Rx IP Update - 2017 Highlights in Canadian Life Sciences IP

Smart & Biggar

Smart & Biggar

The year 2017 was one of the most significant years for Canadian Life Sciences IP and Regulatory Law in Canada’s history. The year saw major developments in patent linkage, patent term, and substantive patent issues.

As we look ahead to 2018, we reflect on last year’s highlights, which included: the striking down of the “promise doctrine” by the Supreme Court of Canada; CETA amendments ushering in certificates of supplementary protection and amended linkage regulations; and a laying of the foundation to overhaul the PMPRB regulations and Guidance by 2019.

We have re-capped the most significant developments below, and will be reviewing these in a 30-minute webinar later this month – click the banner below to register.

By Nancy P. Pei

1. Supreme Court of Canada strikes down “promise doctrine”, upholds AstraZeneca’s NEXIUM patent as useful

On June 30, the Supreme Court of Canada (SCC) delivered its highly anticipated decision, AstraZeneca v Apotex, 2017 SCC 36 relating to esomeprazole (NEXIUM). The SCC rejected the “promise doctrine” and clarified the requirement for patent “utility”; it subsequently dismissed Apotex’s motion for remand. The Federal Court of Appeal (FCA) applied the SCC’s test in its SPRYCEL (dasatanib) decision. Apotex has continued to raise “overpromising” attacks. 

Prior to the SCC decision, on March 16, an international arbitration tribunal dismissed Eli Lilly’s claims seeking damages from the Government of Canada, asserting that the Canadian courts’ application of the promise doctrine to Eli Lilly's STRATTERA (atomoxetine) and ZYPREXA (olanzapine) patents contravened Canada's obligations under NAFTA.

2. CETA amendments: Certificates of supplementary protection (CSP) now available; end of dual litigation

Following pre-publication on July 15, and flowing from its commitments under the Comprehensive Economic and Trade Agreement (CETA), the Certificates of Supplementary Protection Regulations and the Regulations Amending the Patented Medicines (Notice of Compliance) (PMNOC) Regulations came into force on September 21, together with corresponding amendments to the Patent Act. We prepared a chart comparing the new litigation scheme to the US Hatch-Waxman scheme. We also reported on Health Canada’s guidance document regarding CSPs and notice under the amended PMNOC Regulations and the Federal Court’s practice notice regarding actions under the amended PMNOC Regulations. By year-end, four actions (all relating to trastuzumab) had been commenced under the amended PMNOC Regulations and four CSP applications had been filed.

3. Proposed Amendments to Patented Medicines (pricing) Regulations; SOLIRIS (pricing, constitutionality) and DIFFERIN (jurisdiction) decisions

On December 2, proposed Regulations Amending the Patented Medicines Regulations were published; the consultation period ends February 15, 2018, with a proposed coming into force date of January 1, 2019. If passed, they will significantly affect the Patented Medicine Prices Review Board (PMPRB)’s approach to drug price evaluation, including expanding the list of comparator countries to twelve, but excluding the US and Switzerland, and by taking into account the pharmacoeconomic value of patented products. On December 11, the PMPRB released a scoping paper with its preliminary thoughts on “how to best operationalize the proposed changes”. A draft of the new Guidelines is expected in the spring of 2018.

Three decisions of note: On September 20, a PMPRB hearing panel decided that Alexion’s SOLIRIS (eculizumab) was excessively priced as (i) its benchmark price exceeded the lowest international price (an approach outside the Guidelines) and (ii) the increases were beyond those permitted by the Guidelines (despite the increases resulting only from the appreciation of the Canadian dollar relative to foreign currencies). Alexion has sought judicial review. In a November 9 decision, the Federal Court overturned the PMPRB’s finding that a patent ‘pertained’ to Galderma’s DIFFERIN (0.1% adapalene), as the Board failed to consider the entire patent, including its claims. The PMPRB has appealed. Finally, on December 7, the FCA dismissed Alexion’s appeal of a decision rejecting Alexion’s arguments that the PMPRB provisions of the Patent Act are unconstitutional.

4. Section 8 and other claims following failed PMNOC Regulations proceedings

On January 19, the SCC denied Teva leave to appeal the FCA’s decision that overturned Teva’s $125 million award (venlafaxine, EFFEXOR XR) for improper reliance on hearsay evidence and sent the matter back to the trial judge for determination; on May 26, the trial judge reaffirmed the original decision and Pfizer has appealed. On February 27, the Ontario Superior Court dismissed Abbott/Takeda’s motion for summary judgment in a section 8 action brought by Apotex regarding its generic lansoprazole (Abbott’s PREVACID). Apotex’s initial patent hold was revoked and later re-instated, but only after the PMNOC proceedings had been resolved. The Court found that absent the proceedings, the Minister would have issued the Apo-Lansoprazole notice of compliance as of the patent hold date. On March 30 and April 4, the Federal Court awarded Teva section 8 damages in cases regarding pregabalin (Pfizer’s LYRICA) and olanzapine (Eli Lilly’s ZYPREXA), appeals are pending. On July 26, the reference trial judge quantified Apotex’s section 8 losses regarding omeprazole (AstraZeneca’s LOSEC) as nil, as Apotex’s omeprazole would have infringed an AstraZeneca patent; an appeal is pending.

5. Non-infringing alternative (NIA) defence: FCA rules on off-shore NIA as a defence in assessing profits from patent infringement; Federal Court rejects Apotex’s NIA defence in LOSEC profits reference

On February 2, the FCA allowed Apotex’s appeal of a $61 million award disgorging Apotex’s profits for its generic perindopril (COVERSYL). The lower Court had rejected Apotex’s NIA defence based on export sales Apotex alleged it could and would have made from other countries, thereby avoiding infringement in Canada. The Court of Appeal remitted to the Federal Court (decision now under reserve) the factual issue of whether Apotex could and would have obtained non-infringing perindopril from three specific offshore suppliers, and, if so, whether Apotex could and would have sold this material to its Australian and UK affiliates. Following affirmation by the FCA of the validity of AstraZeneca’s omeprazole formulation patent on January 12 (Apotex’s SCC leave application was subsequently denied), on July 26, the reference trial Judge found that Apotex failed to prove that it could and would have sold a NIA of its omeprazole capsules. Apotex’s defence to AstraZeneca’s claim for Apotex’s profits was based on a number of formulations it designed for the purpose of the quantification trial, and in the alternative, product from third party foreign suppliers. Apotex has appealed.

6. Update on Biosimilars

We provided an update on biosimilars: Health Canada’s guidance, approvals and reviews of biosimilars to date, the effect of CETA amendments to biologics, pending patent litigation involving biosimilars, and pricing and reimbursement of biosimilars. Health Canada approved two biosimilars in 2017: ERELZI (Sandoz’s etanercept) and RENFLEXIS (Samsung Bioepis’ infliximab).

7. Health Canada: Revised Regulations and Guidances

The Food and Drug Regulations were amended in June to provide for importation and use of drugs authorized for sale in the United States, European Union or Switzerland to meet an urgent public health need. Health Canada also consulted on proposed amendments to the Food and Drug Regulations including relating to: Vanessa’s Law (some of the proposed amendments would establish rules for the exercise of the new powers to require assessments, tests and studies, and new foreign incident reporting rules); pharmaceutical equivalence (a notice of intent only, proposing to allow a generic drug to have a different salt, ester, or complex of the medicinal ingredient in the Canadian Reference Product (CRP)); and public release of certain clinical information once regulatory review is complete (comments will be received until February 22, 2018). Health Canada released a number of new/revised guidance documents including regarding: data protection; disclosure of Confidential Business Information; interpretation of “identical medicinal ingredient” (an Interim Policy relating to whether the medicinal ingredient in a subsequent entry product is the same at the input stage and/or finished dosage form as the CRP); and use of a foreign-sourced reference product as a CRP.

Separately, in Ontario, on December 12, Bill 160, the Strengthening Quality and Accountability for Patients Act, 2017, received Royal Assent. It enacts the Health Sector Payment Transparency Act, 2017 (Transparency Act) which, when in force, will require payors, including pharmaceutical manufacturers, to report financial relationships with health care professionals and organizations, as well as other prescribed recipients.

8. PMNOC Regulations and data protection statistics

We reported on the six Federal Court and three FCA PMNOC Regulations decisions publicly released in 2017: see summary table here. See also the Therapeutic Products Directorate report providing a statistical overview of Health Canada’s administration of the PMNOC Regulations and data protection; and the Therapeutic Products Directorate and the Biologics and Genetic Therapies Directorate’s Drug Submission Performance Annual Reports regarding drug submission review activity, including approval times.

9. FCA comments on “inventive concept”

On April 11, the FCA dismissed Bristol-Myers Squibb’s appeal of the decision dismissing its prohibition application against Teva for atazanavir sulfate (Bristol-Myers Squibb’s REYATAZ): Bristol-Myers Squibb v Teva, 2017 FCA 76. While the Court of Appeal held that the Federal Court erred in its identification of the inventive concept, it upheld the finding that the patent was obvious. The Court of Appeal held that the “inventive concept” was not “materially different” from “the solution taught by the patent”, which on the facts, was “atazanavir bisulfate, a salt of atazanavir which is pharmaceutically acceptable because it has equal or better bioavailability than the atazanavir free base.” The FCA commented further on inventive concept in its November 17 decision, Ciba Specialty Chemicals Water Treatments v SNF, 2017 FCA 225.

10. Health Canada litigation

Apotex was unsuccessful in three Health Canada court challenges. First, the decision to refuse approval of Apo-Progesterone for containing unusually high levels of sodium lauryl sulfate (SLS) was found reasonable. Second, the requirement for Apotex to provide additional information for products manufactured or tested at Apotex’s facilities in India was not improper or unreasonable with regard to the varenicline and sitagliptin submissions for which data integrity issues remained outstanding. Third, Apotex’s challenge of the Minister’s decision to cancel reconsideration of the Notice of Non-Compliance issued for Apotex’s submission for omeprazole magnesium tablets (Apo-Omeprazole) was rejected. Apotex has appealed all three decisions. 

On April 6, the FCA overturned the Federal Court’s conclusion that Apotex failed to mitigate the loss it incurred as a result of Health Canada’s tortious conduct in considering Apotex’s Apo-Trazodone drug submission. The FCA otherwise dismissed the parties’ appeals relating to Apotex’s claims in negligence, misfeasance in a public office, and contract. The SCC denied Apotex leave. 

Finally, on May 10, the Court allowed Apotex Inc. and two of its Indian affiliates’ claims to proceed against the former federal Minister of Health (Rona Ambrose), the former federal Deputy Minister of Health, and other individuals, as well as the Crown, in connection with Health Canada's import ban placed on products from the Indian affiliates.

Selected Rankings

Canadian IP Impact Case of the Year 
AstraZeneca v Apotex (NEXIUM)
LMG Life Sciences

Read more »

Canada’s Intellectual Property Litigation Firm of the Year
Benchmark Canada

Read more »



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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