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Pharmaceutical companies bringing new brand name drugs to market in Canada will receive 8 years of data exclusivity, up from the current 5 years. However, companies will also have less clout in using patents to block generic drugs before Canadian market entry. This is likely to create increased reliance on patent infringement lawsuits after generic entry.

These are among the proposed changes in regulations announced on December 11, 2004 that would revise the Canadian Patented Medicine (Notice of Compliance) Regulations ("NOC Regulations") and the Food and Drugs Act Regulations. The 75 day period for the public to submit comments has passed. The government recently informed us on May 18, 2005 that it has not yet determined if any of the proposed amendments will be revised in response to comments from the public. The timeline for implementation of the amended NOC Regulations is also unknown.

The NOC Regulations - Background

The Food and Drugs Act Regulations are relatively straightforward and deal with health and safety requirements for brand name and generic drug approval. The NOC Regulations create a unique system that can link the Food and Drugs Act approval to patent status, so some background is helpful before describing the proposed changes. We emphasize that the NOC Regulations do not affect the scope or validity of pharmaceutical patent claims or the ability to bring a patent infringement action. The purpose of the NOC Regulations is to prevent patent infringement. The NOC Regulations create a specialized system that allows patent owners to try to delay government marketing approval (called an "NOC") for a generic drug until expiry of the relevant “listed” patent. This system is in sharp contrast to conventional patent enforcement that usually involves a patent owner suing for patent infringement after a generic company receives its NOC.

Under the NOC Regulations, patent owners have the option to list certain pharmaceutical patents on a government Patent Register, which is the Canadian equivalent of the US Orange Book. Before a generic company can get government marketing approval for its generic drug, it has to allege that it would not infringe a valid claim of a patent listed on the Patent Register. If a generic company makes such an allegation, the patent owner has the right to trigger a court proceeding ("NOC Proceeding") by stating that the generic allegations are not justified and requesting an order prohibiting the government from issuing an NOC to the generic company. The NOC Proceeding typically involves court consideration of evidence on issues such as infringement and validity. The NOC Proceeding can last up to 24 months, during which time the generic company cannot get its NOC. If the generic company wins, it gets its NOC and the patent owner has to sue for patent infringement. If the brand name company wins, the government is prohibited from issuing the NOC to the generic drug until after patent expiry.

Proposed Changes to Food and Drugs Act Regs. and NOC Regs.

The longer data exclusivity protection will clearly benefit brand name companies. Some of the proposed changes confirm current case law or government policies. Others revisions make significant changes to the ability of patent owners to use the NOC Regulations to block generic companies. The proposed changes include:

Data exclusivity for new brand name drugs

New brand name drugs would receive a minimum 8 year period of data exclusivity. An additional six months of data exclusivity would be available for drugs that have been the subject of pediatric studies. During the exclusivity period, the data cannot be relied on by a generic company seeking approval of its own drug. The intent is to allow the brand name company a period of exclusivity to recoup its R&D investments in the drug.

Eligibility for listing on the Patent Register

• Eligible patents i) must have an application filing date before the date of a patent owner's new drug submission ("NDS") and ii) must be directly relevant to the drug in the NDS. Item i) confirms existing case law. Item ii) would narrow the scope of patents that can be listed - under current law, even patents that do not claim the specific formulation approved for sale can be eligible for listing.

• Patents can be listed on the basis of a supplemental new drug submission ("SNDS") filing. However, only patents which precede the date of an SNDS filed for a change in formulation or indication will be eligible for listing on the register, provided they claim the change in issue in the SNDS. This proposed change narrows the scope of patents that can be listed - currently, there is no requirement for the patent submitted with an SNDS to claim the change in issue in the SNDS.

Reducing the occurrence of multiple NOC Proceedings

• A generic company will not have to address a newly listed patent if the patent was submitted on the basis of an SNDS which postdates the filing of the generic drug submission. Currently, generic companies have to address newly-listed patents.

New types of allegations can be made by generic companies

The current allegations made by generic companies are that the patent on the Patent Register is invalid, expired or not infringed. The proposed changes create new types of allegations, described below. Patent owners would be able to challenge generic companies that make these allegations, but risk paying a generic company damages if a court later finds that the generic allegations are justified.

• Generic companies would be able to allege that an innovator has falsely certified a patent's eligibility for inclusion on the register. Currently, eligibility of a patent for listing on the Patent Register can be considered in NOC Proceedings, although not via a generic "allegation."

• For use patents added by way of an SNDS for a change in indication, a generic company seeking approval based on older off-patent indications (rather than seeking approval for the patented indication) would not have to address the patent for the new indication before receiving its marketing authorization. In making this change, the government recognizes the potential for infringing use of the generic drug for the patented indication, but has made a policy decision that the issue of infringement of such use patents is best resolved through an ordinary infringement action, rather than an NOC Proceeding.

Reducing requirements for generic companies to address patents

• Companies that withdraw a drug from the market and replace it with a modified version of the drug could potentially lose protection under the Regulations if the switch leaves generic companies without a Canadian reference product.

• Second entry drugs that submit an NDS rather than an abbreviated new drug submission will not have to address patents on the Patent Register (this proposed change would be effected by repeal of s. 5(1.1) rather than a modified section). This change appears intended to address issues that were recently litigated in Biolyse v. Bristol-Myers Squibb (paclitaxel) in the Supreme Court of Canada. The Court decided that because Biolyse had filed an NDS rather than an abbreviated new drug submission, BMS could not trigger an NOC proceeding.

The draft regulations can be viewed online at:

http://canadagazette.gc.ca/partI/2004/20041211/html/regle4-e.html and

http://canadagazette.gc.ca/partI/2004/20041211/html/regle3-e.html

Please feel free to contact us for additional information.

Copyright, Bereskin & Parr, 2005
Prepared by Noel Courage

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