S 8 NOC Permits Recovery for Losses from Off-Label Indications

Sanofi v Teva / ramipril (NOC) 2014 FCA 69 Mainville JA: Sharlow, Dawson JJA aff’g 2012 FC 551 Snider J (blog)
            ramipril / ALTACE

Sanofi has been engaged in s 8 NOC litigation with both Teva and Apotex over ramipril. In Teva / ramipril (s 8) 2012 FC 552 (blogged here) and Apotex / ramipril (s 8) 2012 FC 553 (blogged here and jointly here), Snider J assessed s 8 damages against Sanofi. These are the first s 8 cases to go all the way to assessment of damages. They are referred to by the FCA as the Teva Liability Judgment (FC) and the Apotex Liability Judgment (FC), respectively. The FCA has apparently issued its decision on appeal from these liability judgments, largely confirming Snider J’s decision [4], [7], but these appeal decisions are not yet publicly available on the FCA website.

In the course of the same litigation, Sanofi also challenged the validity of s 8 of the NOC regulations on a variety of grounds. In the decision under appeal, 2012 FC 551 (referred to by the FCA as the “Validity Judgment,”) Snider J dismissed these challenges to s 8, as described here.

In this appeal, Sanofi appealed on a single question, namely “whether section 8 of the NOC Regulations can validly allow compensation to be paid to a generic drug manufacturer for lost sales attributable to so-called “unapproved” indications,” in particular the so-called HOPE (“Heart Outcomes Prevention Evaluation”) [14], which were covered by two patents (the HOPE patents). As I described in my post on the Teva Liability Judgment (FC):

Teva did not address the HOPE patents, as it chose instead to withdraw those indications from its product monograph 2012 FC 552 [311]. Snider J held that Teva was nonetheless entitled to recover for lost sales attributable to off-label indications, on the basis that in fact, such sales would likely have taken place [319], and the off-label prescribing by physicians is not itself illegal [314].

It appears that these conclusions have been affirmed in the not-yet-available FCA Liability Judgment [22], but “Sanofi nevertheless submits that, as a matter of jurisdiction, section 8 of the NOC Regulations cannot allow compensation to be paid to generic drug manufacturers with respect to sales for unauthorized indications such as the HOPE indications” [23]:

Sanofi essentially argues that since section 6 of the NOC Regulations only gives an innovator drug manufacturer the right to apply for a prohibition order with respect to a listed patent where that patent is worked on by the generic drug manufacturer for the purposes of securing its NOC, the generic drug manufacturer’s right to compensation under section 8 of the Regulations should therefore be limited to the lost sales arising from the uses identified in the patent which the generic drug manufacturer must deal with under the Regulations

The FCA rejected this argument, saying “Sanofi’s submission is a misguided attempt to transform a factual issue into a question of jurisdiction” [24]:

[26] The purpose of section 8 of the NOC Regulations is precisely to ensure that when an innovator drug manufacturer reaps the benefits of those Regulations by initiating unfounded prohibition proceedings, the generic drug manufacturer can then seek appropriate compensation for having been impeded from entering the market earlier as a result of those proceedings.

[28] In the case of both Teva and Sanofi, the Trial Judge simply determined as a matter of fact that “any loss suffered during the period” as referred to in subsection 8(1) of the NOC Regulations (emphasis added), included the sales related to the HOPE indications.

As I noted in my post on Snider J’s Liability Judgments “Generally, Snider J constructed the hypothetical world almost entirely as a matter of determining what would in fact have happened, without regard to various arguments that particular consequences should be ignored for policy purposes.” The FCA decision on the validity of s 8, with its refusal to treat the issue as being one of law, broadly affirms this approach. Compensation under s 8 is to be determined on the basis of an almost purely factual inquiry, rather than by holding that various types of loss are, or are not, recoverable as a matter of law. The major departure from this factual approach is the rule that springboard damages are not recoverable under s 8 as a matter law: Merck Frosst v Apotex Inc / alendronate (NOC) 2009 FCA 187. That rule is looking increasingly anomalous, but it is doubtless too well entrenched to be changed at this point.

This FCA decision provides some interesting hints as to how the FCA will handle the quantification of s 8 damages, but the real meat will come with the FCA Liability Judgments, once released.