CETA: A Very Reasonable Canadian-esque Compromise on Pharmaceutical Intellectual Property Law Changes

CETA: A Very Reasonable Canadian-esque Compromise on Pharmaceutical Intellectual Property Law Changes

At long last, the Canadian Federal Government and the European Commission announced in October that a political agreement has been reached regarding the much anticipated Comprehensive Economic and Trade Agreement (CETA). Although the full-text of the agreement has yet to be revealed, Canadians have a pretty good idea of the way in which CETA will affect Canada’s intellectual property (IP) laws (one of the most contentious issues of the negotiations). In regards to the pharmaceutical industry, the agreement appears to strengthen intellectual property laws by adding up to 2 years of patent term restoration for pharmaceutical patents and providing innovative pharmaceutical companies a “right of appeal” to the Federal Court from decisions made under the Patented Medicines (Notice of Compliance) Regulations.

The Ramifications of CETA on Pharmaceutical IP Laws: The Expected and The Unexpected

CETA has been in the making for many years, and the EU has made clear its desire for Canada to increase its intellectual property law protections for pharmaceuticals - seen by many as among the weakest of the developed countries. However, it was unknown how much Canada would end up changing its intellectual property rights (IPR) regime in the face of intense pressure from both domestic and international organizations resistant to strengthening IPR through CETA and other international trade deals.

In the end, although the full-text will not be available until it has been translated into all of the European languages, it has been widely accepted that the final agreement will have two main effects on pharmaceutical intellectual property laws in Canada:

  1. Patent term restoration will provide innovative pharmaceutical companies the ability to restore up to two years of patent protection that have been lost by regulatory processes;
  2. Innovative pharmaceutical companies will gain a “right of appeal” for decisions made under the Patented Medicines (Notice of Compliance) Regulations - a right that is currently only available for patent challenges from a generic pharmaceutical company.

On its face, these changes are a boon to the innovative pharmaceutical industry in Canada and represent long sought after changes. These anticipated changes could be interpreted as Canada's unwillingness to fully compromise, as the EU purportedly originally wanted up to 5 years of patent term restoration in addition to more extensive data protection provisions. Interestingly, the Canadian Generic Pharmaceutical Association (CGPA) has claimed to have received written assurances from the Government of Canada that the implementation of the “right of appeal” will serve to curb duplicative litigation from innovative pharmaceutical companies. Canada is currently the only country in which an innovative company can sue a generic producer more than once on the same patent.

Varied Reactions to the Report from Various Stakeholders

As expected, the reactions to the proposed changes to Canadian pharmaceutical intellectual property law have been mixed, with various organizations and stakeholders speaking for and against the CETA agreement.  Canada's Research-Based Pharmaceutical Companies (Rx&D) released a statement applauding the agreement and opining that the agreement will serve to increase pharmaceutical innovation and support the discovery of new medications. Interestingly enough, a Canadian patient group, The Mood Disorders Society of Canada, released a statement after the agreement was announced, which echoed the sentiments of Rx&D. The statement also expressed the group’s belief that CETA will encourage more pharmaceutical research in Canada and help develop effective interventions to improve the mental health of Canadians.

The CGPA also released a statement, which cites its disappointment of the CETA agreement and claims the agreement's potential to increase health care costs for provinces, health plans, and patients. The statement also outlined the CGPA's concern that CETA will cause generic medications to be delayed on their way to the marketplace.   The statement was not completely critical however, as the CGPA commended the Canadian government’s efforts to limit the term of patent restoration to 2 years and allow for the potential for the new “right of appeal” regulations to curb litigation costs.  The CGPA was also appreciated that CETA will not impose any changes to the domestic data protection regime.

In my opinion, the biggest stakeholder that is likely to be affected by these proposed changes to Canada's pharmaceutical IP law are the provinces, which bear most of Canada's health care costs. In anticipation of the agreement, many provinces, including Ontario (the largest medication provider in the country) cautioned the Canadian government that concessions to the EU on these points could greatly increase health care costs. Ontario predicts that CETA could increase its prescription drug expenses by $1.2 billion dollars annually. After the release of the agreement, however, provincial fears may have been quelled since the extent of the changes is less drastic than predicted. In addition, the Federal Government has already announced that it will compensate provinces for the higher drug costs, although no further details on this point have been released. The Ontario government responded to this statement quickly, and was the first province to make it known that it will be asking for financial compensation for sectors that will be adversely affected by CETA. As provincial governments and the federal legislative branch still need to approve the changes CETA will bring, there are undoubtedly going to be further developments on this issue, and the ultimate acceptance and implementation of CETA will likely depend upon the details of the final agreement.

CETA: A Changing of the Guard?

Although CETA has only been agreed to “in principle” for now, it is clear that its ratification and implementation will have far-reaching consequences. It will undoubtedly have a significant impact on Canada's health care and pharmaceutical sectors, and may change how Canada is viewed internationally as a health care provider. It seems clear to me that, at least in the intellectual property context, Canada is making the statement that it will not be left behind by its industrialized trading partners in the new knowledge-based economy.

Adam Falconi is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.