News Releases

Generics to Parliamentary Committee: End Abuse of Drug Patent Regulations
Generic industry supports 20-year patents but regulations that automatically block generic competitors must go

Ottawa, June 3, 2003 – Canadian generic drug makers today urged a Parliamentary committee to recommend that the federal government eliminate regulations of Canada’s Patent Act that have been systematically abused by brand-name drug companies. This abuse keeps lower-cost versions of prescription drugs off the market, adding hundreds of millions of dollars to Canada’s prescription drug bill.

Appearing before the House of Commons Standing Committee on Industry, Science and Technology, representatives of the Canadian Generic Pharmaceutical Association (CGPA) told Committee Members that the generic industry’s continuing ability to deliver affordable medicines to Canadians is being hampered by brand companies’ “evergreening” strategies under the Patented Medicines (Notice of Compliance) Regulations.

“The term ‘evergreening’ captures a variety of strategies by brand-name drug companies, all involving abuse of the automatic 24-month injunction under Regulations, to extend their market exclusivity beyond the expiry of their basic 20-year patent on a drug,” explained the Chair of the CGPA, Jean-Guy Goulet.

“A common evergreening strategy involves listing and litigating additional patents after the main patent on the active ingredient has expired. This is done to trigger additional automatic injunctions, and prolong the brand’s monopoly. As a result, evergreening keeps non-infringing generic products off the market, sometimes for years,” Goulet said.

The automatic injunction is a special tool given only to the brand-name pharmaceutical industry. It is not available to patentees in any other industry in Canada.

The Regulations allow a brand-name drug company to commence an application in the Federal Court of Canada, triggering an automatic 24-month injunction against the marketing approval of a lower-cost, generic competitor. The application to the Court is begun after the generic company has had to give notice to the brand-name company of its intention to come to market. This provision is extremely unfair to generic drug makers. In no other industry is a company forced to reveal to its competitors in advance which products it intends to bring to market.

Goulet’s testimony emphasized that the generic industry supports patent rights and intellectual property protection. He also stressed that the Regulations are not required by Canada’s international trade agreements and are not serving the interests of Canadians.

“Innovation is being replaced by litigation, and this litigation is unfairly delaying generic competition and adding hundreds of millions of dollars in unwarranted costs to Canada’s already cash-starved health-care system,” said Goulet. “I am sure this is something legislators and regulators did not foresee or intend.”

The CGPA estimates that delays caused by evergreening strategies involving the automatic 24-month injunction of the Regulations have cost Canadians more than $1 billion since their implementation in 1993.

The CGPA explained to the Committee that eliminating the Regulations would still offer brand companies 20-year patent terms, the right to seek multiple patents on the same medicine if they make improvements to it, and full legal recourse to defend their patents under the provisions of the Patent Act used by every other industry in Canada. Canada would continue to be in full compliance with its international trade agreements.

United States Action to Stop Abuse of Drug Patent Laws
The Canadian Regulations are modeled after the Hatch-Waxman Act, passed by the U.S. Congress in 1984. The United States is the only other country in the world with an automatic injunction for patent disputes in the pharmaceutical industry.

“As in Canada, brand companies in the United States have employed evergreening strategies to trigger multiple automatic injunctions in order to stifle competition and prolong market monopolies. But unlike Canada, the federal government, state governments and government agencies have taken action to stop this anti-competitive behaviour and help control prescription drug costs,” Goulet said.

In 2001, The United States Federal Trade Commission (FTC) launched an investigation into evergreening strategies by brand companies, which found such tactics to be anti-competitive, and importantly, to be bad public policy. The FTC issued a strongly worded report, in July 2002 recommending only one automatic injunction per drug be permitted.

Late last year, U.S. President George Bush announced he is taking action to close loopholes in U.S. drug patent laws that brand-name drug manufacturers have manipulated to unfairly delay the approval of competing generic drugs. President Bush’s solution is to allow only one automatic injunction per generic submission, as suggested by the FTC. The FDA regulation change is imminent.

It is expected that the Committee will file a report based on testimony at this week’s hearings, and the federal Cabinet will then consider the report’s recommendations.

About the Canadian Generic Pharmaceutical Association

The Canadian Generic Pharmaceutical Association represents Canada's generic drug industry – a dynamic group of companies that specialize in the production of high quality, affordable generic drugs and fine chemicals and in conducting the clinical trials required for government approval of generic drugs. It plays an important role in helping control overall healthcare costs by keeping the cost of medications down: generic drugs are priced, on average, 45% less than their brand-name equivalents.

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