2021 FC, 2021 FC 1209

Date: 20211109 Docket: T-815-17 Citation: 2021 FC 1209 Ottawa, Ontario, November 9, 2021 PRESENT: The Honourable Mr. Justice Zinn BETWEEN: PHARMASCIENCE INC. PlaintiffandMEDA AB, MEDA PHARAMCEUTICALS LTD., VALEANT CANADA LP/VALEANT CANADA S.E.C. Defendants ORDER AND REASONS [1] The Plaintiff moves for leave to file a reply expert report of Dr. Hollis [the Proposed Reply Report].

The Law [2] The principles governing reply evidence are well established and much of the Court’s jurisprudence was cited by the parties.Associate Chief Justice Gagné recently summarized the relevant principles at paragraphs 6 to 13 of her decision in Merck Sharp &Dohme Corp v Wyeth LLC, 2020 FC 1087: [6] The general rules governing the filing of reply evidence are well known and relatively simple.

However, they are not sosimple to apply on a preliminary motion, out of context, and without the full evidentiary picture that the experts’ testimoniesand cross-examinations will provide the Court at trial. [7] That said, the starting point is Rule 274(1) of the Federal Courts Rules, SOR/98-106, which sets out the order in whichthe parties present their evidence: 274(1) Subject to subsection (2), at the trial of an action, unless the Court directs otherwise, (

a) the plaintiff shall make an opening address and then adduce evidence; (

b) when the plaintiff’s evidence is concluded, the defendant shall make an opening address and then adduceevidence; (

c) when the defendant’s evidence is concluded, the plaintiff may adduce reply evidence. [8] There are a few rules that govern and limit the nature of evidence the plaintiffs can adduce in reply.

They all flow fromthe fact that a plaintiff will not be allowed to split its case (R v Krause, (SCC), [1986] 2 SCR 466 at 473);the reply evidence must relate to issues raised in defense that were not raised in chief by the plaintiff (Amgen Canada Inc vApotex Inc, 2016 FCA 121 at para 12). [9] As stated by Justice Manson in Janssen Inc v Teva Canada Limited, 2019 FC 1309 at para 16, the Trial Division of theFederal Court in in [sic] Halford v Seed Hawk Inc, 2003 FCT 141 at para 15, had aptly broken this rule down to fourprinciples: 1.

Evidence which is simply confirmatory of evidence already before the court is not to be allowed. 2. Evidence which is directed to a matter raised for the first time in cross examination and which ought to havebeen part of the plaintiff's case in chief is not to be allowed. Any other new matter relevant to a matter in issue,and not simply for the purpose of contradicting a defence witness, may be allowed. 3. Evidence which is simply a rebuttal of evidence led as part of the defence case and which could have beenled in chief is not to be admitted. 4.

Evidence which is excluded because it should have been led as part of the plaintiff’s case in chief will beexamined to determine if it should be admitted in the exercise of trial judge’s discretion. [10] In Merck-Frosst v Canada (Health), 2009 FC 914 at para 10 [Merck-Frosst], Justice Zinn added a few more factors tobe considered when assessing whether evidence is being introduced as proper reply: (

a) whether the further evidence serves the interests of justice; (

b) whether the further evidence assists the Court in making its determination on the merits;

(

c) whether granting the motion will cause substantial or serious prejudice to the other side; and (

d) whether the reply evidence was available and/or could not be anticipated as being relevant at an earlier date. [11] Justice Zinn breaks down this fourth factor into a two-pronged analysis at paragraphs 23 and 25 of Merck-Frosst:

(23) The first step is to ask whether the proposed evidence is properly responsive to the other party’s evidence.It is responsive if it is not a mere statement of counter-opinion but provides evidence that critiques, rebuts,challenges, refutes or disproves the opposite party’s evidence. It is not responsive if it merely repeats orreinforces evidence that the party initially filed. …

(25) If the proposed evidence is found to be responsive, one must then ask whether it could have beenanticipated as being relevant at an earlier date. If it could have been anticipated earlier to be relevant, then it isbeing offered in an attempt to strengthen one’s position by introducing “new” evidence that could and shouldhave been included in the initial affidavit. Such evidence is not proper reply evidence as the party proposing tofile it is splitting his case. [12] On the other hand, Rule 279 of the Federal Courts Rules governs the admissibility of expert evidence.

No expertwitness’ evidence is admissible unless the issue has been defined by the pleading or in an order of the Court; the expert musthave previously served and filed an affidavit or a statement made in accordance with the Federal Courts Rules; and, theexpert must be available at the trial for cross-examination. [13] In R v Mohan, (SCC), [1994] 2 SCR 9 at paragraph 20, the Supreme Court developed a useful test todetermine if expert evidence should be admitted: (

a) It should be relevant; (

b) It should be necessary to assist the trier of fact; (

c) It should not be subject to any exclusionary rule; and (

d) A properly qualified expert should adduce it. [3] The Defendants submit that the Proposed Reply Report is inadmissible as: “(1) it repeatedly expresses Dr. Hollis’ disagreement withDr.

Grootendorst’s opinion and analysis; (2) it repeats and attempts to bolster the opinions expressed in the Hollis Initial Report andRevision; and (3) it contains additions and revisions to the Initial Report and Revision that are not responsive to any new or unanticipatedevidence.” It submits that the proposed reply is an attempt by the Plaintiff to split its case. [4] Justice Roy in Angelcare Development Inc v Munchkin, Inc, 2020 FC 1185 [Angelcare], at paragraph 10 notes the prohibition againstcase splitting and its dangers when seeking to file reply evidence: The general rule against case splitting means the party must advance all the evidence they want to bring forward in the firstinstance; they will not be allowed to make up for their failure to do so in their reply.

That suggests that reply evidence wouldbe short and to the point. [5] The Plaintiff’s expert, Dr. Hollis, served a first report and a revision of it. The Defendants countered with a report by its expert, Dr.Grootendorst. These reports address the respective expert’s opinions on the sales of zolpidem that the Plaintiff would have obtained inthe but-for world had it not been prevented from entering the market. In addition, Dr.

Grootendorst offers his view of the opinion of Dr.Hollis. [6] The Plaintiff, citing Amgen Canada Inc v Apotex Inc, 2016 FCA 121 [Amgen] at paragraphs 9-11, submits that an overarchingprinciple on motions for admitting reply evidence is that the judge should be guided by concerns of procedural fairness and the need tomake a proper determination on the merits of the case. [7] Amgen was a motion in writing, and Justice Stratas’ comments on procedural fairness and the need to make a proper determinationmust be understood in the context of a matter in which there was to be no viva voce testimony.

Indeed, in Amgen, while Justice Stratasallowed the reply evidence to be filed, he also ordered that the deponent of the reply affidavit be subject to cross-examination.

I agreewith the observations of Justice Roy in Angelcare, above, at paragraph 15 where he notes that given that unique scenario “the commentsin Amgen are of limited utility.” Analysis of the Proposed Reply Report [8] Applying the established principles, and keeping in mind that the burden rests with the Plaintiff to establish the need for and thepropriety of the proposed reply evidence, the following is my determination of the Proposed Reply Report. Paragraphs 1-4: Mandate, Qualifications and Duty to Court [9] I agree with the Defendants that these paragraphs merely repeat statements made in Dr.

Hollis’ initial and revised reports. However,they are clearly aimed at complying with the requirements of an expert report under the Federal Court Rules, and although repetitive and

unnecessary, are otherwise unobjectionable. Paragraphs 5-6

Summary of Opinions [ 10 ] Paragraph 5 provides a

summary of the main points of the Proposed Reply Report, while paragraph 6 provides an outline of the structure of the report. For the reasons set out below, the comments of Dr. Hollis regarding first entry into the market and the effects of an Off Formulary Interchange listing in Ontario are not proper reply. Therefore, the summaries of these opinions in paragraph 5 are also not proper reply. Given that all that remains in paragraph 5 is a

summary of a single point, I find that paragraph 5 is not necessary and is not admitted. [ 11 ] Paragraph 6 assists the reader as to the structure of the Proposed Reply Report and is unobjectionable only if it accurately reflects the portions of the report that are admitted as proper reply. As will be seen from these Reasons, it does not and thus is not proper. Paragraph 7: Literature Relied On [ 12 ] This paragraph cites the literature relied on by Dr. Hollis in this report.

If there are admissible sections of the Proposed Reply Report that rely on these documents, then reliance on these documents must be set out, as it is required by the Code of Conduct for Experts. The Defendants have raised no specific objection to the admissibility of paragraph 8, which relies on at least some of these documents. Those portions of paragraph 7 that remain relevant and accurate in light of these Reasons are admissible. Paragraph 8: Corrections [ 13 ] In this paragraph, Dr. Hollis corrects a transcription error that he discovered while comparing his analysis to Dr. Grootendorst’s.

The Defendants do not contest the admissibility of this paragraph. On the other hand, this information could easily be obtained at the commencement of the direct examination by asking the witness, as is frequently done, whether there are any changes to the report he would like to make. Absent an objection, it is permissible reply. Paragraph 9: Total Size of Zolpidem Market [ 14 ] This paragraph merely indicates that the two experts agree on this point. It adds nothing new and is not responsive. It is not admitted.

As with the correction noted above, this may easily be elicited in examination in chief, if it is important. Paragraphs 10-15: Generic Share of the Zolpidem Market [ 15 ] In these paragraphs, Dr. Hollis critiques the methodology adopted by Dr. Grootendorst. The Defendants submit, and I agree, that these paragraphs merely disagree and argue with Dr. Grootendorst’s report. With respect to the ability to anticipate the evidence, I also agree with the Defendants that Dr. Grootendorst’s methodology could have been anticipated. Dr. Hollis argues that he could not have anticipated the methodology because it is flawed.

All he is doing is disagreeing with the choice of methodology. [ 16 ] If Dr. Hollis believes that there are flaws in Dr. Grootendorst’s analysis, he can explain this at trial and the Plaintiff can cross- examine Dr. Grootendorst on his methodology. These paragraphs are not permissible reply evidence. Paragraphs 16-18:

Summary of Differences [ 17 ] These paragraphs include a chart of the results of the various estimates provided by Drs. Hollis and Grootendorst and a brief discussion of why they differ. [ 18 ] The Plaintiff submits that this is helpful as it assists the Court in comparing the two expert’s estimates. It states that Dr. Grootendorst ought to have included such a

section in his report. I agree with the Defendants’ submission that these paragraphs merely confirm existing evidence and are not proper reply. [ 19 ] While a visual comparison may be helpful, the Court can perform its own comparison of numerical data and Dr. Hollis can testify as to the differences between the two opinions. Paragraphs 19-22: Should Pharmascience be treated as the sole first entrant [ 20 ] In these paragraphs, Dr. Hollis discusses why he treats Pharmascience as a first entrant while Dr. Grootendorst treats Pharmascience and Apotex as dual first entrants.

In doing so, he discusses some of the constraints when drafting the paper “Newton’s First Law as Applied to Pharmacies: Why Entry Order Matters for Generics” published in the 2015 volume of the International Journal of the Economics of Business [the IJEB Paper], which Drs. Hollis and Grootendorst co-authored. [ 21 ] The Plaintiff submits that these paragraphs are necessary, as they will provide the Court with the proper context for understanding the IJEB Paper. The Defendants submit that these paragraphs merely express a counter-opinion and are not responsive.

The Defendants also submit that these paragraphs are misleading. [ 22 ] I find that these paragraphs are not admissible. Dr. Hollis is largely trying to explain why Dr. Grootendorst’s methodology is flawed. Given the IJEB Paper used quarterly data, Dr. Grootendorst’s reliance on quarterly data could have been anticipated. Dr. Hollis could have provided an explanation on limitations and the context of the IJEB paper in his previous reports and can still do so at trial.

Paragraphs 23-26: Should the but-for generic market share be based on Apotex or Pharmascience? [ 23 ] In these paragraphs, Dr. Hollis summarizes the two approaches used and then explains why he chose his methodology over the one adopted by Dr. Grootendorst. [ 24 ] The Plaintiff submits that this evidence should be admitted, as it will be useful when comparing the parties’ positions. The Defendants submit that these paragraphs simply serve to repeat and reinforce Dr. Hollis’ evidence in chief. I agree. [ 25 ] Any new information in these paragraphs could have been anticipated. Dr.

Hollis had the opportunity to justify his methodology in his initial reports and can do so in examination in chief. If experts could reply to explain why their methodology differed, then reply would effectively be as of right. Paragraphs 27-33: Is it likely that Apotex would dominate the market if PMS enters first? [ 26 ] In these paragraphs, Dr. Hollis critiques Dr. Grootendorst’s findings on Apotex’s market share in the but-for world, and argues this finding is inconsistent with the IJEB Paper. To rebut Dr. Grootendorst’s findings, Dr.

Hollis analyzes data from IQVIA (formerly IMS) data for three drugs for which two generics entered the market in short succession. [ 27 ] The Plaintiff submits that Dr. Grootendorst’s theory is so drastically different from what is generally accepted that it could not be anticipated. It submits that this evidence is appropriate for reply as it contradicts Dr. Grootendorst’s theory and provides evidence from both sides on a novel theory. The Defendants submit that these paragraphs introduce new evidence based on new data to confirm a general finding already set out in Dr. Hollis’ earlier reports.

The Defendants note that the data relied on by Dr. Hollis was available to him at the time of the earlier reports and argue that the Plaintiff is splitting its case. [ 28 ] I agree that the Plaintiff is splitting its case. It is not appropriate for Dr. Hollis to engage in an analysis of new data to buttress his previous argument that a first mover advantage exists. He could have presented this analysis in his earlier reports and introducing it now would deny Dr. Grootendorst the opportunity to respond. The Plaintiff’s submission that Dr.

Grootendorst’s findings are out of line with the IJEB Paper is a matter that can be addressed in cross-examination of him. Paragraphs 34-35: How should the shortage issue be treated? [ 29 ] In these paragraphs, Dr. Hollis discusses the differences in his and Dr. Grootendorst’s treatment of an alleged Apotex supply shortage. The Plaintiff argues that the Court should have evidence on how this shortage would affect both methodologies. The Defendants say that these paragraphs merely set out what has already been said in past reports. [ 30 ] I agree with the Defendants that there is nothing new here.

There is merely a synthesis of the reports of the two experts with some minor commentary by Dr. Hollis on Dr. Grootendorst’s possible motivation for his method. This is not appropriate reply. Paragraphs 36-46: Revisions in Light of Dr. Grootendorst’s Report [ 31 ] In these paragraphs, Dr. Hollis responds to a criticism by Dr. Grootendorst that Dr. Hollis did not include additional variables that should have been considered. Dr. Hollis responds by including these variables in his analysis while retaining other assumptions with which he disagrees with Dr. Grootendorst. Dr.

Hollis proceeds to explain why those assumptions are well founded. Dr. Hollis ultimately finds that including the additional variables results in a 1.2% decrease in Pharmascience’s lost sales. [ 32 ] The Plaintiff submits that this evidence could not have been led in chief because Dr. Hollis could not have anticipated the criticisms. It says that this evidence is necessary, as revisions to the report are not possible through cross-examination of other witnesses. The Defendants submit that the criticisms were anticipated by Dr.

Hollis, as his initial report included an alternative analysis that included at least some of these variables. The Defendants submit that including these variables in the primary analysis at this stage is case splitting. [ 33 ] While the previous inclusion of an alternative model does suggest that this evidence may have been anticipated, one cannot expect a witness to provide every possible alternative analysis for every possible critique that may be faced.

In Swist v MEG Energy Corp , 2020 FC 759 at paragraph 11 , the party’s inability to anticipate every argument was included as a consideration when determining whether to admit reply evidence. Because Dr. Hollis is accepting Dr. Grootendorst’s critique that certain variables were excluded, there is little likelihood that Dr. Grootendorst would disagree with their inclusion in Dr. Hollis’ new analysis and this evidence would allow the Court to quantify the effects of these changes. Accordingly, paragraphs 37 to 41 and 46 are admissible. [ 34 ] Paragraphs 42-45 only serve for Dr.

Hollis to explain why his initial assumptions were correct and they are inadmissible as reply. Paragraphs 47-49: Errors in the Grootendorst Report [ 35 ] In these paragraphs, Dr. Hollis corrects alleged errors in Dr. Grootendorst’s Report. The Plaintiff submits that Dr. Grootendorst has mischaracterized the IJEB paper and the Court should allow its other co-author to give his version of the context. The Plaintiff also submits that Dr. Grootendorst has mischaracterized Dr. Hollis’ findings. The Defendants submit that these paragraphs merely disagree with Dr.

Grootendorst’s Report, which is not proper reply. [ 36 ] In Bristol-Myers Squibb Canada Co v Pharmascience Inc , 2020 FC 897 at paragraph 21 , I permitted reply evidence of an expert

who asserted that the opposing expert mischaracterized his evidence in chief. I held that it was “admissible for that purpose ” [emphasis in original] [ 37 ] Both experts rely on the IJEB Report, which they jointly authored. I agree with the Plaintiffs that reply to errors Dr. Grootendorst is alleged to have made is relevant, of assistance to the Court, and admissible by way of reply. Paragraph 50: Finale Note on IJEB Paper Version [ 38 ] In this paragraph, Dr. Hollis replies to a comment by Dr. Grootendorst that some minus signs were missing in Dr.

Hollis’ version of the IJEB report. [ 39 ] The Plaintiff makes no submissions on this paragraph. The Defendants submit that this paragraph does not matter and represents a quibbling disagreement. [ 40 ] As the Plaintiff has failed to explain why it should be admitted, it is not admitted. Conclusion [ 41 ] In light of the above, only paragraphs 1 to 4, 8, 37 to 41, and 46 to 49 are admissible reply evidence. Paragraph 7, revised as necessary to include only the literature relied on in the other admissible paragraphs, is also admissible.

As the Defendants have been largely successful in this motion regarding the substantive paragraphs of the Proposed Reply Report, they shall have their costs. JUDGMENT IN T-815-17 THIS COURT ORDERS that the Plaintiff is granted leave to serve and file a reply report of Dr. Hollis consisting of paragraphs 1 to 4, 8, 37 to 41, and 46 to 49 of the Proposed Reply Report attached to the Notice of Motion, and a revised version of paragraph 7 of the Proposed Reply Report that reflects the literature relied on in the above-listed paragraphs; in all other respects the motion is dismissed, with costs to the Defendants.

"Russel W. Zinn" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: t-815-17 STYLE OF CAUSE: PHARMASCIENCE INC v MEDIA AB ET AL PLACE OF HEARING: held by videoconference DATE OF HEARING: NOVEMBER 8, 2021 ORDERR AND reasons: zinn J. DATED: NOVEMBER 9, 2021 APPEARANCES : Jonathan Giraldi for the PLAINTIFF Melanie Baird Cole Meagher Sanjit Rajayer FOR THE DEFENDANTS SOLICITORS OF RECORD :

Aitken Klee LLP Barristers and Solicitors Ottawa, Ontario for the PLAINTIFF Blake, Cassels & Graydon LLP Barristers and Solicitors Toronto, Ontario FOR THE DEFENDANTS