In forceful Reasons, the FCA, per Stratas J.A., found that the Patented Medicine Prices Review Board (“the Board”), the governmental body that reviews the prices of patented medicines, “crashed through the constitutional, statutory and jurisprudential guardrails” when it attempted to exert its regulatory authority over Galderma’s unpatented DIFFERIN product.

Galderma had two patents for its first-generation acne medicine DIFFERIN, which contains 0.1% adapalene. Those patents expired in 2007 and 2009. Galderma also had another patent, the 237 Patent, which did not expire until 2023. The 237 Patent covered the use of 0.3% adapalene, and protected Galderma’s second-generation DIFFERIN XP product. The 237 Patent did not cover 0.1% adapalene and the first-generation DIFFERIN product.

Under the Patent Act, the Board has the authority to ensure that the prices of patented medicines are not excessive. Importantly, as highlighted by the FCA, “[t]he Board does not regulate the pricing of unpatented medicines”.^[1] Thus, after Galderma’s original two patents expired, Galderma stopped supplying the Board with pricing information for DIFFERIN, now an unpatented medicine.

However, due to the existence of the 237 Patent, the Board determined that DIFFERIN was still a patented medicine as the 237 Patent (the 0.3% adapalene patent) “pertained” to DIFFERIN (the 0.1% adapalene product). On this basis the Board ordered Galderma to provide pricing information for DIFFERIN. This determination triggered a series of decisions:

• A first judicial review by the Federal Court in 2017 quashing the Board’s determination (2017 FC 1023).
• A first decision by the Federal Court of Appeal in 2019 sending the matter back to the Board for redetermination, with the guidance that the invention of the 237 Patent is the use of a 0.3% concentration of adapalene (2019 FCA 196).
• A redetermination by the Board in 2020 again finding that the 237 Patent pertained to DIFFERIN and again ordering that Galderma provide pricing information.
• A second judicial review by the Federal Court in January 2024 finding that the Board’s redetermination decision was reasonable (2024 FC 46).

Hearing the matter for a second time, the FCA held that the Board exceeded its authority because DIFFERIN was not a patented medicine during the period the Board sought to regulate. The Board can only “regulate the pricing of patented medicines, not unpatented medicines”.^[2] It “does not have any freestanding consumer protection or general price regulation mandate”.^[3] By attempting to regulate the price of an unpatented product, “the Board crashed through the constitutional, statutory and jurisprudential guardrails”.^[4]

The FCA rejected the government’s arguments, noting that the 237 Patent covers the use of 0.3% adapalene and that, “[a]s a matter of patent law, the Board cannot somehow stretch and pull that ‘use patent’ to cover Differin, which uses a different concentration of adapalene (0.1%)”.^[5] The Court found no merit in the government’s other argument, that patients can use Differin and Differin XP interchangeably. As the court noted: “Nowhere does the Patent Act say that the Board can regulate an unpatented medicine just because a patented medicine might be used in its place or because it shares some unpatented properties of the patented medicine (here, the unpatented ingredient adapalene)”.^[6] Ultimately, the FCA found the 237 Patent did not give the appellant “market power” over DIFFERIN, and as such, is not subject to the Board’s jurisdiction. In concluding, the FCA issued a stern reminder to the Board that it must stay within the “constraints” provided by law:

The Board has an important mandate. Given the importance of that mandate, the Board is dedicated and enthusiastic about pursuing it. That’s worthy of praise. But the Board must temper its dedication and enthusiasm with a firm and unwavering obedience to legality and the rule of law. Like all administrative decision-makers, the Board must stay within the constraints imposed by the Constitution, its governing statute (the Patent Act, interpreted reasonably in the administrative law sense), and the jurisprudence under each.^[7]

The FCA set aside the Board’s order, and this time did not send the matter back for reconsideration by the Board. The government has until early February 2025 to seek leave to appeal to the Supreme Court of Canada.

^[1] Reasons, at para. 4.

^[2] Reasons, at para. 5.

^[3] Reasons, at para. 7.

^[4] Reasons, at para. 10.

^[5] Reasons, at para. 13.

^[6] Reasons, at para. 13.

^[7] Reasons, at para. 19.