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Teva awarded section 8 damages regarding ratiopharm-venlafaxine

by Tracey Stott

On April 3, 2014, the Federal Court released a decision on the merits under section 8 of the Patented Medicines (Notice of Compliance) Regulations (“PMNOC Regulations”) in respect of venlafaxine hydrochloride (Wyeth’s EFFEXOR XR). In Teva Canada Limited v Pfizer Canada Inc, 2014 FC 248, Justice Zinn determined certain issues, which provided direction from which the parties could arrive at the quantum of Teva’s compensation.

The decision relates to two patents: Canadian Patents Nos. 1,248,540 (the “540 patent,” expired on January 10, 2006) and 2,199,778 (the “778 patent,” expires in 2017). Wyeth had initially listed only the 540 patent on the Patent Register. Ratiopharm filed an Abbreviated New Drug Submission (“ANDS”) on February 24, 2005. Ratiopharm’s ANDS was put on patent hold on December 9, 2005. On December 23, 2005, the 778 patent was added to the Patent Register. Ratiopharm served a notice of allegation (“NOA”) on the same day, in which it accepted that a notice of compliance (“NOC”) would not issue until expiry of the 540 Patent and alleged that the 778 Patent was invalid or would not be infringed by its product. At that time, there was a requirement that all patents on the Patent Register be addressed before a NOC issued, including those listed after the filing of an ANDS. Wyeth commenced an application seeking a prohibition Order on February 10, 2006.

As reported previously by Rx IP Update, Wyeth’s application for a prohibition Order was dismissed. The Applications Judge held that relevance is required between the patent and the submission against which it is sought to be listed under the pre-amended Regulations, and the Court of Appeal agreed. Leave to appeal to the Supreme Court was refused. The Government subsequently amended the Regulations in response to this decision to ensure that patents listed before June 17, 2006 were exempt from the amendments made in October 2006 that required relevance between a patent and the submission against which it is proposed to be listed (see the June 2008 Special Edition of Rx IP Update for a detailed discussion of the amendments).

Following the Court of Appeal’s dismissal of Wyeth’s application, ratiopharm received its NOC on August 2, 2007, and launched on September 18, 2007. Ratiopharm then brought the present section 8 action. As reported in the December 2012 edition of Rx IP Update, the Supreme Court denied Wyeth’s leave to appeal a Federal Court of Appeal decision (reported in the July 2012 issue of Rx IP Update) that reversed Justice Hughes' finding that Teva was barred from pursuing the section 8 claim initiated by ratiopharm against Wyeth (ratiopharm and Teva amalgamated in late 2010).

Justice Zinn considered several issues relevant to the determination of section 8 damages, but left finalization of the quantum of damages to the parties.

The parties did not agree on the start date of the relevant period. Wyeth argued that the relevant period cannot start before the statutory stay (i.e. the date of commencement of the application), and therefore, in this case, the patent hold date (December 7, 2005) cannot be the start date. Justice Zinn disagreed, holding that the Regulations establish the patent hold date as the default, but that another date — either earlier or later — may be more appropriate, depending on the circumstances of the case, and that damages could commence before the statutory stay. “The question for the Court is whether there is a causal connection between the failed PMNOC proceedings and the loss” and when that loss first arose. In this case, “but for the improper listing of the 778 patent,” ratiopharm would have been in a position to launch on January 10, 2006. Justice Zinn noted that the earlier patent hold date may have been a more appropriate start date, but ratiopharm had not claimed any loss prior to January 10.

The parties agreed on the end date — August 1, 2007, the date the Court of Appeal dismissed Wyeth’s application. Justice Zinn held that the Regulations allow no discretion — it is the date the application is withdrawn, discontinued, dismissed or reversed.

Regarding size of the overall market, Justice Zinn preferred Teva’s approach, which was to use the real-world sales in the relevant period as an analogue for the but-for world, as it accounted for any trends unique to venlafaxine, the difference between the real world period and the but-for world is “relatively insignificant” and the market dynamics in the real world “closely mirror” those in the but-for world. He also noted that Teva’s approach is consistent with the preferred approach to quantification in which the but-for world should be grounded in the real world.

The parties agreed that the generic market should be based on Novopharm’s actual sales, with adjustments for formulary listing dates.

In determining ratiopharm’s market share, Justice Zinn considered first whether two other generics (Novopharm and Pharmascience) would have entered the market during the relevant period by asking: when the generic would have received its NOC; when the generic had capacity to manufacture or acquire the product; any factors motivating or dissuading the generic from entering; and when the product would have been accepted by the provincial formulary. He concluded that in the but-for world, only Novopharm would have entered the market, and it would have entered on December 1, 2006, as it did in the real world. He also held that ratiopharm would have been able to supply the market during the relevant period, and accepted Teva’s evidence regarding the dates on which the ratiopharm and Novopharm products would have been listed on the provincial formularies.

Justice Zinn held that the value of ratiopharm’s lost sales during the relevant period would be 70% of Wyeth’s price in all provincial formularies, with a ‘trade-spend’ - or rebate – of 15%. When Novopharm was listed on the provincial formularies, the price would drop to 50%, and the trade-spend would increase to 46.6%.

Wyeth argued a deduction should be made from the damages, as ratiopharm launched without fully completing validation, contravening the Food and Drug Regulations. Justice Zinn held that, on the evidence before him, ratiopharm had not breached the Food and Drug Regulations, and declined to make a deduction. He did, however, allow a deduction for ramp-up (the lower level of generic sales in the first few months after receiving the NOC), as to do otherwise would overcompensate the generic for losses not actually suffered.

Application decisions: Court of Appeal — 2007 FCA 264 Motions Judge — 2007 FC 340.

Summary judgment decisions: Supreme Court — SCC Case No. 34918, Court of Appeal — 2012 FCA 141.
Federal Court — 2011 FC 1169 and 2011 FC 1442.


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