Canada: Quebec Superior Court Landmark Decision Awards 100% Of Expert Fees To Plaintiffs In PMPRB Challenge
Litigation and Dispute Resolution Bulletin

On July 6, 2023, the Quebec Superior Court issued an unprecedented decision awarding the plaintiff companies in Merck Canada Inc. et al. v. Canada (AG) 100% of their expert fees, totalling nearly $800,000. The Superior Court cost award follows the Québec Court of Appeal 2022 judgment, which partially invalidated the 2019 amendments to the Patented Medicines Regulations.

We previously discussed the Quebec Superior court decision, the Québec Court of Appeal decision, and the Federal Court decision.

Context

In 2019, the federal government proposed amendments to the Patented Medicine Regulations. In 2020, the amendments were challenged by the pharmaceutical industry, concurrently by judicial review at the Federal Court and at the Quebec Superior Court through a constitutional challenge. Fasken represented a coalition of five major pharmaceutical companies in the Québec-based constitutional challenge.

In 2022, the Québec Court of Appeal found the majority of the regulatory amendments to be unconstitutional. In particular, the Court of Appeal upheld the Superior Court's decision to strike the provisions regarding disclosure of confidential rebates negotiated with insurers and went further, striking down the pharmaco-economic factors as well. The change to the basket comparator countries was upheld. Following the judgment on appeal, the federal government abandoned the bulk of the reform, leaving only the updated basket of reference countries in place. The PMPRB has since gone through various leadership and board changes. It most recently issued draft Interim Guidelines, which are currently under consultation.

The Cost Award

In an unprecedented decision, the Québec Superior Court awarded the extraordinary amount of $781,540.79 to the plaintiffs, which included 100% of the claimed expert fees.

The judgement emphasized the justified nature of the experts retained by the plaintiffs. The Court found not only that the expert reports (three in chief, three in reply and one sur-reply) were useful and necessary to the trial judge, but that 100% of the expert fees were proportionate and reasonable in the circumstances, despite even the Attorney General of Canada incurring the more modest amount of $83,583 in expert fees. Extraordinarily, the Court did not lessen the claimed amount of plaintiff expert fees despite the wide discrepancy.

Of particular note as well was the fact that the trial judge had dedicated no less than 67 paragraphs in her decision to the plaintiffs' expert testimonies. Similarly, the Attorney General of Canada had also frequently and favourably cited the plaintiffs' experts in its trial and appeal factums and was silent in opposing their necessity for the cost award.

Broader Impact

It is extremely rare for the Superior Court of Quebec to award 100% of claimed expert fees, especially totalling such a large amount.

Future litigants should keep in mind several takeaways from this decision when claiming expert fees. First, when selecting and retaining experts, litigants should consider the proportionality of their fees according to the overall costs at stake. In this case, there were approximately 10 billion dollars at stake for the pharmaceutical industry, per the government's own public statements—the costs awarded were therefore but a small fraction of that.

Further, expert reports ought to be crafted in a way that can be easily cited by the courts to help prove their usefulness and necessity later on. The court's and even the defendant's use of the plaintiffs' experts in this case facilitated their justification.

Together with the Court of Appeal decision on the merits, this decision drives home the financial and political consequences for the PMPRB of pursuing a course that attracts further litigation in the next phase of the Guidelines.

The deadline to appeal the Superior Court decision on costs has now elapsed; the decision is therefore final.

The Fasken team, led by Marc-André Fabien, Julie Desrosiers, Michael Shortt, Eliane Ellbogen, Mathieu Gagné and Dara Jospé on the merits and on appeal, and Eliane Ellbogen on the cost submissions, was pleased to represent the plaintiffs in this latest win.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.