Canada’s Federal court rules PMPRB purview does not extend to generic companies

TORONTO — Canada’s Federal court ruled recently that the country’s Patented Medicine Prices Review Board — a federal tribunal that regulates pricing on branded medicines — could not extend price control measures to cover generic drug companies. 

The ruling covered two cases involving generic drug makers Ratiopharm (now Teva Canada) and Sandoz, respectively. 

“The decision means that generic drug makers who do not hold patents themselves and do not exercise monopoly power need not file price information with the Board,” Gavin MacKenzie of Davis LLP’s Toronto office, who represented Ratiopharm and Sandoz, told Canada’s National Post. 

In the case of Ratiopharm, the court reversed a $65 million penalty imposed by PMPRB.

The PMPRB has been in operation since 1987 to ensure that drug manufacturers did not charge exuberant prices for medicines under patent protection and without market competition. In 2008, according to MacKenzie, PMPRB extended those price controls to authorized generics, arguing that because the medicines were still under patent protection that defined the generic manufacturers as “patentees.”

In separate cases Ratiopharm and Sandoz challenged PMPRB’s classification of “patentees,” arguing that the tribunal had no jurisdiction over generic companies and, in the case of Ratiopharm, charging that the Board’s price control powers may be unconstitutional. 

“The Board should confine its role to reviewing prices charged by patent holders, who benefit from a time-limited monopoly, to determine whether those prices are excessive,” wrote Federal Court Judge James O’Reilly in his ruling. He noted that under terms of the Patent Act, that the Act is “not aimed at protecting consumers from high drug prices generally, and the Board’s role certainly does not extend that far. … Generally speaking, generic companies either help create or join a competitive marketplace, which helps keep the costs of patented medicines down,” he wrote. "[They] do not generally hold monopolies and, in fact, do not normally operate in a market where any monopoly exists.”