Pharmascience Inc. v. Meda AB et al - Nov 15, 2021 - Part 2

4:50PM Nov 15, 2021

Speakers:

Keywords:

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damages

issue

submission

quebec

generic

market

defendants

experts

decision

real

noc

adjourn

dresses in back in in just a moment, just a reminder to the parties that are just to advise you that we ask that you just speak into the mic and not try not to speak too fast just to ensure that the transcription is as accurate as possible, if possible, just to make sure we don't have any issues on that side.

I'll just ask before just as incomes it was a bit too fast at times.

I don't know in detail but as possible.

And Andrew, just before Kurt starts, how long do you think you'll be in your opening just so we can line up? Dr. Goodman?

Looks like quarter started, but I'm thinking 20 minutes, 25 minutes, something like that.

You're opening? Okay.

It's good. Yeah, no, yeah. It's

that's my resume. I think we are recording in progress, or has now

resumed. Thank you.

Justice in again. So my friends gone through, went through his case and some of the evidence he intends to lead in some detail, I'll be much briefer. The approach will be somewhat different. This is not a complicated case, at all, it's only about damages. There's only one scenario or multiple scenarios that you know, with decision trees that the experts have, there's just the one scenario, there's not a lot of money at stake. I mean, my friend took you to the numbers 1.4 million at the low ends and 2.9 million at the high end, then I have my Zoom feed on gallery view and a lot of boxes on the screen for a case between 1.4 and 2.9. And those are what the expert reports saying, and my friend took you to some of the portions of those reports and made some comments about the experts. I'm not going to do that in my opening. And we'll we'll see how the evidence comes in. Not going to go to anything specific I met we'll make some general comments about the approaches. But take a high level approach. Also, so it's not factually that complicated of a case. One of the last section eight cases, maybe the last trial, I don't know under the old NOC regulations. So the legal principles are well established, my friend went through the start and end dates in some detail. But that's not really in dispute here. The principles to apply aren't in dispute here. And I think the two cases we have in our book of authority is there cases that are in my friends worked with authority. So it's it's not as though we differ on the principles that apply to section A damages. Anyways, there's an interest issue I'll get to later but the basic principles are, are pretty well fixed by now. And there are a few unique factors, factual factors, real world factors that simplify this case, even more. So one unique factor to this case is that the defendants product are like clients product subblocks was coincidentally genericized by another generic company Apotex at virtually the same time as the beginning of the delay period. So this isn't the case. Like some of the other cases where you have multiple NOC cases going and who knows who's doing what in the real world and what actually happened historical fact. And basically the same time as delay period starts, the market is genericized. So it's a coincidence that might not have been a positive event for the defendants from a financial standpoint, but it certainly helps the court here and help the experts in in addressing the early issues there. So it's easy to answer it's actually agree, it's easy to know what generic penetration into the Canadian market for zolpidem looks like because it happened. So as my friend said, they don't disagree on what the total market would have looked like or what the generic share of the market though, you know, the penetration curves that in some other cases have bedeviled the court and confuse the experts. That's not an issue here. They agree, the market in total looks the same as it would have. And the penetration of the generic or generics into the market is no different in the but for world or the real world.

And a second helpful fact in this case, that, again, is unique is that for a time period, after the dismissal of the PMC application, that is equivalent to the delay period. So the delay period is about to be a little under two years. And as my friend said to you, and there's no dispute as to when the NOC application was dismissed in December 2016, the NOC application is dismissed. And for the next 23 miles and firma signs launches started sales shortly thereafter. And for the next 23 months, the only two generics in the market are Apotex and firma science. So not only do when we call that the proxy period, not just us to the experts call that that is called the proxy period. So you have a delay period, where the product is genericized. And then you have a proxy period of the same length of time where, again, you don't have other market players, you don't have other participants in the market, confusing things, complicating the analysis. We know what it looks like when pharma science and Apotex compete directly in this market for this product, because that actually happened in the real world. And so the difference in this case, the only difference according to the case, law, according to rammer Prill justice Snyder's decision and all the way up is that the pm NOC regulations don't apply to pharma science in respect of this product. Everything else is the same the real world. I mean, it's funny, we talk about the real world and the but for world as if they're two worlds, but the real world is what actually happened. It's not a fictional construct it we take it as it as it happened, Canada's still in the real world. The market is still in the real world, other competitors for products in that therapeutic areas still there. You know, that's why we can figure out what the market looks like. And here, we have that those two great benefits the generic citation at the start of the delay period, and a proxy period afterward where you don't have other generics in the market. And so really, the dispute between the experts is quite narrow to, as I say, we don't have a bunch of different scenarios. We don't have a bunch of different market players coming going. And the real world sees competition between valiant and Apotex about four worlds simply as a third competitor pharma science added in 23 months earlier than what actually happened. So that's why my opening is going to be brief. I'm going to go to three sorry, four areas. One, those basic principles, my friend touched on them already. So I'm not going to spend a ton of time but there's a couple of things. And one comment that my friend made that I need to address that I'll briefly outline the real world. And then I'll briefly outline the three areas that would make a material difference in the world. I'm not going to deal with all of the de minimis stuff. And then I will deal at briefly with costs at the end. And so basic principles and I'll get Ms Torrens to pull up the first of the two cases from our book of authorities, which is the Pfizer Inteva decision of the Court of Appeal in 2016 a case and an appeal from a decision of yours.

And it's paragraph 47. I'm going to go to first just sharing Yes, there is okay. Okay, so this is paragraph 47 of the court of appeals decision.

And the court is making the point which in my respectful submission is correct. But even if it wasn't correct, as with the Court of Appeals says, so my opinions not that important on that, at that am when calculating damages when determining the appropriate compensation for a loss, whether it be patent infringement, or damages under the section eight of the PMRC regulations. In both cases, the court says the courts task is the same to assess hypothetical world where the defendants impugn conduct did not take place and here rather than the defendants commencing a PMC application against pharma science, they don't have the ability to do that, because the regulations don't apply to pharma science. And so that's the event that doesn't happen in the but for world and the question is, what are the consequences of that event? It's that last sentence that in my respectful submission ought to be the touchstone for your hearing of the evidence and consideration through to the end of this case, which is the overriding principle is the same a plaintiff is to be compensated no more, no less. And so a section eight damages claim and the but for world in a Section A damages claim is not a fantasy world, it's not a lottery ticket. It's not a case where the plaintiff can do whatever it wants, where its dreams come true at but as you hear the evidence from the plaintiff, and in particular from Dr. Hollis, in my respectful submission, they've departed from this approach, plaintiff to be compensated, no more, no less. And so Dr. Hollis is approach as opposed to Dr. Gruden doors in general and we'll get to it when we hear from him but he's created about four world where in the bud for World farmer science gets to be appetites. Apotex being the number one pharmaceutical company in Canada, on the generic side at least. And Apotex has to be pharma science. That's the last volumes issue. We'll get to that in a second. On the accounting issues, less less significant in terms of the total dollar value, but still important. There about four world is a world where they spend less and make more. And, frankly, the buck for world if you accept the buck for a world of the plaintiff, they will make much more money having been off the market than they would have been if no case had ever been brought. And so in my respectful submission, that's not in line with what the Court of Appeals says here. And in all of the other damages cases, the case is not supposed to be a windfall. It's supposed to be simply a calculation of the loss suffered by the application of the NOC regulations to the plaintiff. No more or less. We turn forward in this decision to paragraphs 53 to 57. And here we have the section of the Court of Appeal on the burden of proof. And the law is clear. And the Court of Appeal explains this in paragraphs 53 to 57 of this decision, the burden of proof of what would have happened in the but for world is on the plaintiff. We start with the real world the world we live in. And then we make one change. And that changes that as I said the NRC regulations no longer apply to pharma science in respect of this product, PMS OPA and the burden of proving what would happen or what would have happened differently as a result of that change. What would be different in the but for world from the real world is on the plaintiff. And so there was a point in my friend's opening, where he suggested that the burden of showing that Apotex would enter in the buffer world is on the defendants but that's not correct. That's not true. Apotex did enter in the real world it happened. Valiant entered in the real world in 2012. That happened to otherwise we wouldn't be here. But the burden of proving that something would be different in the buck for world then what happened in the real world, whether it be the total size of the market, whether it be generic penetration, whether it be the participants in the Zopa market, whether it would have been participants have competitors in this therapeutic area, other sleep aids affecting the size of the market to and fro any of those things. If the plaintiff wants the but for world to be different from the real world, it bears the burden, as a plaintiff per se plaintiffs bear the burden of proving their case, proving that things would have been different.

And specifically with respect to this issue, so it's it's different than some of the other section eight cases because in those cases, the question of whether or when another generic would have entered the market does depend on the pmse regulations, but here it doesn't Apotex just came in there in the real world. It happened there in the but for world unless the plaintiff can prove they wouldn't have been. Then I'll move to the next case, which is the Apotex and Takeda decision of justice failing Zhan pantoprazole to Section Eight decision. And it's paragraph 21 of justice Fallon's decision and you've cited this before as have others and and there are a number of cases in my friends opening brief and make the same point which is that the but for world should be based on the real world as much as possible. This analysis starts from what happened in the real world because that's what actually happened. And then we we try to track that as much as possible. And again, it's because it's not a fantasy world. It's a real world, but for that one change. And so we just place that event, Farmer signs getting its NOC when it's submission is completed review as opposed to after the case is dismissed. And then the plaintiff has the burden of proving what would have happened as a consequence, would it have launched? How much would it have had? What would the impact of its launch have been on the market those things are the plaintiffs to prove? Because otherwise, if the plaintiff doesn't prove them, then what happened in the real world is what happened? What happens in the bud for a while. So that's it for the cases, I can stop screen sharing or miss Torrance construct and stop screen sharing now. And so what happened in the but for world are sorry, in the real world. That's my second issue. Here. You'll hear from the witnesses. You'll see from the great statement of facts of law this is agreed that subblocks had been on sale in Canada since 2012. That in January of 2014. Health Canada added a patent to the patent register, what we call the 988. patent. You're not going to hear much about it but it was the subject of application that Justice fans and hurt so that's January 2014. Patent goes on the register December 2014. Apotex gets an LLC for a generic version of subblocks. And at around the same time coincidentally, pharma science sends an ad a way to Mata the one of the defendants and at the time valiance commercial partner for this product. In January of 2015, if we go forward one month, pharma sciences submission is put on patent hold my friend, talk to you about that. In February of 2015, Apotex began to selling its generic version of sub Linux into the market. It then we go forward the 23 months, the application, you know, see applications just missed in 2016. And that, as I said earlier for all of 2017 and 2018. The only three competitors in the market are Valliant, Apotex and pharma science. And so as I said earlier, that simplifies things significantly. So, that's the legal situation and the real world. So, what are the three issues of material significance here? What are the what are the issues that move the dial? The first one There are three there their last volumes of trade spend, or as the plaintiff calls it internally, customer investment and interest. You heard a bit about each of those from my friend. So I'm not going to repeat what he said, I'm just going to give you a 10,000 foot view. So on loss volumes, you'll be hearing from two experts Dr. Hollis and Dr. Darst you've seen the reports or portions of them and the reply evidence motion already. At they both seem to agree that the best approach is to use what happened with Zopa to market in the real world during the delay period and during the proxy period, and use that information to calculate what would have happened in the buffer world. And that's what we say should be done. Take what actually happened as the case law says and as is logical take what actually happened and adjusted to account for the difference.

Where they differ is how to do that. And there are spots where and described in some respect, Dr. Hall, the basis for Dr. Hall's his approach, which is that in his view, during the delay period, pharma science gets to be in the position of Apotex and Apotex has to be in the position of pharma science. And Dr. Gore's doesn't do that he keeps pharma science as pharma signs throughout, he just moves their start data by the 23 months. And so what we say and what we'll see from Dr. Hollis and my respectful submission is, the model that he creates is one that permits a number of subjective adjustments that can be made. And then every one of those adjustments, they fall to the side of the plaintiff. And in our respectful submission, the effect of all of those subjective adjustments is to exaggerate the damages of the plaintiff. That's how we get from 1.45 to the 2.9 million that my friend showed you earlier today. And we say in contrast with Dr. Dr. Green doors Dead was what experts are supposed to do. Just try to figure out a method that is relatively objective that has fewer subjective adjustments, and try to help the court get to the actual number, no more or no less as the court as the case law says. And so in listening to the economics experts whose opinions will determine what happens to the last volumes, decision that you need to make, we urge you to keep those principles in mind, who's sticking more closely to the real world, and to the real world that involves zolpidem and the market participants and who they are who's relying on data from Zopa them in the real world and who's not. Who's actually trying to help the court get the right number and who's advocating for a position. And that difference, the difference in law's volumes is the biggest difference in terms of the ultimate award. Now, again, we're only talking about a difference of 1.5 million from one end to the other. But that's still the biggest difference is the last volumes. Second issue that's material is trade, spend customer investment. And this is where the accountants come in. And some of the facts evidence probably from my friends. And here, the difference is a 35% number that the plaintiff's expert was asked to assume and did and an approximately 45% number that the defendants experts actually calculated from the documents. What was available from the real world. And that's the only material issue on the expense side, the loss volumes, because the price is agreed. Loss volumes translates directly into loss revenues. That's an easy, that's just math. And then the question is what comes off that math? Well, it's expenses and the only material expense different species trade spend. And again, we will submit that, again, it is although the differences aren't as stark for the accounting experts on that tends to be the case in these cases, damages cases generally. We again say that Ms. Frederick is taking a more balanced, more principled approach to the issues. She provides the opinion she thinks are right, like Dr. Doors, not necessarily the things that would help the defendants. So she goes in both directions sometimes because her opinion is her opinion. It ought to be independent of the parties and it ought to be there to assist you and determine Meeting what's right. And our respectful submission. That's what she does. And frankly, Mr. psoriatic, to a great degree, was closer to that in his reports. But as my friend mentioned to you earlier today, they've now advised us that Mr. sardana is prepared to accept some of his some additional number of Ms. Frederick's changes, but they're all ones that point in the plaintiff's direction. So it's a situation where, even though presumably his initial opinions that survived a second report and his reply report, probably based on what he thought was the right answer, but he's been convinced to concede them to the benefit of the plaintiffs. So again, we just say here, sticking to what happened, the real world sticking to the objective, independent information, as opposed to the subjective and or self interested evidence that you may hear is the right way to go with respect to customer investment.

Last of the material issues is this prejudgment interest issue that my friends raise. And normally, this isn't, there isn't a huge argument on these things. But in this case, as my friend laid out to you, the plaintiff is seeking five or 6% interest and not the usual interest under the Courts of Justice Act, or bank rates. And I'm not going to get into it in great detail, it's really a legal issue. But given the small amounts of steak, it's enough to make a difference. One, or 2% versus five or 6%. is a material difference. It's the third of the three material differences. And so I'll just know, and there's response to my friend that yes, 30, section 36 of the federal courts Act applies, I think we all agree on that. And with all due respect to my friends arguments, we would say that it's section 36. Two that applies that this is not a cause of action that arises in only one province. It's a cause of action under a federal statute in respect of loss, sales and loss revenues for sales across the country. And you'll see from the IMS data that the largest number of loss sales is in fact in Ontario, not in Quebec or BC or elsewhere, but certainly not in Quebec. So we would say the damages unless the plaintiff is only going to claim damages for loss sales in Quebec, then the cause of action and the damages arise in every province in Canada, because it's sold in every province in Canada. And the cause of action is triggered by the application of a federal statute and regulation and not something unique to Quebec or any other province. But even if you accept my friend's argument, which we say you ought not to, because we say section 36 Two applies, and that the interest to be applied is what you determined to be quote, reasonable in the circumstances and quote, they say they want to rely on Quebec law with respect to interest in Quebec. But with all due respect to their argument, they need to take it as it is. And so it's not just a flat five or 6%. The case law, including cases from the Quebec Court of Appeal, if, if you determined you want to get into this question, is that the interest only runs in Quebec under that act, under their law, from the date that the defendants were notified of the amount being claimed. And so if they take the bad with the good, then that would mean that the five or 6%, according to Quebec law, if you're going to apply five or 6%, and apply Quebec law, then it's only going to start running from July of 2021. When they particularize their damages through Dr. Hollis his report, there's no earlier time damages are not particularly used in the Statement of Claim. And the first time a number is put to this is in the summer of 2021. And so if they want five or 6%, then they have to take that law as it comes. And we understand that this argument was run in the preamble in case this summer in front of justice O'Reilly So my friends, as I understand it, are aware of the case law from the court of appeal that would provide for that start time. And so I think we'll probably all be addressing it in closing. And I'll just close on the interest issue with with the idea of if it's what's reasonable in the circumstances. And just as in you're aware of a investment bank account or other investment, normal investment that's been getting five or 6%, over the last five or six years, I'd be interested to hear about it, because it's not what the interest has been.

And so again, with all due respect, it's not a windfall. It's no more or no less. And so if the plaintiffs thought that they had then there are cases where plaintiffs there's the cephalic core case, for example, for me, Lily, where the were plaintiffs have been able to prove that they would have made more than the amount of money that you can make in just a standard deposit accounts. There's no such evidence, there's been no production, though those those pleadings were removed from the pleadings in the last set of amendments, that there was something else they would have done with the money. It's a basic interest claim. And so what's reasonable in the circumstances, and our respectful submission, is what section eight courts have always done, which is Courts of Justice Act of Bankrate. So that's the what they would have made with the money if they'd had it from 2015. And in our respectful submission, that's what they should get here. And that narrows that difference significantly. But with respect to that third issue with respect to interest, it highlights what we say is a trend and all three of the issues that are of material significance, which is in all three volumes, customer investment, trade, spend and interest. The plaintiff takes positions that are in our respectful submission unreasonable, and that are not consistent with principles of damages assessment or the facts on the ground. And so in all three of those issues, the plaintiff takes positions that are run directly contrary to this core principle, this lodestone of no more no less. And given the amount at stake, and given the unique factors of this case, and given that the principles and the approach are well outlined by now, this this case ought to be an easy one. And the difficulties that are going to arise are in my respectful submission, because the plaintiff is taking a flyer on those three issues. In the hopes that perhaps the court will split the baby in the hopes that the court will find one of those attractive, but in my respectful submission, each of them is relatively binary, either you'll agree with them or you will not. And we say, ultimately, when you've heard all the evidence, and we're here, two weeks from today, you will, you will not finally costs and I'm not going to make much comments on costs, I'm only going to ask here, and I'll ask again, in closing that the court not making a word of costs, until you've released your decision on damages and interest. And that we respectfully request that submissions on costs be requested before a determination on that issue is made. There's there's one last administrative issue before I sit down. And they got raised in correspondence last week. back my friends at the plaintiffs urging this issue of the so called Glenmark witness, that's still on the at least as far as we know, on the table for Thursday. And here's our concern, that the idea of calling someone from Glenmark has been out there since the first witness list in September. And now it's the first day of trial, a trial was started were two hours in and we still don't know who that person is, or, or who what their name is what I think my friend has an objection, I'm not going to talk over him if he wants to make it.

I'm not objecting, I'm just making myself present. It's just code and I don't object during opening, but I'm happy to hear what you have to say and respond at the appropriate time.

Okay, I took that coming on as the standing up, but I'll continue. So the only point I'm making just as in is that it's the first day of trial. We still don't know who this person is. We don't have their name. Add the witness information list went in on Friday, we had to ask the plaintiff for the witness information of their witnesses. There's nobody on it from Glenmark. And so with all due respect to my friends, this is prejudicial and improper. The pre trial schedule required them to notify us of who the witnesses were by a variety of dates and they missed everyone. And, in particular, this is the only witness on the pharmacy witness list who's not under the control of the plaintiffs. And so we would have been entitled, you know, there's no property or witness, the old saying goes, we would have been entitled to contact this person, interview them figure out what they were going to say or what the basis of their evidence was going to be. But we've been unable to do that, because the plaintiff refuses to identify them. So you know, and to the extent there are documents from Glenmark, it doesn't identify who the person might be that they say they're going to call. So we've given them as much time as we could, we had the objection to it going in by affidavit, we've never seen a draft affidavit, we've never been notified of who the person is, with all due respect to my friends at given that the trial is started. And so we've been unable to, as I say, contact this person or do any due diligence or for cross examination prep for it. We're going to be objecting to them leading anybody from Glenmark at this point, and I did, you know, by affidavit or otherwise, to start a trial without with a witness, they seem to have known they were indeed going to need to call since September without ever telling us who that person was. And my respectful submission is not appropriate. And so just wanted to put that out there. Now, if they're withdrawing the Glenmark witness, that's fine. But otherwise, in my respectful submission, that administrative issue, we wanted to give them full notice, and we have to see anything to the contrary. So with that, I'm done subject any questions you may have?

Thank you very much. mystically,

yeah, I'll just address the Glenmark witness issue and the related issue of the use of affidavits for the chief of the witness and then making them available. So my friends have refused to consent to the use of any affidavits. We did that, because we were concerned, some days were long. So that's why they have not seen an affidavit. And there is no final affidavit. Now, nor is there a final name for a person for that affidavit. My friend is at liberty to contact landmark. He can he can do that investigation. But I just respond to the suggestion that there's something inappropriate going on in the way this has been handled. My friend recognize this is not a party that is under the control of pharma sites. And, frankly, don't know whether someone's landmark is actually necessary to show that that order would have been received that one order at issue. But in any event, we're making efforts to have someone before the court. And I can't imagine the basis upon which Mr. Snowden would say a witness cannot be called

I understand correctly, then you don't know who you're going to call from Glenmark.

They get to they get to choose, they will be someone who can speak to the issue. But my understanding is that many of the people who were there at the time are no longer with the company. So it's, it's we're doing the best we can with what we can and it's they who get to choose that person subject to, to the requirement that they have knowledge of what they speak. So that's, that's where we're at. And my friend knows what they're going to say, which is that they would have delivered the order when it was ordered back in 2014. So I'd say it's much ado about nothing I was we were my friend had the affidavit, he would have had their statement in advance, they did not want that they did not want that for other witnesses. They won't admit simple things like IMS data, which everyone uses or part of the trial new trial schedule, will have someone up for 15 minutes talking about IMS data. So in any event, I guess we'll deal with it when it arises. And we will advise my friend of who the witness will be when when we know for sure that that's who it will actually be. Because again, it's not something within our control.

And when do you expect to know that?

I'm hoping tomorrow morning, but again, time difference and other things? That's that's what we anticipate is tomorrow morning to know.

Sorry, where's Glenmark? What's the time difference? We're talking about

there in India. So we're juggling early mornings, late nights to do this usual delay?

Well, it's just golden. I hear your concern. And if and when we actually get a witness from Glenmark you feel free to stand up and object.

And I can tell you, Mr. Cleves that the more the time goes on and more likely that objection is going to be upheld.

Well, perhaps I can ask the court whether they would be willing to receive an affidavit and chief from the witness from landmark

no Okay Just one comment before we get to Mr. Goodman. The one and a half million dollar difference between the parties, it's not escaped my attention, either. And I would have thought that it hadn't escaped the attention of your clients. And I would have thought, given the number of lawyers and paralegals clerks, that are on this call, and will be attending for this trial, that that difference will be largely eaten up by legal costs. And God forbid, a settlement should stand in the way of lawyers getting full pay. But

to do a check, just to make sure your video is working correctly.

Is nobody hearing me? Yeah, I'm

hearing you justice. And I don't talk out loud and

clear. Okay.

I don't know who was asking me to check my audio. But anyway, that's that's, that's a gratuitous observation from the court. So with that, says Mr. Goodman is only going to be half an hour in chief according to Mike Trout schedule. Let's, let's have Mr. Goodman. Justin, we just weren't sure who you're speaking to. All right, speaking to both of both of them.

You're working finite things today, or? No, I'm not. By the way, by the way. Over here doesn't matter. I just got a message from Mr. Morrow. Perfect. Thank you. By the way, how does how does one restart the transcript?

Because mine seems to have ended but we adjourned at 1040. Journey to 1040.

That seems to have happened for everyone. So I would be an apparently perhaps the court reporters are working on it. Hopefully somebody was writing that down.

Hmm. Well, let's just take a few minutes here. Mr. D'Souza, can you communicate with our reporting service and see what's going on here?

Look into the matter. Would you like to adjourn for a few minutes? While that gets figured out and for Mr. Goodman to join us?

Yes, why don't we take 10 minutes since he's going to be brief as I understand it, and see if we can get this problem addressed. So we'll adjourn for 10 minutes. It stands adjourned until 1132. recording stopped