Interpretation of CSP Provisions Must Take Into Account Their Purpose

Merck Canada Inc v Canada (Health) 2021 FC 1015 McHaffie J

            2,670,892 / suvorexant / BELSOMRA

A Certificate of Supplementary Protection (CSP) grants patent-like rights which effectively extends the term of the patent as it relates to the medicinal ingredient covered by the patent. The CSP “is intended to partly compensate for time spent in research and obtaining marketing authorization”: CSP RIAS (Background); CSP RIAS pdf p3294; [11]; and see 2020 FCA 135 [4]. An application for a CSP is permitted only if, inter alia, two requirements are satisfied: the patent pertains to a drug “for which an [NOC] was issued” —the “authorization for sale requirement”—and, if marketing authorization was sought first in a foreign country, “the application for the [NOC] sale was filed [within 12 months of the foreign application]”—the “timely submission requirement”: s 106(1)(c),(f); CSP Regs s 4, 6(1), [13]. The underlying issue in this case relates to the interaction of these two requirements.

The drug at issue is suvorexant, an insomnia medicine sold by Merck as BELSOMRA. Merck’s American affiliate filed an application for approval of BELSOMRA in the US in August 2012 (and the application was approved in 2014) [20]. This was before any Canadian application, so it set the clock running on the timely submission requirement. Merck then filed an NDS for Canadian approval in November 2012—well within the 12 month window [12]. So far, so good. However, in response to the NDS, Health Canada asked for more information that would require additional clinical trial data which Merck could not supply. Merck therefore withdrew that NDS in 2014 [22]. Two years later, after Health Canada indicated that other post-market data could satisfy the need for additional safety evidence, Merck filed a second NDS. It contained largely the same data and information that was in the first NDS, together with further safety evidence [23]. Health Canada ultimately issued an NOC for BELSOMRA based on the second NOC in 2018 [23].

Merck then applied for a CSP for the ’892 Patent in relation to BELSOMRA. The Minister initially refused, essentially on the view that “the [NOC]” in the timely submission requirement must be the same as “an [NOC]” in the authorization for sale requirement [27]. In response, Merck submitted to the Minister that the two NOC’s need not be the same, so long as an NOC was applied for in a timely manner, and an NOC was ultimately granted. Merck made submissions based on the text of the relevant provisions [30], but crucially for the purpose of this appeal, Merck also made purposive arguments supporting this interpretation. According to the CSP RIAS, the purpose of the timely submission requirement is “[t]o incentivize the early introduction of innovative drugs into the Canadian market,” and Merck noted that it had pursued the Canadian NOC diligently [29], even though the initial application had not been successful. More importantly, Merck noted that the purpose of the CSP requirements is to compensate for regulatory delay, and in this case, it was denied the CSP because of regulatory delay. Given the Minister’s refusal to grant an NOC based on the first application, it would be impossible for Merck to obtain a CSP for BELSOMRA, because the NDS that led to the NOC being granted was applied for outside the 12 month window [27]. The result, as Merck put is, is that “The [Minister]’s interpretation of the CSP regime results in a denial of CSP rights on the basis of the exact harm a CSP is intended to address” [29].

The Minister nonetheless issued a final decision refusing the CSP, again on the basis that both requirements must be satisfied by the same NOC [32]. Crucially, the Minister did not address Merck’s arguments related to the purpose of the provisions, either in the initial letter or in the final decision letter [41].

Merck appealed, and McHaffie J allowed the appeal on the basis that the Minister had failed to address Merck’s arguments related to the purpose of the provisions [41].

McHaffie J noted that according to Vavilov 2019 SCC 65 [127] “[t]he principles of justification and transparency require that an administrative decision maker’s reasons meaningfully account for the central issues and concerns raised by the parties”: [43]. If a decision maker “fails entirely to consider a pertinent aspect of [the provision’s] text, context or purpose” and this failure “may well” have affected the result, this can render a decision unreasonable: [42], quoting Vavilov [122]. McHaffie J held that Merck’s arguments regarding the object and purpose of the legislation were sufficiently material that a reasonable interpretation of subsection 106(1) had to take them into account [45].

While the Minister’s decision was unreasonable, this does not necessarily mean that the Minister’s interpretation was unreasonable. To hold that the Minister’s decision was unreasonable, it was enough for McHaffie J to conclude that purposive considerations “may well” have changed the result; he did not need to conclude that they would necessarily have done so. McHaffie J noted that “it may sometimes become clear in the course of reviewing a decision that the interplay of text, context and purpose leaves room for a single reasonable interpretation of the statutory provision”: [48], quoting Vavilov [124], but in this case, McHaffie J was “not satisfied the question is so clear that I should reach the conclusion that there is room for only a single reasonable interpretation” [50]. He therefore remitted the matter to the Minister for redetermination [51]. He deliberately refrained from making any comments on the reasonableness or correctness of either party’s interpretative arguments [51]–[52].

Consequently, while Merck won this battle, that doesn’t mean it has won the war. As McHaffie J noted, “Merck and the Minister each suggest that there is only one reasonable interpretation, namely their own” [49]. We’ll see if the Minister changes their mind on reconsideration.