Canada: Court Upholds Data Exclusivity Rules For Pharmaceutical Manufacturers

The Federal Court, in a decision released on July 17, 2009, has upheld Canada's Food and Drug Regulations as they relate to the protection of data that is submitted by innovators for the purpose of obtaining regulatory approval (the Data Protection Regulations).

Currently, the Data Protection Regulations, implemented on October 5, 2006, provide a period of 8 years of protection from the date of an innovator's first Notice of Compliance for an "innovative drug", and the possibility of a further 6 month period if studies are conducted in the pediatric population. During the period of protection, no competing manufacturer can compare its product to the innovative product in order to obtain approval. Effectively, this protects the underlying clinical trial and other data submitted by innovators from being relied upon by competitors seeking their own approvals. The system was implemented to bring Canada into compliance with its obligations to protect this information, as required by the North American Free Trade Agreement (NAFTA) and the World Trade Organization's Agreement on Trade-related Aspects of Intellectual Property (TRIPS).

The Canadian Generic Pharmaceutical Association (CGPA) and Apotex Inc., in separate court applications, challenged the new system as being ultra vires the authority of Parliament and unconstitutional. Canada's Research-based Pharmaceutical Companies (Rx&D) (represented by Gowlings' Martin Mason and Graham Ragan) was granted intervener status in the CGPA proceeding, while Eli Lilly Canada Inc. (represented by Gowlings' Rick Dearden and Wendy Wagner) was granted intervener status in the Apotex application. The two applications were heard together on December 16 through 18, 2008.

The Attorney General had objected early on in the proceedings to the standing of either applicant, the CGPA or Apotex. Justice Mandamin revisited this issue in respect of the CGPA at the hearing of the matter and determined that the CGPA had public interest standing.

In upholding the Data Protection Regulations, the Court determined that the constitutional authority for the Regulations was not the criminal law power, but rather, that the implementation of the Regulations fell under the federal trade and commerce authority.

In commenting on the nature of the Regulations, the Court stated:

The Data Protection Regulation, although adjunct rather than integral, can be said to "round out" the valid federal regulatory drug scheme established for marketing drugs in Canada much in the manner as described by Chief Justice Lasken in Vapour. It brings the mechanism by which generic copies of new drugs are approved into conformity with Canada's obligations in NAFTA and TRIPS.

The Court further stated:

The Data Protection Regulation deals with the manufacture and marketing of drugs, a local matter in a single industry. However, the evidence also demonstrates that this regulation has implications of a national dimension. It was enacted in compliance with NAFTA and TRIPS. NAFTA involves Canada, the United States and Mexico. The TRIPS agreement involves many countries around the world, most of which participate to some degree or other in the TRIPS scheme for the protection of new drug research investment through market exclusivity mechanisms.

Canada's implementation or failure to implement such international trade agreements has a national dimension that relates to Canada's ability to participate in world trade. In this sense, the Data Protection Regulation deals with a genuine national economic concern of the kind considered by Justice Dickson in Canadian National Transportation.

The Data Protection Regulation deals with the approval of the marketing of new drugs. Provincial legislatures cannot enact legislation that delays the approval of generic drugs since provincial approvals of drugs for the market place would seriously interfere with the federal s. 91(27) criminal law power to prohibit the marketing of drugs but for exceptions where drugs are proven safe and effective. Given the inability of provincial governments to enact legislation to stage approval of generic drugs, the fifth criteria enunciated by Chief Justice Dickson, the failure of one or more provinces jeopardizing the successful operation in other parts of the country, does not arise.

The Court also found that the Data Protection Regulations are not beyond the regulatory power of the Governor in Council in that the Regulations are "properly concerned with data protection for innovator drug companies which are required to provide confidential commercially valuable data to secure a NOC to introduce new drugs to the Canadian market" and that this is consistent with the requirement in the NAFTA and TRIPS provisions.

For a copy of the decision, please see: and T-2047-06.pdf

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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