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Director General, Therapeutic Products Directorate
Health Products and Food Branch, Department of Health
Re: Regulations Amending the Patented Medicines (Notice of Compliance)
Canada Gazette, Part I
Notice Dated December 11, 2004
Re: Regulations Amending the Food and Drug Regulations (1390 – Data
Canada Gazette, Part I
Notice Dated December 11, 2004
We are writing in response to the government’s proposed amendments to the
Patented Medicines (Notice of Compliance) Regulations
(the “NOC Regulations” or the
“Regulations”), and the Food and Drug Regulations
as published in the Canada Gazette,
Volume 138, Number 50 on December 11, 2004.
We are a coalition of Canadian consumers who are concerned about the rising
cost of prescription drug products in Canada. The following groups are members of our
coalition: Canadian Pensioners Concerned Incorporated, National Union of Public and
General Employees, Congress of Union Retirees of Canada, Canadian Health Coalition,
Consumers’ Association of Canada, Alliance of Seniors, National Pensioners and Senior
Citizens Federation Incorporated, and Ontario Society (Coalition) of Senior Citizens
We are submitting comments on these proposed changes to the Regulations
affecting drug approvals in Canada because of the substantial and
Recently, federal and provincial government leaders met to talk about how to
ensure Canadians receive high quality medical care. How can this government claim to
be working toward ensuring that all Canadians have access to our healthcare system, yet
at the same time keep in place an antiquated regulatory regime that artificially increases
The NOC Regulations Should be Repealed
The NOC Regulations should be eliminated in their entirety. In our view, the
Patent laws exist to protect patentees. Only in the case of pharmaceuticals are
patentees entitled to delay a proposed competitor from entering the market. The
Regulations provide brand name companies with an opportunity to prevent generic
competition by merely listing patents on the Patent Register and automatically benefiting
from successive, staggered, 24-month delays. No other category of patent holders has
been given such extraordinary rights, and the result of this extraordinary privilege to
brand name companies is contrary to the public’s interest in having access to affordable
We are aware that in the majority of cases, the generic company that has been
delayed ultimately wins the court battle, and may be entitled to damages. However,
brand name companies who benefit from improper delays never have to fully relinquish
all of the profits made during the period of improper delay. Specifically, Drug
Purchasers are never reimbursed the additional money paid for the higher cost product
during the period of unnecessary and unjustified delay.
Thus, there is a built-in incentive for brand name companies to delay generic
approvals, with disastrous consequences on the timely marketing of affordable generic
drugs. For several years now, we have been writing different levels of government to
express our concern with the NOC Regulations. For example, in May 2003, we
submitted an application for inquiry under section 9 of the Competition Act
Commissioner of Competition to commence an inquiry into patent evergreening and the
effect of evergreening on Drug Purchasers, as well as provide comments on the
interpretation of the NOC Regulations and their impact on competition in pharmaceutical
products. The Commissioner of Competition had this to say about the operation of the
…a number of court decisions over the last several years regarding what
constitutes a relevant patent and the time period during which such a
patent can be added [to the Patent Register] have somewhat altered the
balance contained in the NOC Regulations between the competing
interests of the brand name pharmaceutical patent holders and generic
drug companies. Furthermore, I note that there is no ready mechanism in
the NOC Regulations for compensating consumers affected by delays in
the introduction of generic drugs, thereby creating a possible incentive for
brand name pharmaceutical companies to strategically use the NOC
Regulations to improperly delay generic drug entry.
Therefore, from a competition policy perspective in particular, the
Government may wish to review the current regulatory process established
by the NOC Regulations to ensure that an appropriate balance be
maintained between protecting intellectual property rights and
encouraging a competitive supply of pharmaceutical products for
The Romanow Commission, which undertook a two-year comprehensive review
of Canada’s healthcare system, expressed a similar concern about the practice of brand
…manufacturers of brand name drugs make variations to existing drugs in
order to extend their patent coverage. This delays the ability of generic
manufacturers to develop cheaper products for the marketplace and it is a
questionable outcome of Canada’s patent law … Clearly, if this is the
case, the practice is not in the public interest.1 [emphasis added]
In our complaint to the Competition Bureau, we discussed two cases of
evergreening: omeprazole and paroxetine. The accumulated loss to Drug Purchasers
from expiry of the original patent on omeprazole on July 6, 1999, to April 1, 2003
(calculated to the date of our submission to the Competition Bureau) was approximately
$537 million. This loss continued to mount by approximately $502,000 per day, or $3.5
million per week. Thus, if a generic version of omeprazole had been available in early
2002 (which is when we understand the first generic applicant would have been approved
but for the existence of patents on the Register) the average employer’s total drug benefit
cost would have dropped by 1.6% on omeprazole alone. To the best of our knowledge, a
generic omeprazole product was not available in Canada until June 2004.
In the case of paroxetine, Health Canada’s review of one generic submission was
complete in October 1999. Between October 31, 1999 and April 1, 2003, Drug
Purchasers likely incurred a loss in the amount of approximately $258 million.
Pharmaceuticals are the fastest growing component of Canada’s healthcare
system. We cannot tolerate these kinds of losses any longer. These losses are
unnecessary expenditures and are a major drain on Canada’s healthcare system.
Why is it that this government and others have taken so long to respond to
Commissioner Romanow’s comprehensive report? Why has this government proposed
changes that merely tinker with the existing system, which is fundamentally flawed?
Why has this government allowed brand name pharmaceutical companies to unfairly
From the perspective of Canadian Drug Purchasers, the NOC Regulations are the
possible system. The NOC Regulations are profoundly unfair to Drug Purchasers
who have borne, and will apparently continue bear, the cost of every single
24-month delay mandated under the NOC Regulations. In this sense, the NOC
Regulations have really been adopted on the back of all Canadian Drug Purchasers.
True Innovation vs. Legal Loophole Innovation
Consumers are generally not aware of the effect of patents on the cost of
medicines. We support basic innovative research into new medicines. There is
tremendous consumer benefit from the discovery of new medicines and we support a
patent system that protects and encourages true innovation.
However, recently, pharmaceutical companies have expended tremendous
resources on what is effectively marketing old wine in new bottles. This practice is best
summarized by U.S. President George W. Bush, who in 2002 said as follows:
… some brand name drug manufacturers may have manipulated the law to
delay the approval of competing generic drugs. When a drug patent is
about to expire, one method some companies use is to file a brand new
patent based on a minor feature, such as the color of the pill bottle or a
specific combination of ingredients unrelated to the drug’s effectiveness.
In this way, the brand name company buys time through repeated delays,
called automatic stays, that freeze the status quo as the legal complexities
We note that at the time of making this statement, President Bush announced a
sweeping change to the drug patent laws, effectively preventing companies from
obtaining multiple delays of approval of generic products.
Although the Canadian government is obviously aware of the manner in which
the U.S. system was changed, it nevertheless chose to not follow the U.S. lead, and
instead, proposed changes which still encourage the obtaining of unnecessary and
unjustified delays. This is accomplished by allowing patents on minor changes to
approved products to trigger additional pre-approval lawsuits. We have a number of
concerns with the government’s proposed amendments.
The Proposed Amendments Will Still Allow Unnecessary Delays
It appears to us that the government has only suggested changes to the rules
regarding which patents can be added to the Patent Register, and when they can be added.
Tinkering with the Regulations will necessarily leave room for the creation of additional
For example, brand name companies will still be able to time the issuance and
listing of patents in order to delay entry of generic products. This could be done through
staggering patent applications (and even tinkering with the payment of fees to the Patent
Office) to allow listing with supplemental submissions, obtaining and listing frivolous
patents, obtaining and listing overlapping use patents, and obtaining and listing patents on
different forms of the same medicine. In most cases, as has been the case under the
current Regulations, such patents will not claim anything genuinely new and are simply
the equivalent to packaging old wine in new bottles.
In addition, approval of generic drugs will continue to be delayed by “use” patents
that are entirely irrelevant to the generic drug submission. In our view, a brand name
company should not be permitted to prevent competition for a drug product because it has
developed a new use for an old product. For example, Canadian consumers should not be
deprived of access to affordable aspirin for use in the treatment of headaches merely
because it has been discovered that aspirin is also an effective blood thinner.
The amended Regulations as currently drafted provide a number of obvious
opportunities for continued delay in the approval of lower cost drugs. Put simply, this is
An easy way to stop unnecessary delays is to simplify the system. Early access to
affordable medicine ought to be the fundamental consideration
Canadians with improved access to non-patented prescription drugs.2
In our view, the government’s attempt to remedy the problems associated with the
current operations of the NOC Regulations will not ensure an appropriate balance.
Drug Purchasers Are Entitled To Damages Caused by Unnecessary and Unjustified
Delay in the Approval of Lower cost Pharmaceuticals
We note that the NOC Regulations contain a damages provision for generic
companies who successfully defend a suit brought by the brand name company under the
NOC Regulations. The generic is entitled to recover its lost profits for the period of time
its market entry was inappropriately delayed. We understand, however, that this damages
provision is completely ineffective and that no generic has yet been awarded damages,
despite clear situations of unnecessary and unjustified delay.
In any event, we understand that the brand name company’s profits earned during
the exclusive marketing of its product are always greater than generic profits, and in
every case the brand name company’s profits earned during the improper market delay
will be greater than the damages suffered by the generic company.
Thus, there is always a windfall to the brand name company, which corresponds
directly to a loss, borne directly by Drug Purchasers who have paid higher prices when a
lower-cost product should have been available.
Under the current regime and the proposed amendments, we have no legal remedy
to recover our losses.3 Every dollar not spent by Drug Purchasers on increased drug costs
is money otherwise available for our healthcare system.
In our view, if the government provided a system that compensated everyone,
there would be less incentive for brand name companies to engineer delays in approval of
Proposed Amendments to the Food and Drug Regulations (“Data Protection”)
As set out above, in our view the government’s proposed regulatory amendments
to the NOC Regulations fail to properly address the problem of patent evergreening, and
will still allow unnecessary delays. This is particularly troubling in light of the
government’s proposed amendments regarding Data Protection, which will result in even
longer delays in the market entry of generic drugs.
Commissioner Romanow, the Commissioner of Competition, President Bush and
the U.S. Congress have all, among others, called for an end to evergreening. In contrast,
there has been no public debate in Canada about data protection. Despite this, the
government is proposing to lengthen the exclusivity period of brand companies from five
to eight years. We understand that in many cases this will delay the entry of lower cost
generic drugs at a cost of hundreds of millions of dollars per year.
This measure seems to counter the intent of the government in stopping
unnecessary and unjustified delays in the market entry of safe and effective lower cost
We demand that the government maintain Data Protection at five years, as we
understand is the case under the current regulatory regime.
We are concerned about the impact of the Regulations on the future of the
Canadian healthcare system, and are angry that the government has not tackled this issue
in any meaningful way. Changes to the proposed regulatory package must be made.
We welcome any opportunity to meet with you to discuss our comments
specifically, or reform to the NOC Regulations generally.
Canadian Pensioners Concerned Incorporated
National Union of Public and General Employees
Congress of Union Retirees of Canada (“CURC”)
Canadian Health Coalition
Consumers’ Association of Canada
Alliance of Seniors
National Pensioners and Senior Citizens Federation Incorporated
Ontario Society (Coalition) of Senior Citizens Organizations
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