Canada’s Federal Court says no price-control measures for generic drug companies

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, according to published reports.

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

“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 decision.

The PMPRB has been in operation since 1987 to ensure that drug manufacturers do 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 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 the terms of the Patent Act, 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.”

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