I was largely oblivious to the processes of prescription and generic substitution before my internship at Teva Pharmaceuticals. Little did I know that pharmacists had the discretion of substituting generics for brand name medicines, unless the prescriber had indicated ‘no substitution’ on the prescription, which might occur if a patient had experienced an adverse reaction to an alternative brand. Little did I know that the price of patented medicines is capped on a case-by-case basis by the federal Patented Medicine Prices Review Board. And little did I know that every provincial/territorial jurisdiction in Canada is party to a Tiered Pricing Framework that also places ceilings on generic drug prices relative to the reference brand price. I was fortunate to have a patient and knowledgeable supervisor in Ben Gray with whom to discuss a number of patent issues involving litigation strategy, biologics, skinny labeling, and means by which pharmaceutical companies seek to extend their commercial monopolies.

My internship at Teva afforded me the opportunity to connect with members of the inhouse legal team, including counsel and a law clerk, as well as external counsel to gain a clearer picture of the division of labour on legal matters. In-house counsel oversaw matters on the macro level, sometimes handling matters independently, but also procuring and providing instruction to external counsel and allocating resources across files. External counsel were assigned to individual files, but in-house counsel kept abreast of developments through regular updates to their litigation reports, which provide an overview of ongoing litigation from claims to timelines. The management of intellectual property, having its own dedicated counsel and litigation report separate from all other legal matters, is unsurprisingly a priority for Teva.

While I did encounter a trademark issue pertaining to licensing the use of Teva’s brand materials, the IP matters I was exposed to mostly concerned patents. Though I have completed a handful of undergraduate courses in chemistry, that information has since laid dormant in my brain—so it was to my relief when Ben assured me that a PhD in chemistry is not a prerequisite to the in-house work that he does. I don’t know that the same can be said for the work of external counsel having now reviewed a couple lengthy Notices of Application pursuant to the PM(NOC) Regulations. Admittedly, I took numerous detours while reading to refresh my memory on the meaning of various terms describing chemical groups and molecular structure.

As Teva markets both brand name and generic products, it also both defends and challenges the validity of patents. I found it valuable to be placed with an entity whose interests lie on both sides of the social bargain in patent law. Updating litigation reports on intellectual property and non-intellectual property matters with law clerk Lynn Chacra allowed me to survey a range of legal issues that can arise for a pharmaceutical company. The matters I engaged with in more depth, though, were IP-related. In the
course of my work, I became more familiar with the Patent Act, the Patented Medicines (Notice of Compliance) Regulations, and the Rules of Civil Procedure. But my takeaways were not limited to hard skills.

Future dealings with most corporate adversaries, co-plaintiffs and co-defendants is to be expected in an oligopolistic industry like pharmaceuticals. As I allude to in the title of this blog—it’s a small world in big pharma. Aside from a firm grasp of the relevant substantive law and procedural frameworks, the importance of soft skills cannot be overstated in building respectful working relationships with adversaries and colleagues alike. For instance, favourable procedural arrangements and even settlements can sometimes be reached on consent of the parties. Co-plaintiffs or co-defendants may also pursue joint litigation to pool resources. It was my pleasure to be placed with an office that exemplifies professionalism from the technical to the relational. Owing to my positive experience with the Teva team, I have arranged to virtually observe an appeal hearing after the formal conclusion of my internship, so I can say with complete sincerity that I would choose this internship again.

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As a part of Actavis’ in-house legal team, I gained a deeper understanding of intellectual property (IP) law and its intersection with the pharmaceutical industry. I developed the skills necessary to construe claims of pharmaceutical patents in order to draft clearance opinions, attended a hearing in the Federal Court involving the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations) and learned more about the impact government policy has on the development of generic drugs in Canada. Most importantly, this experience allowed me to combine my prior summer experience at an IP law firm with insight gleaned from a client’s perspective.

My internship began with a brief overview of the global structure of the company and discussing some of the unique challenges being faced by the company as a result of its global structure. For example, in addition to providing clearance opinions for products to be marketed in Canada, Canadian legal counsel must consider IP laws in other jurisdictions where drugs intended for the Canadian market may be manufactured. I drafted clearance opinions by reviewing foreign jurisdictions’ patent databases for products that are being manufactured there before being exported to Canada. I also drafted clearance opinions for products Actavis intends to market in emerging markets such as Brazil. These exercises required me to combine my scientific and legal background to understand the synthetic process, formulation and use of specific products to comment on whether they fall within the claims of relevant patents.

I had an opportunity to attend a hearing in a proceeding under the PM(NOC) Regulations, where a brand company sought to prohibit Health Canada from issuing a Notice of Compliance to Actavis for a drug product. Actavis alleged that the patent at issue was invalid and therefore could not be infringed. While preparing for this hearing, I engaged in discussions about the merit of the case with the in-house counsel as well as the external counsel representing Actavis and observed the strategic progression of the case upon hearing the submission from the brand manufacturer.

An opportunity to observe a PM(NOC) Regulations proceeding helped me realize the risks involved for a generic manufacturer in deciding which drugs to include in their portfolio. Despite being successful in a proceeding under the PM(NOC) Regulations and obtaining an NOC, generic manufacturers may face the risk of damages for infringement in a subsequent infringement action under the Patent Act and may incur additional costs of re-litigating issues concerning the same patent. Hands-on experience through this internship enabled me to reflect on the role of patent linkage regulations in Canada.

Entry of generic competition for a particular product depends upon the willingness of a company to challenge the brand manufacturer’s patents. I also gained more insight on the decision-making process for product pipeline development through discussions with the Business Development team. Through these discussions, I learned about the effects of government policies on the growth of global companies such as Actavis. For example, the Ontario government capped the maximum price of generic drugs permitted under the Ontario Drug Benefit (ODB) program to be no more than 25% of the branded product’s price. As a result, the damages a generic manufacturer may be entitled to under section 8 of the PM(NOC) Regulations for being unfairly held off the market have reduced drastically, while the exposure to damages for infringement (based on lost profits of the brand) has remained the same. As a result, the risk of bringing a product to market has increased due to the increase in the difference in potential damages. Such an increase in risk may impact the resources to be allocated to a Canadian subsidiary of a global generic pharmaceutical company. Moreover, higher risk and lower profit may push numerous manufacturers to leave the market with a limited number of manufacturers dominating each type of drug, running the risk of shortages in drug supply for Canadian consumers.

In sum, my experience at Actavis was highly educational. It fostered the ability in me to critically reflect on complex government policies that regulate the pharmaceutical industry and to assess the adequacy of these regulations from a global perspective. I am grateful to Professor Vaver, Michael Migus (in-house counsel at Actavis) and IP Osgoode for their guidance throughout this journey.

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The Pharmaceutical Patent Regime

Several changes to Canada’s pharmaceutical patent regime were desired by Europe, and . Canada has agreed to allow a patent term extension (PTE) of up to two years. Additionally, the dual proceedings for patents – prohibition applications under the Patented Medicine (Notice Of Compliance) Regulations 1993 (as amended) for regulatory matters, followed by a court determination of patent validity or infringement – will likely be reformed. This second change is coupled with the newly acquired ability of brand companies to appeal an adverse PM(NOC) decision. However, the Canadian data and marketing exclusivity periods will , respectively, rather than move to the European period of 10 years. (To see past IPilogue coverage on this topic, click .)

These changes have predictably elicited polarized viewpoints. The Canadian Generic Pharmaceutical Association (CGPA) commended , but voiced their disappointment of others, including the PTE. The CGPA is pleased with the expected discontinuation of the dual litigation practice, the recognition of the generic pharmaceutical industry’s importance in Canada, and the limitations placed on the use of the PTE. Notably, a suggests that the PTE’s annual increased cost, even with the two year maximum, will range from $850 million to $1.65 billion.

By contrast, it was alleged in January 2013 that in Canada. Opinions nonetheless differ on whether brand companies have met previous promises to increase R&D in Canada in exchange for improved patent protection.

Whether these two changes are good for Canadians or not remains to be seen. Can the predicted annual cost of the PTE to Canadians be offset? The federal government’s will not help those paying for prescriptions out of their own pocket, and lacked any assurance that reimbursement will continue in the long term. Pharmaceutical companies may perhaps decrease their product costs in response to lower litigation costs, or may conduct more research in Canada – but probably not sufficient to offset the high PTE cost.

Geographical Indications

Protecting Geographical Indications (GIs) was another important aspect of CETA. Until now, the only GI protection in Canada has been for . Otherwise, GIs are protected under or as certification marks under the . These laws have not always protected European GI producers against prior Canadian users, as occurred with the Parma ham GI in . In Europe, GI protection is largely and is potentially available for any foodstuff or beverage, although some countries such as the UK have also long had a scheme like Canada’s and have also protected GIs under the law of unfair competition or false marketing.

Under CETA, Canada has agreed to increase the scope of GI protection to include . Areas that will remain unchanged in Canada include: words commonly used to describe items (Black Forest ham), generic plant names (kalamata olives), and components of longer terms, which can all still be used in association with wares. For other items, such as Asiago cheese, current users can continue to use the term, but future users are prohibited. It has not been indicated whether Canadian GIs can be protected in Europe. However, even if this protection is reciprocal, the limited use of GIs by Canadian producers suggests from the additional protection.

While existing Canadian trade-marks will , it seems that previously blocked European GIs, even if potentially confusing with Canadian trade-marks, may now be used in Canada. Thus, the European Commission has claimed that Prosciutto di Parma can in Canada. The possibility of harm to existing Canadian trade-mark owners and consumer confusion over the source of the two products becomes quite real. Consumer impact can of course be viewed as either a benefit (increased choice) or a detriment (confusion) but the potential harm to Canadian producers with valid trade-marks, coupled with the limited GI use by Canadian producers, suggests a clear victory for Europe in this sector.

Conclusion

In light of CETA’s impact on patent law and GIs, Canada appears to have lost the IP game to Europe. Whether this preliminary assessment holds true once the full text of CETA is released, and is applied in Canada, remains to be seen.

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Sildenafil, the medicinal ingredient in Viagra, was initially pursued for its use in treating hypertension and in 1998 Pfizer received a patent claiming sildenafil and its use in treating hypertension and angina. Serendipitously, when testing sildenafil on male patients, it was observed that some patients experienced spontaneous erections. A subsequent study confirmed the result with sildenafil and Pfizer applied for a second patent claiming the use of sildenafil in the treatment of ED. Pfizer received the 446 Patent on July 7, 1998.  In 2007, Teva applied for a Notice of Compliance in order to market a generic version of Viagra. Pfizer responded by bringing a proceeding in the Federal Court for an order prohibiting the Minister of Health from granting approval until expiry of the 446 Patent. Teva alleged the 446 Patent was invalid for insufficient disclosure, obviousness and lack of utility. The Federal Court found the 446 Patent sufficiently disclosed the invention, was not obvious, had utility and prohibited the Minister of Health from issuing a Notice of Compliance. On appeal, the Federal Court of Appeal upheld the Federal Court's decision. Teva, unwavering in its belief that Pfizer’s Viagra monopoly was based on an invalid patent, sought and was granted leave to appeal to the SCC.

The main issue on appeal to the SCC was the sufficiency of the 446 Patent’s disclosure. The 446 Patent discloses that the invention relates to the use of a group of compounds in the treatment of ED.  Despite the fact that sildenafil was the only compound that Pfizer had tested and demonstrated to induce erections, Pfizer artfully drafted the patent to cover an estimated 260 quintillion compounds, effectively hiding the true invention. As described by Teva, Pfizer grew a forest to hide the leaf that was sildenafil.

Teva’s argument before the SCC was simple. In failing to disclose the identity of sildenafil as the only effective compound, Pfizer’s patent failed to fully and correctly disclose the invention as is required by .  Teva argued that by not disclosing the identity of sildenafil, the patent did not place the public in the same position as the patentee and forced the reader to embark on a minor research project to identify the true invention. The factums of both parties can be found .

The SCC agreed with Teva’s argument and stated “the public’s right to proper disclosure was denied in this case” and that the patent obscured the true invention. Justice LeBel wrote that as a matter of policy and sound statutory interpretation, patentees cannot be allowed to “game” the system in this way. The Court reiterated that the patent system is based on a “bargain”, the inventor is granted exclusive rights in a new and useful invention for a limited period in exchange for disclosure of the invention so that society can benefit from this knowledge. Justice LeBel stated that in this particular case, the disclosure failed to enable the public to make the same successful use of the invention as the inventor could at the time of his application, because it failed to indicate that sildenafil is the effective compound.

While it is far too early to conclude what impact this decision will have on Canadian patent law, several interesting implications emerge immediately. First, the decision paves the way for affordable generic Viagra to enter the Canadian marketplace. Secondly, the decision clarifies the disclosure requirement and ensures (hopefully) that patentees will not be able to “game” the patent system to hide their true inventions while retaining the benefits. Finally, it is interesting to note that in a proceeding aimed solely at determining whether the Minister of Health is permitted to issue a Notice of Compliance, the SCC provided the remedy of ruling the 446 Patent invalid. While only father time will reveal the full implications of this decision, it will undoubtedly help ensure the Canadian public receives a fair exchange in patent bargains.

Sean Jackson is a third year J.D. Candidate at Osgoode Hall Law School. A more detailed review of this case will appear in an upcoming edition of the Intellectual Property Journal (IPJ).

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The PM(NOC) Regulations essentially serve as a link between the patent system and the drug regulatory approval system. The Regulations enhance protection for pharmaceutical patents by requiring generic companies to "clear" relevant patents prior to obtaining regulatory approval to produce and sell patented drugs.  Section 8 outlines the liability of an innovator to generic manufacturers after an unsuccessful application for a prohibition order against a generic company. Section 8 states that innovators are liable for "any loss suffered" that occurs as a result of an application being discontinued, withdrawn, dismissed, or successfully appealed by the generic company. Some generic companies have argued that the wording in section 8 indicates that generic manufacturers are entitled to damages as a result of being held off the market, including disgorgement of profits/revenues from the innovators and future lost profits.

On October 21, 2008, the Canadian Federal Court issued the first trial decision in regards to section 8 in . Apotex, a major generic drug manufacturer, filed a Notice of Allegation (NOA) in respect of the patent on alendronic acid held by Merck, a multinational pharmaceutical company. Alendronic acid is used in the treatment of osteoporosis as well as other bone diseases.  The drug inhibits bone resorption and is marketed by Merck under the brand name "Fosamax". Apotex claimed that Merck's patent was invalid for a number of reasons. Merck replied by initiating a proceeding for the issues Apotex raised in its NOA. Once proceedings are commenced by an innovator in response to a NOA, the Minister of Health is barred from issuing regulatory approval (NOC) to the generic company for 24 months or until proceedings are finished. Regulatory approval is required for generic companies to manufacture patented medicines.

Apotex was ultimately successful on some, but not all, of its patent invalidity claims in its NOA against Merck. Thus Apotex was able to bring a claim under section 8 for "any loss suffered" as a result of Merck's application against Apotex which prevented Apotex from manufacturing the drug for approximately one year. At trial, Apotex was awarded damages which included compensation for future losses, but was unsuccessful in obtaining a costs order against Merck. As well, Apotex's argument that it was entitled to a remedy of disgorgement of the innovator's profits was not accepted by the court, as it did not take into account the fact that Apotex is not in the position of a patentee and thus, the court states, should not be awarded the same types of damages as a patent owner seeking remedies for patent infringement.

On , Apotex successfully claimed some damages from Merck's proceedings under the PM(NOC) Regulations. However, Merck was successful in denying a large portion of damages. Apotex was successful in claiming damages for losing market share due to the fact that other generic drug manufacturers entered the market at the same time as Apotex. However, while the trial court included future lost profits in the damages award, the Court of Appeal decreased the damages award to only include profits lost during the time period that Apotex was unable to obtain a NOC. The Court referenced an analysis done by the Governor-in-Council in 1998 which stated that lost profits and compensation should not include future losses. The Court of Appeal also rejected Apotex's assertion that disgorging Merck's profits was necessary to uphold the purpose of section 55.2 of the . Section 55.2 states that it is not patent infringement to produce patented products for certain purposes prior to the expiration of a patent. For example, generic manufacturers are allowed to produce patented drugs intended for sale once the patent expires.

Apotex also failed to receive a costs award at trial because it was determined that both parties "largely" failed to succeed on the issues each party brought to the court. In order for a costs decision to be challenged, there must have been a legal error or misinterpretation of facts by the trial court. The Court of Appeal determined that there was no misapprehension of facts when the costs award was granted therefore the costs decision was not changed.

Would awarding future lost profits serve as a disincentive to litigate for innovators when a generic company files a NOA? Because the court determined in this case that only lost profits within the (maximum) 24 month time frame are recoverable by a generic manufacturer, it might be more profitable for the innovator to take a risk and challenge every NOA. Will there be a case where judges treat generic manufacturers more similarly to patent holders and award damages for future lost profits and/or disgorgement of an innovator's profits? Considering that recent amendments to the Regulations in October of 2006 eliminated the reference to profits in section 8, damage awards that include innovator's profits are highly unlikely.  It seems as though only a highly unusual case with obvious malicious intentions by innovators could render such a result.

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