Does 2022 already seem like a blur? The Pharma in Brief team is here for you with a summary of some of 2022’s most significant legal and regulatory developments in the Canadian pharmaceutical space. We also flag what to watch out for in 2023.
The most significant legislative changes concerned the Patent Act and accompanying rules/regulations. The Patented Medicine Prices Review Board (PMPRB) gained a new basket of comparator countries for international reference pricing but abandoned other proposed changes to its price-review process. New Patent Rules came into force introducing excess claim fees and a new continued examination scheme.
In the courts, the Supreme Court of Canada (SCC) clarified accounting of profits in patent disputes, and the Court of Appeal for Ontario (ONCA) confirmed that innovators are not liable, beyond damages under section 8, for the legitimate exercise of their rights under the PM(NOC) Regulations. The Federal Court (FC) and Federal Court of Appeal (FCA) continued to develop substantive patent law. There were also several judicial review proceedings challenging decisions by the Minister of Health (Minister).
1. Changes to how the PMPRB reviews prices
In 2019, the federal government introduced amendments to the Patented Medicines Regulations (the Amendments). The Amendments were intended to lower the prices of patented medicines in Canada by changing how the PMPRB assesses whether patentees’ prices are “excessive”. The Amendments had three main features:
- The New Price Calculation, requiring reporting prices net of confidential third-party rebates;
- The New Mandatory Factors, requiring the Board to consider pharmacoeconomic value, market size, and Gross Domestic Product; and
- The PMPRB11, a revised “basket” of international comparator countries that removed the US and Switzerland while adding six lower-price countries.
Following successful legal challenges in the FC and the Quebec Court of Appeal, the government repealed the New Price Calculation and the New Mandatory Factors in June 2022 (see here). This left the PMPRB11 amendment, the validity of which was upheld by the FCA in December 2022 (see here). In its decision, the FCA expressly affirmed the statutory limits on how the Board can use PMPRB11 price information, holding that “pure price regulation or price setting is invalid; policing excessive pricing is valid.”
Currently, the PMPRB is reviewing prices based on an August 18, 2022 Interim Guidance, after having consulted on new Guidelines. Until further notice, the Interim Guidance remains in effect.
2. New Patent Rules
In October 2022, changes to the Patent Rules came into force (see here). The changes introduced an additional fee for each claim in the application in excess of 20. The changes also introduced a new continued examination scheme that limits the number of examination reports that may be issued before examination ceases. Applicants will have to file a request for a continued examination and pay a prescribed fee for a response to a third examination report to be considered. It remains to be seen how these changes will impact patent prosecution strategy in the pharmaceutical sector in 2023.
3. The Supreme Court on accounting of profits
In 2022, the SCC clarified the law on an accounting of profits, a remedy for patent infringement (see here). Although the case did not concern pharmaceuticals, this remedy – and the relevance of non-infringing alternatives – is important in pharmaceutical patent ligation. The SCC set out a three-part test: (i) calculate the actual profits earned by selling the infringing product; (ii) determine whether there is a non-infringing option that can help isolate the portion of the profits causally attributable to the invention; and (iii) if there is a non-infringing option, subtract the profits the infringer could have made with it. The SCC also confirmed that “springboard profits” can be included in an accounting of profits.
4. Court of Appeal for Ontario rejects Statute of Monopolies claims
For nearly a decade, a generic manufacturer has been pursuing damages in the Ontario courts under the Statutes of Monopolies and other novel causes of action. The generic manufacturer argued that it was entitled to damages – beyond those afforded by section 8 – if an innovator excluded it from the market under the PM(NOC) Regulations with a patent that was subsequently held invalid and void ab initio.
In August 2022, the ONCA found that the generic manufacturer’s claims lacked merit, confirming that innovators are not liable beyond section 8 for the legitimate exercise of their rights under the Patent Act and the PM(NOC) Regulations (see here). Leave to appeal to the SCC is being sought.
5. Federal Court of Appeal decisions on patent validity
In 2022, the FCA provided guidance on a number of patent validity issues:
- Utility vs. obviousness: The FCA considered how the common general knowledge (CGK) relates to allegations of obviousness and inutility (see here). The patent in question did not provide certain clinical trial results, such that its utility could only be soundly predicted by applying information from the CGK. The generic challenger reasoned that if the CGK provided a sound prediction of utility, then that same knowledge would make the patent’s invention “obvious to try”. The FCA rejected this argument, holding that the legal tests for sound prediction and obviousness have distinct requirements. On the facts, it was open for the FC to find enough CGK to support a sound prediction of utility while still concluding that the invention was not obvious. The application for leave to appeal to the SCC was dismissed.
- Claims construction: The FCA clarified that the patent description must always be considered in construing the claims (see here), even for claim terms that would appear – at first glance – to be simple and unambiguous.
- Sufficiency and selection patents: The FCA confirmed that when assessing the sufficiency of disclosure, it is the issued patent – not the patent application as filed – that is considered (see here). The issue arose because the relevant claims were not included in the patent application as filed. In the same decision, the FCA upheld the validity of the selection patent, holding that the FC was entitled to (i) consider the claims in determining how a skilled person would have understood the patent as a whole; and (ii) find that a special advantage was disclosed by inference.
6. Federal Court decisions on inducing infringement
In 2022, the FC released a number of decisions on whether a generic manufacturer’s product monograph induced infringement of an innovator’s patent claims to a new use of a drug. Such cases typically concern “skinny labels” in which the generic seeks to avoid reference to indications related to the patented use.
- Combination use: The FC found that a generic manufacturer’s single-compound product would induce infringement of claims to a combination therapy (see here). The FC rejected the generic’s argument that it would not induce infringement because it had scrubbed its product monograph of all references to the combination. In another action involving the same patent but a different generic manufacturer, the FC upheld the patent’s validity (see here).
- With or without food: The FC rejected an innovator’s claim that a generic manufacturer would induce infringement of its patent claims to the use of an oral dosage form “with or without food or beverage intake”. The generic’s product monograph was restricted to use with food (see here).
- Dosing regimen: In another case, a generic manufacturer had attempted to avoid infringement by carving out from its product monograph certain statements about the claimed dosing regimen. Following a summary trial, the FC held that the generic would induce infringement (see here).
7. Judicial reviews of decisions by the Minister of Health
In 2022, the FC and FCA issued several judicial review decisions related to the pharmaceutical industry:
- DIN-specific marketing requirement: The FC dismissed an application for judicial review of a Minister’s decision to grant an NOC to a biosimilar manufacturer who had not addressed patents on the Patent Register (see here). The Minister determined that the PM(NOC) Regulations did not apply where the New Drug Submission (NDS) for the biosimilar compared to a presentation of a reference drug that was not being marketed in Canada, even though the innovator marketed a different presentation of the same drug in Canada. The FC’s decision has been appealed.
- Data protection: The FC dismissed an application for judicial review by a first manufacturer concerning the Minister’s decision to issue an NOC to a second manufacturer. The manufacturers had each filed an NDS for products with the same medicinal ingredient. The first manufacturer’s NDS was approved and designated as an innovative drug, affording it data protection. The second manufacturer’s drug was approved 10 days later. In January 2023, the FCA overturned the FC and restored the Minister’s decision. The FCA found that the Minister’s decision was reasonable – despite the first manufacturer’s data protection – as the second manufacturer did not, in fact, rely on the first manufacturer’s data to obtain its NOC (see here).
8. Areas to watch in 2023
With 2023 already in full swing, here are some of the areas that we expect to make headlines for Pharma in Brief readers this year:
- PMPRB changes: There is the potential for a range of developments at the PMPRB in 2023. These include the appointment of a new Chairperson and Vice-chairperson, as well as a replacement for the current Interim Guidance on price review. The PMPRB has yet to signal when it will move forward in these areas.
- Summary disposition: The continued rise of summary judgment motions for patent infringement seems more uncertain following a 2022 decision of the FCA that highlighted the limitations of this approach (see here). The Court observed that “while patent infringement issues are not by definition excluded from the ambit of the summary judgment process, they tend to raise complex issues of fact and law that are usually better left for trial”. We will continue to report on the use of summary disposition in patent cases as 2023 unfolds.
- Agile licensing: At the end of 2022, Health Canada launched a consultation on wide-ranging proposed amendments to the approvals processes under the Food and Drug Regulations and the Medical Devices Regulations (see here). The amendments build upon the regulatory flexibilities introduced in the Interim Order Respecting the Importation, Sale and Advertising of Drugs for Use in Relation to COVID-19, which allowed the Minister to apply terms and conditions on drug approvals and allowed for rolling reviews for drug and vaccine submissions. We will watch for further developments following the March 27, 2023 close of the consultation period.
- Changes to generic submissions: In March 2019, the government published proposed amendments to the Food and Drug Regulations intended to clarify whether a generic version of a drug can be approved using the abbreviated new drug submission (ANDS) pathway (see here). According to the proposed amendments, the generic product would no longer need an identical medicinal ingredient to the innovator’s reference product. Instead, a generic product could be approved via ANDS if it has the same “therapeutically active component” as the reference product. A consultation on the proposed changes took place in 2019. Health Canada plans to publish the proposed changes in the Canada Gazette, Part II, in spring 2023 (see here).
- Statutes of Monopolies leave application: As discussed above, the generic manufacturer has sought leave from the SCC to appeal the ONCA’s decision that dismissed its claims under the Statutes of Monopolies. We will watch for the outcome of this leave application in 2023.
The Pharma in Brief Team thanks you for your readership in 2022 and looks forward to continuing to update you on legal and regulatory developments in 2023.