As you start the new year, allow us to recap 2023’s important legal and regulatory developments for Canadian pharma. We also flag what to watch out for in 2024.
The most significant legal development in 2023 was the introduction of a system of patent term adjustment (PTA). On the regulatory front, seemingly all of Canada’s agencies – the PMPRB, pCPA, CADTH, Health Canada – had important developments in 2023, including that CADTH is being expanded into a new agency: the CDA. Other notable developments in 2023 included increased fees for patent and trademark applications, patent law decisions from the courts, and Federal Court guidance on artificial intelligence. Expected highlights for 2024 include a final PTA regime, more details on PMPRB drug pricing guidelines and national pharmacare, and fall-out from the US mass drug importation program targeting Canadian medicines.
1. Patent term adjustment coming to Canada
On June 22, 2023, the federal government passed Bill C-47, which amends the Patent Act to bring a system of general PTA to Canada for the first time (see here). The amendments are scheduled to come into force no later than January 1, 2025.
- The new PTA system is intended to compensate patentees for “unreasonable delays” by the Canadian Intellectual Property Office (CIPO) in issuing a patent.
- Unlike Certificates of Supplementary Protection (CSP), which are only available for certain pharmaceutical patents, PTA will apply to all eligible patents. Notably for pharmaceutical patentees, any PTA term would run concurrently with any CSP term.
Some key aspects of the PTA system are now clear (see here). However, many details remain to be addressed in forthcoming regulations. CIPO consulted on proposed features of the regulations in 2023 (see here), including many factors that would reduce the length of the PTA term. Draft regulations are expected to be released for consultation in 2024.
2. CIPO’s application fees – and “small entities” – are getting larger in 2024
On January 1, 2024, CIPO imposed the first substantial increases to its service fees since 2004 (see here). Many fees will increase by 25% or more, though some “low materiality fees” will remain capped at $150. The fee increases apply to both patent and trademark applications.
At the same time, the definition of a “small entity” under the Patent Rules was broadened as of January 1, 2024. The employee count cut-off in all small entity definitions has increased from 50 to fewer than 100.
3. Changes in Canada’s pricing and market access regimes
This year saw major developments in the drug price and reimbursement space, including at the Patented Medicine Prices Review Board (PMPRB), the pan-Canadian Pharmaceutical Alliance (pCPA), and the Canadian Agency for Drugs and Technologies in Health (CADTH).
- PMPRB in flux. The PMPRB reviews the prices of patented medicines to ensure that they are not sold at “excessive” prices. In 2023, the government appointed four new members to the PMPRB’s five-member Board, including a new Chairperson. The Board also finalized amendments to its Interim Guidance, which bridge the gap between the Board’s previous Compendium of Policies, Guidelines and Procedures and forthcoming new guidelines (see here). In November 2023, the PMPRB launched its consultation on new guidelines (see here).
- pCPA incorporates. The pCPA negotiates with manufacturers on behalf of Canada’s provincial, territorial, and federal governments. In 2023, the pCPA completed its transition into a stand-alone, not-for-profit corporation; issued its inaugural report; and announced Douglas Clark as its first CEO. Mr. Clark was formerly the Executive Director of the PMPRB.
- CADTH launches time-limited recommendations. CADTH makes non-binding recommendations on public drug reimbursement (except in Quebec). In 2023, CADTH introduced a new time-limited recommendation pathway to facilitate access to certain therapies (see here); in tandem, the pCPA published accompanying principles and conditions to inform the negotiation process for eligible drug products (see here).
- CDA announced. In December 2023, the federal government announced that a new Canadian Drug Agency (CDA) will be built from the existing CADTH organization with the participation of the provinces and territories (see here). The CDA will build on CADTH’s existing mandate and expand it to improve use of medicines, data collection and access, and drug system coordination.
4. Health Canada updates
Health Canada also made some notable changes in 2023, including:
- Advertising guidance. In July 2023, Health Canada finally published an updated Guidance on distinction between advertising and other activities for health products (see here). The Guidance outlines the factors that contribute to rendering a message or activity promotional in nature. Promotional messages and activities are subject to the advertising provisions of the Food and Drugs Act and the Food and Drug Regulations. The Guidance was last updated in 2005. It now contemplates IT platforms (e.g., social media) and applies to drugs for use in humans as well as medical devices, natural health products, biologics, vaccines, and animal health products.
- Rare disease strategy. In March 2023, the federal government announced its first-ever National Strategy for Drugs for Rare Diseases, including an investment of up to $1.5 billion over three years to help increase drug access and affordability (see here).The government has since established an Implementation Advisory Group for the national strategy.
5. Case law updates
In 2023, the Patented Medicines (Notice of Compliance) Regulations (Regulations) turned 30 years old, inspiring our litigators to consider how the Regulations have evolved since 1993 (see here). Meanwhile, the evolution of case law under the Regulations and the Patent Act continued in 2023. Highlights included:
- Supreme Court denies leave on Statute of Monopolies. The Supreme Court of Canada dismissed an application for leave to appeal a decision affirming that innovators are not liable beyond damages under section 8 of the Regulations for the legitimate exercise of their rights under the Regulations (see here). Novel claims for damages by generics, including claims under the Statute of Monopolies, have been definitively rejected (see here).
- Section 8 damages refused. The Ontario Superior Court of Justice dismissed a generic’s claim for damages under section 8 of the Regulations (see here). The Ontario Court held that the generic was not entitled to damages as none of its invalidity allegations had been found to be justified by the Federal Court. In any event, the Ontario Court found that the generic had not suffered any losses, as it would not have entered the market earlier in the but-for world than it did in the real world.
- Proving induced infringement. The Federal Court of Appeal held that the Federal Court had erred by applying an elevated causation requirement for induced infringement (see here). The Court of Appeal re-affirmed that “what is required is proof that the putative infringer influenced the party that directly infringes to the point that, without such encouragement, infringement would not have occurred”. Including the alleged infringing use in the product monograph can be sufficient proof of causation.
- Injunction refused on infringed patent. The Federal Court refused to issue an injunction in a case where an antibody formulation patent was found to be valid and infringed (see here). The Court found that it was “not in the public interest” to require patients taking the infringing biosimilar to switch medications, as the infringing product was “the only 80 mg/0.8 mL formulation in Canada”.
6. Artificial intelligence
2023 saw remarkable developments in – and growing awareness of – artificial intelligence (AI). In December 2023, the Federal Court announced Interim Principles and Guidelines on the Court’s use of AI, as well as a Notice to the Parties and the Profession on the use of AI in court proceedings (see here). The Court now requires a declaration identifying documents with AI-generated content that are prepared for the purpose of litigation and submitted to the Court. The Court will not use AI in making its judgments and orders without first engaging in public consultation.
7. Areas to watch in 2024
We expect the following to be hot topics in the Canadian pharma space in 2024:
- US mass drug imports from Canada. The US Food and Drug Administration kicked off 2024 by authorizing the first drug importation program by a US State (Florida) under section 804 of the US Food, Drug, and Cosmetic Act (see here). This law provides a pathway for importing certain prescription drugs from Canada to reduce costs for American patients. We expect 2024 will see the Canadian federal government and other stakeholders react to this development, including by taking mitigating steps.
- PTA. Canada’s new PTA system will come into force on or before January 1, 2025. In 2024, we can expect more consultation and the release of regulations specifying the missing details of the PTA system.
- PMPRB. The PMPRB intends to finalize its new guidelines in 2024. The Board has indicated that it will release a “What We Heard” document from the first phase of consultations completed in 2023, to be followed by a second phase of consultation on draft guidelines.
- CDA & national pharmacare? We expect to learn more details regarding the launch of the CDA, which was announced at the end of 2023. It remains to be seen whether the federal government will introduce national pharmacare legislation.
- Artificial intelligence. As AI-enabled systems continue to proliferate in the business and legal communities, governments and decision-makers will continue to grapple with the role of AI. This includes the legal implications of AI in generating intellectual property – especially in the fields of copyright and patentable inventions. We anticipate that the government will continue to advance the Digital Charter Implementation Act, 2022 (Bill C-27). This bill includes the Artificial Intelligence and Data Act (see here and here) – a proposed national regulatory framework for AI. We will report on AI developments with the assistance of our colleagues (see here our 2023 technology, privacy and cybersecurity summit).
- Regulatory changes. Health Canada’s 2023 to 2025 Forward Regulatory Plan highlights a number of new regulatory initiatives that could take shape in 2024, including:
- Amendments to the Cannabis Regulations to clarify existing requirements and reduce administrative and regulatory burden;
- Consolidation and modernization of regulations under the Controlled Drugs and Substances Act; and
- A range of regulatory initiatives under the Food and Drugs Act, including: a new framework to regulate outsourced drug preparation in Canada, modernizing the Drug Establishment Licensing (DEL) framework, and modernizing the Medical Device Establishment Licensing (MDEL) framework.
Thank you for your continued readership and all the best for 2024.