Canada-Europe Free Trade Deal Gives Brand Name Pharmaceutical Companies a Shot in the Arm

Canada and Europe announced an agreement in principle on a Comprehensive Economic and Trade Agreement (“CETA”) that will potentially increase Canadian drug patent terms by up to 2 years.

CETA was the product of several years of negotiations. It is a wide-ranging trade agreement covering diverse topics such as foreign ownership and investments, access to public procurement contracts, automobiles, food (eg. beef and dairy products) and agriculture. Pharmaceuticals were also a prominent part of the discussion. The agreement was negotiated in secret. Europe was reportedly pressuring Canada to strengthen exclusivities for brand name drugs. Leaked drafts of the agreement showed that the main pharmaceutical intellectual property issues on the table were: i) providing patent term extension, ii) longer period of data exclusivity protection for brand name drugs to keep generics off the market, and iii) improving the right of pharmaceutical companies to appeal a loss in certain specialized pharmaceutical patent litigation cases called “NOC Proceedings”.

Not many specifics of the agreement in principle were released when it was announced on October 18, 2013. Patent term extension has been agreed upon. Media outlets attending a Canadian government press briefing reported that patent term extension would be provided for up to 2 years in the case of government regulatory delays in approving the drug (see: Financial Post and Globe & Mail). This is a similar concept as US patent term extension for FDA regulatory delays. It was not stated whether this extension would be available to currently approved drugs or only drugs entering the market after the new rules come into effect. The only written government statement provided online today was, “Patents: With respect to the pharmaceutical sector, CETA will provide extended protection for innovators…” (Government of Canada. Opening New Markets in Europe – an Overview. 2013).

Data exclusivity was not addressed in government statements, so it is likely not part of the agreement in principle. It is unclear whether it remains a possible addition to the final version of the trade deal, since there is still likely to be extensive CETA lobbying by the brand name and generic drug industries.

Canada’s brand name pharmaceutical association, named Rx&D, issued a press release stating that it was informed by the government that improved brand name rights for patent appeals in NOC Proceedings are part of CETA. No additional details were provided. The Canadian Generic Pharmaceutical Association (“CGPA”) press release said it received a letter from the Canadian government that confirmed the right of appeal point but also stated that the government would commit to reducing the occurrence of multiple patent cases on the same patents. The CGPA also said that CETA provides an exception under the patent term extension for activities relating to generic drugs to be exported. Again, the effects on industry will greatly depend on the specific implementation of such laws. Some of the information from the industry associations may refer to government policy positions that are outside the strict terms of the agreement in principle in CETA, but could nonetheless be additional to CETA amendments to Canadian laws.

It will take some time for the governments to draft and finalize an agreement, likely more than a year. The next Canadian federal election is expected in 2015, so the government will aim to have the deal completed by then. CETA would be in jeopardy if it remained an agreement in principle at election time and there was a change in power.

The federal governments must then pass new laws to implement CETA before it comes into effect. It is unclear the extent to which the government would consult with Canadian stakeholders prior to bringing in new laws. Implementation of this complex trade agreement would be staged so that different portions of laws come into effect at different times. Stay tuned for more information about the timing of pharmaceutical patent changes coming into force.