Government of Canada Amends Intellectual Property Rules for Pharmaceuticals and Bio-Pharmaceuticals

OTTAWA, October 18, 2006 — Today, the Government of Canada published Industry Canada's Regulations Amending the Patented Medicines (Notice of Compliance) Regulations ("PM(NOC) Regulations") and Health Canada's Regulations Amending the Food and Drug Regulations in Part II of the Canada Gazette. These regulations, which came into force on October 5, 2006, will strengthen the economy in the long term by restoring certainty, predictability and balance to Canada's intellectual property framework for pharmaceuticals and bio-pharmaceuticals.

"These improvements to the intellectual property environment are the product of extensive consultations with the pharmaceutical and biotechnology industry, and respond to the major concerns expressed by each sector of that industry," said the Honourable Maxime Bernier, Minister of Industry. "These improvements will encourage research into new and innovative drugs, and help to deliver on our governments commitment to provide the right environment for business-driven research and excellence."

"The amendments published today will benefit Canadians by making it easier for lower-cost, generic versions of these drugs to enter the market in a timely fashion," said the Honourable Tony Clement, Minister of Health.

Under Health Canada's Regulations Amending the Food and Drug Regulations, new and innovative drugs will receive an internationally competitive, guaranteed minimum period of market exclusivity of eight years — up from the current five years. This is especially important to Canada's burgeoning biotechnology industry, since biologic drugs often have little patent protection left by the time they are approved for sale due to lengthy development and regulatory review times. These regulations will also provide a further six months of market exclusivity to innovative drugs that are the subject of pediatric studies, in order to encourage companies to provide more information about the effects these products have on children.

In turn, Industry Canada's Regulations Amending the PM(NOC) Regulations will restore their original policy intent by enabling generic versions of innovative drugs to enter the market immediately following the expiry of relevant patents, while also allowing substantive improvements to innovative drugs to be duly protected. This will provide greater certainty and predictability for the industry overall, thereby strengthening investment and innovation in Canada.

Electronic copies of both sets of these regulations, as published in Part II of the Canada Gazette, can be found at http://canadagazette.gc.ca/index-e.html.

For more information, please contact:

Isabelle Fontaine
Office of the Honourable Maxime Bernier
Minister of Industry
613-995-9001

Erik Waddell
Office of the Honourable Tony Clement
Minister of Health
613-957-0200

Media Relations
Industry Canada
613-943-2502

Alastair Sinclair
Media Relations
Health Canada
613-957-1803

October 13, 2006

Backgrounder
Regulations Amending the Intellectual Property Rules for Pharmaceuticals

In Canada, there are two types of regulations that protect intellectual property in the pharmaceutical and biotechnology industry, the Patented Medicines (Notice of Compliance) Regulations ("PM(NOC) Regulations") and the data protection provisions in the Food and Drug Regulations. Industry Canada is responsible for the PM(NOC) Regulations and Health Canada is responsible for the data protection regulations.

On October 18, 2006, a joint set of amendments to these two sets of regulations was published in Part II of the Canada Gazette. The purpose of Industry Canada's amendments to the PM(NOC) Regulations is to make it easier for generic drug companies to predict when they may enter the market with a lower-cost version of an innovative, patented drug. This will accelerate the market entry of generic drugs once relevant patents expire. The purpose of Health Canada's amendments to the data protection regulations is to provide new and innovative drugs with a guaranteed eight-year minimum period of market exclusivity. A further six months of protection is available to drugs that have been the subject of pediatric studies. This will encourage research in the area and improve drug information available to pediatric health professionals. Together, these amendments will make Canada's intellectual property environment for pharmaceuticals more predictable, stable and internationally competitive.

A draft version of the amendments was pre-published in Part I of the Canada Gazette on June 17, 2006. Pre-publication was followed by a 30-day public comment period during which the government received over thirty separate submissions from various sources, including brand-name, biotech and generic pharmaceutical companies, as well as patent law practitioners, parliamentarians and provincial governments. Minor technical changes were made to the amendments in response to these submissions.

Rationale

The past few years have given rise to significant public dialogue about the intellectual property protection of pharmaceuticals, internationally and nationally. Internationally, many countries have made policy adjustments to optimize the balance between innovation and access to affordable medicines. In 2003, the United States amended its version of the PM(NOC) Regulations to make it easier for generic drugs to enter the market. In 2004, the European Union adopted new measures for data protection, settling upon a uniform 10-year period of protection, with an additional year of protection in instances where a drug is approved for a new use.

In Canada, rising concerns have been expressed about the balance between encouraging innovation and the availability of generic drugs, most notably in the report of the Romanow Commission on the Future of Health Care in Canada, the 2003 review of the PM(NOC) Regulations by the House of Commons Standing Committee on Industry, Science and Technology, and most recently, in a February 2004 statement by the Competition Bureau.

In response to these concerns, Industry Canada and Health Canada carefully examined Canada's intellectual property regime as it relates to the pharmaceutical and biotech industry and concluded that two types of changes are needed to restore balance and predictability to the marketplace. On the patent side, it was found that some brand-name drug companies were using the PM(NOC) Regulations to delay legitimate generic competition, a practice sometimes referred to as "evergreening." On the trade-secret side, it was found that Canadas data protection provisions, which are intended to implement a NAFTA and WTO obligation to protect the research data submitted to regulatory agencies by innovative (i.e., brand-name and biotech) companies, do not currently prohibit generic drug companies from obtaining marketing approval on the basis of bioequivalence comparisons to already-approved innovative drugs. This is out of line with current practice in other jurisdictions, most notably Europe and the United States.

On December 11, 2004, the government pre-published a joint set of amendments designed to address these problems in Part I of the Canada Gazette. Pre-publication was followed by extensive consultations with the innovative and generic sectors of the industry. The amendments published in the Canada Gazette on October 18 incorporate the most sought-after change requested by each side of the industry, but have the same underlying objectives of restoring balance and making Canada's intellectual property regime more predictable and internationally competitive.