On July 26, 2024, JAMP Pharma Corporation ("JAMP") – a Canadian generic/biosimilar pharmaceutical company – applied for leave to the Competition Tribunal (the "Tribunal") to bring an application under the abuse of dominance provisions of the Competition Act (the "Act") against Janssen Inc. ("J&J"). This marks just the second private abuse of dominance case raised under the recently amended Act.1
JAMP launched a ustekinumab biosimilar in 2024. JAMP's application alleges that J&J engaged in numerous anti-competitive acts to prevent competitors from developing biosimilar products to its ustekinumab drug product (known as Stelara). JAMP alleges that due to these acts, no biosimilar firm (including JAMP) was willing to launch a Stelara biosimilar from 2021-2024, a period in which J&J allegedly enjoyed sales of $2.138 billion.
If the Tribunal agrees with JAMP to initiate an application, the Tribunal could potentially impose an administrative monetary penalty of up to $35M along with other relief. This application highlights the Act's growing role in commercial and IP disputes.
Background: Amendments to the Competition Act: Opening the Doors to Private Enforcement
As a result of amendments enacted in 2022, private parties can now seek leave to bring abuse of dominance applications under the Act. Prior to these amendments, only the Commissioner of Competition could pursue alleged abuses of dominance.
Recent amendments to the Act (summarized here) have not only allowed private litigants to seek relief under the abuse of dominance provisions, they have also increased the incentives for private enforcement.
- Bill C-56, which became law in December 2023, lowered the substantive test for establishing abuse of dominance under the Act. Previously, the Tribunal could find that an abuse of dominance occurred only where three elements were established: dominance, anti-competitive intent, and anti-competitive effects. With the enactment of Bill C-56, the need to prove both anticompetitive intent and anticompetitive effects has been removed. The Tribunal can now make a prohibition order against a dominant firm if its conduct meets either of the anti-competitive intent or the anti-competitive effect requirements.
- Bill C-59, which received royal assent in June 2024, will introduce a lower test for leave to bring a private enforcement action. Currently, to obtain leave to bring an abuse of dominance case, an applicant must show that its entire business was significantly affected by the target's conduct. Pursuant to Bill C-59, leave may be granted even if only part of an applicant's business is affected, or if the Tribunal determines it is in the "public interest" to grant leave. Bill C-59 will also make disgorgement awards available to private litigants for an amount up to the value of the benefit derived from the conduct. These Bill C-59 amendments will come into effect in June 2025, and will provide further incentives for private enforcement.
With these amendments, we expect that private parties will rely on the Act as an important strategic tool for advancing commercial disputes, including pharmaceutical disputes, as we describe below.
JAMP's Competition Complaint
JAMP's application alleges that J&J engaged in a number of anti-competitive acts to prevent competitors from developing biosimilar products to its ustekinumab drug product (known as Stelara), including:
- Gaming the Regulatory System and Engaging in Sham Litigation: In 2022, and after the 2021 expiry of its final listed patent, J&J submitted another patent for Stelara, which was denied listing by the Minister of Health. J&J unsuccessfully challenged the Minister's decision before the Federal Court, and the Federal Court of Appeal. JAMP alleges that J&J knew they were out of time to list the patent, and the listing and subsequent "sham" litigation were prosecuted with the intent of delaying biosimilar launches.
- Developing a Fighting Brand to Exclude Rivals: In 2023, J&J sought and received approval for a new ustekinumab drug product, which JAMP claims was merely a "relabelled version of Stelara." J&J then sought to list the same patent (which it had attempted to with Stelara), which Health Canada also denied. JAMP then judicially reviewed that decision too, which it ultimately discontinued. JAMP further alleges that J&J priced its new ustekinumab product at a very significant discount to Stelara (despite the fact that both drugs are "nominally differentiated products") with the aim of impeding biosimilars from entering the market.
- Misleading Patients, Prescribers and Private Insurers to Exclude Rivals: JAMP contends that J&J deployed various misleading marketing tactics to: (a) encourage patients to continue using Stelara instead of switching to biosimilar drugs; (b) issue untrue statements about J&J introducing a biosimilar (i.e., the "fighting brand") despite J&J allegedly knowing that the new product was not a biosimilar and not available for biosimilar reimbursement; (c) "intimidate" prescribers to deter them from engaging with JAMP's sales staff about its ustekinumab drug product; and (d) delay private insurers from discussing biosimilar options with suppliers.
JAMP seeks an order prohibiting J&J from: (a) marketing and selling its "relabelled" ustekinumab drug product for a period of 10 years; and, (b) offering a drug that is biosimilar to Stelara for a period of 5 years. JAMP also seeks an order requiring J&J to advise health care professionals prescribing or administering Stelara of these prohibitions and to pay an administrative monetary penalty in an amount determined by the Tribunal.
Strategic Implications
- Private abuse of dominance cases in the pharmaceutical context are in their infancy. JAMP's novel strategy underscores that this new private tool will be used by generic/biosimilar manufacturers to seek remedies outside of the traditional section 8 damages context under the Patented Medicines (Notice of Compliance) Regulations. As such, innovators in the pharmaceutical space should expect further abuse of dominance applications (or a threat thereof).
- With a lower leave test coming in June 2025, the risk for private litigation will be greater.
- Disgorgement awards, which will also become available to private litigants in June 2025, represent an additional source of leverage and an added incentive to bring abuse of dominance cases.
- When considering biosimilar/generic entry, pharmaceutical companies are well-advised to consider the legal implications of their strategies, including under the abuse of dominance amendments in the Act.
Footnote
1 The first complaint was initiated by Apotex, who alleged that Takeda Pharmaceuticals U.S.A. Inc. and Paladin Labs Inc. refused to provide Apotex with the necessary samples to launch a competing generic drug. The application was discontinued prior to decision after Apotex obtained the samples it sought.
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