Health Canada Provides Guidance on Regulation of Software as a Medical Device (SaMD)

Caroline HenrieDavid YiJordana SanftBy Caroline Henrie, David Yi and Jordana Sanft on Posted in Life sciences and healthcare, Pharmaceuticals and life sciences

On December 18, 2019, Health Canada published a new Guidance Document Software as a Medical Device (SaMD): Definition and Classification (Guidance Document). The Guidance Document explains what products would be regulated as SaMD under the Food and Drugs Act (Act) and the Medical Devices Regulations (Regulations) as well as information on classification of SaMD.

What Constitutes SaMD

Not all software falls within the scope of the Act and Regulations. The Guidance Document provides current interpretations of what constitutes a “device” or “medical device” in the Act and Regulations (including by reference to the definition of SaMD as developed by the International Medical Device Regulators Forum).

Whether software meets the definition of a “medical device” is largely driven by two issues: 1) the functionality of the software product; and 2) the manner in which it is represented or labeled for use.

The Guidance Document also provides more specific inclusion and exclusion criteria that Health Canada will consider in determining whether software is a “medical device”; however, these criteria are not rigid and other factors may also be considered.

Inclusion Criteria

A software is considered a “medical device” when: 1) it is intended to be used for one or more medical purposes; and 2) it performs these purposes without being part of a hardware medical device. Medical purposes are set out in the definition of “device” in the Act. Health Canada will generally consider software as having a medical purpose where it is intended to:

  • acquire, process, or analyze a medical image, or a signal from an in vitro diagnostic device or a pattern/signal from a signal acquisition system or imaging device; or
  • support or provide recommendations to health care professionals, patients or non-healthcare professional caregivers about prevention, diagnosis, treatment, or mitigation of a disease or condition.
Exclusion Criteria

Software that does not have a direct impact on the diagnosis, treatment, or management of an individual’s disease, disorder, abnormal physical state or symptoms are excluded. This includes:

  • software intended for administrative support of a healthcare facility;
  • software that enables clinical communication and workflow including patient registration, scheduling visits, voice calling, and video calling;
  • software intended for maintaining or encouraging a healthy lifestyle, such as general wellness apps; and
  • software intended to serve as electronic patient records or tools to allow a patient to access their personal health information.

The Guidance Document additionally states that various types of clinical decision support (CDS) and patient decision support (PDS) software may not meet the definition of “device”, and as such, are not subject to the Regulations. Specific examples of excluded CDS and PDS software and more detailed criteria are also provided.

Classification

If software is considered to be a “medical device”, it must be classified according to the Classification Rules in Schedule 1 of the Regulations. Classification of SaMD is based on a combination of factors, such as the intended use of the software, the conditions and diseases it is intended to treat, and whether the SaMD is intended for critical, serious or non-serious conditions. There are four classes of medical devices, with Class I being the lowest risk and Class IV being the highest risk. The Guidance Document provides a framework for classification and specific examples of software falling into the different classes.

The Guidance Document is an administrative document and does not have force of law, but provides information intended to assist SaMD applicants with compliance.

Health Canada’s Notice announcing the Guidance can be found here.

Pharma in Brief: The 2019 Year in Review

Kristin WallJordana SanftChristopher A. GuerreiroColin HyslopBy Kristin Wall, Jordana Sanft, Christopher A. Guerreiro and Colin Hyslop on Posted in Intellectual property, Life sciences and healthcare, Pharmaceuticals and life sciences

In this article, the Pharma in Brief team curated the most significant topics we covered during 2019.

The Canadian pharma and life sciences space saw many developments in 2019. These included major policy initiatives and regulatory changes affecting the industry, driven in part by three high-profile federal objectives: lowering drug prices to move towards national pharmacare, replacing the North American Free Trade Agreement (NAFTA), and changes to drug approval pathways.

There were few pharmaceutical patent decisions released in 2019 but plenty of activity in the Courts, as the first actions under the new Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations) wound their way to the first trials—currently scheduled for 2020. Meanwhile, the era of prohibition applications neared its end as some of the last of these cases from the pre-CETA regime were decided.

1. Major policy initiatives

Throughout 2019, there was activity across a range of federal portfolios affecting health and IP policy. This included ongoing work to ratify a replacement for the NAFTA, as well as development of an evolving set of policies intended to lay the foundation for national pharmacare. One such change—reforms to the Patented Medicine Prices Review Board (PMPRB)—has already passed into law via new regulations scheduled to come into force on July 1, 2020. Consultations on guidelines to implement these reforms are now underway.

The federal government also made a range of amendments, both proposed and enacted, that affect drug approval pathways and the use of clinical information under the Food and Drugs Act and the Food and Drug Regulations. Advertising Standards Canada and the Competition Bureau released policies and guidance to regulate this sector as well.

(a) Changes to the PMPRB

In August 2019, the government finalized amendments to the PMPRB’s Patented Medicines Regulations. These amendments aim to lower prices of patented medicines by changing how the PMPRB assesses whether these prices are excessive. These amendments have been positioned by the government as a step toward making national pharmacare affordable. In pursuit of this goal, the amendments introduce new price tests based on market-size and pharmacoeconomic factors, as well as a revised and enlarged “basket” of 11 comparator countries that—for the first time—omits the United States.

In preparation for the amendments coming into force on July 1, 2020, the PMPRB has been consulting since November 2019 on a new set of price-review and reporting guidelines to accompany these amendments. The PMPRB is accepting feedback until February 14, 2020 and expects to finalize both the guidelines and a revised set of reporting forms before the amendments come into force. The PMPRB has indicated that patentees will be expected to comply with the revised reporting requirements in the filing for the first reporting period in 2020, which come due no later than July 31, 2020.

Meanwhile, two court challenges have been launched against the government’s jurisdiction to make these amendments to the Patented Medicines Regulations: an action in the Quebec Superior Court, as well as an application for judicial review before the Federal Court. The Federal Court application—in which the Applicants are represented by counsel from Norton Rose Fulbright—is scheduled to be heard in April 2020, before the amendments come into force.

For more info:

(b) CUSMA

On December 10, 2019, Canada signed onto an amended version of the Canada–United States–Mexico Agreement (CUSMA), the trade agreement that replaces the NAFTA. Among other changes, the amendments deleted a provision of the original November 30, 2018 agreement that would have required Canada to provide ten years of data protection for biologics, up from the eight years’ protection available today.

With a new final agreement in place, attention will now turn to ratification and implementation by the parties. Prior to the December amendments, Canada had already taken steps toward implementing the November 2018 version of the CUSMA by introducing legislation (Bill C‑100). Bill C-100 was not passed before the October 2019 federal election and can no longer be debated in Parliament.

Following the demise of Bill C-100, a new bill will have to be introduced to implement the amended version of the CUSMA—without extended data protection for biologics. Canada has advised that its current intellectual property scheme is already compliant with the amended provisions of the CUSMA.

For more info:

(c) Changes to the Food and Drugs Act and the Food and Drug Regulations

In the first quarter of 2019, there were significant changes—both proposed and finalized—affecting the treatment of submissions and approval pathways for pharmaceuticals and medical devices under the Food and Drugs Act and the Food and Drug Regulations.

In February, the government amended the Food and Drug Regulations to allow for the public disclosure of clinical information in regulatory submissions for drugs and medical devices. Health Canada now maintains a growing public database of clinical information.

In March 2019, the government proposed various regulatory changes that would affect the eligibility of generics for the abbreviated new drug submission pathway. Health Canada concluded a consultation on the proposal later in the year but has yet to publish final amendments.

In April 2019, the government introduced several proposed amendments to the Food and Drugs Act in its 2019 budget bill, including the creation of a distinct approval pathway for a “new class” of advanced therapeutic products. The bill passed in June 2019, following which Health Canada held consultations on how best to implement these amendments. Health Canada has yet to publish on next steps following consultations.

For more info:

(d) Other federal regulators

Outside the health portfolio, Advertising Standards Canada and the Competition Bureau were among the other regulators to amend policies that relate to pharmaceutical and life sciences businesses.

Here are some highlights:

2. New PM(NOC) Regulations: year two

As of September 2019, it has been two years since the new PM(NOC) Regulations came into force. As of yet, no action has proceeded to trial under the new PM(NOC) Regulations.

The first cases under the new regime were scheduled to go to trial in 2019, but were discontinued or adjourned to 2020. However, 2020 is off to a strong start: families of litigation about more than 15 drugs are ongoing, with several trials set down for January, February, and March. There is sure to be more activity under the new PM(NOC) Regulations in the coming months.

Meanwhile, the 2019 jurisprudence under the PM(NOC) Regulations focused on disputes about the procedure for conducting condensed actions under the new regime. Some of these decisions are currently under appeal and will be heard by the Federal Court of Appeal early in the new year.

For more info:

3. Other litigation

Outside of litigation under the new PM(NOC) Regulations, there were other court decisions in 2019 that impacted the pharmaceutical and life sciences sector.

(a) Last of the old PM(NOC) applications

While there were no trial decisions under the new PM(NOC) Regulations in 2019, the Court issued what are likely among the last substantive decisions in section 6 prohibition applications under the old PM(NOC) Regulations.

(b) First application of the file wrapper to claims construction

At the end of 2018, the Patent Act was amended to make patent prosecution history (file wrapper) admissible as evidence to rebut any representation made by a patentee as to claims construction. The first and only case to apply this provision was decided in 2019. Although the patent in issue concerned methods for roasting oil seed, the Court’s approach to file-wrapper evidence could have implications for pharma and life sciences litigation. An appeal of the decision is underway.

(c) Other decisions

On December 19, just in time for the holidays, the Supreme Court of Canada released its long-awaited decision on the standard of review applicable to administrative decision-makers in judicial review proceedings. Canada (Minister of Citizenship and Immigration) v Vavilov (Vavilov) saw the Court unite around a presumption that the reasonableness standard of review should be applied. However, two justices issued dissenting reasons that were critical of the majority’s approach to both reasonableness review and the exceptions where correctness review continues to apply. The majority’s approach, they argued, results in reduced deference to administrative decision-makers.

The changes to the standard of review introduced by Vavilov will reverberate through ongoing and future judicial review proceedings in 2020, with potential implications for a variety of cases involving challenges to regulations and administrative action by government actors, such as the Minister of Health.

There were other decisions in 2019, in both the federal courts and the courts across the provinces, that were also relevant to the pharmaceutical and life sciences sector. Here are the Pharma in Brief Team’s takes on three of them:

The Pharma in Brief Team thanks you for readership in 2019. We will continue to monitor developments and share our findings with you in 2020 and beyond.

Federal Court reinstates damages decision concerning prejudgment interest

Colin HyslopDavid YiAllyson Whyte NowakBy Colin Hyslop, David Yi and Allyson Whyte Nowak on Posted in Damages

The Federal Court has vindicated Lilly, reinstating a patent infringement damages decision that awarded Lilly prejudgment interest equal to its average annual rate of return during the interest earning period, on a compound basis. It found that Lilly’s real-world rate of return was convincing evidence of both what could have and what would have occurred in the but-for world.

Background

This was a redetermination of the prejudgment interest portion of damages awarded to Eli Lilly and Company and Eli Lilly Canada Inc. (collectively, Lilly) for patent infringement by Apotex Inc. (Apotex) in respect of Lilly’s drug cefaclor. At first instance, the Federal Court found that there was a presumption that prejudgment interest should be awarded on a compound basis and awarded prejudgment interest at a rate equal to Lilly’s real-world average annual rate of return, compounded.

As we reported, the Federal Court of Appeal overturned the decision on this issue, finding that there was no presumption that prejudgment interest should be awarded on a compound basis. The Federal Court of Appeal found that compensation could be awarded for a lost opportunity or to reflect the time value of money, but that the burden was on the plaintiff to prove its loss.

Evidence of real-world use of profits is strong evidence of the use that “could have” been made of lost profits in the but-for world

On redetermination, the Federal Court held that proof of a specific lost opportunity requires a plaintiff to prove both that it “could have” and “would have” pursued that opportunity. Lilly provided evidence of its real-world rate of return, shifting the burden to Apotex to show that it would have been impossible for Lilly to earn the same rate of return on the lost profits in the but-for world. The Federal Court found that Lilly’s real-world average rate of return was convincing and unequivocal evidence that the same rate of return could be generated on the lost profits in the but-for world.

Proportion of lost profits to real-world profits is relevant to how lost profits “would have” been invested in the but-for world

The Court held that in assessing the rate of return that would have been earned in the but-for world, a relevant consideration is the relative size of the lost profits as compared to other profits available to Lilly in the real-world over the same period. When lost profits are relatively small, it is more likely that they would have been used in a manner similar to real-world profits. When lost profits are relatively large, it is more likely that they would have been used in a manner different than real-world profits. The Court found that Lilly’s lost profits represented a small proportion of its real-world profits and accepted that the lost profits would have earned the same rate of return as Lilly’s real-world profits.

Burden on infringer to prove tax deductions

Apotex argued that any award for interest ought to be reduced to factor in taxes in the but-for world. The Court agreed in principle, but held that the burden of proving tax deductions lies with the party asserting the deduction. Apotex provided no evidence to this effect.

In the result, the original damages award was maintained.

This case is: Lilly v Apotex, 2019 FC 1463.

Ontario implements regulatory changes to streamline drug formulary listing and reduce government payments to pharmacies

William ChalmersKristin WallBy William Chalmers and Kristin Wall on Posted in Uncategorized

The Ontario Ministry of Health and Long-Term Care (the Ministry) has amended Regulations made under the Ontario Drug Benefit Act (ODBA) and the Ontario Drug Interchangeability and Dispensing Fee Act (DIDFA). The new Regulations are substantially similar to those originally proposed (as we reported). The intended effect of the amendments is to reduce technical requirements for listing a product on the Ontario formulary and align policies with industry standards and other provinces.

The amendments

Key changes to the Regulations include:

  • Remove the requirement for the Drug Notification Form (DNF) from formulary drug submissions. A DNF is a form submitted to Health Canada as proof of a “first sale” of the drug and indicates that the manufacturer has supply of the drug. Currently, in Ontario, the absence of this form is one of the most frequent reasons why a submission for listing is deemed incomplete. The Ministry advises that the removal of the DNF requirement will ease burden on industry and enable earlier formulary submissions. This change comes into force January 1, 2020.
  • Reduce requirements for biosimilar drug submissions. Health Canada has an approval method for biosimilar drug products that assesses whether there are clinically meaningful differences between the biosimilar product and the reference biologic product. The amendments are intended to allow the Ministry to rely upon Health Canada’s approval, and eliminate the requirement that the manufacturer submit clinical evidence of efficacy and safety, along with evidence of the pharmacoeconomic benefit of the product. According to the Ministry, eliminating these submission requirements will enable biosimilar products to be funded more quickly. This change comes into force January 1, 2020.
  • Permit generic drug price adjustments. Pricing of interchangeable generic drugs changes depending on the number of market competitors with the lowest price typically achieved with three or more generics in the market. The changes are intended to reduce the regulatory burden on the generic industry since manufacturers would no longer need to apply for price adjustments when the number of competitors change. This change is deemed to have come into force April 1, 2018.
  • Streamline drug submission requirements for generic line extension. The changes simplify the submission requirements if Health Canada has approved a generic line extension for sale in Canada (for example, a dosage strength or formulation that is different from what the brand is offering). Under the Regulations, manufacturers will no longer be required to submit clinical evidence of the product’s efficacy and safety, or evidence demonstrating the product’s pharmacoeconomic benefit to have their line extensions listed on the Ontario Formulary. This change comes into force January 1, 2020.
  • Revoke provisions authorizing Ontario to conduct price review of certain single source generic products. This pricing assessment is already conducted through the current pan-Canadian generic pricing framework. The Ministry characterizes this change as a “housekeeping change that removes out-dated clauses”. This change comes into force January 1, 2020.
  • Permit short-term funding by exempting certain submission requirements in the event of drug shortages. Where there is a shortage of a listed drug product and it is in the public’s interest, a manufacturer will no longer be required to submit to the Ministry evidence of a Health Canada approval for sale, clinical evidence of the product’s efficacy and safety, or evidence of the product’s pharmacoeconomic benefit in order to be listed. Following consultation, the Regulations were also amended so that manufacturers will no longer be required to submit evidence of ability to supply the drug product at the proposed drug benefit price. This provision would only apply to drug products that have the same or similar active ingredients or therapeutic uses as the drug product subject to the shortage. This change is deemed to have come into force November 1, 2019.
  • Reduce the Ministry’s payments to pharmacies. The new Regulations will reduce payments made by the Ministry to pharmacies for dispensing drug benefits for Ontario Drug Benefit program recipients, other than long-term care home residents. The Ministry will now deduct a percentage from the sum of the dispensing fee and mark-up paid for all drug claims. The reconciliation adjustment is two-tiered, with adjustments based on the cost of the drug: Tier 1: Maximum of 16% for drug costs equal to or over $1,000; and Tier 2: Maximum of 4% for drug cost under $1,000. The Regulations implementing this change can be accessed here.

All other changes to the ODBA regulations can be found here, while the changes to the DIDFA regulations can be found here.

Ontario reduces restrictions on ordinary commercial term benefits and private label products

William ChalmersRandy SuttonAllyson Whyte NowakBy William Chalmers, Randy Sutton and Allyson Whyte Nowak on Posted in Life sciences and healthcare, Pharmaceuticals and life sciences

The Ontario Ministry of Health and Long-Term Care (the Ministry) introduced changes to regulations (collectively, the Regulations) made under the Ontario Drug Benefit Act (ODBA) and the Drug Interchangeability and Dispensing Fee Act (DIDFA). These changes will remove the financial caps on ordinary commercial term (OCT) payments made by drug manufacturers to pharmacies and allow private label products to be listed as benefits or be designated as “interchangeable”. The amendments to the Regulations come into force on January 1, 2020. 

Removal of OCT benefit financial cap

OCT benefits are payments made between manufacturers, wholesalers or pharmacies that relate to an ordinary commercial relationship, specifically a prompt payment discount, a volume discount, or a distribution service fee. There is a current cap of 10% of the value of the generic drug, as set out in the Ontario Drug Benefit Formulary. 

As we reported, the Ministry originally proposed raising the OCT benefits cap to 25%. Following consultation, the cap was removed entirely. The changes apply equally to those drug products listed on the formulary as a benefit and for those designated as off-formulary interchangeable.

Private label products can now be listed as benefits and designated as interchangeable

Private label products are those which a pharmacy acquires from a manufacturer that did not fabricate the drug itself, and which is not at arm’s-length with the pharmacy. Since 2010, private label products have been barred from listing on the formulary or being designated as interchangeable. The prohibitions were designed to prevent pharmacies from purchasing the fabricated product at a lower price than the amount reimbursed by the Ontario government, without passing these savings on to the government and private payers. 

The new Regulations permit private label products to be listed as benefits or be designated as interchangeable. 

The Ontario Government’s press release announcing the amendments to the Regulations can be found here. 

Amended CUSMA no longer extends data protection for biologics

Kassandra ShorttChristopher A. GuerreiroKristin WallBy Kassandra Shortt, Christopher A. Guerreiro and Kristin Wall on Posted in Intellectual property, Life sciences and healthcare, Pharmaceuticals and life sciences

On December 10, 2019, Canada, the United States, and Mexico agreed to amend the Canada-United States-Mexico Agreement (CUSMA, also referred to as USMCA) as the trade agreement proceeds toward ratification in each country. Among other changes, the amended CUSMA no longer requires Canada to extend data protection for biologics to 10 years from the 8 years currently provided under Canadian law.

Changes to the CUSMA

As we reported, the previous version of CUSMA required two notable changes to Canadian law concerning pharmaceuticals and biologics:

  • Extended data protection for biologics. CUSMA previously required Canada to provide a minimum of 10 years of data protection to biologics, an increase from the 8 years currently provided under Canadian law.
  • Patent-term restoration. CUSMA required Canada to adopt a patent-term restoration system to recover time lost due to “unreasonable delays” in the issuance of a patent.

In its statement on the changes agreed among the parties this week, the Government identified three amendments to the Intellectual Property Chapter. The parties agreed to:

  • “remove the obligation on data protection for biologics, meaning that Canada will no longer need to amend its domestic regime to provide 10 years of data protection in this area”;
  • “remove a provision on the availability of patents for new uses, new methods or new processes of using a known product, as well as a provision on data protection for “new indications” of existing drugs”; and
  • “include additional language on an exception related to regulatory reviews, and new language on how parties may meet obligations dealing with patent-term restoration, patent linkage and data protection for small molecule drugs.”

The Government also stated that as a result of these changes, “Canada will not be required to make changes to its domestic patent or pharmaceutical IP regimes in order to implement the amended provisions.”

Next steps

Each country must now ratify the amended CUSMA before it will come into force. The expected timing of the ratification procedures in each country is not yet known.

As we reported, the Government had introduced a bill to implement the previous version of the CUSMA on May 29, 2019. That bill, known as Bill C-100, did not pass into law before the October federal election and can no longer be advanced. As a result, it will be necessary for the Government to introduce a new implementation bill. The Government has not yet indicated when this is likely to occur.

References

The full text of the amended CUSMA is not yet available. The Canadian government has published a “Summary of revised outcomes”.

PMPRB extends consultation on new Draft Guidelines implementing amendments to the Patented Medicines Regulations

Christopher A. GuerreiroKristin WallBrian R. DaleyBy Christopher A. Guerreiro, Kristin Wall and Brian R. Daley on Posted in Intellectual property, Life sciences and healthcare, Pharmaceuticals and life sciences

The Patented Medicine Prices Review aboard (PMPRB) has extended the deadline for written submissions on new Draft Guidelines until January 31, 2020. Originally, the consultation was scheduled to run until January 20, 2020.

Background

As we reported, the Board proposed Draft Guidelines to replace its existing price-review practices, including the Compendium of Policies, Guidelines and Procedures. The changes are intended to implement the recent amendments to the Patented Medicines Regulations, which come into force on July 1, 2020. The PMPRB released the Draft Guidelines on November 21, 2019.

Consultation update

According to a December 10, 2019 update on its consultation website, the PMPRB has been meeting with stakeholders. These meetings have included a one-day outreach session with industry on compliance and operational issues on December 9, 2019, and a “civil society” forum on December 10, 2019, both in Ottawa. The PMPRB also stated that its outreach efforts in this consultation include “the possibility for individual companies to request bilateral meetings with the PMPRB at any time during the consultation period”.

Federal Court dismisses motion for determination of an issue of law under the new PM(NOC) Regulations

Colin HyslopJudith RobinsonJordana SanftBy Colin Hyslop, Judith Robinson and Jordana Sanft on Posted in Pharmaceuticals and life sciences

The Federal Court dismissed Pharmascience Inc.’s (Pharmascience) motion to determine a question of law on the issue of whether a first person can commence an action under subsection 6(1) of the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations) for a drug for which there are no patents listed on the patent register. The Court held that the facts required to determine the motion were contested so answering the question of law would not determine the dispute as between the parties. It also stated that, in the context of the PM(NOC) Regulations, such motions may not provide any efficiencies.

Background

Teva Canada Innovation (Teva) has a patent covering two strengths of glatiramer acetate (20 mg/ml and 40 mg/ml); however, it only listed the patent against the 40 mg/ml strength. Pharmascience obtained a Notice of Compliance (NOC) to sell the 20 mg/ml strength. When Pharmascience filed a Supplementary New Drug Submission (SNDS) for the second strength (40 mg/ml), Teva brought an action against Pharmascience under the PM(NOC) Regulations with respect to both strengths.

We have previously reported on a motion by Pharmascience to strike allegations in Teva’s statement of claim in respect of the 20 mg/ml strength. What remained was an allegation that Pharmascience’s SNDS pertained to both the 20 mg/ml strength as well as the 40 mg/ml strength. The Federal Court of Appeal denied leave to appeal that motion.

No Leave for Proposed Preliminary Question

Pharmascience proposed the following preliminary question:

Does subsection 6 (1) of the Patented Medicines (Notice of Compliance) Regulations permit first persons to pursue an action thereunder in respect of a drug against which there is no listed patent and for which no section 5 obligations are triggered?

Prothonotary Tabib found that Pharmascience’s motion: (1) was not a question of pure law, (2) would not dispose of the action or a substantial part thereof, and (3) would save neither time nor money.

Prothonotary Tabib found that the motion was premised on contested factual assumptions relating to whether or not Pharmascience’s SNDS related to the 20 mg/ml strength. The Court concluded it could not determine a question of law where the facts required to make the determination were contested.

For the same reason determining the question would not dispose of any issues between the parties because the factual issues would still have to be proved at trial.

For the same reason, there were no efficiencies to be gained. To the extent there were, these efficiencies were outweighed by the need to meet the 24-month period to hear PM(NOC) cases imposed by the PM(NOC) Regulations.

The case is: Millennium Pharmaceuticals Inc. v Teva Canada Limited, 2019 FC 1394.

Federal Court refuses to allow fifth generic to join common trial on validity

Colin HyslopJordana SanftBy Colin Hyslop and Jordana Sanft on Posted in Intellectual property, Life sciences and healthcare, Pharmaceuticals and life sciences

The Federal Court has denied a motion by Dr. Reddy’s Laboratories’ (Dr. Reddy’s) seeking to participate in a common validity issues trial in actions concerning four other generic versions of the same drug under the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations).

Background

As we reported, the Federal Court has made a number of orders concerning common validity trials in actions commenced by Bayer Inc. (Bayer) under the PM(NOC) Regulations in respect of generic versions of XARELTO (rivaroxaban). The common validity issues in these earlier actions against Apotex Inc., Teva Canada Limited, Taro Pharmaceuticals Inc., and Sandoz Canada Inc. are now scheduled to be heard before Pentney J. in September 2020, with separate infringement trials for each generic scheduled afterward.

Dr. Reddy’s served its Notice of Allegation on Bayer on June 7, 2019, after the other four actions were already underway. Bayer brought its action against Dr. Reddy’s on July 22, 2019, less than two weeks before the third and fourth generics were added to the common validity trial. By this motion, Dr. Reddy’s sought to join in the common validity trial. Bayer and several of the generics opposed the motion.

Complications outweigh efficiencies

Dr. Reddy’s argued that its motion was on all fours with the two previous decisions granting participation in the common validity trial against Bayer. Given that discoveries were largely complete, Dr. Reddy’s also declared itself ready to accept the transcript of the discoveries of Bayer’s representatives and of the inventors and the answers to undertakings already provided, and to comply with such schedule as will be necessary for it to be ready to proceed to a trial on the invalidity issues in September 2020.

The Court declined to exercise its discretion to grant the motion. In doing so, it had regard to two main factors:

  • The requirement to determine matters under the Regulations within a 24-month time frame; and
  • The overall balance of interests as between innovators, generics, and the wider public interest.

The Court acknowledged that hearing the common invalidity issues in the Dr. Reddy’s action alongside the other four would be a more efficient use of Court resources and avoid duplication, but held that adding a fifth generic party would jeopardize its ability to decide the earlier actions within 24 months. Case Management Judge Tabib remarked that “adding yet another set of lawyers to an already crowded proceeding adds a layer of complexity and unwieldiness that tips the efficiency balance against the addition of another party”.

The Court also held that conducting a complete separate trial for Dr. Reddy’s is a viable alternative in these circumstances. Even without Dr. Reddy’s participation in the common invalidity issues trial, the decisions in the earlier actions will likely narrow the issues for trial in Dr. Reddy’s action. In any event, the Court found that there would still be enough time to hear a full two-week trial on all issues in the Dr. Reddy’s action, before the same judge, within its 24-month period.

The Court declined to award costs.

The case is Bayer Inc. v. Dr. Reddy’s Laboratories Ltd., 2019 FC 1408.

PMPRB launches 60-day consultation on new Draft Guidelines following amendments to the Patented Medicines Regulations

Christopher A. GuerreiroKristin WallBrian R. DaleyBy Christopher A. Guerreiro, Kristin Wall and Brian R. Daley on Posted in Intellectual property, Life sciences and healthcare, Pharmaceuticals and life sciences

Today, the PMPRB launched a consultation on Draft Guidelines intended to implement recent amendments to the Patented Medicines Regulations. The PMPRB also released a Q&A-style Consultation Backgrounder. Interested parties have 60 days, until January 20, 2020, to make submissions on the Draft Guidelines.

Background

As we reported, the Government released final amendments to the Patented Medicines Regulations on August 9, 2019. These amendments are scheduled to come into force on July 1, 2020 and are intended to lower the prices of patented medicines in Canada. They include: (1) new factors for assessing excessive pricing, (2) new powers to collect information regarding these factors, (3) new obligations to report indirect price adjustments, (4) risk-based reporting obligations for OTC and generic drugs, and (5) a revised list of international price comparator countries (the PMPRB11).

Rather than amending the PMPRB’s existing Compendium of Policies, Guidelines and Procedures (Compendium), the Draft Guidelines state that they are intended to supersede all previous guidance documents, policy communiqués and written or verbal statements of any kind by the PMPRB regarding the administration of the price review process and investigations. The Draft Guidelines also make reference to the Patentee’s Guide to Reporting, which has not yet been updated by the PMPRB in connection with the amendments.

The Draft Guidelines at a glance

Under the Draft Guidelines, different price review processes will apply depending on when the patented medicine received its DIN:

  • Grandfathered medicines. For patented medicines that received a DIN before August 21, 2019, the PMPRB will set a maximum list price (MLP) based on the lower of (1) the median international price across the new PMPRB11 and (2) the ceiling price set under the existing Compendium. A new process is provided for price calculations and adjustments going forward.
  • Non-grandfathered medicines. All other medicines (including non-DIN medicines, such as those distributed under the SAP) will be divided into either “Category I” or “Category II”, based on 12-month treatment cost (greater than 50% of GDP per capita) and an estimated or actual market size exceeding $25 million.
    • All medicines will have an MLP set based on domestic and international price comparisons, then tested against the list price of the medicine. This will be the only price test for Category II medicines.
    • In addition, Category I medicines will have a maximum rebated price (MRP) set using the new excessive-pricing factors (pharmacoeconomics and market size), then tested against the average transaction price (ATP) computed net of rebates and other price adjustments.

For Category I medicines, a pharmacoeconomic price will be calculated based on a cost-per-QALY threshold of $60,000. This is higher than the threshold proposed in the Regulatory Impact Analysis Statement accompanying the amendments. The pharmacoeconomic price is used to set the MRP, subject to a Market Size Adjustment Methodology that may increase or decrease the MRP based on certain thresholds. This may result in a higher price ceiling for “rare disease or disorder” patented medicines.

The Draft Guidelines also include processes for reassessing the category or price ceilings of any patented medicine, including Grandfathered ones.

A number of differences from the current system are highlighted in the Consultation Backgrounder:

  • Price ceilings will no longer fluctuate annually based on the ATP of the medicine.
  • Prices of Category II medicines will only be assessed using list prices — not ATPs. As a result, rebates and other price adjustments will not be considered.
  • The number of markets and customer classes has been reduced.

The consultation: next steps

In addition to receiving written submissions from stakeholders, the PMPRB has also indicated that it will host a policy forum where stakeholders will be invited to appear in person to make their views known to the Board, as well as working groups to discuss specific questions and issues arising from the Draft Guidelines.

So far, the PMPRB has indicated that it will meet with various stakeholders in: Victoria, Vancouver, Edmonton, Regina, and Winnipeg during the week of December 2, 2019. The PMPRB has also scheduled a Civil Society Forum (distinct from government or business) for December 10, 2019 in Ottawa. Information about how to participate in the consultations is available on the PMPRB website.

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