By now, most people who have been following the discussions/negotiations between Canada and the European Union (EU) with respect to putting into place a trade agreement are aware that Canada and the EU have come to an agreement on the text of the trade agreement...

One section of CETA has captured my interest more so than others: the section on intellectual property and, more particularly, the subsection addressing pharmaceutical patents. Canada is traditionally and internationally considered to be a less-than-hospitable jurisdiction for pharmaceutical patentees and intellectual property rights generally. By agreeing to the current draft of CETA, Canada has effectively agreed inter alia to (lightly) bolster pharmaceutical patent rights. This is surprising to say the least (and both welcome and long over-due).

What changes are forthcoming and what does it all mean?

Many people have summarized the elements of CETA’s pharmaceutical patent section, followed by their forecast of the good or bad that will result from the eventual amendments to Canadian legislation. One thing is for sure: No one knows exactly what the changes to Canadian legislation will be. A lot of work has to be done before CETA is implemented in Canada.

... Let’s look at the individual pharma related elements of CETA garnering (simultaneously) the most support and criticism and whether/how they would potentially change the current state of Canadian pharma related legislation.

Period of data protection

What is data protection? What data are we talking about? High level overview: When a drug company applies to Health Canada for marketing authorization (permission to sell its drug in Canada; this permission takes the form of a document called a Notice of Compliance), it must satisfy Health Canada that the drug is both safe and effective. Where the drug is new and cannot be compared to a previously approved drug, the drug company must submit data for Health Canada to review so as to satisfy itself that the product is safe and effective. The sponsor will have invested many millions of dollars to generate the data needed to obtain approval.

Section C.08.004.1 currently provides for a six-year period of “data protection” during which a subsequent drug company cannot seek approval for a comparator version of the “innovative drug” (as defined in section C.08.004.1 of the Food and Drug Regulations. After 6 years have elapsed, the subsequent drug manufacturer can submit its request for marketing approval, but will have to wait a further 2 years before its Notice of Compliance is issued and the drug can be sold. This gives a total of 8 years of “data protection” for the innovative drug manufacturer. Where pediatric clinical trials were conducted on the innovative drug and submitted to Health Canada, an additional 6 months of “data protection” can be attained. This protection was incorporated into Canadian legislation as a means of implementing portions of the North American Free Trade Agreement (NAFTA).

Will the implementation of CETA change Canadian data protection? In short, the answer is no. The EU pushed for a 10 year total period of “data protection”, but Canada rejected the EU’s request to extend its current 8 year protection period. Canada has, however, undertaken to lock in its current 8 year period of data protection.

Extending patent protection (also known as patent restoration)

The term (life) of a patent in Canada (for patent applications filed in October 1989 and onwards) is 20 years from the Canadian filing date. During this period, the patentee (patent owner) has a monopoly on making, using and selling the patented invention in Canada. This may seem like a long time, but in the pharmaceutical world this 20 years evaporates very quickly. A patentee who wants to sell its drug on the market and benefit from the monopoly the patent affords has to develop the drug, test it, run it through clinical trials and satisfy Health Canada that the drug is safe and effective. Suffice it to say, this doesn’t happen overnight. By the time the patentee comes to market, half or more of the monopoly period has usually disappeared.

During whatever time is left of its monopoly, the patentee hopes to recoup the large investment in the research and development it made to bring the new drug to market. Once the monopoly period expires (expiry of patent protection), other manufacturers can come to market, typically flooding the market with generic versions of the drug. These generic drug manufacturers can file an abbreviated new drug submission for marketing approval of their generic version of the drug relying on the clinical data previously submitted to Health Canada by the innovative drug manufacturer. Generics need only show that their drug is bioequivalent to the innovator’s.

To compensate innovative drug manufacturers for some of the time lost obtaining regulatory approval, Canada has agreed to extend the life of patent protection for these innovative drugs at the request of the EU. While the EU proposed extending patent protection by 5 years, Canada has agreed to extend patent protection by up to 2 years. How it will be applied will not be known until amendments to legislation are made available. Canada also carved out an exception for the generic drug manufacturers. During this extended period, generic drug manufacturers can continue to make the drug and export it.

Patent linkage and right of appeal

Under Canadian legislation, disputes between innovative and generic drug manufacturers regarding access to the market and issuance of a Notice of Compliance during the period where an innovative drug is still under patent are typically resolved by way of a summary proceeding that is specifically designed to accelerate the resolution of such disputes. The aforementioned procedure is set forth in the Patented Medicines (Notice of Compliance) Regulations.

The Patented Medicines (Notice of Compliance) Regulations allow an innovative drug manufacturer whose drug is under patent and listed on the patent register (a list maintained by the Minister of Health of drugs under patent in Canada) to apply to the Federal Court for an Order prohibiting the Minister of Health from issuing a Notice of Compliance to a generic drug manufacturer who wants to come to market with a drug product that infringes its patent.

Evidence is limited to affidavits in this fast paced accelerated proceeding. The Court will review the submissions and evidence by both parties to determine whether the generic drug manufacturer’s allegations of invalidity and/or non-infringement are “justified.” Because of the summary nature of the proceeding and the limited evidence typically relied upon therein, it is possible for an innovative drug manufacturer to lose a summary proceeding and subsequently be forced to institute a full action against the generic suing for patent infringement (once the generic drug manufacturer hits the market) should its patent still be in force to assert its rights.

If the generic drug manufacturer wins the summary proceeding, the Minister of Health can issue a Notice of Compliance to it for the drug in question. Once the Notice of Compliance issues, the innovative drug company has no right of appeal. Additionally, the generic drug manufacturer can sue the innovative drug company for the profits it can prove it would have made but for the fact it was held off the market because of the summary proceeding instituted by the innovative drug company.

If the innovative drug company wins the summary proceeding, the Minister of Health is ordered not to issue a notice of compliance to the generic drug manufacturer for its drug until the expiry of the patent in question. However, unlike the innovative drug manufacturer, the generic drug manufacturer does have a right of appeal.

CETA’s implementation will seemingly remedy this inequity by providing innovative drug manufacturers with an equal right of appeal.

Conclusion

The eventual implementation of the CETA elements discussed above is a step in the right direction for improving the protection of intellectual property rights of pharmaceutical companies (specifically innovative drug companies who invest in the research and development of new life-saving and life-improving drugs).

Most comments and criticisms of the proposed sections of CETA which relate to pharmaceutical patents hinge on the cost of drugs in Canada : If innovative drug companies are given additional rights and if their intellectual property is protected at a level that is similar or approaching that of every other industrialized country, then will Canadians be forced to pay more for drugs? This view is, respectfully, very short sighted and an easy way to stir up concern/fear. Drug prices in Canada are regulated by the federal government and negotiated with public and private payors. In addition, the contribution of innovative pharmaceutical companies to the health and well-being of Canadians is something that seems to be commonly and conveniently overlooked. Without innovative pharma, who will fund the research and development of new medicines in the future?

Providing innovative pharmaceutical companies with adequate intellectual property protection may encourage further innovation and investments in Canada, bringing new life-saving and life-improving drugs to market in Canada.

This has been excerpted from a 22 August 2014 article by Brian John Capogrosso, intellectual property lawyer, for the National, Legal Insights & Practice Trends.