Canada’s Excessive Pricing Regulations Survive Another Constitutional Challenge

The Patented Medicine Prices Review Board (the “PMPRB”) commenced a proceeding against Alexion Pharmaceuticals Inc. (“Alexion”) in respect of Alexion’s drug, SOLIRIS (eculizumab), which is used to treat rare and devastating blood and genetic conditions. The PMPRB claimed and successfully argued that Alexion was selling Soliris at an excessive price, under sections 82 and 85 of the Patent Act.

Alexion applied for judicial review of the PMPRB decision claiming, inter alia, that the excessive price provisions of the Patent Act were unconstitutional. In response, the Attorney General successfully brought motions before Prothonotary Aalto to dismiss the constitutional challenge on the basis that the issue was decided in Canada (Attorney General) v. Sandoz Canada Inc., 2015 FCA 249 (“Sandoz”). Alexion appealed the decision of the Prothonotary to the Federal Court on the basis that Alexion had expert evidence that was not before the court in Sandoz and, consequently, Alexion should be entitled to a fresh opportunity to properly and fully litigate the constitutionality of the pricing provisions.

Justice Simpson dismissed Alexion's appeal. The court affirmed that Sandoz is binding authority, and held that there was no basis for revisiting the constitutionality of the provisions. In doing so, the court (a) found that the Prothonotary’s decision was correct; (b) upheld the constitutionality of the Patent Act's pricing provisions; and (c) endorsed the PMPRB's powers to add additional excessive pricing allegations before a PMPRB hearing.

The PMPRB heard evidence on the matter of the price of SOLIRIS from January 16 to January 27, 2017 and we expect an order concerning any penalty owed by Alexion for excessive pricing to issue in the coming months. More information can be found here, and we will update the blog as more information becomes available.

The full text of the Court’s decision can be found here.

This article was written with the helpful contribution of Michael Garbuz (Articling Student).