completed its review of the ANDS on December 7, 2005 [the Patent Hold Date] but that the NOC would not be issued until the requirements of the PMNOC Regulations were met. Subsequently, as part of this litigation, Ratiopharm wrote to Health Canada requesting “certification of the date that a notice of compliance would have issued to ratiopharm Inc. in respect of venlafaxine hydrochloride capsules in the absence of the Patented Medicines (Notice of Compliance Regulations).” It received the following reply:
Pursuant to subsection 8(1) of the PM(NOC) Regulations, I certify that in the absence of the PM(NOC) Regulations a notice of compliance would have issued to Ratiopharm Inc. in respect of venlafaxine hydrochloride capsules on December 7, 2005.
[16] When the 778 Patent was listed on the Patent Register on December 23, 2005, Ratiopharm served a NOA on the same day. In the NOA, Ratiopharm accepted that its NOC would not issue until the expiration of the 540 Patent on January 10, 2006. Ratiopharm also alleged that the 778 Patent was invalid or would not be infringed by Ratio-Venlafaxine. In response, on February 10, 2006, Wyeth commenced a Prohibition Application (Court File T-243-06) seeking an order prohibiting the Minister from issuing a NOC to Ratiopharm.
[17] The addition of the 778 Patent to the Patent Register substantially extended the time before Ratiopharm could enter the Venlafaxine market because it now had to address the 778 Patent as well as wait for the expiry of the 540 Patent. It is relevant to note that these events occurred prior to the amendment to section 5 of the PMNOC Regulations in 2006, which “freezes” the Patent Register on the date a generic manufacturer files its ANDS. As a result of that amendment, from October 5, 2006 onwards, a generic manufacturer is not required to address a patent added to the Patent Register after it files its ANDS. However, in 2005 when Ratiopharm filed its ANDS referencing Effexor XR, it had a continuing obligation to address all patents on the Patent Register, including the 778 Patent which was added after it filed its ANDS and before it obtained its NOC.
[18] On December 18, 2006, Ratiopharm, under paragraph 6(5)(a) of the PMNOC Regulations, filed a motion to dismiss the Prohibition Application on the basis that the 778 Patent was not eligible for listing on the Patent Register in respect of Effexor XR. On March 29, 2007, the motion judge found that the 778 Patent was eligible for listing against two of the six NOCs listed on the Patent Register for Effexor XR, but not as against the remaining four NOCs: Wyeth v Ratiopharm Inc, 2007 FC 340, 58 CPR (4th) 154 [Venlafaxine FC 2007]. On August 1, 2007, the Court of Appeal allowed an appeal and held that the 778 Patent was not eligible for listing against any NOC because the SNDSs against which the 778 Patent was listed could not support a patent listing. Therefore, Ratiopharm’s motion was allowed and Wyeth’s Prohibition Application was dismissed: Ratiopharm Inc v Wyeth, 2007 FCA 264, [2008] 1 FCR 447 [Venlafaxine FCA 2007]. Ratiopharm received its NOC on August 2, 2007, and launched Ratio-Venlafaxine into the Canadian market on September 18, 2007.
[19] The Court of Appeal also found that an order directing the Minister to remove the 778 Patent from the Patent Register was not an available remedy, despite the fact that it had been improperly listed, because Ratiopharm did not seek such an order in its motion. Therefore, the 778 Patent remained listed on the Patent Register, but would not apply vis-à-vis Ratiopharm.
[20] The Prohibition Application and the attendant Statutory Stay of the issuance to Ratiopharm of a NOC for its drug, together with the subsequent dismissal of the Prohibition Application by Venlafaxine FCA 2007, provides the basis for this action for damages under section 8 of the PMNOC Regulations.
[21] Ratiopharm commenced this action against Wyeth on October 22, 2007. Wyeth responded, in part, by commencing a counterclaim alleging that Ratiopharm’s product infringed the 778 Patent. That counterclaim was discontinued by Notice of Discontinuance filed by Wyeth on September 21, 2011.
[22] On motion by the Plaintiff for a summary trial, Justice Hughes held that Teva was not entitled to continue Ratiopharm’s claim for damages under section 8 of the PMNOC Regulations and he dismissed the action: Teva Canada Limited v Wyeth, 2011 FC 1169, 99 CPR (4th) 398, and 2011 FC 1442, [2011] FCJ No 1741 (QL) [Venlafaxine FC 2011].
[23] The Court of Appeal set aside that judgment: Teva Canada Limited v Wyeth, 2012 FCA 141, 431 NR 342 [Venlafaxine FCA 2012]. It held that Teva was entitled to continue Ratiopharm’s claim for damages and, most relevant to this trial, it addressed the impact of the license agreement Wyeth had entered into with Novopharm on December 7, 2005 [the Wyeth-Novopharm Agreement] pursuant to which Wyeth licensed Novopharm to sell Novopharm’s generic version of Venlafaxine [Novo-Venlafaxine]. Novopharm commenced selling Novo-Venlafaxine on December 1, 2006. The Court of Appeal held that Ratiopharm’s claim for damages under section 8 of the PMNOC Regulations is not to be reduced by gains realized by Novopharm as a licensee of Wyeth during the period January 10, 2006 to August 2, 2007, notwithstanding that those companies later amalgamated and are continued as the Plaintiff in this action.
[24] In addition to Ratiopharm and Novopharm, another generic drug company entered the Venlafaxine market. Ratiopharm entered into a cross-license agreement with Pharmascience Inc. [Pharmascience] on September 20, 2005 [the Ratiopharm-PMS Agreement] pursuant to which [……………………Redacted……………] its Venlafaxine product [PMS-Venlafaxine]. Pharmascience was issued a NOC on August 17, 2007 for PMS-Venlafaxine and commenced marketing it on October 29, 2007.
The Issues
[25] The cases setting out the framework for an action under section 8 which guide this judgment are: Apotex Inc v Merck & Co Inc, 2008 FC 1185, [2009] 3 FCR 234 [Alendronate FC 2008]; Apotex Inc v Merck & Co Inc, 2009 FCA 187, [2010] 2 FCR 389 [Alendronate FCA 2009]; Apotex Inc v Merck & Co, 2011 FCA 329, 107 CPR (4th) 155 [Norfloxacin FCA 2011]; Apotex Inc v Merck Canada Inc, 2012 FC 1235, [2012] FCJ No 1323 [Alendronate FC 2012]; Apotex Inc v Astrazeneca Canada Inc, 2012 FC 559, 410 FTR 168 [Omeprazole FC 2012]; Astrazeneca Canada Inc v Apotex Inc, 2013 FCA 77, 444 NR 254 [Omeprazole FCA 2013]; Sanofi-Aventis Canada Inc v Teva Canada Limited, 2012 FC 552, 410 FTR 1 [Teva-Ramipril FC 2012]; Apotex Inc v Sanofi-Aventis, 2012 FC 553, [2012] FCJ No 620 [Apotex-Ramipril FC 2012]; and Apotex Inc v Takeda Canada Inc, 2013 FC 1237, [2013] FCJ No 1355 (QL) [Pantoprazole FC 2013].
[26] The seminal cases, Alendronate FC 2012, Teva-Ramipril FC 2012, Apotex-Ramipril FC 2012, and Pantoprazole FC 2013 are all currently under appeal; however, as of the date of issuance of the Confidential Reasons in this action, no judgment has yet issued from the Court of Appeal.
[27] In Teva-Ramipril FC 2012 and Apotex-Ramipril FC 2012, Justice Snider outlined the steps to follow in assessing a damages claim under section 8 of the PMNOC Regulations. That framework has since been followed in all section 8 actions, as it will be in this action. It is the following:
1. Determine the period of liability [the Relevant Period];
2. Determine the overall size of the market for the relevant pharmaceutical [the Relevant Pharmaceutical Market] during the Relevant Period;
3. Determine the portion of the Relevant Pharmaceutical Market that would have been held by generic manufacturers during the Relevant Period [The Generic Market];
4. Determine the portion of the Generic Market that would have been held by the plaintiff [the Plaintiff’s Lost Volume]; and
5. Quantify the damages that would have been suffered by the plaintiff in respect of the Plaintiff’s Lost Volume [the Plaintiff’s Net Lost Profit].
[28] Applying that framework to this action, the questions that must be answered, are the following:
1. What is the Relevant Period?
2. What would have been the size of the Venlafaxine market during the Relevant Period [the Overall Venlafaxine Market]?
3. What would have been the size of the generics’ share of the venlafaxine market during the Relevant Period [the Generic Venlafaxine Market]?
4. What portion of the Generic Venlafaxine Market would have been captured by Ratiopharm during the Relevant Period [Ratiopharm’s Market Share]? The answer to this is dependant on determining the following:
(a) Would any other generics have entered the market during the Relevant Period and, if so, when would they have launched?
(b) At what date would Ratiopharm have launched and were there any impediments to it being able to supply the market?
(c) When would Ratiopharm and its generic competitors have been listed on provincial formularies?
(d) What is the appropriate pipe-fill inventory adjustment?
5. What is the value of Ratiopharm’s lost sales during the Relevant Period [Ratiopharm’s Lost Sales]? The answer to this is dependant on determining the following:
(a) At what price would Ratiopharm have sold its product in each province?
(b) What would Ratiopharm’s trade-spend (or rebates or allowances expense) have been during the Relevant Period? The answer to this is dependant on determining the following:
(i) What is Ratiopharm’s single-source trade-spend rate?
(ii) What is Ratiopharm’s multi-source trade-spend rate?
(iii) When does Ratiopharm’s multi-source trade-spend rate take effect?
(c) What other costs would Ratiopharm have incurred in making and selling its product?
6. What deductions or adjustments should be made to Ratiopharm’s damages pursuant to subsection 8(5) of the PMNOC Regulations?
(a) Did Ratiopharm’s validation and launch process contravene the Food and Drug Regulations? If so, what effect does this have?
(b) Should the Court not include ramp-up in the Relevant Period?
7. What is the applicable period and rate of pre-judgment interest?
The Evidence
[29] Ratiopharm called the following as fact witnesses:
1. John Kane Denike, Director of Intellectual Property at Teva: Prior to the amalgamation of Ratiopharm and Teva, he was with Ratiopharm and was head of the team responsible for its ANDS for Ratio-Venlafaxine. At the relevant time he was Ratiopharm’s Director for Regulatory Affairs and Patent Affairs. He testified as to Ratiopharm’s development and plans for marketing Ratio-Venlafaxine, the state of the Patent Register with respect to Effexor XR, the Ratiopharm-PMS Agreement, and the various steps taken in the current litigation.
2. Kent Major, Vice-President for Scientific Affairs, Cobalt Pharmaceuticals: Prior to June 2011, Mr. Major was employed with Ratiopharm and at the relevant time was its Vice-President for Development Management and Regulatory Affairs. He testified as to the development of Ratio-Venlafaxine, the commercial supply agreement with Alembic Pharmaceuticals [Alembic] to manufacture Ratio-Venlafaxine, its expected launch in January 2006, Ratiopharm’s trade-spend practices, the Ratiopharm-PMS Agreement, and the validation process for Ratio-Venlafaxine.
3. Doug Somerville, Senior Vice-President and General Manager, Teva: At the relevant time, he was its Vice-President Sales for Corporate and Retail Accounts. He testified as to the marketing, pricing and trade-spend of Novo-Venlafaxine.
4. David Boughner, Director of Strategic Initiatives, Teva: At the relevant time, he was its Director of Marketing. He testified as to the development of Novo-Venlafaxine, as well as production and validation issues relating to it.
5. Brian Des Islet, Executive Director of Scientific Affairs, Teva: At the relevant time, he was its Executive Director of Research and Development. In 2006, he also took over responsibility for regulatory affairs. He testified as to quality assurance and formulary listing of Novo-Venlafaxine.
6. Brent David Fraser, Director of Direct Program Services, Ontario Public Drug Program, Ministry of Health and Long-Term Care: He testified as to Ontario’s formulary, pricing, interchangeability, reimbursement and drug submission regime.
7. Uri Hillel, Deputy of the Executive Vice-President for Quality, Vice-President of Compliance and Vice-President of Research & Development, Teva Pharmaceuticals [Teva Israel]: At the relevant time, he was Quality Assurance Manager of the Oral Dosage Form Production Plant in Kfar-Saba, Israel, and in 2006 he became the Executive Director of Quality for the Pharmaceutical Operation Division in Israel. He testified as to the validation process for Novo-Venlafaxine.
[30] Ratiopharm also called the following expert witnesses:
1. Rosemary Bacovsky: On the parties’ agreement she was qualified as a pharmaceutical industry consultant and pharmacist with expertise in formulary listings, market access, and reimbursement policies of the Canadian pharmaceutical marketplace. She testified as to provincial drug plans, the formulary listing process, and provincial pricing and interchangeability regimes.
2. Scott Davidson, Managing Director of the Toronto office of Duff & Phelps: On the parties’ agreement he was qualified as an expert in business valuation, financial loss damage quantification in commercial and intellectual property disputes.
3. Dr. Aidan Hollis, Professor of Economics, University of Calgary: On the parties’ agreement he was qualified as an expert in economics and industrial organization with particular expertise in pharmaceutical markets and competition in pharmaceutical markets. Dr. Hollis gave evidence on the Overall Venlafaxine Market, the Generic Venlafaxine Market, Ratiopharm’s Market Share, penetration rate and extent, erosion dynamics, pipe-fill adjustment, and trade-spend.
4. Paul Larocque, President of Acerna Incorporated: On the parties’ agreement he was qualified as an expert in pharmaceutical regulatory issues including the validation of processes to manufacture pharmaceuticals for sale in the Canadian market.
[31] Wyeth called the following as fact witnesses:
1. Steven Whitehead: At the relevant time he was Vice-President of Strategic and Commercial Advancement and a part of the Wyeth senior leadership team. He testified as to the Wyeth-Novopharm Agreement, Wyeth’s preparations for the genericization of Effexor XR, and Wyeth’s reaction to generic versions of Effexor XR in 2006.
2. Virginia Cirocco: She is presently a consultant but at the relevant time was an Executive Vice-President of Shoppers Drug Mart. She testified as to her employer’s purchasing practices and rebate expectations in the relevant time.
3. Michael Blacher: He is a pharmacist and owes his own dispensary that is located inside a medical clinic in Windsor, Ontario. He testified as to his experience in receiving rebates and in purchasing of brand name and generic pharmaceuticals.
4. Lucie Robitaille, Secrétaire générale et vice-président à la gouvernance et à l’administration, Québec Institut national d’excellence en santé et en services sociaux: At the relevant time she was the Directrice générale Conseil des Médicaments. She testified regarding Québec’s formulary, pricing, interchangeability, and drug submission regime.
5. Glen Monteith, Chief Delivery Officer, Alberta Ministry of Health and Wellness: At the relevant time, he was the Executive Director of the Pharmaceutical and Life Sciences Branch, Alberta Ministry of Health and Wellness. He testified regarding Alberta’s formulary, pricing, interchangeability, reimbursement, and drug submission regime.
6. Debby Ship, Senior Director, Portfolio and Project Management, Pharmascience: At the relevant time she was its Senior Director, Business Development. She testified as to the Ratiopharm-PMS Agreement, the PMS-Venlafaxine product, and the ability of Pharmascience to enter the Venlafaxine market in the Relevant Period.
[32] Wyeth also called the following expert witnesses:
1. W. Neil Palmer: On the parties’ agreement he was qualified as a pharmaceutical industry consultant with expertise in formulary listings, market access, and reimbursement policies of the Canadian pharmaceutical marketplace.
2. Stuart Wright, a consultant with OptumInsight: On the parties’ agreement he was qualified as an expert in pharmaceutical regulatory issues, including the validation of processes to manufacture pharmaceuticals for sale in the Canadian market.
3. Dr. Andrew Tepperman, a principal at Charles River Associates with a PhD in economics: On the parties’ agreement he was qualified as an expert in economics and industrial organizations with particular expertise in pharmaceutical markets and competition in pharmaceutical markets. He gave evidence on the Overall Venlafaxine Market, the Generic Venlafaxine Market, and Ratiopharm’s Market Share in various hypothetical scenarios through the use of an econometric model.
4. Ross Hamilton, a principal at Cohen Hamilton Steger & Co: On the parties’ agreement he was qualified as a chartered accountant with a specialist designation in investigative and forensic accounting and expertise in damages quantification in commercial and intellectual property disputes, including in the Canadian pharmaceutical marketplace. He testified as to the assessment and quantification of Ratiopharm’s lost profits in various scenarios.
[33] All of the witnesses were subject to vigorous and, on occasion, very effective cross-examination. I find all of them, but one, to be generally credible; however, I also have the following observations with respect to some of the witnesses who were otherwise found credible.
[34] I found Virginia Cirocco not credible. Ms. Cirocco has previously testified before this Court in two section 8 claims. In Alendronate FC 2012, Justice Hughes found her to be lacking in candour and to engage in game playing. Justice Phelan in Pantoprazole FC 2013 found “her evidence was straightforward” but not particularly helpful because her knowledge of the generic’s rebate rate was based on a blended rate across all products and she had no knowledge as to what rebate the generic company gave internally on a given product.
[35] I found Ms. Cirocco to be less than forthright in her evidence. She attempted to leave the Court with the impression that she was a reluctant witness. In chief she was asked: “Under what circumstances you’re here today?” She responded: “I received a summons to appear.” She also said that she was being compensated for her time through her consulting company. When asked about her frame of mind, she testified that “[i]t’s not my favourite thing to do, to be here.” However, on cross-examination, it was revealed that she had arranged compensation with Wyeth prior to her receiving a summons to appear.
[36] Before this Court, she testified that Shoppers Drug Mart received rebates on a molecule-by-molecule basis and not on the basis of a bundle or basket of drugs. This evidence is contrary to that which she gave in Pantoprazole FC 2013 where, as noted, Justice Phelan found that her knowledge of the rebates received was based on a blended rate across all products in a bundle or basket of products. Her previous testimony regarding rebates on baskets or bundles of products was put to her. Her responses were evasive and lacking in candour. She described what the Court views as a fundamental and material contradiction between her evidence here and that offered earlier, to be “semantics.” It is not. Her evidence before this Court was at odds with evidence she provided previously on the same questions. Accordingly, unless her evidence is corroborated by other witnesses or documentary evidence, it is not accepted.
[37] Uri Hillel appeared overly prepared - as if he had been told that he had one message to convey and he ensured that he did so at every opportunity. His evidence was directed to the manufacturing process and problems Teva Israel had with the manufacture of Novo-Venlafaxine. He was put forward by Ratiopharm to support its position that Novo-Venlafaxine would not have come to market in the but-for world sooner than it did in the real world. Mr. Hillel testified that the manufacture of the product was a “high priority” for Teva Israel. He added that observation frequently and often when it was not responsive to the question asked. Notwithstanding this propensity, Mr. Hillel was found credible because, despite this concern, the Court was not provided with any convincing evidence that challenged his evidence. All the Defendant offered was suspicion and speculation.
[38] The last witness deserving of comment is Dr. Tepperman. Dr. Tepperman exhibited extreme reluctance to concede any point; even the most obvious. As an example, he refused to acknowledge that the data he used (which was provided to him by Wyeth) produced results that were inconsistent with and contrary to his own findings in Pantoprazole FC 2013 where he testified as an expert for the generic Apotex. Moreover, he firmly resisted stating the obvious, that the results of his report in this case were contrary to common sense.
[39] In his report filed in this action, Dr. Tepperman found that the two largest generic companies at the relevant time, Apotex and Novopharm, “had inherent competitive advantages relative to other generic companies.” Based on the data he used, he concluded that “[Novopharm’s] average market share premium is approximately 8 percentage points as of its date of initial market entry; Apotex’s is approximately 4 percentage points.” However, on cross-examination it was put to him that in his report filed in Pantoprazole FC 2013 he concluded, based on the data he used there, that Novopharm’s average market share premium is approximately 5 percentage points as of its date of initial market entry; and Apotex’s is approximately 12 percentage points.
[40] Dr. Tepperman simply refused to accept that the data obtained from Wyeth that he used may have resulted in a finding inconsistent with his previous expert evidence and with common sense, given that Apotex is the larger of the two generic companies in the market. His response was simply to say: “There's nothing wrong with the analysis. The analysis is dependent on the data, and this is the data that I have here.” This begs the question: Should he have questioned the appropriateness of the data he used?
[41] This inconsistency is one of the reasons the Court preferred the approach used by Dr. Hollis over Dr. Tepperman.
What is the Relevant Period?
[42] The Relevant Period is the period within which the loss suffered by the plaintiff generic is compensable. In my view, there is no requirement that the actual loss commences on the first day or that it continues through to the last day of the Relevant Period. Rather, the Relevant Period is merely the period of time within which any loss suffered is compensable.
[43] Paragraph 8(1)(b) of the PMNOC Regulations allows no discretion as to the end date of the Relevant Period - it is the date the Prohibition Application is withdrawn, discontinued, dismissed, or reversed. The parties are in agreement that the Relevant Period ends on August 1, 2007, the date that the Court of Appeal issued Venlafaxine FCA 2007, dismissing Wyeth’s Prohibition Application.
[44] I am mindful that Justice Snider held in Apotex-Ramipril FC 2012 that the Court has some discretion to choose a more appropriate end date. While this is not a live issue in this case because the parties agree on the end date, I respectfully disagree with Justice Snider on this point. In my view, the statutory language is explicit as to when the end date for the period of liability must be fixed. Even though the end date is fixed, it may be that the loss ends at an earlier date, as was the effect of Justice Snider's judgment. In the unique circumstances in Apotex-Ramipril FC 2012 the NOC had issued notwithstanding that procedurally, the Prohibition Application was still outstanding. Accordingly, the Prohibition Application was no longer a barrier to the generic’s entry into the market and there was no evidence establishing a causal connection between the Prohibition Application and any subsequent loss. In such circumstances, where a plaintiff generic is unable to establish that connection, it will be precluded from recovering damages, despite the fact that the period of liability and potential for recovery extends further to the end date fixed by the PMNOC Regulations.
[45] Paragraph 8(1)(a) of the PMNOC Regulations allows a Court discretion as to the start date of the Relevant Period. The relevant part of the paragraph reads that the Relevant Period starts “on the date, as certified by the Minister, on which a notice of compliance would have been issued in the absence of these Regulations [the Patent Hold Date], unless the court concludes that … a date other than the certified date is more appropriate.”
[46] The parties are not in agreement as to the date the Relevant Period commences.
[47] Ratiopharm submits that the Relevant Period commences on January 10, 2006, the date of the expiry of the 540 Patent. It will be recalled that in its ANDS and NOA, Ratiopharm had agreed to wait for the expiry of that patent before launching Ratio-Venlafaxine.
[48] Wyeth submits that the Relevant Period can commence no earlier than February 13, 2006; the date the Minister would have issued a NOC to Ratiopharm if it had served Wyeth with a NOA relating to the 778 Patent and Wyeth had not commenced a Prohibition Application within the 45 day period permitted by the PMNOC Regulations. Wyeth says that it could not be an earlier date because there is jurisprudence holding that the Relevant Period cannot commence prior to the date the Statutory Stay would have been triggered. As a consequence, Wyeth says that in the but-for world, a plaintiff generic must comply with the PMNOC Regulations and serve a NOA on the innovator because that is a condition precedent to the potential triggering of the Statutory Stay. It relies on the decisions in Teva-Ramipril FC 2012, Norfloxacin FCA 2011, and Alendronate FCA 2009. I do not accept either of Wyeth’s propositions.
[49] Wyeth’s submission that the start of the Relevant Period can never be earlier than the date the Statutory Stay would be triggered was as follows:
In this case, the date as certified by the Minister on which Ratiopharm would have received its NOC for RATIO-VELAFAXINE XR is December 7, 2005. On that day, Health Canada completed its review of Ratiopharm’s ANDS and placed Ratiopharm’s application on administrative hold until Ratiopharm finished addressing the Regulations’ requirements (“patent-hold”). However, in this case, the date at which Ratiopharm was placed on patent-hold is not the date at which the liability period under section 8(1) of the Regulations commences.
As was the case in the Teva Ramipril case, this case presents the “somewhat unusual situation in which the certified, or ‘patent hold’ date precedes the beginning of the statutory stay.” As a result the period of liability cannot begin until the date at which the Application was commenced and the statutory stay under the Regulations was triggered. [emphasis added]
[50] I agree that the Patent Hold Date, in this case, may not be the appropriate date at which Wyeth’s liability under the PMNOC Regulations begins. However that has nothing to do with the fact that the Patent Hold date precedes the beginning of the Statutory Stay.
[51] The submission of Wyeth is that when the Patent Hold Date precedes the commencement of the Statutory Stay under the PMNOC Regulations, it is not that there is a more appropriate commencement date; rather, the commencement date of the liability period cannot be that Patent Hold Date. In my view, in order to accept that submission, one would have to ignore the clear and unambiguous wording of section 8.
[52] Paragraph 8(1)(a) clearly establishes a default commencement date - the Patent Hold Date. It is only if the Court finds that there is a “more appropriate” commencement date, that the Court, in the exercise of its discretion, may substitute that other date. The use of the phrase “more appropriate” (“plus appropriée”) (emphasis added) in the relevant paragraph, makes it clear that the Patent Hold Date is an appropriate date for the commencement of the Relevant Period, although another date may be more appropriate given the particular circumstances of the case under consideration. Accordingly, to say, as Wyeth does, that the Patent Hold Date “cannot” be the start date, in the present circumstances, quite simply is not correct, based on the clear and unambiguous wording of paragraph 8(1)(a) of the PMNOC Regulations. The real question is whether there is a more appropriate start date.
[53] In my view, where the loss suffered by the plaintiff generic commences only after the Patent Hold Date, a more appropriate start date of the Relevant Period may well be the date that the plaintiff generic’s loss began. That is what Justice Snider found in Teva-Ramipril FC 2012.
[54] In Teva-Ramipril FC 2012 all of the patents on the Patent Register but one had been addressed by Teva through serving a NOA and each of those patents had been found by the Court not to be an impediment to Teva marketing Teva-Ramipril. The sole patent that had not been addressed by Teva through a NOA was the 457 Patent. In its ANDS Teva had agreed not to market Teva-Ramipril until the expiry of the 457 Patent on December 13, 2005, a date subsequent to the Patent Hold Date of October 14, 2003. Justice Snider held that December 13, 2005, was the more appropriate date for the commencement of the Relevant Period.
[55] In Apotex-Ramipril FC 2012 the plaintiff generic addressed all of the patents on the Patent Register by serving several NOAs (three of those patents were listed after the Patent Hold Date) and all were found by the Court not to be an impediment to Apotex marketing Apo-Ramipril. In assessing the damages incurred by the plaintiff generic, the Court held that it did not have to serve a NOA on the innovator in the but-for world.
[56] In Teva-Ramipril FC 2012, Apotex-Ramipril FC 2012, and Pantoprazole FC 2013 the start date selected by the trial judge was the date when, with the benefit of hindsight from the results of the Prohibition Applications, all impediments to the plaintiff generic marketing its product had been removed. In short, the real world informs the but-for world and tells us in those three decisions that, with one exception, the patents listed on the Patent Register by the innovator ought not to have been an impediment to the plaintiff generic coming to market. The exception was the 457 Patent in Teva-Ramipril FC 2012, which the plaintiff generic agreed to let expire before marketing its product.
[57] The imposition of the Statutory Stay by the innovator commencing an unsuccessful Proh