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FDA-related holdups, court documents say, forced Apotex to repeat and recertify its studies, delaying the journey of the drugs to market.Peter Power/The Globe and Mail

Apotex Inc. was awarded an eight-figure sum by an Ontario court for costs and lost profits it says it incurred after the U.S. Food and Drug Administration rejected studies conducted for the generic-drug company by MDS Pharma Services.

Apotex had contracted MDS to conduct studies to confirm that two generics it was developing were true therapeutic equivalents of their originals – with hopes that the FDA would let Apotex bring them to market in the United States. But FDA-related holdups, court documents say, forced Apotex to repeat and recertify its studies, delaying the journey of the drugs to market.

In a ruling dated Dec. 22, Justice Laurence Pattillo of the Ontario Superior Court wrote that defendants including MDS, which is no longer in operation but whose corporate entity was taken over by subsidiaries of health-science company Nordion Inc., owed Apotex $11-million for extra costs and lost profits, plus court costs and interest.

Apotex was founded in 1974 by Barry Sherman. In a case that has shocked those who knew them, Mr. Sherman and his wife, the well-known philanthropist Honey Sherman, were found dead on Dec. 15, hanging from a railing by their home's basement pool. The Globe and Mail and other media have reported investigators were considering a theory that the deaths were a murder-suicide; a lawyer for the family told The Globe this week that such speculation was "absurd" without more information.

Apotex, under Mr. Sherman's guidance, gained a reputation as a highly litigious company, frequently taking on patent and other legal disputes with competing drug manufacturers or its suppliers. Mr. Sherman was also embroiled in a long-running court battle launched by cousins seeking a share of Apotex, which he won last year.

In the MDS case, Apotex originally sought from MDS an amount nearly triple what the court awarded.

Nordion did not respond to a request for comment before publication, though its counsel, John Campion, a partner with Gardiner Roberts LLP, said that "the parties are considering whether an appeal will be brought or not." Both an Apotex spokesperson and its counsel in the case, Daniel Murdoch, a Stikeman Elliott LLP partner, declined to comment on the litigation.

When a drug's patent expires, generic manufacturers tend to rush in and bring their own versions to market. Getting a generic drug to market requires a "bioequivalence" assessment to prove to regulatory bodies such as Health Canada or the FDA that the generic drug has the same therapeutic effects, quality, safety and efficacy as the reference drug.

In 2003 and 2004, court documents say, Apotex Research Inc. entered into agreements with MDS to do three bioequivalence studies to help get two of its generics approved by the FDA. One was Amoxi-Clav, a bacterial infection treatment first developed and marketed in the United States by GlaxoSmithKline as Augmentin; the other, the Parkinson's disease medication Levo-Carb IR, originally made and marketed in the United States by DuPont Pharmaceuticals as Sinemet. MDS had already done work to help get Canadian approvals for the same drugs.

But the FDA took issue with MDS's Montreal lab facility. Inspections by the regulator early last decade prompted concerns of "contamination issues." MDS shut down the Montreal facility in 2006 amid months of correspondence between the two companies and the U.S. regulator.

In January, 2007, the FDA sent letters to Apotex advising the drug giant it would have to repeat the three studies, re-analyze the original samples it had sent MDS, or get a third party to review the original studies, documents say.

Apotex did just that, finally getting FDA approval for the drugs in 2008 and 2009 – until September of 2009, when the FDA banned imports from two of Apotex's facilities to the United States, which Apotex challenged several years later.

Separately, Apotex also sought to recoup its lost profit and costs from MDS in Ontario's courts in November, 2008, after the latter's issues with the FDA.

In the courts, MDS argued that this was beyond the two-year time limit to commence a legal proceeding as outlined in Ontario's Limitations Act. The company suggested that Apotex's limitation period would have begun, at latest, when it received a "deficiency letter" from the FDA regarding Amoxi-Clav in April, 2006.

Justice Pattillo, however, wrote that "it was not appropriate for Apotex to have commenced a proceeding against MDS in May, 2006, [when MDS revised its projected approval date for Amoxi-Clav because of FDA issues] but rather to do as it did and await the outcome of MDS' review of the studies and the FDA response."

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