Federal Court rules feds cannot regulate generic drug prices

June 04 01:00 2014 by ushadmin

Generic drug companies are beyond the jurisdiction of the Patented Medicine Prices Review Board, the Federal Court has ruled in twin 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,” says Gavin MacKenzie in Davis LLP’s Toronto office, who represented Ratiopharm and Sandoz.

The PMPRB, a federal tribunal, came into existence in 1987 about the time the federal government extended protection for patented medicines.

“There was a perceived need to regulate prices of patented medicines where a monopoly existed,” MacKenzie explains. “Generics were excluded for obvious reasons.”

About 2008, however, the Board decided to exercise jurisdiction over generics who obtained the rights to certain drugs from the patentees and resold them using their own branding.

In the Ratiopharm case, the company entered into such an agreement regarding a Ventolin inhaler, more commonly known as a “puffer.” The patentee was selling the puffer for $12.50, but Ratiopharm marketed its brand at $4.50.

Subsequently, Ratiopharm raised its price to $7.50. Although that increase merely brought the price into line with Ratiopharm’s competitors, the Board, focusing on the increase, found that Ratiopharm’s price was unreasonable and ordered it to repay “excess revenues” of some $65-million to the federal treasury. This also despite the fact that Ratiopharm’s product had been listed on the Ontario Provincial Formulary (the list of drugs approved for public drug programs) at the increased price.

The Sandoz case, by contrast, dealt only with Sandoz’ objections to certain filing obligations under the legislation.