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Canada and the EU Successfully Conclude CETA: What It Means to the Pharmaceutical Industry

Date

September 30, 2014

AUTHOR(s)

Steven Mason
Sanjaya Mendis
Andrew J. Reddon


On September 26, 2014, Prime Minister Harper announced that Canada and the European Union have successfully concluded negotiations on a new trade agreement, the Comprehensive Economic and Trade Agreement (CETA) that was five years in the making, and publicly released the consolidated text of the agreement.

CETA is deeper in substance and broader in scope than any other such agreement in Canadian history, significantly affecting all economic areas, including the pharmaceutical sector.

The CETA chapter on intellectual property is of particular interest to the pharmaceutical industry, because it will introduce into Canada for the first time:

  • additional (sui generis) patent protection for pharmaceutical products; and
  • effective rights of appeal for Patented Medicines (Notice of Compliance) (PM(NOC)) litigants

Article 9.2: Sui Generis Protection for Pharmaceuticals

The sui generis protection for pharmaceuticals provided for by CETA will allow patent holders to extend patent monopolies (currently 20 years in Canada) on eligible patents in respect of products that are subject to regulatory “delay” when achieving market entry. CETA limits this extra protection to a period of two to five years, calculated as follows:

Period = Authorization date to market product – Filing date of patent application – 5 years

Notably, CETA provides discretion to each member nation to provide further extension to incentivize or reward research in certain target populations, such as pediatrics.

It appears that Canada intends to cap the sui generis protection period at two years, allow Canadian-made generic medicines to be exported during the period of additional protection and provide extra protection only to pharmaceuticals that are approved after CETA takes effect in Canada (i.e., there will be no retroactivity).

Article 9 bis: Patent Linkage/Right of Appeal

Another key provision under CETA is the recognition that litigants under the PM(NOC) Regulations will be “afforded equivalent and effective rights of appeal.” The current regime handicaps innovators’ rights because once a generic is successful at the trial level, the Minister of Health immediately issues a notice of compliance to the generic manufacturer, thereby rendering any appeal moot. A newly established innovator right of appeal should ensure an innovator’s legal rights are fairly and completely adjudicated before generic entry into the marketplace is granted. In addition, there is some speculation that the government is contemplating a mechanism to limit or eliminate subsequent patent infringement actions brought by innovators that are unsuccessful in PM(NOC) applications.

Next Steps

In order for CETA to become enforceable in Canada, it must be ratified and implemented through the passing of specific implementing legislation to amend Canada’s existing laws (e.g. the Patent Act and the Food and Drug Regulations). This implementing legislation will specify the precise terms of sui generis protection and the mechanism for providing effective rights of appeal to PM(NOC) litigants.

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