Competition Tribunal |
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Tribunal de la concurrence
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PUBLIC VERSION
Citation:
File No.: CT-20
Registry Document No.:
IN THE MATTER OF the Competition Act, RSC 1985, c C-34, as amended;
AND IN THE MATTER OF an application by JAMP Pharma Corporation for an order pursuant to section 103.1 granting leave to make an application under section 79 of the Competition Act.
BETWEEN:
(applicant)
and
(respondent)
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Decided on the basis of the written record.
Before:
Date of order:
REASONS FOR ORDER AND ORDER GRANTING AN APPLICATION FOR LEAVE TO FILE AFFIDAVIT EVIDENCE UNDER RULE 119(3)
[1] By application filed on July 26, 2024, JAMP Pharma Corporation (“JAMP”) applied under section 103.1 of the Competition Act for leave to commence an application against Janssen Inc. (“Janssen”) under section 79.
[2] By informal motion to the Tribunal, Janssen seeks leave under Rule 119(3) of the Competition Tribunal Rules (the “Rules”) to file affidavit evidence in response to JAMP’s application for leave under section 103.1.
A. Applications for leave under section 103.1 of the Competition Act
[3] Section 103.1 contemplates that the Tribunal determine whether it has “reason to believe” that the applicant is “directly and substantially affected in the applicant’s business by any practice referred to in [section 79] that could be subject to an order under that section”: Competition Act, subsection 103.1(7). The Tribunal must determine whether the application for leave is supported by evidence that gives rise to a bona fide belief that the applicant may have been directly and substantially affected in its business by the impugned practice, and that the practice could be subject to an order under section 79: Symbol Technologies Canada ULC v Barcode Systems Inc, 2004 FCA 339, [2005] 2 FCR 254 (“Symbol Technologies FCA”), at paras 17-19; CarGurus, Inc v Trader Corporation, 2017 FCA 181 (“CarGurus FCA”), at para 9; Audatex Canada, ULC v CarProof Corporation, 2015 Comp Trib 13 (“Audatex I”), at paras 9, 17; CarGurus, Inc v Trader Corporation, 2016 Comp Trib 12 (“CarGurus CT”), at para 9.
[4] In the leave application under section 103.1, the Tribunal proceeds summarily and expeditiously to carry out a screening function based on the sufficiency of credible, cogent and objective evidence advanced: Symbol Technologies FCA, at para 24; CarGurus FCA, at paras 9, 21-23, 25, 28; Audatex I, at paras 11, 16-17, 19; CarGurus CT, at paras 9, 32. A decision on an application for leave under section 103.1 is not meant to be a final determination made on the basis of a full evidentiary record: Audatex I, at paras 10, 12, 16; CarGurus CT, at para 15.
B. JAMP’s Proposed Application under Section 79
[5] JAMP’s proposed application under section 79 is, for present purposes, captured by the executive summary in its proposed notice of application. It proposes to allege:
2. An affiliate of the Respondent, Janssen Inc. (“J&J”), developed ustekinumab, a biologic medicine. In 2008, Health Canada approved the sale of Stelara, which is J&J’s drug product that contains ustekinumab as an active ingredient. Stelara proved to be an effective long-term treatment for many patients suffering from certain chronic diseases, such as psoriasis.
3. J&J’s monopoly over the Canadian market for ustekinumab spanned many years. Canada’s data protection regime ensured that Stelara could face no competition until December 2016. Canada’s patent regime, coupled with the Patented Medicines (Notice of Compliance) Regulations, ensured that Stelara could face no competition until August 2021, when the last of J&J’s patents for Stelara listed on the patent register expired.
4. J&J sells Stelara for more than $4,000 per dose. As a result of the time-limited monopolies granted by Canada’s data protection and patent regimes, J&J’s revenues from Stelara in Canada ballooned, growing every year and totalling more than $690 million on a wholesale basis in 2021. Between launch in 2008 and August 2021, J&J earned revenues of $2.249 billion from sales of Stelara in Canada.
5. At that point, apparently unsatisfied with its thirteen years of monopolistic profits, and rather than accepting that its time-limited monopoly was at an end and engaging in competition for ustekinumab, J&J gamed the pharmaceutical regulatory system and used sham litigation to disincentivize rivals from launching their own ustekinumab drugs. This resulted in J&J being the only supplier of ustekinumab drugs in Canada between August 2021 and March 1, 2024. In that period alone, because it still did not face any competition, J&J almost doubled its total revenue from the first 13 years of selling Stelara in Canada, generating an additional $2.138 billion of revenues.
6. The inevitable eventually happened and two of J&J’s rivals (including the Applicant, JAMP Pharma Corporation (“JAMP”)) launched competing new ustekinumab drugs called biosimilars in March 2024. Now that J&J faces actual rivals, it has again declined to compete as Parliament intended – for example, by lowering Stelara’s price or innovating. Instead, J&J again seeks to defend and maintain its monopoly. To do so, J&J has conceived of and implemented a series of inter-connected anti-competitive acts, including:
(a) the development of a fighting brand;
(b) the misuse of a patient support program;
(c) the dissemination of deceptive communications to prescribing
physicians and health care professionals, patients and insurers;
(d) predatory pricing; and
(e) selective and discriminatory responses to a competitor for the purpose of impeding its expansion and eliminating it from a market.
7. Some of these anti-competitive acts come from a playbook that J&J developed when defending and maintaining its monopoly in another biologic drug. But Parliament recently updated the Competition Act and so yesterday’s abusive practices are no longer shielded from legal scrutiny today.
8. All of these anti-competitive acts are intended to have an exclusionary negative effect on competitors and an adverse effect on competition. These anti-competitive acts are intended to maintain J&J’s monopoly for ustekinumab drugs in Canada and preserve Stelara’s high prices. The anti-competitive acts deprive Canadian patients of the ability to access new competitive options for ustekinumab drugs, and result in Canadian patients and payers (including provincial drug plans and private insurers) paying far more than they otherwise would for this vital medicine.
C. Legal Principles Applicable to the Present Motion under Rule 119(3)
[6] Part 8 of the Rules contains the procedure to be followed on applications for leave under section 103.1. Rule 115 provides that an application for leave shall include an affidavit setting out the facts in support of the proposed application, a proposed notice of application and a memorandum of fact and law. Rule 119 authorizes a respondent to file representations in writing. Rule 119(3) provides that the “[r]epresentations in writing shall not contain affidavit evidence, except with leave of the Tribunal”.
[7] As the Tribunal held in Audatex I, the general rule is therefore that a respondent is only allowed to file written representations, without affidavit evidence. A respondent filing affidavit evidence is the exception. The respondent must obtain the Tribunal’s permission: Audatex I, at para 13. (The Tribunal addressed the requirements for an applicant to obtain leave under Rule 2 to file reply affidavit evidence in Audatex Canada, ULC v CarProof Corporation, 2015 Comp Trib 28 (“Audatex II”), at paras 34-39.)
[8] To obtain permission under Rule 119(3), a respondent must demonstrate the existence of “specific facts and circumstances justifying the filing of affidavit evidence, bearing in mind that an application for leave [under section 103.1] is a screening process meant to be decided expeditiously and not on the basis of a full evidentiary record”: Audatex I, at para 16.
[9] The Tribunal stated in Audatex I, at paragraph 17:
[…] the party seeking leave to file affidavit evidence needs to set out, in as much detail as possible, the discrete facts and specific evidence that it wishes to include in the proposed affidavit. It also needs to indicate how the evidence intended to be filed is necessary to its written representations and would be of assistance to the Tribunal in its screening function.
See also CarGurus CT, at paras 11, 22, 31.
[10] The Tribunal provided guidance in Audatex I and CarGurus CT by way of illustrative lists of evidence that may (or may not) be included by way of affidavit evidence in response, focusing on the particular issues to be determined by the Tribunal under sections 75, 76 and 77. See Audatex I, at para 17; CarGurus CT, at paras 11, 14.
[11] In its decision on the merits of Audatex’s section 103.1 leave application, the Tribunal noted that when it granted leave under Rule 119(3), it did not have much detail on the actual contents of the affidavits proposed to be filed. The Tribunal observed that filing a draft affidavit on the Rule 119(3) motion would be helpful to allow the Tribunal “to better and more quickly assess whether the contemplated evidence fell within the principles and guidance” set out in Audatex I: see Audatex II, at para 40. The moving parties did so in CarGurus CT: at paras 4, 16, 31.
[12] In prior motions seeking permission under Rule 119(3), the Tribunal has granted permission to file specific evidence in an affidavit related to narrowly-defined issues or discrete facts, principally linked to the elements of the statutory provisions for which the applicant sought leave under section 103.1 to commence an application: Audatex I, at paras 22-24, 28-29; CarGurus CT, at paras 22, 25-30, 31. The Tribunal may also grant leave to file affidavit evidence concerning whether the applicant was directly and substantially affected in its business (to the extent such factual evidence may be adduced by a respondent): see CarGurus CT, at paras 23, 30.
[13] The Tribunal has declined to admit “wide-ranging” affidavit evidence, as doing so would generally be contrary to the interests of justice on an application for leave under section 103.1. See Audatex I, at paras 19, 23; CarGurus CT, at paras 15, 20, 30.
D. Janssen’s Proposed Affidavit Evidence and JAMP’s Position
[14] Janssen’s informal motion advised that its proposed evidence will contain specific facts that are relevant to whether the alleged conduct could be subject to an order under section 79. Its proposed evidence will address certain of JAMP’s allegations which, according to Janssen, are based on speculation and/or hearsay and which Janssen’s evidence “will demonstrate” are “simply false or misleading”, or are in the exclusive knowledge of Janssen.
[15] Janssen advised that its proposed evidence is directly relevant to: (a) whether Janssen has engaged or is engaging in anticompetitive acts within the meaning of section 79 as alleged, and (b) whether JAMP’s business could have possibly been directly and substantially affected by those alleged acts. Janssen organized its proposed evidence under three headings:
· Janssen has not engaged in any anti-competitive acts,
· JAMP could not have been directly and substantially affected, and
· JAMP is barred from bringing many of its claims.
[16] Janssen provided additional information about its proposed evidence under each heading.
[17] JAMP opposed Janssen’s motion, arguing that Janssen’s proposed evidence is in the nature of “wide-ranging” evidence. JAMP submitted that Janssen failed to explain to the Tribunal how the proposed evidence under the second and third headings are related to the individual elements of section 79, and did not advise the Tribunal why all of its proposed topics were necessary to its written representations.
[18] JAMP also observed that Janssen did not provide the Tribunal with draft affidavits, despite the guidance in Audatex II.
[19] In reply, Janssen emphasized that its proposed affidavit evidence would go to the credibility and sufficiency of JAMP’s evidence and provide evidence on topics that are in its exclusive knowledge, from persons with firsthand knowledge, on which JAMP provided speculative or inaccurate hearsay evidence. Janssen submitted that it is not in the interests of justice that an application under section 79 proceed on the “basis of factual allegations that can easily be dismissed as false”.
[20] Janssen also made submissions on the Tribunal’s jurisdiction to consider whether some of JAMP’s claims are barred.
E. Analysis
[21] This proceeding will be the first time the Tribunal will decide whether to grant, under section 103.1, leave to commence an application under section 79: see S.C. 2022, c. 10, section 266. (Sections 78 and 79 have also been recently amended: see S.C. 2022, c. 10, sections 261-262; S.C. 2023, c. 31, sections 7.1, 7.2; S.C. 2024, c. 15, section 247.)
[22] As with prior leave applications under section 103.1, the Tribunal has a meaningful screening role to ensure that, considering the requirements in subsection 103.1(7), there is reason to believe that an applicant is directly and substantially affected in its business by the alleged practices and that the Tribunal “could” make an order under section 79.
[23] The nature and content of the elements of section 79 (as affected by the descriptions of anti-competitive acts in section 78) are different from the elements of sections 75, 76 and 77. The relative breadth and flexibility of the descriptions of anti-competitive acts in section 78 and paragraph 79(1)(a), and of the word “conduct” in paragraph 79(1)(b), may affect how the Tribunal approaches its task under section 103.1, which in turn may affect the kinds of evidence that may be properly the subject of a successful request for leave to adduce evidence under Rule 119(3).
[24] In this case, the proposed responding affidavit evidence must be assessed in light of the applicant’s allegations, which include both past and ongoing conduct by the respondent alleged to be a “practice of anti-competitive acts” under paragraph 79(1)(a) or “conduct” for the purposes of paragraph 79(1)(b). The proposed section 79 application includes claims related to an alleged fighting brand (see paragraph 78(1)(d)) and predatory pricing (see paragraph 78(1)(j)), as well as various other alleged conduct, including communications with third parties that is claimed to affect competition substantially in the alleged market in which the respondent is claimed to be dominant.
[25] The applicant makes a fair point that the respondent’s submissions on this motion do not expressly provide the Tribunal with all of the detailed information contemplated in Audatex I to assist the Tribunal. The absence of any draft affidavit evidence from Janssen makes the Tribunal’s job more challenging in predicting the scope of appropriate evidence on this motion: the Tribunal does not know the extent of Janssen’s proposed affidavit evidence. That said, Janssen also argued that the Tribunal should not be deprived of evidence to respond to factual allegations that can “easily be dismissed as false”.
[26] In the circumstances, in order to exercise the discretion to permit Janssen to adduce responding evidence under Rule 119(3) while maintaining both the summary and expeditious nature of an application for leave under section 103.1 and the Tribunal’s meaningful screening role, I must attempt to circumscribe the scope and nature of the permissible evidence in these Reasons.
[27] With these preliminary observations in mind, I will address Janssen’s proposed affidavit evidence under the headings it used.
(1) Proposed affidavit evidence that Janssen has not engaged in any anti-competitive acts
[28] Janssen proposes four areas of affidavit evidence related to its position refuting that it has engaged in anti-competitive acts.
[29] First, Janssen seeks to introduce evidence that its product called Finlius is not a “fighting brand” and was not introduced for reasons related to patent litigation. Janssen proposes to submit confidential evidence as to why Finlius was introduced.
[30] Second, Janssen seeks to introduce evidence that the pricing of Stelara and Finlius is comparable to biosimilar alternatives, and to respond to two allegations made by JAMP – i.e., that Janssen has not lowered the price of Stelara in response to the introduction of biosimilars, and that Janssen is engaging in predatory pricing with respect to Finlius. Janssen proposes to submit confidential evidence about what it did as a competitive response to the introduction of ustekinumab biosimilars and about the pricing of Stelara and Finlius.
[31] Third, Janssen seeks to introduce evidence that it “did not mislead anyone” about Finlius or its patient support program, noting that JAMP adduced no direct evidence that it did. Janssen proposes to submit confidential evidence about what it did do in its marketing efforts. It also proposes evidence that its patient support program will support patients prescribed with one biosimilar alternative.
[32] JAMP’s position on these first three areas is that this evidence is not appropriate for a section 103.1 leave application as it goes to the “heart of the dispute” and therefore, should be left to the application on the merits under section 79.
[33] Having considered the parties’ submissions in light of JAMP’s position on the section 103.1 leave application, as well as the contents of sections 78 and 79 of the Competition Act, I conclude that Janssen should be granted leave to file focussed responding affidavit evidence on these three topics, subject to certain conditions described below. The same conditions will also apply to other areas of proposed evidence requested by Janssen.
[34] On the first topic, evidence related to the allegation of a “fighting brand” is relevant to one or more elements of section 79, namely, whether the respondent engaged in a “practice of anti-competitive acts” under paragraph 79(1)(a) and/or engaged in relevant “conduct” under paragraph 79(1)(b): see the description of the “anti-competitive act” in paragraph 78(1)(d). While JAMP may be right that this area of evidence goes to the “heart of the dispute” under section 79, that characterization alone does not preclude any and all evidence from the respondent on the subject at this stage. The absence of a “fighting brand” is a relevant topic for consideration in the section 103.1 leave application. The Tribunal can assess whether JAMP’s evidence could, in light of Janssen’s, lead to an order under section 79, on the lower standard of proof applicable at the leave stage.
[35] I have greater concerns about whether Janssen’s second proposed area is sufficiently discrete and precise for responding affidavit evidence, given the possible scope and complexity of the proposed evidence on product pricing (including evidence that could show an absence of predatory pricing). Without some limitations, evidence on these issues could easily become unwieldy for a section 103.1 leave application. It is not the Tribunal’s role on a section 103.1 leave application to make findings of fact that are properly made by a panel on a subsequent section 79 application on the merits. However, Janssen’s proposed area is relevant to the same aspects of paragraphs 79(1)(a) and (b) as its first proposed area of evidence, and to a possible anti-competitive act described in paragraph 78(1)(j).
[36] Janssen should be permitted to adduce focussed evidence in response if that evidence supports a finding that no order “could” be made under section 79 as a result of JAMP’s allegations and evidence on these topics.
[37] In my view, to be acceptable on the section 103.1 leave application, Janssen’s evidence in this area must be limited to factual (not expert) evidence and be tailored to negate or respond directly to JAMP’s factual allegations, keeping in mind the legal test and requirements under section 103.1 (including the requirement for credible, cogent and objective evidence at this stage). It also bears reinforcing that the role of a single judicial member of the Tribunal on the leave application is a summary and screening role, and is more constrained than the panel’s role in deciding a section 79 application on its merits.
[38] The third area proposed by Janssen also raises some concerns about scope and whether the responding evidence will be sufficiently specific. Janssen will be granted leave to file affidavit evidence related to its marketing and communications for Finlius, as actually implemented, including its communications scripts and training provided to its salesforce and BioAdvance coordinators concerning Finlius and the introduction of a biosimilar to its patient support program. In addition, to the extent that the proposed evidence about Janssen’s marketing and communications “strategies” may be material to its subjective or objective competitive intention in engaging in these activities (an element in the chapeau language of subsection 78(1) and discussed in the section 79 cases), Janssen may adduce evidence about its “strategies”. This area of responding evidence is subject to the same conditions as stated in paragraph [37].
[39] Janssen will be granted leave to adduce evidence that its patient support program will support patients prescribed with one biosimilar alternative, as proposed.
[40] Fourth, Janssen seeks to introduce evidence to show that it is “patently false” that it has non-disclosure agreements with prescribers that prohibit them from communicating with sales representatives of competitors. On this area of proposed evidence, JAMP contended in response that Janssen’s submissions had mischaracterized its allegations related to Janssen’s interactions with healthcare professionals and the alleged terms of non-disclosure agreements. In reply, Janssen maintained that JAMP’s submissions had expanded its original claim, but that Janssen was prepared and proposed to address the broadened claim with proposed affidavit evidence.
[41] Janssen may adduce evidence in this area that is responsive to the original allegations and factual evidence filed by JAMP on its section 103.1 leave application, and the terms of its agreements, if any, with prescribers who are on advisory boards. To be clear: the scope of allegations and responding evidence shall not be expanded by the positions taken on this motion.
(2) Proposed affidavit evidence that JAMP could not have been directly and substantially affected
[42] Janssen’s position is that JAMP’s claims regarding the effects of Janssen’s alleged conduct do not paint an accurate picture of the competition between Stelara, Finlius, and biosimilars, or the public and private insurance landscape. While Janssen has proposed more discrete areas related to this position (discussed immediately below) which may need to be placed in some factual context tailored for the section 103.1 leave application, I emphasize that Janssen is not granted leave to file wide-ranging evidence about the competitive or payor landscape, akin to what might be introduced on the merits of a section 79 application.
[43] First, Janssen seeks to introduce evidence that JAMP’s product, Jamteki, is not indicated for the majority of ustekinumab patients and that Jamteki cannot be marketed for most ustekinumab patients because of its medical classification. On this area of proposed evidence, JAMP contended that some or all of the facts are already in evidence before the Tribunal. While Janssen did not reply to confirm one way or the other, I conclude that Janssen may adduce its own evidence on this topic. This evidence relates to subparagraph 79(1)(b)(i) and to whether the applicant is substantially affected in its business by the respondent’s alleged practices. Counsel’s submissions will be able to address (among other things) any discrepancies that may be identified between the parties’ evidence of permitted indications, and their possible impact.
[44] Second, Janssen seeks to introduce evidence that Stelara is being delisted from public formularies and that Finlius is only available to private payors. This evidence will, according to Janssen, show that: (i) any alleged conduct cannot substantially prevent or lessen competition with respect to public insurers, which represent a substantial proportion of the market for ustekinumab, and (ii) Janssen will not be competing for public payors at all. Janssen advised that JAMP’s allegations relating to its performance fail to take into account the effect of when the biologic is delisted and non-medical switching implemented by provincial authorities, rather than any conduct of Janssen.
[45] On this area of proposed evidence, JAMP argued that many facts are already in evidence and again that this evidence goes to the heart of the dispute between the parties under section 79.
[46] Janssen’s proposed evidence goes to the determination of whether JAMP is substantially affected in its business under subsection 103.1(7). The proposed evidence also goes to at least one element of section 79, namely, the required effect on competition in subparagraph 79(1)(b)(i). Janssen will again have to ensure that its focussed evidence respects the scope and nature of a section 103.1 leave application as described above in paragraph [37].
[47] Third, Janssen seeks to introduce evidence that JAMP’s comparison to Simlandi is misleading because Simlandi entered the market under very different circumstances. JAMP’s response was that this evidence is inappropriate to consider on a section 103.1 leave application. I agree with JAMP. This proposed area invites considerable, wide-ranging evidence comparing two different proposed markets for the sale of two different products. Janssen is not granted leave to adduce affidavit evidence on this topic for the purposes of the section 103.1 leave application.
(3) Proposed affidavit evidence that JAMP is barred from bringing many of its claims
[48] Janssen seeks to introduce evidence that it contends is of “vital importance” to the Tribunal’s gatekeeping function, namely, an agreement that would bar JAMP from advancing a significant portion of the claims in its draft notice of application under section 79. JAMP’s response was that the agreement does not bar its claim and that the Tribunal has no legal jurisdiction to decide the issue. As noted earlier, Janssen disagreed in its reply to this motion.
[49] Janssen will be permitted to adduce evidence related to the agreement in question. The evidence goes to whether the applicant has relinquished its ability to allege in legal proceedings that the respondent engaged in anti-competitive conduct by purportedly “gaming” the regulatory system and engaging in sham litigation. These claims go at least to the allegation of a practice of anti-competitive acts under paragraph 79(1)(a) and the Tribunal’s assessment under section 103.1 of whether it could make an order under section 79 in the circumstances.
[50] Related to the scope of this proposed evidence, I note that Janssen did not seek to introduce any extrinsic evidence related to the parties’ intentions that may affect the interpretation of the agreement.
F. Conclusion
[51] Janssen will be granted leave to file factual affidavit evidence on this section 103.1 leave application as stated above and on the conditions set out in these Reasons.
[52] With respect to the timing of the respondent’s filings, the parties traded submissions related to urgency and delay given the allegations of exclusionary conduct, and advised the Tribunal about their communications leading to this motion.
[53] Janssen requested to file its responding affidavit evidence by September 20, 2024, based on the “inherent time requirements” to prepare its evidence (without elaboration) and owing to pre-planned summer holidays for several key Janssen personnel (who were not named or their roles identified, nor were their vacation dates provided).
[54] Under subsection 103.1(6) and Rule 119(1), a respondent has 15 days to respond with written representations after receiving the Tribunal’s notice under subsection 103.1(5). In this case, the Tribunal extended the filing deadline from Wednesday, August 21, to Monday, August 26, 2024, in order to deal with this motion.
[55] Given the circumstances leading to this motion, including the passage of time since the filing of JAMP’s application and the Tribunal’s notice, and the extent of the evidence for which leave has been granted under Rule 119(3), the time for delivery of materials (including Janssen’s responding affidavit evidence) will be extended to Friday, September 6, 2024.
[56] Costs of this motion will be reserved to the Tribunal’s disposition of the section 103.1 leave application.
[57] Counsel for the parties are directed to review these Reasons and confer, and to propose any necessary redactions arising from confidentiality claims within 3 business days of their receipt of this Order and Reasons.
FOR THE ABOVE REASONS, THE TRIBUNAL THEREFORE ORDERS THAT:
[58] Janssen is granted leave to file affidavit evidence concerning the areas identified in the Tribunal’s Reasons for this Order and on the conditions described in the Reasons.
[59] The time for delivery of materials under subsection 103.1(6) and Rule 119(1), including Janssen’s responding affidavit evidence, is extended to Friday, September 6, 2024.
[60] Costs of this motion are reserved to the Tribunal’s disposition of the leave application under section 103.1.
DATED at |
SIGNED on behalf of the Tribunal by the |
(s) |
COUNSEL OF RECORD:
For the applicant:
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Andrew Brodkin
David Rosner
Jordan Scopa
Jonathan Wall
Arash Rouhi
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For the respondent:
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Robert Kwinter
Nicole Henderson
Cathy Beagan Flood
Jonathan Bitran
Brian Facey
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