Federal Court Ruling Upholds Data Protection Period for Research-Based, Innovative Drug Companies

The period of data protection allocated to research-based, innovative drug companies is a hotly debated topic in the pharmaceutical industry and beyond. This period of protection allows research-based, brand name drug companies to maintain a monopoly on the market for any particular drug for a specified duration. During the period of data protection, competing generic drug manufacturers are not permitted to compare their product to the innovative one for the purpose of obtaining their own regulatory approval.

In a recent federal court decision, Justice Leonard Mandamin upheld federal regulations (created under Canada’s Food and Drug Act), which provides data protection for a period of up to 8.5 years. Research-based, innovative drug companies (represented in this litigation by Canada’s Research-based Pharmaceutical Companies (CRPA) and Eli Lilly Canada Inc.), consider this ruling a major victory in that it will help to promote the creation, production and distribution of new and innovative drugs in Canada. They claim that the positive effects generated by this ruling will ultimately have the greatest impact on Canadian patients, who will apparently have greater access to a wider variety of innovative medications and vaccines. These companies also stress that a rigorous data protection regime in Canada is necessary to secure sufficient and lasting investment in R&D. It is entirely understandable that potential investors would be hesitant to get involved in a project where data protection is weak.

Conversely, the generic drug companies (represented in this litigation by the Canadian Generic Pharmaceutical Association (CGPA) and Apotex Inc.), argue that this ruling is an unfair one, the negative effects of which, will be felt most markedly by Canadian patients/consumers. Jim Keon, president of the CGPA claims that as a result of this ruling, “brand drug companies will continue to have monopoly rules that go beyond Canada’s international trade obligations and beyond similar provisions in the United States.” However, according to a recent article, it seems highly probable that the United States will be extending the period of data protection in the near future. In a 16-7 vote, the US Senate health committee cast their ballots in favour of a 12 year data protection period.

In my opinion, the most important thing to consider in this debate between research-based, innovative drug companies and their generic counterparts is the interest/well-being of patients/consumers of these drugs. On the one hand, it is important to maintain a financial incentive for brand-name drug companies to continue to research and innovate to ensure that patients are receiving the most highly developed, quality products as possible. On the other hand, if generic drug companies are removed from the equation, it will become progressively easier for brand-name pharmaceutical companies to monopolize their respective markets, eventually causing undue hardship on the consumers who depend on these drugs.

  1. This is a debate that will (likely) never see an end that satisfies all of the parties involved. I believe it has been suggested on this site before, but maybe some sort of licensing scheme that allows generics to be made in certain circumstances would serve as a middle ground.

    While I am certainly not trying to suggest that I do not agree with data protection periods for innovators, has anyone considered what would happen if the period of time was drastically reduced? Would these companies stop producing pharmaceuticals? Likely not. While the point can be made that investors might not want to invest in something that has weak legal protection, I wonder if reducing the time period would really make the innovators push to develop more drugs so as to not rely on longer data protection periods for fewer drugs. I completely agree that data protection is necessary, but it is an interesting thought to consider.

  2. Interesting comments, but the decision turns not on whether eight years data protection is a good thing in the abstract (which is not for the judge to decide), but (1) whether the federal government has the authority to pass the Data Protection Regulations, which are far broader than required under Canada’s treaty obligations under TRIPS and NAFTA and thus authorized under the regulation-making power in the statute, and (2) whether the federal government has constitutional jurisdiction to pass the regulations under the fed/prov division of powers. Most of Mandamin’s reasons dealt with the latter issue. His decision in that regard was very unusual – he invoked the Trade and Commerce power, which was not even asserted by the respondent Attorney General of Canada, and rejected the AG’s argument that the regulations were validly enacted under the criminal law power.

    It will be interesting to see what happens on appeal.

    Ed Hore, Class of 84
    Counsel for CGPA

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