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Cablegate: Potential for Ipr Progress: Canada's Proposed

VZCZCXRO5122
RR RUEHGA RUEHHA RUEHQU RUEHVC
DE RUEHOT #2021/01 1801957
ZNR UUUUU ZZH
R 291957Z JUN 06
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC 3024
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 OTTAWA 002021

SIPDIS

SENSITIVE
SIPDIS

STATE PASS TO USTR FOR GARDE, ESPINEL, CHANDLER
STATE PASS TO USDOC FOR GWORD, JBOGER
STATE PASS TO USPTO FOR MKEPLINGER

E.O. 12958: N/A
TAGS: KIPR ECON TBIO CA
SUBJECT: POTENTIAL FOR IPR PROGRESS: CANADA'S PROPOSED
DATA PROTECTION REGULATIONS

REF: A. OTTAWA 1701

B. OTTAWA 1317

1. (SBU) Summary: The GOC has proposed a two-regulation
package (significantly different from its 2004 proposal)
consisting of data protection for the innovative
pharmaceutical industries and "Patented Medicines (Notice of
Compliance)" for the generic drug industries, a combination
designed to force compromise between the two sectors.
Although the innovative pharmaceutical industry organizations
PhRMA and Rx&D have minor complaints which they hope to have
addressed in the final regulations (the comment period ends
July 17), in general the package seems to be a positive
development for IPR protection in Canada. In particular, the
Data Protection regulation is designed to bring Canada into
compliance with its international obligations to provide
protection for proprietary data belonging to patent-holding
companies, something that the Embassy has been encouraging.
Assuming the proposed rules are finalized, industry observes
believe that this will be a step forward for Canada's
protection of IPR and will directly address one complaint
from the last two Special 301 Reports on Canada. End Summary.

The Regulations
---------------

2. (U) (SBU) The Patented Medicines (Notice of Compliance)
or PMNOC regulation and, to a lesser extent, the Data
Protection regulation are complex, and we would welcome
insights from USG experts. The data protection regulation
can be found at
canadagazette.gc.ca/partI/2006/20060617/html/ regle4-e.html
The PMNOC regulation can be found at
canadagazette.gc.ca/partI/2006/20060617/html/ regle6-e.html
Our initial perusal and conversations with contacts have
provided the following information.

3. (SBU) The draft Data Protection regulation stipulates
that a secondary manufacturer (usually a generic) cannot file
a new drug submission on the basis of a direct or indirect
comparison between the new drug and an innovative drug until
six years after the first notice of compliance was issued to
the innovator. The submission will not be approved until at
least eight years after the first notice of compliance was
issued. This data protection period of eight years compares
favorably to the U.S. "five plus three" period. (Comment:
One observer joked to us that now Canada would have better
data protection than the United States and that the
innovative industry may start to use this as leverage to
argue for better data protection in the United States. End
comment.) Both the Canadian industry group Rx&D and PhRMA in
the United States are preparing comments to submit to Health
Canada. From discussions with industry contacts, we believe
the industry comments will focus on requests for
clarification, particularly surrounding the transitional
language that will determine how drug submissions already in
the pipeline are treated. A particular point which seems
unclear to many observers (and of concern to the
pharmaceutical industry) is paragraph (5) which states that
the eight year protection period does not apply "if the
innovative drug is not being marketed in Canada." We expect
that the final regulations will clarify how this will be
applied. However, the innovative industry's reaction to the
data protection regulation is positive, with observers
stating that this will not only bring Canada into compliance
with its international obligations but will also make the
country more competitive internationally.
Qcountry more competitive internationally.

4. (SBU) The Patented Medicines (Notice of Compliance) or
PMNOC regulation is the part of the package designed to keep
the generic companies in the deal. The PMNOC regulation is
more complex than the data protection regulation, but in
general it is intended to limit innovative drug companies'
ability to "evergreen" drug patents, or renew patents based
on small changes to a drug. The PMNOC regulation attempts to
address the unintended consequences of unclear language in
previous regulation which required court interpretation;
these include the "possibility that an innovator company may
delay generic market entry by listing new and sometimes
irrelevant patents on the basis of minor product revisions."
In what seems to be a valuable victory for the innovative
drug industry, however, the PMNOC's Regulatory Impact
Assessment Statement states that dosage form patents (patents
that focus on the form of the drug, not its chemical
composition) deserve "special protection provided by the
PM(NOC) regulations," adding that this is "particularly true

OTTAWA 00002021 002 OF 002


in the case of biologic drugs where effective administration
of the medicinal ingredient is often dependent on the
development of new and innovative delivery mechanisms." The
generic industry in Canada has not made any public statement
on the draft regulations, although they will probably submit
formal comments. Our contacts also tell us that the generics
are trying to arrange for meetings with relevant officials
and members of parliament before the comment period ends on
July 17.

GOC Officials' Perspective
---------------------------

5. (SBU) Our GOC contacts seem confident that these
regulations will be finalized, with very few changes, in as
short a period as is possible under Canada's regulatory
process. They describe the regulations as fair and balanced,
and they suggest that neither the innovative nor the generic
industry should be surprised by the regulations' content. In
general, this is what we are hearing from industry contacts
as well, although industry contacts hesitate to describe
themselves as happy with the regulations and insist that
certain changes need to be made. Any rhetoric about pushing
for 10 years of data protection such as in Europe seems to be
more a bargaining tool than an actual goal. GOC officials
are aware that both industries, but particularly the
innovative industry, are eager for a package to be finalized
and are willing to accept the compromises inherent in these
proposed regulations.

Domestic Political Context
--------------------------

6. (SBU) The current Conservative government has been more
receptive to U.S. concerns about intellectual property
rights, and domestically the Conservative party is less
beholden to the generic industry, which is predominantly
based in the greater Toronto area, a Liberal stronghold.
(Comment: a recent bit of much-hyped campaign scandal
involved questionable donations to a Toronto-area Liberal
MP--totalling C$54,000--from Apotex Inc's top two executives,
their wives and six children. Apotex is Canada's largest
generic drug company. End comment.) The innovative drug
companies, on the other hand, are primarily based in Quebec,
where the Conservatives are very interested in picking up
additional seats. In general, this suggests that the
generics industry, which is thought to be responsible for
delaying progress on the 2004 proposal of the first version
of these regulations, will not be able to delay progress on
the new draft regulations. The most optimistic timeframe for
final regulations is probably the end of 2006. As with our
other IPR goal of amendments to the copyright act, much will
hinge on whether another election is called in the meantime.
An election before finalization of the regulations would at
the very least delay them regulations and could result in yet
another redraft.

Visit Canada's Classified Web Site at
http://www.state.sgov.gov/p/wha/ottawa

WILKINS

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