A Further Limitation on the Ability of the Generic Drug Companies to Chase the Profits of Innovators?
Can a generic drug company bring an action for disgorgement of profits when an innovator pharmaceutical company is ultimately unsuccessful in invoking the Patented Medicines (Notice of Compliance) Regulations? That question is now going to be determined by the Divisional Court, according to a recent decision that strikes another blow to generic drug companies in this ongoing debate.
Eli Lilly is the owner of the Canadian patent for atomoxetine hydrochloride, a drug used in Strattera, which is a medication for the treatment of attention-deficit/hyperactivity disorder, commonly known as ADHD. Eli Lilly had its patent listed on the PM(NOC) register, meaning that Apotex either had to await the expiry of the patent or make an allegation attacking the patent’s validity or asserting that it would not infringe the patent.
In response to a notice of allegation by Apotex, Eli Lilly commenced a prohibition application in the Federal Court. Under the PM(NOC) Regulations, the Minister was precluded from issuing an NOC to Apotex until the prohibition application was determined. Fast forward a few years and Apotex sues Eli Lilly for disgorgement of profits on the basis of unjust enrichment during the period of time that Apotex claims it was wrongfully delayed in obtaining the NOC.
On July 25, 2012, Justice Macdonald dismissed a motion brought by Eli Lilly seeking to strike Apotex’s claim. Eli Lilly then sought leave to appeal the decision to the Divisional Court.
In his February 22, 2013, decision, Justice Ducharme granted leave to Eli Lilly to appeal to the Divisional Court the dismissal of its motion to strike Apotex’s claim for disgorgement of profits relating to the sale of Strattera. In his reasons, Ducharme J. notes that after Macdonald J.’s refusal to strike out Apotex’s unjust enrichment claim, another decision was rendered where a similar claim was advanced by Apotex against Abbott Laboratories (see Apotex v. Abbott Laboratories, 2013 ONSC 356). In Abbott, Quigley J. definitively concluded that the framework of the PM(NOC) Regulations constitutes a complete remedial code and that the remedy for unjust enrichment does not exist absent “extraordinary egregious circumstances”, which would give rise to a separate cause of action.
Ducharme J. held that Quigley J. may well be right about the limited ability of a generic drug company to seek equitable relief in PM(NOC) cases and, if so, there would be good reason to doubt the correctness of the decision not to strike Apotex’s unjust enrichment claim.
The case law appears to be moving towards a limitation on the rights of a generic drug company to seek disgorgement of profits in almost all PM(NOC) disputes. The Divisional Court is now going to chime in on this debate. The ruling is likely to be an important appellate decision for all pharma companies, innovators and generics alike. Stay tuned…
Apotex Inc. v. Eli Lilly, 2013 ONSC 1135 (CanLII)
Date of Decision: February 22, 2013
ADHD disgorgement of profits Divisional Court Patented Medicines (Notice of Compliance) Regulations Strattera