Monday, January 12, 2015

Correctness Standard of Review for Minister's Interpretation of S 5 of the PM(NOC) Regulations

Pfizer Canada Inc v Canada (Attorney General) 2014 FC 1243 Gleason J
            2,409,059 – exemestane – AROMASIN.

Under s 3.4.1 of the most recent (2012) Guidance Document: Patented Medicines (Notice of Compliance) Regulations, if one generic has received an NOC by comparing its product with a patentee's reference product, and a second generic obtains a licence from the first, the licensee is not required to comply with s 5 of the PM(NOC) Regulations, which is to say that the licensee need not serve an NOA on the patentee and need not address the patents listed against the drug [33]. Prior to April 2012, when the new Guidance document came into effect, a licensee would have been required to comply with s 5 [31]. Under the new policy Health Canada will require only an “administrative” drug submission, such as is used when a party that has received an NOC changes its name as a result of a corporate restructuring [28].This change in policy was made as a matter of Health Canada’s changed interpretation of the Regulations; there was no change to the Regulations themselves.

In this case, Pfizer successfully challenged that new policy (though an appeal will no doubt follow). Note that counsel for the Attorney General carried the argument in this case [51], so Health Canada evidently (and rightly) views this as a policy issue of general significance.  

Generic Medical Partners Inc. [GMP] filed an ANDS with the Health Canada with respect to exemestane, using Pfizer’s exemestane product, AROMASIN, as the reference product [45]. In August 2013 GMP sent Pfizer an NOA with respect to the ‘059 Patent, which was listed by Pfizer against AROMASIN. Pfizer chose not to commence a prohibition application against GMP, apparently because GMP does not sell products in Canada [44]. The NOC was issued to GMP for exemestane in October [45]. On the same day, Health Canada also issued an NOC to Teva with respect to exemestane. This NOC was granted on the basis of an administrative ANDS filed by Teva, based on a licensing agreement with GMP. The NOC issued to Teva also shows AROMASIN as the Canadian Reference product [46]. Teva never served an NOA on Pfizer. Pfizer sought judicial review to set aside the NOC granted to Teva [1].

There were two main issues. The first was the standard of review applicable to the Minister’s interpretation of the PM(NOC) Regulations. I discuss that issue in this post. The second was the substantive interpretation of the relevant provisions. I will discuss that in tomorrow’s post.

There were three main issues relating to the standard of review: (1) whether prior case law of the Federal Courts applying a correctness standard to decisions of the Minister of Health under the PM(NOC) Regulations were still binding in light of recent SCC case law [58]; (2) whether it mattered that the decision-maker was the Minister as opposed to an administrative tribunal [59]; and third, whether the decision of the SCC in Canadian National Railway v Canada 2014 SCC 40 [CN] meant that a reasonableness standard is always applicable when an administrative decision-maker interprets its constituent statute or regulation, or a statute or regulation that is closely connected with its function, unless the decision falls into one of four exceptions which were not suggested to be relevant in this case [60].

On the first issue, Gleason J agreed with the Attorney General that pre-Dunsmuir 2008 SCC 9 case law of the FC and FCA [58] cannot be considered determinative, and that in light of Dunsmuir and subsequent SCC cases, the reasonableness standard is “presumptively” applicable whenever an administrative decision-maker interprets its constituent statute or a statute or regulation that is closely connected with its function [67].

While the conclusion that pre-Dunsmuir case law of the Federal Courts can no longer be determinative seems fair enough, I am puzzled by the fact that the SCC Biolyse 2005 SCC 26 decision was not discussed in this context. The question at issue in this Exemestane case was the Minister’s interpretation of “submission" for an NOC in s 5(1) of the Regulations [123]. The question at issue in Biolyse was the interpretation of the word “submission” in s 5(1.1) as it then was [Biolyse 40ff]. The changes to s 5 were aimed at addressing when a patentee's product is considered a reference product (when a comparison is made "directly or indirectly" in the current provision), and not what constitutes a "submission." That is, the question was the deference to be given to the Minister’s interpretation of the very same word, in functionally the same provision. This is the very next thing to being exactly the same question.

In Biolyse, the SCC held that “On the question of interpretation, the Minister's opinion is not entitled to deference. The Federal Court quite properly said that the standard of review on that point is correctness” [36]. The discussion was brief, but this is evidently because the SCC thought the point was clear, and in any event it was undoubtedly part of the ratio of the case. It is true that the FC’s 2002 FCT 1205 [20]-[29] assessment of the standard of review in Biolyse was based on the “ pragmatic or functional analysis” that is no longer the accepted approach. But my understanding is that Dunsmuir was intended to simplify the previous three-standard model (correctness, reasonableness and patent unreasonablness) that had proven too difficult to apply: “What is needed is a test that offers guidance, is not formalistic or artificial, and permits review where justice requires it, but not otherwise. A simpler test is needed” [Dunsmuir 43]. In particular, the crux of the difficulty was that "lower courts were struggling with the conceptual distinction between patent unreasonableness and reasonableness simpliciter" [40]. So, the problem is not that SCC itself was getting wrong answers, but that it was not providing sufficient guidance. I don't see this as saying that the highly contextual functional test which had been previously applied was wrong in principle, just that it was too difficult to apply. None of this calls into question the specific results of the contextual, functional analysis, properly applied. 

Given the difficulty of applying the previous test, we might well doubt whether it was properly applied by lower courts, but I don’t see why Dunsmuir should call into question the outcome of the functional analysis when the previous test was applied by the SCC itself. In this case, the SCC Biolyse decision was discussed at length in other parts of Gleason J’s decision, but not at all in the context of the standard of review, presumably because it was not argued. It seems that the parties must have thought it so clear that Biolyse was implicitly overruled that it was not worth even discussing the specific SCC holding in Biolyse. This is quite remarkable. Biolyse itself was not discussed in Dunsmuir, so if it is no longer good law on this point, it can only be because Dunsmuir implicitly over-ruled all prior SCC decisions, not just on the general approach, but on the specific holding of all those cases on their facts. This seems to me to be far-fetched, given that the SCC built its new approach by a synthesis of the strengths of its prior case law (see eg [54]). Moreover, all of the members of majority in Dunsmuir, except Bastarache J, were also members of the majority in Biolyse that held the standard of review to clearly be correctness. Could they really have changed their minds so dramatically about judicial review in the intervening three years as to want to repudiate their own specific holdings? 

I am not an administrative law expert, so I may well be missing something glaring. But it certainly looks to me like the SCC itself has already held that the appropriate standard of review for the Minister's interpretation of the word "submission" in s 5 of the PM(NOC) Regulations is correctness, and this holding is still good law.

Moving on, Gleason J also agreed with the Attorney General that the fact that the Minister was the decision-maker does not in itself alter that presumption [84], given that FCA case law was split on this point [80].

However, Gleason J rejected the view that CN implies that the presumption of a reasonableness standard can only be rebutted in the four enumerated exceptions [88]. After an extensive review of the SCC authorities, Gleason J held that while the SCC case law as a whole does establish a presumption that the standard is reasonableness, the SCC authority requires a contextual analysis as to whether the presumption has been rebutted [98]. The four exceptions in which a correctness standard applies are only four cases where it has been settled, by a contextual analysis, that the presumption of a reasonableness standard has been rebutted; they do not constitute an exhaustive taxonomy of the only times the reasonableness standard can possibly be rebutted.

Again, I am not an administrative law expert, but Gleason J’s analysis appears to me to be sound in light of the many cases she cites. Moreover, it seems to me that the four exceptions cannot be exhaustive. For example, if the relevant statute explicitly provided that the administrative decision-maker was not entitled to deference, then a correctness standard would necessarily apply, even though that situation is not one of the four enumerated exceptions. (The closest is the existence or absence of a privative clause, which is a contextual factor, not an enumerated exception.) The discussion of the standard of review in CN is quite brief – only eight paragraphs ([55] - [62]) – and it strikes me as nothing but an application of the established framework of analysis, resulting in a finding of a reasonableness standard on the facts of the particular case. I think Gleason J is right to say that “[i]t would take a much more deliberate treatment of the issue by the Supreme Court than that which is contained in CN” to effect a change in the approach endorsed by the SCC [98].

The question then was whether, on a contextual analysis, the presumption of a reasonableness standard should be considered to be rebutted in this case. Gleason J held that it was rebutted. One key point was that the Minister has no discretion as to when to issue an NOC [114], and indeed,

the Governor in Council left the ultimate determination of whether an NOC should be issued under the PMNOC Regulations to this Court as it is the Court that is required to rule on prohibition applications made by innovator companies who wish to forestall the issuance of an NOC to a generic company through an ANDS. The role assigned to this Court under the PMNOC Regulations is inconsistent with application of the reasonableness standard to interpretations of the Minister or officials at Health Canada of the Regulations. [115]

This latter point in particular strikes me as compelling. A purposive analysis plays an important role in the modern approach to statutory interpretation. The purpose of the provision must be considered, but it must be considered in light of the purpose of the legislation as a whole. That is particularly true in the case of the PM(NOC) Regulations, where both the case law and the RIAS accompanying the 2006 amendments make it clear that the PM(NOC) Regulations are intended to strike a balance between the goals of promoting timely entry of generics, and providing effective patent enforcement: [16], [134], Biolyse [2]. The Minister of Health has no particular expertise in the construction of the PM(NOC) Regulations as a whole. The various provisions have been heavily litigated before the courts, and often the Minister, though a party to the proceeding, does not participate. This is true even of cases which raise issues of the interpretation of the Regulations. So, for example, the Minister has no view as to whether the allegations in the NOA must be correct as of the date of the hearing or as of the date the NOA was served: 2009 FC 648 [7]. Indeed, some of the provisions will never be interpreted by the Minister, even nominally, because they are only applicable in an action between the generic and the patentee (eg the s 8 remedial provisions). Because the Federal Courts are called on to interpret and apply all aspects of the Regulations, they have a better understanding of the balance sought by the Regulations as a whole. When the legislative history insists that the Regulations must be understood as a whole, it seems to me very unlikely that when the legislature would have intended to give deference to an interpretation by the Minister, who actively engages with only a part of those Regulations.

Finally, on a personal note, Dunsmuir was the clerk of the court in Fredericton, New Brunswick (the full name of the case is Dunsmuir v New Brunswick), and my wife and I were married in 2004 at the Fredericton City Hall, by David Dunsmuir, about a year before he was removed from office. He did a brief Elvis impersonation, which my wife particularly enjoyed, but so far as I know he performed competently, and we are validly married.

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