IN THE MATTER OF the Patent Act, R.S.C. 1985, c. P-4, as amended
AND IN THE MATTER OF sanofi pasteur Limited, (the “Respondent”) and the medicines “Quadracel & Pentacel”

STATEMENT OF ALLEGATIONS OF BOARD STAFF

INTRODUCTION

1. This Statement of Allegations results from an investigation by Board Staff into the prices of Quadracel (DIN 02230946) and Pentacel (DIN 02231343), patented medicines currently sold in Canada by sanofi pasteur Limited (“sanofi pasteur”), formerly known as Aventis Pasteur Limited (“Aventis Pasteur”).

MEDICINES

2. Quadracel is a Component Pertussis Vaccine and Diphtheria and Tetanus Toxoids Adsorbed combined with Inactivated Poliomyelitis Vaccine. It is indicated for the primary immunization of infants, at or above the age of 2 months, and as a booster in children up to their 7th birthday against diphtheria, tetanus, whooping cough (pertussis) and poliomyelitis. It is sold in Canada in the form of a single dose (0.5 mL) suspension for injection. (Attachment 1)

3. Pentacel is a co-marketing of two licensed vaccines: Act-HIB (the lyophilized Haemophilus b Conjugate Vaccine (Tetanus Protein-Conjugate) to be reconstituted with Quadracel. It is indicated for the routine immunization of all children between 2 and 59 months of age against diphtheria, tetanus, whooping cough (pertussis), poliomyelitis and haemophilus influenzae type b disease. It is sold in Canada in the form of a reconstituted product for injection combining one single dose vial of Act-HIB (Lyophilized powder for injection) and one single (0.5 mL) dose ampoule of Quadracel (suspension for injection). (Attachment 2)

4. Health Canada issued a Notice of Compliance for Quadracel on March 20, 1997 (Attachment 3) and for Pentacel on May 12, 1997. (Attachment 4) Both Quadracel and Pentacel were first sold in Canada in June 1997.

PATENTS

5. Canadian Patent No. 1,198,702 pertained to both Quadracel and Pentacel. This patent was granted to Teijin Limited Japan on December 31, 1985 and expired on December 31, 2002. (Attachment 5)

6. Canadian Patent No. 1,280,693 pertains to both Quadracel and Pentacel. This patent was granted to Public Health Laboratory Service Board, U.K. on February 26, 1991 and will expire on February 26, 2008. (Attachment 6)

7. Canadian Patent Nos.1,331,134 and 2,079,887 also pertain to both Quadracel and Pentacel. These patents were granted to Connaught Laboratories Limited, Canada, on August 2, 1994 and June 23, 1998 and will expire on August 2, 2011 and April 3, 2011, respectively. (Attachment 7)

8. Sanofi pasteur is, for the purposes of the Patented Medicine Prices Review Board (“the Board”), considered the Canadian patentee.

REGULATORY FILINGS

9. On July 29, 2004, Aventis Pasteur, now known as sanofi pasteur, filed amended price and sales information for both Quadracel and Pentacel for the years 1997 to 2003. Aventis Pasteur also filed price and sales information for both medicines for the period January 1, 2004 to June 30, 2004, in accordance with the Patented Medicines Regulations, 1994, (“Regulations”). For the period July 1, 2004 to December 31, 2006, all price and sales information for both Quadracel and Pentacel has been filed by sanofi pasteur as per the Regulations.

PATENT ACT

10. In accordance with the factors set out in subsection 85(1) of the Patent Act (“Act”), to determine whether a patented medicine is being or has been sold at an excessive price in any market in Canada, the Board, following considerable deliberation and consultation with all stakeholders pursuant to subsection 96(5) of the Act, published the Board's Compendium of Guidelines, Policies and Procedures (“Guidelines”). Although the

Guidelines are not binding on the Board, Board Staff submits that it is appropriate, in the case at bar, for the Board to give due consideration to its Guidelines to establish an approach and methodology in applying the factors set out in subsection 85(1) of the Act.

APPLICABLE GUIDELINES

Category

11. Section 3 of Chapter 3 - Scientific Review Procedures (“Scientific Review Procedures”) provides the following guidance with respect to determining categorization for a new drug product:

3.1 A Category 1 drug product is a new DIN of an existing dosage form of an existing medicine, or a new DIN of another dosage form of the medicine that is comparable to the existing dosage form as per Schedule 7.

3.2 A Category 2 drug product is one that provides a breakthrough or substantial improvement. It is a new DIN of a non-comparable dosage form of an existing medicine or the first DIN of a new chemical entity.

3.3 A Category 3 drug product is a new DIN of a non-comparable dosage form of an existing medicine or the first DIN of a new chemical entity. These DINs provide moderate, little or no therapeutic advantage over comparable medicines. This group includes those new drug products that are not included in Category 2 above.

12. Based on the above Scientific Review Procedures, the Human Drug Advisory Panel categorized both Quadracel and Pentacel as Category 3 new drug products, as they provide moderate, little or no therapeutic advantage over comparable medicines.

The Maximum Non-Excessive (“MNE) Prices for Quadracel and Pentacel

13. Chapter 1 - Excessive Price Guidelines (“Excessive Price Guidelines”) sets out the appropriate introductory price tests for a Category 3 new drug product during the benchmark period (from the date of first sale to the end of the six-month regulatory reporting period) and thereafter the tests applicable to an existing drug product as follows:

International Price Comparison Test

7.1 The price of a new or existing patented drug product will be presumed to be excessive if it exceeds the prices of the same medicine sold in all countries listed in the Regulations. These prices will be determined using the International Price Comparison Test described in Schedule 3.

Therapeutic Class Comparison Test

8.5 In addition to the Guideline applicable to all patented drug products detailed in Section 7, the introductory price of a Category 3 new drug product will be presumed to be excessive if it exceeds the prices of all of the comparable drug products based on a Therapeutic Class Comparison Test (Schedule 2).

8.7 Unless the introductory price of the new DIN is outside the Guidelines, it will establish the benchmark price. If the introductory price exceeds the Guidelines, the maximum non-excessive price will establish the benchmark price. Thereafter, the price will be reviewed using the test applicable to existing DINs.

CPI-Adjusted Price Test

9.1 In addition to the Guideline applicable to all patented drug products detailed in Section 7, the price of an existing DIN will be presumed to be excessive if it exceeds the benchmark price of the DIN adjusted for the cumulative change in the Consumer Price Index (CPI) from the benchmark period to the pricing period under review (CPI-adjusted price). Schedule 4 provides detailed definitions and examples of the PMPRB's CPI-adjustment methodology.

9.2 Regardless of the above, and in addition to the Guideline applicable to all patented drug products detailed in Section 7, one-year price increases in the current pricing period may not exceed 1.5 times the forecast change in the annual CPI. In periods of high inflation (over 10%), the limit will be five percentage points more than the forecast change in the CPI.

14. The introductory prices of both Quadracel and Pentacel were found to be within the Excessive Price Guidelines for the benchmark period (July 1997 to December 1997), based on the Therapeutic Class Comparison Test conducted for each medicine. (Attachment 8)

15. An International Price Comparison (“IPC”) Test, based on the patentee's regulatory filings, was not conducted for either Quadracel or Pentacel as neither medicine was sold during the benchmark period in any of the 7 countries listed in the Regulations. (Attachment 9)

16. Board Staff reviewed the prices of Quadracel and Pentacel, as existing drug products, for the period January 1998 to December 1998, and for each subsequent year, by applying the PMPRB's CPI-Adjustment methodology, in accordance with the Excessive Price Guidelines. Upon review, it was determined that the prices of both Quadracel and Pentacel have exceeded the Excessive Price Guidelines since 2002 as follows: (Attachment 10)

17. According to publicly available information in 2007, sanofi pasteur sells Quadracel and Pentacel at prices of $30.5940 per dose and $40.2280 per dose, respectively. (Attachment 11)

18. Quadracel has never been sold in any of the 7 countries listed in the Regulations, and as such Board Staff has never conducted an IPC Test for Quadracel, based on the patentee's regulatory filings. Based on the patentee's regulatory filings, Pentacel was first sold in one of the 7 countries (U.K) listed in the Regulations in 2004 and continued to be sold only in the U.K. in 2005 and 2006. In each of these years Canada had the lowest price. (Attachment 9)

19. By letters dated May, 19, 2005 and August 11, 2006, Board Staff informed sanofi pasteur that it had completed its investigation and that the prices of both Quadracel and Pentacel have exceeded the Excessive Price Guidelines since 2002. (Attachment 12)

POLICY OF EXCESSIVE PRICING

20. Subsection 83(4) of the Act provides that:

Where the Board, having regard to the extent and duration of the sales of the medicine at an excessive price, is of the opinion that the patentee or former patentee has engaged in a policy of selling the medicine at an excessive price, the Board may, by order, in lieu of any order it may make under subsection (2) or

(3), as the case may be, direct the patentee or former patentee to do any one or more of the things referred to in that subsection as will, in the Board's opinion, offset not more than twice the amount of the excess revenues estimated by it to have been derived by the patentee or former patentee from the sale of the medicine at an excessive price.

21. It is the position of Board Staff that sanofi pasteur has engaged in a policy of selling both Quadracel and Pentacel at excessive prices. Sanofi pasteur has been selling Quadracel and Pentacel since 2002, at prices per unit, which sanofi pasteur knew or ought to have known exceeded the MNE prices calculated in accordance with the PMPRB's CPI-Adjustment Methodology. To date, sanofi pasteur has failed and/or refused to lower the prices of Quadracel and Pentacel, in order to comply with the Board's Guidelines.

22. It is respectfully submitted that there are grounds for the Board to conclude pursuant to Section 83 of the Act that sanofi pasteur is selling or has sold the medicines known as Quadracel and Pentacel, in any market in Canada, at prices which are or were excessive.

ORDER REQUESTED

23. Board Staff seeks the issuance of an Order against sanofi pasteur, the terms of which would be as follows:

a) The MNE prices of Quadracel in Canada for the period January 1, 2002 to December 31, 2006 inclusive shall be as follows:

b) The MNE prices of Pentacel in Canada for the period January 1, 2002 to December 31, 2006 inclusive shall be as follows:

c) The MNE prices of Quadracel and Pentacel, respectively in Canada, in future years shall be calculated in accordance with the Guidelines;

d) In accordance with subsection 83(1) of the Act, sanofi pasteur shall cause the maximum prices at which it sells Quadracel and Pentacel, respectively in Canada, to be reduced to the respective MNE prices effective on or before 30 days from the date of the Board's Order.

e) In accordance with subsection 83(4) of the Act, and in lieu of an Order under subsection 83(2), sanofi pasteur shall offset twice the amount of excess revenues estimated to have been derived by sanofi pasteur from the sales of Quadracel and Pentacel, respectively, at excessive prices from January 1, 2002, until the date on which the price reduction referred to in paragraph d) above comes into effect:

i) With respect to the period from January 1, 2002 to December 31, 2006, sanofi pasteur shall pay to Her Majesty in right of Canada, within 30 days of the date of the Board's Order, an amount equal to twice the amount set out in Attachment 10; and

ii) With respect to the period from January 1, 2007 to the date on which the price reductions referred to in paragraph d) comes into effect, sanofi pasteur shall pay to Her Majesty in Right of Canada, a further amount equal to twice the amount of the excess revenues estimated by the Board to have been derived by sanofi pasteur from the sales of Quadracel and Pentacel, respectively, at excessive prices and make the payment within 30 days of receipt of a notification from the Board of its estimate of excess revenues based on the information filed in response to paragraph f) below;

f) Sanofi pasteur shall, within 30 days of the date of the Board's Order:

i) Notify federal/provincial/territorial ministers of health or their representatives and all customers of the price decreases with respect to both Quadracel and Pentacel as required by the Board's Order (a copy of which shall be included in such notifications) and the effective date of such price decreases;

ii) Submit copies of the above-noted notifications and any other notice to the Board; and

iii) Provide to the Board information concerning the quantity of Quadracel and Pentacel, respectively, sold and either the average price per unit or the net revenue from sales of Quadracel and Pentacel in Canada, in the same form as required by subsection 4(1) of the Regulations for the period January 1, 2007 to the date on which the price reduction referred to in paragraph d) comes into effect.

OTHER

24. Board Staff reserves the right to make such other allegations and submissions and introduce other additional documents as Board Staff may advise and the Board may permit.

25. Pursuant to section 86 of the Act, a hearing shall be held in public unless the Board orders otherwise. Board Staff submits that any hearing conducted by the Board into the prices of Quadracel and Pentacel, respectively, should be held in public and, subject to the orders of the Board, all information and documents filed should form part of the public record.

Dated at Ottawa this 15th day of March, 2007.

Borden Ladner Gervais, LLP
The Chambers
Suite 1100, 100 Queen Street
Ottawa, Ontario
K1P 1J9

Tel: (613) 787-3521
Fax: (613) 230-8842

Guy Pratte
E-Mail: gpratte@blgcanada.com

Nadia Effendi
E-Mail: neffendi@blgcanada.com

LIST OF ATTACHMENTS