Tuesday, December 23, 2008

Court denies data protection: first test of new Food and Drug regulations

An article by Alison Lester

The Federal Court determined that EBIXA was not entitled to data protection because it received marketing approval in 2004 and refused to prevent two generic companies from comparing products to EBIXA for the purpose of obtaining regulatory approval.

On December 16, 2008, Justice Lemieux dismissed proceedings brought by Lundbeck Canada Inc. against ratiopharm Inc. and Cobalt Pharmaceuticals Inc (2008 FC 1379).

Both ratiopharm and Cobalt are seeking regulatory approval (i.e., receipt of a Notice of Compliance, or NOC) of memantine hydrochloride products. In their regulatory submissions, both ratiopharm and Cobalt compared their memantine hydrochloride products to EBIXA, which is currently marketed in Canada by Lundbeck Canada Inc. pursuant to a NOC with conditions obtained in 2004.

Lundbeck argued that because its NOC is subject by Health Canada to certain conditions, EBIXA cannot be used as a reference product in any generic regulatory submission. Furthermore, Lundbeck argued that EBIXA should be entitled to data protection once the conditions are removed from its NOC.

The court rejected Lundbeck’s argument, holding that there is no difference between a NOC and a NOC with conditions because under the Food and Drugs Act Lundbeck cannot market its product at all without a NOC. The court concluded that the NOC with conditions is a term coined for administrative convenience and has no legal effect. Accordingly, EBIXA is an appropriate reference product for generic submissions.

The court went on to reject Lundbeck’s attempt to secure data protection for EBIXA, finding that the old data protection regime continues to apply to a product that obtained a NOC before June 17, 2006, regardless of any conditions placed on the NOC.

The court also based its decision on two technical grounds. Firstly, that a brand company has no standing to challenge the regulatory review of a generic company’s product or the Minister’s application of the data protection provisions during the course of that review.

Secondly, the court determined that the Minister’s decision to accept ratiopharm and Cobalt’s regulatory submissions for review was an interlocutory decision and therefore not subject to judicial review.

Alison Lester
Gilbert’s LLP

Monday, December 22, 2008

Accounting of Profits CIPR Article...

Just cleaning up my office, and I don't think I ever posted about this article coming out...

Accounting of Profits in Intellectual Property Cases in Canada (2007)

Norman Siebrasse, Alexander Stack, and the Cole & Partners IP Litigation Support Group
(2008) Vol 24 No. 1 Canadian Intellectual Property Review, pp 83-136

We (members of Cole & Partners and I) first published an article on this topic in 2001. New with this version is the addition of Norman Siebrasse as an author, which brought another dimension and perspective to the article.

This is an update - and the law has arguably moved quite a bit since 2001, particularly in light of the Supreme Court of Canada decision in Schmeiser. The remedy portion of the Schmeiser decision arguably (and I personally think quite probably) points out that the proper measure of an accounting of profits is the difference between

"the defendant's profit attributable to the invention and his profit had he used the best non-infringing option"

and not

"expenditures made to produce and sell the infringing articles and the receipts therefrom".

Since the accounting of profits (and not damages - sorry, that's a pet peeve of mine ;) ) is traditionally the main monetary remedy for patent infringement in Canada, the remedy section of the Schmeiser decision may end up being of greater long term importance than all that fussing about genes, cells and canola ;).

An earlier version of this article is available on the Cole & Partners website .

Wednesday, December 3, 2008

Competition Bureau Report on the Generic Drug Industry

Grade: Incomplete ;)

As noted below, last Thursday (November 25), the Competition Bureau came out with “Benefiting from Generic Drug Competition in Canada: The Way Forward”. This was the second report in an ongoing advocacy effort by the Competition Bureau to encourage governments to adopt policies that will increase competition in the generic drug industry (see http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/h_02704e.html, which discusses the Bureau’s health industry efforts).

Inevitably, this sort of report always contains lots of grounds for criticism, and I have little doubt that criticisms will appear in print (and, of course, behind the scenes) in the near future. But when I read this report, one big comment leaps to mind. (and I think its a whale*)

This report ignores the role of generic drug companies in making drugs “generic” in the first place. As a result, it risks recommending measures that might decrease the cost of generic drugs but increase the cost of pharmaceuticals to Canadians overall. It also misses the opportunity to investigate which measures might best decrease the cost of generic drugs to consumers while maintaining the pipeline of drugs moving to a generic, multisource market.

“Brand name” drugs are drugs protected by patents held by the producing company. As with patents in all industries, some patents issued in the pharmaceutical industry are invalid (i.e. never should have been issued in the first place) or issued with claims that are too broad. In most industries, a company that sees a competitor with patents that it thinks are invalid or too broad may choose to simply launch its product and see if the competitor wishes to risk its (weak?) patent position in a lawsuit.

The pharmaceutical industry is different. Under the PM (NOC)** regulations, a generic company that wants to bring a product to the marketplace that is nominally protected by a patent must notify the patent owning brand name company. Under the regulations, the brand company can then begin a proceeding for a non-binding determination of whether the generic company’s products would infringe the patent – and obtain an automatic 24 month injunction forbidding Health Canada from giving permission to the generic company to market a generic version of the drug. Meanwhile, if the generic loses the non-binding, summary proceeding (a proceeding with only limited evidence and argument), Health Canada is permanently forbidden to allow the generic product on the market until the final expiry of the patent. On the other hand, if the brand name company loses, it still can get a second kick at the can by suing the generic for patent infringement.

In other words, pharmaceutical patents by government regulation pose greater barriers to entry than patents in other industries. Generic companies must surmount these hurdles before bringing their less expensive medicines to the public.

And this costs money.

The PM(NOC) system rests, as a matter of policy, on generic drug companies with the capability and interest in supporting patent challenges. This may be looked at in two ways: are the Canadian markets for generic drugs profitable enough to justify a generic company spending money to challenge patents via the PM(NOC) process?; and do the generic drug companies interested in the Canadian market have enough reliable profits to fund the risky endeavour of challenging questionable patents?

In other words, reducing the profitability of generic drug companies that supply the Canadian market – for example, in the pursuit of lower prices for the paying public – comes at a cost of reducing challenges to pharmaceutical patents in the future. Given the high expense of pharmaceutical drugs, and a typical drop of some 80% in costs for a medicine after it becomes generic, the costs to consumers of delaying the move of even a few drugs to a generic status via patent challenges – i.e. maintaining higher prices for presently-patented drugs - could easily outweigh the benefits of lower generic drug prices. For example, one year of Lipitor freed of patent protection and supplied at generic rather than brand name prices would be word hundreds of millions of dollars alone. Recall that generic drugs are already off-patent, and thus relatively inexpensive.

This is a key trade-off in health policy in respect of pharmaceutical pricing. The generic and patented drug markets are directly connected in Canada, and their effects on consumer welfare cannot be coherently analyzed in isolation.

However, there is no mention of this trade-off in the latest Competition Bureau report – and scarce mention in the previous report in 2007. The latest report seems to assume that drugs become generic following patent expiry, and simply goes on to discuss how competition may be improved in the already-generic drug market.

This lack of attention is particularly worrisome, since the Competition Bureau report finds that competition among generic drug companies is already fierce – suggesting that policy changes that further squeeze the profitability of generic drug companies may have a meaningful and negative impact on these companies’ ability to fund future patent challenges.

Undoubtedly, this is a difficult trade-off, and really needs to be addressed through empirical investigation. Of course, this is easier said than done – for example, the European Competition Commission report on the pharmaceutical industry in Europe*** is admirably empirical, but obviously a huge undertaking (the results are not directly applicable in Canada, since Europe does not have a PM(NOC)-style linkage system).

However, the Competition Bureau is presumably motivated by consumer welfare – and when making policy analyses and recommendations in an industry, it should at least raise the more obvious routes through which the industry being studied affects consumer welfare, even if only to clearly state that its recommendations are limited by a lack of empirical knowledge on a particular point.

The absence of discussion on this point in the Competition Bureau’s report is unfortunate, as there is no necessary conflict between the goals of lowering generic drug prices for consumers and maintaining the incentives and ability of generic drug makers to challenge pharmaceutical patents. There are many players involved in the generic drug market other than generic drug manufacturers, and the Competition Bureau report itself has several suggestions to lower the cost of generic drugs to the public that would not meaningfully affect the profitability of generic drug companies.

Even if one considers measures aimed specifically at achieving lower drug prices from the generic drug companies, such measures could be designed to maintain an incentive for generic drug companies to challenge patents. For example, one could temporarily allow the first generic to successfully challenge a patent to temporarily be the only generic in the market – say, for six months, as is done under equivalent legislation in the United States. Similarly, provinces could implement progressively more aggressive pricing strategies over time starting from a successful PM(NOC) challenge, thus maintaining some reward for challenging patents.

Personally, I hope to see issues like this highlighted in the next Competition Bureau study.

* In keeping with my recent focus on harpooning whales, not minnows ;)
**Patented Medicines (Notice of Compliance)
*** http://ec.europa.eu/comm/competition/sectors/pharmaceuticals/inquiry/index.html

Monday, December 1, 2008

I have published an article on the Ontario tendering situation in the latest issue of the Food and Drug Law Institute's Update magazine.

I will post a link to the actual article here if I can figure out how to do so ;).