We reviewed innovator drugs approved by Health Canada in 2015-2016 and found that there was no clear winner between the legal protections offered by Canadian patents and data protection. Both are important. In some cases, a key patent expires after data protection. Other times, data protection outlasts the initial patent.
We found that patent protection offers longer-lasting exclusivity than data protection for the majority of new, innovative drugs approved in this two-year time period. However, data protection is the primary line of defence against the generic market entry for about ¼ of the new drugs because there are no patents listed with Health Canada.
Overview of Exclusivities
Patent and regulatory exclusivities are crucial to protect innovative drug companies from generic competition. The government created these time periods of exclusive rights to recognize the massive amounts of time, money and effort required to arrive at any single new drug approval. Generic drug companies are later able to provide the same drugs at lower cost, by, among other things, relying on the brand name drug company’s clinical trials. Thus, innovator drug exclusivities are necessary to ensure that innovative companies can profit from their inventions, and re-invest in future R&D.
In Canada, patent exclusivities typically provide a 20-year monopoly from the filing date (no patent term extension yet). The monopoly provides the exclusive right to make, use and sell an invention. The patent that covers an approved new drug compound (or the initial approved indication) is often the most commercially important. Later patents covering new uses or formulations are often easily designed around by generic companies. Quality matters more than quantity when it comes to patents.
Regulatory Exclusivities, such as data protection provide an eight-year basic exclusivity term in Canada where a generic drug company cannot rely on an innovator company’s approval to get its generic marketing approval. This effectively bars the generic company from the market, since it is not likely to conduct its own clinical trials.
We reviewed new drugs approved in 2015 and 2016 to determine whether innovative companies were more likely to rely on patents or data protection as the last defence against generic competition. Patents might initially appear to be more advantageous due to the 20-year term. However, much of the patent term gets chewed up while the drug is still on the long road of drug development and approval.
Exclusivities by the Numbers
Almost all new active substances approved by Health Canada, with only a few exceptions, qualified for data protection (the exceptions also did not have patents listed with Health Canada). In 2015, 8 of 36 new substances had data exclusivity but no patent on Health Canada’s Patent Register. Similarly, in 2016, it was 9 of 35. Therefore, data protection fills an important gap in a significant number of cases where there is no patent (or a time lag before listing the patents).
Where there was at least one patent on the Health Canada Register, patent exclusivities tended to last longer:
- data protection was the last expiring exclusivity only in about 20% of cases in 2015 and 35% in 2016;
- the first patent on the Register outlasts data protection almost 40% of the time for drugs approved in 2015 and 2016. The first-listed patent is often significant because it typically provides the broadest protection, for example, covering the compound or the approved indication;
- in the remaining cases, data protection outlasts the first patent but not one or more later-filed patents. These later patents may be improvement patents, which are typically narrower and easier for generic companies to circumvent. The effectiveness of improvement patents varies case-by-case. We also note that patents, particularly improvement patents, are sometimes invalidated in litigation, whereas data protection is infrequently challenged.
This analysis supports the conventional wisdom that innovative drug companies should continue to pursue patents and data protection, whenever both are available. They provide complimentary protections.
Noel Courage is a partner with Bereskin & Parr LLP and a member of the Life Sciences practice group. Noel’s practice focuses on the patenting and licensing of biotechnological, chemical and mechanical inventions. He provides opinions on patent validity and infringement issues. He also has experience in regulatory, trademark and copyright law, and provides advice on IP portfolio management strategy. His regulatory work includes advising on data exclusivity, Patent Medicine Prices Review Board and Patented Medicines (NOC) Regulations strategy.
Phil Goldbach is an intellectual property manager at MaRS Innovation (MI) in Toronto, Canada. Federally supported through the Networks of Centres of Excellence, MI is a not-for-profit organization and commercialization agent for 15 leading Ontario academic institutions.