Aribitration Tribunal Rules Against Apotex in Case Against FDA

An arbitration tribunal has rejected Apotex’s claims that the US Food and Drug Administration (FDA) violated the North American Free Trade Agreement (NAFTA) by prohibiting imports of Apotex products from two plants in Ontario, Canada. Apotex Holdings Inc. and Apotex Inc. had sought up to $1.5 billion in damages for losses allegedly caused by an FDA Import Alert issued in 2009 for Apotex’s Etobicoke and Signet manufacturing facilities in Ontario, Canada. The facilities were issued the Import Alert based on GMP violations at the facilities. The facilities were removed from the Import Alert in 2011.

In February 2012, Apotex Holdings Inc. and Apotex Inc. initiated arbitration against the United States. Apotex claimed that the Import Alert violated the United States' obligations under NAFTA Chapter Eleven to accord Apotex and its US investments national and most-favored-nation treatment. Apotex also claimed that the United States adopted the Import Alert without due process, in violation of the customary international law minimum standard of treatment.

The tribunal, by a majority, concluded that Apotex was barred from relitigating the issue of whether Apotex Inc.'s “abbreviated new drug applications” constituted “investments” in the United States for purposes of NAFTA Chapter Eleven, given a previous tribunal's determination of that issue. The tribunal thus concluded that it lacked jurisdiction to decide some of Apotex's claims. The tribunal concluded that the Import Alert was a lawful and appropriate exercise of FDA's regulatory authority. FDA's issuance of the Import Alert, therefore, did not violate the United States' obligations under NAFTA Chapter Eleven. The tribunal ordered Apotex to reimburse 100%  of the United States' legal costs and to pay 75% of the costs of arbitration.

“The FDA’s import alert against our Etobicoke and Signet facilities effectively removed Apotex from the US solid-dose drug market for almost two years,” said Jeremy B. Desai, Apotex’s president and chief executive officer, in a company statement. “While we are disappointed in the Tribunal’s decision, we remain strongly committed to the US market, and we continue to work closely with the FDA to resolve all outstanding issues and to achieve our shared objective of expanding the public’s access to quality, affordable generic medicines.”

Source: US State Department and Apotex

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