DAMAGES IN THE PHARMACEUTICAL & BIOTECH SECTOR

CD: Could you provide an overview of the challenges associated with assessing the value of a potential award, and the factors that need to be taken into consideration when calculating damages?

Cockburn: Fundamentally, the challenge is to reconstruct the market under the assumption that the allegedly illegal conduct did not take place. How much better off would the claimant have been in that circumstance? Determining exactly how this assessment is done will differ from case to case. Typical considerations include: how might the claimant’s activities have differed had the challenged conduct not taken place? What course of action would the respondent have taken had it not committed the allegedly illegal conduct? And how might third-party participants in the market have responded? These considerations often require a detailed analysis of the marketplace, including the attributes of relevant products sold by the claimant and the respondent, the valuation of these attributes by purchasers, the degree of price responsiveness, competitive strategies pursued by various players, and the like.

Bell: Some challenges include the perspective and consideration of potential future damages. On perspective, the claimant and respondent may have different valuations based on inconsistent expectations or opportunities, which requires an award consideration that addresses the reasonable outcome based on information, opportunities and activities of both parties as well as market conditions. On the potential for future damages, awards are typically backward-looking but might need to address continuing harm, sometimes under different assumptions or methodologies. There are examples from many types of disputes. For example, would a royalty rate for past infringement necessarily be appropriate for ongoing infringement? Can sales recover from a suboptimal launch, or will they always lag what they otherwise would have reached? Is the harm from a delayed marketing authorisation limited to the time value of money or are opportunities irrevocably lost? Do lost profits awards fully compensate for contested generic or biosimilar entry?

Apr-Jun 2015 issue

Boston University

CRA International

McCarthy Tétrault LLP