Federal Court Issues Landmark Decision in Ratiopharm case: Ratiopharm Not a “Patentee” Subject to PMPRB Juridiction

This morning, the Federal Court of Canada released its decision in the much anticipated Ratiopharm (Now Teva Canada) case.  http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/71656/index.do

Mr. Justice O’Reilly has affirmed Ratiopharm’s contention that, with respect to its ratio-salbutamol HFA product, Ratiopharm was not a patentee within the meaning of the provisions of the Patent Act and related regulations.

In reaching its decision, the court relied on the fact that Ratiopharm held no patent, had no potential for monopoly power and did not enjoy any of the normal rights of a patent holder such as the power to sue for patent infringement.  The judge does state that in the case of generic companies that actually do hold patents, he would consider them to be patentees subject to PMPRB jurisdiction.

The decision is grounded in the view that the Federal government’s ability to grant powers to the PMPRB flows from and must remain connected to the federal jurisdiction over patents of invention.  The PMPRB Board’s decision that a generic company that was purchasing finished product from the actual patent holder (GSK) and that held no rights with respect to the underlying patent was a “patentee” was unreasonable as it would have taken the Board outside of its federally granted powers and into the exclusive constitutional jurisdiction of the provinces to regulate the prices of generic drugs.

The decision also included an affirmation of the court interpretation of the Pfizer v. Attorney General of Canada (2009) case.  Mr. Justice O’Reilly clearly states that the PMPRB’s jurisdiction is restricted to the factory-gate prices charged by manufacturers to their first purchasers – and does not extend to subsequent transactions further down the chain of sale.  A close reading of the decision suggests that any subsequent PMPRB decision that narrows the Pfizer decision – for example, a finding that only the review of subsequent transactions involving governments or governmental bodies is prohibited – would be overturned.

Given the significant potential impact of this decision, it will very likely be appealed by the Attorney General of Canada to the Federal Court of Appeal.

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