Vol. 142, No. 17 — April 26, 2008

Regulations Amending the Patented Medicines (Notice of Compliance) Regulations

Statutory authority

Patent Act

Sponsoring department

Department of Industry

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The purpose of the proposed amendments to the Patented Medicines (Notice of Compliance) Regulations [PM(NOC) Regulations] is to reinforce the predictability, stability and consistency of Canada’s intellectual property (IP) regime for pharmaceuticals by reaffirming and clarifying the intended effect of a transitional measure included in an earlier round of amendments to the same underlying instrument. The intention of this measure was to ensure that patents protected under the PM(NOC) Regulations prior to 2006 (i.e. “grandfathered” patents) continue to enjoy that protection until expiry.

Background

On October 5, 2006, the PM(NOC) Regulations were amended to restore their original policy intent, which is to balance effective patent enforcement over new and innovative drugs with the timely market entry of their lower-priced generic competitors. (see footnote 1) Part of the 2006 amendments entailed reaffirming the requirements for listing patents on the patent register of the Minister of Health (Minister) and clarifying when listed patents must be addressed. These changes were necessary to clarify certain aspects of the regulatory language which had given rise to abundant and sometimes conflicting case law, particularly on patent listing issues.

Some of the amendments to the patent listing requirements made in 2006 confirm or build on the interpretation that prevailed in the jurisprudence at the time [e.g. new listing requirements governing what type of supplement to a new drug submission (SNDS) allows for the listing of a new patent on the register (see footnote 2)]. However, others depart significantly from, or reverse, settled case law (e.g. the broadening in scope of eligible subject matter to allow for the listing of dosage form patents (see footnote 3)).

Given the potential unfairness to patentees if patents submitted for listing under the Regulations in conformity with then-applicable jurisprudence were made subject to the new and different requirements in the 2006 amendments, the Government opted to “grandfather” them. (see footnote 4) The intention was to ensure that grandfathered patents remain subject to the listing requirements as they were interpreted and applied prior to June 17, 2006, the date on which the 2006 amendments were published in the Canada Gazette, Part I. In addition, the Government wanted to minimize any market disruption and investment uncertainty that could result from the application of the new requirements to patents already listed, or submitted for listing, on the register.

However, shortly after the coming into force of the 2006 amendments, the Supreme Court of Canada rendered a decision under the PM(NOC) Regulations as they were prior to those amendments. This decision cast doubt on some of the reasoning that had been employed by lower courts in their interpretation of the pre-amended version of the Regulations. Subsequently, the Federal Court of Appeal cited the Supreme Court’s decision in reversing its own previous ruling that a patent containing a claim for the medicine in a drug is listed generally against the drug, rather than against the specific submission for a NOC upon which the list is based. (see footnote 5) In circumstances where the submission in question is an SNDS, the Court came to the view that there must be relevance between the invention claimed in the patent and the change to the drug effected by the SNDS.

It is acknowledged that this new interpretation brings the old patent listing requirements closer into line with how the 2006 amended requirements are intended to operate. However, the Government is concerned that this may result in many patents submitted in full compliance with the listing requirements, as they were interpreted and applied prior to June 17, 2006, being deleted from, or not added, to the register. This could result in a sudden and unexpected loss of market exclusivity for a number of innovative drugs. The language of the grandfathering provision does not prohibit an evolution in the judicial interpretation of the old listing requirements. Nevertheless, the impact of such a marked departure from precedent would be inconsistent with the intention and purpose of the Government’s decision to grandfather the register.

The Government is also concerned about the possibility that the Court of Appeal’s recent decision to revisit its own precedent may be followed in other decisions. If the Supreme Court’s reasoning opens the door to a broader unsettling of the jurisprudence on the listing requirements as they were prior to the 2006 amendments, this would defeat one of the foremost benefits which the Government sought to achieve in clarifying those rules, namely a reduction in litigation. To ensure that this does not occur, the Government is proposing to amend section 3 of the PM(NOC) Regulations to prohibit the Minister from deleting grandfathered patents from the register, subject to certain common-sense exceptions. (see footnote 6) The Government is also proposing to amend section 3 to prohibit the Minister from refusing to add any such patent to the register solely on the grounds that it is not relevant to the SNDS in relation to which it is submitted. The Minister remains free to refuse to add a patent on other unrelated grounds, should they exist. A related proposed amendment to section 6 would prevent generic pharmaceutical manufacturers from seeking to have a prohibition application dismissed on the grounds that a grandfathered patent does not meet the listing requirements under the old PM(NOC) Regulations. This would effectively foreclose any additional litigation on this issue.

A number of transitional provisions are also included in the amendments which would undo any actions taken by the Minister in relation to grandfathered patents as a result of the above-mentioned decision of the Federal Court of Appeal. These provisions would enable a first person to make a written request that a patent on a patent list which the Minister had deleted from the register solely on the basis that it was not relevant to the SNDS in relation to which it was submitted for listing be added back to the register. They would also enable a first person to make a written request that a patent on a patent list which the Minister had refused to add to the register on the same singular basis be added to the register. In either instance, the Minister would be required to respond by adding the patent in question to the register within 30 days of the first person’s request. However, the addition of any such patent to the register would not operate as an impediment to a second person who has already filed a submission for a NOC comparing its drug to the drug against which the patent is listed.

A further transitional provision is proposed to ensure that the above-mentioned amendment to section 6 would not apply to a summary dismissal motion brought by a second person under subsection 6(5) before the date on which these Regulations are pre-published in the Canada Gazette, Part I.

Alternatives

In determining how best to address the grandfathering issue, the Government considered making a more targeted amendment that would only address the Federal Court of Appeal’s decision and would not foreclose future litigation on other eligibility questions in relation to grandfathered patents. While this approach was thought to have some advantages in terms of simplicity, it would leave the door open to potentially endless litigation and would be inconsistent with the overall policy thrust of the 2006 amendments to the PM(NOC) Regulations.

Consultation

In 2006, there were extensive consultations with stakeholders on the amendments to the PM(NOC) Regulations, including on the transitional measures. Given that the proposed grandfathering amendments reaffirm the intended effect of one such measure, the Government will pre-publish them in Part I of the Canada Gazette, followed by a shorter than average 15-day public comment period. During such time, interested persons may provide their views on the proposed amendments.

Benefits and costs

By clarifying the Government’s original intention that grandfathered patents should continue to benefit from the special protection provided by the PM(NOC) Regulations, the proposed amendments would reaffirm the stability, predictability and competitiveness of Canada’s IP regime for pharmaceuticals. In addition, it would close down further potential litigation on this issue. Innovative and generic pharmaceutical companies would thus be spared the associated legal costs of such litigation, and the courts the burden of adjudicating it.

The Government recognizes that one possible consequence of the proposed amendments is that some generic drug companies may not be able to enter the market with a generic version of a patented drug on the same date as had been expected if the Federal Court of Appeal’s decision were left to stand. While this could result in delayed savings to consumers and provincial drug plans, the Government considers these potential costs to be counter-balanced by the above-mentioned benefits, which are fundamental to the innovative industry’s continued confidence in Canada as a place to invest in research and development and as a market in which to bring new and better products.

Compliance and enforcement

The courts and the Minister will continue to exercise jurisdiction over issues related to the administration of the PM(NOC) Regulations.

Contact

Susan Bincoletto
Director General
Marketplace Framework Policy Branch
Industry Canada
East Tower, 10th Floor
235 Queen Street
Ottawa, Ontario
K1A 0H5
Telephone: 613-952-0736
Fax: 613-948-6393
Email: bincoletto.susan@ic.gc.ca

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to subsection 55.2(4) (see footnote a) of the Patent Act (see footnote b), proposes to make the annexed Regulations Amending the Patented Medicines (Notice of Compliance) Regulations.

Interested persons may make representations concerning the proposed Regulations within 15 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Susan Bincoletto, Director General, Marketplace Framework Policy Branch, Industry Canada, 10th floor, East Tower, 235 Queen Street, Ottawa, Ontario K1A 0H5 (tel.: 613-952-0736; fax: 613-948-6393; e-mail: bincoletto.susan@ic.gc.ca).

Ottawa, April 17, 2008

MARY PICHETTE
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE PATENTED MEDICINES
(NOTICE OF COMPLIANCE) REGULATIONS

AMENDMENTS

1. The definition “court” in section 2 of the Patented Medicines (Notice of Compliance) Regulations (see footnote 7) is replaced by the following:

“court” means the Federal Court or any other superior court of competent jurisdiction; (tribunal)

2. The Regulations are amended by adding the following after section 3:

3.1 (1) The Minister shall not delete from the register a patent on a patent list that was submitted before June 17, 2006, unless

(a) the patent has expired;

(b) a court has, under subsection 60(1) of the Patent Act, declared that the patent is invalid or void;

(c) the identification number assigned to the drug in respect of which the patent is listed is cancelled under paragraph C.01.014.6(1)(a) of the Food and Drug Regulations; or

(d) the patent is found, under paragraph 6(5)(a), not to be eligible for inclusion on the register.

(2) The Minister shall not refuse to add to the register a patent on a patent list that was submitted before June 17, 2006 solely on the basis that the patent is not relevant to the submission for a notice of compliance to which the patent list relates, where the submission is a supplement to a new drug submission as that term is used in Division 8 of Part C of the Food and Drug Regulations.

3. (1) The portion of subsection 6(5) of the Regulations before paragraph (a) is replaced by the following:

(5) Subject to subsection (5.1), in a proceeding in respect of an application under subsection (1), the court may, on the motion of a second person, dismiss the application in whole or in part

(2) Section 6 of the Regulations is amended by adding the following after subsection (5):

(5.1) In a proceeding in respect of an application under subsection (1), the court shall not dismiss an application in whole or in part solely on the basis that a patent on a patent list that was submitted before June 17, 2006 is not eligible for inclusion on the register.

TRANSITIONAL PROVISIONS

4. (1) The following definitions apply in this section.

“new drug submission” means a new drug submission as that term is used in Division 8 of Part C of the Food and Drug Regulations. (présentation de drogue nouvelle)

“supplement to a new drug submission” means a supplement to a new drug submission as that term is used in Division 8 of Part C of the Food and Drug Regulations. (supplément à une présentation de drogue nouvelle)

(2) Other words and expressions not defined in subsection (1) have the same meaning as in the Patented Medicines (Notice of Compliance) Regulations.

(3) If, after March 27, 2007, the Minister of Health deleted from the register a patent on a patent list that was submitted before June 17, 2006 solely on the basis that the patent is not relevant to the submission for a notice of compliance to which the patent list relates and if that submission is a supplement to a new drug submission, the first person may, within 30 days after the day on which this section comes into force, deliver a written request to the Minister asking that the patent be added to the register.

(4) The Minister of Health shall, within 30 days after the day on which the request referred to in subsection (3) is received, add the patent to the register.

(5) If, after March 27, 2007, the Minister of Health refused to add to the register a patent on a patent list submitted before June 17, 2006 solely on the basis that the patent is not relevant to the submission for a notice of compliance to which the patent list relates and if that submission is a supplement to a new drug submission, the first person may, within 30 days after the day on which this section comes into force, deliver a written request to the Minister asking that the patent be added to the register.

(6) The Minister of Health shall, within 30 days after the later of the day on which the request referred to in subsection (5) is received and the day on which the notice of compliance referred to in that subsection is issued, add the patent to the register.

(7) Subsection 6(5.1) of the Patented Medicines (Notice of Compliance) Regulations does not apply to a motion of the second person brought under subsection 6(5) of those Regulations before the date of the publication of these Regulations in Part I of the Canada Gazette.

COMING INTO FORCE

5. These Regulations come into force on the day on which they are registered.

[17-1-o]

Footnote 1
The Regulatory Impact Analysis Statement (RIAS) accompanying SOR/2006-22 contains an in-depth discussion of that policy, as well as of the role played by the PM(NOC) Regulations.

Footnote 2
Subsection 4(2) of the amended Regulations and Hoffman-La Roche Ltd. v. Canada (Minister of Health), 2005 FCA 140; (2005), 253 D.L.R. (4th) 644; (2005), 40 C.P.R. (4th) 108.

Footnote 3
Paragraph 4(2)(c) of the amended Regulations and GlaxoSmithKline Inc. v. Canada (Minister of Health), 2005 FCA 197, Pelletier, J. A.

Footnote 4
Section 6 of the transitional provisions provides that “Section 4 of the Patented Medicines (Notice of Compliance) Regulations, as enacted by section 2 of these Regulations, does not apply to patents on a patent list submitted prior to June 17, 2006.”

Footnote 5
Ratiopharm Inc. v. Wyeth and Wyeth Canada, 2007 FCA 264.

Footnote 6
This includes situations where the patent has expired or been declared invalid in an action under the Patent Act, where the identification number assigned to the drug in respect of the patent is listed is cancelled under the Food and Drug Regulations, or where the patent is found under paragraph 6(5)(a) of the PM(NOC) Regulations to be not eligible for inclusion on the Patent Register.

Footnote a
S.C. 2001, c. 10, s. 2(2)

Footnote b
R.S., c. P-4

Footnote 7
SOR/93-133

NOTICE:
The format of the electronic version of this issue of the Canada Gazette was modified in order to be compatible with extensible hypertext markup language (XHTML 1.0 Strict).