The litigation in this case concerned a request made under the Access to Information Act by a competitor of Merck’s [FCA 4], for access to information submitted by Merck as part of the regulatory approval process for Singulair®. While the Supreme Court dismissed Merck’s appeal in 6 - 3 split, the decision as a whole is not hostile to the interests of innovator pharmaceutical companies. It should remain possible for an innovator to protect all significant information in an NDS, though it will be more burdensome to do so than if the dissenting view had prevailed. In some important respects the Supreme Court decision is clearly more favourable to innovator pharmaceutical companies than was the decision of the FCA.
The Access to Information Act provides that the public is presumptively entitled to access “to any record under the control of a government institution” (s 4). There are, however, exemptions from disclosure for trade secrets, confidential information, and prejudicial information supplied by a third party to the government (s 20(1)(a),(b),(c)). (What I will call prejudicial information is defined in 20(1)(c) as “information the disclosure of which could reasonably be expected to result in material financial loss or gain to, or could reasonably be expected to prejudice the competitive position of, a third party”.) Procedurally, where the government intends to disclose information that might be subject to one of the exemptions, notice must be given to the third party, who then has the opportunity to make representations as to whether the information should be disclosed (ss 27, 28).
The AIA request in this case concerned NDS and SNDS for Merck’s Singulair®, including, in the case of the NDS, a request for access to the Notice of Compliance, the Comprehensive Summary, the Health Canada reviewers’ notes, and the correspondence between Health Canada and Merck Frosst. In response to the AIA request respecting the NDS, Health Canada determined that there were 30 pages that could not be disclosed, and 15 pages that did not disclose confidential information. It disclosed the 15 pages without notice to Merck. It then gave notice to Merck of the AIA request, and provided Merck with a copy of the over 500 pages that remained undisclosed. Merck took the position that essentially all of the information was exempt, including that which had already been disclosed [30]. After some back and forth, Health Canada redacted substantial additional information, but the parties were ultimately unable to agree as to the extent of the necessary disclosure. (The story was substantially similar in respect of the SNDS). Merck sought judicial review of Health Canada’s determination as to what was to be disclosed. After some preliminary proceedings, Beaudry J ordered substantial additional redactions. Both parties appealed, and Health Canada was largely successful in the FCA. Merck appealed to the Supreme Court. Merck’s position was essentially that no information at all could be disclosed without prior notice to Merck, and that ultimately, nothing in the file except the Product Monograph and some published studies could be disclosed. In the Supreme Court, Cromwell J wrote for the majority opinion for himself, McLachlin C.J. and Binnie, LeBel, Fish, and Charron JJ, while Deschamps J wrote in dissent for himself, Abella and Rothstein JJ. The majority and dissent agreed on all of the basic principles, and the dissent turned on the standard of review of the decision of the Beaudry J’s decision.
The Supreme Court began by stating general principles that might seem to imply a strong presumption in favour of disclosure:
The Act has three guiding principles: first, that government information should be
available to the public; second, that necessary exceptions to the right of access should be
limited and specific; and third, that decisions on the disclosure of government
information should be reviewed independently of government (s. 2(1)) [21].
However, the Court also noted that “[r]outine disclosure of [commercially sensitive] information might even ultimately discourage research and innovation” [2], and the Court also emphasized that “It is important to recognize that the institutional head has a duty both to disclose nonexempt material and to refuse to disclose exempted material” [73] (original emphasis). The Court also stated that
it may be useful to observe that the impression I have is that both Merck and Health
Canada at times took rather extreme positions that were not in accordance with the
purpose, letter or spirit of the Act. The record suggests both that the institutional head
emphasized the duty to disclose rather than the equally important duty not to disclose and
that Merck was not as helpful as it could have been in making clear and targeted
submissions in relation to its various objections. It is to be hoped that the clarifications
that I have set out above will lead to more constructive and cooperative approaches to
these issues in the future. [91].
This is an explicit message to Health Canada that its mandate under the Access to Information Act is not to adopt an adversarial posture in pursuing the maximum possible disclosure, but rather to work constructively to ensure that disclosure is neither too meagre nor too extensive. (The corresponding message to third parties regarding their submissions to Health Canada are discussed below.)
The first substantive question was whether Health Canada was required to give notice to Merck. The Supreme Court held, unanimously on this point [63], [243], that there is no “automatic” right to notice. This conclusion, in my view, was inescapable on the text of the Act, as pointed out by the Court [64]-[68]. However, the Court also said that there is a high threshold for disclosure without notice:
Such disclosure is only justified in clear cases, that is where the head, reviewing all the
relevant evidence before him or her, concludes that there is no reason to believe that the
record might contain material referred to in s. 20(1). The institutional head cannot repent
after the fact from an ill-advised decision to disclose. Disclosure without notice and any
harm that might follow are irreversible. Giving notice in all but clear cases reduces the
risk of irremediable harm to the third party through inappropriate disclosure. Moreover,
the institutional head may not have enough information to make a correct judgment about
whether the information is exempt; the input of the third party may be required in order
for the institutional head’s decision to be properly informed. It is, therefore, both prudent
and consistent with the text of the Act for the institutional head to disclose without notice
only where the exemptions clearly cannot apply.
This reasoning is both compelling, and as favourable to Merck as could be expected in light of the Act itself.
It was uncontroversial that the third party, Merck in this case, bears the burden of showing why disclosure should not be made [92], but there was a real dispute as to the standard of proof. The Federal Court of Appeal, consistently with a strong presumption in favour of disclosure, had held that the burden is “heavy” [FCA 62]. The Supreme Court, again unanimously, overruled the FCA and held that the ordinary standard of proof on the balance of probabilities was applicable [94]-[95], [243].
Turning to the exemptions themselves, the Court held that the trade secrets exemption set out in s. 20(1)(a) was intended to be narrower than the confidential information concept in s 20(1)(b). Functionally, the distinction is that “the trade secrets exemption is not subject to the public interest override in s. 20(6), which permits confidential information to be disclosed on general public interest grounds” [106]. (The public interest override was not at issue in this case.) Thus, a narrow definition of trade secrets does not imply a narrow scope for exemptions to disclosure, but only a narrow scope to exemptions that cannot be overridden in any circumstances.
On the confidential information branch, the debate revolved in part around Merck’s citation of publically available studies. Merck argued that “while the content of published studies may not be confidential information for s. 20(1)(b) purposes, the fact that it relied on certain published studies is not publicly available and is confidential” [147]. The Supreme Court largely accepted this point, with the caveat that the mere fact of a reference to a study in the NDS was not sufficient to establish that the findings were relied on. However, “express or implicit statements of the applicant’s evaluation of the reliability of a study will generally meet the definition of confidential information” [150]. The Court specifically approved 2005 FC 1633, in which information was withheld on this basis [148].
The most difficult substantive issue, in my view, was reviewers’ notes prepared by scientists retained by Health Canada to evaluate the drug and correspondence between Merck and Health Canada. “While these records contain information supplied by Merck, they also contain other information, such as the analysis and observations of the reviewers, their conclusions and recommendations, as well as information from scientific literature” [152]. On this point, the Court interpreted the exemption relatively broadly. While the Court said that “[j]udgments or conclusions expressed by officials based on their own observations generally cannot be said to be information supplied by a third party,” it also stated that “the mere fact that the information appears in a government document does not, on its own, resolve the issue. The exemption must be applied to information that reveals the confidential information supplied by the third party, as well as to that information itself” [158].
Finally, on the third branch, disclosure of information that could reasonably be expected to harm the third party, the Court approved the test that had long been applied in the Federal Courts, as requiring a showing of “a reasonable expectation of probable harm” [196]. The Court explained this “somewhat opaque” standard as follows: “while the third party need not show on a balance of probabilities that the harm will in fact come to pass if the records are disclosed, the third party must nonetheless do more than show that such harm is simply possible” [196]. Thus, this is relatively favourable to the third party, in not requiring proof on the balance of probabilities. The Court explained that “what is at issue is risk of future harm that depends on how future uncertain
events unfold. Thus, requiring a third party (or, in other provisions, the government) to prove that harm is more likely than not to occur would impose in many cases an impossible standard of proof” [204]. On the facts, Merck submitted “that the compilation of publicly available studies is a separate work from the studies themselves” which should be protected under this heading [209]. The Court accepted this submission in principle [210], [220].
Thus the Court’s holdings in principle were relatively favourable to Merck’s position. Where Merck lost is on the evidence. Of course, evidentiary considerations can be as important as substantive ones. If the law sets a low threshold in principle, but in practice requires extensive evidence to cross that threshold, the effect may be the same as if the threshold itself were high as a matter of law. That does not appear to be the case here. Rather, it seems that Merck adopted a very aggressive strategy of seeking, in effect, a blanket exemption for everything in the file, either as a matter of law, or by establishing a very low evidentiary standard. This strategy, while understandable, did not pay off.
For example, in applying the trade secrets exemption, the Court held as follows (emphasis added):
[124] In his affidavit, Mr. Sarrazin objects to disclosing pages 469 and 470 because they
contain certain information which in his view constitutes trade secrets. However, in the
version of pages 469 and 470 which Health Canada proposed to disclose and which was
before the reviewing judge, both have been heavily redacted with the entire table on page
470 having been removed: see C.A. reasons, at paras. 49 and 51. Thus the evidence
before the reviewing judge from Merck was that these pages contained trade secrets while
Health Canada’s evidence was that it had agreed to delete all such content and indeed that
the content of the table on page 470 had been deleted more than four years before the
hearing before the reviewing judge. On this record, the reviewing judge’s conclusion that
virtually blank pages constituted trade secrets is a palpable and overriding error.
[125] In this case, the reviewing judge ruled that an essentially blank page is a trade
secret. . . . This, in my respectful view, was a material error.
The Court’s concerns with confidential information [122], [151], [171], and prejudicial information [222], was largely the same, as the evidence provide by Health Canada “was largely unanswered by Merck” [222].
Consequently, while Merck lost its appeal, the Supreme Court’s decision cannot be understood as anti-innovator, or as having tipped the balance too far in favour of freedom of information. The statements of principle allow a broad scope of protection to information provided for regulatory purposes, though it is now clear that at least some evidence will have to be brought to establish that the exemption applies.
The more pertinent criticisms are those raised by the strong dissent of Deschamps J, Abella and Rothstein JJ concurring. The dissent, which would have restored the decision of the Federal Court judge, argued forcefully in favour of a deferential standard of appellate review of the decision by the Federal Court judge.
[257] My colleague accepts Health Canada’s submissions and enters into the fray, arguing
that one page or another illustrates the vacuity of Merck’s position and that Beaudry J.
erred in this regard. . . .Where information is highly technical — as is the case here — it
may mean little to a non-expert but be of significance to a competitor who can ‘connect
the dots’. Information that is superficially benign because its significance is lost on the
person conducting the review can cause harm if disclosed. My colleague’s review lacks
the insight the reviewing judge gained in the four days the latter spent hearing the case.
[258] Beaudry J. heard all the parties’ arguments. More importantly, the same arguments
that Merck’s representations were insufficiently specific and that its evidence did not
respond to changes to the court’s record were presented to him. They did not carry the
day. Health Canada’s statement that all confidential information had been redacted is just
an argument. It is not proof that all such information has in fact been redacted [258].
While “[Beaudry J]’s reasons could have been more explicit, a judge is not required to explain every conclusion in detail for reasons to be considered sufficient” [255].
The dissent noted that “The size of the record, the time allotted to the parties to argue their cases in this Court, and the Court’s institutional role are all factors that militate against reviewing the facts in such minute detail” [259] and “Health Canada and Merck fought tooth and nail for over 5 years before being heard by Beaudry J. Access to information may be becoming the favourite battleground of innovative and generic drug manufacturers. The quantity of resources, both public and private, expended as a consequence of the war between the parties in the case at bar is appalling. This may be a sign of a more wide-scale problem” [260]. Consequently,
The redaction of documents could sometimes be simplified by establishing categories
rather than reviewing every word. It is clear that the word-by-word approach is not
working in cases such as the one at bar. A purposeful review of the file is more apposite
[260].
On appellate review “The reviewing judge should not be required to provide a word-by-word, line-by-line or even page-by-page explanation for his or her decision” [261]. This is not merely a matter of economy of judicial resources, but because “reviewing the evidence at the appeal level imports a high risk of error in a case such as this” [262]. The dissent felt that the majority had made exactly such an error [263].
My own view is that the dissent’s arguments are compelling. In particular the arguments in favour of a categorical approach are eminently sensible. But it is significant that the difference between the dissent and the majority was on this technical point, rather than on the principles themselves. Going forward, an innovator pharmaceutical company that is willing to address Health Canada’s concerns with specific evidence should be able to prevent the disclosure of any prejudicial information.
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