Source: http://pdfmedarticles.com/i/italaw.ca1.html
Timestamp: 2019-04-18 14:16:55+00:00

Document:
APOTEX IS AN INVESTOR THAT MADE INVESMENTS PURSUANT TO NAFTA ARTICLE 1139. . 3 APOTEX HAS STANDING UNDER ARTICLE 1139(g). . 4 APOTEX HAS STANDING UNDER ARTICLE 1139(h). . 11 THE TRIBUNAL MUST CONSIDER FDA’S ADMINISTRATIVE RULING IN REVIEWING APOTEX’S PRAVASTATIN CLAIM. 14 APOTEX SUFFICIENTLY EXHAUSTED ITS LOCAL REMEDIES WITH RESPECT TO ITS PRAVASTATIN CLAIM TO SATISFY ANY FINALITY REQUIREMENT. . 17 In accordance with Procedural Order No. 1, entered on December 16, 2010, Claimant Apotex Inc. hereby respectfully submits its Rejoinder Memorial On Respondent’s INTRODUCTION.
4 Id. at “investment” (emphasis added). As Respondent previously has acknowledged, the term “investment” must be construed broadly.5 Similarly, others have observed that “[t]he definition of ‘investment’ that is protected under Chapter 11 is much broader than the real property rights and specific interests in property that are protected under the Takings Clause” in the United States.6 Invoking these inclusive interpretations here, Apotex’s ANDAs and ANDA- related interests unquestionably qualify as investments under both Article 1139(g) and Article APOTEX HAS STANDING UNDER ARTICLE 1139(g).
The main thrust of Respondent’s initial argument appears to be that Apotex cannot satisfy the definition of “investment” under Article 1139(g) because Apotex’s ANDAs were merely “tentatively approved” when the breaches occurred, as opposed to being “finally approved.” Specifically, according to Respondent, Apotex “has not established under Article 1139(g) that, on the date its claims arose, its ANDAs were property acquired or used. Instead, those ANDAs were tentatively approved applications . . . .”7 Respondent’s distinctions between tentatively approved ANDAs and finally approved ANDAs are distinctions without a difference. Regardless of whether an ANDA is “tentatively approved,” “finally approved,” or is still under substantive review by the FDA, the ANDA is the exclusive “property” of the 5 NORTH AMERICAN FREE TRADE AGREEMENT, IMPLEMENTATION ACT, STATEMENT OF ADMINISTRATIVE ACTION, H.R. Doc. No. 103-159, Vol. 1, 103d Cong. 1st Sess., at 140 (1993) (“‘Investment’ is broadly defined in Article 1139, and both existing and future investments are covered.”) [R82]. 6 See, e.g., Matthew C. Porterfield, International Expropriation Rules and Federalism, 23 STAN. ENVTL. L. J. 3, 6 (2004). [C86]. 7 Reply on Objections to Jurisdiction of Respondent United States of America ¶ 16 (Oct. 17, 2011) (emphasis in original) (hereinafter “U.S. Reply M.O.J.”). ANDA applicant that has been acquired for, and/or is expected to be used for, the purpose of economic benefit or other business purposes. Indeed, an ANDA meets the Article 1139(g) definition of investment at the very moment it is submitted to FDA. FDA regulations explicitly state that, once filed in the United States with the FDA, only the “applicant may transfer ownership of its application.”8 In other words, FDA readily admits that an ANDA applicant owns its ANDA, and that the property rights in such ANDA may only be transferred by the applicant itself. Respondent’s argument, moreover, fails to account for the critical fact that, but for Respondent’s breach of its legal obligations, Apotex would have been granted final, not tentative, approval because no other impediments to approval existed at that time. According to Respondent, “FDA grants ‘tentative approval’ to an ANDA when all scientific and procedural conditions for approval have been met, but FDA cannot finally approve an ANDA until various other barriers to approval no longer apply.”9 In FDA’s own words: If a generic drug product is ready for approval before the expiration of any patents or exclusivities accorded to the reference listed drug product, FDA issues a tentative approval letter to the applicant. The tentative approval letter details the circumstances associated with the tentative approval. FDA delays final approval of the generic drug product until all patent or exclusivity issues have been resolved. A tentative approval does not allow the applicant to market the generic drug product.10 18. Apotex’s own tentative approval letters for its pravastatin and sertraline ANDAs, moreover, acknowledge that Apotex had met the manufacturing quality, clinical safety and efficacy requirements necessary for ANDA approval in the United States, but that, due solely to 10 [email protected] glossary, “Tentative Approval” (emphasis added) [C77]; see also 21 U.S.C. § 355(j)(5)(B)(iv)(II)(dd)(AA) (codifying FDA’s long-standing definition) [C2]. unexpired periods of 180-day generic marketing exclusivity, FDA was prevented from granting Apotex’s pravastatin and sertraline NAFTA claims stem directly from Apotex’s efforts to clear the approval blockade caused by the respective exclusivity periods. Apotex was unable to lift the blockades, however, precisely because of the unlawful and improper actions of FDA and the United States federal courts, which Apotex has challenged via these actions. Indeed, had the FDA and the United States federal courts fulfilled their obligations under NAFTA and international law, Apotex would have obtained final approval without delay, thereby eliminating the need for this NAFTA action altogether. Respondent can not now hide behind its own unlawful breach to deny Apotex jurisdiction over its NAFTA claims. Moreover, even “tentatively approved” ANDAs and ANDAs that are still under review have value, to the extent such factor is relevant to the Tribunal’s “investment” analysis.12 Indeed, companies regularly buy, sell, and calculate the estimated value of ANDAs that have not 11 See FDA Tentative Approval for Sertraline Hydrochloride Tablets (25, 50, and 100 mgs) (Sept. 27, 2006) [R96]; FDA Tentative Approval for Pravastatin Sodium Tablets (10, 20, 40, and 80 mgs) (Apr. 25, 2006) [R99]. 13 See, e.g., Zydus Acquires KV’s Generics Business, World Generic Markets (August 5, 2011), available at 2011 WLNR 15529655 (“KV Pharmaceutical announced that it had entered into a definitive agreement to divest [the firm’s generics subsidiary] . . . to Zydus Pharmaceuticals USA for around US $60 million in cash . . . . [T]he agreement included . . . existing and pipeline ANDAs . . . . The acquired ANDA pipeline comprises eight existing filings and five products under development . . . .”) [C81]; Impax Laboratories at Jeffries & Co. Global SpecPharma & European Healthcare Conference – Final Transcript, Fair Disclosure Wire (October 5, 2010) (Art Koch, Senior VP of Finance and CFO of Impax Laboratories, Inc. stating that “So for 2010 on a budget of $41 million, about the same as the prior year, we expect to file 8 to 10 new ANDA’s . . . . A key aspect of our business is our pipeline. We have 96 products in the pipeline. 63 in the lab and 33 already pending [ANDAs filed with FDA]”) [C78]; Q3 2007 Abraxis BioScience Earnings Conference Call – Final Transcript, Fair Disclosure Wire (November 8, 2007) (Tom Silberg, Chairman of APP, Abraxis Bioscience stating that “[W]e continue to fuel our development pipeline. We have over 60 product candidates in current stages of development and currently have 29 ANDA’s pending with the FDA, including tentative approvals. Present market value of As an extension of Respondent’s baseless “tentative approval” argument, Respondent argues that Apotex has no property interests in its sertraline and pravastatin ANDAs for the further reason that they “were subject to change on the basis of new information that may come to FDA’s attention,” and because even finally approved ANDAs can “be revoked for numerous public health and policy reasons under U.S. law without giving rise to compensation.”14 Again, these arguments offer much ado about nothing, and have no basis in To begin, while this is not the appropriate venue to address whether an ANDA may be revoked without giving rise to compensation—and certainly Respondent has offered no legal support for this proposition—even if this were true (Apotex takes no position on this point),15 it has no bearing on the issue of whether Apotex’s ANDAs constitute “property” for purposes of Article 1139(g). The law in the United States is clear that a party may enjoy property rights in something regardless of whether such party would be entitled to compensation the pending ANDAs is over $2.6 billion . . . .”) [C80]; Impax Laboratories at JP Morgan HealthCare Conference – Final Transcript, Fair Disclosure (January 11, 2011) (Larry Hsu, President, CEO, Impax Laboratories, stating that “In our generic division, we have 65 ANDAs approved, and currently market 43 of them. Our pipeline of opportunity remains strong with 36 pending at the FDA and 62 under development that will fuel our future growth. These 98 products in the pipeline currently have a U.S. brand and generic sales totaling over $33 billion. This is a clear indication of the potential and the value we see in our generic business.”) [C79]. 14 U.S. Reply M.O.J. ¶¶ 18, 20 (internal quotations omitted). 15 Respondent further cannot use Apotex’s prior omeprazole litigation proceedings in an attempt to raise some sort of quasi-estoppel theory. (See U.S. Reply M.O.J. ¶ 20 n.22). In the omeprazole litigation, FDA granted Apotex final approval of its omeprazole ANDA on October 6, 2003, and Apotex commenced marketing that drug product. Apotex Inc. v. FDA, 508 F. Supp. 2d 78, 81 (D.D.C. 2007) [R115]. On June 14, 2007, a district court found that Apotex’s product infringed a patent, and because the pediatric exclusivity associated with that product did not expire until October 20, 2007, “FDA revoked final approval of [Apotex’s] ANDA until at least October 20, 2007.” Id. at 81-82. Again, however, the focus on FDA’s ability to revoke an ANDA misses the mark. Apotex’s property interests lie in its ANDAs, not in FDA’s approval of such ANDAs. for a government taking of that property.16 Moreover, as noted above, “[t]he definition of ‘investment’ that is protected under Chapter 11 is much broader than the real property rights and specific interests in property that are protected under the Takings Clause” in the United States.17 Similarly, the fact that an ANDA—whether tentatively or finally approved—is subject to continuing governmental oversight and regulation to ensure patient health and safety is immaterial to whether or not the ANDA itself constitutes “property.” Any number of products are subject to continuing governmental oversight and/or product recalls—that does not mean that none can claim to be “property.” For the same reason, it simply is not relevant whether FDA retains the authority to revoke an ANDA applicant’s tentative or final approval. Apotex has property rights in its ANDAs, regardless of whether FDA’s approval of such ANDAs or the products that are the subjects of those ANDAs may be revoked or recalled. In other words, Apotex’s property rights arise from the ANDAs themselves—not from FDA’s “permission” to Respondent next criticizes Apotex’s reliance on Black’s Law Dictionary’s definition of “property.”18 Yet, tellingly, Respondent cites nothing in its place to show that reliance on this definition is improper—nor could it. Black’s Law Dictionary is an acceptable legal authority routinely cited by United States federal courts, including numerous courts that have relied specifically upon its definition of “property,” as well as other NAFTA Tribunals.19 16 See, e.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001-1004 (1984) (whether manufacturer had a protectable property interest was a separate inquiry from whether a governmental taking of such property required compensation) [C75]; Tri-Bio Labs., Inc. v. U.S., 836 F.2d 135, 139-141 (3d Cir. 1988) (same) [C76]. 17 Matthew C. Porterfield, International Expropriation Rules and Federalism, 23 STAN. ENVTL. L. J. 3, 6 (2004). [C86]. 19 See, e.g., Brobeck, Phleger & Harrison LLP v. Orrick, Herrington & Sutcliffe LLP, 408 B.R. 318, 337 (Bankr. N.D. Cal. 2009) (“While the [United States] Bankruptcy Code does not define ‘property,’ Black’s Respondent in fact relies on Black’s Law Dictionary itself, and points to the definition of “private property” to argue that Apotex does not enjoy property interests in its ANDAs because Apotex allegedly does not have “exclusive” or “absolute” rights to such ANDAs.20 This argument appears to be little more than a regurgitation of Respondent’s “tentative approval” and “revocation” arguments, and thus is subject to the same fatal flaws For example, Respondent appears to argue that, because Apotex’s ANDAs are subject to continuing regulatory oversight, and because Apotex cannot sell its ANDA products until such ANDAs are approved by FDA, Apotex does not have “exclusive” ownership over its ANDAs. As explained above, irrespective of whether Apotex’s ANDAs are subject to continuing governmental oversight, or are subject to revocation or recall, Apotex still has a property interest in the underlying ANDA itself. Moreover, Respondent’s “market-based notion of exclusivity” reveals a clear lack of understanding of what an ANDA is and is not. Far from what Respondent would have this Tribunal believe, “[a]ny manufacturer of [a] generic drug” can not simply “produce the same product” as a different manufacturer.21 Each ANDA contains proprietary information regarding its formulation, development, testing, and compliance with the overriding statutory and Law Dictionary defines it as ‘[t]he right to possess, use and enjoy a determinate thing.”) [C72]; Nat’l Sign & Signal v. Livingston, 422 B.R. 645, 655 (W.D. Mich. 2009) (“When faced with the need for a definition of ‘property,’ Michigan courts have relied on Black’s Law Dictionary, where property is defined as ‘the right to possess, use and enjoy a determinate thing (either a tract of land or a chattel); the right of ownership.’” (citing several additional cases relying upon Black’s Law Dictionary’s definition of property)) [C74]; John R. Sand & Gravel Co. v. U.S., 60 Fed. Cl. 230, 237 (Fed. Cl. 2004) (citing Black’s Law Dictionary 1232 (7th ed. 1999) for the definition of “property as ‘[t]he right to possess, use, and enjoy a determinate thing.’”) [C73]; see also Grand River Enterprises Six Nations Ltd. v. United States, NAFTA/UNCITRAL, Award ¶ 110 (Jan. 12, 2011) [R76]. regulatory requirements. Thus, while competing generic companies may file ANDAs referencing the same brand-name drug product, each ANDA represents a separate investment, and each drug product subject to those ANDAs is considered a separate proprietary product subject to its own individual testing and compliance requirements, among other things. Finally, Respondent argues that because much of Apotex’s development costs “were incurred: (1) in Canada, and (2) to meet regulatory requirements to export a particular product for sale by others,” the costs associated with Apotex’s ANDAs “cannot constitute an investment under NAFTA.”22 In support of this argument, Respondent cites the Bayview Award for the proposition that “NAFTA Chapter Eleven was not intended to provide substantive protections or rights of action to investors whose investments are wholly confined to their own national States, in circumstances where those investments may be affected by measures taken by another NAFTA State Party.” 23 This additional argument fails at several levels. First, Apotex’s investments (i.e., ANDAs) are not “wholly confined to [Apotex’s] own national State.” Far from it: (1) Apotex’s ANDAs were filed and are maintained in the United States; (2) the sole purpose of an ANDA is to develop and market a product for the purpose of obtaining economic benefit in the United States; and (3) because Apotex has designated certain U.S. suppliers in its ANDAs, Apotex must manufacture its ANDA products with components obtained from the United States. Second, in arguing that “[t]he mere regulation of Apotex’s foreign products . . . cannot transform the costs incurred in developing those products into U.S. investments,”24 23 U.S. Reply M.O.J. ¶¶ 28-29 (citing Bayview Award ¶ 103 [R69] (emphasis added) and Grand River Award ¶ 87 [R76]). Respondent purposefully ignores the fact that Apotex’s ANDAs seek approval to market the subject products solely in the United States. The Grand River Award relied upon by Respondents thus has little application here, as Claimants Grand River, Kenneth Hill and Jerry Montour sold products “only in Canada.”25 This Tribunal should thus find that, consistent with the Bayview Award, because Apotex, a Canadian company, has “ma[de] an investment that falls under the laws and the jurisdiction of the authorities of another NAFTA Party, it [should] be treated as a foreign APOTEX HAS STANDING UNDER ARTICLE 1139(h).
RULING IN REVIEWING APOTEX’S PRAVASTATIN CLAIM.
Finally, Respondent argues that the June 6, 2006 decision of the United States Court of Appeals for the District of Columbia and the subsequent August 17, 2006 denial of rehearing en banc did not satisfy the finality requirements necessary to impart State responsibility under NAFTA. Rather, according to Respondent, even after the D.C. Circuit denied Apotex’s petition for rehearing en banc with only 67 days remaining in the 180-day exclusivity period for pravastatin, Apotex nevertheless was required to pursue one of two options: (1) seek certiorari from the U.S. Supreme Court, or (2) proceed to have its case heard on the merits in the district court.44 By failing to do so, Respondent argues that the judicial acts on which Apotex’s claim is based lack the requisite finality because both paths were “available” to Apotex. Respondent not only misrepresents what is required under the finality doctrine, but also how that doctrine properly applies to Apotex’s facts here. Respondent concedes that a Claimant need not exhaust all local remedies if such action would be “obviously futile.”45 Yet, Respondent’s overly restrictive interpretation of the finality doctrine effectively eliminates that exception altogether. Neither NAFTA nor international law permits this. As Apotex explained in its opening brief, neither of Respondent’s suggested courses of action would have allowed Apotex to obtain relief that was “effective and adequate” before the relevant 180-day exclusivity period expired on its own accord.46 For that reason, once the D.C. Circuit denied Apotex’s petition for rehearing en banc, Respondent’s breach was sufficiently final for purposes of implicating State responsibility under Chapter According to Respondent, “[u]nder international law, the question of whether the failure to obtain judicial finality may be excused for ‘obvious futility’ turns on the unavailability of relief by a higher judicial authority, not on measuring the likelihood that the higher judicial authority would have granted the desired relief.”47 And because, Respondent continues, Apotex could have petitioned the United States Supreme Court for certiorari or continued litigating its case before the district court, despite the fact that only 67 days remained in the exclusivity period, Apotex had an available local remedy that it failed to exhaust. This, quite simply, is not The “obvious futility” exception to the finality doctrine, by its plain and ordinary terms, cannot require Apotex to have undertaken obviously futile measures to preserve its NAFTA claim. The question therefore is not whether any further judicial recourse is merely “available,” but whether any such recourse would have offered Apotex an effective and adequate 46 Apotex Counter-Mem. ¶¶ 90-96; Loewen, Award ¶ 168 [R78]. remedy under the circumstances.48 Here, at the time that Apotex dismissed its case, because of the impending natural expiration of the 180-day exclusivity period, the clear answer to that Respondent argues that “Apotex misunderstands the futility exception under international law, conflating the availability of a remedy with a prediction of the likelihood of obtaining preferred relief in a particular case.”49 Not so. At no point has Apotex argued that it lacked a “reasonable prospect of success” or that success was “improbable.”50 Apotex asserts, rather, that, at the time Apotex dismissed its litigation, even if it were eventually successful on the merits, any local remedy could not have effectively redressed its injuries. Respondent’s own authority recognizes that this is the critical issue in any proper finality analysis. For example, Judge Aréchaga expressly acknowledges that, “even if there are remedies existing and available, the [judicial exhaustion] rule does not apply if these remedies are ‘obviously futile’ or ‘manifestly ineffective,’” and further that such circumstances would exist where there is “such unreasonable delay in the administration of the remedy that it becomes ineffective.”51 This is precisely the situation here where, due to the impending expiration of the 180-day exclusivity period—which Apotex does not control—there simply was no further avenue for Apotex to pursue in order to attain effective relief from the U.S. federal courts. Professor Borchard similarly observes that the need to seek local remedies is “subject to the important condition that the local remedy sought is obtainable and is effective in 48 See, e.g., Loewen, Award ¶ 168 [R78]. 51 Jiménez de Aréchaga, International Law in the Past Third of a Century, 159 RECUEIL DES COURS 294-95 (1978) [R132]. securing redress. If this condition is absent, it would be futile and an empty form to require the injured individual to resort to local remedies.”52 And Dr. C. F. Amerasinghe agrees that, “[w]here it is clear that the resort to an appeal or reference to another court or tribunal would not be a source of adequate redress, the alien is excused from spending his money and time.”53 Holding firm to its “mere availability” theory of finality, Respondent makes the unremarkable observation that the “United States Supreme Court has the power to hear cases that relate only to preliminary procedural issues and to issue stays.”54 As noted above, however, it is not enough that further judicial recourse is merely available; the question is whether pursuing such recourse would have been obviously futile. Here, there is no question that it would have Applying the proper recitation of the finality doctrine to the facts here, it is unrealistic to the point of absurdity to suggest that, with only 67 days left in Teva’s 180-day exclusivity period, the Supreme Court would not only grant a petition for certiorari, but could schedule argument and render an opinion before the exclusivity period expired. The average time between a grant of certiorari and the Supreme Court’s decision is approximately nine months—a fact Respondent does not dispute.55 Moreover, the briefing schedule alone likely would have extended beyond the 180-day exclusivity period.56 52 E. BORCHARD, THE DIPLOMATIC PROTECTION OF CITIZENS ABROAD 821-22 (1916) (emphasis added) [C84]. 53 C.F. AMERASINGHE, LOCAL REMEDIES IN INTERNATIONAL LAW 205 (2d ed. 2004) [C82]; see also RESTATEMENT (THIRD) FOREIGN RELATIONS LAW § 713 cmt. f (the failure to exhaust local remedies is excused if “such remedies are clearly sham or inadequate, or their application is unreasonably prolonged”) [C83]. Nor is it any more reasonable to suggest that, had Apotex pressed forward with its case at the district court level, it could have obtained a favorable court decision before the issue became moot on October 23, 2006. At the time Apotex voluntarily dismissed its litigation on October 3, 2006, only 20 days remained in the 180-day exclusivity period. Apotex had no reasonable expectation that it could obtain a decision that would afford it effective relief before Taking Respondent’s argument to its logical conclusion, had Apotex simply continued to litigate for those additional twenty days at the district court level, regardless of whether the court had provided Apotex with any effective relief whatsoever, Apotex’s claims would have met the finality requirements under NAFTA. Yet, because Apotex voluntarily dismissed its action once it became obvious there was no possibility of obtaining effective relief, this Tribunal, according to Respondent, lacks jurisdiction to review Apotex’s challenge to the U.S. courts’ adjudication of Apotex’s Pravastatin Claim. This is absurd. As noted above, “[w]here it is clear that the resort to an appeal or reference to another court or tribunal would not be a source of adequate redress, the alien is excused from spending his money and time.”58 Respondent’s additional suggestion that Apotex is somehow at “fault” for the futility of any effective remedy has no factual or legal support and should be rejected out of hand. Apotex complied with all deadlines, and actively pursued its case. And, far from 57 Respondent incredibly argues that even after the D.C. District Court and D.C. Circuit rejected Apotex’s motion for expedited consideration and preliminary injunctive relief, Apotex should nevertheless have sought expedited consideration again from the district court. The law does not require Apotex to expend its resources in an unreasonable or irresponsible manner simply because it can. 58 C.F. AMERASINGHE, LOCAL REMEDIES IN INTERNATIONAL LAW 205 (2d ed. 2004) [C82]; see also RESTATEMENT (THIRD) FOREIGN RELATIONS LAW § 713 cmt. f (the failure to exhaust local remedies is excused if “such remedies are clearly sham or inadequate, or their application is unreasonably prolonged”) [C83]. intentionally waiving its right to a local remedy, like the Claimant in the Ambatielos Case, Apotex vigorously appealed its case until any such further action was obviously futile.59 Finally, Respondent’s arguments regarding the 80 mg strength of pravastatin are a red herring and reveal a substantial lack of understanding of the generic pharmaceutical market. The fact is, once Teva’s exclusivity period had expired for all the other strengths, Apotex’s ability to obtain any effective relief expired with it, as the damage to the generic In the end, under a proper application of the finality doctrine to the facts here, this Tribunal has jurisdiction over the judicial actions challenged in Apotex’s Pravastatin Claim, as pursuing the options suggested by Respondent would have been obviously futile and could not have provided Apotex with any effective relief before the 180-day exclusivity period expired on CONCLUSION AND RELIEF REQUESTED.

References: § 355
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 713
 § 713