The Patented Medicines (Notice of Compliance) Regulations 16.04.2017 The Patented Medicines (Notice of Compliance) Regulations An Overview In Canada, there are two legislative regimes of note when it comes to patented pharmaceuticals: Food and Drugs Act and Regulations which govern the approval of new drugs to ensure that they are safe and effective before they can be marketed The Patent system which provides a period of market exclusivity to an innovator in exchange for disclosure of the invention to the public. The PM(NOC) Regulations lie at the intersection of these two regimes and create a mechanism to prevent the regulatory approval for a potentially infringing generic drug product. ] Christina Capone Settimi Associate, Cameron MacKendrick LLP Toronto January 23, 2009  Cameron MacKendrick 2009

16.04.2017 The Canadian Pharmaceutical Regulatory Regime – the PM(NOC) Regulations A Brief History of the PM(NOC) Regulations The Drug Approval Process in Canada Pharmaceutical Patent Law – The Current System Overview Patent Register PM(NOC) Regulations Litigation under the PM(NOC) Regulations Data Protection

I. A Brief History of the PM(NOC) Regulations 16.04.2017 I. A Brief History of the PM(NOC) Regulations

I. A Brief History of the PM(NOC) Regulations 16.04.2017 I. A Brief History of the PM(NOC) Regulations Pre-1993: Prior to 1993, pharmaceutical patents were subject to a compulsory licensing regime Generic companies could manufacture, sell and import a patented medicine before the expiry of a patent, provided the drug is shown to be “safe and effective” Innovators paid fixed royalty of 4% Compulsory licenses were available virtually as of right and/or generic drug manufacturers could enter the market at any time Result was that there was virtually no protection for pharmaceutical patents in Canada

I. A Brief History of the PM(NOC) Regulations 16.04.2017 I. A Brief History of the PM(NOC) Regulations 1980’s: Parliament began re-vamping patent laws to rebalance the compulsory licensing regime in order to generate growth in the pharmaceutical industry and in light of international trade obligations Let to major overhaul of the patent system in 1987-1989 Various changes made to the regime over a number of years which gradually increased the protection available to pharmaceutical patents from compulsory licensing However, compulsory licensing regime viewed by international community as being inconsistent with Canada’s trade obligations under TRIPS and NAFTA The compulsory licensing regime created a very favourable environment for generic manufacturers and led to the growth of a strong generic drug industry in Canada. It also had a significant impact on the research and development undertaking by innovative drug companies in Canada, and resulted in the closure of a number of high profile research centres. As a result, the government began re-vamping the patent system in order to encourage multinational drug companies in R&D in Canada while also maintaining control over patented drug prices. In addition, during this time, Canada ratified the NAFTA, and later the TRIPS Agreement, both of which included provisions setting minimum standards of protection for intellectual property. Canada’s regime at the time was generally viewed as being inconsistent with these obligations

I. A Brief History of the PM(NOC) Regulations 16.04.2017 I. A Brief History of the PM(NOC) Regulations 1993: Compulsory licensing abolished New regime introduced to attempt to strike a balance between encouraging innovation and providing access to lower cost medicines. Bill C-91 established “early working” and “stockpiling” exceptions to patent infringement “Early Working” – Section 55.2(1) of the Patent Act “Stockpiling” exception was abolished in 2001 as being inconsistent with Canada’s international treaty obligations PM(NOC) Regulations brought into force Consequently, in 1993, the government abolished compulsory licenses and the government adopted other methods to try and strike a balance between encouraging innovation and providing access to lower cost medicines. To achieve this balance, two exceptions to patent infringement were added to the Patent Act, both of which were designed to enable a generic manufacturer to market its generic product as soon as possible after patent expiry of the equivalent innovative product: Stockpiling – allowed manufacturers of generic medicines to stockpile their products for 6 months before a patent expired so that they would be ready to hit the market upon patent expiry. This was challenged by the international community and ultimately held to be inconsistent with Canada’s international trade obligations; and Early working, which still exists which allows generic manufacturers to apply to Health Canada for approval of their product before patent expiry.

I. A Brief History of the PM(NOC) Regulations 16.04.2017 I. A Brief History of the PM(NOC) Regulations PM(NOC) Regulations: Link the drug regulatory approval system and the patent system Enhance protection for pharmaceutical patents by requiring a generic drug manufacturers to “clear” relevant patents prior to obtaining regulatory approval Ultimately, the stockpiling and early working provisions allowed generic manufacturers to do things that would otherwise be patent infringement. As a result, the government introduced the PM(NOC) Regulations to prevent abuse of these exceptions by generics who may seek to sell their products during the term of the innovator’s patent. They do this by requiring a generic manufacturer to address an innovator’s patent before Health Canada may issue regulatory approval for a generic version of a patented medicine.

I. A Brief History of the PM(NOC) Regulations 16.04.2017 I. A Brief History of the PM(NOC) Regulations 2006: Major amendments to the PM(NOC) Regulations brought into force to address perceived deficiencies in the regime Operation of the Regulations reaffirmed and clarified Established an 8-year data protection for patented medicines to guarantee a minimum term of market exclusivity to patentees Protected data is the bundle of confidential information that is submitted to Health Canada to obtain market authorization The PM(NOC) Regulations resulted in an explosion of pharmaceutical patent litigation and were the subject of much judicial interpretation. Literal interpretation of the Regulations enabled both generic and innovative manufactures to abuse the system jeopardizing its effectiveness. Led the government to introduce major amendments to the regime in 2006 to clarify the operation of the regulation. In addition, the government introduced an 8-year period of data protection for innovative drugs whereby generic manufacturers are prohibited from obtaining access of the confidential data submitted by the innovator to Health Canada for regulatory approval.

II. The Drug Approval Process in Canada 16.04.2017 II. The Drug Approval Process in Canada

II. The Drug Approval Process in Canada 16.04.2017 II. The Drug Approval Process in Canada All drugs sold in Canada must be authorized for sale by Health Canada To gain Health Canada authorization for a “new” drug, the manufacturer submits a New Drug Submission (“NDS”) setting out all data establishing the safety and efficacy of the drug (obtained through rigorous clinical testing) Health Canada reviews the submitted information and evaluates the drug’s safety, efficacy and quality At the completion of the review, if Health Canada has approved the new drug, it issues a Notice of Compliance (“NOC”) which permits the drug to be marketed in Canada To gain Health Canada authorization for a new drug, a manufacturer, typically an innovator, submits a New Drug Submission (“NDS”) setting out all data (obtained through rigorous clinical testing) establishing the safety and efficacy of the drug. Such submissions typically require pre-clinical, clinical, chemistry and manufacturing data. Health Canada then reviews the submitted information and evaluates the drug’s safety, efficacy and quality to determine whether it is suitable to be marketed in Canada. At the completion of a review, if Health Canada has approved the new drug, it issues a Notice of Compliance (“NOC”), which permits the drug to be marketed in Canada.

II. The Drug Approval Process in Canada 16.04.2017 II. The Drug Approval Process in Canada Innovative pharmaceutical company is typically the first person to discover/develop a drug and/or a new therapeutic indication Therefore, an NDS is typically filed by an “innovative” pharmaceutical company Generally, an innovator will have one or more patents pertaining to a new drug

II. The Drug Approval Process in Canada 16.04.2017 II. The Drug Approval Process in Canada Unlike innovator, a generic manufacturer need not establish safety and efficacy of a generic drug Generic need only demonstrate bioequivalence to a drug which is already on the market and has been approved by Health Canada Bioequivalence” = the active ingredient of a generic drug be absorbed into the body and metabolized in approximately the same amount over approximately the same period as the active ingredient of the innovator drug

II. The Drug Approval Process in Canada 16.04.2017 II. The Drug Approval Process in Canada To obtain marketing approval for a generic drug, the generic manufacturer submits an Abbreviated NDS (“ANDS”) demonstrating that the generic formulation is “bioequivalent” to the brand formulation ANDS typically does not contain clinical data By establishing bioequivalence, generic demonstrates safety and effectiveness by comparison, without having to do extensive clinical trials Significantly less money and time required to bring generic drug to market

II. The Drug Approval Process in Canada 16.04.2017 II. The Drug Approval Process in Canada Once a manufacturer has obtained its NOC, any changes to the approval (e.g. change of name, packaging, product monograph) requires the manufacturer to file a Supplementary New Drug Submission (“SNDS”)

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System The current system reflects Parliament’s attempt to strike a balance between two competing objectives: (i) provision of low-cost, high-quality pharmaceuticals, and (ii) protection of innovation and stimulation of R&D Generic manufacturers are given the benefit of “early working” for a drug approval prior to patent expiry but must address patent issues prior to obtaining marketing approval Innovators are given the benefit of 8-years of data protection Generic manufacturers are prohibited from filing an ANDS or triggering litigation under the PM(NOC) Regulations for the first 6 years of the 8 year term (except for submissions made under the Jean Chrétien Act)

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Overview Astra Zeneca Canada Inc. v. Canada (Minister of Health), 2006 SCC 49 at para. 12: The NOC Regulations lie at the intersection of two regulatory systems with sometimes conflicting objectives.  First, is the law governing approval of new drugs, which seeks to ensure the safety and efficacy of new medications before they can be put on the market.  The governing rules are set out in the Food and Drugs Act, R.S.C. 1985, c. F-27 (“FDA”), and the Food and Drug Regulations, C.R.C. 1978, c. 870.  The FDA process culminates (if successful) in the issuance of a NOC to an applicant manufacturer by the Minister of Health on the advice of his officials in the Therapeutic Products Directorate.  The FDA objective is to encourage bringing safe and effective medicines to market to advance the nation’s health.  The achievement of this objective is tempered by a second and to some extent overlapping  regulatory system created by the Patent Act, R.S.C. 1985, c. P-4.  Under that system, in exchange for disclosure to the public of an invention, including the invention of a medication, the innovator is given the exclusive right to its exploitation for a period of 20 years.  Until 1993, the two regulatory systems were largely kept distinct and separate.

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Overview Astra Zeneca Canada Inc. v. Canada (Minister of Health), 2006 SCC 49 at para. 13: The problem perceived by Parliament in 1993 was that if a generic manufacturer waits to begin its preparation of a copy-cat medicine for regulatory approval until the patent expires, the FDA approval process will likely add at least two years to the effective monopoly of the patent owner, which is two years of monopoly longer than the Patent Act contemplates.  On the other hand, if the generic manufacturer tries to work the patented invention prior to the expiry of the patent, even if solely to satisfy the FDA requirements for a NOC, it will infringe the patent, thus inviting litigation by the patent owner (and this is a very litigious industry).

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Patent Listing and The Patent Register (sections 3 & 4) Minister of Health maintains a public register of patents based on patent lists submitted by patentees/licensees who file an NDS and to whom an NOC have been issued “linchpin” of the PM(NOC) Regulations Patents which are listed on the Patent Register are entitled to protection under the PM(NOC) Regulations Minister has a duty to determine what patents are listed and to remove patents that have been listed improperly Generic drug manufacturers have no say on the listing or delisting of a patent on the Patent Register The PM(NOC) Regulations create the linkage, in part, by requiring the Minister of Health to maintain a register of patents pertaining to medicines for which NOCs have been issued (the “Patent Register”). The patentee or licensee who has filed a NDS or SNDS may file with the Minister a list of all the relevant patents pertaining to the submission or supplement, and these patents may then be entered on the Patent Register.

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Patent Listing cont’d To have a patent listed a “first person” (e.g. an innovator) who files or has filed a NDS or SNDS submits a patent list in respect of the drug to the Minster of Health Not all patents are eligible for listing. To qualify for listing, the patent must meet three (3) key requirements: (1) Timing (2) Relevance (3) Subject matter See Ratiopharm v. Wyeth, 2007 FCA 264 The practice of listing patents on the Patent Register has been the subject of some controversy and questions have been raised regarding the appropriate timing, subject matter and relevance requirements for listed patents. The 2006 amendments sought to clarify what patents are eligible for listing on the Patent Register.

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Patent Listing cont’d - Timing Patent list must be filed (1) at the time the NDS or SNDS is filed for a drug; or (2) within 30 days of the grant of the patent There is no mechanism for listing a patent on the Patent Register if a patent list is submitted outside of these timelines Only patent lists submitted in accordance with the above timelines will be accepted. Patent lists submitted separately will be refused as not meeting the timing requirements

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Patent Listing cont’d – Subject Matter Eligible patents listed in respect of a NDS must contain: (1) a claim for the approved medicinal ingredient; (2) a claim for the approved formulation containing that medicinal ingredient; (3) a claim for the approved dosage form containing that medicinal ingredient; or (4) a claim for the approved use of that medicinal ingredient

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Patent Listing cont’d – Subject Matter Eligible patents listed in respect of a SNDS must contain: (1) a claim for the approved change in formulation; (2) a claim for the approved change in dosage form; or (3) a claim for the approved change in use of that medicinal ingredient

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Section 2 definitions: "claim for the medicinal ingredient" includes a claim in the patent for the medicinal ingredient, whether chemical or biological in nature, when prepared or produced by the methods or processes of manufacture particularly described and claimed in the patent, or by their obvious chemical equivalents, and also includes a claim for different polymorphs of the medicinal ingredient, but does not include different chemical forms of the medicinal ingredient; "claim for the formulation" means a claim for a substance that is a mixture of medicinal and non-medicinal ingredients in a drug and that is administered to a patient in a particular dosage form; "claim for the dosage form" means a claim for a delivery system for administering a medicinal ingredient in a drug or a formulation of a drug that includes within its scope that medicinal ingredient or formulation; "claim for the use of the medicinal ingredient" means a claim for the use of the medicinal ingredient for the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or its symptoms

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System The Patent Register – Ineligible Subject Matter Patents which may not be listed on the Patent Register include: (1) a purely process patent (2) a patent for a medical device (3) a patent claiming only an active metabolite of a medicine contained in a drug for which a NOC is sought (4) a patent for an impurity present in the final drug product (5) a patent for a difference chemical form of the medicinal ingredient or uses thereof E.g. salts, esters, other derivatives

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Patent Listing cont’d – Relevance To be eligible for listing on the Patent Register a patent must be relevant to the drug which is the subject of the submission against which the patent is to be listed i.e. the patent must claim the specific product which the innovator is seeking to sell Therefore, a patent listed with respect to a SNDS must claim the change in use of the medicinal ingredient, formulation or dosage form applied for To be eligible for listing on the Patent Register, a patent must be RELEVANT to the drug which is the subject of the NDS or SNDS against which the patent is to be listed. This means that, in order for a patent to be listed in relation to an NDS, the patent must actually contain a claim for the approved new medicinal ingredient, formulation, dosage form or use of the medicinal ingredient. Likewise, in order for a patent to be listable in relation to an SNDS, the purpose of the SNDS must correspond to at least one claim in the patent. These relevance requirements were enacted as part of the 2006 amendments in response to innovators who had attempted to list patents with SNDSs filed in respect of trivial or mundane changes

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System PM(NOC) Litigation – Sequence of Events “First Person” (e.g. Innovator) files a New Drug Submission (NDS) and has patents listed on the Patent Register. When a “Second Person” (e.g. generic manufacturer) files an ANDS referencing the Innovator’s drug, and the innovator drug has associated patents listed on the register, PM(NOC) Regulations are triggered

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Section 5 Generic manufacturer must address each patent which is listed for the referenced drug at the time of filing of the ADNS Generic only has to address patents listed on the Register at the time the ANDS is filed (“frozen register”) Generic can: Await expiry of all listed patents before receiving a NOC; Allege invalidity or non-infringement of the patent at issue by filing a Notice of Allegation to the innovator setting out the basis of its allegations A generic drug company which compares its product directly or indirectly with a patented, innovative drug in order to establish the former's safety and efficacy and to secure marketing approval from Health Canada must make one of two choices: agree to await patent expiry before obtaining its NOC; or make an allegation (called a “Notice of Allegation” or “NOA”) to attempt to justify its immediate market entry, on the basis that the person who filed the patent list is not the patentee or a person acting under consent of the patentee, or that the patent has either expired, is not valid, or is not infringed.

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Section 6 Upon receiving NOA, Innovator may, within 45 days, apply to the Federal Court for an order prohibiting the Minister of Health from approving the sale of the generic drug. Innovator argues that the generic’s allegations of invalidity and/or non-infringement are “not justified” At this stage, generic can move to strike the proceedings on the basis that an asserted patent was improperly listed

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Section 7 Once an application for an order of prohibition is filed, the Minister may not issue a NOC until the expiry of 24 months, unless: (i) the court finds in favour of the generic, or (ii) the patent expires Effectively an interlocutory injunction without preconditions having been met

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System PM(NOC) Litigation A proceeding under the PM(NOC) Regulations is a judicial review proceeding to determine whether NOC should issue. NOT an action for patent infringement. Proceedings are intended to be summary proceedings governed by the Federal Court Rules regarding applications Must be completed within 24 months. Once 24 month period is over, MOH is no longer prevented from issuing NOC Unlike a traditional action for patent infringement, proceedings under the PM(NOC) Regulations proceed by way of application and are summary in nature. There is no general obligation to produce documents, no examinations for discovery, and no live testimony at the hearing. Evidence is tendered by way of affidavits and cross-examination transcripts.

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System PM(NOC) Litigation – Burden of Proof The first person has the legal burden to prove on a balance of probabilities that none of the allegations in the Notice of Allegation is justified Can rely on the presumption of validity but to its peril Allegations in the Notice of Allegation are presumed to be true until the contrary is proved See Pfizer v. Minister of Health, 2008 FC 11 for a summary of the jurisprudence as to the BOP in NOC Proceedings At the hearing, the innovator bears the burden of proving, on a balance of probabilities that the generic’s allegations of invalidity and non-infringement are not justified (i.e., a reverse onus). The judge will review the documentary record and hear the oral submissions of counsel to decide whether the innovator has met its burden of proof.

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System PM(NOC) Litigation Parties exchange pleadings, expert affidavits, conduct witness cross examination and file legal briefs. Following a hearing, the Court will either: Grant an order of prohibition preventing the Minister from approving the sale of the generic drug until expiry of the patent; or, Dismiss the application. The generic drug can be manufactured and sold.

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Section 8 If the Court dismisses the application for prohibition (or if the application is otherwise discontinued), the second person may recover any loss suffered as a result of being held off the market Second person is limited to its damages. It cannot claim the first person’s profits The second person bears no liability for compensation if the application for prohibition is successful First trial decision on section 8 damages: Apotex Inc. v. Merck & Co., Inc. et al. (October 21, 2008), Ottawa, T-1144-05 (Fed. Ct.) If an application for a prohibition order is withdrawn, discontinued or dismissed by the court hearing the application, the “first person” may be liable for any loss suffered by the second person for its having been delayed in obtaining a NOC. The relevant time period generally begins running from the time that the Minister would have issued a NOC to the generic manufacturer but for the application. The generic may recover its loss by instituting an action either in the Federal Court or in one of the provincial superior courts.

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System PM(NOC) Litigation – Implication of Decision If unsuccessful, the Innovator can appeal to the Federal Court of Appeal; however, once the NOC has issued, any appeal is moot. Since the Court does not rule on the ultimate validity or infringement of the patent, patent infringement and impeachment proceedings under the Patent Act are still an option. It is important to note that the Court’s decision in a prohibition proceeding is not a determination of the ultimate infringement or validity of the patent(s) at issue; rather, it constitutes a determination of whether the generic’s allegations of non-infringement were justified. Since the Court does not rule on the ultimate validity or infringement of the patent, infringement and impeachment proceedings under the Patent Act are still an option for an innovator whose application for prohibition is ultimately dismissed.

III. Pharmaceutical Patent Law – The Current System 16.04.2017 III. Pharmaceutical Patent Law – The Current System Data Protection (pre – October, 2006) Based on international obligations imposed by NAFTA and TRIPS Require that where a company submits confidential data to a regulatory authority when seeking approval for a new drug, the data is protected from reliance by competitors for a certain period of time after the date the drug is approved Prior to the 2006 amendments, the data protection provision of the Food and Drug Regulations was interpreted narrowly by the Courts such that it was rarely, if ever, triggered See e.g. Bayer v. Attorney General of Canada (1999), 87 C.P.R. (3d) 29 (FCA) The Food and Drug Regulations creates a regulatory framework to protect the clinical data submitted by an innovator in support of its drug regulatory submissions, by providing new drugs with a guaranteed minimum period of market exclusivity.

III. Pharmaceutical Patent Law – The Current System Data Protection (post – October 2006) Amended Food and Drug Regulations prohibit issuance of a NOC to a manufacturer that makes a direct or indirect comparison to an “innovative drug” until eight (8) years after issuance of the innovators first NOC + additional 6 months for certain paediatric submissions Applies to all drugs that have received a NOC on or after June 17, 2006 A generic manufacturer may file an ANDS or trigger litigation under the PM(NOC) Regulations after 6 years Amended regulations are more in line with comparable foreign jurisdictions

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