Supreme Court of Canada finds Patented Medicine Prices Review Board has jurisdiction over price of Thalomid in Canada

Geoffrey North & Catherine Newnham

The Supreme Court of Canada released a decision on January 20, 2011 in Celgene Corp. v. Canada (Attorney General), 2011 SCC 1 that may have a chilling effect on the availability of medicines under Health Canada’s Special Access Program (SAP).

The SAP

Most medicines are sold in Canada after Health Canada has satisfied itself as to the medicine’s safety and effectiveness, and has issued a notice of compliance (NOC) to the drug’s manufacturer. However, where Health Canada has not granted a NOC for a medicine, or where a manufacturer has not yet applied for one, medicines may in certain cases be sold to medical practitioners through an alternate route – the SAP – a program that allows access to drugs for the treatment of “serious or life-threatening conditions where conventional therapies have failed, are unsuitable, or are unavailable either as marketed products or through enrolment in clinical trials”.There is no limit on the period of time that a manufacturer may supply a medicine under the SAP, nor is there a limit on the volume of sales that can be made pursuant to the SAP.The manufacturer is simply authorized to sell the medicine for use by the specific patient or clinical trial identified in a special request, if Health Canada approves the request for sales pursuant to the SAP.

Use of Thalomid under the SAP

In the case at hand, Celgene, a New Jersey based corporation, is the seller and distributor of a pharmaceutical sold under the brand name Thalomid. This drug contains the active ingredient thalidomide, which has proven to be effective in the treatment of multiple myeloma and leprosy, and is approved for those uses in the United States.

Celgene did not obtain a NOC for Thalomid. However, it is the most frequently sourced drug under the SAP, and has been sold in Canada in this manner since 1995.

When a Canadian doctor orders Thalomid under the SAP, the medicine is packaged in Celgene’s facilities in the U.S., and shipped Free on Board (FOB) to the doctor in Canada. The sale of the medicine therefore takes place in New Jersey for purposes of commercial law. Payment is made in U.S. dollars and mailed back to Celgene in New Jersey. No Canadian taxes are paid on these transactions, and the drug is never redistributed in Canada – any unused portions must be returned to a Celgene facility in Pennsylvania.

The Patented Medicine Prices Review Board

The Patented Medicine Prices Review Board (PMPRB) has the authority under ss. 80(1)(b) and 81(1)(a) of the Patent Act to require the patentee of a medicine to provide it with information so it can investigate the price at which the medicine “is being or has been sold in any market in Canada”.  If the PMPRB finds that the price charged is excessive, it can order that the price be reduced under under s. 83(1) of the Patent Act.

On the other hand, if a drug manufacturer does not hold a patent that pertains to the medicine at issue, then the PMPRB has no jurisdiction to investigate the price at which the medicine “is being or has been sold in any market in Canada”.

The PMPRB’s interest in Thalomid

Celgene had no interaction with the PMPRB over Thalomid between 1995 and 2006 – that is, until Celgene obtained a Canadian patent in relation to Thalomid on April 4, 2006.  Just seven days later, the PMPRB advised Celgene that in view of this patent, it now had jurisdiction to request pricing information from Celgene from the time it first sold Thalomid in 1995 through the SAP.

Celgene provided some initial pricing information, but eventually refused. Celgene argued that because the medicine was sold in New Jersey, it was outside the PMPRB’s authority which extended only to medicine “sold … in Canada”.

The PMPRB argued that because its mandate included protecting Canadians from excessive prices that could be charged for patented medicines, it concluded that sales “in any market in Canada” included sales of medicine that was regulated by Canadian law, would be delivered and used in Canada, and where the cost of the medicine would be borne by Canadians.  Since the SAP was a Canadian law, the PMPRB argued that Celgene’s sales under this programme were included within the PMPRB’s mandate.

The Federal Court overturned the PMPRB’s conclusion that it had jurisdiction, but this decision was overturned by the Federal Court of Appeal, and the PMPRB’s decision was restored. The matter was then appealed by Celgene to the Supreme Court of Canada.

The Supreme Court’s decision

In a unanimous decision, the Supreme Court found that the PMPRB did not misinterpret its jurisdiction as provided by the Patent Act. In rejecting the technical commercial law definition of “sold” and “selling”, the Board was guided by the consumer protection goals of its mandate, and rightfully concluded that Celgene’s approach would undercut these objectives by preventing the PMPRB from protecting Canadian purchasers of Thalomid and other foreign-sold SAP patented medicines. As a result, sales “in any market in Canada” for the purposes of the relevant provisions, should be interpreted  to“include sales of medicines that are regulated by the public laws of Canada, that will be delivered in Canada, to be dispensed in Canada, and where, in particular, the cost of the medicine will be borne by Canadians — patients or taxpayers, as the case may be”. Such an interpretation was supported by the legislative history.

The PMPRB therefore had authority over Celgene’s sales of Thalomid to Canadians through the SAP.

As a result of this decision, the manufacturers of pharmaceutical products not sold in Canada may nonetheless have to provide pricing information and subject themselves to the PMPRB’s “excessive price” jurisdiction for products made available under the SAP. It will be interesting to see if the decision impacts the approach of manufacturers such as Celgene to providing medicines under the SAP program to Canadian patients who are in serious need of medicines not otherwise available in Canada.

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