Teva Canada Limited v. Pfizer Canada Inc.

Teva Canada Limited v. Pfizer Canada Inc.
Court (s) Database
Federal Court Decisions
Date
2017-03-30
Neutral citation
2017 FC 332
File numbers
T-1496-13
Decision Content
Date: 20170330
Docket: T-1496-13
Citation: 2017 FC 332
BETWEEN:
TEVA CANADA LIMITED
Plaintiff
and
PFIZER CANADA INC.,
WARNER-LAMBERT COMPANY and WARNER-LAMBERT COMPANY, LLC
Defendants
PUBLIC REASONS FOR JUDGMENT
(Confidential Reasons for Judgment issued March 30, 2017)
TABLE OF CONTENTS
SECTIONS:
PARAGRAPH #
I. Introduction
[1] - [6]
II. Legal Framework
[7] - [15]
A. Teva’s Position
[16] - [17]
B. Pfizer’s Position
[18] - [23]
III. Witnesses
[24] - [25]
A. Teva’s Fact Witnesses
[26] - [27]
(1) Mr. Kent Major
[28] - [33]
(2) Mr. Brent Fraser
[34] - [35]
(3) Mr. Douglas Sommerville
[36] - [39]
(4) Mr. Jeevan Reddy
[40] - [44]
(5) Mr. Peppino D’Agostinis
[45] - [46]
(6) Mr. Christopher Morin
[47] - [48]
(7) Dr. Brian Des Islet
[49] - [52]
(8) Mr. Barry Fishman
[53] - [58]
B. Teva’s Expert Witnesses
[59] - [60]
(1) Mr. Robert Ferguson
[61] - [66]
(2) Dr. Aidan Hollis
[67] - [69]
(3) Mr. Ian Hilley
[70] - [73]
C. Pfizer’s Fact Witnesses
[74]
(1) Ms. Cynthia Di Lullo
[75] - [79]
(2) Mr. Oscar Mancini
[80] - [82]
(3) Ms. Rania Cassar-Awe
[83] - [87]
(4) Mr. Darren Noseworthy
[88] - [94]
D. Other Fact Witnesses
[95]
(1) Generics
[95] - [101]
(2) Ms. Laura Meaney
[102] - [105]
E. Pfizer’s Expert Witnesses
[106]
(1) Dr. Iain Cockburn
[107] - [110]
(2) Dr. Paul Reider
[111] - [116]
(3) Mr. Peter Steger
[117] - [124]
(4) Mr. Neil Palmer
[125] - [130]
IV. Analysis and Findings
[131]
A. Liability Period
[132] - [154]
B. Size of Pregabalin Market
[155] - [168]
C. Size of Generic Portion of Pregabalin Market
[169] - [171]
D. Teva’s Share of the Generic Market
[172]
(1) Experts
[172] - [177]
(2) Competition
[178] - [183]
(3) Teva’s Ability to Launch
[184] - [197]
E. Generic Entry - General
[198] - [201]
(1) Third Party Generics
[202] - [217]
(2) GenMed Entry
[218] - [244]
(3) Authorized Generics
[245] - [258]
F. Formulary Listing
[259] - [273]
G. Pricing
[274] - [280]
H. Trade Spend
[281] - [297]
I. Miscellaneous Accounting and Cost Issues
[298]
(1) Inspection Costs
[299] - [301]
(2) Cost of API
[302] - [304]
(3) Recipe Costs and Quantity of API
[305] - [306]
(4) Pipefill
[307] - [312]
V. Agreed upon Findings
[313]
VI. Conclusion
[314] - [317]
PHELAN J.
I. Introduction
[1] Teva Canada Limited [Teva] claims in this action damages under s 8 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 [PMNOC Regulations or Regulations]. The claim stems from Pfizer Canada Inc’s [Pfizer] commencement of applications under s 6 of the Regulations against Ratiopharm Inc [Ratiopharm] and against Teva to prevent the federal Minister of Health from issuing Notices of Compliance [NOCs] authorizing the sale of the generic version of Pregabalin. The effect of those s 6 applications was to prevent Teva from entering the Canadian market with that drug until February 14, 2013 (Teva took over Ratiopharm).
[2] Lyrica is a popular pharmaceutical for the management of neuropathic pain. It was the reference product for both Ratiopharm’s and Teva’s Pregabalin drug, which was the subject of NOC proceedings. This action for damages arises out of those NOC proceedings, which were commenced by Pfizer in 2009 to prevent NOCs being issued for Ratiopharm’s Pregabalin product and for Teva’s Pregabalin product. These proceedings were discontinued on February 14, 2013 (Court File Nos. T-1422-09 and T-1868-09).
[3] The Defendants are interrelated companies and are hereinafter referred to as Pfizer unless otherwise indicated.
[4] The parties are in agreement that Teva is entitled to recover its losses or damages, but they disagree about many important aspects of how those losses should be determined.
[5] However, there is agreement that the Court should determine the issues that remain unresolved so that a precise calculation of Teva’s damages can be settled between the parties. There is also agreement that the Court should remain seized of the matter and can receive submissions and determine any matter arising from this Judgment.
[6] The Court concurs with the above as it makes little practical sense for the Court to engage in the accounting and mathematical calculations which will give rise to a final damages number.
II. Legal Framework
[7] There is no dispute as to the steps which the Court should follow in assessing damages. These are well laid out in Apotex Inc v Sanofi-Aventis, 2012 FC 553, 410 FTR 78, aff’d 2014 FCA 68, aff’d 2015 SCC 20.
[8] The five steps can effectively be described as follows in respect of the relevant drug:
determine the duration of the period of liability [the Liability Period];
determine the overall size of the Pregabalin market during the Liability Period;
determine the portion of the Pregabalin market that would have been held by Teva and any other generic manufacturers during the Liability Period – the generic market;
determine the portion of the generic market that would have been held by Teva – its lost volumes; and
quantify the damages that would have been suffered by Teva in respect of its lost volumes (net lost profits).
There are subsets to each of these steps as well, depending on the circumstances.
[9] These steps are part of the Federal Court of Appeal mandated construction of the “But For World” [BFW] – a world where Teva (or Ratiopharm) would not have been prevented from entering the Canadian market solely by virtue of the automatic stay under the PMNOC Regulations. It is a somewhat artificial world akin to lost business opportunity analysis, but it is grounded in real world experience. It is not a dream world or an ideal world. The NOC Regulations otherwise continue to operate, and real events happen and/or inform the BFW. (See, for example, Merck Frosst Canada & Co v Apotex Inc, 2011 FCA 329, 210 ACWS (3d) 224, and Teva Canada Limited v Sanofi-Aventis Canada Inc, 2014 FCA 67, 239 ACWS (3d) 180.)
[10] The Court of Appeal recently confirmed that the fundamental question for the Court is what would have happened if Pfizer had not commenced prohibition proceedings against Ratiopharm and Teva (Pfizer Canada Inc v Teva Canada Limited, 2016 FCA 161, 267 ACWS (3d) 628 [Venlafaxine decision]; see also: Apotex Inc v ADIR, 2017 FCA 23).
[11] In the Venlafaxine decision, the Court of Appeal, in addition to reiterating the applicability of the Hearsay Rule (which is referred to again later in this Judgment), also emphasized that the Court must examine both what could have happened and what would have happened. This is Teva’s burden that it could have and would have come to market in the timeframe alleged.
[12] The Court of Appeal in the Venlafaxine decision summarized this two-sided analysis thus:
[50] Both “would have” and “could have” are key. Compensatory damages are to place plaintiffs in the position they would have been in had a wrong not been committed. Proof of that first requires demonstration that nothing made it impossible for them to be in that position—i.e., they could have been in that position. And proof that plaintiffs would have been in a particular position also requires demonstration that events would transpire in such a way as to put them in that position—i.e., they would have been in that position.
[51] Both elements have to be present. “Could have” does not prove “would have”; “would have” does not prove “could have”:
• Evidence that a party would have done something does not prove that it could have done something. I might swear up and down that I would have run in a marathon in Toronto on April 1 aiming to complete it, but that says nothing about whether I could have completed it. Maybe I am not fit enough to complete it.
• Evidence that a party could have done something does not prove that it would have done something. A trainer might testify that I was fit enough to complete a marathon race in Toronto on April 1, but that says nothing about whether I would have completed it. Perhaps on April 1 I would have skipped the marathon and gone to a baseball game instead.
[13] The Federal Court of Appeal’s judgment emphasizes that the BFW must be viewed through realistic assessments of the likelihood that the plaintiff’s BFW scenario would occur. The real world plays a significant role in the construction of the BFW.
[14] The BFW is to mirror, as much as possible, the real world experiences and circumstances – to use history as the basis for assessing the assumptions advanced in the BFW scenarios.
[15] Consistent with the civil burden of proof, Teva bears the burden of establishing the facts upon which it claims compensation. The Court can rightfully question the “would have” aspect of the analysis where it is based principally on oral evidence of intent. This caution is applicable as well to Pfizer’s claims of what it would have done in the face of Teva’s asserted BFW conduct.
A. Teva’s Position
[16] Teva’s position generally is set out in the Findings of Fact which it asks this Court to adopt. Those Findings, modified by the Court, parallel the five-step analysis referred to earlier. They also follow, in large measure, the manner in which this case was presented by both sides: issue by issue rather than through a historical or “story line” approach.
[17] Those requested Findings are:
Duration of the Liability Period
The start date of the Liability Period is May 1, 2010 because:
The conditional NOC [NOC/c] for ratio-Pregabalin would have issued by May 1, 2010.
In the alternative, the NOC with carve out would have issued by May 1, 2010.
In the further alternative, the NOC for ratio-Pregabalin would have issued on the patent hold date of August 26, 2010.
The end date of the Liability Period is February 14, 2013.
The Court should adopt Dr. Hollis’ model of the size of the “but for” generic Pregabalin market.
In the alternative, the Court could reasonably adopt the corrected version of Dr. Cockburn’s analysis as set out in Dr. Hollis’ reply report.
Overall size of Pregabalin market
The overall size of the generic portion of the Pregabalin market
The evidence of Dr. Hollis should be preferred to that of Dr. Cockburn.
The Portion of the generic market that would have been held by Teva
GenMed
Pfizer would not have launched GenMed in the BFW.
In the alternative, if GenMed had launched, it would not have entered the market until six months after Teva had entered the market.
Mylan
Mylan would not have been an authorized generic for Pfizer in the BFW.
Other generics
Pfizer would not have had an authorized generic in the BFW.
There is no evidence that any other generic manufacturer could or would have entered the Pregabalin market in the BFW.
Formulary Listings
Neither Ratiopharm nor Teva would have listed Pregabalin on any formulary outside Quebec during the Liability Period.
Quantification of Teva’s Damages
Ability to Supply
Ratiopharm would have been able to launch its Pregabalin product as early as May 1, 2010 and would have been able to supply the entire Canadian generic market.
After the merger, Teva would have chosen to continue marketing ratio-Pregabalin and would have been able to supply the entire Canadian generic market.
At some time after February 2011, Teva would have chosen to replace ratio-Pregabalin with Teva-Pregabalin and would have been able to supply the entire Canadian generic market.
Active pharmaceutical ingredient [API] issues would not have delayed the launch of ratio-Pregabalin or Teva-Pregabalin.
Ability of other generic manufacturers to supply the market
No other generics would have entered or could have supplied the Pregabalin market.
Price
Outside Quebec, in a non-formulary market Ratiopharm and Teva would have priced the Pregabalin product at 85% of the Lyrica price.
In Quebec, generic Pregabalin would have been listed on the formulary at 60% of the Lyrica price (until a second generic was listed, when it would be listed at 54%).
Outside of Quebec, when listed on a provincial formulary, Ratiopharm and Teva would have priced Pregabalin in accordance with provincial regulations.
Ratiopharm’s trade spend for ratio-Pregabalin would have been 15% in a sole source market.
Teva’s trade spend for ratio-Pregabalin and Teva-Pregabalin would have been 20% in a sole source market (from September 2010 until the entry of a second generic).
Teva’s trade spend for ratio-Pregabalin and Teva-Pregabalin would have been 30% in a dual source market (where the second entrant is other than GenMed).
Teva’s trade spend for ratio-Pregabalin and Teva-Pregabalin would have been 45% in a multi-source market (which does not arise in the BFW).
Ratiopharm’s allowable expenses do not include inspections.
Teva’s API costs do not include the cancelled |||||||||||||||||||| purchase orders.
Ratiopharm’s COGS do not include an API overage based on the recipe card error.
Trade Spend
Accounting issues
Pipe file
Teva’s lost sales include pipe fill volumes.
B. Pfizer’s Position
[18] Pfizer takes the position that there are significant issues surrounding the nature and quality of the evidence advanced by Teva.
[19] It also argues that the BFW constructed by Teva was based on wishful thinking – that it excluded consideration of real world events, contemporaneous documents, and information the Court could reasonably expect to be before it. From this assertion, Pfizer asks the Court to draw adverse inferences on a number of issues.
[20] Pfizer asserts that the absence of key evidence deprives the Court of what it needs to determine the case and deprives Pfizer of the opportunity to fully cross-examine on the issues in this litigation.
[21] Pfizer criticizes Teva’s evidence for what was presented and what was not presented. This general approach infused Pfizer’s submissions on most, if not all, of the issues.
[22] The difficulty with part of Pfizer’s argument is that it asks the Court to assume that there was better evidence available or a better witness to give evidence. The Court, however, must decide the case on the evidence presented. It can assess the quality of the witnesses’ testimony but, except in the clearest of cases, it cannot speculate on what evidence it could have heard. It can comment on evidence it heard and its strength and weakness. The discovery process is the proper method of ferreting out the assumed missing evidence; if a party did not exercise those rights fully, it cannot ask the Court to assume that witnesses are not forthright and that counsel aided and abetted in hiding documents.
[23] However, as will be seen later in these Reasons, Pfizer’s argument has some merit particularly in assessing the Liability Period and the actions/inactions of Ratiopharm.
III. Witnesses
[24] During the trial Teva called eleven (11) witnesses, while Pfizer called fifteen (15), both factual and expert.
While credibility is always in issue, much of the determination of what evidence was persuasive turned on weight rather than honesty or believability.
[25] It is not the intention of the Court to give a lengthy summary of each witness’ evidence, nor in the following brief summary to make comments on the acceptance of or preference for some witnesses over others. To the extent necessary, those comments are reflected in the findings on the issues.
A. Teva’s Fact Witnesses
[26] Teva called eight (8) fact witnesses including Brent Fraser, a senior public official previously at the Ontario Drug Benefit Plan. Given Fraser’s experience and understanding of the provincial regulation and pricing, he may be a fact witness but his evidence is based on deep expertise.
[27] Teva’s other fact witnesses included two from Ratiopharm, four from Teva, and one from MSN Pharmachem Pvt Ltd [MSN].
(1) Mr. Kent Major
[28] Major was the most significant corporate witness to address issues related to Ratiopharm and his evidence is critical to the assessment of whether Ratiopharm could and would have launched its Pregabalin product on or about May 1.
[29] Major was formerly the second most senior officer at Ratiopharm in Canada, Vice President Research and Development and Regulatory Affairs. As such, he was the senior member of the executive team responsible for product development and management. After March 2010, he was part of the Ratiopharm integration team following acquisition by Teva. Amalgamation of Ratiopharm into Teva occurred on August 10, 2010, after which he left the company.
[30] He testified as to the history of Ratiopharm’s project and its status as of August 2010. He gave specific evidence on the issuance to Ratiopharm of the Health Canada patent hold letter, its trade spend rate, and the prices at which Ratiopharm Pregabalin would be sold. He also gave his view of the BFW.
[31] As discussed more fully under the Liability Period section of these Reasons, from April to August, Ratiopharm did next to nothing to advance its product or secure a patent hold letter. While Major suggests that this was likely an administrative error which would not be repeated in the BFW, it represents a major flaw in Teva’s construct of the BFW.
[32] Pfizer is critical of Major’s evidence as being out of touch, out of date, and documentarily deficient. They suggest that there were other Ratiopharm employees who could have provided better evidence. While there were gaps in his memory (he had not been involved in these matters since September 2010) and contemporaneous Ratiopharm documents had not been produced, it is speculation that there was some other senior officer to be called. The Court must take Major and Ratiopharm’s evidence as it is.
[33] Major was in a senior position in the relevant area at Ratiopharm. He is an appropriate corporate officer to be called to speak to the issues. In a BFW analysis, which is itself somewhat speculative, a senior officer is appropriate to speak to what was done, planned, capable of being done, and whether it would have been done.
As indicated later, Ratiopharm’s evidence, particularly as to the start of the Liability Period, was not persuasive or helpful to Teva.
(2) Mr. Brent Fraser
[34] In the Liability Period, Fraser was Director, Drug Program Services of Ontario Drug Programs. He testified for both parties and it is fair to say that he gave complete, helpful, and cogent evidence. It was extremely useful in assessing what had been occurring in respect of Ontario’s policy on formulary listings (the provincial drug reimbursement plan as followed by multiple private plans) and what could or would have happened.
[35] In summary, his evidence was that Ontario would have listed Pregabalin and Lyrica as a general benefit on the Ontario formulary when there were three generics in the market or about to enter the market.
(3) Mr. Douglas Sommerville
[36] From 2014 through to trial, Sommerville was Senior Vice President and General Manager at Teva. He was also the Vice President of Sales and Marketing at Teva during the Liability Period.
[37] His evidence covered Teva’s position with respect to:
price at which Teva would sell Pregabalin;
pricing strategies and customer profiles;
Teva’s gross profit margin profiles;
the track spend it would have offered; and
whether it would have given greater discounts (trade spend) if it received something else in return.
[38] Sommerville, given his position at Teva, was in an excellent position to give evidence of Teva’s real world experience and its BFW position.
[39] Sommerville is a “marketer” and the Court appreciates that his enthusiasm for his product and position may colour his perspective. That does not detract from the knowledge he imparted, but it required the Court to approach his BFW scenario with caution.
(4) Mr. Jeevan Reddy
[40] Reddy, head of global sales at MSN Pharmachem in India (a pharmaceutical ingredient supplier), is an experienced market participant and has direct knowledge of MSN’s dealings with Teva in respect of Pregabalin.
[41] His evidence was to the effect that MSN could have supplied commercial quantities of Pregabalin to Teva in advance of a product launch in either May or August 2010.
[42] Pfizer challenges Reddy’s evidence, firstly because he is a senior salesperson and not a production person, and secondly because of the absence of the type of documentation it says should have been produced. Some documents were produced – sales invoices, certificates of analysis – but not enough documentation.
[43] His position in the company was sufficient to permit him to give evidence of the company’s willingness and ability to supply Pregabalin. As a corporate spokesman, he is entitled to rely on what he knows or is told internally about various aspects of corporate operations.
[44] It is not the absence of a substantial record of documents which poses an issue, as MSN’s dealings were done in the absence of such documents as supply agreements; rather, it is the credibility of Reddy’s assertion that MSN could supply whatever was needed. However, he essentially made that assertion and it was not undercut by cross-examination. Reddy confirmed the availability of the necessary batch size, capacity to manufacture, the market, and pricing of the product. However, there were gaps in his testimony regarding precisely how MSN would scale up for the new market and about “out of spec” situations, which caused some concern.
(5) Mr. Peppino D’Agostinis
[45] De Agostinis is currently an employee of Halo, which took over Teva’s Mirabel facility. He had been Ratiopharm’s Associate Director of Technical Services, and upon acquisition of Ratiopharm by Teva he joined Teva at the Mirabel plant.
[46] His evidence largely related to the preparation of Ratiopharm’s submission to Health Canada, batch sizes, and the validation process. It was confirmatory of Ratiopharm and Teva’s ability to supply the Canadian market with Pregabalin. His evidence was straightforward, balanced and fair. He was also consistent with other Ratiopharm’s witnesses in that there was a noticeable absence of documentation – a common theme and criticism running through Pfizer’s submissions.
(6) Mr. Christopher Morin
[47] During the Liability Period, Morin, now Director of Financial Operations, worked in Teva’s finance group as Senior Manager, Solid Dose Products. His evidence covered aspects of both Mirabel and Stouffville production operations, various aspects of costing of goods, and errors in certain documents and the necessary adjustment to the calculations of costs to adjust for the errors.
[48] He also spoke to the capacity of Stouffville to produce and to increase production with the equipment in place, as well as problems with particle sizing and shortages of product.
(7) Dr. Brian Des Islet
[49] Des Islet was Teva’s Executive Director of Scientific Affairs in the Liability Period. He had overall responsibility for the pipeline of products and was knowledgeable about the research and development of Teva’s Pregabalin. Pfizer accepts, as does the Court, that he was forthright, objective, and helpful.
[50] His evidence included the required development process for bringing a product to market. He gave a reasonable explanation of the BFW from Teva’s perspective, including recognition of past problems with API from India and Israel and a confirmation that Teva would have used MSN - Ratiopharm’s API supplier - as Teva’s supplier.
[51] Importantly, Des Islet was part of the Integration Team dealing with Ratiopharm. However, he had little information about Ratiopharm’s ability and willingness to go to market. As Pfizer has pointed out on numerous occasions, there was a dearth of Ratiopharm documentation about its ability and willingness to come to market which cannot be explained away simply by saying that Ratiopharm was on patent hold and therefore no other company would be looking at coming to market.
[52] While Des Islet’s evidence underscores the weakness in proof regarding Ratiopharm and its coming to market with Pregabalin, the same cannot be said about Teva. Des Islet confirmed key aspects of Teva’s ability and intention to come to market. Some documents from the Operations Group were produced. Pfizer says that more should have been forthcoming; however, Pfizer chose not to pursue these other documents and the Court does not know if production was refused and, if so, on what grounds. If Pfizer wished to impeach Des Islet or other Teva witnesses on the basis that other “relevant” documents undermined their testimony, it was incumbent on Pfizer to obtain the documents.
(8) Mr. Barry Fishman
[53] Fishman was the President and CEO of Teva during the Liability Period. He was at Teva from 2003 to 2014.
[54] Fishman provided important evidence of market strategy in respect of products, prices, and Teva’s BFW. He addressed the issue of “would Teva launch” from the high level position he held. Many real world aspects were addressed by other witnesses, but Fishman was in an excellent position to speak to Teva’s intent to launch and the application of that intent in Teva’s BFW.
[55] This witness also addressed aspects of the merger with Ratiopharm and the amalgamation of operations and products. He gave clear evidence that depending on which product was further developed, Teva would have launched either with Ratiopharm or its own Pregabalin.
[56] Fishman gave important evidence about pricing. While he acknowledged that pricing would be at 75% of the brand list, he constructed a BFW scenario at 85% while admitting that he knew of no example of a Teva product being listed at even 80%.
[57] He underscored the importance of Ontario to Teva’s market and Teva’s general best interest to accede to whatever pricing regime Ontario demands (subject to economic viability).
[58] While Fishman was a strong witness, his evidence was from the “10,000 ft level” and suffered when he was forced to “devil in the detail”. Nevertheless, he confirmed that Teva could and would have launched Pregabalin as soon as possible.
B. Teva’s Expert Witnesses
[59] Much of this case, and the resolution of specific aspects of damages, is directed by the experts called by both sides. The specifics of their respective evidence are also referred to in the analysis of the issues which the Court is asked to address.
[60] Teva called experts in economics, in the industry itself, in regulatory affairs, and in accounting.
(1) Mr. Robert Ferguson
[61] Ferguson was an expert in forensic accounting with expertise in business valuations. He examined four scenarios and calculated Teva’s loss in each scenario.
[62] The points of major disagreement with Pfizer’s comparable expert Peter Steger (a CPA and business evaluator) were in respect of the cost of API and trade spend rates.
[63] In respect of API, Ferguson relied on the delivered orders placed with MSN. While his acceptance of API is criticized by Pfizer as ignoring real world conditions, in this case it was a reasonable basis for Ferguson’s premise because the evidence of Teva was that in a BTW it would have used MSN for reasons of availability and reliability.
[64] With respect to trade spend, Ferguson was to assume that in a sole source trade spend situation the rate would be 15-20%. The validity of that assumption must be established by Teva. An expert can accept an assumption if in their judgment it is reasonable and if ultimately the assumption is shown to be valid.
[65] Ferguson had to make some corrections to his calculations, but these did not alter his overall conclusions. The handling of the Quebec trade spend and the Montreal Group Agreement were somewhat problematic.
[66] Ultimately, the Court concludes that Ferguson was a helpful, credible, and balanced witness whose opinion is deserving of considerable acceptance.
(2) Dr. Aidan Hollis
[67] Hollis is an expert in the economics of the generic pharmaceutical industry. He was clearly a supporter of the generic pharmaceutical industry, and while there was no bias exhibited in favour of Teva the Court does view his evidence in light of a potential predisposition to favour generics.
[68] While his evidence is touched on later, he made a strong case for the “first mover advantage” (the advantage the first generic into the market gains), which has some lasting if diminishing effect.
[69] There was significant disagreement between Hollis and Pfizer’s expert Iain Cockburn. This was evident in the use by Cockburn of economic models, contrasted with that of Hollis who used modeling plus observation, experience, and expertise. It is also evident in their respective approaches to the “pipe fill” concept – Hollis favours it, Cockburn does not.
(3) Mr. Ian Hilley
[70] Hilley is a pharmaceutical industry expert and a former senior executive of Mylan Canada and its predecessor GenPharm. He was well versed in the generic pharmaceutical industry.
[71] Hilley gave important evidence on his opinion as to the start of the Liability Period, which turned on Ratiopharm’s actions and the status of a NOC/c issued to Lyrica.
[72] Hilley suggested that the start date would be in late April-early May 2010 because Ratiopharm was “regulatory ready” in mid-April 2010. However, despite advocating for an early start date, he was clearly uncomfortable with Ratiopharm’s mishandling of the patent hold letter and its failure to follow up on its ANDS – all of which is inconsistent with the notion that Ratiopharm was ready and willing to launch in May 2010.
[73] Hilley exhibited moments of evasiveness and unnecessary stubbornness. The Court is cautious in accepting much of his evidence, and he was less helpful to Teva than they might have expected.
C. Pfizer’s Fact Witnesses
[74] Pfizer called four of their own fact witnesses: three current employees and a former employee. Pfizer also called representatives of four other and non-related generics to address when and how these other generics would have entered the market. These witnesses were called by Pfizer, and therefore were not subject to cross-examination by other than Teva.
(1) Ms. Cynthia Di Lullo
[75] During the Liability Period, Di Lullo was the marketing Director for Pfizer’s Lyrica product. She had 24 years of experience in the pharmaceutical industry, including fourteen with Pfizer.
[76] She gave extensive evidence on the way Pfizer marketed Lyrica. Her most pertinent evidence was the description of how Pfizer managed Lyrica as it moved toward loss of exclusivity [LOE] and what strategies were used. Pfizer had a practice of moving a product from exclusive status to a competitive situation through the Established Products Business Unit.
[77] Di Lullo covered off subjects such as product promotion (including to physicians), as well as dealings with formularies. She also touched upon the elements of LOE strategy to maintain brand market position and to counter competition through its own generic – GenMed – as well as the use of other authorized generics.
[78] In summary, her evidence was that the strategies used for Lyrica and other drugs, including having an authorized generic, would have been used by Pfizer in the Pregabalin BFW. She relied in part on a number of Business Plans created to deal with the LOE anticipated to be in 2013. There were no such plans for 2010 and 2011 because competitors were on patent hold. However, there was in fact a 2011 Operations Plan which she had not seen nor had she seen the GenMed Strategic Plan.
[79] While Di Lullo gave important evidence delivered forthrightly, she also had some key information gaps and was obviously uncomfortable in testifying on some aspects of the plans (particularly regarding generics). Some of the same criticisms levelled by Pfizer against Teva’s witnesses could be levelled at this evidence.
(2) Mr. Oscar Mancini
[80] Mancini’s evidence focused on supply chain management and outlined how his group prepared for a product launch. He also gave evidence on how it handled the LOE in terms of strategy with GenMed and authorized generics, particularly in respect of Lyrica, its manufacturing (in Germany), labeling, and other such matters.
[81] His evidence was particularly relevant to how the supply chain management system worked for GenMed and its launch in October 2012. He outlined the challenges and feasibility of getting GenMed ready for May 2010 to counter Teva’s claim of May 1, 2010 as the start of the Liability Period. His evidence was inconsistent as to the time frame to launch GenMed’s Pregabalin or other generics, ranging from under three months to at least six months and leaning generally toward three months depending on real world circumstances. He could not commit to a “hard” date.
[82] Mancini tried to be helpful and did the best he could within the narrow frame of his mandate and experience.
(3) Ms. Rania Cassar-Awe
[83] Cassar-Awe was no longer an employee of Pfizer at the time of her evidence, having moved to Shoppers Drug Mart after 23 years at Pfizer. She had held a number of relevant positions during the events under consideration, including Director of Loss of Exclusivity, Management Generic Strategy, and New Business Development, and Director of Retail Generics. She was instrumental in Pfizer’s LOE strategy including Lyrica and GenMed Pregabalin.
[84] Her evidence was wide ranging, both in dealing with real events and in constructing Pfizer’s BFW scenarios.
[85] It is not accurate, as suggested by Pfizer, that her evidence was not undermined by cross-examination. Much of her evidence dealt with her own actions and her justification or views of what happened or could have happened. Her interest in her “good name or reputation” was apparent (although not unusual in any witness) and she cannot qualify as a disinterested witness.
[86] Cassar-Awe went through the GenMed set-up and its use. Relevant to this case is her acknowledgement that in 2010 Pfizer took approximately six months for its second or generic product. She suggested it could be narrowed to nine weeks if a generic pushed on to market.
She also acknowledged that in 2010 GenMed was just starting up, and it was not a significant generic provider. One can conclude that GenMed in 2010 was not the more forceful competitor it would become in later years.
[87] Her evidence suffered from an optimistic view of the BFW where Pfizer and GenMed would do everything to defeat new competition without difficulties. Her faith in Pfizer’s Toolbox (a series of marketing strategies to be pulled out and applied as if a wrench or screwdriver to fix competition) has to be approached with considerable caution.
(4) Mr. Darren Noseworthy
[88] Noseworthy was general counsel to Pfizer during the Liability Period, but he has since moved on to the UK and become responsible for Pfizer in Europe. He was called to the Bar in Ontario in 1999.
[89] He gave evidence on Pfizer’s LOE strategy, including the circumstances for launching GenMed and negotiating authorized generic agreements.
[90] He also outlined Pfizer’s strategy against other generics when exclusivity was lost. His evidence was that once the exclusive market was lost, Pfizer would let everyone in and would not attempt an injunction application nor sue for damages, no matter how long was left on the relevant patent. On this basis no generic would ever launch “at risk” – a factor other generics have said deters the numbers of generics who would enter the market.
Teva rightly cross-examined and challenged this proposition. It is inconsistent with concerns raised by other witnesses and tests the Court’s ability to accept it. Noseworthy is an officer of the Court, and I accept that it is his honest belief; however, it is inconsistent with usual competition, as pointed out by Teva, that a powerful brand would readily abandon all its potential legal rights against competitors for not much apparent gain, and this goes to the weight of this evidence.
[91] His evidence about past marketing actions of Pfizer is largely consistent with Cassar-Awe. He also discussed the state of GenMed in 2010. In addition, he discussed some issues of timing of legal actions, adjournments, and other matters. These are to some extent covered in the Joint Submissions whereby the period of the adjournments in T-1422-09 and T-1868-09 (both NOC proceedings) are to be neutral events as between the parties.
[92] In that regard, the Court accepts Pfizer’s position that the Court should draw no conclusions about the fact or length of the extensions, stays, and adjournments of the two PMNOC proceedings to either increase, decrease, or award or refuse to award damages under s 8 beyond those which would otherwise be awarded or refused.
[93] In essence, Noseworthy testified that in a BFW Pfizer would have been ready with GenMed at the point of LOE and/or would have entered into authorized generic agreements.
[94] While he had some knowledge of the history of other events upon which he built his BFW analysis, there were serious gaps which undermine the weight to be given to his testimony.
D. Other Fact Witnesses
(1) Generics
[95] Pfizer called six generic drug companies who competed with Teva in the Pregabalin market. All appeared under subpoena and only one agreed to meet with counsel beforehand. Some of the evidence was confidential because of the competitive circumstances.
[96] The Court recognizes the difficulty faced by counsel trying, in direct examination, to elicit positive evidence from competitors, even where such examination is skillfully and artfully done as in this case.
[97] In summary, these witnesses, with one exception, indicated less than overwhelming enthusiasm for entering the market in a BFW scenario. For most it was an exercise too remote from what they did in real life – too theoretical for their comfort. Any indication of market entry was couched with numerous pre-conditions, assumptions, and caveats. Their overall response was the somewhat typically Canadian “entry if necessary but not necessarily entry”.
[98] The Court can draw very little in the way of concrete conclusions from this evidence, except for that of Naguib Fahmy from Mylan. Fahmy made it clear that Mylan would generally not have entered into an authorized generic market. The evidence of Len Arsenault from Sandoz was to the same effect, but less categorical.
[99] The problem for Pfizer is that it continues to insist that Mylan would have entered the market and therefore indirectly impeaches its own witness. This technical problem aside, Pfizer continues to insist that a number of generics would have entered the market and would have done so on specific dates or within certain timeframes when the general weight of the evidence was that they would not.
[100] These generic product witnesses also underscored that there were a number of barriers to entry into the market including not just price but also the potential for “launching at risk” – the potential for being sued by the patent holder. This was a barrier despite Noseworthy’s questionable position that Pfizer would never do that.
[101] These witnesses from Pharmascience, Mylan, Sandoz, Riva, Ranbaxy, and Pro Doc were generally not helpful to Pfizer’s BFW competitive scenario.
(2) Ms. Laura Meaney
[102] The last witness in this general category was Meaney, an employee of Health Canada who worked directly on Ratiopharm’s Pregabalin ANDS approval. She handled the interaction with Ratiopharm on the issuance of the NOC.
[103] The Court accepts her evidence as credible, reliable, and fair.
[104] In summary, Meaney put “paid” to Teva’s submissions and some of its witnesses that a NOC/c could and would have been issued by June 1, 2010. She testified that it was practically impossible for Ratiopharm to receive a NOC/c in the BFW before it received its patent hold letter in the real world.
[105] Her evidence emphasized the importance of the patent hold letter, and it raises again the lack of action or explanation of the approximately four month gap in Ratiopharm’s activities from May to August 2010, as discussed earlier.
E. Pfizer’s Expe