Sold in New Jersey = Sold in Canada

Catherine Lemay, March 2011

In its first decision of 2011 (see Celgene Corporation v. Attorney General of Canada, 2011 SCC 1), the Supreme Court of Canada (“SCC”) clarified the meaning of “sold in any market in Canada” in the relevant provisions of the Patent Act giving the Patented Medicine Prices Review Board (“PMPRB”) its jurisdiction to regulate the prices of patented medicines in Canada. The only issue addressed by the SCC was whether the concept of “sold in any market in Canada” should be interpreted strictly in accordance with commercial law principles, or whether its definition should be responsive to the surrounding legislative context and purpose.

The appellant, Celgene Corporation, is based in New Jersey and distributor of the pharmaceutical drug Thalomid® (thalidomide). Thalomid is not marketed in Canada under a Notice of Compliance, but has been selling Thalomid since 1995 under the Special Access Programme (“SAP”), a program administered by Health Canada allowing access to drugs not otherwise available in a particular market for the treatment of “serious or life-threatening conditions where conventional therapies have failed, are unsuitable, or are unavailable either as marketed products or through enrollment in clinical trials” (similar to FDA’s Expanded Access Program). When a Canadian doctor places an order for Thalomid under the SAP, the drug is packed in Celgene’s facilities in the U.S. and shipped Free on Board (“FOB”) to the doctor in Canada. An invoice is then prepared in New Jersey, mailed to Canada and the doctor is directed to make a payment in U.S. dollars and mailed back to New Jersey.

Celgene obtained a Canadian patent in relation to Thalomid on April 6, 2004 and the PMPRB subsequently asserted that it had jurisdiction to request pricing information from Celgene. Although it initially provided some pricing information, Celegene subsequently took the position that the PMPRB did not have jurisdiction over the sales of Thalomid as the medicine was, in accordance with ordinary commercial law principles, “sold” in New Jersey not in Canada as required by the relevant provisions of the Patent Act which, as noted above, require that the medicine be “sold in any market in Canada” (our emphasis).

While acknowledging that the expression “sold in any market in Canada” lends itself to different interpretations, the SCC agreed with the PMPRB’s position that the legislative context and the consumer protection purpose of the Patent Act in regard to pricing support a conclusion that it should have authority over Celgene’s sales of Thalomid to Canadians through the SAP. According to the SCC, the PMPRB did not misinterpret the words “sold” and “selling” in rejecting the technical commercial law definition. Instead the PMPRB was properly guided by the consumer protection goals of its mandate, which is to ensure that the monopoly that accompanies the granting of a patent is not abused to the financial detriment of Canadian patients and insurers.