LEXPERT MAGAZINE
|
MAY 2019 9
APOTEX INC. V. NORDION
(CANADA) INC., 2019 ONCA 23
DECISION DATE: JANUARY 16, 2019
Apotex Inc. successfully defended the Nor-
dion appeal of a Limitations Act defence;
the cross-appeal on damages was dismissed.
MDS Inc., a life science company, had
performed bioequivalence studies for
Apotex to be submitted with applications
for approval from the US Food and Drug
Administration (FDA) to market generic
pharmaceutical products in the US mar-
ket. e relationship between Apotex and
MDS was governed by a Master Labora-
tory Services Agreement (MLSA). During
the 2003 and 2004 the FDA conducted in-
spections of MDS's Montréal-area labora-
tory and identified serious concerns about
the operation of the laboratory. is led the
FDA, in December 2004, to instruct MDS
to perform a review of all studies it had per-
formed at its Montreal laboratory between
2000 and 2004.
Apotex was formally informed by the
FDA in January 2007 that the FDA's con-
cerns about the Montréal-area facility had
not been resolved by MDS, and that Apo-
tex was required to repeat the studies or
have them certified, or have the study sam-
ples re-analyzed by a third-party provider.
e FDA's unwillingness to accept bio-
equivalence studies from MDS's Montréal
laboratory caused delays in the launch of
two pharmaceutical products that Apotex
was seeking approval to market in the US:
Amoxi Clav and Levo-Carb IR.
In November 2008 Apotex brought
an action against MDS for breach of con-
tract and negligence claiming damages for
the repeat study and certification costs, as
well as lost profits for the delay in the ap-
proval of Amoxi Clav and Levo-Carb IR
that were caused by the problems with the
MDS facility.
The Trial Decision
Aer a 17-day trial, Justice Laurence A.
Pattillo of Ontario's Superior Court of
Justice released his decision in Apotex v.
Nordion, 2017 ONSC 1323 on December
22, 2017.
e trial judge found that MDS's failure
to meet US regulatory requirements was
both a breach of the MLSA and negli-
gent, entitling Apotex to recovery of repeat
study costs and lost profits from the delay
in bringing Amoxi Clav and Levo-Carb IR
to market.
Justice Pattillo found that the obliga-
tions under the MLSA were continuing,
and had been breached by MDS in its
negligent running of the Montreal fa-
cility as a whole.
Two of the main battlegrounds at trial
and on appeal were MDS's Limitations Act
defence and the quantification of loss-of-
profit damages. e trial judge held, con-
trary to the submissions of Apotex, that by
May 2006 Apotex knew its applications to
the FDA were at risk and therefore the fac-
tors at s. 5(1)(a) (i)-(iii) of the Limitations
Act, 2002 were met.
However, Justice Pattillo further con-
cluded that it would not have been appro-
priate for Apotex to have commenced a
proceeding against MDS at that time, rely-
ing on the "appropriateness" criterion in s.
5(1)(a)(iv) of the Limitations Act, 2002, be-
cause Apotex did not know until Decem-
ber 11, 2006, that it would be required to
remediate the studies.
He found that, prior to that date, Apo-
tex was "never in a position to assess wheth-
er the FDA's concerns involving the Mont-
real Facility directly impacted the Studies
such that they would not be accepted by
the FDA."
e trial judge accepted Nordion's ex-
pert witness on loss of profit damages and
awarded Apotex only 33% of its loss-of-
profit damages claimed (based on esti-
mated market share). He preferred Nor-
dion's expert witness's use of actual data
from the time period Apotex marketed
Amoxi Clav and Levo-Carb IR in the US
market: "By using the actual market share
that Apotex achieved during the periods it
sold Levo-Carb IR and Amoxi-Clav in the
U.S., it is based on actual results," Justice
Pattillo wrote.
The Appeal Decision
MDS appealed the trial judgment, in
particular the judge's finding that Apo-
tex's action was not barred by an expired
limitation period. Apotex cross-appealed
the damages award. e Ontario Court
of Appeal (Strathy C.J.O., Benotto and
Roberts JJ.A.) dismissed the appeal and
cross-appeal in a decision released on
January 16, 2019, in Apotex v. Nordion,
2018 ONCA 23.
On appeal, Apotex maintained the pos-
ition, as it had at trial, that the limitation
period did not begin to run until Decem-
ber 2006 because it did not know that an
injury, loss or damage had occurred, as
required by s. 5.1(a)(i) of the Limitations
Act, 2002, until the FDA required it to
remediate the bioequivalence studies in
December 2006. e Court accepted this
argument and found that the trial judge
did not need to resort to the appropriate
-
ness criterion in s. 5(1)(a)(iv) of the Limit-
ations Act, 2002.
e Court dismissed the cross-appeal
on damages.
Daniel Murdoch, Jordan Moss and
Elizabeth Nixon of Stikeman Elliott LLP
represented Apotex Inc.
John Campion of Gardiner Roberts
LLP, Antonio Di Domenico of Fasken
Martineau DuMoulin LLP and Stephan-
ie Clark of Gardiner Roberts LLP acted
for MDS/Nordion.
A look at Apotex Inc.'s successful defence of Nordion's appeal of a Limitations Act defence.
Ontario's appellate court agreed that the limitation period did not begin to run until December 2006
because Apotex did not know that an injury, loss or damage had occurred resulting from the defendant's
performance of bioequivalence studies.
RECENT LITIGATION OF IMPORTANCE BIG SUITS
LITIGATION
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