As ratification stutters for the Comprehensive Economic and Trade Agreement (CETA), the much-maligned free-trade deal between Canada and the European Union, debate continues as to whether the Canadian intellectual property (IP) regime will provide adequate protection for innovative biologic medicines in relation to subsequent-entry biologics (SEBs). Biologic medicines are complex molecules derived from living organisms and include a wide range of therapies, such as vaccines, hormones and antibodies. An SEB is a biologic that enters the market subsequent to a previously authorized reference biologic with which it has demonstrated similarity. Importantly, an SEB may benefit from accelerated regulatory approval by relying, in part, on data previously submitted for its reference biologic. Unlike small molecule generic pharmaceuticals that can be identical and, thus, bioequivalent to their reference products, SEBs will typically contain notable differences despite sharing the same core manufacturing process.
Therapeutic use of biologics has increased considerably in recent years. Unfortunately, due to the complexity of these molecules, development and commercial production have proven very costly. Indeed, it is estimated that most biologics must enjoy market exclusivity for, on average, 12.9 to 16.2 years before initial research and development costs can be recovered. Adequate IP safeguards are then vital for continued research and investment in this area.
It is axiomatic that patents play a key role in the pharmaceutical industry, but their practical value is questionable when applied to biologics in Canada. On account of the fundamental nature of biologics, it is often said that the “product is the process.” Process patents are, therefore, of central importance. Nevertheless, pure process patents are not permitted for listing in the Patent Register for the purposes of proceedings under the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations). The result is a significant gap in patent protection. There remains, of course, the option to pursue an action for patent infringement against manufacturers of SEBs, but this avenue is fraught with practical difficulties. Chief among these issues are the typical length of time for a case to come to trial and be tried and how rarely preliminary injunctions are granted in Canada.
Due to this gap in patent protection, data exclusivity serves as important insurance to safeguard innovator investment. Data protection garnered considerable debate among stakeholders during CETA negotiations as innovators pressed unsuccessfully for the US standard of 12 years. Under the current Canadian regulatory scheme, SEBs are barred from relying on reference biologic data for 8 years and will remain so should CETA be ratified. This falls well short of the estimated market exclusivity that a biologic typically requires to be profitable. Without adequate insurance, investment in these medicines is discouraged.
Under these circumstances, reliance on trade secrets may represent a reasonable supplement or alternative to data protection and patents. For reasons already discussed, innovators may see trade secret protection as a more attractive mechanism than process patents. Indeed, in light of patent law’s disclosure requirements, it may be worthwhile to forego patenting entirely. Alternatively, innovators may seek to obtain substance patents that do not disclose the best mode of manufacture, although there is debate as to whether this is permissible. As a practical consideration, innovators that opt for trade secrets over patents would also find themselves outside the jurisdiction of the Patented Medicines Price Review Board (PMPRB).
For the public, the costs of a trade secret strategy are significant. Besides the obvious detriment to the pool of collective knowledge, this strategy will force prospective SEB manufacturers to reverse engineer reference biologics in order to identify the necessary manufacturing processes – an expensive and time-consuming procedure. In turn, the time and cost incurred by the SEB manufacturer will delay the arrival of more affordable therapies and increase the market price of these medicines.
How then can the Canadian IP regime better protect biologics? With CETA negotiations over, the opportunity to increase data protection in the near future has likely passed. Another possibility is to develop a patent-based framework specific to biologics. In Canada, such a framework could be established with a second patent register that would allow for process patents to be listed for biologics. The pharmaceutical industry`s familiarity with the PM(NOC) framework may make this an appealing option with real potential for improved enforcement of biologic-related patents. Whatever the solution, Canada must not be shortsighted in its approach to emerging medical therapies and should design balanced protections that are alive to the realities of the industry.
Stephen J. Dalby is a JD Candidate at Osgoode Hall Law School. Stephen is currently enrolled in Osgoode’s Intellectual Property Law Intensive Program. As part of the program requirements, students were asked to write a blog on a topic of their choice.
 Health Canada, “Guidance For Sponsors: Information and Submission Requirements for Subsequent Entry Biologics (SEBs)”, (Ottawa: Health Canada, 2010), online: http://www.hc-sc.gc.ca/dhp-mps/brgtherap/applic-demande/guides/seb-pbu/seb-pbu_2010-eng.php.
 Kristina Lybecker, “The Biologics Revolution in the Production of Drugs” in Steven Globerman, ed, Intellectual Property Rights and the Promotion of Biologics, Medical Devices, and Trade in Pharmaceuticals. (Vancouver: Fraser Institute, 2016) 9 at 12.
 Ibid at 16 – 20.
 Supra note 4 at 30.
 Henry Grabowski, Genia Long, and Richard Mortimer, “Data Exclusivity for Biologics” (2011) 10 Nature Reviews: Drug Discover 15 at 15.
 Walter Jeske et al, “Update on the safety and bioequivalence of biosimilars – focus on enoxaparin” (2013) 5 Drug, Healthcare and Patient Safety 133 at 135.
 Health Canada, “Guidance Document: Patented Medicines (Notice of Compliance) Regulations”, (Ottawa: Health Canada, 2015), online: http://www.hc-sc.gc.ca/dhp-mps/prodpharma/applic-demande/guide-ld/patmedbrev/pmreg3_mbreg3-eng.php.
 Aleksandar Nikolic, “A Comparative Study of Patent Infringement Remedies Related to Non-Practicing Entities in the Courts of Canada, the United Kingdom, and the United States” (2014). LLM Theses. Paper 4 at 73.
 Henry Grabowski, “Data Exclusivity for Biologics: What is the Appropriate Period of Protection?” (2009) 10 American Enterprise Institute for Public Policy Research 1 at 5; Biotechnology Industry Organization, “The Trans-Pacific Partnership and Innovation in the Bioeconomy: The Need for 12 Years of Data Protection for Biologics” (2013) at 4, online: https://www.bio.org/sites/default/files/files/TPP%20White%20Paper%20_2_.pdf.
 Biologics Price Competition and Innovation Act, 42 USC §262 (2009) s 351(k)(7)(A), online: http://www.fda.gov/downloads/drugs/guidancecomplianceregulatoryinformation/ucm216146.pdf.
 Canada CRC, c 870, C.08.004.1(3)(b); Comprehensive Economic and Trade Agreement, Canada and European Union, art 20.29 at s 2(b).
 Paul A Calvo, “Choosing Between Patent And Trade Secret Protection In A Biosimilar World” (13 January 2016), Biosimilar Development (blog), online: http://www.biosimilardevelopment.com/doc/choosing-between-patent-and-trade-secret-protection-in-a-biosimilar-world-0001.
 Patent Act, RSC, 1985, c P-4, s 27(3).
 Teva Canada Ltd. v Novartis AG, 2013 FC 141 at para 376; David Vaver, “Best Mode Disclosure in Canadian Patents” (2013). Comparative Research in Law & Political Economy. Research Paper No. 30/2013, online: http://digitalcommons.osgoode.yorku.ca/clpe/276/.
 Supra note 14 at s 80(1).
 W. Nicholson Price II and Arti K. Rai, “Manufacturing Barriers to Biologics Competition and Innovation” (2016) 101:3 Iowa L Rev 1023 at 1029.