Competition Bureau Responds to Complaint Over Alleged Misuse of Canada's Drug Patent Rules

Backgrounder

February 27, 2004

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Background

The purpose of this document is to outline in general terms the findings of the Competition Bureau's inquiry into the alleged misuse of Canada's drug patent rules by brand name pharmaceutical companies. The Bureau commenced its inquiry on June 9, 2003, following a six-resident application under section 9 of the Competition Act.

The Bureau's policies and practices regarding the treatment of confidential information limit its ability to disclose specific information obtained during the course of an inquiry. However, the general findings of the Bureau on the relevant issues are summarized below.

Overview of the Drug Patent Process

The process of approving brand name drugs and generic drugs is administered by Health Canada under the Patented Medicines (Notice of Compliance) Regulations. The practice alleged by the complaint also falls under the purview of these regulations.

Prior to marketing a drug in Canada, a brand name manufacturer must file a new drug submission with Health Canada and obtain a Notice of Compliance (NOC) from the Minister of Health. Brand name manufacturers can also file supplemental new drug submissions if they make a significant change to the original drug. Significant change can include changes to dosage, strengths or new uses for the drug. When filing drug submissions with Health Canada, brand name manufacturers must also submit a list of patents associated with that drug. The list is then added to the Patent Register, an alphabetical listing of medicines and relevant patents for a given drug or its variations.

In order to have a patent listed on the Patent Register, it must be submitted in a timely fashion and be relevant to the drug. The Minister of Health reviews the patent and decides if it should be added. The Federal Court and the Federal Court of Appeal have broadened the meaning of what is a relevant patent as well as stating that patents can be added to the Patent Register any time a supplemental new drug submission is filed with Health Canada, even if the change does not materially affect the original drug. For a patent to be eligible to be listed on the Patent Register, it must contain a claim for the medicine itself or a claim for the use of the medicine.

In order to obtain an NOC to sell its own version of a brand name drug, a generic drug company must serve a Notice of Allegation (NOA) on the brand name manufacturer that it wants to copy the drug following the expiration of the original patent. The generic drug company must address each patent associated with the drug listed on the Patent Register and indicate why there is no infringement on the drug being copied. If the brand name manufacturer wishes to oppose the NOA, it can file an application with the Federal Court seeking to prevent the issuance of an NOC for the generic version of the drug being copied. This process then triggers an automatic 24-month stay in which the NOC cannot be issued. If during the injunction new patents are added by the brand name manufacturer, the generic company must amend its NOA and the brand name manufacturer can again oppose it and trigger a new automatic 24-month stay of the NOC.

The Complaint

The complaint, which became public on May 14, 2003, was filed by the National Union of Public and General Employees and other national organizations representing seniors, pensioners, patient advocates and health care activists.

The alleged evergreening of patents raised in the complaint refers to the addition of patents to the patent list for a given medicine after the generic company has filed an NOA for a given drug. The additions provide the patent holder with the possibility of claiming infringement of those patents thus delaying the entry of generic drugs beyond the original patent protection period.

The Bureau's Findings

The Competition Bureau recognizes that the above-mentioned process can delay the introduction of a generic drug. However, under the NOC Regulations, if the infringement claims were redundant, scandalous, frivolous or vexatious, they could be dismissed by the Federal Court and give rise to potential action for damages by the generic drug manufacturers.

At the same time, depending on the information provided by the generic company in the NOA, brand name pharmaceutical patent holders may be acting within the purpose and intent of the NOC Regulations when they seek a Prohibition Order blocking the issuance of an NOC to a generic company. For example, the allegation that the generic drug will not infringe on a patent may be incomplete, incorrect or unjustified in some other way.

The NOC Regulations contain specific provisions to address and balance the competitive interests of brand name pharmaceutical patent holders and generic drug manufacturers and to remedy the practice raised in the complaint. Under the civil provisions of the Competition Act, there are no provisions for awarding damages in the circumstances described. Furthermore, inquiries under the Competition Act relate to specific company behaviour and do not contemplate a non-company specific review of a regulatory regime. In these circumstances, it is the Bureau's view that the Competition Act is not the appropriate vehicle to address the allegations raised in the complaint.

A number of court decisions over the last several years regarding what constitutes a relevant patent and the time period during which such a patent can be added have somewhat altered the balance contained in the NOC Regulations between the competing interests of the brand name pharmaceutical patent holders and generic drug companies. There is also no ready mechanism in the NOC Regulations for compensating consumers affected by delays in the introduction of generic drugs, thereby creating a possible incentive for brand name pharmaceutical companies to strategically use the NOC Regulations to improperly delay generic drug entry.

From a competition policy perspective in particular, the Government may wish to review the current rules to ensure that an appropriate balance is maintained between protecting intellectual property rights and facilitating a competitive supply of pharmaceutical products for Canadian consumers.