Canada: RxIP Update - 2016 Year In Review

Last Updated: January 11 2017
Article by Daphne Lainson

The following are highlights of developments in Canadian life sciences intellectual property and regulatory law in 2016, updating our 2016 mid-year highlights.

1. Substantive patent law developments

Utility and the promise doctrine remain unresolved in 2016: The Supreme Court of Canada (SCC) heard AstraZeneca's appeal on November 8 regarding the utility "promise" doctrine and AstraZeneca's patent relating to esomeprazole (NEXIUM). The decision was reserved. Also pending is a decision of the arbitration tribunal regarding the damages claim made by Eli Lilly under the North American Free Trade Agreement (NAFTA). The claim is based on the Canadian judiciary's application of the promise doctrine to patents pertaining to STRATTERA (atomoxetine) and ZYPREXA (olanzapine) as contravening Canada's obligations under NAFTA and the Patent Cooperation Treaty. The hearing concluded on June 8, 2016, and post-hearing submissions were filed on July 25.

Greater clarity is provided on obviousness and double patenting: The Federal Court of Appeal confirmed that the correct test for determining whether an invention is obvious under the "obvious to try" test is still whether it was "more or less self-evident" to try to obtain the invention, and not a lower standard, such as whether the solution provides a "fair expectation of success" or whether "the skilled person had good reason to pursue predictable solutions". The Federal Court of Appeal also clarified the test for double-patenting.

2. Section 8 and other claims following failed PMNOC Regulations proceedings

The Ontario Divisional Court denied Pfizer leave to appeal a decision permitting Apotex's unjust enrichment claim regarding sildenafil to proceed. The Federal Court of Appeal overturned Teva's $125 million award (venlaxafine, EFFEXOR XR) for improper reliance on hearsay evidence and remitted the matter to the trial judge for redetermination. However, the scheduled redetermination by the trial judge has been adjourned while a leave application to the SCC is pending, and if leave is granted, until the appeal is determined. Apotex was denied leave from the SCC regarding a decision striking an unjust enrichment claim against Eli Lilly relating to atomoxetine. However, Apotex's damage claim relating to Apo-Ramipril and based on alleged improper issuance of a patent/a failed prohibition proceeding pursuant to the Trademarks Act and Statutes of Monopolies has been permitted to proceed. The SCC also denied leave in a proposed class action regarding VIAGRA, which sought to allege that consumers had been overcharged as a result of Pfizer's unsuccessful prohibition proceeding.

3. Quantification of damages

The SCC declined to hear Apotex's proposed appeal regarding the relevance of a non-infringing alternative in assessing damages for patent infringement in a case involving lovastatin (MEVACOR). The Federal Court awarded Janssen close to $20 million from Teva for infringing its patent relating to levofloxacin (LEVAQUIN). Teva's appeal is pending.

4. Actions

Bayer prevails in drospirenone/ethinyl estradiol infringement action against Apotex and Cobalt and is entitled to elect between damages and an accounting of profits. On September 9, the Federal Court released a decision finding that Apotex and Cobalt each infringed Bayer's valid patent for an oral contraceptive composition combining drospirenone and ethinyl estradiol. The Court rejected all alleged grounds of invalidity: novelty, obviousness, overbreadth, insufficiency and utility, and granted Bayer a declaration of validity and infringement by Apotex and Cobalt, as well as an order enjoining Apotex and Cobalt from further infringement, and delivery up of any infringing goods. The Court requested written submissions on an election of damages or an accounting of profits. The judgment regarding the injunction and delivery up/destruction as it applied to Apotex has been stayed, and the Court has required that Apotex meet certain conditions including to expedite its appeal. Cobalt has also appealed. On October 27, the Federal Court found that Bayer should be entitled to elect between damages and an accounting of the defendants' profits despite Apotex's argument that it, not Bayer, should decide Bayer's remedy.

5. CETA/TPP

Patent term restoration, on the horizon: On October 31, the day following the signing of the Comprehensive Economic and Trade Agreement (CETA) between Canada and Europe, Bill C-30 was tabled in order to implement CETA. The Second Reading and Referral to Committee was completed on December 13. If passed into law, certificates of supplementary protection (CSPs) will become available, which may provide up to two years patent term restoration for marketing delays resulting from the regulatory approval process. Bill C-30 also provides regulation-making authority to end "dual litigation" under the PMNOC Regulations and the Patent Act. If CETA is not ratified, patent term restoration may still become available in Canada if the Trans-Pacific Partnership (TPP) is ratified. Public submissions on the TPP are being accepted until January 27, 2017, and the fate of the TPP remains uncertain.

6. PMPRB

Planning, reporting and consulting continue: At the end of 2015, the PMPRB released its 2015-2018 Strategic Plan. Reports were released in February analyzing generic drug pricing, in May on public drug plan expenditures, and October saw a Market Intelligence Report: Biologic response modifier agents, 2015, which was highlighted in the PMPRB November NEWSletter. The NEWSletter also reported on the consultations on modernizing pricing guidelines, which began in May to modernize and simplify the framework for determining when patented drug prices are excessive. Phase 1 of the consultation is complete, with the timing of phase 2 of the consultation process to be announced, which will allow stakeholders who provided comments on the PMPRB Discussion Paper an opportunity to make oral submissions. The PMPRB annual report was released, after being tabled in August. The 2015 Annual Report indicates that Canadian patented drug prices remain the third-highest among the seven comparator countries against which the PMPRB reviews prices, behind Germany and the United States. At the end of 2015, 93 investigations into possible excessive patented drug pricing were ongoing.

Judicial challenges to PMPRB jurisdiction unsuccessful, so far: in June, the Federal Court struck Alexion's constitutional challenge of PMPRB provisions in the Patent Act. The Court noted that should leave to appeal be granted in the Sandoz matter, the issue of the constitutionality of the price control regime and the jurisdiction of the PMPRB would be open to consideration by the SCC. However, Sandoz and ratiopharm discontinued their application for leave to appeal on September 8. An appeal by Alexion of its challenge remains pending.

7. Health Canada/CADTH

New transparency initiatives include an expanded Health Canada listing of Regulatory Decision Summaries and Submissions Under Review. Further, flowing from Vanessa's Law, Health Canada released a Draft Guide on Disclosure of Confidential Business Information, an interim approach to drug safety updates, and an Issue Identification Paper for comment regarding mandatory reporting of serious adverse drug reactions by healthcare institutions.

8. Biologics update

Health Canada provides further guidance on biosimilars: New Guidance for biosimilars was adopted on November 14, replacing the Guidance from March 5, 2010. A revised Fact Sheet: Biosimilars was also published.

BIOSIMILAR approvals and litigation continue in 2016: BRENZYS, a product of Samsung Bioepis, was approved on August 31, making it the sixth biosimilar after OMNITROPE (Sandoz, 2009), REMSIMA/INFLECTRA (Celltrion, Hospira, 2014), BASAGLAR (Eli Lilly, 2015), and GRASTOFIL (Apotex, 2015). A PMNOC proceeding concerning Sandoz's etanercept biosimilar is pending; a patent impeachment/infringement trial is on-going for REMSIMA/INFLECTRA and a patent infringement/impeachment action for GRASTOFIL is pending. Amgen's leave to appeal to the SCC the FCA decision dismissing the GRASTOFIL PMNOC proceeding for mootness was denied. For INFLECTRA, the Federal Court upheld a decision summarily dismissing the PMNOC proceeding relating to the IBD indications based on a patent found to "speak specifically and directly to and only to the RA Indications" of infliximab. Janssen is seeking leave to appeal to the SCC the FCA decision finding that a cross-referenced drug submission did not trigger section 5 of the PMNOC Regulations absent early working, resulting in a NOC to Hospira for infliximab.

Other biologics news for 2016 included a settlement of The Children's Hospital of Eastern Ontario (CHEO) action with Transgenomic, allowing "CHEO and all other Canadian public sector hospitals and laboratories the right to test Canadians for Long QT syndrome on a not-for-profit basis ... without legal roadblocks from [the] gene patents." In addition, CIPO has signalled a change in practice for humanized antibodies with a decision clarifying support requirements.

9. Patent litigation practice

A "quia timet" patent infringement claim was allowed to proceed, with the Federal Court dismissing Teva's motion to strike a patent infringement claim by Gilead made further to Teva's impeachment action regarding patents relating to tenofovir disoproxil fumarate products (TRUVADA and VIREAD). Valeant's prohibition application under the PMNOC Regulations in respect of metformin (Valeant's GLUMETZA) was struck as an abuse of process upon a section 6(5)(b) motion brought by Apotex. New case management guidelines for PMNOC applications were released in May. The "blinding" of experts in PMNOC applications (e.g. as to the generic's product) continues to have mixed results: one judge found it not determinative; another weighed it as a relevant factor in preferring one expert's testimony over another, while another found the 'blinding' of experts was not a reason to prefer one expert's opinion over another's opinion. In another decision, the Court found that the blinding issue is a question of relevance, reliability and weight rather than a doctrinal matter, and therefore approached the evidence on a case-by-case basis.

10. Competition law

In March, the Competition Bureau released updated Intellectual Property Enforcement Guidelines which describe the Bureau's approach to conducting investigations of potentially anti-competitive activities relating to intellectual property, including settlements in PMNOC proceedings and "product switching". In October 2016, the Competition Bureau released a report questioning restrictions on health care advertising.

11. PMNOC Regulations and data protection statistics

Based on the 8 Federal Court PMNOC Regulations decisions reported by year-end, the patentee was successful on the merits on 3 patents in 3 cases and the generic manufacturer was successful on 6 patents in 6 cases. The FCA affirmed all 5 PMNOC Regulations appeals (patentee on 3 patents; generic manufacturer on 2 patents). See summary table here. See also the Therapeutic Products Directorate report providing a statistical overview of Health Canada's administration of the PMNOC Regulations and data protection; and the Therapeutic Products Directorate and the Biologics and Genetic Therapies Directorate's Drug Submission Performance Annual Reports.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

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Daphne Lainson
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