Friday, December 17, 2010
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Canada’s Data Protection Upheld by the Federal Court of Appeal - Apotex Inc. v. Canada (Health)

Friday, December 17, 2010
Canada’s Data Protection regime was upheld by the Federal Court of Appeal on December 9, 2010 (see Apotex Inc. v. Canada (Health), 2010 FCA 334 here). In a unanimous decision penned by Justice Nadon, the Court found the regime was a proper delegation by the Canadian Parliament to the Governor in Council and intra vires pursuant to subsection 30(3) of the Food and Drugs Act. Moreovoer, the Court also found the regime intra vires the Federal government’s jurisdiction under the criminal law head of the Canadian Constitution.

The case involved two challenges filed by the appellants, Apotex Inc. and Canada’s Generic Pharmaceutical Association, seeking a declaration that subsection 30(3) of the Food and Drugs Act[1]  and section C.08.004.1 of the Food and Drug Regulations[2] (the provision in the Food and Drugs Regulations providing for Data Protection), were ultra vires and without legal force and effect. The challenge was dismissed by the Federal Court of Canada at first instance on July 17, 2009[3] .

Since October 2006[4] , Canada’s Data Protection regime provides innovative drug companies with a marketing exclusivity period of 8 years from the date of approval of their “innovative drugs” (with a possibility of 8.5 years, under certain circumstances, if pediatric studies are filed with Health Canada). Within this market exclusivity period, there is a 6 year “no file” period during which generic manufacturers are prohibited from filing a drug submission directly or indirectly comparing their drug with an innovative drug. This new regulatory regime was adopted by Health Canada pursuant to its regulatory authority under subsection 30(3) of the Food and Drugs Act to “make such regulations as the Governor in Council deems necessary” so as to implement Article 1711 of the North America Free Trade Agreement (NAFTA) or Article 39(3) of the Trade-Related Aspects of Intellectual Property Rights (TRIPS).

In finding that the new Data Protection regime was in line with the Canadian Constitution and a proper delegation of the Canadian government’s authority under the Food and Drugs Act, Justice Nadon noted that the test for application of the regime is not reliance on the innovator’s data, either by the Minister of Health or by the generic manufacturer, but rather whether there has been a direct or indirect comparison between the generic manufacturer’s drug and the innovative drug. Although Justice Nadon found in the instant case that reliance was not the test, in his view, in filing an Abbreviated New Drug Submission (“ANDS”), generic manufacturers “at the very least” indirectly rely on the safety and efficacy information filed in the innovators’ NDSs:

While it is true that the Minister does not usually examine the information provided by innovators in granting a NOC to a generic manufacturer following the filing of an ANDS on the basis of bio-equivalence, there cannot be much doubt that the ANDS process involves, at the very least, indirect reliance on the safety and efficacy information derived from innovators’ NDS. In other words, a generic manufacturer relies on the information found in an innovator’s NDS in that: (i) that information provides the actual knowledge about the safety and efficacy of the drug and its conditions of use; (ii) without that knowledge, it would not be possible for a generic manufacturer to produce its new drug without conducting extensive non-clinical and clinical studies […]. It is in that sense that a generic manufacturer relies upon the data provided by an innovator in its NDS[5].

With regard to the constitutional challenge specifically, Justice Nadon rejected the appellants’ argument that the pith and substance of the regime concerned commercial considerations, not public safety, and that the protection of trade secrets and confidential information is a matter of property and civil rights, thereby failing under the provincial jurisdiction of the Constitution. In the view of Justice Nadon, the Data Protection regime is a mechanism deemed necessary to balance the effects of the ANDS regulatory scheme which may provide a disincentive for innovative manufacturers to develop new and innovative drugs. By granting innovators a period of market protection for eight years, the Canadian government sought to put in place a regime which provides incentives for innovators to continue their search for “innovative drugs”. Ultimately, according to Justice Nadon, Data Protection “exists to encourage the development of new drugs which constitutes a valid public health and safety purpose”, a matter clearly falling within the federal government’s legislative criminal law power.

This decision will provide comfort to innovative manufacturers which expend heavy investment in pre-clinical development and clinical trials on new drugs. Given the importance of this matter to the generic industry, however, it may well be anticipated that an application for leave to appeal the Federal Court of Appeal’s decision to the Supreme Court of Canada will be forthcoming.


[1]  R.S., 1985, c. F-27.
[2]  C.R.C., c. 870.
[3]  2009 FC 725.
[4]  See Regulations Amending the Food and Drug Regulations (Data Protection), SOR/2006-241.
[5]  Para. 91.
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