Unlike the United States and many other innovative countries, Canada historically did not provide any recourse to a patentee whose patent term was effectively diminished due to the lengthy drug approval process. By the time marketing authorization granted, much of the 20-year patent term may have passed.
This changed in 2017, when Canada entered a wide-ranging trade agreement with the European Union known as the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). In addition to such disparate matters as financial services, international marine transport, and telecommunications, CETA also addresses intellectual property obligations. IP proved to be a newsworthy aspect of CETA, and much public attention during the treaty negotiations focused on the pharmaceutical patent law issues. Ultimately, under CETA, Canada agreed for the first time to provide relief to patentees whose term of patent protection is effectively reduced as a result of delay in the granting of marketing authorization.
In the United States, delay in drug approval by the FDA is compensated by Hatch-Waxman patent term extension. Canada’s approach under CETA is different. The actual term of the patent itself is not extended. Rather, Canada implemented what is described as a “sui generis” (a Latin expression meaning “of its own kind” or “in a class by itself”) system, whereby Certificates of Supplementary Protection (CSPs) are granted, providing additional protection for a drug product beyond the 20-year patent term. The system is largely modeled on the EU Supplementary Protection Certificate regime with which many pharmaceutical innovators will be familiar.
Basic requirements of the Canadian CSP system include:
- A CSP is available only in respect of a medicinal ingredient or combination of medicinal ingredients which first received marketing authorization in Canada on or after September 21, 2017.
- The Canadian application for marketing authorization must have been filed within 12 months of the first application for marketing authorization in any of the United States, the European Union or any member country, Australia, Switzerland, or Japan.
- The CSP application must be based on the first marketing authorization for the medicinal ingredient or combination of medicinal ingredients in Canada.
- There must not have been a previous CSP issued in respect of the medicinal ingredient or combination of medicinal ingredients.
- The Canadian patent must contain:
- A claim for the medicinal ingredient or combination of all the medicinal ingredients contained in the drug;
- A product-by-process claim for the medicinal ingredient or combination as in (a); or
- A claim for a use of the medicinal ingredient or combination as in the first bullet.
- The applicant must be the patentee, or the holder of the marketing authorization if authorized by the patentee.
Greater access to European markets may be seen as coming at the cost of higher drug prices in the domestic market. In implementing its obligations under CETA, Canada took a conservative approach, in some instances granting only the minimum negotiated scope of protection. For example, CETA permits the parties to provide a term of protection ranging from two to five years, plus a possible extension as an incentive or reward for research in target populations such as children. Canada legislated the minimum permitted scope of protection—CSPs have a maximum term of two years, and there is no paediatric or other extension.
Health Canada has similarly taken a narrow view of the CSP legislation implementing Canada’s obligations under CETA. The first decisions of the Canadian courts concerning Canada’s new CSP system issued in 2020. In one instance, the Minister of Health found a patent ineligible for a CSP as claiming a CSP-ineligible “formulation” comprising the combination of a medicinal ingredient (antigen) and a non-medicinal ingredient (adjuvant), despite agreeing that both components are biologically active and required for an effective vaccine. In the other, the Minister interpreted the Canadian legislation as requiring the patent to claim the combination of both medicinal ingredients contained in the approved drug, rather than only one of them. In both cases, the Federal Court held that the Minister of Health’s decision to refuse to grant a CSP was unreasonable and remanded the matter for redetermination by the Minister. In particular, the Minister of Health had failed to properly consider Canada’s obligations under CETA in interpreting the scope of the Canadian legislation.
As Canada’s CSP system is new, and the early court decisions suggest that the Minister of Health may be interpreting the regulations too narrowly, pharmaceutical innovators should review their pending and granted Canadian patent portfolios carefully, and obtain professional advice to assess whether a CSP may be obtained. There is only one opportunity to apply for a CSP, either within 120 days after marketing authorization has granted for a drug, or within 120 days after the relevant patent issues if it had not issued at the time that marketing authorization granted. It may be advisable to file a CSP application in any case where eligibility is uncertain or even possibly doubtful, as the goal line for eligibility may continue to move for some time.
About the Author:
Partner, Smart & Biggar LLP
David Schwartz, is a partner at Smart & Biggar’s Ottawa office. Smart & Biggar is widely recognized as Canada’s leading firm for intellectual property law, with offices in Ottawa, Toronto, Montreal, Vancouver and Calgary.
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