1. In accordance with the Tribunal’s First Procedural Order, Respondent United States of America respectfully submits this Counter-Memorial on Merits and Objections to Jurisdiction to the claims of Apotex Inc. and Apotex Holdings Inc., on its own behalf and on behalf of its U.S. enterprise Apotex Corp. (collectively, “Apotex”).1

2. The Tribunal should deny Apotex’s improper and unsupported claims concerning the United States’ lawful and appropriate exercise of its authority to protect the health of its people. The Tribunal has no jurisdiction to hear Apotex’s claims, which in any event fail on the merits.

3. For more than a century, the United States has established laws and regulations to prevent importation of adulterated drugs in order to protect public health. The United States did not relinquish this authority and responsibility when it concluded the NAFTA. Nor did the United States and its NAFTA partners establish Chapter Eleven investment arbitration to resolve complaints by foreign traders whose adulterated drugs have been turned away at the border.

4. The material facts of this case are largely undisputed. In December 2008, the U.S. Food and Drug Administration (FDA) inspected Apotex Inc.’s manufacturing facility in Etobicoke, Ontario following complaints from U.S. consumers, doctors, and pharmacists about problems with Apotex drugs. FDA’s eight-day inspection uncovered significant violations of U.S. laws and regulations, including numerous deviations from current good manufacturing practice (cGMP). The investigators informed Apotex of their findings at the close of the inspection. FDA subsequently issued Apotex Inc. a “warning letter,” apprising the firm that drugs from its Etobicoke facility were “adulterated” under U.S. law and thus could be denied admission to the United States. FDA further warned Apotex that the agency could withhold approval of drug applications linked to the facility. Apotex Inc. acknowledged the serious problems with its manufacturing practices and promised to implement corrective action.