Teva Canada Limited v. Pfizer Canada Inc.

Teva Canada Limited v. Pfizer Canada Inc.
Court (s) Database
Federal Court Decisions
Date
2017-05-26
Neutral citation
2017 FC 526
File numbers
T-1844-07
Notes
A correction was made on June 30, 2017.
Decision Content
Date: May 26, 2017
Docket: T-1844-07
Citation: 2017 FC 526
Ottawa, Ontario, May 26, 2017
PRESENT: The Honourable Mr. Justice Zinn
BETWEEN:
TEVA CANADA LIMITED
Plaintiff
and
PFIZER CANADA INC.
Defendant
JUDGMENT AND REASONS
[1] At trial, it was found that the Plaintiff had made its case for damages pursuant to section 8 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 [the PMNOC Regulations]: See Teva Canada Limited v Pfizer Canada Inc, 2014 FC 248 [the Trial Decision] and Teva Canada Limited v Pfizer Canada Inc, 2014 FC 634 [the Judgment].
[2] On appeal, the Federal Court of Appeal held that the Trial Decision relied, in part, on evidence that was not admissible for the truth of its content; it was hearsay. [1] The Federal Court of Appeal set aside the judgment and remitted the matter back to this Court to redetermine “the issue whether Teva is entitled to damages and, if so, to what extent”: Pfizer Canada Inc v Teva Canada Limited, 2016 FCA 161 [the Appeal Decision]. At paragraph 164, it stated that:
The redetermination is to decide upon whether and to what extent Ratiopharm (Teva) is entitled to section 8 damages and is to be conducted by applying proper legal principles to the admissible evidence in the record. Without limiting the foregoing, the key issue for the redetermination is whether in the hypothetical world Ratiopharm (Teva) would have had and could have had access to sufficient quantities of venlafaxine at the relevant time. [emphasis added]
Background
[3] The background to this claim for damages pursuant to section 8 of the PMNOC Regulations is set out in the Trial Decision at paragraphs 14 to 24 and in the Appeal Decision at paragraphs 6 to 12 and 19 to 27. For the purposes of this redetermination, the following are the relevant background facts.
[4] The Defendant is the corporate successor to Wyeth and Wyeth Canada [Wyeth]. The Plaintiff is the corporate successor to ratiopharm inc. [Ratiopharm].
[5] Wyeth marketed an extended release version of venlafaxine hydrochloride [Venlafaxine] under the trade name Effexor XR, under Canadian Patent 1,248,540 [the 540 Patent]. When Ratiopharm made the decision to market a generic form of Venlafaxine, the 540 Patent was the only patent listed against Effexor XR on the Patent Register and it was due to expire on January 10, 2006.
[6] Kent Major, then Ratiopharm’s Vice-President for Development Management and Regulatory Affairs, testified that Ratiopharm (then named Altimed Pharma Inc.) became interested in Venlafaxine around 2000. [2] The first step taken by Ratiopharm to be in a position to market a generic Venlafaxine, was to enter into an agreement with Karma Pharm, Ltd. [KarmaPharm] on April 18, 2002, to obtain the exclusive rights to KarmaPharm’s formulation for generic Venlafaxine. [3]
[7] Ratiopharm then looked for a party to manufacture its generic Venlafaxine. Ratiopharm selected BioArc Research Solutions, a Division of Alembic Limited [Alembic] to manufacture both the generic Venlafaxine active pharmaceutical ingredient [API] and the Ratiopharm Venlafaxine capsules.
[8] Mr. Major testified that “Alembic is a pharmaceutical manufacturer of both active pharmaceutical ingredients and dosage form located in Gujarat, India.” He also testified that “Alembic had a long relationship with [Ratiopharm] as an API supplier, and we were aware of their intentions to go into the dosage form business as well.” [4] [emphasis added]
[9] On March 24, 2004, Ratiopharm and Alembic entered into the first of two agreements relating to generic Venlafaxine - a development contract [the Development Agreement]. [5] Pursuant to the Development Agreement, Alembic manufactured bio-batches of the generic Venlafaxine which Ratiopharm used to demonstrate to Health Canada that its product was bio-equivalent, met purity and safety standards, and that the manufacturing process was robust. Mr. Major testified that its demonstration was contained in the Abbreviated New Drug Submission [ANDS] for Ratiopharm’s generic Venlafaxine, which Ratiopharm filed with Health Canada on February 24, 2005. [6]
[10] As part of the Health Canada approval process, in 2004, when Alembic was manufacturing the bio-batches, Mr. Major spent two weeks at Alembic’s facilities alongside a Health Canada Inspector who inspected and certified the facilities as meeting Good Manufacturing Practices. This visit provided Mr. Major with personal knowledge, based on his experience in the pharmaceutical business and his observations, of the capacity of Alembic’s facilities at that time. The Federal Court of Appeal accepted that it was open to “admit the evidence of what Mr. Major saw and the conclusions he drew from his observations.” [7]
[11] On December 7, 2005, Health Canada informed Ratiopharm that it had completed its review of the ANDS and that a notice of compliance [NOC] would issue after the requirements of the PMNOC Regulations had been met. Ratiopharm had planned for a launch date after the expiry of the 540 Patent on January 10, 2006, and at that date, but for subsequent actions by Wyeth, it would have met all of the requirements under the PMNOC Regulations.
[12] In order to have product to launch and meet market demand, on April 13, 2005, some nine months before its anticipated launch, Ratiopharm and Alembic entered into a second contract [the Licence and Supply Agreement], pursuant to which Alembic agreed to manufacture and supply Ratiopharm with generic Venlafaxine. [8] Article 3.1 of the Licence and Supply Agreement provided:
Alembic shall supply exclusively to ratiopharm and ratiopharm shall purchase exclusively from Alembic, all of ratiopharm’s requirements of Product. [emphasis added]
[13] Ratiopharm, through Alembic, was manufacturing the API, and encapsulating the generic Venlafaxine, and complying with all regulatory requirements in order to be on the market on January 10, 2006. In the real world, Ratiopharm did not expect that it would be the sole generic on the market. [9] In fact, Ratiopharm had entered into a cross-licence agreement with Pharmascience Inc. [Pharmascience] pursuant to which Pharmascience was permitted to use Ratiopharm’s generic formulation and sell generic Venlafaxine under its name. Of note, their agreement also provided that Pharmascience would inform Ratiopharm of the quantities needed, and Ratiopharm would place orders in those amounts with Alembic, which would manufacture and deliver to Pharmascience the Pharmascience Venlafaxine. Thus, Alembic would be supplying both Ratiopharm and Pharmascience with generic Venlafaxine for the Canadian market. It was found in the Trial Decision, that in the but-for world, Pharmascience did not enter the market in the Relevant Period; thus in the but-for world, Alembic was required only to meet the Canadian market requirements of Ratiopharm.
[14] While Ratiopharm expected other generic companies to enter the generic Venlafaxine market, only Novopharm entered the Canadian market in the Relevant Period and it did so on December 1, 2006, under licence from Wyeth and after obtaining its NOC. In the Trial Decision, it was found that had Wyeth not taken the actions described immediately below, Ratiopharm would have occupied the entire generic Venlafaxine market from January 10, 2006, to December 1, 2006, when Novopharm commenced selling its product, and that thereafter Ratiopharm’s share of the generic market would have eroded at the same rate that Novopharm’s did in the real world when Ratiopharm actually entered the market.
[15] In May 2005, Mr. Major and others at Ratiopharm were warned that there was a “very strong likelihood” that Wyeth would try to “evergreen” Effexor XR by listing a new patent against it on the Patent Registry, and it was expected that it would likely take this action in October or November 2005. [10] Mr. Deneke, a witness at trial, advised Ratiopharm officials in September 2005, that Wyeth had received an NOC for a new indication on September 1, 2005, for Effexor XR, thus making the likelihood of Wyeth being able to evergreen its product a strong likelihood. [11]
[16] If Wyeth added a new patent on the Patent Register against Effexor XR, and did so prior to the expiry of the 540 Patent, then Ratiopharm would be required to wait until that patent expired or was delisted to market its generic Venlafaxine. Although no new patent had yet been added to the Patent Registry, as a precaution, on October 24, 2005, Ratiopharm directed Alembic to put a hold to converting API to the manufactured product but to “complete the present production cycle and transfer any finished bulk to bright stock.” [12]
[17] In fact, Canadian Patent 2,199,778 [the 778 Patent] was listed by Wyeth on the Patent Register as against Effexor XR on December 23, 2005. As a consequence, Ratiopharm was prevented from entering the Venlafaxine market and it remained so prevented until August 1, 2007 when the Federal Court of Appeal held that the 778 Patent was not eligible for listing: See Ratiopharm Inc v Wyeth Canada, 2007 FCA 264. That judgment cleared the way for Ratiopharm to launch into the Canadian market with its generic Venlafaxine. [13] It did so on September 18, 2007, and on October 22, 2007, it commenced this action against Wyeth pursuant to section 8 of the PMNOC Regulations.
[18] There is no dispute that in these circumstances, having improperly kept Ratiopharm off the market, Wyeth is “liable to the second person [Ratiopharm] for any loss suffered during the period.” The question requiring the Court’s attention is what loss, if any, Ratiopharm has proven on the balance of probabilities that it suffered.
[19] The test to establish damages under section 8 of the PMNOC Regulations is the ‘but-for’ test. A plaintiff must show on a balance of probabilities that it suffered a loss that but-for the defendant’s wrongful conduct, it would not have suffered. In this action, Ratiopharm claims that but-for the wrongful act of Wyeth, it would have entered the generic Venlafaxine market on January 10, 2006, and thus it suffered the loss of the sales it would have made from January 10, 2006, to August 1, 2007, when it was able to enter the market.
[20] The Federal Court of Appeal in Apotex Inc v Merck & Co Inc, 2015 FCA 171 at paragraph 45 [Lovastatin FCA], has instructed that “the ‘but-for’ test for causation is to be applied in a ‘robust common sense fashion’.” In doing so, the Federal Court of Appeal referenced the judgment of the Supreme Court of Canada in Clements v Clements, 2012 SCC 32, an action in negligence, wherein at paragraphs 8-9, the majority stated the following:
The test for showing causation is the “but for” test. The plaintiff must show on a balance of probabilities that “but for” the defendant’s negligent act, the injury would not have occurred. Inherent in the phrase “but for” is the requirement that the defendant’s negligence was necessary to bring about the injury -- in other words that the injury would not have occurred without the defendant’s negligence. This is a factual inquiry. If the plaintiff does not establish this on a balance of probabilities, having regard to all the evidence, her action against the defendant fails.
The “but for” causation test must be applied in a robust common sense fashion. There is no need for scientific evidence of the precise contribution the defendant’s negligence made to the injury. See Wilsher v. Essex Area Health Authority, [1988] A.C. 1074 (H.L.), at p. 1090, per Lord Bridge; Snell v. Farrell, [1990] 2 S.C.R. 311. [emphasis added]
[21] In the context of this redetermination, the Federal Court of Appeal has directed that it is incumbent on Ratiopharm to show, on the balance of probabilities, either by way of admissible evidence or inference from such evidence, that it would have entered the generic Venlafaxine market and that it could have done so in the January 10, 2006 to August 1, 2007 period [the Relevant Period]. The Federal Court of Appeal observed that “would have” and “could have” are different aspects of the test, both of which have to be satisfied by a section 8 plaintiff. At paragraph 72 of the Appeal Decision, it is stated that whether Ratiopharm wanted to supply the market and whether Alembic was willing to produce Venlafaxine addresses the “would have” aspect; whereas whether Ratiopharm, and Alembic as its manufacturer and supplier, was able to supply the generic Venlafaxine market (or part of it) addresses the “could have” aspect.
[22] The Federal Court of Appeal at paragraph 169 of the Appeal Decision, directed the attention of this Court and the parties to the decision of Justice Ducharme of the Ontario Superior Court in R v Munoz (2006), 86 OR (3d) 134, 38 CR (6th) 376 at paragraphs 23-31, concerning the “legal limits on what inferences can be drawn from evidence.” The principles set out in that decision have recently been summarized by this Court in K (K) v The Minister of Citizenship and Immigration, 2014 FC 78 at paragraph 61, in the following manner:
● An inference is a conclusion that follows logically and reasonably to a sufficient degree of probability from accepted facts by the application of an inductive reasoning process that utilizes the uniformity of prior human experience as its benchmark.
● The facts that are said to provide the basis for the inference must be established by the evidence and cannot be substituted for by speculation.
● Because there is no bright line, drawing a distinction in degrees of probability between permissible reasonable inferences and impermissible speculation is often a very difficult task.
● Drawing inferences is not about possibilities, nor is it a process of creating a hypothetical narrative, or applying subjective imagination even where the circumstances permit an educated guess.
● Inferences need not be the most obvious or the most easily drawn; all that is required is that the inference be reasonable and logical. [emphasis added]
[23] Ratiopharm submits, with respect to the fourth bullet above, that it must be kept in mind that the but-for world is entirely hypothetical as the Federal Court of Appeal noted at paragraph 46 in the Appeal Decision: “In effect, the court is examining a hypothetical world.”
[24] At trial, it was found that the overall Venlafaxine market in the Relevant Period was 361,506,200 capsules, and that in the but-for world the generic share of that overall market would be 248,640,087 capsules. [14]
[25] It is relevant to recall that Ratiopharm would not have supplied all 248,640,087 capsules of generic Venlafaxine during the Relevant Period, because it was found at trial that “[f]rom December 1, 2006, onwards, Ratiopharm’s market share would have eroded at the same rate as Novopharm’s did in the real world as a result of Ratiopharm entering the market, with an adjustment for any differences in formulary listing dates between Novopharm and Ratiopharm.” [15] If Ratiopharm met the would-have-could-have test, then it would have sold slightly less than 248,640,087 capsules in the Relevant Period.
[26] It was also found at trial that every generic works to be the first to market. The reason is set out at paragraph 136 of the Trial Decision:
It is not disputed that the goal of every generic is to be the first to market, but if not the first to be tied for first. Coming second or later is never the goal. The first generic to market has the advantage. It is the only generic alternative to the innovator product and given the provincial formulary and many private plan requirements that the generic product is to be used to fill a prescription, it will quickly occupy a large share of the market. Once established, the evidence is that it is difficult for another generic to displace the first generic’s product on the pharmacy shelves.
[27] Mr. Major testified that “we were ambitious and we felt that we would have a shot at being the first into market space.” [16] In the but-for world, Ratiopharm, unlike all of the other generic hopefuls, did not have to address the 778 Patent: See Apotex Inc v Sanofi Aventis, 2012 FC 553 at paragraphs 156-158; and Apotex Inc v Takeda Canada Inc, 2013 FC 1237 at paragraph 56. Consequently, in the but-for world, Ratiopharm would have known that while the 778 Patent would prevent its competitors from entering the generic Venlafaxine market on January 10, 2006, it had no such impediment. As a consequence, Ratiopharm would have known that it would be the first generic into the Venlafaxine market or, at the very least, have known that it was highly probable that would be the case. The actions that it would have and could have taken in the but-for world must be considered in light of that very important background.
[28] Mr. Major also testified that in 2006, Ratiopharm was the third largest generic pharmaceutical company in the Canadian market, after Apotex and Novopharm. The difference between Novopharm and Ratiopharm was “less than 3 per cent market share and around about $50 million” in gross sales, which he testified was “about one product launch.” [17] In addition to its Canadian operation, Mr. Major testified that Ratiopharm at the relevant time was the third largest generic manufacturer in the world, and had the largest generic production facility in Europe. [18]
[29] Mr. Major testified that in the real world, it takes time for a generic to erode the market share held by the innovator, and there is no reason to think the same would not occur in the but-for world. The evidence of Mr. Major was that at the end of the first year, Ratiopharm could have expected to have occupied 50% of the market held by Wyeth. In other words, in the but-for world when Ratiopharm commenced selling in the market, it would have 0% of the market and Wyeth would have 100%, but at the end of the first year, each would occupy 50% of the market, more or less. [19]
[30] Before addressing the material issues on this redetermination, I wish to say a few words about admissible evidence.
Admissible Evidence
[31] Admissible evidence is evidence the trier of fact is legally permitted to consider. Justice Watt in R v Candir, 2009 ONCA 915 [20] at paragraph 50 stated:
Admissibility is wholly and exclusively a creature of the law. The rules of admissibility, for the most part negative, exclude evidence that is both relevant and material. A rule of admissibility need not be invoked when an item of evidence is either irrelevant or immaterial. Evidence is admissible if it satisfies all applicable exclusionary rules.
[32] An issue raised by the parties on this redetermination is whether the Court is permitted to consider the “evidence” in the record that was not previously objected to by Wyeth at trial or on appeal, or whether the Court is now required to review that trial record with a fresh eye and exclude all inadmissible evidence. This issue arises because Wyeth is now objecting to other evidence in the record on the basis that it is hearsay and inadmissible, when no such objection was previously made.
[33] There is Canadian jurisprudence that a trial judge has a duty to reject inadmissible evidence even though no objection was made to it at trial: See Young v Denton, [1927] 1 DLR 426 (Sask CA); McLeod v Pearson et al, [1931] 4 DLR 673 (Alta SC); Stadel v Stadel, [1959] MJ No 71 (Man QB). In Young v Denton, Justice Martin at 433-434 put it as follows:
In Phipson on Evidence [6th ed], p. 688, the author says: --"If inadmissible evidence has been received (whether with or without objection), it is the duty of the Judge to reject it when giving judgment; and if he has not done so, it will be rejected on appeal, as it is the duty of Court to arrive at their decisions upon legal evidence only."
This statement of the law appears to me to answer the contention of counsel for the defendant that, inasmuch as the admission of the memorandum was not objected to, it is now too late to take the objection.
[34] Justice Martin cites only a part of the passage from Phipson on Evidence. The entire passage, which provides for a more nuanced approach than the Court’s statement suggests, is this:
If inadmissible evidence has been received (whether with or without objection), it is the duty of the Judge to reject it when giving judgment; and if he has not done so, it will be rejected on appeal, as it is the duty of Courts to arrive at their decisions upon legal evidence only; a party may however, by his conduct at the trial, be precluded from objecting to such evidence. [emphasis added and cited authorities omitted]
[35] On the other hand, there is authority that a failure to raise any objection at trial regarding the admissibility of evidence may be fatal if that party attempts to raise it on appeal: See Lederman, Bryant & Fuerst, The Law of Evidence in Canada, 4th ed (Markham: LexisNexis, 2014), §2.98:
In a civil case, an objection on appeal will not usually succeed unless the objection is made at the trial. A failure to object may constitute the tacit waiver of a privilege that would otherwise apply to make the document inadmissible. [emphasis added]
[36] The Supreme Court of Canada has warned that when counsel has failed to challenge the admissibility of evidence, trial judges ought not to take it upon themselves to do so. Although stated in a criminal context, the following passage from R v T (SG), 2010 SCC 20 at paragraphs 35-36, in my view, applies equally in the civil context:
More importantly, in deciding whether there was clear evidence that ought to have triggered the need for the trial judge to raise the issue on his own motion, an appellate court must consider the question from the perspective of the trial judge at the time the decision was made.
Here, the most significant circumstance is that the defence consented to the admission of the evidence. In an adversarial system of criminal trials, trial judges must, barring exceptional circumstances, defer to the tactical decisions of counsel: see generally R. v. Lomage (1991), 2 O.R. (3d) 621 (C.A.), at pp. 629-30. There is a "strong presumption" that defence counsel are competent in advancing the interests of their clients: see R. v. G.D.B., 2000 SCC 22, [2000] 1 S.C.R. 520, at para. 27; Hodgson, at para. 99. Moreover, counsel will generally be in a better position to assess the wisdom, in light of their overall trial strategy, of a particular tactical decision than is the trial judge. By contrast, trial judges are expected to be impartial arbiters of the dispute before them; the more a trial judge second-guesses or overrides the decisions of counsel, the greater is the risk that the trial judge will, in either appearance or reality, cease being a neutral arbiter and instead become an advocate for one party. For these reasons, this Court has previously held that the burden to raise evidentiary issues properly rests on the shoulders of counsel: Hodgson, at para. 98. [emphasis added]
[37] In addition to this rationale, it is my view that on a redetermination of a fundamental issue at trial based on an existing trial record, the principle of fairness dictates that the Court deal with the record as it stands and not as one party might wish it to stand. This is so because there is now no possibility for Ratiopharm to cure any deficiency or to supplement its case by leading other evidence, whereas there would have been such an opportunity had the objection been raised by Wyeth at trial thus putting Ratiopharm on notice of its position. This is exactly what occurred with respect to the hearsay objections it raised regarding some of the tendered evidence. Ratiopharm knew that Wyeth had objections and, although the objection was overruled, it had the opportunity to consider its case, including the likelihood of an appeal, and an opportunity to supplement the evidence that had been put before the Court. No such opportunity now exists with these new objections.
[38] This is the position advanced and the rationale given by the British Columbia Court of Appeal in Lam v Chiu, 2014 BCCA 32, wherein at paragraphs 47-48, it stated:
If a party objects to the admissibility of evidence, then that objection should be made in a timely manner, namely at the time the evidence is tendered. This is particularly so in civil cases. As Chief Justice Macdonald stated in Hall v. Geiger, [1930] 3 D.L.R. 644 at 644 (B.C.C.A.), “The Court assumes that where no objection is taken to evidence, it is not regarded as of any prejudice to the defendant, the person who might have taken the objection.” See also: McBryde v. Womack, 2013 BCCA 260 at paras. 52 - 57, 44 B.C.L.R. (5th) 209; Bransford v. Yilmazcan, 2010 BCCA 271 at para. 24, 320 D.L.R. (4th) 535; Mallet v. Alberta (Motor Vehicle Accident Claims Act, Administrator), 2002 ABCA 297 at paras. 62 - 65, 15 Alta. L.R. (4th) 231. …
Another consideration is that had a timely objection been taken, Mr. Lam might have been able to establish a basis for admitting the notes. In his factum, Mr. Lam advances several such arguments to which Ms. Chiu has filed a reply. However, because of the position taken by Ms. Chiu at trial, this Court does not have available the record necessary to deal with all of those arguments. The following statement by Mr. Justice Doherty in R. v. Bero (2000), 151 C.C.C. (3d) 545 (Ont. C.A.), is equally apt in civil cases:
[12] It would be wrong for this court to undertake the analysis required to decide whether the evidence was admissible based on a record in which none of the relevant considerations were explored because the defence chose not to litigate the admissibility of the evidence at trial. Absent any suggestion of ineffective representation at trial, or some other adequate explanation for the absence of any objection to admissibility at trial, I would not give effect to an argument that comes down to the contention that an accused should receive a new trial on the ground that had he chosen to challenge the admissibility of evidence at trial he might have been successful.
[39] Wigmore takes a similar approach to that stated in Phipson on Evidence: A failure to raise a timely objection at trial constitutes a waiver of the right to later raise an objection:
A rule of evidence not invoked is waived. The authority gathered below and the various decisions, rules and codes gathered throughout this section show that this principle is well established. [21]
[40] The Federal Court of Appeal, in rejecting a late challenge to the admissibility of expert evidence in a section 8 claim for damages in Pfizer Canada Inc v Apotex Inc, 2014 FCA 54, offered a rationale similar to that expressed above. There, Justice Gauthier for the Court, at paragraphs 9-11 stated:
The Supreme Court of Canada in [R. v J.-L.J., 2000 SCC 51, [2000] 2 S.C.R. 600] at paragraph 28 observed that the admissibility of expert evidence should be scrutinized "at the time it is proffered". There is an important rationale behind the preclusion of objections to the admissibility of evidence on appeal: had the objection been made in a timely way before or at trial, the parties would have been able to conduct examinations of the person presented as an expert, the trial judge would have made all appropriate factual and credibility findings on the matter, after the ruling of the trial judge the parties might call other evidence or adjust their examinations of other witnesses accordingly, and the appellate court would have the reasons of the trial judge. [emphasis added]
It is also material to consider that nowadays, complex civil cases like pharmaceutical patent cases are court managed from the start to ensure that there is full disclosure of all the evidence and of all the issues to be determined before the trial or at the trial in a manner that will ensure the most efficient prosecution of the case and use of court resources. In this context, trial judges should generally be allowed to rely on experienced counsel who have the assistance of their technical experts to raise admissibility issues, especially those regarding the reliability of scientific evidence. The court must be especially vigilant to prevent tactical conduct: Apotex Inc. v. Bristol-Myers Squibb Company, 2011 FCA 34 at paragraph 37.
However, there are cases where appellate courts will use their discretion to consider admissibility issues despite the absence of an objection at first instance. Pfizer referred to a few such cases. But considering all the circumstances of this case, especially those set out in paragraph 8 above, this Court should refuse to consider the admissibility issue for the first time on this appeal.
[41] Like the Federal Court of Appeal, I am concerned that Wyeth’s recent objection to admissibility is seriously prejudicial to Ratiopharm. It cannot advance other evidence or take any of the steps it might have taken at trial had it known that admissibility of unchallenged evidence would be at issue, whether then or now. For this reason, I will not entertain any new objection to admissibility proffered by Wyeth.
[42] This approach is consistent with the direction provided in paragraph 109 of the Appeal Decision which draws a distinction between admissible evidence and evidence not objected to at trial: “Yet there is admissible evidence or evidence not objected to in the record that might conceivably bear on these matters … .” [emphasis added] In my assessment, the Federal Court of Appeal in so stating recognized that there may be evidence in the record that might be inadmissible had a timely objection been made, but it may be considered on this reconsideration because no objection was made at trial to that evidence being received.
[43] With this background and instruction, I turn to the issue on this redetermination, which I will address by responding to three questions:
Would Ratiopharm have wanted to supply the market with generic Venlafaxine in the but-for world during the Relevant Period and was Alembic willing to produce Venlafaxine?This is responsive to the “would have” requirement of the analysis.
Was Ratiopharm, through Alembic, able to supply the market with generic Venlafaxine during the Relevant Period?This is responsive to the “could have” requirement of the analysis.
If Ratiopharm, through Alembic, would have and could have supplied the market with generic Venlafaxine in the Relevant Period, then would it and could it have access to sufficient quantities to supply all or a part of the generic market?
The “Would Have” Analysis
[44] Leaving aside for the moment the question of the size of the generic Venlafaxine market, there is ample admissible evidence from which to conclude on the balance of probabilities that Ratiopharm wanted to supply the market with generic Venlafaxine and that Alembic wanted and was willing to produce it for Ratiopharm.
[45] When judging a claim made pursuant to section 8 of the PMNOC Regulations, and having to make findings as to what would have and could have happened had the innovator pharmaceutical company not acted in the manner that it did to prevent the generic from entering the market, a judge is constructing a hypothetical world. It has been often observed by this Court that the construct of that hypothetical world is often best informed by what happened in the real world: See e.g. Apotex Inc v Takeda Canada Inc, 2013 FC 1237 at paragraph 21.
[46] At trial, admissible evidence was lead through the testimony of John Kane Deneke and Kent Major, in addition to admissible exhibits entered during their testimony (discussed below), that Ratiopharm very much wished to supply the market with generic Venlafaxine in the Relevant Period. Aside from the evidence of Ratiopharm’s witnesses as to the “wishes” of the company, this is evidenced by the fact that Ratiopharm had previously taken the required and appropriate steps to be in a position to do so commencing in January 2006. [22]
[47] As noted above, in 2002, Ratiopharm negotiated the rights to KarmaPharm’s generic Venlafaxine product in anticipation of being able to enter the Canadian market upon the expiry of the 540 Patent. It also, in 2005, entered into two agreements with Alembic; the first for the development of the product and the second for the manufacture of the product. No objection was taken to either of these agreements when tendered as evidence. There is evidence from Mr. Major, again made without objection, that pursuant to these agreements Alembic manufactured both the API and the generic Venlafaxine capsules that Ratiopharm intended to market. Moreover, as detailed immediately below, it did so in a manner satisfactory to Health Canada. In entering into these agreements, Ratiopharm had secured a willing and able supplier of the generic Venlafaxine product. In taking these steps, Ratiopharm had satisfied all of the practical requirements to be able to enter the generic Venlafaxine market in January 2006, had Wyeth not listed the 778 Patent when it did.
[48] Ratiopharm ensured that the Alembic plant was inspected and certified by Health Canada. In February 2005, Ratiopharm filed its ANDS with Health Canada for its generic Venlafaxine. [23] No objection was raised to the ANDS being entered as an exhibit. On February 24, 2005, Ratiopharm received a letter from Health Canada acknowledging the receipt of the ANDS. [24] By letter dated December 9, 2005 from Health Canada [the Patent Hold Letter], Ratiopharm was advised that the examination of its ANDS had been completed on December 7, 2005, and that an NOC would issue once the requirements of the PMNOC Regulations were met. [25] Again, there was no objection made to any of these letters being entered as exhibits. In taking these steps and receiving the approvals of Health Canada, Ratiopharm had satisfied all the legal requirements to be able to enter the generic Venlafaxine market in January 2006, had Wyeth not listed the 778 Patent when it did.
[49] In addition to the above, in the Licence and Supply Agreement, Alembic committed to “supply exclusively to ratiopharm … all of ratiopharm’s requirements of Product.” [26] It was acknowledged by counsel for Wyeth, that this agreement is admissible to show the intention of the parties at the time when it was entered into. [27] In short, it proves that Alembic was willing to produce the generic Venlafaxine, which goes to the “would have” aspect of the test. Moreover, Alembic actually did manufacture bio-batches and a full batch of the generic Venlafaxine prior to January 2006. There can be no better evidence of its willingness to supply Ratiopharm with generic Venlafaxine, than the fact that in the real world it did just that.
[50] The above evidence satisfies me, on the balance of probabilities, that Ratiopharm (through Alembic) would have entered the market with generic Venlafaxine at the commencement of the Relevant Period on January 10, 2006, but for the wrongful actions of Wyeth. The same evidence supports a finding that it would have continued in the market having entered it.
The “Could Have” Analysis
[51] Much of the admissible evidence relied on above for the “would have” analysis is also relevant to the “could have” analysis. In this section, the question to be addressed is whether Ratiopharm (and Alembic as its manufacturer and supplier) was able to supply the market with generic Venlafaxine at the relevant time. Again, the quantity of generic Venlafaxine it would be able to supply is left aside for the moment.
[52] In addition to having complied with all regulatory requirements in the but-for world, and having secured a manufacturer and supplier of its generic Venlafaxine, Ratiopharm had placed orders with Alembic to manufacture the product so that it would be in a position to enter the market in January 2006. There is uncontroverted evidence from Mr. Major that Alembic had manufactured “quantities” of the generic Venlafaxine for the “purpose of the proposed January 2006 launch.” [28] Alembic had manufactured and had in storage “saleable” bio-batches of the generic Venlafaxine produced for the purposes of the ANDS, and it also had the initial larger scale batch that had been manufactured prior to Ratiopharm directing Alembic to stand-down manufacturing due to the probable 778 Patent listing. [29] His uncontradicted evidence was that if Ratiopharm had not directed Alembic to cease production, then by January 2006, it would have had 6.6 million capsules in addition to the bio-batches, bringing the inventory to “probably around 7 million.” [30]
[53] Mr. Major testified that the quantity of product at hand as described above would have permitted Ratiopharm to have launched its product in January 2006. [31] Although the product was in India, Mr. Major testified that Ratiopharm would have used air freight to move the product to Canada had it been necessary in order to have the product in Canada to launch in January 2006. [32]
[54] The question whether Alembic could have supplied product to Ratiopharm to launch in January 2006 is answered by this same evidence. It had in fact manufactured some product – bio-batches, one full production run, and additional API, before it was told by Ratiopharm to put a hold on production. It is a reasonable and logical inference from the evidence that but-for Ratiopharm stopping production because of the wrongful conduct of Wyeth, Alembic was in a position to be able to produce sufficient quantities of the product to permit Ratiopharm to commence and continue marketing its generic Venlafaxine.
[55] The answer to the question whether Ratiopharm (and Alembic as its manufacturer and supplier) was able to supply the market with generic Venlafaxine at the relevant time is that it was. There is admissible evidence that but-for Wyeth’s actions, Ratiopharm could have had sufficient product on hand from Alembic to launch its product. There is no evidence that would support any supposition (and none was advanced) that at any time during the Relevant Period Ratiopharm (through Alembic) would cease having generic Venlafaxine to market.
[56] Thus, the second part of the test has been satisfied on the balance of probabilities.
The Portion of the Market Analysis
[57] Having found that Ratiopharm and Alembic would have and could have supplied the market at the relevant time with its generic Venlafaxine, the final question to address is “whether in the hypothetical world Ratiopharm (Teva) would have had and could have had access to sufficient quantities of venlafaxine at the relevant time [emphasis added].” [33] This essentially turns on the extent of Alembic’s ability to supply Ratiopharm with its generic Venlafaxine, as Ratiopharm would undoubtedly be willing to sell as much of it as the market demanded. At trial, it was found that Ratiopharm would have been the sole generic on the market from January 10, 2006 to December 1, 2006, and thereafter, when Novopharm entered the generic market, Ratiopharm’s share would have eroded at the same rate as Novopharm’s market share in the real world eroded to Ratiopharm’s product. [34]
[58] I have already found that the evidence proves on the balance of probabilities that Ratiopharm (through Alembic) would have had and could have had access to a sufficient quantity of generic Venlafaxine to enter the market on January 2006. There is no evidence that but-for the listing of the 778 Patent, Alembic could have or would have ceased manufacturing the generic Venlafaxine during the Relevant Period, or that Ratiopharm would have directed it to do so.
[59] Wyeth submits at paragraphs 18 and 19 of its Written Argument on Redetermination that the question before the Court is as follows:
The only issue on this redetermination is whether Ratiopharm, through Alembic, would