Competition Bureau and Health Canada to cooperate to facilitate competition
April 27, 2022
By Melanie Szweras and Luca Manfredi
The Competition Bureau and the Health and Food Products Branch of Health Canada (HFPB) issued a joint notice in January 2022, announcing their increased cooperation in relation to pharmaceuticals and biologics. Despite their different mandates, the agencies identified several areas where they will work together. HFPB will provide information to the Competition Bureau in the context of an investigation and will pro-actively refer matters to the Competition Bureau where the Competition Act could be engaged. For its part, the Bureau will assist HFPB’s policy development to ensure a more competitive pharmaceutical marketplace. In addition, both organizations have agreed to share general information of interest to the other.
Brand manufacturers benefit from protections including patents, supplementary certificates, and data exclusivity. Upon their expiry, generic manufacturers may launch their products at a lower cost.
Commercializing any drug in Canada requires safety and efficacy data, which brand manufacturers collect through extensive clinical trials. When a generic applies for approval, it must wait until the expiry of the data exclusivity period, and where a patent is registered, must wait for patent expiry or make an assertion of non-infringement or invalidity. For approval, the generic needs to access the brand’s clinical trial data information and use it as a reference for their own products. They must run comparative studies to prove their product and the brand-name one are equivalent in the case of a drug and highly similar in the case of a biologic. To do the comparative studies, generic companies need to obtain a sample of the product from the brand.
The Competition Bureau previously considered the issue of availability of brand product samples twice. Celgene, Pfizer and Sanofi faced scrutiny in 2018, particularly with respect to distribution. The Bureau examined whether distribution agreements hampered legitimate sample requests from generics to distributors, and whether actions by brands unduly delayed generics’ market entry.
Celgene administered a strict control program for its drug REVLIMID to ensure it was distributed, prescribed and used safely. The program limited the number of distributors and required all supply chain participants to register. While the Bureau did not find the program anti-competitive, it warned that its restrictions could have anti-competitive effects if generics were forced to deal directly with the brand manufacturer.
The 2018 investigation was eventually discontinued because the generic companies secured samples through alternative channels. The Bureau, however, stated its position on several relevant issues. Firstly, brand-name manufacturers are in a position of market dominance until generics appear. Secondly, restricting access to samples is not a legitimate exercise of intellectual property protection. The Bureau took the opportunity to favourably acknowledge the steps Pfizer took during the investigation. Pfizer’s efforts included letters to internal staff and distributors highlighting that there was no policy restricting generics’ access and that there should be no discrimination between generics and other customers.
In the second investigation in 2020, the Bureau investigated Otsuka on similar allegations as in the 2018 cases, in a situation where the brand had a Risk Management Plan (RMP). The RMP included a controlled distribution plan due to the risk of liver injury. Otsuka claimed that its strict RMP for JINARC forbade it from supplying the drug, even in sample form, to anyone outside the RMP. The Bureau was unpersuaded, citing prior notices from Health Canada regarding RMPs and Otsuka’s lengthy delay between its refusal and its request for guidance from Health Canada on the matter.
The Competition Bureau took the view that Otsuka acted in an anti-competitive manner. Moreover, refusing to provide the samples would foreseeably hamper the generics’ market entry and thus indicated intent. As samples were eventually provided before the Bureau issued a decision, the investigation was discontinued. This is likely the last time such investigations would stop without consequences.
According to the Bureau, “in future even if samples are eventually supplied, the Bureau will take the necessary steps to address past conduct, including seeking administrative monetary penalties, where the evidence establishes the Act is engaged”. Brands will also face a more stringent burden of proof, as the Bureau vowed to treat any explanation for failing to supply samples with “an extremely high degree of skepticism”.
For brand manufacturers and distributors, compliance with the Competition Act should now be a top-of-mind concern. Increased cooperation with Health Canada gives the Competition Bureau the opportunity to intervene early in a dispute between a generic and a brand company. A brand manufacturer may then face an uphill battle at the Competition Tribunal and could face various restrictive orders and significant administrative monetary penalties if found non-compliant.
The intersection of intellectual property, health and competition is an active area of interest. Current trends indicate a strong focus by all agencies on consumer access and contained costs. An experienced regulatory practitioner can assist manufacturers in navigating this evolving framework. Distribution agreements and external liaison policies need to be reviewed, to ensure all participants understand the Competition Bureau’s perspective on providing generics access to timely samples. Companies need clear procedures, guaranteed timelines and strong record-keeping to overcome the Bureau’s promised “extremely high degree of skepticism”. Pfizer’s course of action in 2018, commended by the Bureau, is one example of effective internal communication to ensure compliance. On that occasion, key staff and partners whose decisions could affect a generic company’s access to a protected product were instructed that requests for samples are no different than other customers’ requests, and should not be obstructed.
Canada maintains extensive patent and data protection for innovators. However, this cooperation between Health Canada and the Competition Bureau sends innovators a strong signal. Those who are provided protection must facilitate public access once the protection expires.
 Competition Bureau statement regarding its inquiry into alleged anti-competitive conduct by Otsuka, April 2, 2020, https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04524.html
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