The Canadian government and European Union (EU) are currently negotiating a Comprehensive Economic and Trade Agreement (CETA). A key issue has been ensuring that Canadian intellectual property rights for pharmaceutical products are brought in line with EU standards. It appears that the EU believes Canada’s legal regime regulating the approval of drugs does not provide intellectual property rights holders with adequate protection.
Canada’s current drug approval system is administered under the Patented Medicines Notice of Compliance (PM(NOC)) Regulations. Under this system a pharmaceutical company must obtain approval from the Minister of Health in the form of a Notice of Compliance (NOC) before a new drug can be sold in Canada. To obtain a NOC an applicant (typically a research based pharmaceutical company or “innovator”) must submit a new drug submission (NDS) containing data that establishes the safety and efficacy of the drug. Once a NOC has been issued, the company may list patents related to the drug on the patent register. When a generic drug manufacturer wishes to market a drug it must also obtain a NOC. Where the generic manufacturer can satisfy the Minister of Health that its drug is pharmaceutically equivalent to a drug that has already obtained approval, they may file an abbreviated new drug submission (ANDS) and rely on the safety and efficacy data filed by the innovator in the original NDS. Data within an NDS is covered by a data protection regime that prevents a generic manufacturer from filing an ANDS for 6 years and a NOC being issued for 8 years. In addition to the data protection hurdle, a generic manufacturer must also address the patents listed on the register before a NOC will be granted. The patents can be addressed by convincing the Minister of Health that (1) the patents will not be infringed, (2) the patents are invalid or (3) that it will wait until the patents have expired before going to market.
In order to bolster Canada’s intellectual property rights and harmonize them with European standards, the EU has proposed three changes:
- Provide innovator companies with fair treatment under the PM(NOC) Regulations by providing them with the same right of appeal currently afforded to generic manufacturers;
- Extend the term of data protection; and
- Adopt patent term restoration (PTR), a mechanism that allows a patentee to “recoup” some of the patent term lost during drug development and regulatory approval.
The association of Canada’s leading innovator drug companies (Rx&D) supports the proposed changes and encourages their adoption by the Canadian government. Rx&D claim that increased intellectual property rights will allow them to invest more money into research and development leading to new drugs for Canadians. Rx&D is not the only group in favour of these proposals. Lawyers from Norton Rose published a report addressing why Canada should adopt these changes and strengthen intellectual property protection. The Norton Rose report suggests that drug approval rates in the EU are faster than those in Canada and that by harmonizing Canada’s system with that of the EU, Canadians will have faster access to new drugs. The report also contends that harmonization would not extend the total market exclusivity granted to Canadian drugs in the majority of cases.
Canada’s generic pharmaceutical companies oppose the EU’s proposed changes. It is their position that increased intellectual property rights will result in greater market exclusivity for brand name pharmaceuticals, delays in the emergence of cheaper generic drugs and ultimately greater costs to Canada’s health care system. This position is supported by a study demonstrating that if all three proposals are adopted it could cost Ontario taxpayers up to $1.2 billion annually. Furthermore, the Drummond Report recommends that provincial governments “work with the federal government to ensure that Ontario’s interests in expanding use of generic drugs are not undermined by a Canada-European Union Free Trade Agreement.” The report also stated that the drug patent proposals advanced by the EU “could cost Ontario dearly since generic drugs would be kept off the market for a longer time.” Generic pharmaceutical companies also suggest that increased intellectual property rights will not result in greater investment in research and development by innovator companies.
With CETA negotiations set to conclude sometime in 2012, the Canadian government will be forced to make some difficult decisions, given the importance of health care and the tough economic times facing Canadians and Canadian companies alike.
Sean Jackson is a J.D. candidate at Osgoode Hall Law School.