[Ip-health] Biologics protection, Canada's patent utility regime among PhRMA's NAFTA priorities - Inside US Trade

Ma Gagnon MarcAndreGagnon at cunet.carleton.ca
Mon Jun 19 07:46:50 PDT 2017

Biologics protection, Canada's patent utility regime among PhRMA's NAFTA priorities
June 19, 2017
The Pharmaceutical Research and Manufacturers of America wants a renegotiated NAFTA to tackle a slew of complaints it has with how Canada and Mexico handle pharmaceutical intellectual property and enforce existing NAFTA obligations, arguing that the failure to do so will hinder U.S. export and manufacturing of drugs.
PhRMA, in comments on NAFTA renegotiation objectives<http://phrma-docs.phrma.org/files/dmfile/PhRMA-Comments-on-Negotiating-Objectives-for-Modernization-of-NAFTA-June-2017.pdf?utm_campaign=Subscribe&utm_source=hs_email&utm_medium=email&utm_content=53071646&_hsenc=p2ANqtz-9-m14hsHdqYZ5Cw7Cymi6mjJ5iAcovX_E4rLZsuTcLu38x_Gg-eiql5BT4oo6uIzGQTQr7S9GaaSCOer4SongcjCu2cA&_hsmi=53071646> submitted to the Office of the U.S. Trade Representative this week, said the redo should serve as a vehicle to address patentability standards in Canada, inadequate regulatory data protection for chemical and biologic drugs, effective mechanisms to resolve patent disputes, patent term restoration, and other issues.
An industry source told Inside U.S. Trade that PhRMA officials are still debating the association's position on the period of regulatory data protection NAFTA should mandate that its members provide for biologic drugs, and PhRMA in its comments does not recommend such a period for NAFTA.
The regulatory data protection period for biologic drugs was one of the most contentious issues discussed in Trans-Pacific Partnership negotiations, both among the countries that were party to the deal as well as on Capitol Hill when lawmakers were weighing a vote on it. Many Republicans and PhRMA itself<https://insidetrade.com/node/152558> were disappointed that TPP did not require that its members provide 12 years of protection for biologics, in line with U.S. law under the Affordable Care Act. TPP required eight years of protection or five years of protection and additional measures.
PhRMA's NAFTA comments do say that patents alone are likely insufficient protection for innovative biologics and add that the 12 years of protection provided by the ACA "was not an arbitrary number," but one arrived at through careful consideration.
The Biotechnology Innovation Organization, in its NAFTA comments, is more explicit, stating that 12 years of data protection "remains one of BIO's top objectives in any future trade agreement."
"Any NAFTA modernization must align data protection in North America with the U.S. standard of 12 years, in accordance with the Trade Promotion Authority Act's requirement that the U.S. government leverage trade agreements to bring our trade partners in line with U.S. standards for intellectual property rights," BIO added.
The objectives outlined in BIO's comments overlap considerably with PhRMA's.
Requiring 12 years of protection for biologics under NAFTA would require changes to Canadian and Mexican policy. Canada provides eight years of data protection for biologics but Mexico's protection for biologics is not as clear-cut, the industry source said.
PhRMA, in its comments, noted what it called ambiguous and potentially non-permanent guidelines Mexico issued in 2012."Mexico has taken initial steps to implement RDP provisions in 2012 by issuing guidelines to key federal agencies. However, the guidelines can be rescinded at any time because they have not been reflected in any national regulations or legislation," PhRMA said.
"They also do not explicitly recognize biologic medicines as 'new chemical entities' -- a term used in NAFTA and well-accepted to include small molecule and biologic medicines," it added. Mexico provides five years of data exclusivity for pharmaceuticals but its regulations do not explicitly state that biologics are afforded that protection.
An industry source said that disparities exist among Mexican government offices dealing with the data protection provided to chemical drugs and biologics.
In comments submitted for USTR's Section 301 report on IP issues in February, PhRMA noted<http://phrma-docs.phrma.org/files/dmfile/PhRMA-2017-Special-301-Submission.pdf> that Mexico's health regulatory agency and its patent office "have committed to provide protection for data generated to obtain marketing approval for all pharmaceutical products, including biologics. However, PhRMA and its members remain concerned with the apparent distinction made by the regulatory authorities between the provision of RDP to chemically synthesized (small molecule) and biologic drugs. Consistent with TRIPS, RDP should be provided regardless of the manner in which the medicine is synthesized."
Mexican Economy Minister Ildefonso Guajardo Villarreal<https://insidetrade.com/node/159134>, in a June interview with Inside U.S. Trade, said Mexico went into TPP talks offering zero years of biologics protection and agreed to the deal's five-plus-three model during the talks only after negotiation and compromise. He indicated that the baseline exclusivity period for biologics going into the NAFTA renegotiation is again zero years.
PhRMA also wants USTR to place its crosshairs on Canada's patent utility regime, also known as the promise doctrine, in the NAFTA renegotiation.
Article 1709 of NAFTA states that members shall make patents available for inventions that are new, non-obvious, and useful. As it has previously contended, PhRMA argues that the standard for determining patent "utility" is higher when applied to pharmaceuticals, which has resulted in court decisions invalidating patents for lack of utility. Further, it argues that courts apply this standard in a discriminatory fashion, claiming that since 2005 no non-biopharmaceutical patent has been revoked due to lack of utility.
"Canada remains the only country in the world that interprets patent utility in this manner, breaking the letter and spirit of its NAFTA and other international commitments on IP rights," PhRMA said. "This doctrine continues to undermine patent protection and removes a critical incentive that drives and sustains biopharmaceutical innovation."
PhRMA also knocked the decision in an investor-state dispute settlement case brought by Eli Lilly against Canada<https://insidetrade.com/node/158045>, connected to the utility test, saying it did not weigh in on whether the doctrine is consistent with NAFTA rules. The panel ruled in favor of Canada in the dispute, finding that a violation of NAFTA's investment chapter had not taken place when Canadian courts invalidated patents for two drugs made by Eli Lilly. The U.S. in that dispute filed a brief in 2016 in support of the Canadian government's position, as did the Mexican government.
USTR negotiators should also resolve the so-called right of appeal issue in Canada, PhRMA said. Brand-name drug makers under Canada's patent linkage rules -- known as "Patented Medicines (Notice of Compliance) Regulations" -- do not have a right of appeal in patent infringement proceedings in Canada, while Canadian generic drug makers do. Patent owners must therefore start a new judicial proceeding outside of the regulation to seek damages once a generic product enters the market.
The Canada-European Union Comprehensive Trade and Economic Agreement was crafted to remedy this<https://insidetrade.com/node/154500> by requiring that both generic drug manufacturers and patent holders be allowed to appeal the outcome of a challenge to a generic manufacturer's application for marketing approval of a patented drug. But PhRMA in its comments said "the proposed regulations to implement this commitment are contrary to this objective."
Pamela Fralick, president of Innovative Medicines Canada -- which represents brand-name pharmaceutical companies in Canada -- told Inside U.S. Trade that the implementation plan for the equal right of appeal obligation under CETA remains confidential and the details cannot be publicly discussed, but the group has "indicated to both Canada and the European Union that we have significant concerns regarding these changes, most of which are not required under CETA, and which may have the effect of complicating and destabilizing pharmaceutical patent litigation in Canada once implemented."
Brand-name pharmaceutical companies have sharply criticized the Canadian government's plan to implement its CETA obligations by combining two separate tracks of litigation into one procedure, sources said. The fear is that combining the proceedings could stretch litigation over patent validity and infringement, and marketing approval, beyond 24 months, which is the maximum amount of time litigation can take before Health Canada -- the government agency tasked with handling national public health issues -- automatically grants marketing approval to the applicant.
Canada also does not provide for patent term restoration, an extension of patent terms based on time consumed by regulatory delays and clinical trials, but under CETA it has decided to implement up to two years of restoration, Fralick said. PhRMA in its NAFTA comments calls for NAFTA countries to enhance their patent term restoration mechanisms.
Fralick noted that the Canadian government's plan to implement that CETA obligation also remains confidential, but the brand-name pharmaceutical group would prefer that companies be allowed to seek five years of restoration, as is the case in the U.S., EU, and Japan.
In Mexico, patent holders face difficulties filing preliminary injunctions to challenge the launch of a generic drug on grounds of patent infringement, PhRMA added in its NAFTA comments.
PhRMA member companies have difficulty gathering information from Mexican authorities prior to generics or biosimilars acquiring market authorization there, the group added in its Special 301 comments.
"As a result, PHRMA members have little to no notice that a potentially patent infringing product is entering the market. Further, obtaining effective preliminary injunctions or final decisions on cases regarding IP infringement within a reasonable time (as well as collecting adequate damages when appropriate) remains the rare exception rather than the norm," the 301 comments read.
Initial injunctions can also be easily lifted via payments or applications, the comments state.
"The failure to provide effective patent enforcement mechanisms is inconsistent with Mexico's commitments under NAFTA and the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)," PhRMA concludes in its 301 comments.
PhRMA, in its NAFTA comments, also charged that Canada has lowered the threshold laid out in NAFTA and TRIPS for the disclosure of confidential business information, including biopharmaceutical clinical trial and other data.
NAFTA and TRIPS state that such information cannot be disclosed unless doing so is deemed "necessary to protect the public."
"However," PhRMA states, "Canada has lowered this objective threshold by permitting the Ministry of Health to disclose CBI related to biopharmaceutical products if the Minister 'believes' that the information 'may' protect the public. There is no necessity requirement for disclosure to occur, only that it be related to protecting or promoting health." -- Jack Caporal (jcaporal at iwpnew.com<mailto:jcaporal at iwpnew.com>)

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