Comprehensive economic and trade agreement (ceta)

Comprehensive Economic and Trade Agreement (CETA):

Impact on Pharmaceutical Products

June 2013

Dentons Canada LLP

By: Xavier Van Overmeire and Saminda Pathmasiri

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Dentons Canada LLP Document reference # 2802705v2 4

Table of Contents

June 2013

1) Economic and political context of CETA

2) Overview of the existing legal framework governing pharmaceutical products

• Current state of cooperation between Canada and European Union• Legal aspects of Intellectual property in Canada• Comparative analysis of the levels of intellectual property protection in the European Union and Canada• The generic industry

3) Expectative vision of CETA: the new intellectual property landscape for pharmaceutical products

• Understanding CETA• Status of negotiations on the protection of intellectual property• Political and economic issues• Outline of the legal consequences of this agreement

5Dentons Canada LLP Document reference # 2802705v2

Why a global economic and commercial agreement?

June 2013

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What is the political context?

• October 16, 2008: a joint study evaluating the costs and benefits of a closer economic partnership between the EU and Canada

• March 5, 2009: Canada-European Union Joint Report: Towards a Comprehensive Economic Agreement

• May 6, 2009: Prague Summit to launch negotiations on the conclusion of a Comprehensive Economic and Trade Agreement (CETA)

• Between 2009 and 2012: Nine rounds of negotiations took place alternatively between Ottawa and Brussels.

Dentons Canada LLP Document reference # 2802705v2 June 2013

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What is the economic context?

• The European Union is the largest single market in the world

• European Union is the second largest source of direct foreign investment in Canada

• 503 million consumers

• 20% increase in bilateral trade

• $12 billion in GDP growth for Canada


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NAFTA Vs CETA

“First generation” agreement

• Elimination of customs barriers on trade in goods and services

• Facilitation of trade and investment between party States

• Provisions on intellectual property law

• “Second generation” agreement

• Elimination of customs barriers on trade in goods and services

• Removal of non-tariff barriers (the various standards, procedures and regulations between each partner)

• New areas: investment, education, recognition of professional qualifications…

• Harmonization of standards


Dentons Canada LLP Document reference # 900 Month 2013

IP importers vs. IP exporters?

They have ≠ economic and IP interests

?

?


Credit: “Rights and Rents” report by Canadian International Council


June 2013

Generic market shares % (in value and in volume)

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The European Market


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The Canadian Pharmaceutical Market



Just over half of Canadian production is exported (primarily to the United States) and a significant portion of the Canadian market is supplied by foreign imports (29 percent from the U.S. and 57 percent from EU).

Total Canadian Pharmaceutical Trade (2001 to 2011) (in $ billions)

Year Domestic Exports Imports Trade Deficit

2001 2.0 6.4 4.4

2002 2.1 7.3 5.2

2003 2.8 8.2 5.4

2004 3.6 8.6 5.2

2005 3.9 9.1 5.2

2006 5.0 10.4 5.7

2007 6.3 11.3 5.2

2008 6.0 11.6 5.6

2009 6.7 13.4 6.7

2010 5.1 12.2 7.1

2011 4.3 12.5 8.2

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Intellectual property in bilateral agreements

Dentons Canada LLP Document reference # 2802705v2

• The new bilateral agreements systematically devote sections pertaining to intellectual property rights

• CETA provisions provide for a higher standard of protection of intellectual property rights than those in TRIPS

• The European Union asks its commercial partners to offer levels of protection equivalent to its own

Canada European Union

Patent term

20 years 20 years

Patent lifetime extension

N/A 0-5 years

Exclusive data protection

8 yr + 6 months for paediatric use drugs

10 yr + 1 years for new indications

Patent liaison to notice of compliance requests Yes No

June 2013


Negotiations = Tug of WarThere will be a winner and a loser at the table


What have been the benefits of increased collaboration between Canada and the EU for the pharmaceutical industry?

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Retrospective of the existing legal framework governing pharmaceutical products

• History

1976: Framework Agreement for Commercial and Economical Cooperation

1990: Transatlantic Declaration

1998: Agreement on Mutual Recognition in relation to Conformity Assessment between European Community and Canada:

“The European Community shall accept the results of conformity assessment procedures, including certifications of compliance, as required by the European Community and Member States legislation and regulations identified in the Sectoral Annexes, produced by designated conformity assessment bodies or authorities in Canada in accordance with this Agreement.”


Measures put in place to facilitate access for Canadian pharmaceutical products wishing to enter the European market


• Section XV of the Mutual Recognition Agreement: this agreement stipulates that a partner must grant access to its market to all products originating from the other partner which have met the requirements of a conformity assessment to good manufacturing practices.

• Sectoral Annex on drugs: certification of the compliance of the drugs to good manufacturing practices.

• Acceptance of authorisations and licences directly issued by Health Canada

• A certificate demonstrating the equivalency of compliance programmes for good manufacturing practices would suffice for the other Party to recognize the compliance of the products.

• Section 2.1 of the Sectoral Annex on drugs: “… It should be understood that equivalent does not mean identical but it does mean leading to the same result.”

June 2013

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What are the legal aspects of Canadian policy on intellectual property rights?


• Intellectual property rights on drugs are protected by:TrademarksPatentsData protection mechanismsTrade secrets

• This framework is conditioned by the obligations to which Canada is bound (NAFTA, GATT and TRIPS), and which it must comply with.

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How effective are patents in the protection of pharmaceutical products in Canada?


• What is patentable? An invention

• An invention is “any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter”

Broad interpretation of “new” and “useful” which encourages “evergreening” by means of : • Patenting improvements on existing drugs,

• Advanced patenting of a drug through the application of the doctrine of “sound prediction” and;

• Patenting a second use for an existing drug.

June 2013

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What is the legal term of a pharmaceutical patent?


Before 1989, patent lifetime

of17 years

WTO Agreement on Trade-Related Aspects of Intellectual Property

Rights (TRIPS) provides a minimal

protection of 20 years.

Section 44 of the Patent Act modified in 1989, provides for

a protection of 20 years

June 2013

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Effective duration of a patent


Patent

Patent request

Request for a notice of compliance for an innovative drug

Health Canada issues a notice of compliance

Expiration of the patent

0 10 20Duration in years

June 2013

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NOC Regulations or Patented Medicines Regulations, a new infringement action offered to patent holders?

June 2013 Dentons Canada LLP Document reference # 2802705v2

• This regulation ties notice of compliance requests to a preliminary verification of the patent registry kept by the Minister of Health. It forbids generic manufacturers from marketing their products prior to the expiration of the patent. They can however seek to demonstrate that the patent is invalid or expired.

• “If a second person files a submission for a notice of compliance in respect of a drug and the submission directly or indirectly compares the drug with, or makes reference to, another drug marketed in Canada under a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the second person shall, in the submission, with respect to each patent on the register in respect of the other drug,

• (a) state that the second person accepts that the notice of compliance will not issue until the patent expires ; or

• (b) allege that

• (i) the statement made by the first person under paragraph 4(4)(d) is false,

• (ii) the patent has expired,

• (iii) the patent is not valid, or

• (iv) no claim for the medicinal ingredient, no claim for the formulation, no claim for the dosage form and no claim for the use of the medicinal ingredient would be infringed by the second person making, constructing, using or selling the drug for which the submission is filed.”

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NOC Regulations


Denunciation to the patent

holder

Section 5.3

The injunction automatically block the notice of compliance issuance procedure

for 24 months

Section 7.1

Court may declare the patent valid or

invalid

The patent holder has 45 days to request a Court order to prevent the issuance of a NOCSection 6.1

June 2013

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What protection for non-patented pharmaceutical products? Are they neglected from the intellectual property system?


• Exclusive data protection allows the manufacturer of an innovative drug to benefit from an exclusivity period for its clinical data, which prevents of competitors from using it to quickly obtain a notice of compliance.

• Distinct protection from the one conferred by a patent but has a similar effect

• Protection of exclusive data stems from international agreements which Canada has agreed to.

June 2013

28June 2013 Dentons Canada LLP Document reference # 2802705v2

“5. If a Party requires, as a condition for approving the marketing of pharmaceutical or agricultural chemical products that utilize new chemical entities, the submission of undisclosed test or other data necessary to determine whether the use of such products is safe and effective, the Party shall protect against disclosure of the data of persons making such submissions, where the origination of such data involves considerable effort, except where the disclosure is necessary to protect the public or unless steps are taken to ensure that the data is protected against unfair commercial use.

6. Each Party shall provide that for data subject to paragraph 5 that are submitted to the Party after the date of entry into force of this Agreement, no person other than the person that submitted them may, without the latter's permission, rely on such data in support of an application for product approval during a reasonable period of time after their submission. For this purpose, a reasonable period shall normally mean not less than five years from the date on which the Party granted approval to the person that produced the data for approval to market its product, taking account of the nature of the data and the person's efforts and expenditures in producing them. Subject to this provision, there shall be no limitation on any Party to implement abbreviated approval procedures for such products on the basis of bioequivalence and bioavailability studies.

Where a Party relies on a marketing approval granted by another Party, the reasonable period of exclusive use of the data submitted in connection with obtaining the approval relied on shall begin with the date of the first marketing approval relied on.”

The section 1711 NAFTA, provides a minimum protection of five years:

Minimum period of 5 years

Data protection starts on the date on which the first Notice of compliance is issued

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For which drugs? … Innovative drugs


• Section C.08.004.1 (1) of the Food and Drug Regulations:

"Innovative drug" means "a drug that contains a medicinal ingredient not previously approved in a drug by the Minister and

that is not a variation of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate or polymorph."

June 2013

For what duration?


• Before June 2006: five years protection with no real effectiveness Strict interpretation of exclusive data protection by the Federal Court in Bayer Inc. v.

Canada

• After June 2006:

No new drug submission may be made on the basis of an innovative drug for a period of 6 years

"If a manufacturer seeks a notice of compliance for a new drug on the basis of a direct or indirect comparison between the new drug and an innovative drug :

a) the manufacturer may not file a new drug submission, a supplement to a new drug submission, an abbreviated new drug submission or a supplement to an abbreviated new drug submission in respect of the new drug before the end of a period of six years after the day on which the first notice of compliance was issued to the innovator in respect of the innovative drug" Section C.08.004.1.(3) a)

No Notice of compliance shall be issued by the Minister of Health before the expiry of a period of eight years;

"the Minister shall not approve that submission or supplement and shall not issue a notice of compliance in respect of the new drug before the end of a period of eight years after the day on which the first notice of compliance was issued to the innovator in respect of the innovative drug." Section C.008.004.1.(3) b)

This period is lengthened to eight years and six months for paediatric use drugs (section C.008.004.1 (4a)

June 2013


Can the European Union claim to have higher standards of IP protection?

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Can the European Union claim to have higher standards of IP protection?


Canada European Union

Patent term 20 years 20 years

October 5, 1973 Munich Agreement

Section 63

Patent life time extension

N/A 0-5 ans

May 6, 2009, Paliament and Council Regulation CE n°469/2009

“Protection Supplementary Certificate" The product is protected by a basic patent

The drug has received approval to market

The drug has not been the subject of a certificate

For the first authorization of issued marketing

Exclusive data protection

8 yr (innovative drugs)

+ 6 months for paediatric use drugs)

No additional protection for orphan drugs

10 yr (any drug)

( + 1 year for new indications)

Directive 2001/83/CE as amended in 2004 by Directive 2004/27/CE

Exclusivity of full 10 years for orphan drugs

December 16, 2009, European Parliament and Council Regulation CE n°141/2000

Patent liaison to NOC requests

Yes No

June 2013


The CETA vision: a new legal landscape of pharmaceutical products – what are the benefits in terms of economic growth for Canada?

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The CETA vision: a new legal landscape of pharmaceutical products

• 20% increase in trade through the elimination of tariff and non-tariff barriers;

• GDP growth of $12 billion in Canada;

• Wealth Increase of $360 per Canadian resident;

• The EU is the second largest source of foreign direct investment in Canada;

• The EU welcomes 23.6% of Canada’s foreign direct investment.


What are the benefits in terms of economic growth for Canada?

June 2013


How will the CETA agreement affect intellectual property rights in Canada?

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How will the future CETA agreement affect intellectual property rights in Canada?


• Consolidated Draft of AECG 2010 “Section 9.2 Supplementary protection Certificates :

The Parties recognise that medicinal and plant protection products protected by a patent on their respective territory may be subject to an administrative authorisation procedure before being put on their market. They recognise that the period that elapses between the filing of the application for a patent and the first authorisation to place the product on their respective market, as defined for that purpose by the relevant legislation, may shorten the period of effective protection under the patent.

The Parties shall provide for a further period of protection for a medicinal or plant protection product which is protected by a patent and which has been subject to an administrative authorisation procedure, that period being equal to the period referred to in paragraph 1 second sentence above, reduced by a period of five years.

Notwithstanding paragraph 2, the duration of the further period of protection may not exceed five years.

A medicinal product for which paediatric studies have been carried out may be entitled to a six months extension of the period mentioned in paragraphs 2 and 3.]”

… An extension of the legal term of patents…

Extension of 5 years of the life term of a patent

Five years and six months for paediatric use drugs

June 2013

3700 Month 2013 Dentons Canada LLP Document reference # 2802705v2

• Section 10 : Protection of Data Submitted to Obtain an Authorisation to put a Pharmaceutical Product on the Market

The Parties shall guarantee the confidentiality, non-disclosure and non-reliance of data submitted for the purpose of obtaining an authorisation to put a pharmaceutical product on the market.

[EC: 2. For that purpose, the Parties shall ensure in their respective legislation that any information submitted to obtain an authorisation to put a pharmaceutical product on the market will remain undisclosed to third parties and benefit from a period of at least ten years of protection against unfair commercial use starting from the date of grant of marketing approval in either of the Parties.

(a) during a period of at least eight years, no person or entity (public or private), other than the person or entity who submitted such undisclosed data, will, without the explicit consent of the person or entity who submitted this data, rely directly or indirectly on such data in support of an application for the authorisation to put a pharmaceutical product on the market;

(b) during a ten-year period, a marketing authorization granted for a subsequent application will not permit placing a pharmaceutical product on the market, unless the subsequent applicant submitted his/her own data (or data used with authorization of the right holder) meeting the same requirements as the first applicant. Products registered without submission of such data would be removed from the market until the requirements were met.

Extending the duration of protection for exclusive data

New protection term: 10 years from the issuance of the Notice of Compliance

Possibility for a generic manufacturer to begin proceedings for the issuance of a NOC, two years before the protection expiry

June 2013


• Data protection as provided for by the EU applies to ALL drugs

• Canadian data protection applies only to innovative drugs:

• “ “Innovative drug“ means a drug that contains a medicinal ingredient not previously approved in a drug by the Minister and that is not a variation of a previously approved medicinal ingredient such as a of salt, ester, enantiomer, solvate or polymorph"

To broaden the scope of protection of exclusive data, the term "innovative drug" could be replaced by "existing drug" which would be defined as any drug already approved by the Minister.

A small yet significant change in terminology

June 2013


• “In addition, the ten-year period referred shall be extended to a maximum of eleven years if, during the first eight years after obtaining the authorisation in either of the Parties, the holder of the basic authorisation obtains an authorisation for one or more new therapeutic indications which are considered of significant clinical benefit in comparison with existing therapies.”

Lengthened to 11 years if, during the first eight years of protection, the company received approval to treat one or more therapeutic indications

June 2013


Section 10 « [EC: 4. If a Party relies on "patent linkage" mechanisms whereby the granting of

marketing authorizations (or notices of compliance or similar concepts) for generic medicines

is linked to the existence of patent protection, it shall ensure that the patent holders and the

manufacturers of generic medicines are treated in a fair and equitable way, including

regarding their respective rights of appeal.]

Strengthening the protection granted to rights holders in the NOC Regulations

Establishment of an effective right of appeal against the Courtdecision

June 2013

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NOC Regulations


Denunciation to the patent

holder

Section 5.3

The injunction automatically block the notice of compliance issuance procedure

for 24 months

Section 7.1

Court may declare the patent valid or

invalid

The patent holder has 45 days to request a Court order to prevent the issuance of a NOCSection 6.1

June 2013

Injunction refused!Appeal process

New!

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What are the political and economic implications of CETA?


• Recoup cost of research through an extension of the exclusive marketing period;

• Encourage innovators to push their innovative research further;

• Attract more investment in R & D in Canada

• These benefits may be tempered (e.g. increased protection for data in 2006 did not lead to higher R&D)

Premise: greater protection promotes R & D

June 2013

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A difficult pill to swallow for drug users


• Significant shortfalls for the generic industry

• Impact on the cost of drugs for provinces and private insurers

• Delays in the marketing of generics could impose costs on prescriptions estimated at $2.8 billion

• Impact on the cost to consumers

The case of Crestor molecule: if CETA had come into force, this molecule would still not be marketed as a generic. Its patent expired on June 2, 2012, but with the extension of the patent term provided for in CETA, it would have only expired on January 2, 2018. The estimated cost for the province of Alberta, before accessing this drug in 2018, would be $145,3 million

June 2013

Outlining the legal consequences of the agreement:


• Section 44 of the Patent Act:

"Subject to section 46, where an application for a patent is filed under this Act on or after October 1, 1989, the term limited for the duration of the patent is twenty years from the filing date."

• Section 45 (2) of the Patent Act:

"Where the term limited for the duration of a patent referred to in subsection (1) had not expired before the day on which this section came into force, the term is seventeen years from the date on which the patent is issued or twenty years from the filing date, whichever term expires later.“

This section must be repealed. The new regulation will have to provide for the legal status governing existing patents when a certificate extending its term enters into force, and also limit the lifespan of a patent to 15 years after the first issuance of a notice of compliance.

A new reform of the Patent Act?

Adding a paragraph referring to the Regulations which will provide for the possibility of obtaining a certificate to extend the patent term by 5 years.

June 2013


• Actual section C.08.004.1 "(3) If a manufacturer seeks a notice of compliance for a new drug on the basis of a direct or indirect comparison between the nwe drug and an innovative drug:

a) The manufacturer may not file a new drug submission, a supplement to a new drug submission, an abbreviated new drug submission or a supplement to an abbreviated new drug submission in respect of the new drug before the end of a period of six years after the day on which the first notice of compliance was issued to the innovator in respect of the innovative drug; and

b) The Minister shall not approve that submission or supplement and shall not issue a notice of compliance in respect of the new drug before the end of a period of eight years after the day on which the first notice of complance was issued to the innovator in respect of the innovative

c) the Minister shall not approve that submission or supplement and shall not issue a notice of compliance in respect of the new drug before the end of a period of eleven years if, during the first three years following the issuance of the notice of compliance the manufacturer of the existing drug obtained an authorization to process one or several new therapeutic indications."

Changes to the Food and Drug Regulation?

Becomes 8 years

Becomes 10 ans

Adding a paragraph

June 2013

To broaden the scope of protection of exclusive data, the term "innovative drug" could be replaced by "existing drug" which would

be defined as any drug already approved by the Minister.


• Adjusting section C.08.004.1 (4) that provides for a protection period of eight years and six months for paediatric use drugs. This protection period will have to be extended to ten years and six months.

• Provide for an expedited special approval process?

Are other changes needed?

June 2013


1) A more strict interpretation of the patentability criteriaPatenting of simple improvementsAdvanced patenting of inventionsPatenting a new use of a drug

2) Impose conditions on the extension of patents.

3) Grant additional time only on the first patent for an innovative product or;

Proposals for achieving a new balance in the Patent Act

Ending the practice of "evergreening"

June 2013

IP

Investment protection

Gov. procurement

Increase in import quotas

CETA is much more than an IP agreement….

Canada will win on certain issues, will lose or compromise on others….

Labour and investment

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Questions ?


The preceding presentation contains examples of the kinds of issues people dealing with estate administration could face. If you are faced with one of these issues, please retain professional assistance as each situation is unique.

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Xavier Van Overmeire Regional Head of the International Trade Group D +1 514 878 [email protected]

Saminda Pathmasiri AssociateD +1 514 878 [email protected]

Dentons Canada s.e.n.c.r.l. 1, Place Ville-Marie, 39e étage Montréal (Québec) H3B 3A7

Thank you.

© 2013 Dentons. Dentons est un cabinet d’avocats international qui fournit des services à sa clientèle par l’intermédiaire de ses cabinets membres et des membres de son groupe partout dans le monde. La présente publication n’est pas destinée à servir d’avis d’ordre juridique ou autre et vous ne devriez pas agir, ou vous abstenir d’agir sur la foi de son contenu. Veuillez consulter les avis juridiques à l’adresse dentons.com.

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Comprehensive economic and trade agreement (ceta)

Health & Medicine

Transcript of Comprehensive economic and trade agreement (ceta)