Issue 06/29 | June 23, 2006
Proposed Changes to Pharmaceutical Regulations in Canada

The Canadian government has announced major changes to two regulations governing the approval of generic drugs. Together, the proposals are likely to lessen the burden on generic drug companies, but innovator companies would also be granted important protection in the form of an eight year data exclusivity period. Currently, the Canadian regime is roughly similar to the American Hatch-Waxman regime, although with some significant differences which have tended to make life difficult for generic producers and bountiful for lawyers.

This is the second time in two years that the government has proposed amendments to the Food and Drugs Act and the Patented Medicines (Notice of Compliance) Regulations. The earlier proposal, in 2004, generated significant comment from both the generic and innovator industries. The new proposals are changed in many respects, although much of the substance remains unchanged from the previous proposals. The proposals are the result of recognition that the current regime governing generic drug approval is flawed. Notably, innovator companies are able to obtain successive two year stays of generic drug introduction by obtaining new patents and applying for supplementary drug approvals at carefully timed intervals. This is similar to the American practice before the 2003 amendments to the Hatch-Waxman Act. On the other hand, Canada is one of very few (if any) industrialized countries to deny innovator companies effective data exclusivity for new drugs. The result, not surprisingly, has been near constant warfare between the generic and innovator industries.

Highlights of the current round of proposals are:

  • An eight year period of data exclusivity for a new innovative drug (i.e., not simply a variation of an older drug), with generic companies not being permitted to file an abbreviated new drug submission (ANDS) for the first six years.
  • An additional 6 months data exclusivity if the innovator supplies clinical trial data of new pediatric uses of a drug.
  • Significant limitations to the right of innovative companies to list patents on the Patent Register (a counterpart to the "Orange Book"); patents may only be listed if they specifically claim the particular medicinal ingredient, formulation, use or dosage form that has been approved. Previously, a patent could be listed even if it covered a formulation or use different from the approved use or formulation. However, innovators now have the right to list patents covering "dosage forms," such as at least some kinds of previously unlistable drug delivery systems.
  • An attempt to clarify the effect of listed "use" patents, i.e., patents covering a novel therapeutic use of a drug. Currently, there is confusion as to whether an innovator can block a generic by showing that a listed use patent would likely be infringed by a patient or pharmacist, regardless of the generic company's future marketing of the drug, or whether the generic company must actively induce infringement. The proposed regulations seek to clarify that the generic must actively induce infringement, although it is unclear whether the proposed wording achieves this result.
  • An end to the requirement that generic companies must address patents newly added to the Patent Register even after the generic company has filed its ANDS and related materials. Currently, generics are subject to successive 24 month stays as new patents were added to the Register. In some cases this effectively blocks generic producers for many years after the original patents expired. Under the proposal, the Register would be effectively "frozen" for a generic producer when it commences its proceeding (i.e. it files its ANDS and allegations against all listed patents).
  • A limit to the compensation payable to generic companies if they succeed in their action. Currently, they have a right to claim a portion of the innovator's profits. Instead, they would be limited to their own damages. The government's view was that the limits to the "multiple stays" balanced the loss of this particular incentive for generic producers.

The government has announced a 30 day consultation period. It is not known when these proposals will then be passed; and may depend in part on the comments received from industry.

For further information relating to this topic, please feel free to contact the author, Adrian Zahl (azahl@ridoutmaybee.com) at Ridout & Maybee LLP (www.ridoutmaybee.com), Ottawa, Canada.

The information contained in this email is provided for informational purposes only and does not represent legal advice. Neither the APLF nor the author intends to create an attorney client relationship by providing this information to you through this message.

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