Application for Judicial Review Dismissed

Martin W. Mason and Graham S. Ragan for the Applicant, Sanofi-Aventis Canada Inc.
F.B. (Rick) Woyiwada for the Respondent, Attorney General of Canada

This case concerned administrative litigation ongoing since 1999 between Sanofi-Aventis Canada Inc. (“Sanofi”) (the successor company to Hoechst Marion Roussel Canada Inc., or “HMRC”) and the Patented Medicine Prices Review Board (the “PMPRB”).

The PMPRB’s mandate is to ensure that the prices of patented medicines charged by patentees are not excessive. Subsequent to a Notice of Hearing issued against HMRC in April 1999, Sanofi and Board Staff (the prosecutorial arm of the PMPRB) made a Joint Submission in August 2006 to the Board Panel (the adjudicative arm of the PMPRB), requesting that further proceedings against HMRC regarding the pricing of the medicine Nicoderm be terminated (the “impugned decision”), and that the Board be prohibited from conducting a hearing on allegations of excessive pricing by HMRC. The Panel refused this request, and Sanofi sought judicial review of what both parties agreed was an interlocutory decision.

Four questions were isolated:

1. Should the application be dismissed given that it calls for the review of an interlocutory decision?

2. Did the Board have jurisdiction to continue the proceedings?

3. Did the Board breach principles of procedural fairness in rendering the impugned decision?

4. Was the Board’s decision to continue the proceedings otherwise unreasonable?

A 2005 Federal Court ruling dismissed HMRC’s application for judicial review contesting the Board’s jurisdiction, confirming that the Board did indeed have jurisdiction over Nicoderm as a “medicine” (and not a “device”), and dismissing the allegations of institutional bias and breach of procedural fairness. An allegation of predetermination of issues on the basis of the Board’s decision to issue a Notice of Hearing was held to be unfounded. The Court did, however, quash that part of the Board’s decision stating that it had jurisdiction over two laid-open patent applications.

As a result of this 2005 decision, the amount of excess revenues charged against HMRC was decreased to about 20% of the amount previously calculated by Board Staff in 1999. Subsequent negotiations between HMRC and Board Staff over the pricing of Nicoderm resulted in the above Joint Submission to the Board Panel (the crux of the Board Panel’s objections appeared to be a proposed off-setting of the excessive revenues, in purported contravention of the PMPRB Guidelines).

Regarding the first question, the Court considered the recent jurisprudence, which requires “the most exceptional of circumstances” for reviewing an interlocutory decision. The Court reviewed the multiple interlocutory judicial review applications, which it held resulted in long delays, fragmentation of proceedings and monopolized limited judicial resources at all levels, and deemed no special circumstances existed. The Board’s decision to reject the Joint Submission was not determinative of whether the Applicant engaged in excessive pricing, the Applicant may well be successful at the upcoming hearing, rendering any litigation before the Federal Court useless.

Regarding the first proposed ground for review, loss of jurisdiction, HMRC argued it had “ceased to benefit from the patents in question more than three years before the day on which proceedings in the matter commenced” (Section 83(7) of the Patent Act). This argument was dismissed by the Court: the Applicant ceased to benefit from the patents in 2000, and while no steps beyond the Notice of Hearing (issued in 1999) had been taken until 2008, there were still “proceedings” ongoing (as opposed to a “hearing”). To decide otherwise would have gone against the intent of Parliament.

The second proposed ground for review was the improper constitution of the Panel. The Applicant interpreted Section 93 of the Patent Act as requiring the Chair and Vice-Chair of the Board to be present at every single hearing. The Court held this provision simply required them to manage the assignment of members (including themselves) to sit and preside at hearings of the Board.

The third proposed ground for review was a breach of procedural fairness, in the form of an unreasonably long delay between the issuance of the Notice of Hearing and the proposed date for the hearing, amounting to an abuse of process and violation of procedural fairness, pursuant to which the Board lost its jurisdiction to hear the matter. The Court admitted that Section 97(1) of the Patent Act required the Board to deal with matters “expeditiously”, but noted that since issuance of the Notice of Hearing, HMRC had commenced two judicial review applications to prevent the Board for hearing the matter (1999-2005); the motion of Board Staff to be added as party or granted intervenor status contributed to the remaining delay.

The Applicant also claimed that in failing to accept the Joint Submission, the Panel had merged together the prosecutorial and adjudicative functions. However, the Court held that in concurring with HMRC in the request to discontinue the proceedings, Board Staff did not withdraw the allegations previously made concerning excessive pricing. Since the Joint Submission did not determine the issue of whether HMRC engaged in excessive pricing, the issue remains very much alive. A well-informed person would see no reasonable apprehension of bias on the part of the Board panel in deciding to hear the matter.

Furthermore, the Court held that no evidence from the Patent Act or PMPRB Guidelines suggests that the Panel is functus officio, that is, having no other choice but to accept the Joint Submission and terminate the proceedings.

An argument of legitimate expectations also failed, the Applicant’s argument being that the Board’s practice is normally to terminate the present proceedings because the reduction in their prices had off-set any excess revenue they may have previously accumulated. No cogent evidence was deemed to support this assertion.

A last argument of insufficient reasons was proffered, however it was agreed that the main argument of the Joint Submission, namely that proceedings should be discontinued because the issues raised in the Notice of Hearing had been resolved, were in fact addressed in the reasons. The Court noted that the Applicant had been given the opportunity to be heard on the most salient features.

Regarding the fourth question, the Federal Court held that the Board’s decision to continue with the proceedings was reasonable: to decide it should be bound by any recommendation would have empowered Board Staff and the patentee with the ability to dictate the outcome of proceedings before the Board, contravening its’ institutional independence.

In light of all the foregoing reasons, the application for judicial review was dismissed.

By : Ira Shatzmiller