Canada: Pharmacapsules@Gowlings – February 2006

Last Updated: March 23 2006

Edited by Adrienne Blanchard and Jennifer Wilkie


  • Transfer Pricing Issues
  • Quebec Denies Certification Of Pharmaceutical Class Action
  • PMPRB Announces Increased Enforcement Activities
  • Cancer Drug Access And The Canada Health Act
  • Proposed Changes To U.S. Patent Rule Not Welcomed By Biotech Industry
  • Online Pharmacists Seek Clean Slate With New Conservative Government
  • Release Of Draft Guidance Document For Drug Submissions In Electronic Format
  • Recent Cases

Transfer Pricing Issues

Possible consequences of several recent changes (particularly those in Canada) to the allowed profitability of R&D activities are considered by Dr. Jamal Hejazi, member of the Gowlings Transfer Pricing Goup, in the article, "Transfer Pricing Within the North American Pharmaceutical Industry: Has There Been a Structural Shift in Risk?". Considering the focus on the alleged profitability of e.g. marketing and distribution activities, Dr. Hejazi states his reasons for fearing that the high returns for R&D activities, needed to make their business a success, are being diminished.

The full text of the article can be seen on Gowlings website.

For more information on transfer pricing issues, please contact Gowlings' Chief Economist, Jamal Hejazi Ph.D.

Quebec Denies Certification Of Pharmaceutical Class Action

On January 17, 2006, the Quebec Superior Court refused to authorize a class action in a case that was brought based on information reported in an article printed in La Presse. Justice Roy held that despite the amendments made in 2003 to the Code of Civil Procedure (CCP) intended to reduce the criteria for instituting a class action suit, there is still a minimal factual foundation that must be demonstrated to a Court before it can authorize a class action.

The case began in February 2003, when a proposed class action was filed against several generic pharmaceutical manufacturers for allegedly giving out "illegal" rebates and other benefits to pharmacists in Quebec and other provinces. The suit was based on information contained in La Presse.

Justice Roy's decision re-establishes a balance between the amendments to the CCP in January 2003, which lessen a petitioner's burden to provide evidence in support of a certification motion, and the requirement to include precise and sufficient facts to allow a Court to determine whether the requirements for instituting a class action have been meet.

For more information, please see:

Also, please see the judgment in Option Consommateurs et al. c. Novopharm Ltd. et al., 2006 QCCS 118 (in French)

PMPRB Announces Increased Enforcement Activities

The PMPRB signalled in its January 2006 Newsletter that there will be increased enforcement activities. As recent evidence of this, one can point to the hearing notices that issued in respect of two drugs during the month of January.

The January 2006 Newsletter also reviews the Federal Court decision in Hoechst Marion Roussel Canada Inc. v. Attorney General of Canada. The Federal Court held that, as a patent application only gives rise to a potential grant of a patent, the PMPRB is not authorized to assert jurisdiction over a medicine until a patent is issued. However, the PMPRB comments in its newsletter:

"Patentees will be interested to know that the HMRC decision does not affect the Board's present policy on patent pending, which is to assert jurisdiction retroactively to review the price at which the medicine was sold during the pre-grant infringement period, once the patent issues".

The January 2006 Newsletter also reports on:

  • the PMPRB's new initiative to monitor and report on non-patented drug prices; and
  • voluntary compliance undertakings that were accepted in the last quarter relating to two separate drugs

To access the Newsletter, please see:

Cancer Drug Access And The Canada Health Act

In its Annual Report Card, the Cancer Advocacy Coalition of Canada (CACC) examined cancer drug access across Canada, posing the question does cancer drug treatment comply with the principles of the Canada Health Act, namely, universality, comprehensiveness, accessibility, portability and public administration.

The Canada Health Act mandates coverage of hospital and physician services but not drug coverage. Historically, when cancer treatment consisted of in-patient chemotherapy and radiation, treatment was covered under hospital budgets. As a result of the shift of cancer treatment from an in-patient to an out-patient environment, each province has employed its own process for providing for cancer drug treatments. These include payment through cancer agency and hospital budgets, provincial and private insurance plans, patient payment options and pharmaceutical company sponsored payment assistance programs.

In its study, the CACC identified 24 recently approved drugs, along with evidence supporting their use, and then assessed the availability of these drugs in each province. The results ranged from 21 of the 24 drugs being approved for funding in British Columbia to only 4 of the drugs being approved for funding in Prince Edward Island. Ontario, Alberta and Quebec had approved funding for 6, 7, and 14 of the drugs respectively. In addition to the drugs approved for funding, all of the provinces also allowed some type of limited access to at least one additional drug, to a maximum of 13 of the 24 drugs in Ontario.

The authors conclude that "evaluated on the guiding principles of the Canada Health Act, new cancer drugs are not accessible to all patients that require them, or universal in their coverage, or comprehensive in their integration with other cancer treatments, or portable from province to province, or even publicly funded."

To ensure more timely access to cancer drug treatments, the CACC has issued recommendations which include:

- establishing a national catastrophic drug strategy;
- developing Canadian wide guidelines for cancer drug treatment;
- increasing research to establish which patients would best benefit from new therapies; and
- incorporating patient choice into decision-making.

The CACC Report Card 2005 is available at:

Proposed changes to U.S. Patent rule not welcomed by biotech industry

Although the proposed amendments to the U.S. federal patent rules may alleviate the backlog of patent applications waiting review by examiners, biotech leaders warn that these amendments will have a crippling effect on their industry. The new rule seeks to limit the number of continuation applications to one, as well as limit the number of claims for any subsequent applications to 10.

According to Todd Gillenwater, vice-president of public policy at the California Healthcare Institute, the proposed amendments may result in devastating consequences. "The biotech patent process not only concerns the product itself but also the process to make the product. As you go through 12-15 year cycle, you learn matters about the product, process and its ultimate application – all would require revisiting that application. If you restrict continuing applications, it will force the industry to file overly broad patents to catch everything."

Advocates for the changes state that the amendments will reduce the backlog at the U.S. Patent Office as well as address the issue of abuse in the present patent system. "Continuous applications are sometimes used by less scrupulous companies to claim competitors' technologies in add-on filings while maintaining their priority date on the invention, a practice referred to in the industry as a "submarine patent".

For more information, please see:

Online Pharmacists Seek Clean Slate With New Conservative Government

Having lived for over a year in fear of a crackdown on cross-border trade by the previous Liberal government, the online pharmacy industry is looking forward to starting anew with the newly elected Conservative government.

There remains concern, however, that the newly elected government will not give the issue the same priority as the previous Liberal government.

Just prior to the fall of the previous Liberal government, former health minister Ujjal Dosanjh introduced a bill that was also supported by the Conservatives which that would provide the ability to ban the bulk export of drugs to the U.S.

For more information, please see:

Release Of Draft Guidance Document For Drug Submissions In Electronic Format

By a notice dated January 25, 2006, Health Canada has released a draft guidance document for comment within a 60 day consultation period. The guidance document will assist sponsors in the preparation of drug submissions in the electronic Common Technical Document (eCTD) format developed by the ICH of Technical Requirements for Registration of Pharmaceuticals for Human Use.

The document defines three types of filing formats for drug submissions in eCTD format: co-submission, hybrid submission and electronic-only submission. It also contains information on pilot implementation of the hybrid filing format set to begin on June 30, 2006. It is indicated that the guidance document reflects comments received from stake-holders, including industry representatives, and is expected to be modified upon completion of the 60 day consultation and further, that there may be subsequent iterations of the draft.

Since September 1, 2004, Health Canada has accepted submissions in the eCTD format along with full paper based submissions (known as a co-submission format of filing). At this stage, Health Canada is entering into a transition plan that will eventually accept submissions in the electronic only submission format.

Any comments or questions regarding the draft guidance document should be submitted no later than March 31, 2006.

For information please see the following link:

Recent Cases

Syntex Pharmaceuticals International Limited v. Canada, December 12, 2005, s. 8 proceeding

- the defendant appealed an order striking out a third party notice joining the Crown as a third party to the plaintiff's claim for damages under s. 8 of the NOC Regulations.

- the Court of Appeal held that there could be a claim in negligence against the Crown and proof of a statutory breach that causes damages may be evidence of such negligence, however, the defendants have not properly plead a valid cause of action in negligence

- thus, the appeal was allowed, and although the current pleading was struck, leave was granted to file an amended third party notice.

For the text of this decision, please see:

AstraZeneca AB v. Apotex Inc., January 18, 2006, s. 55.2 proceeding

- prohibition denied

- the Applicant argued issue estoppel in relation to the respondent's formulation, however, as this issue was not plead in the Notice of Application, the argument was rejected.

- after construing the patent, it was determined that the respondent's tablets would not infringe.

- the invalidity allegations were not considered by the Court.

For the text of this decision, please see:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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