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Alexion challenges constitutionality of Patented Medicine Prices Review Board price regulation provisions

On September 11, 2015, Alexion Pharmaceuticals Inc. ("Alexion") filed a notice of application in the Federal Court, naming the Patented Medicine Prices Review Board (PMPRB) as a respondent, seeking a declaration that sections 83 to 86 and the words “in any proceeding under s. 83” in section 87(1) of the Patent Act, which provide a scheme for regulating the price of patented medicines in Canada, are ultra vires the Parliament of Canada and therefore unconstitutional.

Alexion’s complaint arises from PMPRB scheduled hearings with respect to the price of SOLIRIS (eculizumab), which treats two rare blood disorders: paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS). As previously reported, the PMPRB seeks to determine whether Alexion has sold or is selling SOLIRIS in Canada “at a price that, in the Board’s opinion, is or was excessive; and if so, what order, if any, should be made to remedy the excessive pricing.”

In its Statement of Allegations, PMPRB staff had alleged that the price of SOLIRIS at $224.7333/mL is “excessive” over a three-year period beginning in 2012 based on comparisons to other countries including France, Germany, Italy, Sweden, Switzerland, the United Kingdom and the United States. Alexion filed a Response to the PMPRB allegations denying that the prices were excessive, and the proceeding was ongoing when Alexion filed its notice of application in the Federal Court.

In its notice of application, Alexion states that the price of SOLIRIS in Canada has neither increased since introduced in Canada in 2009 nor decreased in countries where the product is sold outside Canada. Alexion alleges that the PMPRB’s allegations of excessive pricing were due to exchange rate fluctuations in the value of Canadian currency and thus the PMPRB was “seeking to use its alleged price control powers to confiscate a significant portion of Alexion's revenues based upon international market forces over which Alexion has no control.”

Alexion also alleges that the PMPRB’s stated mandate of “protect[ing] consumers” and mission of “contribut[ing] to Canadian health care by ensuring that prices of patented medicines are not excessive”, as well as the scheme provided for under sections 83 through 86 and 87(1) of the Patent Act, are invalid as they exceed the scope of power granted to the federal government pursuant to the Constitution Act, 1867.

Alexion further alleges that the scheme intrudes on provincial jurisdiction over property and civil rights under section 92(13) of the Constitution Act, 1867, and given the extent of intrusion into provincial jurisdiction cannot be justified by integration within the federal Patent Act.

The constitutionality of the PMPRB provisions of the Patent Act has been raised in previous cases, most recently in Sandoz Canada Inc v Canada (Attorney General), 2014 FC 501 [Sandoz], and ratiopharm Inc v Canada (Attorney General), 2014 FC 502 [ratiopharm]. As previously reported, the Federal Court held in those cases that the PMPRB’s remedial and punitive powers and the relevant sections of the Patent Act fell within federal jurisdiction over patents of invention and were therefore constitutional. The Attorney General’s appeals regarding the findings that the PMPRB did not have jurisdiction over the generic manufacturers’ pricing were heard by the Federal Court of Appeal on September 22, 2015, and a decision remains under reserve.

The Federal Court in Sandoz and ratiopharm relied on a decision of the Manitoba Court of Queen’s Bench as affirmed by the Manitoba Court of Appeal, Manitoba Society of Seniors Inc v Canada (Attorney General), (1991) 77 DLR (4th) 485 (Man QB), at para 21, aff’d (1992) 96 DLR (4th) 606 (Man CA), which held that the then-nascent provisions under the Patent Act regulating the price of patented medicines were constitutional as a scheme relating to patent protection rather than a scheme for controlling the price of drugs.

If Alexion’s application succeeds, there would be significant impact to the regulatory scheme relating to the prices of patented medicines in Canada, and the PMPRB’s jurisdiction to make rulings on and impose penalties for “excessive pricing” of patented medicines could potentially be removed.

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