Law Times

Law Times • February 2, 2015 Page 11 www.lawtimesnews.com Sanofi-Aventis v. Apotex Inc. Drug makers eagerly awaiting SCC ruling on generic compensation By marg. Bruineman For Law Times he eyes of the phar- maceutical industry will be on the Supreme Court of Canada in April as it deliberates on the is- sue of compensation to generic drug manufacturers in Sanofi- Aventis v. Apotex Inc. The case will examine com- pensation for generic drug manufacturers subject to de- layed entry into the market as a result of a statutory stay caused by failed prohibition proceed- ings. "It will be the first opportu- nity for the Supreme Court to provide direction on the factors and approach of the calcula- tions under s. 8," says Adam Bobker, a partner at Bereskin & Parr LLP who focuses on intel- lectual property litigation. "The patented medicines (notice of compliance) regula- tions is an important piece of legislation in the world of pat- ents. One of the issues the court is likely to deal with is how to deal with historical facts or facts in the real world [and] how that plays into the hypothetical but-for world. . . . It's significant because it deals with a large amount of money." The regulations strive to strike a balance between the in- novative drug makers and the generic companies. The generic manufacturers may file an ab- breviated new-drug submission in which it compares its pro- posed copy drug with a product already marketed in Canada for which a notice of compliance has already been issued. Sanofi-Aventis Canada Inc. has the rights to a series of Ca- nadian patents for Ramipril, a drug used in the treatment of hypertension that was set to expire in 2002. Sanofi-Aventis obtained a further series of pat- ents for different indications for Ramipril. Apotex and other generic manufacturers that had certain regulatory approvals from Health Canada and were seeking a notice of compliance to market a generic version of Ramipril challenged the new patents. Sanofi-Aventis applied for orders prohibiting the health minister from issuing the no- tice of compliance to Apotex, which prevented the generic drug makers from entering the market for 24 months. But only one prohibition application was successful. At the end of 2006, Apotex obtained its notice of compliance to market Apo- Ramipril and brought an action to claim damages for lost profits during the prohibition period under s. 8. The trial judge de- termined Sanofi-Aventis had to pay $200 million. Under the legislation, s. 8 allows for a calculation of liability if an application for a prohibition order is unsuccess- ful in order to compensate for the earnings the generic drug maker would have made during the prohibition period. Without such a remedy, there's no disin- centive for brands to challenge the generics on every applica- tion, says Jonathan Mesiano- Crookston of Goldman Hine LLP. "It's designed to compen- sate the generic for the damages it suffered for being wrongfully off the market," says Mesiano- Crookston. "There's so much money at stake, it's rational for brands to challenge generics for almost all notices. Whatever they [the Supreme Court judges] say will certainly impact every s. 8 case that comes down the pipe. . . . All the practitioners will be watching this closely." During the Federal Court proceedings, the judge assessed the compensation owed by considering what would have happened if Sanofi-Aventis hadn't brought applications for prohibition against Apotex. To do that, she constructed a hy- pothetical but-for world during a defined period to determine what share of the Ramipril market Apotex would have cap- tured if it had been able to sell its generic version of the drug. Sanofi-Aventis contends the determination amounted to ex- cessive compensation and that the award to the generic drug makers was an inappropriate windfall. The Supreme Court of Cana- da now has to decide the correct interpretation of s. 8 and the legal framework that applies to determine the appropriate com- pensation. "In my view, the Supreme Court has elected to take this up because this s. 8 . . . has been liti- gated significantly and will con- tinue to be litigated," said Geoff Mowatt, a lawyer who focuses on patent and trademark litiga- tion at Dimock Stratton LLP. "The scary thing is rejecting one hypothetical for another varies the amount so much." Mowatt found the split Fed- eral Court of Appeal decision particularly interesting because it tried to bring the hypothetical world as close to the real world as it could get. "They almost put limits on the hypotheti- cal world," he says, pointing to paragraph 186 of the decision. In it, Justice Karen Sharlow wrote: "Therefore, it appears to me that in the hypotheti- cal world as well as in the real world, the prohibition appli- cations against Apotex would have been dismissed just as they were in the real world. Each such dismissal gave Apotex a right to claim damages under section 8 of the NOC Regula- tions. But at the same time, each dismissal based on an invalidity allegation potentially put at risk any other Sanofi prohibition applications based on the same FOCUS For more information, please contact Jennifer Brown Email: jen.brown@thomsonreuters.com | Phone: 416-649-8867 The Canadian Lawyer InHouse 2015 Innovatio Awards is the pre-eminent award program recognizing innovation by members of the in-house bar within the Canadian legal market. The second annual awards celebrate in-house counsel, both individuals and teams, who have found ways to show leadership by becoming more efficient, innovative and creative in meeting the needs of their organizations. NOMINATIONS ARE NOW OPEN AND THE SEARCH IS ON FOR CANADA'S MOST INNOVATIVE IN-HOUSE COUNSEL NOMINATE YOURSELF OR YOUR DEPARTMENT IN THE FOLLOWING CATEGORIES: • Law department management • Diversity • Best practices in compliance systems • In-house M&A/Dealmakers • Working with external counsel • Litigation management • Risk management • Tomorrow's leader in innovation NOMINATIONS CLOSE FEBRUARY 16, 2015 Nomination forms and more information can be found at: www.innovatio-awards.com Untitled-6 1 2015-01-13 3:01 PM T The case is 'significant because it deals with a large amount of money,' says Adam Bobker. See Dissent, page 12

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