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Cablegate: Canadian Pharmaceutical Patents: Parliamentary

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS OTTAWA 001675

SIPDIS

STATE FOR EB/IPC SWILSON; WHA/CAN PNORMAN; AND EB/DCT
USDOC FOR CBUSQUETS
DEPT PASS USTR FOR SCHANDLER AND CBURCKY
DEPT ALSO PASS FDA FOR MECKLES

E.O. 12958: N/A
TAGS: KIPR ECON CA
SUBJECT: CANADIAN PHARMACEUTICAL PATENTS: PARLIAMENTARY
COMMITTEE POSTPONES DECISION TO AMEND REGULATIONS

1. Summary ) A Parliamentary committee has postponed a
decision to recommend changes to Canada,s drug patent rules
that cover the process for bringing generic drugs to the
market once the innovator,s patents expire. The Canadian
review mirrors the recent U.S. deliberations on the
Hatch-Waxman law that led to a June 12 decision by the FDA to
streamline the process for bringing generics to the market.
The committee,s decision to delay a recommendation for
possible regulatory change before the end of the current
Parliamentary session is seen as a temporary victory for the
brand-name pharmaceutical companies that oppose any
legislative changes. End Summary.

2. After four days of testimony, the House Industry and
Science committee postponed a decision to recommend reform of
Canada,s drug patent rules until Parliament reconvenes in
the fall. The committee reviewed the Patented Medicine
Notice of Compliance (NOC) Regulations, which are also known
as the &linkage regulations8 because these rules link the
regulatory approval of a generic drug to the patent status of
the drug it seeks to copy. A similar review of the
Hatch-Waxman law in the U.S. led to the recent FDA decision,
announced by President Bush on June 12, to institute new
regulations to streamline the process for bringing generic
drugs to the market.

3. The linkage regulations, which were last amended in 1998,
block Health Canada from approving a generic drug for up to
two years if there is any allegation of patent infringement.
Generic companies complained that by filing sequential
patents on minor improvements on a drug and then alleging
infringement on each, brand-name companies can "evergreen8
the market for a drug long after its original 20-year patent
expires. The generics proposed scrapping the automatic
24-month injunction altogether. The brand-name manufacturers
encouraged the committee to maintain the status quo, arguing
that the automatic injunction is necessary to prevent patent
infringement and encourage the development of new drugs.
Canada and the U.S. are the only countries that provide an
automatic injunction in cases of alleged patent infringement.


4. The recent high profile review of the Canadian health care
system by Roy Romanov, which was released last fall,
recommended that the GOC consider overhauling the Notice of
Compliance regulations. Health Canada, which administers the
regulations, generally agreed with this recommendation,
testifying to the committee that the growing complexity of
patents has made it difficult for them to administer the NOC
regulations. Industry Canada, on the other hand, argued
against changes to the regulations, noting that they are
necessary to protect and promote incremental innovation by
brand-name companies. The Parliamentary committee was evenly
divided on the issue and determined that they needed more
information before deciding on whether or not to amend the
regulations.

5. Comment ) Failure to reach a decision is a victory for
the brand-name drug companies, who had hoped to avoid the
Parliamentary review of the regulations altogether. With the
upcoming Canadian elections it is not clear when or if the
committee will reconvene to make a final decision on whether
or not the regulations will be amended. Although Canada,s
patent regime is generally considered more pro-generic than
the U.S. system, even after the recent decision by the FDA,
the perception that the U.S. is taking action to &lower the
costs8 of prescription medications could motivate the
committee to recommend changes to the linkage regulations.
CELLUCCI

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