Apotex Inc v The Government of the United States of America: Will Barriers to Jurisdiction Inhibit an Emerging Trend?

In a recent investor–State case brought against the United States under the North American Free Trade Agreement (NAFTA),4 the Tribunal upheld the Respondent’s preliminary objections to jurisdiction. The Decision in Apotex Inc v The Government of the United States of America sheds further light on the precise meaning of the term ‘investment’ under NAFTA and confirms that investors must surmount a high jurisdictional threshold in order to bring claims before a NAFTA tribunal. That said, the fact that the Claimant chose to bring its claims before a NAFTA tribunal at all confirms an emerging trend of intellectual property and pharmaceutical claims being brought to investor–State tribunals. Whether this decision will inhibit that trend is the subject of this case note. Apotex Inc is a Canadian company that develops and manufactures generic drugs, including solid oral dosage forms such as capsules and tablets.5 Apotex claimed that it was subject to mistreatment by the United States as it endeavoured to bring generic versions of anti-depressant and anti-cholesterol drugs to market in that country. From a regulatory standpoint, Apotex’s endeavour began with the filing of an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration (FDA), establishing that the generic drug is the equivalent to the patented brand name drug.6 Once a patent expires (or is deemed invalid by a court), the first-filed ADNA applicant is eligible to benefit from an exclusive 180-day sales period during which only it can sell the drug in the US market.7 Apotex filed ANDAs for two drugs and then applied for declaratory judgments from the US Federal Courts which it hoped would trigger the 180-day exclusivity period for its commercial benefit. The ensuing litigation was complex and not wholly pertinent to this case note. In sum, the FDA and then the US Federal Courts held that Apotex could only trigger the 180-day exclusivity period by filing its ANDAs and then obtaining declaratory judgments on the merits against the existing patent holder that its patent was invalid or would not be infringed by the drug for which the applicant sought approval.8 Apotex argued in its NAFTA claim that the US regulatory agency and judicial decisions pertaining to its ANDAs were a misapplication of longstanding principles of US law, and in particular that these decisions were ‘arbitrary’, ‘capricious’, and ‘unjust’—and therefore amounted to a breach of the NAFTA.9

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