US embassy cable - 03OTTAWA1675

UNCLAS OTTAWA 001675 
 
SIPDIS 
 
STATE FOR EB/IPC SWILSON; WHA/CAN PNORMAN; AND EB/DCT 
USDOC FOR CBUSQUETS 
DEPT PASS USTR FOR SCHANDLER AND CBURCKY 
DEPT ALSO PASS FDA FOR MECKLES 
 
E.O. 12958: N/A 
TAGS: KIPR, ECON, CA 
SUBJECT: CANADIAN PHARMACEUTICAL PATENTS: PARLIAMENTARY 
COMMITTEE POSTPONES DECISION TO AMEND REGULATIONS 
 
1. Summary ) A Parliamentary committee has postponed a 
decision to recommend changes to Canada,s drug patent rules 
that cover the process for bringing generic drugs to the 
market once the innovator,s patents expire.  The Canadian 
review mirrors the recent U.S. deliberations on the 
Hatch-Waxman law that led to a June 12 decision by the FDA to 
streamline the process for bringing generics to the market. 
The committee,s decision to delay a recommendation for 
possible regulatory change before the end of the current 
Parliamentary session is seen as a temporary victory for the 
brand-name pharmaceutical companies that oppose any 
legislative changes.  End Summary. 
 
2. After four days of testimony, the House Industry and 
Science committee postponed a decision to recommend reform of 
Canada,s drug patent rules until Parliament reconvenes in 
the fall.  The committee reviewed the Patented Medicine 
Notice of Compliance (NOC) Regulations, which are also known 
as the &linkage regulations8 because these rules link the 
regulatory approval of a generic drug to the patent status of 
the drug it seeks to copy.  A similar review of the 
Hatch-Waxman law in the U.S. led to the recent FDA decision, 
announced by President Bush on June 12, to institute new 
regulations to streamline the process for bringing generic 
drugs to the market. 
 
3. The linkage regulations, which were last amended in 1998, 
block Health Canada from approving a generic drug for up to 
two years if there is any allegation of patent infringement. 
Generic companies complained that by filing sequential 
patents on minor improvements on a drug and then alleging 
infringement on each, brand-name companies can "evergreen8 
the market for a drug long after its original 20-year patent 
expires.  The generics proposed scrapping the automatic 
24-month injunction altogether.  The brand-name manufacturers 
encouraged the committee to maintain the status quo, arguing 
that the automatic injunction is necessary to prevent patent 
infringement and encourage the development of new drugs. 
Canada and the U.S. are the only countries that provide an 
automatic injunction in cases of alleged patent infringement. 
 
 
4. The recent high profile review of the Canadian health care 
system by Roy Romanov, which was released last fall, 
recommended that the GOC consider overhauling the Notice of 
Compliance regulations.  Health Canada, which administers the 
regulations, generally agreed with this recommendation, 
testifying to the committee that the growing complexity of 
patents has made it difficult for them to administer the NOC 
regulations.  Industry Canada, on the other hand, argued 
against changes to the regulations, noting that they are 
necessary to protect and promote incremental innovation by 
brand-name companies.  The Parliamentary committee was evenly 
divided on the issue and determined that they needed more 
information before deciding on whether or not to amend the 
regulations. 
 
5. Comment ) Failure to reach a decision is a victory for 
the brand-name drug companies, who had hoped to avoid the 
Parliamentary review of the regulations altogether.  With the 
upcoming Canadian elections it is not clear when or if the 
committee will reconvene to make a final decision on whether 
or not the regulations will be amended.  Although Canada,s 
patent regime is generally considered more pro-generic than 
the U.S. system, even after the recent decision by the FDA, 
the perception that the U.S. is taking action to &lower the 
costs8 of prescription medications could motivate the 
committee to recommend changes to the linkage regulations. 
CELLUCCI