Canada’s Patented Medicine Prices Review Board (PMPRB) has no jurisdiction over the pricing of generic drugs, the country’s Federal Court has said, ruling in cases brought against the Board by Sandoz Canada Inc and Ratiopharm Inc (now Teva Canada Ltd)..
The two companies had sought judicial review of the PMPRB’s claim that, because they sold medicines that were patented, they came within the definition of “patentee,” and that it therefore had jurisdiction over the prices they charged for their products. They rejected the Board’s classification of them as patentees, and also charged that the Board’s price control powers were unconstitutional.
It its ruling, the Court found that, under the terms of the Patent Act, the Board’s definition of Sandoz and Ratiopharm as patentees was unreasonable, and that it therefore had no such pricing jurisdiction over them.
Giving the ruling, Federal Court Judge James O’Reilly pointed out that the relevant provisions of the Patent Act had been enacted to guard against patient holders taking “undue advantage of their monopolies, to the detriment of Canadian consumers” by increasing their prices to “unacceptable levels.” But the exclusive rights and benefits which are enjoyed by patent holders did not accrue to either Sandoz nor Ratiopharm, he said, and warned that expanding the definition of patentee to generics makers which have neither patents nor monopolies would expose the Act “to an attack on constitutional grounds,” an approach which “should be avoided.”
Justice O’Reilly also criticised the Board for placing too much emphasis on the Act’s “consumer protection purpose” which, he said, “is served solely by reviewing the prices at which patent holders sell patented medicines to determine whether, by virtue of their monopolies, those prices are too high.”
The Act is “not aimed at protecting consumers from high drug prices generally, and the Board’s role certainly does not extend that far,” according to Justice O’Reilly. “Generally speaking, generic companies either help create or join a competitive marketplace, which helps keep the costs of patented medicines down.” They “do not generally hold monopolies and, in fact, do not normally operate in a market where any monopoly exists,” he said, and told the Board that it “should confine its role to reviewing the prices charged by patent holders.”
However, the Court rejected the firms’ claim that the PMPRB’s pricing powers were unconstitutional.