The Supreme Court of Canada has recently denied leave to appeal a 2010 Federal Court of Appeal ruling that protects innovators in the drug industry. The Federal Court of Appeal decision stated that manufacturers of “innovative drugs” should be entitled to a period of eight years of exclusivity before generic copies of their drugs are produced. The Supreme Court of Canada has decided not to interfere with this finding.  

In the December 9, 2010 decision of Canadian Generic Pharmaceutical Assn. v. Canada (Minister of Health), the Federal Court of Appeal dismissed an appeal by Apotex Inc. and the Canadian Generic Pharmaceutical Association (“CGPA”) from a Federal Court judgment which held that certain regulatory provisions for drug manufacturers were both a valid exercise of the power of Cabinet and lawfully enacted under the Constitution Act, 1867. The Supreme Court of Canada has refused leave to appeal the Federal Court judgment.

The regulatory provision at issue was section C.08.004.1 - the Data Protection Regulation of the Regulations Respecting Food and Drug, C.R.C. 1978, c. 870 (the "DPR"). The DPR provides manufacturers of innovative drugs with a period of market exclusivity by imposing an eight year freeze on the approval of marketing of generic copies of such drugs. Prior to the enactment of the DPR, generic drug manufacturers were free to obtain approval to market a generic drug unless there was an unexpired patent for the drug at issue.

Subsection 30(3) of the Food and Drugs Act (the “FDA”) gives Cabinet the power to enact regulations for the purpose of implementing data protection provisions that are set out in the World Trade Organization Agreement (the “WTO Provisions”).

The CGPA argued that the DPR is not within Cabinet’s power to enact regulations under subsection 30(3) of the FDA. It was argued that the purpose of the WTO Provisions is to protect trade secrets and confidential information, whereas the DPR seeks to protect innovators in the drug industry without regard to whether the information disclosed in their new drug applications is confidential. As such, the GGPA argued that the WTO Provisions did not seek to protect the data used by innovators in the drug industry when manufacturing new drugs.

The Court held that the DPR was a valid exercise of Cabinet’s power under subsection 30(3) of the FDA because the purpose of this provision is to implement the WTO provisions in relation to drugs. It was held that Cabinet chose to use the DPR as a means to protect the data submitted by innovators against unfair commercial use.

The CGPA further argued that the DPR was unconstitutional because it concerned the protection of trade secrets and confidential information, which is a matter of provincial jurisdiction under subsection 92(10) of the Constitution Act, 1867 and does not fall under federal purview.

The Court held that the DPR constitutes a valid exercise of the federal criminal law power under subsection 92(27) of the Constitution Act, 1867. The purpose of the DPR, the Court stated, is to encourage the development of new drugs, which is a valid public health and safety purpose, which accords with the federal criminal law power.

It was also held that the DPR does not intrude on matters of provincial jurisdiction, since provinces do not regulate the safety and effectiveness of new drugs. Furthermore, the DPR does not interfere with provincial jurisdiction to authorize generic manufacturers to commercially market their drugs.

The Federal Court of Appeal therefore upheld the validity of the DPR. Given the Supreme Court’s refusal to hear an appeal on this issue, the decision of the Federal Court of Appeal stands and innovators in the drug industry will continue to be protected by the DPR.