Canada To Have Patent Term Extensions Soon – And An Export Waiver

Legislation implementing patent term extensions for pharmaceuticals in Canada is expected to come into effect in May or early June this year after completion of the ratification process for the Comprehensive Economic and Trade Agreement (CETA), the trade deal that Canada and the EU signed in October last year, according to Jody Cox, vice-president, federal & international affairs, at the Canadian Generic Pharmaceutical Association.

The new Certificate of Supplementary Protection (CSP) will be similar to the Supplementary Protection Certificate (SPC) that has been available in the EU since 1992, but it will have a maximum term of just two years compared with five for the EU instrument.

Moreover, as a result of strong lobbying by the generics industry in both Canada and Europe, CETA also provides for a waiver that will allow generics companies to manufacture their products for export while the CSP on the reference drug is still in force, Cox told the 15^th biosimilar medicines conference organized in London on March 23-24 by the generics and biosimilars industry body, Medicines for Europe.

CETA brings some other novelties to the Canadian IP landscape for pharmaceuticals, including changes to the “patent linkage” system that has come under fire from both innovators and generics companies. However, despite pressure from the EU for a 10-year data/market protection period, Canada is to retain the current eight-year period (six years of data protection plus two further years of market exclusivity, and a six-month pediatric extension).

The provisions contained in the CETA text will be implemented via new legislation, in the form of Bill C-30, amending Canada’s Patent Act. The Bill was introduced in October 2016 and is currently in its second reading in the Senate, having had its third reading in the House of Commons in mid-February.

CSPs With Maximum Two-Year Validity

For the pharmaceutical industry, the key provision in CETA is the introduction of patent term extension, which is seen by originator companies as highly valuable in compensating for the time lost due to lengthy drug approval procedures. Canada is currently the only G7 country without this kind of instrument.

To qualify for a CSP, a drug will have to meet a number of criteria. For example, it will have to have a valid patent with an application filing date of no earlier than Oct. 1, 1989, and the patent must cover a medicinal ingredient (or combination of ingredients) in a drug product. The marketing authorization must be the first to be granted for that ingredient in Canada, and no other CSP must have been issued for it.

The period of added protection conferred by a CSP will be calculated based on the period between the filing of the patent application and the time of first marketing authorization in Canada, and will be limited to a maximum of two years, compared with the EU’s five-year ceiling.

Export Waiver

The fact that Bill C-30 will also introduce a CSP export waiver is of key importance to the generics industry, particularly as the EU still has no such waiver available – although the European Commission is shortly to begin a consultation on introducing one. (Also see "EC To Consult On Ways To Boost Generics & Biosimilars Industry, Introduce EU-wide SPC" - Pink Sheet, 27 Mar, 2017.) While a waiver has been on the cards in Europe for some time, it was suggested at the conference that the commission had been spurred into action by the inclusion of the measure in CETA.

Explaining why the Canadian generics industry had pushed for the waiver, Cox said: “Generics companies wanted to mitigate the effects of expected CETA concessions on their domestic manufacturing operations. They saw that a new CSP system under CETA would negatively impact the manufacturing competitiveness of Canadian generics manufacturers, particularly vis-à-vis the US, our top export market.”

“The legal language is clear… the export waiver will apply to both generic and biosimilar drugs” – Jody Cox, Canadian Generic Pharmaceutical Association

She said that the CGPA’s priorities had included an export waiver and a shorter CSP length (two years instead of five), and that the association conducted an “extensive advocacy campaign” to secure the waiver. Its efforts were aided by the fact that the Canadian government saw the overall competitiveness of the manufacturing sector as a priority, and parallel efforts were made by Medicines for Europe to persuade the commission and the European Parliament to include an export waiver in CETA.

The result was that the “legal language is clear, no further regulations are needed, no more red tape, and the export waiver will apply to both generic and biosimilar drugs,” Cox told the conference.

Although Bill-C30 is expected to be passed in the next few months, CSPs will only be available to drugs approved after that date, so the first certificates are not expected to be issued until 2025-2027, she said.

Patent linkage

Bill C-30 also makes some changes to the “patent linkage” mechanism, which governs patent litigation among generic and brand name companies.

Under current rules, a generic can only be approved for marketing (i.e., receive a Notice of Compliance) if the company can overcome the patents on the reference product that are listed in the Patent Register under the Patented Medicines (Notice of Compliance) Regulations. These regulations form a “linkage” between marketing authorization and the Canadian Patent Act.

Canada allows for two legal proceedings between parties relating to the same patent: proceedings under the PM(NOC) Regulations and patent infringement actions. This is known as “dual litigation” and has been criticized by both the generic and the originator industry.

According to law firm Marks & Clerk, R&D firms say they do not have an effective right of appeal when a PM(NOC) decision is given in favor of the generics company, while a generic can appeal against a decision that benefits the innovator, even when the patent has expired.

Moreover, a PM(NOC) decision in favor of a generics firm does not prevent an innovator from suing for patent infringement under the Patent Act. “The result is the possibility of ‘dual litigation’,” Marks & Clerk said in a note following the CETA agreement last October. “Generics have complained that this situation is unfair, as it creates unpredictability for them.”

“Canada has made a general commitment under CETA to ensure that both innovators and generics are afforded ‘equivalent and effective rights of appeal’, which gives scope for Canada to end the practice of dual litigation,” according to the law firm.

Under Bill C-30, “it appears that the PM(NOC) system would survive but in an amended form that would effectively replace the current summary PM(NOC) proceedings with full patent infringement and validity actions that would result in a final determination on infringement and validity issues,” Marks & Clerk said. “Changing PM(NOC) proceedings to full actions should obviate the objections that both innovators and generics have with the current system.”