Canada: Proposed Regulations For Compulsory Licences

Last Updated: November 10 2004

Edited by Adrienne Blanchard and Jennifer Wilkie


  • Proposed Regulations For Compulsory Licences
  • Court Finds Notice Of Allegation Insufficient
  • Court Finds Cross-Referenced Submission Not Submission For NOC
  • Importing Less Expensive Drugs Not Seen As Cure For U.S. Woes
  • Schwarzenegger Vetoes Bills Seeking Drugs From Canada
  • Health Canada On Look Alike/Sound Alike Product Names
  • Health Canada Guidance On Health Professional Communications
  • Bush And Kerry On Drug Importation

Proposed Regulations For Compulsory Licences

On October 2, 2004, the Canadian Government released three proposed sets of regulations designed to implement the legislation known as the "Jean Chretien Pledge to Africa", which amended the Food and Drugs Act and the Patent Act. The law, once in effect, will permit compulsory licences to be issued for drugs and other pharmaceutical products such as devices, for export to developing and least developed countries. The Bill, given Royal Assent on May 14, 2004, is not yet in force, given that regulations must be in place before the legislation can take effect. The time period for comment is 75 days, and as such, expires on December 16, 2004.

Regulations under the Food and Drugs Act

There are two sets of Regulations proposed under the Food and Drugs Act — one set for drugs, and another for medical devices (although currently there are no medical devices on the list of products eligible for export under the system). These regulations outline the process for applying for regulatory authorization by the Minister of Health, which is required before obtaining a compulsory licence from the Commissioner of Patents to export the drugs or devices in question. The regulations also specify the labelling and marking requirements as well as the record keeping requirements that will be required of manufacturers.

The regulatory provisions include: a prohibition against using the same colour as the version being sold in Canada; a requirement that solid dosage forms must be marked XCL; a requirement for each product to bear a label which states "NOT FOR SALE IN CANADA"; and a requirement for each product label to identify the unique export number which, it is stated in the Regulatory Impact Analysis Statement (RIAS), will be issued on the basis of individual applications for licences filed with the Commissioner of Patents.

Regulations under the Patent Act

The proposed Patent Act regulations, the Use of Patented Products for International Humanitarian Purposes, govern a few substantive issues, as well as operational issues for the Canadian Intellectual Property Office, prescribing forms such as those that will be used to apply for, and to grant, the licences being sought.

The legislation sets out that royalties are required to be paid. The proposed regulations in effect link the royalties payable to the development status of the country importing the product. The royalty payable will be payable in full within 45 days after export notice is given to the patentee, if product is shipped in one shipment, or, if not all product is shipped at once, the payments will be prorated and payable 45 days after each export notice.

The legislation permits regulations to be made concerning information that will be required to be posted on the website operated by the exporter. These requirements include the name of the product, the quantity of product in each shipment, the export tracking number issued by the Minister of Health, and the names of all known parties who will be handling the product while in transit.

The legislation contains a provision permitting a patentee to challenge whether a contract is commercial in nature. In order to bring a count application the price of the generic product for developing countries must exceed 25% of the average price of the patentee's product in Canada. The legislation provides that the publications used to determine the patentee's average price of a product being sold in Canada will be set in the regulations. Those publications are identified in the proposed regulations as: the Ontario Drug Benefit Formulary, the Drug Formulary, as published by the Régie de l'assurance maladie du Québec and the PPS Pharma Publication published by Total Pricing Systems Inc.

It should be noted that other non-regulatory changes are being contemplated. For example, the RIAS sets out that various documents, such as Management of Drug Submissions Guidance, Management of Device Licence Applications Guidance, Changes to Marketed New Drugs, Guidance for Interpretation of Significant Change of a Medical Device will be changed. Guidance documents on fixed dose combination products, the processing of adverse event information and pre-export inspections will also be developed, once the program becomes operational.

For the text of the legislation, please see:

For the text of the proposed regulations in respect of drugs, please see:

For the text of the proposed regulations in respect of medical devices, please see:

For the text of the proposed regulations under the Patent Act, please see:

Court Finds Notice Of Allegation Insufficient

In a recent Federal Court decision in a proceeding brought under the Patented Medicines (Notice of Compliance) Regulations, an innovator was successful in claiming that a generic manufacturer's notice of allegation (NOA) was insufficient. The NOA contained a single paragraph that purported to be the factual basis for non-infringement.

The generic manufacturer sought regulatory approval for one process that makes the medicine, however, according to its Abbreviated New Drug Submission, the manufacturer was using two different processes to make the medicine. The innovator commenced a proceeding under the Regulations, to prevent issuance of marketing approval on the basis that its patents would be infringed. The innovator took the position that the NOA was insufficient for the purposes of the Regulations. The court agreed, following earlier case law that held that a bald assertion of non-infringement is insufficient, but that an NOA may be adequate if further disclosure elaborates on the basis for which the allegation of non-infringement was made, and in doing so, reveals sufficient evidence upon which to evaluate the allegation.

As the only further evidence of non-infringement consisted of emails between the generic manufacturer and its supplier indicating that only the purported non-infringing process would be used, the court held that this was insufficient.

For the full text of the decision, please see:

Court Finds Cross-Referenced Submission Not Submission For NOC

In a proceeding brought under the Patented Medicines (Notice of Compliance) Regulations, an innovator sought to quash a notice of compliance (NOC) issued by the Minister of Health to a generic manufacturer, on the basis that the Minister should have required the generic manufacturer serve a notice of allegation on the innovator pursuant to section 5(1.1) of the Regulations.

The Court accepted the Minister's position that the generic company's cross-referenced submission was not a "submission for a NOC" within the meaning of the words found in sections 5(1) or 5(1.1) of the Regulations, notwithstanding the position of the innovator that it is a submission for a NOC, and therefore the submission fell outside the Regulations. As such, the Court found no notice of allegation was required because the Regulations were not triggered.

The Court further determined that, in the event that a cross-referenced submission was in fact a submission for a NOC under the Regulations, section 5(1) applied in the circumstances and section 5(1.1) therefore did not, notwithstanding the innovator's position that a NOA must be sent to a first person with patent lists even where the generic did not rely upon the innovator's product to demonstrate bioequivalence of its product, and in particular, when a generic's submission is a cross-referenced submission to another party's submission.

For the full text of the decision, please see:

Importing Less Expensive Drugs Not Seen As Cure For U.S. Woes

Drug importation from Canada has been a political target in the U.S. presidential campaigns of both Senator John Kerry and President Bush. While many analysts have advanced the idea that it may make political sense to point to Canada as a solution to higher prescription drug prices in the United States, many economists and health-care experts say that importing drugs from countries that control their prices, like Canada, would do little to solve the problem.

For more information, please see:

Schwarzenegger Vetoes Bills Seeking Drugs From Canada

California Governor Arnold Schwarzenegger vetoed two bills that would have made California the middleman in large-scale consumer purchases of Canadian prescription drugs. Governor Schwarzenegger stated that the bills, which would have set up a state-run Web site to help consumers acquire discount drugs in Canada, were illegal under federal law and did not have adequate provisions to ensure the safety of imported medicine. The Republican governor told the Democratic-controlled legislature that such measures "oversimplify the complex safety, trade, supply and pricing issues involved in the marketplace."

For more information, please see:

Health Canada On Look Alike/Sound Alike Product Names

Health Canada recently released a Draft Guidance Document that deals with the implementation of a framework for the review of proposed drug names with the aim of reducing medication/dispensing errors due to name confusion. Submissions and comments on this document can be made up until November 15, 2004.

For the draft document, please see the following:

Health Canada Guidance On Health Professional Communications

The deadline to provide comments in respect of the draft guidance document on Health Canada's expectations concerning the issuance of Health Professional Communications (HPCs) and Health Product consumer updates will expire on October 25, 2004. HPCs include, for example, Dear Health Care Professional Letters (DHCPLs) and Notices to Hospitals (NtoHs). The guidance is intended to address issues such as: roles and responsibilities, issuance process, content development, and timelines.

For more information, please see:

Bush And Kerry On Drug Importation

Over the course of the U.S. Presidential debates, President Bush and Senator Kerry made drug importation a key issue, particularly, the safety of importing prescription drugs from Canada. Asked at their town hall-style debate about Canadian drug imports, Democratic presidential candidate Senator Kerry has said that under his health care proposal, "all Americans will be able to buy less expensive prescription drugs from countries like Canada." President Bush, however, said he just wanted to make sure Canadian drugs are safe: "When a drug comes in from Canada, I want to make sure it cures you and doesn't kill you … And what my worry is that, you know, it looks like it's from Canada, and it might be from a third world."

For more information, please see:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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