Private Member´s Bill Proposes Repeal of NOC Regulations

Edited by Hafeez Rupani and Wendy Wagner

A private member's bill entitled "An Act to amend the Patent Act" (Bill C-274) was introduced before the House of Commons on November 15, 2004, by the NDP member for Windsor West, Brian Masse. The stated objects of the Bill are to:

1. exclude medicines from the scope of the regulation-making power provided for in subsection 55.2(4) of the Patent Act;
2. make other amendments to reduce the extent of patent protection for medicines; and
3. repeal the Patented Medicines (Notice of Compliance) Regulations ("NOC Regulations").

The Bill also proposes to provide for payment of damages that may be sought by a generic manufacturer from an innovative drug manufacturer, by way of a set formula.

The object of Canada's pharmaceutical patent policy is to allow generic drug manufacturers to develop generic drugs during the innovator's patent term while ensuring that the rights of the patentee are respected. The "early working" exemption found in the Patent Act allows generic competitors to undertake activities necessary to work up a submission to obtain regulatory approval for a drug. The NOC Regulations, which came into effect on March 12, 1993, permit the innovator to apply to the Federal Court to test the issues of patent infringement before a generic product is on the market.

The Regulatory Impact Analysis Statement (RIAS) accompanying the NOC Regulations in 1993 states that:

"These Regulations are needed to ensure this new exception to patent infringement is not abused by generic drug applicants seeking to sell their product in Canada during the term of their competitor's patent while nonetheless allowing generic competitors to undertake the regulatory approval work necessary to ensure they are in a position to market their products immediately after the expiry of any relevant patents."

In the absence of the NOC Regulations, innovative drug manufacturers would have to bring an action for patent infringement in the courts to seek recourse against generic drug manufacturers who enter the market during the patent term. The Bill would also be punitive to innovators who have exercised their right to bring prohibition proceedings under the NOC Regulations, since damages would be available to a generic manufacturer for all prohibition orders granted under the NOC Regulations from 1993 to present.

Regulations Repealed And No Replacement Available

Bill C-274 would repeal the NOC Regulations, and would add a new subsection to the Patent Act with the effect that no substitute regulatory system could be put in place under the current provisions of the Patent Act.

All Orders Granted In Favour Of Innovator Are Reversed

The Bill would reverse any prohibition order made by the Federal Court under the NOC Regulations where the court found in the innovator's favour on the issues of infringement. Under these orders, the court prohibited the Minister of Health from issuing marketing approval to a generic manufacturer until patent expiry. All orders granted since the NOC Regulations came into force in 1993 would be reversed. The effect is that the innovator patentee would need to start full infringement proceedings to protect its patents.

The Bill provides that any current court case, where an innovator has applied to the Federal Court under the NOC Regulations to stop a generic manufacturer from obtaining marketing approval until after patent expiry, would be dismissed. The effect is that, instead, to protect its patents, the innovator would need to commence a patent infringement suit.

Date Of NOC Issuance

The Bill provides that the Minister of Health must issue a certificate specifying the date on which the generic manufacturer's NOC would have been issued. Effectively, the Minister must provide a date from which the generic would have proceeded through the regulatory approval process, and would have satisfied Health Canada's safety and efficacy requirements.

Innovator Shall Pay The Generic's Court Costs And Damages

The Bill provides that the innovator shall pay to the generic manufacturer:

1. compensation for court costs incurred during litigation under the NOC Regulations, on a "solicitor and client" basis, assessed from the date the NOC would have issued to the date the NOC did actually issue; and
2. damages, in an amount to be determined by a court.

This provision would permit a generic manufacturer to seek costs and damages from an innovator who had in the past used the NOC Regulations. The Bill would compensate the generic manufacturer for any delay in obtaining marketing approval that resulted from the operation the NOC Regulations, even if the innovator won on the issues of infringement.

Formula For Damages To Be Paid

The Bill would prescribe the amount of damages to be payable to a generic manufacturer as the number of prescriptions that would have been issued for the generic drug (deemed to be 50% of the innovator's prescriptions that issued during the period from which the NOC was approvable to the date the NOC issued) multiplied by the price of the generic product (deemed to be 75% of the innovative product).

The Bill provides a series of definitions, most of which are taken from either the current NOC Regulations or the Food and Drug Regulations. The definition of "court" is defined to mean "any court of competent jurisdiction". This would mean that proceedings for damages could proceed before any court of Canada or any other superior court of competent jurisdiction.

The Bill provides that the generic manufacturer still has a right to commence or continue actions under Section 8 of the current NOC Regulations.

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