PMPRB Update: Supreme Court Refuses To Hear Appeal From Decision Restricting Canada's Patented Medicine Pricing Review Board's Drug Price Mandate

On March 24, 2022, the Supreme Court of Canada denied the Attorney General's application for leave to appeal the Federal Court of Appeal's decision in Alexion Pharmaceuticals v. Canada (Attorney General), 2021 FCA 157 (the "Alexion FCA" Decision).

The Supreme Court's denial of leave means the Federal Court of Appeal's holding that the Patented Medicines Review Board's (the "PMPRB") jurisdiction to prevent excessive drug prices does not extend to general price control or consumer protection is the last word on these issues.

Background: The PMPRB's challenge of Alexion's pricing for SOLIRIS

Alexion markets the patented medicine SOLIRIS, a breakthrough treatment for two rare and life-threatening blood-related disorders. The PMPRB initiated proceedings considering whether Alexion priced SOLIRIS excessively contrary to the Patent Act. The PMPRB found that it did, and ordered Alexion to forfeit what it deemed as excess revenues earned between 2009 and 2017. The Board relied on the fact that the Canadian list price of SOLIRIS was higher than the price in one of seven comparator countries. According to the PMPRB, the price of SOLIRIS had to be lower than that of all seven comparator countries to avoid being excessive, departing from the provisions of the PMPRB Guidelines.

Alexion applied for judicial review. The Federal Court dismissed Alexion's application, finding that the PMPRB's decision was reasonable because it was entitled to significant deference. Alexion appealed, and the Federal Court of Appeal quashed the lower court's decision and remitted the matter back to the PMPRB for re-determination. The Attorney General's application for leave to appeal the FCA's decision to the Supreme Court was dismissed today.

Alexion FCA confirms the PMPRB's mandate does not include general price control or consumer protection

The Federal Court of Appeal determined that:

1. General price control is not part of the balance struck by the Patent Act: The Federal Court of Appeal specifically rejected the notion that Parliament empowered the PMPRB to implement general price control of patented medicines. The Court emphasized that the Patent Act "aims at a balance between incentivizing the research and development of patented medicines and their introduction into Canada through the grant of a monopoly and protecting against the abuse of that monopoly. General price control is no part of that exercise."¹

2. The PMPRB's mandate is to prevent patent abuse & excessive pricing; not consumer protection: The Federal Court of Appeal disagreed with the PMPRB's view of its mandate. The excessive pricing provisions in the Patent Act are directed at controlling patent abuse, not reasonable pricing, price regulation or consumer protection at large.² In particular, the Court defined the PMPRB's mandate as "preventing abusive pricing, i.e., excessive pricing made possible by the abuse of the monopoly power given by a patent."³ The PMPRB's remedial powers are not triggered merely by prices that are considered high or insufficiently protective of consumers.

3. The Patent Act sets out the test for excessive pricing: The PMPRB's analysis of excessive pricing must be grounded in the law.⁴ The Court held that the test for excessive pricing is that codified in section 85 of the Patent Act, and it must be applied by the PMPRB before any other factors are considered.⁵ The PMPRB must interpret section 85 purposively and in context; not in a non-tendentious, non-expedient way.⁶

If in its decision the Board departs from the PMPRB Guidelines, which are non-binding, it must provide a reasoned explanation for any such departure.⁷ The PMPRB did not do so. The Court found the PMPRB obfuscated its decision making it impossible for a reviewing court to know whether the Board has helped itself to a power it does not lawfully have, effectively putting itself beyond review. The Court cautioned that administrative boards like the PMPRB "cannot put themselves in a position where they are not accountable"⁸

What does this mean for the pharmaceutical industry in Canada?

Canadian appeal courts have sent a strong signal that general price control and consumer protection is not within the PMPRB's jurisdiction, and are not part of balance struck in the Patent Act between incentivizing research and development of patented medicines in Canada and protecting against patent abuse.

Consistent with the Federal Court of Appeal's decision, on February 18, 2022 the Québec Court of Appeal similarly held that Parliament's power to address adverse effects of pricing arising from a patent monopoly does not include a general price control power.⁹ In Merck Canada inc. c. Procureur general du Canada, 2022 QCCA 240, the Québec Court of Appeal found that proposed amendments to the Patented Medicines Regulations that would add new economic factors to consider when assessing whether a drug price is excessive (namely pharmacoeconomic value, market size in Canada, and GDP and GDP per capita in Canada), and a requirement to report net prices, were unconstitutional. See our recent article on this decision for more information.

The Federal Court of Appeal's decision further signals that reviewing courts will scrutinize any deviations the PMPRB makes from the PMPRB Regulations or Guidelines, which will make it more difficult going forward for the Board to rely on the lowest international price as a determining comparator of whether a drug price is excessive or otherwise attempt to exercise general price control.

Footnotes

1. ¶ 49-50.

2. ¶ 49.

3. ¶ 11.

4. ¶ 34.

5. ¶ 36, 40.

6. ¶ 36-37.

7. ¶ 38-39, 58-60.

8. ¶ 44.

9. Merck Canada inc. c. Procureur general du Canada, 2022 QCCA 240.

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