Canada: Federal Court Upholds Canadian Drug Data Protection Provisions

The Federal Court of Canada, in its recent decision in Canadian Generic Pharmaceutical Association v. Canada (Health), upheld the constitutionality of the data protection provisions of the Food and Drug Regulations (the Data Protection Regulation).

By way of background, the Data Protection Regulation came into force in 2006 and was enacted to comply with Canada's obligations under the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the North American Free Trade Agreement (NAFTA).

In Canada, drug manufacturers apply to the government for authorization to market new drugs. To obtain the approval, known as a Notice of Compliance (NOC), drug manufacturers often file data that contains confidential or trade secret information. The Data Protection Regulation recognizes that this data should be afforded some protection/degree of exclusivity before a third party can directly or indirectly rely on it.

The regulation shields the data relating to "innovative drugs" (drugs comprising medicinal ingredients that have not been previously approved in Canada and that are not a variation of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate or polymorph) for eight years, with a possible six-month extension if pediatric studies are conducted. During the first six years, a third-party manufacturer is prohibited from filing a drug submission that directly or indirectly makes a comparison with an innovative drug. In the subsequent two years, a third-party manufacturer can file a drug submission but market approval will not be granted until the expiration of the "protected period."

Data protection does not apply if the drug is not being marketed in Canada or if the innovator consents to the issuance of the NOC to the subsequent manufacturer. The term of data exclusivity/protection is available irrespective of whether the drug is protected by a patent.

In this case, the Canadian Generic Pharmaceutical Association challenged the Data Protection Regulation in the Federal Court, alleging that the federal government did not have the constitutional power to enact the regulation, and that the regulation was therefore invalid. Research-Based Pharmaceutical Companies (Rx&D), an association of drug manufacturers and related companies, were granted intervenor status. Apotex brought a similar and parallel application, with Eli Lilly as intervenor. As the two applications raised the same issues, they were consolidated and heard together.

Justice Mandamin started his analysis by looking at the purpose of Data Protection Regulation to see whether the regulation fell within the federal criminal law power in subsection 91(27) of the Constitution Act, 1867. He determined that the data protection provisions were geared at balancing "the commercial considerations between the protection of an innovator drug manufacturer's investments in preparing the ... information in order to obtain a NOC for a new drug and the eventual NOC approval of generic drug manufacturer's [submission] for a lower cost generic version of the new drug." While he accepted that the drug regulatory scheme has a public health and safety purpose, he determined that the Data Protection Regulation was not integral to that scheme.

Since the Data Protection Regulation did not have a public safety purpose, the court held that the regulation could not be upheld under the criminal law power. However, the court ruled that the federal government did have power under the trade and commerce branch of subsection 91(2) to enact the Data Protection Regulation. The court held that:

The Data Protection Regulation rounds out the valid federal drug regulatory scheme, has a national economic dimension because of Canada's obligations pursuant to international trade agreements NAFTA and TRIPS, and is a matter which the provinces cannot address legislatively individually or collectively.

Further, the court held that that the Data Protection Regulation was not beyond the Governor in Council's regulatory authority, concluding that:

... the regulation is 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. This is consistent with the requirement in the NAFTA and TRIPS provisions.

Lastly, Justice Mandamin rejected the argument that the Data Protection Regulation was an improper delegation of Parliament's international treaty implementation obligations to the Governor in Council. He noted that "Parliament has given the Governor in Council the authority to enact regulations in a narrow area specified by the boundaries of the NAFTA and TRIPS provisions."

The Canadian Generic Pharmaceutical Association and Apotex are appealing the decision.

McCarthy Tétrault Notes:

For now, Canada has primarily three regulatory mechanisms to maximize drug exclusivity in Canada: (1) Data Protection; (2) Patents; and (3) Patent/Drug Regulatory Linkage Provisions under the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations).

Data Protection Regulation

The amended data protection provisions apply to drugs that have received NOCs following pre-publication of the regulations in the Canada Gazette, Part 1 on June 17, 2006.

Unlike the United States and Europe, no additional data protection is available for new uses or combinations of previously approved drugs beyond the remaining term of data exclusivity existing for that drug.


Patent protection in Canada, for patents with a filing date prior to October 1, 1989, is the longer of 17 years from the date of issue or 20 years from the Canadian filing date. For patents that have a Canadian filing date after October 1, 1989, the patent term is 20 years from the Canadian filing date. Unlike the United States and Europe, no patent term extensions are available.

Irrespective of whether a patent is eligible for listing on the Patent Register, patent owners can enforce their patents against third parties in patent infringement actions through the courts; however, preliminary injunctions are rarely awarded.

Patent/Drug Regulatory Linkage Provisions

The PM(NOC) Regulations enable a drug manufacturer to file a patent list before Health Canada to place "eligible" patents on the Patent Register (which is similar to the Orange Book in the United States). A third party who files a drug submission for a drug on which a patent is listed must file a notice of allegation stating that:

  • it accepts the fact that market authorization will not be granted until the patent expires,
  • its drug does not infringe the patent,
  • the patent is not valid, or
  • the patent is improperly listed on the Patent Register.

The drug manufacturer (originator) who has the patent listed for the drug can then prevent a third party (a generic) from obtaining market approval until:

  • the patent expires,
  • the Federal Court decides in favour of the third party with respect to its
    allegations; or
  • 24 months has elapsed.

Thus, the originator can get a preliminary injunction that is not normally obtainable through a regular patent infringement action. However, as a third party only needs to address patents listed on the register at the time it files its drug submission (otherwise known as the frozen register), multiple or sequential 24-month stays are not available. As stated above, whether a patent is listed on the Patent Register or not does not preclude the patent holder from bringing a patent infringement action in the courts against the third party.

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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