Date: 19980331
Docket: T-1273-97
BETWEEN:
MERCK & CO., INC.,
- and -
MERCK FROSST CANADA INC.,
Applicants
AND:
THE MINISTER OF HEALTH
- and -
THE ATTORNEY GENERAL FOR CANADA
- and -
APOTEX INC.,
- and -
APOTEX FERMENTATION INC.,
Respondents
REASONS FOR ORDER
WETSTON J.
[1] The applicants seek judicial review of the decision of the Minister of Health ("Minister") to issue, on 26 March 1997, a notice of compliance ("NOC") to Apotex Inc. ("Apotex") for the drug Apo-lovastatin, under s. 18.1 of the Federal Court Act, R.S.C. 1985, c. F-7. The applicants have requested an order directing the Minister to revoke or suspend the NOC issued to Apotex, and enjoining him from issuing any further NOC or amended product monograph, or commencing or continuing to evaluate any further submission in respect of the drug Apo-lovastatin, filed on behalf of Apotex.
[2] There are three main issues in this application:
| (1) whether Apotex failed to comply with section 5 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (the "NOC Regulations"); |
| (2) whether Apotex made material misrepresentations to the Minister in its submissions in request of a NOC for Apo-lovastatin; and |
| (3) whether the Minister exceeded or fettered his jurisdiction, or exercised his powers for an improper purpose, in granting the NOC. |
[3] Apotex submits that the application for judicial review should be dismissed on the basis that the Applicants" argument is not consistent with the grounds for review contained in their originating notice of motion. Apotex contends that an application for judicial review is not a fishing license that allows the applicant to search for grounds for review to be relied upon later in the proceeding.
[4] Apotex further that the applicants had sought review of the Minister's decision solely on the basis of allegations concerning his review of Apotex's new drug submission in respect of Apo-lovastatin. They contend that as a result of a decision of Hugessen J., dated October 10, 1997, (T-1273-97) in Merck Frosst Canada v. the Minister of Health, these allegations were found to be not justiciable at the suit of Merck. In other words, Apotex contends that Merck cannot now raise a failure to comply with the NOC Regulations as a ground for review.
[5] While the originating notice of motion in this matter is unusual in that it sets out detailed allegations of fact of the sort that one might expect in a statement of claim, it is not a statement of claim and, therefore, should not be treated as such. Rule 1602(2)(d) of the Federal Court Rules requires only that the grounds of review be provided in the originating notice of motion. There is no doubt that within the applicant's detailed allegations is the general ground of review that the Minister acted beyond his authority in granting a NOC to Apotex for Apo-lovastatin. In my opinion, Merck has always known and advanced the complaint that the NOC was issued, in its opinion, following noncompliance by the Minister with the NOC Regulations. As is normally the case in applications for judicial review, the material facts have evolved over time as affidavits were filed, cross-examinations conducted and documents produced and exchanged.
[6] The aforementioned proceeding before Hugessen J., as well as that which took place before MacKay J., dated 1 October 1997, defined what the relevant issues are for this judicial review application. An originating notice of motion is not a pleading as is a statement of claim and, as such, I cannot accept Apotex's argument that Merck Frosst has introduced arguments which were not based upon grounds generally contained within the originating notice of motion. While it is the case that the applicants are precluded from alleging grounds which concern health and safety or the administration of the Food and Drug Act and the Food and Drug Regulations ("F & D Regulations") by the Minister, in respect of Apotex's NDS for Apo-lovastatin, they are nonetheless able to question the Minister's appropriate administration of the NOC Regulations as it pertains to their interest in whether a NOC should have been issued.
[7] As this case is the result of a lengthy series of disputes between the parties concerning Apotex"s request for a NOC for the drug Apo-lovastatin, a detailed chronology is required.
[8] On 31 January 1984, the applicant Merck & Co., Ltd. ("Merck"), received a patent for the process by which it manufactures the drug, lovastatin, using the microbe aspergillus terreus ("terreus"), which it consequently licensed to the applicant, Merck Frosst Canada ("Merck Frosst"), for the marketing and sale of lovastatin in Canada, under the trademark Mevacor". On 30 June 1988, the applicants received the first of four NOC"s for the marketing and sale of Mevacor" from the Minister. A second patent, dealing with the conversion of lovastatin into a lactone, was also granted to Merck on 13 September 1991.
[9] On 12 March 1993, the NOC Regulations were enacted. Shortly thereafter, on 25 March 1993, Apotex filed a new drug submission ("NDS") for the drug, Apo-lovastatin, in three tablet sizes, using lovastatin made from the microbe aspergillus flavipes ("flavipes"). On 6 April 1993, the applicants filed a patent list under s. 4(1) of the NOC Regulations which included reference to its two patents relating to the manufacture of lovastatin made with terreus.
[10] Two weeks later, on 20 April 1993, Apotex filed an allegation with the Minister that no claim for lovastatin and no claim for the use of lovastatin would be infringed, in respect of Merck"s patents. A notice of the allegation ("NOA") was served on the applicants on 19 April 1993, along with a document purporting to be a detailed statement of the legal and factual basis of the allegation. Proof of service of that notice was also provided to the Minister.
[11] On 1 June 1993, the applicants filed a motion for an order of prohibition, under s. 6 of the NOC Regulations, seeking to prevent the Minister from issuing a NOC to Apotex in respect of its NDS for Apo-lovastatin. The NOA and detailed statement of fact and law did not specify how Merck's patents would not be infringed. However, subject to a protective order by McGillis J., dated 10 June 1993, the applicants were advised that the lovastatin would be manufactured using the microbe coniothyrium fuckelii ("fuckelii"), not terreus. This was confirmed by Apotex in a further detailed statement of fact and law that it was required to provide as a result of an order of Cullen J., dated 20 December 1993.
[12] On 19 November 1993, the Minister issued a notice of deficiency ("NOD") to Apotex concerning its NDS for Apo-lovastatin on the ground that Apotex had not submitted sufficient information to Health Canada to satisfy safety and efficacy concerns under the F & D Regulations. As Apotex did not submit the required information within the time allowed, the NDS was deemed withdrawn by the Minister on 10 March 1994. The practical effect of the NDS having been deemed withdrawn by the Minister was that Apotex had lost its place in the queue for its NDS evaluation, and was forced, so to speak, to the end of the line. Approximately nine months later, on 21 December 1994, Apotex re-filed its NDS for Apo-lovastatin manufactured using the microbe flavipes, as well as another microbe -- aspergillus obscurus ("obscurus"). The Minister issued a letter of acceptance to Apotex for review of the re-filed NDS ("1995 NDS") on 26 January 1995.
[13] In summary, by January 1995, four different microbes for the manufacture of lovastatin had been identified in various documents. Terreus was the microbe to which Merck's patents applied, and in respect of which its NOC's had been issued. Flavipes was the microbe named in the NDS filed by Apotex for the manufacture of Apo-lovastatin in 1993, and in its re-filed NDS, accepted for review in early 1995. Obscurus was another microbe named in the 1995 NDS. Finally, the Fuckelii microbe was named in the detailed statement of fact and law pursuant to Cullen J.'s order of December 1993.
[14] In the 1995 NDS, Apotex provided the Minister with its allegation of non-infringement dated 12 December 1994, a photocopy of its NOA dated 19 April 1993, and a copy of the proofs of service of the NOA, effected in April 1993. At the time it filed the 1995 NDS, Apotex did not serve any further NOA or a new detailed statement of fact and law on the applicants. Moreover, it did not provide the Minister with a copy of a more recent proof of service.
[15] Later that same year, on 23 June 1995, Apotex served Merck Frosst with a new NOA alleging that its Apo-lovastatin tablets would be manufactured using a second non-infringing process. On 9 August 1995, the applicants accordingly filed a second motion for an order of prohibition against the Minister issuing a NOC to Apotex for Apo-lovastatin based on the process alleged in the new NOA. Within the course of those proceedings, it was revealed that the second allegation concerned obscurus. The second NOA was never attached to the 1995 NDS, nor was proof of service of the second NOA ever filed with the Minister.
[16] Shortly after the applicants commenced the second prohibition proceedings, Richard J. granted an extension of one year (on 6 September 1995), with regard to the first prohibition proceedings. This order, made on consent of the parties, extended the limitation period to at least December 1996, before which the Minister could issue a NOC in respect Apo-lovastatin using lovastatin manufactured with fuckelii, the microbe which was the subject of the first NOA.
[17] Meanwhile, on October 11 1995, the Minister issued a notice of non-compliance ("NON") to Apotex in respect of its re-filed NDS for Apo-lovastatin. The NON raised deficiencies concerning the information pertaining to obscurus and flavipes, and required changes to the product monograph, as it had identified the micro-organism used to produce the lovastatin base as terreus. Apotex responded to the NON on 11 October 1995. On 21 March 1996, the Minister advised Apotex that the proposed source for lovastatin manufactured with obscurus was not considered acceptable, and on 29 March 1996, Apotex advised the Minister that its NDS with respect to obscurus should be considered withdrawn. Accordingly, the NDS for Apo-lovastatin before the Minister was left with only one proposed process of manufacture for lovastatin (i.e. flavipes).
[18] One month later, on 30 April 1996, Health Canada recommended the issuance of a NOC for Apo-lovastatin using an "aspergillus genus" process. On 25 May 1996, Apotex's 1995 NDS was placed on "patent hold," meaning that issuance of a NOC for Apo-lovastatin manufactured with flavipes was recommended pending resolution of the two ongoing prohibition proceedings, in respect of flavipes and/or obscurus, or upon the expiration of the applicants' patents.
[19] On 12 August 1996, Apotex submitted a request to the Minister to amend its re-filed NDS to provide for a NOC for Apo-lovastatin formulated from lovastatin manufactured using the fuckelii microbe, rather than flavipes. This request for a "notifiable change" was considered by Health Canada under its amended 1994 Policy on Marketed New Drug Products, developed by the Minister as part of his responsibility for evaluating NDS's and granting NOC"s under the F & D Regulations . The 1994 Policy was amended in order to permit notifiable changes to a NDS for which a NOC was recommended, but which was subject to a patent hold. The policy change was made on 29 May 1996, approximately three months prior to Health Canada"s receipt of Apotex"s notifiable change request.
[20] On 18 November 1996, the Minister issued a not satisfactory notice ("NSN") to Apotex in respect of its request to amend its NDS by replacing flavipes with fuckelii. The NSN required specifications for the identification of fuckelii and a justification for changing the method of manufacture of lovastatin. On 20 December 1996, Apotex responded to the NSN, and on 7 January 1997, the Minister accepted for review Apotex"s requested amendment to its NDS as a "notifiable change."
[21] At roughly the same time as the Minister was considering Apotex"s request for a notifiable change, the applicants requested another extension of time for the first prohibition proceedings. Dube J. determined, on 23 October 1996, that a further extension was required. However, on 10 February 1997, the Court of Appeal vacated Dube J."s order, and declared that the Federal Court had no jurisdiction to extend the determination period provided for under s. 7 of the NOC Regulations in absence of specific allegations of non-cooperation by the party to the proceeding: Merck Frosst Canada Inc. v. Apotex Inc. (1997), 72 C.P.R. (3d) 170 (F.C.A.). An appeal to the Supreme Court of Canada was denied on 25 September 1997.
[22] On or about the same time that the Court of Appeal rendered its decision, 10 February 1997, Apotex notified the Minister and the applicants of its withdrawal of the second NOA, in respect of obscurus (for which its NDS had been withdrawn since 29 March 1996). On 27 February 1997, the Minister issued a "no objection" letter to Apotex concerning the notifiable change to its re-filed NDS in respect of the substitution of fuckelii for flavipes, in the manufacture of lovastatin to be used in the formulation of Apo-lovastatin tablets.
[23] On 26 March 1997, Rothstein J. dismissed the first prohibition proceedings (re: fuckelii) in view of the Court of Appeal"s judgement of 10 February 1997, which, in his opinion, rendered the issue res judicata . Rothstein J. also found that the proceedings should be dismissed due to the absence of any evidence to support a finding of a failure to co-operate on the part of Apotex: Merck Frosst Canada Inc. et al. v. The Minister of National Health and Welfare et al. (1997), 72 C.P.R. (3d) 453 (F.C.T.D.). In addition, the second prohibition proceedings (re: obscurus) were dismissed on the basis that the underlying NOA had been withdrawn by Apotex: Merck Frosst Canada Inc. et al. v. The Minister of National Health and Welfare et al. (1997), 72 C.P.R. (3d) 468 (F.C.T.D.).
[24] Upon receipt of Rothstein J."s judgement, on 26 March 1997, the Minister issued a NOC to Apotex for Apo-lovastatin tablets used for the treatment of elevated cholesterol levels. The product monograph attached to the NOC indicated that Apo-lovastatin could be manufactured from the obscurus or flavipes microbes. Following an access-to-information request, and further correspondence with the applicants, the product monograph was corrected by the Minister, on 11 July 1997. The corrected product monograph attached to the NOC now permits the manufacture of Apo-lovastatin from fuckelii, rather than flavipes or obscurus.
[25] On 12 June 1997, the applicants brought an action for infringement of their patent rights in the manufacture of lovastatin against Apotex and Apotex Fermentation Inc. ("AFI"). At the same time, the present application was filed by way of originating notice of motion.
Compliance with Section 5 of the NOC Regulations
[26] The applicants argue that the decision of the Minister to issue a NOC to Apotex for Apo-lovastatin, on 26 March 1996, is null and void, as Apotex had failed to comply with the requirements of s. 5 of the NOC Regulations. Section 5 provides:
| 5. (1) Where a person files or, before the coming into force of these Regulations, has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make a reference to, a drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the patent list, |
| (a) state that the person accepts that the notice of compliance will not issue until the patent expires; or |
| (b) allege that |
| (i) the statement made by the first person pursuant to paragraph 4(2)(b) is false, |
| (ii) the patent has expired, |
| (iii) the patent is not valid, or |
| (iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed. |
| (2) Where, after a second person files a submission for a notice of compliance, but before the notice of compliance is issued, a patent list is submitted or amended in respect of a patent pursuant to subsection 4(5), the second person shall amend the submission to include, in respect of that patent, the statement or allegation that is required by subsection (1). |
| (3) Where a person makes an allegation pursuant to paragraph (1)(b) or subsection (2) the person shall |
| (a) provide a detailed statement of the legal and factual basis for the allegation; and |
| (b) serve a notice of the allegation on the first person and proof of such service on the Minister. |
[27] The applicants contend that s. 5 of the NOC Regulations requires that the second person shall (1) provide a detailed statement of the legal and factual basis for the allegation; (2) serve a notice of the allegation on the first person; and (3) file proof of such service with the Minister. Moreover, a NOA must be attached to the NDS and must be completed by the detailed statement: Apotex Inc. v. Canada (Minister of National Health and Welfare) (1997), 153 D.L.R. (4th) 68 ("Eli Lilly"). It is argued that the respondents have failed to comply with each of these requirements.
[28] The applicants provided extensive and detailed arguments to the effect that s. 5 must be interpreted strictly in respect of the requirements above. They argue that the legislative objective behind the Act and NOC Regulations requires a literal interpretation of s. 5 and strict adherence to the requirements found therein.
[29] The legislative objective, in the opinion of the applicants, is to prevent the infringement of a patent, in relation to the granting of NOC"s by the Minister. They submit that Parliament stated this objective in unambiguous terms in s. 55.2(4) of the Patent Act . Moreover, they rely on several decisions of this Court, and the Court of Appeal, in submitting that patent protection is the overriding goal of the Act and Regulations: Eli Lilly & Co. v. Novopharm Ltd. (1995), 60 C.P.R. (3d) 417 at 428 (F.C.T.D.); Hoffmann - La Roche Ltd. v. Canada (Minister of National Health and Welfare), (1996), 70 C.P.R. (3d) 206 at 213 (F.C.A.) & AB Hassle v. Canada (Minister of National Health and Welfare) (1997), 72 C.P.R. (3d) 318 at 320 (F.C.T.D.).
[30] The applicants maintain that the NOA occupies a central place in the regulatory framework. That is, like a cause of action, it triggers proceedings under the NOC Regulations: Bayer AG v. Canada (Minister of National Health and Welfare) (1995), 60 C.P.R. (3d) 129 at 134 (F.C.A.). They also argue that the detailed statement of fact and law is important because it alerts the first person to the fact that a NDS has been made, something about which it might otherwise have no knowledge, Eli Lilly and Co. v. Nu-Pharm Inc. (1996), 69 C.P.R. (3d) 1 at 17 (F.C.A.); Bayer AG v. Canada (Minister of National Health and Welfare) (1993), 51 C.P.R. (3d) 329 at 337 (F.C.A.). Moreover, it satisfies the regulatory requirement that a first person shall be provided with the opportunity to file an application for an order of prohibition under s. 6(1), if it so chooses: AB Hassle v. Canada (Minister of National Health and Welfare) (1994), 55 C.P.R. (3d) 293 at 298 (F.C.T.D.).
[31] The applicants stress that the NDS, NOA and detailed statement are inextricably linked: Janssen Pharmaceuteca v. Apotex Inc. (1996), 68 C.P.R. (3d) 114 at 116 (F.C.T.D.). As such, the applicants maintain that the information referred to in the NOA and the detailed statement must relate, throughout the NOC approval process, to the information referred to in the NDS; i.e., the microbe referred to in the NOA and detailed statement must, at all times, be the same microbe referred to in the NDS: Eli Lilly, supra at 78-79 & Janssen, supra at 117. It is submitted that the use of the term "shall" in s. 5 also mandates that the sequence implied in the terms of the provision is mandatory.
[32] The applicants rely on the findings of the Federal Court of Appeal in Eli Lilly, supra, to support their argument. In that case, the Court of Appeal was presented with a situation where a NOA was served four months prior to the amendment of an existing NDS to refer to a new allegation. Marceau J.A. considered the issue of whether the requirements of s. 5 had to be observed in sequence. He held , at 78-79:
| In the Minister"s submission, the three step sequence as set out in section 5 is merely directory, not mandatory. The Minister argues that the process cannot be vitiated by the sole fact that requirements of section 5 were complied with in an out-of-sequence manner. I fully agree. The basic purpose of the Regulations is to provide a means by which patents are noted and protected from possible infringement at the instance of the patent-holder. The Regulations thus ensure an NOC is not issued without a patent-holder having the opportunity to defend its patent. This opportunity is not diminished by the fact that the notice of allegation is giving first, if, as here, it contains sufficient information for the patent-holder to determine whether to seek a prohibition order and the Court can immediately proceed to determine its justification. If the sequence is held to be mandatory, the process would simply have to be commenced anew and this would cause a purposeless delay in the marketing of a drug in cases where the allegation proves to have been justified. The intent of the regulations shows that compliance with section 5 in a manner inconsistent with the sequence set out should not be considered a defect sufficient to vitiate the process. |
[33] In Smithkline Beecham Pharma Inc. v. The Minister of Health and Welfare et al. (T-2528-96, 24 November 1997, F.C.T.D., McKeown J. applied Marceau J.A."s analysis in Eli Lilly . In Smithkline Beecham, a NOA was filed before a NDS was filed. McKeown J. found that the only linkage that exists between an allegation of non-infringement and a NDS is that the allegation must be attached to the NDS. So long as the first person is made aware of the allegation, and is provided with the details of it, the patent-holder has everything it needs to know in order to challenge the allegation under s. 6.
[34] The applicants contend that Eli Lilly stands for the proposition that the requirements of s. 5 may be breached, but only where the defect in question is minor, and does not violate the intent or purpose of the NOC Regulations. However, in cases where the requirements of s. 5 are absent, or where the sequence followed conflicts with the overriding statutory and regulatory goals, the Minister may be prohibited from issuing a NOC.
[35] The applicants submit that, if Smithkline Beecham was correctly decided, the defect found in that case was also found to be minor. Moreover, they note that the finding in Smithkline Beecham is distinguishable from the facts of this case, where a NDS did exist, in which the allegation referred to a manufacturing process that was different from that which was contained within the NOA and detailed statement.
[36] I cannot accept the applicant"s interpretation of this jurisprudence. In Eli Lilly , Marceau J.A. indicated that the goal of the NOC Regulations will be satisfied upon compliance with the three requirements of s. 5 in any sequence. He did not say that a particular sequence mandated by the section may be violated, only if the breach is found to be of minor effect. Rather, he indicated that, so long as its requirements are met, s. 5 does not mandate a particular sequence of compliance. That is, any sequence that can be inferred from the wording of the provision is to be interpreted as directory, rather than mandatory.
[37] This conclusion is reinforced by the terms of paragraph 5(3)(b), which obliges the second person to serve the "notice of allegation" on the first person. By its reference to paragraph 5(1)(b), the provision clearly specifies that the "allegation" served on the first person must be the same allegation included in the NDS once it is filed, but it makes no reference to the submission itself. If the requirements of s. 5 are met in any sequence, the first person will have received proper notice of the allegation and, at the appropriate time, the Minister will be able to confirm that the allegation, as served in the NOA, is the same allegation attached to the NDS.
[38] I now turn to the question of whether Apotex is in breach of the requirements of s. 5, which are, in keeping with Eli Lilly, supra, that an allegation must be attached to a NDS, must be completed by a detailed statement, and must be served on the first person. In addition, proof of such service must be provided to the Minister.
[39] The applicants first identify which NDS should be the focus of this inquiry. It is submitted that Apotex filed two separate and distinct NDS's in respect of Apo-lovastatin, as the first NDS, filed in 1993, was deemed withdrawn by the Minister in early 1994. As such, they maintain that there was a period of approximately nine months during which there was no NDS for Apo-lovastatin. The applicants argue that if the withdrawal of a NOA results in prohibition proceedings becoming moot, then the withdrawal of a NDS equally renders prohibition proceedings moot. Therefore, they argue that, as there was no underlying NDS to which the 1993 NOA and detailed statement were linked, the first prohibition proceeding should be considered moot and the 1993 NOA and detailed statement should lose any legal significance.
[40] The applicants submit that since the 1993 NDS was withdrawn, the 1995 NDS must meet the requirements of s. 5 prior to the Minister issuing a NOC for Apo-lovastatin. The re-filed NDS referred to the manufacture of Apo-lovastatin with either flavipes or obscurus. As Apotex wished to make reference to Merck Frosst's lovastatin medicine, Apotex was required to file an allegation attached to the NDS that it would not infringe the applicants' patents "by the making ... of the drug for which the submission for the notice of compliance is filed": s. 5(1)(b)(iv). Although it did file an allegation when it re-filed the 1995 NDS, the applicants argue that the allegation must have referred to fuckelii, not either process referred to in the NDS (i.e. flavipes or obscurus).
[41] The NOA, detailed statement, and proof of service filed with the 1995 NDS were actually copies of the same documents which had been filed with the 1993 NDS. Though not attached to the 1995 NDS, the further detailed statement, ordered by Cullen J. during the first prohibition proceedings, stipulates that fuckelii was the alleged non-infringing method. From this, the applicants conclude that the allegation in the 1995 NDS must have referred to lovastatin made using fuckelii, rather than either of the microbes referred to in the 1995 NDS, flavipes and obscurus. Thus, it is submitted that Apotex failed to comply with the first requirement of s. 5 of the NOC Regulations as it did not file in the 1995 NDS (for Apo-lovastatin derived from flavipes or obscurus) an allegation of non-infringement which pertained to the method of manufacture contained in such submission, which the applicants argue should have been fuckelii.
[42] I cannot agree with this line of argument. At the relevant time, the Minister had a NDS for Apo-lovastatin on file that satisfied all requirements under the F & D Regulations. It does not matter whether the NDS was a "new" or "re-filed" NDS, or the same NDS which was filed with the Minister in 1993. The NDS review process is separate and distinct from the prohibition proceedings provided for under s. 6 of the NOC Regulations . It is the NOA, not the NDS, that underpins the prohibition proceedings. The NDS does not form part of the record in prohibition proceedings under s. 6, and does not play a substantive role in determining the outcome of such proceedings: Hoffman-La Roche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 67 C.P.R. (3d) 484 at 505 (F.C.T.D.); aff"d (1996), 70 C.P.R. (3d) 206 (F.C.A.). As such, the deemed withdrawal of the Apotex's NDS had no effect on the prohibition proceedings in respect of fuckelii, and did not render the 1993 NOA, detailed statement or proof of service moot or without effect.
[43] Similarly, the content of a NDS, at any given point in time, however it has been amended, is not material to the substantive effect of an allegation, and any ongoing prohibition proceedings. The NDS approval process and the prohibition proceedings in relation to an allegation are separate and distinct. While an allegation must be attached to a NDS, the validity of an allegation with respect to a claim for the medicine itself or a claim for the use of a medicine only needs to be linked to the proposed method of manufacture of the medicine specified in the NDS prior to the issuance of a NOC: Smithkline Beecham, supra.
[44] The opportunity to challenge an allegation is not diminished by the fact that the notice of allegation is given first, as it contains sufficient information for the first person to determine whether to seek a prohibition order and for the court to proceed to determine whether one should be granted: Smithkline Beecham, supra & Eli Lilly, supra. The first person"s ability to initiate a prohibition proceeding, and trigger the legislative stay, is unaffected by the timing of an allegation or NOA. Moreover, since a NOC cannot issue until a NDS is filed, it is only the second person who would be prejudiced by any tardiness in its filing of the NDS. The Ministerial review required under the F & D Regulations cannot proceed in its absence, and a NOC will not issue until the review is satisfactorily completed.
[45] Conversely, an interpretation which would require the NOA to be served contemporaneously with, or later than, the NDS would artificially extend the 30-month legislative stay, whenever a NDS is delayed, for any reason, or must be re-filed. An interpretation that affords a first person the opportunity to needlessly extend the time before which a competitor can enter the market, rather than the simple opportunity to seek a summary determination on the merits of a particular allegation, should be rejected as fundamentally incompatible with the objectives of the Act and NOC Regulations: Eli Lilly, supra.
[46] The applicants further argue that Apotex failed to provide to the Minister, or to Merck Frosst, a detailed statement of the legal and factual basis for the allegation made in the 1995 NDS. Rather, Apotex submitted a copy of the 1993 NOA and detailed statement, which they argue was unsatisfactory for two reasons. First, it is maintained that the 1993 NOA and detailed statement were rendered moot by the deemed withdrawal of the 1993 NDS, and as such the NOA and detailed statement could not pertain to the allegation attached to the 1995 NDS. Second, it is argued that, as the 1993 detailed statement had been found insufficient by Cullen J., on 20 December 1993, supra, it could not be attached to the 1995 submission in satisfaction of the requirements of s. 5.
[47] The applicants argue that since the detailed statement contained within the 1993 NOA was found inadequate by Cullen J., and the decision was not appealed by Apotex, the matter is chose jugée: Novopharm Limited v. Canada (Minister of National Health and Welfare) (1995), 61 C.P.R. (3d) 82 at 87 (F.C.A.). As between the parties, it is contended that the matter is therefore settled, and Apotex cannot now rely upon its purported "detailed statement" in satisfaction of the requirements of s. 5, even if the so-called "detailed statement" did relate to the allegation attached to the 1995 NDS, and was not rendered moot by the deemed withdrawal of the 1993 NDS.
[48] I cannot agree with this submission. It does not matter, with respect to the issue herein, that the detailed statement prepared by Apotex in 1993 was found to be insufficient by Cullen J. in December 1993, and that his decision was not appealed. Notice of the allegation and a detailed statement had been provided to the applicants, albeit more than three years earlier than the date on which the NDS was updated with reference to fuckelii, and proof of service was filed with the Minister. Apotex complied with the order for a better detailed statement in early 1994. Apotex"s re-filing of copies of the original NOA, detailed statement, and proof of service may have been useful to the Minister, from an administrative perspective, but their being attached at the time of the re-filing of the 1995 NDS was unnecessary to comply with the requirements of s. 5.
[49] Furthermore, the applicants argue that Apotex did not comply with s. 5(3)(b) of the NOC Regulations in that it did not serve notice of the allegation attached to the 1995 NDS, and consequently did not file the necessary proof of service with the Minister. The "allegation" of which Apotex was required to serve notice on Merck Frosst, under s. 5(3)(b), was the allegation made in the 1995 NDS, not the allegation made in the previous NDS filed approximately 20 months earlier.
[50] It is maintained that the service referred to in s. 5(3)(b) is required to be made at the time of the allegation in the subject submission, or at least subsequent thereto. Section 5(1) provides for the possibility "in the submission" of making an allegation (ss. 1(b) & (2)). Section 5(3) then provides that "[where] a person makes an allegation pursuant to paragraph (1)(b) or subsection (2) the person shall ... (b) serve a notice of the allegation on the first person." As such, the applicants argue that a NOA could not be served twenty months before the allegation and submission actually existed.
[51] Again, I cannot agree. The requirement of providing proof of service of the NOA to the Minister is designed to ensure that the Minister will only grant a NOC once the first person has had the opportunity to challenge an allegation under s. 6. Whether the Minister receives such proof of service in advance of, contemporaneous with, or after any given NDS is filed or amended can in no way affect his ability to confirm whether the NOC should issue, based upon the restrictions imposed under s. 7.
[52] It is therefore clear that the applicants" argument that Apotex failed to comply with s. 5 cannot succeed. All of the requirements of s. 5 were met, albeit in a different sequence than submitted by Merck Frosst The applicants were provided with an opportunity to challenge the allegations put forward by Apotex, of which they took full advantage, and the Minister was provided with the required notice to ensure that s. 7 would be observed prior to the issuance of a NOC. While the applicants may have run out of time, that problem cannot be attributed to Apotex or AFI. As such, the object of the NOC Regulations was satisfied.
Were Serious Misrepresentations Made to the Minister?
[53] The applicants argue that even if Apotex complied with s. 5 of the NOC Regulations, the issuance of the NOC on 26 March 1997 should be declared null and void, since the Minister's decision to issue the NOC was based upon serious misrepresentations made by Apotex.
[54] The applicants submit two bases for misrepresentation by Apotex. First, they assert that where the method of manufacture contained in a NDS is one that a second person knows is embraced within the first person"s patent(s), the second person must undertake to await the expiry of the relevant patent(s) before a NOC can issue under s. 5(1)(a). In both the 1993 NDS and the 1995 NDS, Apotex sought a NOC for Apo-lovastatin made from flavipes (obscurus having been withdrawn from the NDS in March 1996). The applicants argue that these submissions would have led the Minister to conclude that lovastatin made from flavipes would not infringe any claim for the medicine in Merck"s patents, as indicated in the allegation of non-infringement attached to the 1995 NDS.
[55] On 19 April 1993, Dr. Sherman certified a Form V, which is a declaration concerning a Patent List prepared by a second person. In it, Dr. Sherman alleged that s. 5(1)(b)(iv) of the NOC Regulations applied to the manufacture of Apo-lovastatin. On 12 December 1994, another Form V was certified by Dr. Sherman with respect to the 1995 NDS. Again, s. 5(1)(b)(iv) was alleged with respect to the manufacture of Apo-lovastatin. The applicants contend that in the latter Form V, the box for s. 5(1)(a) should have been checked, i.e., that the second person accepted that the NOC would not be issued until the declared expiration date of the patent expired. Thus, it is submitted that Apotex made a serious misrepresentation to the Minister.
[56] Secondly, the applicants argue that, even though Apotex made an allegation of non-infringement in December 1994 and attached it to the 1995 NDS, Apotex knew that lovastatin made from flavipes, the only microbe named in the NDS prior to the change to fuckelii, would infringe Merck"s patents in respect of terreus. As such, if the allegation referred to flavipes, it was a serious misrepresentation. They argue that had Apotex refrained from making an allegation, as it knew flavipes to be infringing, a NOC could not have been issued until at least the expiry of the first Merck patent, in 2001. In other words, it is contended that Apotex did not make the required statement in s. 5 and thus they misrepresented the facts and did not tell the truth.
[57] I have considered the evidence and argument with respect to whether a serious misrepresentation was made and I do not accept the applicants' contentions to that effect. I am satisfied that the evidence concerning the pre-clinical studies in 1991 and 1992 indicates that they were conducted in the context of Apotex obtaining a compulsory license. The compulsory licensing regime was such that the identity of the microbe or the process by which the lovastatin was manufactured was not significant. Had the law not been changed, it is likely that Apotex would have pursued their efforts to obtain a compulsory license for Apo-lovastatin tablets using the terreus microbe. The materials used to make the tablets in '91-'92 were made using terreus and therefore Apotex submits that is the reason terreus was disclosed.
[58] Nevertheless, in August 1992 there was a belief, on the part of Apotex, that flavipes may have been different from terreus. Indeed, Apotex had obtained a report from the American Type Culture Collection, an independent organization where strains are deposited and analysed, which indicated that there were distinctions between these two microbes.
[59] Regardless of whether Apotex actually knew that flavipes was infringing at the time it filed its 1993 NDS, in light of my findings concerning the interpretation of s. 5 of the NOC Regulations, there can be no misrepresentation before the Minister regarding the identity of the microbe because the Minister, at this stage, is not concerned with the allegation of non-infringement -- i.e. with proprietary rights. Pursuant to s. 7, the point in time at which the Minister must be satisfied that the requirements of s. 5 are met is prior to his granting a NOC.
[60] It should also be recalled that Apotex's NDS was made in respect of Apo-lovastatin tablets, not the process by which lovastatin is made. The allegation is not that flavipes is non-infringing but rather that Apotex has a non-infringing microbe, i.e., fuckelii. For the purposes of the NOC Regulations, flavipes was never put forward as the non-infringing process. While the Minister may have been concerned with the proposed process of manufacture of lovastatin, in so far as it impacted upon safety and efficacy issues, (i.e.,impurities) his primary concern was whether Apotex's formulation of lovastatin, however manufactured, would be safe and effective.
[61] It is clear, from my review of Dr. Cox's evidence, that when the NDS was re-filed in December 1994, Apotex knew that flavipes would be an infringing microbe. However, this is not sufficient to find a misrepresentation given my interpretation of the NOC Regulations and my assessment of the evidence. The applicants rely on Dr. Sherman's evidence to support their argument regarding misrepresentation, but Dr. Sherman was quite clear when he said in cross-examination regarding the pre-clinical application, i.e., prior to 1993, that:
| There is no reason that I can see that a microbe would have been specified at that time! |
[62] In other words, Dr. Sherman did not regard a NDS as the key to determining proprietary rights. On these facts, I cannot make a finding of misrepresentation by Apotex.
[63] After the Minister completed his analysis of the 1995 NDS under the F & D Regulations, wherein the proposed process of manufacture of lovastatin tablets still involved flavipes, the NDS was placed on patent hold (on 25 May 1996). Pursuant to s. 7, the NDS would have remained on patent hold until the patent expired, or at least until such time as an allegation was made in respect of lovastatin made with flavipes, and a NOA and detailed statement had been served on the applicants (giving them the opportunity to contest the allegation through s. 6 proceedings). As of 25 May 1996, only two allegations were available which could be matched to the NDS, i.e, those allegations in respect of which a NOA and detailed statement had been served. The NOA for obscurus was withdrawn by Apotex on 10 February 1997, and the proposed source for it had been rejected by the Minister on 21 March 1996. The other NOA was for fuckelii, which Apotex had not, at this time, proposed to the Minister as a process for the making of lovastatin in the NDS.
[64] Later in 1996, the Minister accepted Apotex"s application for a notifiable change to its 1995 NDS, and evaluated the NDS for Apo-lovastatin formulated with lovastatin manufactured using fuckelii. As before, the Minister"s evaluation of the 1995 NDS was conducted independently of any ongoing prohibition proceedings. It was only when the Minister was ready to issue the NOC for Apo-lovastatin, manufactured using fuckelii, that a link had to exist between the allegation in respect of fuckelii, and the proposed manufacturing process referred to in the NDS.
[65] In conclusion, I find that no misrepresentation was made by Apotex to the Minister which resulted in the issuance of the NOC by the Minister on 26 March 1997.
Whether the Minister Acted Improperly in Granting the NOC
[66] The applicants submit that the Minister's decision to issue the NOC should be quashed because the Minister acted unlawfully and exceeded or unreasonably fettered his jurisdiction. They first allege that the Minister was under a duty to take steps to have the fuckelii prohibition proceedings terminated when the 1993 NDS was deemed withdrawn. That is, he should not have permitted the proceedings to continue, or at least should have notified either Merck Frosst or the Court that there was no longer any NDS with respect to Apo-lovastatin. In their opinion, had the Minister acted lawfully in this regard, Apotex would have lost the "camouflage of its moot proceedings" and would thus have had to serve a new allegation when its NDS was re-filed. The same analysis applies in respect of the 1995 NDS concerning obscurus, which was withdrawn even though its corresponding prohibition proceeding continued.
[67] Similarly, it is contended that the Minister failed in ensuring that a proper linkage was maintained, pursuant to the requirements and sequence which the applicants say are mandated under s. 5.
[68] In support of this position, the applicants went to some length to establish the nature of the Minister"s duties in respect to the impugned proceedings. While they acknowledge that the Minister is responsible to protect public health and safety, in their opinion he has a parallel duty to enforce the Linkage Regulations , and is in this sense charged with administering a scheme designed to preserve proprietary interests. They maintain that the Minister cannot take a passive role in this regard, i.e., that the Minister is not a mere pawn in enforcing the NOC Regulation; Merck Frosst (1997), supra, at 327.
[69] Indeed, the applicants submit that the Minister, as guardian of the proprietary rights of others, is under a quasi-fiduciary duty arising from the gross inequality in information between the Minister and a first person as to the status of a second person"s application: Guerin v. The Queen, [1984] 2 S.C.R. 335, and Chinoin Gyogyszer es Vegyeszeti Termekek Gyara R.T. v. Deputy Attorney General of Canada, [1977] 2 F.C. 313 (C.A.). Moreover, they argue that the Minister"s representatives, who are lawyers from the Department of Justice, and as officers of the Court, had a duty to advise the Court that the 1993 NDS had been withdrawn.
[70] While it is evident that the Minister is under a duty to comply with the NOC Regulations, in my opinion, he was not under any duty to inform Merck of the deemed withdrawal of the 1993 NDS or to otherwise become involved in the prohibition proceeding. His duty is restricted to ensuring that the requirements of the regulations are met prior to the issuance of a NOC. That is, he must ensure that the patent register is maintained and ensure that no NOC will issue unless the patent holder or licensee has had the opportunity to contest a NOA with respect to a patent on that list.
[71] I have already found that the NDS does not underpin a prohibition proceeding. The Minister is not under any obligation to ensure that the second person"s NDS is linked, at all times, to the NOA and detailed statement, or to inform a first person of any differences that may exist between them. As previously stated, the Minister must ensure that the information in the NDS and NOA matches prior to the issuance of a NOC: Eli Lilly , supra & Smithkline Beecham, supra. As the Minister was not under any duty to inform the Court of the withdrawal of the NDS, his representatives, as officers of the Court, would similarly not be under an obligation to do so.
[72] Nor does a quasi-fiduciary duty arise in relation to these facts. The cases cited by the Applicant with respect to the existence of a quasi-fiduciary duty apply to a completely different legal and factual context. In this case, the Minister had information that the Applicant did not, i.e., he received the NDS and could therefore compare it with the NOA. However, this is not in my opinion a "gross inequality" of information which would give rise to a quasi-fiduciary duty owed to the Applicant. The Minister"s role in respect to information provided by Apotex was to protect the public interest with respect to the safety and effectiveness of drugs, not to preserve the proprietary rights of either Apotex or Merck Frosst: Glaxo Canada v. Min. Of National Health and Welfare (1988) 18 C.P.R. 206 at 220 (F.C.T.D.); Apotex Inc. v. Attorney General of Canada et. Al. (1986), 9 C.P.R. (3d) 193 at 198 (F.C.T.D.).
[73] The Applicants also submit that the Minister acted unlawfully either in implementing its policy with respect to notifiable changes in 1996, or in permitting Apotex to submit a notifiable change for its re-filed NDS in 1996, in respect of the method of manufacture of lovastatin using the fuckelii microbe. Had the Minister not changed his policy, the Applicants argue that Apotex would have been required to submit a supplementary or new NDS in respect of fuckelii, which would have required a new NOA and detailed statement to be served on Merck Frosst. This would have provided the Applicants with another opportunity to initiate prohibition proceedings under s. 6.
[74] It is argued that the Minister was under an obligation to ensure that the letter and spirit of the NOC Regulations were fulfilled, and not to effect a policy change which appears to have been targeted at NDS's for generic drugs. Moreover, given the confidential nature of the NDS review process, the first person would not know whether the linkage which the Applicants argue must be maintained between a NDS review and any prohibition proceedings is actually being met. As such, the purpose of the NOC Regulations, to safeguard the patent rights of first persons, in exchange for a loosening of patent protection in the Act to allow second persons to work-up a new drug , would be subverted.
[75] The Applicants further argue that the policy may be impeached on the grounds of a legitimate expectation. It is alleged that the pharmaceutical industry was not consulted about the Minister's policy change in 1996, though it had been routinely consulted about such policies in the past. Moreover, as the NOC Regulations extend procedural rights to first persons, in order to notify them of allegations of non-infringement which may be false, the Applicants argue that the regulatory framework itself gives rise to a legitimate expectation that the provisions granting such rights will be enforced, rather than subverted by a change in the Minister's administrative policy.
[76] The doctrine of legitimate expectation affords a party affected by the decision of a public official an opportunity to make representations in circumstances in which there would otherwise be no opportunity: Old St. Boniface Residents Assn. v. Winnipeg (City), [1990] 3 S.C.R. 1170 at 1204 (per Sopinka J.). It arises out of the duty of fairness which is generally owed by public officials in exercising their administrative function: Reference Re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525 at 557. Such a duty of fairness has been found to be owed by the Minister to first persons, with respect to the manner in which the Minister maintains the register of patent lists submitted by first persons pursuant to s. 4 of the NOC Regulations: Merck Frosst Canada v. Canada (Minister of National Health and Welfare) (1997), 74 C.P.R. (3d) 307 at 329 (F.C.T.D.) "Simvastatin".
[77] There are two types of circumstances where the doctrine may arise, even in the absence of a legal requirement to consult: (1) where there has been an express undertaking to consult a party affected by a decision: R. v. Liverpool Corp., [1972] 2 All E.R. 589 (C.A.) & Bendahmane v. Minister of Employment and Immigration, [1989] 3 F.C. 16 (F.C.A.); and (2) where it has been established that the past practice of granting participation to a particular party prior to the making of a public decision generates a reasonable expectation, on the part of that party, that such participation would be provided by the public authority in advance of any change to that decision: Council of Civil Service Unions v. Minister for Civil Service, [1985] 1 A.C. 374 at 401 (H.L.) & Brinks Canada Ltd. v. Canada Council of Teamsters et al. (1995), 185 N.R. 299 at 308-309 (F.C.A.). This case involves the latter type.
[78] The Applicants allege that the Minister"s past practice of consulting pharmaceutical manufacturers, including Merck Frosst, in advance of making changes policies employed to administer the F & D Regulations raises a legitimate expectation on the part of Merck Frosst that it would be consulted concerning changes to the 1994 Notifiable Change Policy. As it was not consulted, the Applicants maintain that the Policy was wrongfully amended, and the Minister"s decision to accept Apotex"s notifiable change request, which had been based upon the policy change, is a nullity. I cannot accept this argument. While I have considered the evidence of Mr. Saheb of Merck Frosst, I am not satisfied that there is sufficient evidence before me to find that the Minister"s past consulting practices and procedures give rise to a legitimate expectation that would require consultation prior to the Minister making the policy change.
[79] The Minister clearly owes a duty of fairness to Merck in administering the NOC Regulations. However, he only owes this duty in respect of decisions which impact directly upon Merck"s rights: Simvastatin , supra. At issue in this dispute is the Minister's decision to issue a NOC to Apotex on 26 March 1997. In so far as the Minister"s past consulting practices might raise a legitimate expectation concerning evaluation of Apotex"s NDS, from the standpoint of the F & D Regulations , the matter is not one in which the Applicants have any standing to pursue: Merck Frosst Canada Inc. et al. v. The Minister of Health et al. (T-1273-97, 10 October 1997, Hugessen J.). To have a legitimate expectation, Merck Frosst must demonstrate that it has been directly affected by the policy change, and in my opinion, it is not directly affected in this case.
[80] I also cannot accept the Applicants" further argument that the framework of the NOC Regulations itself gives rise to a legitimate expectation which would prevent the Minister from making any amendment to the 1994 Notifiable Change Policy that would allow Apotex to change the microbe proposed for the manufacture of lovastatin. First, as I have found above, I do not agree with this argument concerning the match required to be made by the Minister between a NDS and a NOA. Second, the doctrine of legitimate expectation provides only procedural protection within the context of administrative decision-making where consultation should have taken place, but did not. It does not give rise to substantive rights: Old St. Boniface, supra. As such, the mere existence of a regulatory framework alone does not give rise to a legitimate expectation.
[81] This is not to say that the Applicants do not have standing to raise the issue of whether the Minister, acting in relation to one of his policies with respect to NDS evaluation, breached the NOC Regulations. They may do so. However, in this case, I cannot find any such breach.
[82] Contrary to what the Applicants have argued, it was pursuant to the 1994 Policy on Marketed New Drug Products that the ability to amend a NDS by way of notifiable change was provided by the Minister. The 1996 Policy change, which is not limited to notifiable changes, simply permitted the amendment of a NDS, by way of notifiable change, while a NDS is on patent hold. Prior to this time, a notifiable change could be requested in respect of a manufacturing process, but only if the NDS had not yet been placed on patent hold. These policy changes had no effect on the administration of the NOC Regulations.
[83] In other words, the Minister's acceptance of Apotex's notifiable change request had no effect on the Applicants' opportunity, under the NOC Regulations, to challenge Apotex's allegation that lovastatin manufactured using fuckelii would not infringe Merck's patents. After the Minister decided to accept the notifiable change from Apotex, Apotex was still required to demonstrate the safety and efficacy of lovastatin manufactured using fuckelii. If there had never been a NOA, and subsequent s. 6 proceeding in respect of fuckelii, or if a prohibition order had been issued, then no NOC would have been issued. As such, the goal of the NOC Regulations, and of s. 5 in particular, was achieved in this case.
[84] The Applicants, AFI and Apotex have each asked for costs in this proceeding. Under Rule 1618 of the Federal Court Rules, costs are not to be awarded in an application for judicial review, unless the Court finds special reasons to do so. Notwithstanding the arguments of counsel, I have found no special reasons to award costs in this matter.
[85] The application for judicial review shall be dismissed.
"Howard I. Wetston"
Judge
Toronto, Ontario
March 31, 1998
[86]
FEDERAL COURT OF CANADA
Date: 19980331
Docket: T-1273-97
BETWEEN:
MERCK & CO., INC.,
- and -
MERCK FROSST CANADA INC.,
Applicants
AND:
THE MINISTER OF HEALTH
- and -
THE ATTORNEY GENERAL FOR CANADA
- and -
APOTEX INC.,
- and -
APOTEX FERMENTATION INC.,
Respondents
REASONS FOR ORDER
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: T-1273-97
STYLE OF CAUSE: MERCK & CO., INC.,
MERCK FROSST CANADA INC.
-and-
THE MINISTER OF HEALTH,
THE ATTORNEY GENERAL FOR
CANADA, APOTEX INC.,
APOTEX FERMENTATION INC.
DATE OF HEARING: JANUARY 26, 1998
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR ORDER BY: WETSTON, J.
DATED: MARCH 31, 1998
APPEARANCES: Mr. Robert Charlton
Mr. Leigh Crestohl
For the Applicants
Me. Andre L'Esperance
Me. Francisco Couto
For the Respondent
(The Minister of Health and
The Attorney General for Canada)
Mr. J. Myers
Mr. Patrick Riley
For the Respondent
(Apotex Fermentation Inc.)
Mr. Harry Radomski
Mr David Scrimger
For the Respondent
(Apotex Inc.)
Page 2
SOLICITORS OF RECORD: Mr. Robert Charlton, Mr. J. Nelson Landry
OGILVY, RENAULT
Barristers and Solicitors
1981 McGill College Avenue
Suite 1100
Montreal, Quebec
H3A 3C1
For the Applicants
Mr. George Thomson
Deputy Attorney General
of Canada
For the Respondent
(The Minister of Health and
The Attorney General for Canada)
Mr. J. Myers
TAYLOR, McCAFFREY
Barristers and Solicitors
9th Floor, 400 St. Mary Avenue
Winnipeg, Manitoba
R3C 4K5
For the Respondent
(Apotex Fermenation Inc.)
Mr. Harry Radomski
GOODMAN PHILLIPS & VINEBERG
Barristers and Solicitors
250 Yonge Street
Suite 2400
Toronto, Ontario
M5B 2M6
For the Respondent
(Apotex Inc.)