Articles Posted in Canada

canada.jpgEli Lilly (“Lilly”) filed a CDN$500M North American Free Trade Agreement (“NAFTA”) suit against the Canadian Government as a direct consequence of losing patent protection in Canada on two of its major drugs, Zyprexa® (olanzapine) and Straterra® (atomoxetine hydrochloride). The formal notice of arbitration came after it had failed to settle by negotiation the dispute it lodged in June 2013.

NAFTA obligates Canada to grant patents for inventions that are new, non-obvious, and useful. Lilley’s position is that Canadian utility patentability rules are different than the Untied States and Europe. In the United States, the utility requirement is met by an assertion of a specific and substantial use, and in Europe the utility requirement is met by a use that is specified and “plausible.” However, in Canada there can be the added requirement that if in the patent specification there is a “promise,” for example, to treat a human disease with fewer side effects, then the utility is measured against that promise, and the patentee is required to prove that it has demonstrated or soundly predicted the promised result as of the date the patent was filed.

Lilly pointed out that Canada is a party to international treaties that require Member countries to offer a uniform level of substantive patent protection on a non-discriminatory basis, and Lilly argued this sound prediction requirement is discriminatory. The Canadian courts have been applying this “promise doctrine” since around 2005 and have invalidated 19 pharmaceutical or biopharmaceutical patents for lack of utility under this doctrine between 2005 and 2012. This doctrine has been codified within the Canadian Intellectual Property Office. The Manual of Patent Office Practice describes the “promise of the patent” as follows:

Where the utility of an invention is self-evident to the person skilled in the art, and no particular promise has been made in regard to any advantages of the invention (e.g. if the invention was to simplify a known invention), the self-evident utility is sufficient to meet the required standard.

Where, however, the inventors promise that their invention will provide particular advantages (e.g. will do something better or more efficiently or will be useful for a previously unrecognized purpose) it is this utility that the invention must in fact have.

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canada.jpgIn a recent 43-54 vote, the U.S. Senate defeated a proposed amendment to the FDA Safety and Innovation Act (S.3187), which we previously reported on here, that would have allowed Americans to purchase drugs from Canadian pharmacies. The Amendment, proposed by Sen. John McCain (R-Ariz.) sought to lower the cost of prescription drugs for Americans.

In the days leading up to the vote, McCain had been critical of the pharmaceutical industry for lobbying the Senate to defeat the Amendment. “In a normal world, this would probably require a voice vote, but what we’re about to see is the incredible influence of the special interests, particularly pharma, here in Washington, that keeps people who cannot–that have to make a choice between eating and medicine,” McCain said. “So what you’re about to see is the reason for the cynicism that people have for the way we do things in Washington. Pharma, one of the most powerful lobbies in Washington, will exert its influence again at the expense of average, low income Americans who, again, will have to choose between medication and eating.”

While the Amendment was defeated, several fellow Republicans voiced support for McCain’s proposal. Sen. Charles Grassley (R-Iowa), a proponent of importation of Canadian pharmaceuticals, reasoned that allowing importation would provide economic incentives. “I have always considered drug importation a free-trade issue,” Grassley said. “Imports create competition and keep domestic industry more responsive to consumers. If Americans could legally and safely access prescription drugs outside the United States, then drug companies will be forced to re-evaluate their pricing strategies.”
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Stem Cell.jpgOn May 17, Health Canada approved Prochymal® (remestemcel-L) for the treatment of acute graft-versus-host disease (“GvHD”) in children. GvHD, a complication of bone marrow transplantation, occurs when the white blood cells in the grafted tissue recognize the host’s organs as foreign and attack the host. Acute GvHD usually presents within three months of the bone marrow transplant, and most often causes damage to the liver, skin, stomach, and intestines. Acute GvHD is categorized as stage I, II, III, or IV based on the number of affected areas, and the severity of the damage. Prochymal® is the first approved treatment for GvHD worldwide, and it receives eight and one half years of exclusivity in Canada.

Currently, the standard treatment for GvHD is intravenous steroids, which suppress the immune system to prevent attack of the transplant recipient’s organs. Treatment with steroids, however, is only successful in 30 to 50 percent of patients, as suppressing the immune system can lead to infections or even death. Health Canada approved Prochymal® for use in children with acute GvHD where steroid treatment has been unsuccessful.

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Written by Julie E. Kurzrok

by Howard E. Rosenberg, Ph.D.

NAFTA.bmpApotex, Canada’s largest generic drug manufacturer, claims that as a consequence of action taken by FDA with respect to two Canadian facilities operated by Apotex-Canada, Apotex-U.S. incurred a loss of income exceeding $520 million. Apparently these two facilities produce about 80 percent of the products sold by Apotex-U.S. and an FDA-imposed import alert raised in August 2009 prevented Apotex-U.S. from receiving any drugs produced by these two facilities until the import alert was fully lifted at the end of July 2011.

Apotex alleged that during the relevant time period, FDA accorded more favorable treatment to other U.S. investors and U.S.-owned investments having issues similar to Apotex, in that these other investors were not subjected to a measure as severe as the import alert imposed on the Apotex companies. The problems began for Apotex when their two manufacturing facilities were inspected by FDA that uncovered quality system problems. These issues and the resolution of the issues by a FDA re-inspection were far more protracted to resolve than say those by Teva who, according to Apotex, appeared to have similar or analogous problems. Teva’s re-inspection by FDA and the resolution of their quality failures proved to be far quicker than that for Apotex.

According to Apotex, the import alert violated North American Free Trade Agreement (“NAFTA”) Article 1102 (National Treatment), Article 1103 (Most-Favored-Nation Treatment) and Article 1105 (Minimum Standard of Treatment). Article 1102 provides, in part, that each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. Apotex claim that the Import Alert put Apotex Holdings and Apotex-Canada at a clear disadvantage compared to U.S. investors in like circumstances, who were not prevented from applying for authorization of new generic drugs or from benefiting from sales thereof.
Article 1103 extends 1102 by referring to the treatment afforded to third-country investors in like circumstances. Here Apotex pointed to the apparent favorable treatment given to Teva being in stark contrast to what they themselves received. Article 1105 provides that each Party shall accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security.
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by Dario Machleidt


The United States Department of Justice (“DOJ”) recently fined Google Inc. (“Google”) $500 million for permitting Canadian pharmacies to advertise on its search engine to American consumers. The importation of controlled and non-controlled prescription drugs is a violation of federal law, including the Federal Food, Drug, and Cosmetic Act (“FD&C Act”), and, in the case of controlled prescription drugs (those with high chances for abuse) the Controlled Substances Act. Google, despite knowing this fact, permitted Canadian pharmacies to post advertisements directed to United States citizens through its AdWords program. Google’s profits stem primarily from AdWords advertising revenue.

The importation or re-importation of prescription drugs into the United States from foreign countries potentially violates several sections of the FD&C Act. Such conduct can violate 21 U.S.C. § 355, which prohibits the introduction of non-FDA approved medications into interstate commerce. This includes foreign versions of drugs approved in the United States and drugs manufactured in the United States but intended for foreign markets. The importation of foreign prescription drugs can also violate 21 U.S.C. § 353(b)(2) which prohibits dispensing a drug without proper labeling. 21 U.S.C. § 331(a), (d), and (i) forbid marketing of misbranded, adulterated, or counterfeit drugs, acts that are difficult to monitor when ex-United States pharmaceuticals find their way into this country. And finally, 21 U.S.C. § 381(d)(1) prohibits a party, except the actual drug manufacturer, from re-importing a drug from a non-United States market.

As early as 2003, Google was aware that companies violated federal law by importing prescription drugs into the United States from foreign countries. Google even blocked pharmacies from various countries from advertising in the United States through Google’s AdWords program. Google, however, did not block Canadian pharmacy advertisers from targeting American consumers. In fact, it provided customer support to Canadian online pharmacy advertisers so that they could improve and optimize their AdWords advertisements.
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