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Submission on the proposed regulations amending the patented medicines (notice of compliance) regulations
3 May 2008
Prepared for Industry Canada
The Innovation Partnership (TIP) appreciates the opportunity to address Industry Canada on the topic of the proposed regulations amending the Patented Medicines (Notice of Compliance) Regulations (NOC Regulations) set out in the Canada Gazette, Part I, Vol. 142, No. 17, April 26, 2008. TIP is an independent, not-for-profit organisation located in Montreal, Canada. TIP’s mission is to enhance understanding, use and management of intellectual property policies that foster innovation, improve research capacity and increase access to new products. In the last year, TIP provided policy advice on the use of intellectual property policies and dissemination of innovation to Health Canada, Industry Canada, UNITAID, the Organization for Economic Cooperation and Development and the Canadian Breast Cancer Foundation. TIP works closely with the Centre for Intellectual Property Policy (CIPP) at McGill University to translate cutting-edge social science and legal research into concrete policy.
The NOC Regulations are designed to promote the development and distribution of new and useful therapeutics to Canadians by balancing the interests of patent holders with those of generic manufacturers. Given the intense competition between these actors, such a balance is difficult to obtain and maintain. The proposed amendments represent only the most recent attempt by the government to readjust the balance between these actors. Nevertheless, the NOC Regulations remain unstable despite the government’s intentions, as both patent holders and generic producers litigate every conceivable aspect of the NOC Regulations and the underlying Patent Act.
It is within this context that we make the following observations:
- Despite the government’s intentions as set out in the Regulatory Impact Analysis Statement, it is very unlikely that the proposed amendments will lead to less litigation. In fact, given the litigous nature of the principal actors, these amendments are likely to lead to more, not less, litigation as new wording will inevitably lead the actors to propose new interpretations of the NOC Regulations;
- Despite the intention expressed in the Regulatory Impact Analysis Statement, the principle that laws are not to be restropective is not being respected by the proposed amendments. While the government may have intended its 2006 amendments to have one meaning, the courts have determined otherwise. The parties interpreting the NOC Regulations prior to and after the 2006 amendments did so in accordance with their best interpretations of the NOC Regulations and understood the risks and benefits of their various positions. The courts inevitably ruled in favour of one or the other of the parties but each party was prepared for this eventuality, experienced as they were with the judicial system. To retrospectively change the authoritative interpretation of the pre-2006 NOC Regulations undermines the certainty of the law and the calculations that all parties made on reading those regulations. Retrospectively changing the NOC Regulations risks greater uncertainty than allowing the courts to supervise the natural elucidation of the regulations.
- There is too much litigation surrounding the NOC Regulations. A simple search from May 1, 2005 to May 1, 2008, turns up well over 250 court proceedings relating to those regulations. The Canadian public and the Canadian judicial system is paying a high price in terms of costs and burden for these proceedings, which bring no benefit, in themselves, to the Canadian public. In order to meet the laudable goal expressed in the Regulatory Impact Analysis Statement of reducing litigation, the government can proceed in one of two ways: replace the current NOC Regulations with a simpler set of rules or allow the courts to proceed in their elucidation of the regulations.
- The first option would be to drastically simplify or replace the NOC Regulations. Justice Hughes in Ferring inc. v. Canada (Health) [2007] FC 300 called the NOC Regulations “arcane” while Justice Sharlow in Ratiopharm inc. v. Wyeth, Wyeth Canada [2007] FCA 264 stated that “the NOC Regulations spawn a great deal of litigation because the financial stakes are high, even in relation to what may amount to only a delay in the entry of a generic drug product into the market.” Given the adversarial relationship between patent holders and generic producers, litigation will inevitably continue notwithstanding regular efforts to refine and optimize the NOC regulations.
- Short of replacing the NOC Regulations, the best approach to limiting litigation is to allow the courts to interpret the regulations and reduce uncertainty. The courts are institutionally better positioned than the government to control litigation. Amending the NOC Regulations in bits and pieces undermines their ability to do so, thus increasing and not reducing litigation. The current situation is a case in point. The Supreme Court of Canada in AstraZeneca Canada Inc. v. Canada (Minister of Health) [2006] 2 S.C.R. 560 did its job of answering the open question of which patents could be listed on the Patent Register. As it turns out, this decision achieved the same goal as the 2006 amendments to the NOC Regulations. This progressive and consistent judicial approach to elucidating the law is preferrable to the disruptive and ad hoc modifications represented by the present proposal.
- We are puzzled by the contention in the Regulatory Impact Analysis Statement that, in respect of the AstraZeneca decision, “the Government is concerned that this may result in any patents submitted in full compliance with the listing requirements, as they were interpreted and applied prior to June 17, 2006, being deleted from, or not added, to the register. This could result in a sudden and unexpected loss of market exclusivity for a number of innovative drugs” [emphasis added]. As we note above, given that patent holders understood the development of the case law, were aware of the appeal to the Supreme Court of Canada and the arguments advanced in the appeal in that case, it would have been negligent for anyone in the industry to have not seriously contemplated the loss of market exclusivity. Allowing parties to gain through regulation what they lost through the judicial process of which they were too obviously aware undermines not only the certainty of the law, but the integrity and faith in the judicial process.
TIP supports the government’s attempt to rationalize the NOC Regulations. We believe that the observations set out above should help guide policy development in this admittedly difficult and contentious area. We would be pleased to follow up on any of these observations if desired.