Law Times

Law Times • January 31, 2011 FOCUS Parties look to SCC after federal courts uphold drug provisions protection provisions under the food and drug regulations. The provisions protect data submitted by innovators in pursuit of regulatory approval for new drugs. The ruling upholds the July 2009 decision of Justice Leon- ard Mandamin of the Fed- eral Court, albeit on different grounds. Still, a contrary result would have been of tremen- dous benefit to the generic drug industry because access to the information protected by the provisions would have given companies more ammunition to attack innovators' patents. "As well, this reflects on something quite different from the protection that patents af- ford," says Adrienne Blanchard of Gowling Lafleur Hender- son LLP's Ottawa office. "For example, this may be the only protection for compounds that haven't been commercialized." The government implement- ed the provisions in 2006 to bring Canada into compliance with its international obliga- tions to protect innovators' data under the North American Free Trade Agreement and the World Trade Organization's Agreement on Trade-Related Aspects of In- tellectual Property Rights. The rules give innovators' data eight years of protection from the date they file their first notice of compliance for an in- novative drug with the possi- bility of a six-month extension. During that time, competitors can't compare their products to the innovative product in order to obtain approval, which ef- fectively stops them from using the innovators' data to their advantage in seeking approval for their own drugs. The Canadian Generic Phar- maceutical Association, repre- sented by Edward Hore and Geoffrey Langen of Toronto's Hazzard & Hore, and Apo- tex Inc., represented by Harry Radomski of Goodmans LLP, challenged the provisions as unconstitutional in separate ap- plications that were eventually heard together. The court granted inter- vener status in the associa- tion's proceedings to Canada's Research-Based Pharmaceuti- cal Companies, represented by Martin Mason and Graham Ragan of Gowlings. In addi- tion, it gave such status to Eli Lilly Canada Inc., represented by Gowlings' Richard Dearden Generics seek to appeal data protection ruling T BY JULIUS MELNITZER For Law Times he Federal Court of Ap- peal has upheld the con- stitutionality of the data and Wendy Wagner, in the Apotex matter. Frederick Woyiwada of Justice Canada argued that the association didn't have public-interest standing that would allow it to attain inter- vener status. But Mandamin ruled the organization had demonstrated there was a serious issue to be tried; that it had a direct or genuine in- terest in the matter; and that there was no other reason- able or effective way to bring the issue to court despite the fact that Apotex, as a private litigant, was also raising the issue. "At the time the [associa- tion] commenced its appli- cation, Apotex had not yet filed its application," Man- damin noted. "In my view, at the time the [association] commenced its application, it was entitled to public-interest standing. "Since Canada has not pro- The Federal Court of Appeal miscon- ceived the criminal law power, says Edward Hore. through market exclusivity mechanisms." As such, the provisions re- vided any jurisprudence that sets out the proposition that a party that was entitled to stand- ing at the commencement of its application loses that stand- ing because another party commences an application on the same issue, I see no reason to decide the [association] lost that public-interest standing when Apotex commenced its own application." On the substantive issues, Mandamin ruled the court couldn't uphold the provisions under the federal criminal law power. But it was constitution- al under the federal trade and commerce power as "integral to the operation of an overall scheme concerning the mar- keting of drugs" in Canada. "I have found the dominant feature of the data protection regulation is the balancing of commercial considerations between the protection of an innovator drug manufacturer's investment [in preparing the notice of compliance] for a new drug and the eventual approval of a generic drug company's [submission] for a lower cost generic copy of the new drug," Mandamin wrote. At the same time, the pro- visions had an international dimension. "It was enacted in compliance with NAFTA and [the WTO agreement]," Man- damin noted. "NAFTA involves Canada, the United States, and Mexico. The [WTO] agree- ment involves many countries around the world, most of which participate to some de- gree or other in the [WTO] scheme for the protection of new drug research investment lated to Canada's ability to par- ticipate in world trade. "The data protection regula- tion comes within the second branch of the s. 91(2) regula- tion of trade and commerce power as this provision meets the criteria set out by the Su- preme Court of Canada in [General Motors of Canada Ltd. v.] National City Leasing [sic] for being a matter of genuine national economic concern," Mandamin wrote. "The data protection regula- tion rounds out the valid feder- al drug regulatory scheme, has a national economic dimension because of Canada's obligations pursuant to international trade agreements NAFTA and [under the WTO], and is a matter which the provinces cannot address legislatively individually or collectively." Mandamin also dismissed the argument that the provi- sions were beyond cabinet's regulatory power. "The data protection regulation is not beyond the regulatory power of the governor in council in that the regulation is properly concerned with data protec- tion for innovator drug com- panies which are required to provide confidential commer- cially valuable data to secure a [notice of compliance] to in- troduce new drugs to the Ca- nadian market," he concluded. "This is consistent with the re- quirement in the NAFTA and [the WTO] provisions." The argument that the provisions constituted an im- proper delegation of power also failed. "Finally, the data protec- tion regulation is a permissible sub-delegation by Parliament to the governor in council since the delegated regulatory power is constrained by the limitations in the NAFTA and [WTO] agree- ments," Mandamin wrote. But at the Federal Court of Appeal, Justice Marc Nadon, writing for a unanimous bench, relied on the federal criminal law power to support the con- stitutionality of the provisions. The "pith and substance" of the provisions, Nadon con- cluded, was to implement the relevant portion of NAFTA and the WTO agreement "so as to encourage the develop- ment of new drugs, a valid public health and safety pur- pose." As such, the regulation "constitutes a valid exercise of the federal criminal law power under subsection 91(27) of the Constitution Act." Indeed, the provisions met the requirements of valid crim- inal legislation: they contained a prohibition and penal sanc- tion and were directed at a "le- gitimate public health evil." The prohibition was found in the rules against selling or advertising a new drug unless certain conditions were met and sanctions of up to three years' imprisonment or a fine of up to $5,000 or both. As well, the provisions existed to protect the public from the sale of unsafe or ineffective drugs while ensuring it had access to appropriate medications. At the same time, the ap- peal court found the provi- sions weren't separable from the "overall scheme of criminal law" as found in the food and drug regulations as a whole. Indeed, it ruled Mandamin had erred in confining his analysis of the pith and substance to the lan- guage of the provisions without regard to the overall scheme. Hore, however, says the Court of Appeal misconceived the criminal law power. "The regulations do not address a public health evil, but rather their purpose is to ban generic competition in order to protect big pharma companies," he tells Law Times. "We will be seeking leave to appeal from the Su- preme Court of Canada." LT PAGE 11 Dimock Stratton is pleased to welcome Etienne de Villiers to the partnership Etienne has built a busy practice in the areas of patent litigation and prosecution with a focus on the mechanical, electrical and high technology fields. He is also a registered patent and trademark agent. He completed an undergraduate degree in Engineering Physics from Queen's University and a M.Eng. in Mechanical Engineering from McMaster University. After a brief work stint in the Research & Technology Group of a leading security company, Etienne earned his llb from the University of British Columbia in 2003. Etienne brings a lot to the firm and we're happy to have him join the partnership. Dimock Stratton llp experience. results. 20 Queen W. 32nd fl, Toronto | 416.971.7202 | dimock.com Untitled-3 1www.lawtimesnews.com 1/25/11 1:13:41 PM

• Cover
• Stepping Up
• Parental Hostility
• Focus On IP/Trademark Law