[Ip-health] Politico: Eli Lilly sues Canada on drug patents

Thiru Balasubramaniam thiru at keionline.org
Fri Sep 13 07:44:26 PDT 2013

Eli Lilly sues Canada on drug patents

By ADAM BEHSUDI <http://www.politico.com/reporters/AdamBehsudi.html> |
9/12/13 7:03 PM EDT

Read more:

U.S. pharmaceutical giant Eli Lilly has filed a $500 million international
lawsuit against the Canadian government, saying it unfairly shortened the
life of patents for its best-selling drugs.

The case, filed Thursday under the rules of the North American Free Trade
Agreement, threatens to shed a negative light on a dispute resolution
mechanism also being proposed by the U.S. as part of the Pacific trade deal.

Eli Lilly has been arguing with Canada for almost a year over the patents
for its best-selling drugs Straterra, used to treat Attention Deficit
Hyperactivity Disorder, and Zyprexa, used to treat schizophrenia. The
pharmaceutical company says Canadian courts unfairly threw out these
patents when challenged by generic drug manufacturers, using a legal
doctrine that requires a company to provide an unreasonable amount of
scientific data in order to secure the patent.

Eli Lilly argues that the Canadian courts are creating too high of a
standard for companies to prove the “usefulness” of their products when
their patents are challenged by other firms seeking to produce their own
versions of drugs. Usefulness is a common benchmark for establishing or
maintaining a patent.

The legal fight is moving to the next stage after the two sides failed to
settle their differences during a 90-day consultation process, which ends

Doug Norman, Eli Lilly’s chief patent counsel, told POLITICO in an
interview this week that the court decisions are “so misaligned” with
Canada’s obligations under NAFTA, Ottawa should be held accountable for
stopping any future judgments that threaten the company’s presence in the
Canadian market.

“The Parliament could have stepped in and fixed Canada’s patent statutes,”
said Norman. “To date they have looked the other way.”

But critics argue that the case is another example where trade agreements
have enabled private companies to run roughshod over government decisions
made in the public interest.

“It’s an eye opener that a domestic court decision can be second-guessed by
a foreign tribunal,” said Lori Wallach, director of Public Citizen’s Global
Trade Watch, an advocacy group that traditionally opposes trade deals.

She said the Eli Lilly’s use of NAFTA’s dispute resolution mechanism is
particularly “invasive” because it subjects Canada’s entire patent system
to the whims of a single company.

Public interest groups are trying to battle a similar “investor-state”
dispute mechanism being advocated by the Obama administration as part of
the proposed 12-country Trans-Pacific Partnership agreement. Australia,
which is also involved in the talks, has vehemently opposed an
investor-state dispute mechanism and other countries remain skeptical about
its inclusion.

At the March round of Pacific trade deal negotiations in Singapore, Wallach
said she packed the house with more than 60 TPP negotiators when she gave a
briefing on the negative impacts of the Eli Lilly case.

Wallach said the case may also give the administration heartburn in
Congress, where some members may use it as ammo in the debate over trade
promotion authority – legislation that would allow President Obama to “fast
track” final trade deals by allowing only an up or down vote.

Outside observers also view the case as unique because Eli Lilly is not
directly challenging Canadian patent law, which by most accounts is very
similar to U.S. law, but rather how Canadian judges have interpreted the

The drug company is entering relatively untested legal waters because NAFTA
cases have normally been geared toward the administrative or legislative
actions of government, not the decisions of courts, said Lawrence Herman, a
Toronto-based attorney and former senior Canadian trade official.

“I would call it an aggressive claim because it goes pretty far in its
reach,” Herman said, adding that his initial reaction to the case was that
“you can’t attack judicial procedure because the NAFTA is geared towards
measures of government.”

However, Wallach argued that an earlier NAFTA dispute between a Canadian
firm and the U.S. government established that the functions of domestic
courts can be the subject of disputes.

But Herman believes Eli Lilly isn’t just trying to secure just one victory
in this latest dispute. He said the company’s ultimate goal is not
compensation. It most likely wants to see any outcome result in Canada’s
Parliament tweaking the patent law in a way that would prevent judges from
being able to make similar interpretations in the future.

But Simon Lester, a trade policy analyst at the Cato Institute, said for
Eli Lilly to secure a favorable ruling, it would require Canada to change
its own laws. It’s unlikely that the government of Canada can order its
courts to cease their approach toward testing pharmaceutical patents
because the courts, as they are in the U.S., are independent in Canada.

“It’s not easy to tell courts what to do,” Lester said.

More information about the Ip-health mailing list