Latest draft Canada/European Union IP Chapter

Michael Geist provides a link and a report on an updated version of the draft chapter on intellectual property being negotiated in the Canada/European Union trade agreement talks.

It is really quite long - covering all the main areas of IP. Interestingly, there are only a few areas where Canada has proposed substantive alternative language - its mainly a wish list for the EU.

Canada has proposed alternative language on geographical indications and data protection - providing at least some indication that Canada is concerned about adopting the EU position on those points. However, that might be reading too much into a draft document - if, for example, Canada is utterly opposed to patent term extension, then you wouldn't expect Canada to propose alternative language on patent term extension in a draft of the chapter - Canada would simply say no.

I note that the European language that would require Canada to grant parallel copyright and industrial design protection has been amended to remove the requirement.

What I'm finding most interesting today - although I don't have time to go on at length - is the European proposal for an institution to be established to oversee implementation of the chapter on intellectual property. With no details provided, it is difficult to say too much about it, other than to point out its potential. But, institutions to monitor compliance, gather and exchange information and allow for regular meetings and exchange of ideas have played a huge role in international thinking and harmonization in a wide range of fields, including IP.

Gilbert's new-ish website "Law firm website of the month"

The lawandstyle (Precedent Magazine) blog recognizes the new-ish Gilbert's website as "Law firm website of the month" and interviews Aidan Butler (a generally useful person) about it.

Ontario's generic drug policies: still up in the air?

Adam Radawanski, who I think is the reporter showing the most interest in the ongoing pharmaceutical regulation in Ontario issue, had an article in Friday's Globe titled "Looks deceiving in Ontario's generic-drug strategy". The key quote:

"Predictably, Finance Minister Dwight Duncan touted the imminent drug savings in his budget speech – the first time the Liberals have made much effort to publicly sell their reforms. But less predictably, the government also gave some observers the impression that it was already moving through with those reforms, by including them in its budget implementation bill.

In reality, all the budget bill will achieve is the really easy part. By changing some definitions, it will pave the way for the government to do away with “professional allowances” – the industry quirk that wildly inflates the price of prescriptions. But it won’t actually eliminate them, nor will it address the many challenges that will arise from doing so."

Ontario budget targets pharmacists - the end of allowances?

The Ontario Government handed down its budget yesterday. The government is running a big deficit, and health care costs eat up an ever-larger portion of the budget (estimated at 45% of program spending this year). So, included in the budget are measures designed to slow the growth in spending on pharmaceuticals - specifically, slowing spending on generic drugs by forbidding professional allowances.

According to news reports, the government will ban the payment of allowances to pharmacists. Rebates - i.e. paying back to pharmacists X% of the purchase price of the nominal cost of the drugs - have been forbidden since 2006; however, the 2006 legislation left professional allowances on the table. Professional allowances are substantial: reportedly $750 million in 2008-09 - for comparison, the province spent about $800 million on generic drugs the same year (see National Post article). The 2010 budget re-enacts the legislative definition of "rebates" to catch professional allowances.

Obviously, on its face this loss of $750 million in income is a big issue for pharmacists. As this article in the Toronto Star reports:

"The finance minister said he's ready for flak from generic drug makers who fear losing competitive advantage and from pharmacies – which have already hired scores of lobbyists to plead their case – worried about lost income.

"I'm sure there will be some groups not happy," Duncan said."

Intellectual Property and the Canada/EU Free Trade Agreement: time to pay attention

Canada and the European Union are negotiating a free trade agreement ( CETA ), and I don’t think the Canadian IP community has been paying enough attention. After all, how often does Canada negotiate an intellectual property treaty with a giant partner that cares about Canada’s IP systems? There’s the potential for significant impact on Canada’s IP regime – perhaps greater than the TRIPs Agreement (which was largely anticipated in Canada by the CUSFTA and NAFTA negotiations and Agreements).

The EU’s draft chapter on intellectual property rights – presumably the EU’s starting negotiating position – has been leaked. It came to my attention via Michael Geist's blog, who has mainly focused on copyright issues; but there are several other interesting points in the patent and trade-mark areas.

It should be kept in mind that this is a draft position, not a final document. For all I know, the entire chapter will be scrapped when the final draft treaty comes out. Although I doubt that – official documents over several years including the “scoping exercise” have highlighted intellectual property as a core part of the agreement. IP chapters now seem to be firmly entrenched in the archetype for free trade deals. I could see the two sides digging in their heels on any number of points, however.

From another viewpoint, it is interesting to observe how Canada’s intellectual property laws are influenced by lobbying and through international treaties. When I’ve mentioned this draft to some people, their reaction is “wait a minute – in the US, provision X was balanced out by provision Y – you can’t have X without Y! These things have to balance!” Others ask “is there any reason to think that Canada’s laws on X need to be fixed? Any evidence?”
I think this reflects a lobbying mindset – i.e. that laws are set largely through lobbying by interested groups, which often circle around trade-offs and can be bolstered through argument or evidence of effects. But laws are also influenced by treaties – and yes, the perceived self-interest of states in negotiations is probably set by interest groups, but the context of engagement is different. Specifically, one gets a different set of trade-offs – instead of, for example, trading off the interests of generic versus innovative pharma groups, there might be a trade-off between Canada’s position on intellectual property for pharmaceuticals versus agricultural issues. Also, different people are doing the negotiating – trade negotiators will bring a trade-law mindset to negotiations as opposed to an IP-mindset or pharmaceutical-mindset. More bluntly, the years of lobbying person X at Health Canada might be futile when person Y at the Department of Foreign Affairs and International Trade is the person making the important decisions (and he thinks that pesky person X is pushing a narrow-view agenda compared to the important project of Constructing the International Trade System… etc. etc. )

Suffice it to say I find this all fascinating, but I won’t bore you with an endless diatribe (for that, see my hypothetical book… assuming it ever appears ;) ).

Speaking of the perceived self interest of states and interest groups… it seems that Canadian officials have been disappointed with the lack of commentary and input from Canadians, and are still actively seeking feedback although the official deadline for consultations has passed. This leaked document is a big insight into a (regrettably?) opaque process - maybe now is a good time to speak up before positions are hardened.

Meanwhile, here are the specific points I find interesting (largely ignoring copyright).

1) Data protection for pharmaceuticals

Most importantly, the EU position is that data protection should apply to “data submitted for the purpose of obtaining an authorization to put a pharmaceutical product on the market.” Canada grants data protection only for pharmaceuticals that are “innovative drugs”, and in the mid-2000’s there was a storm of lobbying about the meaning of innovative drugs. The EU position would get rid of all that fussing about with innovative drugs, and just grant data protection widely.

The EU also wants to extend Canada’s data protection regime to 8+2 years rather than the present 6+2 – i.e. no filing an application relying on someone else’s data for 8 years, and no granting an authorization that relies on the data for 10 years.

The EU position is also to extend the period to 11 years if the holder of the basic authorization obtains another authorization for new therapeutic indications of significant clinical benefit compared to existing therapies.

2) Patent term extension

Unsurprisingly, the EU would like Canada to implement patent term extension.

Whatever one thinks of this, the proposed mechanism seems unrealistic – “the period that elapses between the filing of the application for a patent and the first authorization to place the product” on the market minus five years. There is no mention of the actions of the pharmaceutical company in here – i.e. did they move promptly to get marketing approval, or sit on it for ten years? There have been cases in Canada where the marketing approval comes after the expiration of the first relevant patent. This seems to be a free pass for applicants to dawdle.

3) Data protection for plant protection products

Personally, I was unfamiliar with the term “plant protection products” or the idea of granting data protection for related “test or study reports”. A quick google search suggests that plant protection products is a European term which basically means pesticides and herbicides –

“Plant protection products: these are products consisting of, or containing, active substances, safeners or synergists, intended for one of the following uses:
• protecting plants or plant products against all harmful organisms or preventing the action of such organisms, except if they are mainly designed for reasons of hygiene rather than protection of vegetables or vegetable products;
• influencing the life processes of plants, other than as a nutrient (e.g. plant growth regulators);
• preserving plant products, in so far as such substances or products are not subject to Community provisions on preservatives;
• destroying undesirable plants, or parts thereof, with the exception of algae;
• checking or preventing undesired growth of plants, except algae.”

My quick read is that this does not apply to genetically modified organisms (GMOs), although it would apply to pesticides and herbicides designed to be applied to GMOs.

In any case, if a test or study report is necessary for the marketing authorization of the plant protection product, the EU would like a ten year period of data protection to apply starting at the date of first authorization in Canada, to be extended to 13 years for “low risk” plant protection products.

3) Copyright for industrial designs

The EU would like industrial designs to be eligible for copyright protection. This is the opposite of Canada’s present law, which states that copyright cannot be enforced if 50 articles are produced to which the design is applied.

4) Patent Law Treaty

The EU wants Canada to comply with Articles 1 to 16 of the Patent Law Treaty (Geneva, 2000). Canada signed the treaty, but I believe has not implemented it. I don’t think the Patent Law Treaty is particularly contentious – it focuses on the formalities and procedures to obtain a patent – but it might be embarrassing for Canada to implement it while ignoring various copyright treaties that are similarly signed but not implemented.

5) Legal procedures and remedies

The EU draft chapter also has a lengthy section setting out minimum standards for courts and enforcement – i.e. who is entitled to enforce IP, discovery obligations, anton piller and mareva orders, the availability of costs, interlocutory injunctions, what looks like a new legal tool to force disclosure of the distribution networks of infringing goods, the recall from the channels of commerce and destruction of infringing goods, permanent injunctions, the calculation of damages (including elements other than economic factors, such as “the moral prejudice” caused to the right holder), the publication of judicial decisions, border measures, and the standards applicable to administrative procedures.

This section probably has parts that have bite in terms of changing Canadian laws – but I suspect that a big motivation here for the EU and perhaps for Canada is to set precedents for use in other contexts with other countries.


6) Geographical Indications

What would a discussion of European intellectual property concerns be without a reference to geographical indications? Prepare for more fussing about Parma, (C)cheddar and Roquefort cheese, (C)champagne and Newcastle Brown Ale.

McGuinty government only winning half the war on drugs

Sure, the Liberals have saved Ontario taxpayers millions; but, as a result, most Ontarians under the age of 65 pay more for drugs

From today's Globe and Mail (Adam Radwanski)

According to industry observers, the costs of company drug plans are rising by 10 to 15 per cent annually. The result is that those plans are covering less, with Ontarians who don't qualify for the ODB forced to pick up a growing percentage of prescription prices.

It wasn't intended that way. But since Bill 102 overhauled the province's prescription policies four years ago, the consequence has been a large discrepancy between what the public and private drug plans pay for both brand and generic pharmaceuticals.

... [go read the article ;) ]

As a result, while the government is paying much less for generics than it used to, private plans and cash-paying customers have seen prices go up by nearly an equivalent amount.

And why does the public end up in this situation?

The system has evolved this way without most Ontarians noticing, because there's no organized lobby protesting the rising private costs.

A pithy comment on how pharma regulation works...

Teva (Novopharm) buys ratiopharm

See previous post here. Novopharm is the #2 Canadian generic by sales in 2007; ratiopharm was the #4.

Article in NY Times is here. Price: $5 billion.

Ontario pharma rebate program threatened by freedom-of-information disclosure

From today's Globe and Mail (Adam Radwanski):

For the past four years, Ontario has been buying brand drugs for well below the going rate. But an elaborate payment system has been set up to prevent anyone else from finding out exactly how much the government has been paying.

Now, that information might be on the verge of becoming public. And drug companies, fearing national and even international repercussions, appear to be in a panic.

In addition to the size of the rebates, another issue is the terms under which the rebate is given - for example, if the deal obligates the Ontario government to purchase beyond the expiration date of related patents, there is the possibility of antitrust/competition law or patent misuse/abuse problems with the deal.

Bidding war for ratiopharm

Interesting news item: Pfizer and Teva and Actavis are in a three-way bidding war to purchase ratiopharm.

Teva and Actavis are generic drug companies, so its not surprising that they want to buy ratiopharm, which is also a generic drug company. Its interesting that Pfizer would like to buy ratiopharm.

Its another reflection of the blending of "innovative" or "brand name" pharmaceutical companies. (I had a discussion about this with Jocelyn Mackie this morning, so what follows is her thoughts as well as mine)

Innovative companies have been moving into the generic space for a while. One common way to do so is to do what Pfizer is trying to do - buy an established generic drug manufacturer. Another way is for a innovator company to license a generic manufacturer to begin production of a generic product even while the innovator company is still supplying a patent-protected (and more expensive) version - i.e. authorized generics. Or, the brand name company can produce a second version of their product, separately branded and at a lower cost point, then their more-expensive version. Or, most dramatically, as they see their patent protection about to expire, they can reduce their prices for their brand-name product to generic levels and refuse to concede the post-patent market to the generic drug companies.

At the end of the day, the industry is evolving so there is not not as much difference between "innovative" and "generic" drug companies - there may just be pharmaceutical drug companies with different strengths in different product areas and marketing capabilities. Company A may be strongly "innovative" (i.e. lots of patent protection) in one sector and simultaneously compete as a generic in another sector. A more resilient distinction may be in their marketing capabilities - some (innovative) companies have built large sales forces to sell to individual doctors, while other (generic) companies have developed strengths in dealing with pharmacies and governments which does not involve as large a sales force or the same capabilities.

This challenges many fundamental assumptions about public policy in the pharmaceutical arena. Generally, in the past it was easy to assume that innovative and generic companies are fundamentally different, and never the twain shall meet. That assumption is going a bit by the wayside.

This would affect, for example, provincial governments deciding which drugs to place on the formulary and what price to pay for pharmaceuticals. It affects tendering schemes and other price control schemes, which I've written about before. It affects the antitrust analysis of patent settlements in the pharma area. It affects the working of Hatch-Waxman and the PM(NOC) Regulations. It also raises questions about future interest-group lobbying - the commonality of interest between certain groups of companies is eroding. And it is heavily affects consideration of biologics and second-entry biologics - in fact, biologics is probably accelerating the blending of the traditional innovative and generic pharma markets.

Note that I linked to ratiopharm's Canadian website. ratiopharm is a significant player in the Canadian generic marketplace - this 2007 Competition Bureau report states that in 2006, ratiopharm was the fourth largest Canadian generic company measured by sales. Teva, which owns Novopharm, was number two.

What is implied by a patent under international law?

An interesting blog and responses by Simon Lester on his International Economic Law and Policy blog HERE. It asks whether there is "anything in TRIPS that would restrict the ability of a state to set price controls on patented pharmaceutical products."

It seems to me that there is some logic to saying that the minimum standards for a "patent" under international law (including TRIPs) include some ability for the owner to potentially profit from it - and (to be blunt) the countries that have signed on to TRIPs had at least that in mind. But that is still a long way from concluding that no price controls are allowed at all.

Another interesting question (to me, anyway ;) ) is whether it matters what state is doing the price controls. It seems to me that whether a price control is TRIPs-compliant would be a highly factual question - i.e. how is the price control being implemented, on what grounds, is it across the board or on a drug by drug basis, and on what basis is the price ceiling set? And if so, does it matter whether the country is poor or rich? Wracked by disease (say, AIDS) or relatively healthy? Is there more unwritten leeway for a least developed country to implement price controls than, say, Canada?