Canadian Drug Price Review of Generic Companies Holding Patents
September 30, 2019
By Noel Courage and Nyrie Israelian
Generic drug companies typically do not have patents. Occasionally they may have patents on a new formulation of an old drug. Other times they may be operating under a license of another company’s patent. Either scenario can trigger Canadian price review.
The Patented Medicines Price Review Board (PMPRB) is an independent, quasi-judicial body with the mandate of ensuring that prices for patented medicines sold in Canada are not excessive. The PMPRB has jurisdiction to review price of any patented medicines, as long as a Canadian patent exists with the slenderest thread of connection to the medicine. Generic drugs makers should take note that recent case law and updates to PMPRB policies have made clear that the PMPRB’s jurisdiction extends to generic drugs as well. However generic companies are considered a low risk by the PMPRB and are not going to be required to make price filings with the Board, except upon request.
Generics can come within the definition of “patentees”
In Canada (Attorney General) v Sandoz Canada Inc, the Federal Court of Appeal (FCA) considered whether generic drug makers could be “patentees” subject to review under the excessive price provisions of the Patent Act1. The FCA found that an implied licence existed from the consent given by patent holders in order to allow Sandoz to cross-reference their medicine and obtain the required marketing authorization (called a Notice of Compliance (NOC))2.
The issue turned on the interpretation of the definition of “patentee.” This definition states that a “in respect of an invention pertaining to a medicine, means the person for the time being entitled to the benefit of the patent for that invention and includes, where any other person is entitled to exercise any rights in relation to that patent … that other person in respect of those rights”3.
The FCA found that the legislative purpose was not only preventing patent holders from pricing their patented medicines excessively (generic companies charge less than the brand name medicine)4. The FCA held that the mischief sought to be prevented could be caused without the patent owner itself charging excessive prices, and therefore a broader characterization of the legislative purpose was the correct interpretation5. Review of generic prices in this situation also withstood a constitutional challenge, and was found to be within federal jurisdiction.
Sandoz’s and Ratiopharm’s application for leave to appeal to the SCC was discontinued, and the FCA’s decision was subsequently followed in the FCA in Alexion Pharmaceuticals Inv v. Canada (Attorney General)6. As a result, the PMPRB has jurisdiction to control the prices charged by generic companies for patented medicines, when the patent owner or holder has given explicit or implied selling rights under a licence to the generic company.
Updates to the PMPRB’s policies on patented generic drugs
In February 2017, the PMPRB announced that it will be moving patented generic drug price reviews to a complaint-based process, similar to the provisions for new and existing veterinary and over the counter drug products7. In its updated policy on generic medicines, the stated rationale for this decreased regulatory burden was that patented generic drugs represent a potentially lower risk category of patented medicines, and therefore a lower priority for PMPRB regulatory investigation8. The Board staff will commence an investigation into the price of a patented generic drug if all three of the following conditions are met:
- a substantiated complaint has been received in respect of the patented generic drug;
- the patentee of the patented generic drug is the only company in Canada selling a generic version of the drug in Canada; and
- the patented generic drug is not the subject of a pricing agreement with the pan-Canadian Pharmaceutical Alliance (pCPA), to which it is compliant. The onus of proving to PMPRB staff that a patented generic drug is subject to, and compliant with, a pricing agreement with the pCPA will rest with the patentee for that patented generic drug.
Reduced Reporting Requirements - Amendments to the PMPRB Regulations
Forthcoming amendments to the PMPRB Regulations would reduce reporting obligations to patented generic medicines so that price, sales, and identity information would only be required on request by the PMPRB. According to the PMPRB, during the initial consultation on the proposed amendments to the Regulations, generic medicine industry representatives supported this amendment.
There Appears to be No Publicly Available Ongoing Enforcement Action Against A Generic Company
We reviewed the list of PMPRB of hearings. The only relevant matter before the Board is a failure to file issue with Apotex, but the PMPRB’s Application has been discontinued (it’s been ongoing since 2007, and the Sandoz and Ratiopharm cases settled the jurisdictional issues raised in the Application). We reviewed the settlements (called Voluntary Compliance Undertakings (VCU)) from 2016-2019, and saw no ‘patented generic’ drugs. It appears that generic company patentees need to be aware of potential for PMPRB price review, but not concerned about ongoing PMPRB administrative filings or undergoing regular scrutiny.
1 Canada (Attorney General) v Sandoz Canada Inc, 2015 FCA 249 [Sandoz 2]
2 Ibid at paras 103-108.
3 Patent Act, RSC 1985, c P-4, s 79(1)
4 Supra note 1.
5 Ibid at paras 65-67.
6 Alexion Pharmaceuticals Inc v Canada (Attorney General), 2017 FCA 241.
7 Canada, Patented Medicine Price Review Board, PMPRB NEWSletter, vol 21 issue 1 (Ottawa: PMPRB, 2017), online: < http://www.pmprb-cepmb.gc.ca/view.asp?ccid=1292&lang=en#a5:>
8 Canada, Patented Medicine Price Review Board, Compendium of Policies, Guidelines and Procedures at B.8
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