Federal Court Of Appeal Finds That Apotex Did Not Fail To Mitigate Its Damages In Relation To Apo-Trazadone Drug Submission

On April 6, 2017, the Federal Court of Appeal overturned the Federal Court's finding that Apotex failed to mitigate the damage it incurred as the result of Health Canada's misfeasance in public office and negligence in its processing of Apotex's drug submission for Apo-Trazodone: Apotex Inc v Canada, 2017 FCA 73, varying 2014 FC 1087 (previously reported here). Apotex's appeal, and Health Canada's appeal and cross appeal, were otherwise dismissed.

Facts

This appeal arises from a lengthy dispute between Apotex and Health Canada as to whether Apotex was entitled to demonstrate the bioequivalence of Apo-Trazodone using a foreign reference product or whether a Canadian reference product was required. Health Canada insisted that Apotex use a Canadian reference product, unless the US product on which it wished to rely could be "conclusively proven to be identical" to the Canadian product. The ensuing application for judicial review was resolved on the basis of a settlement agreement in which Health Canada agreed that:

Any existing and further data provided by Apotex to establish that [Apo-trazodone] is chemically and therapeutically equivalent to a drug product sold in Canada will be considered. For the purposes of a comparative bioavailability study, the Health Protection Branch is prepared to consider evidence to establish equivalency between Canadian and non-Canadian reference standards.

Following the settlement agreement, Health Canada refused to approve Apotex's submission for Apo-Trazodone on the basis that Apotex had failed to adequately establish equivalence of the US and Canadian reference products. Apotex received approval to market Apo-Trazodone in 1995.

Federal Court decision

The Federal Court concluded that contrary to the settlement agreement, Health Canada had insisted that Apotex demonstrate identicality, rather than equivalence, to a Canadian reference product. The Court held that this constituted misfeasance in public office: as of the date of the settlement agreement, Health Canada knew that the submission was to be considered for equivalence, but ignored this and concealed it from Apotex. The Court also held that Health Canada's actions constituted negligence. The settlement agreement gave rise to a duty of care, and Health Canada breached the standard of care by insisting on assessing the submission for identicality.

The Court found that Apotex ought to have received its NOC for Apo-Trazodone on November 26, 1991; damages...