Patented Medicines

Statutory interpretation – figuring out what a piece of legislation (a law) means – is a complex issue.  As the following case shows, even a simple word like “sold” may have different meanings even within the same piece of legislation.

Yesterday, the Supreme Court of Canada released Celgene Corp. v. Canada, 2011 SCC 1 and clarified the law on the scope of the Patented Medicine Prices Review Board’s price‑regulating and remedial authority. At issue is the meaning of the phrase “sold in any market in Canada”.

Celgene owns a Canadian patent on the drug Thalomid and distributes it in Canada under the Special Access Programme (“SAP”).  Under ordinary commercial law definitions as used in other patent cases relating to infringement (such as Dole Refrigerating and Domco Industries), Thalomid would be considered “sold” in the US: the medicine is packed in the US and shipped Free on Board (“FOB”) to the requesting doctor in Canada, the invoice was prepared in the US and mailed to Canada, payment is in U.S. dollars and is mailed to Celgene in the US, no Canadian taxes are paid, and the drug is never redistributed in Canada.

However, the Patented Medicine Prices Review Board concluded that Celgene’s Thalomid sales to Canadians pursuant to SAP were “sold in any market in Canada” and fell within both its authority for price investigation and its related remedial powers.

In siding with the Board and rejecting the technical commercial law definition advanced by Celgene, the Supreme Court recognized that the mandate of the Board includes balancing the monopoly power held by the patentee of a medicine with the interests of the purchasers of those medicines.  In order to comply with that mandate, sales “in any market in Canada” were interpreted to include sales of medicines that are regulated by the public laws of Canada, that will be delivered in Canada, to be dispensed in Canada, and where, in particular, the cost of the medicine will be borne by Canadians — patients or taxpayers, as the case may be.  In this case, Celgene’s Thalomid SAP sales met that criteria and thus falls within the Board’s authority.

As this case shows, defining the meaning of a word in a piece of legislation is a complex issue – even a simple word like “sold” may have different meanings even within the same piece of legislation.  If you are reading a piece of legislation concerning an issue that is important to your business, be sure to consult a lawyer for advice.