Canada: Innovator Delays Its Own Canadian Drug Approval In Effort To Secure Data Protection

On June 12, 2015, at the urgent request of Horizon Pharma PLC ("Horizon"), the Federal Court of Canada granted a rare interlocutory stay preventing the Minister of Health (the "Minister") from issuing a Notice of Compliance ("NOC") to Horizon in respect of its own glycerol phenylbutyrate drug RAVICTI that will be used to treat Urea Cycle Disorders ("UCDs"). Horizon sought the stay to prevent generic competitors from using the information in its regulatory submission while Horizon challenged the Minister's decision to deny RAVICTI data protection. The Minister did not oppose Horizon's motion.

While this case raises a fairly unique issue, the Court's ruling in respect of irreparable harm may have broader implications in terms of the ability to obtain interlocutory injunctions (TROs) in Canadian pharmaceutical patent litigation. In this case, the Court linked the recovery of Horizon's R&D investment to the period of exclusivity Horizon would enjoy should data protection ultimately apply. The risk associated with the inability of Horizon recouping its investment in that specific time period was held to be irreparable harm.

This finding may have broader implications, for example, in the context of pharmaceutical patent litigation where innovators are often entitled to a period of market exclusivity as a result of patent protection. In such instances, the grant of a generic NOC before the expiry of a relevant patent might make it impossible for an innovator to recoup its R&D investment during the period of exclusivity it would have otherwise enjoyed as a result of its patent protection. This is especially so if and where patent infringement damages may be limited or reduced. Accordingly, a stay of the Minister's decision to grant a generic NOC might be appropriate in certain circumstances, for example, where an innovator is seeking to appeal from an invalidity judgment in the context of the PM(NOC) Regulations and might be unable to fully recoup its R&D investment in the form of damages for patent infringement.

Background of this Case

Canada's Food and Drug Regulations protect pharmaceutical innovators who submit undisclosed data to the Minister in support of regulatory approval to market their drugs in Canada. These regulations prevent generic competitors from using the innovator's data to support their own drug submissions for a defined period. This is so even when no patent protection exists. Innovators are not granted the protection by default, but rather it is obtained at the discretion of the Minister, who determines inter alia, whether the drug is an "innovative drug" as defined by the regulations, namely whether it:

  1. contains "a medicinal ingredient not previously approved in a drug by the Minister"; and
  2. is not "a variation of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate or polymorph".

Horizon was notified that its RAVICTI product was ineligible for data protection as it was considered an ester variation of another drug (PHEBURANE (sodium phenylbutyrate)) and in the alternative, was a "second minor variation" of phenylbutyric acid, which was approved in PHEBURANE as a sodium salt. Horizon sought judicial review of the Minister's decision on May 20, 2015, and to allow time for that application to be decided, sought the stay to prevent generic access to the data filed for its RAVICTI submission.

In considering the request for a stay, the Court applied the test recognized in RJR-MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311, which requires an applicant to demonstrate:

  1. a serious issue to be tried;
  2. irreparable harm if no stay is granted; and
  3. the balance of convenience favouring the requested relief.

Serious Issue to be Tried

While reiterating that the threshold to find a "serious issue" is low, the Court still considered the merits of Horizon's contentions, including that the Minister misinterpreted and misapplied the definition of "variation" for an "innovative drug" (noted above). The Court was satisfied that there was a serious issued to be tried.

Irreparable Harm

To demonstrate irreparable harm, and on the basis of affidavit evidence, Horizon presented two categories of harm, namely non-compensable harm to Horizon, and irreparable harm to patients requiring the drug at issue.

With regard to the first category, Horizon argued that should the stay not be granted, it would withdraw its drug submission and refuse to market RAVICTI in Canada, thereby losing profits that would be unrecoverable by other means. The Court agreed that Horizon would not be able to recoup its sunk investment costs should its market become genericized so quickly, in the absence of data protection. The Court was satisfied this alone was sufficient to demonstrate irreparable harm.

In other words, the Court held that the inability to recoup R&D investment costs with respect to the drug was irreparable harm. The Court did not go any further in its reasons and did not consider, for example, what (if any) impact the inability to recoup its investment might have on Horizon. Nor did the Court consider relevant whether Horizon would have been able to recoup its investment through future sales, even in the face of generic competition. Clearly, the Court linked the recovery of investment to the period of exclusivity Horizon would enjoy should data protection ultimately apply.

With regard to the second category—harm to patients—the Court considered whether third party harm could be used to demonstrate irreparable harm, but opted not to determine the issue based on the fact that irreparable harm had already been demonstrated by the non-compensable harm faced by Horizon itself.

Balance of Convenience

In finding that the balance of convenience favoured granting the stay, the Court referred to the public interest, noting that patients with UCDs would have access to what could be a life-saving drug should the stay be granted and Horizon not withdraw from the Canadian market. The Court also reinforced its position by noting the Minister's lack of objection to Horizon's motion for the stay.

The case is published as Horizon Pharma PLC v Minister of Health et al, 2015 FC 744.

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