Statutory Freeze Period Sought by Innovator Drug Company under NOC Regulations Denied by Supreme Court of Canada

In Apotex Inc v AstraZeneca Canada Inc et al, 2006 SCC 49, the Supreme Court of Canada has held that there are limits to "evergreening" within the complex process of determining when a generic drug manufacturer is able to manufacture and sell a "copycat" drug. The process in question is outlined in the Patented Medicines (Notice of Compliance) Regulations (NOC Regulations) which lie at the intersection of two regulatory systems, one under the Food and Drugs Act and the other under the Patent Act. At the heart of the NOC process is a Patent Registry within the federal Department of Health in which an innovator drug company may list patents relevant to its various drug submissions for regulatory approval. If a generic manufacturer is not prepared to wait until the expiry of all the patents listed, in effect, it must challenge the list; even so, the innovator manufacturer can bring an application to the Federal Court for an order to prohibit the Minister of Health from issuing a NOC to the generic manufacturer until the expiry of the relevant patents. The commencement of such a proceeding has the effect of freezing for two years any action by the Minister in the generic company's pending application. In 1989 the innovator drug manufacturer, AstraZeneca Canada Inc (Astra), obtained a NOC from the Minister of Health for the product at issue, Losec 20, and that product was sold until 1996 when it was withdrawn from the Canadian marketplace by Astra. Astra's patent on omeprazole itself expired in 1999. In 1993, Apotex Inc (Apotex) had applied for a NOC for its generic version of Losec 20. In 2002, despite the absence from the market of Losec 20, Astra obtained and registered with the Minister of Health two more patents associated with Losec 20 but did not incorporate this new technology into any products which it sold in Canada. When the Apotex application eventually came before the Minister for approval in 2004, the Minister granted the generic application, ruling that Apotex did not have to address the two after-issued patents. Astra applied for judicial review and the motions judge in the Federal Court of Canada upheld the Minister's decision. On appeal to the Federal Court of Appeal, in a split (2-1) decision, the appeal was allowed and the Minister's decision quashed. On a further appeal to the Supreme Court of Canada, Justice Binnie, writing for all nine judges, allowed the appeal and restored the Minister's decision. In upholding the Apotex view of the NOC Regulations (that is, that the NOC Regulations could not apply to this application in respect of the after-issued patents), the Court made a number of observations. In dealing with Astra's argument that a patent list is submitted in respect of a drug and not in respect of any particular drug submission, the Court had this to say:

"On this view a [patent owner] could carry on "evergreening" its product indefinitely by the addition of new patents of marginal significance which would trigger an indefinite series of 24-month statutory freezes even though such subsequently listed patents are [those] from which … the generic manufacturer derives no advantage. "

The Court recognized that Parliament's stated purpose in authorizing the NOC Regulations was to permit early working of the patented invention, and noted the importance of the linkage between the patent listed and the submission(s) to which it relates. Because Apotex did not make use of the patented inventions taught by the two later listed patents, the Court held that the scheme of the NOC Regulations and the statutory freeze with respect to those patents should not apply to Apotex. Coupled with Justice Binnie's references to the NOC Regulations as being "much litigated" and the industry as "very litigious" and his approval of former Justice Iacobucci's remark in an earlier case that the NOC Regulations are "draconian", the Supreme Court of Canada appears to be signalling that, at the margin when close interpretation of the NOC Regulations is involved, the innovator manufacturers will need to demonstrate a clear right under the legislation in order to defend delaying the time when generic competitors can enter the market. For the full text of the case, visit: http://scc.lexum.umontreal.ca/en/2006/2006scc49/2006scc49.html Summary by: The Editor