T-1154-97
Bayer Inc. (Plaintiff)
v.
The Attorney General of Canada and The Minister of Health (Defendants)
Indexed as: Bayer Inc.v. Canada (Attorney General) (T.D.)
Trial Division, Evans J."Ottawa, September 9 and November 3, 1998.
Food and Drugs — Motion for summary judgment declaring Food and Drug Regulations, C.08.004.1 confers on first manufacturer five-year period free from competition from other manufacturers of drugs functionally identical to drug first manufacturer authorized to sell in Canada — Applicant filing new drug submission (NDS) in respect of drug X to be used in connection with disease X — Applicant innovator of drug X — C.08.004.1 providing where manufacturer filing abbreviated new drug submission (ANDS) to establish safety, effectiveness of new drug, and Minister examining any information in NDS filed by innovator, and relying on data contained therein, NOC shall not issue earlier than five years after date of issuance — Parties agreed drug X —new drug— — —Drug— defined as substance sold for treatment of diseases in humans or animals — Drug X containing substance approved for sale in Canada in connection with animal diseases — C.08.004.1 applies in respect of drug containing substance not previously approved for sale in Canada — But when material filed by innovator of drug intended for human use, relevant inquiry whether contains substance previously approved for sale for human use i.e. read in —human— to qualify —drug— whenever context required — Such interpretation consistent with overall purposes of statutory scheme — C.08.004.1 must be read in context of overall scheme to facilitate approval process for new drugs, thus reducing cost — Not intended to create protection analogous to patent for all innovators of new drugs who have obtained NOC — Minister not —relying— on innovator's information for purpose of C.08.004.1 when issuing NOC solely on basis of information contained in ANDS i.e. relying on fact NOC already issued as proof of safety, effectiveness — —Indirectly— should not be read into C.08.004.1 so as to broaden scope of —relies— — Evidence decision whether to issue NOC normally based on information in ANDS, not on information supplied by innovator — Minister may issue NOC as soon as generic manufacturer establishing, based on ANDS, pharmaceutical equivalence, bioequivalence of its product to drug X.
Foreign trade — Applicant innovator of drug X — Filing new drug submission (NDS) — Food and Drug Regulations, C.08.004.1 providing where manufacturer filing abbreviated new drug submission (ANDS) to establish safety, effectiveness of new drug, and Minister examining any information in NDS filed by innovator, and relying on data contained therein, NOC shall not issue earlier than five years after date of issuance — Included in regulations to comply with Canada's obligations under NAFTA, particularly Art. 1711 — Par. 6 of Art. 1711 requiring each party to provide that no person, other than person that submitted test data, shall rely on such data in support of application for product approval during reasonable period of time after submission — —Reasonable period— normally no less than five years from date when party granted approval to person producing data — Applicant submitting as Art. 1711 not requiring examination of information submitted by innovator as condition precedent to manufacturer's entitlement to five year's protection from generic manufacturers, examination requirement in C.08.004.1 should not be interpreted as imposing additional requirement beyond those in Art. 1711 — Par. 6 contemplating situation in which competitor —relying— on information submitted by manufacturer to obtain marketing approval — Appears to provide remedy when party failed to keep data confidential by preventing issue of approval to competitor for five years — Consistent with par. 1 statement each party to provide legal means for preventing unauthorized disclosure, use of trade secrets in manner contrary to honest commercial practices — Had Art. 1711 been intended to impose delay of five years in abbreviated submission process, would have said so expressly — Minister only —examining— data supplied by applicant in connection with drug X, within C.08.004.1, if in exercise of discretion under C.08.003, consulting previously filed material — Such interpretation not depriving applicant of Art. 1711 protection.
This was a motion for summary judgment declaring that Food and Drug Regulations, C.08.004.1 confers on the first manufacturer a five-year period free from competition from other manufacturers of drugs that are functionally identical to the drug that the first manufacturer has been authorized to sell in Canada.
The applicant filed with the Minister a new drug submission (NDS) in respect of drug X to be used in connection with disease X. The applicant was the innovator of drug X, which contains an active ingredient used previously in drug Z, which has been marketed in Canada for use in connection with certain animal diseases.
The current scheme for the approval of drugs requires a manufacturer of a "new drug" to obtain a notice of compliance (NOC) from the Minister of Health before selling and advertising the drug in Canada. "New drug" is defined as a drug claimed for use as a drug, and that has not been sold for that use in Canada for sufficient time and in sufficient quantity to establish the safety and effectiveness of that use. In order to obtain an NOC a manufacturer must file an NDS containing the information needed to assess the safety and effectiveness of the drug, or an abbreviated new drug submission (ANDS) which compares its drug to another drug (the "Canadian reference product") for which an NOC has already issued, and which is marketed in Canada. The ANDS contains comparative studies which prove that the drug is the pharmaceutical and bioequivalent of the "Canadian reference product". C.08.004.1 provides that where a manufacturer files an ANDS to establish the safety and effectiveness of a new drug, and the Minister examines any information in an NDS filed by the innovator, and relies on data contained therein, an NOC shall not issue in respect of that submission earlier than five years after the date of issuance of the NOC to the innovator. C.08.004.1 was included in the new regulatory framework in order to comply with the North American Free Trade Agreement , Article 1711, paragraph 6 of which states that each party shall provide that "no person other than the person that submitted" the undisclosed test data referred to in paragraph 5 shall "rely on such data in support of an application for product approval during a reasonable period of time after their submission". It goes on to say that "a reasonable period" shall normally be no less than five years from the date when the party granted approval to the person who produced the data.
The issues were: 1(a) whether drug X is a "new drug"; (b) if so, whether the fact that drug X contains a chemical or biological substance contained in a drug previously approved for sale in connection with an animal disease, excludes it from the scope of C.08.004.1; (2) whether the Minister needs to rely on data contained in the material filed by the innovator to establish the safety and effectiveness of a drug of a second manufacturer who files an ANDS; (3) whether the Minister is prohibited from issuing an NOC to a second manufacturer who files an ANDS only if he examines the material filed in the applicant's NDS in the course of considering the ANDS; and (4) whether the Minister is prohibited from issuing an NOC on the basis of an ANDS until five years after the issuance of the NOC for drug X in the treatment of disease X.
Held, the motion should be dismissed.
1(a) The parties agreed that drug X was a "new drug" within the definition contained in C.08.001 paragraph (c ). C.08.004.1 applies only when a submission has been made to establish the safety and effectiveness of a "new drug".
(b) C.08.004.1 applies only in respect of a drug that contains a substance not previously approved for sale in Canada as a drug. The Minister maintained that since a "drug" is defined as a substance sold for use in the treatment of diseases in "human beings or animals", then drug X contains a substance that has been previously approved for sale in Canada, and C.08.004.1 does not apply to the applicant's NDS filed for an NOC for drug X. When material is filed by the innovator of a drug intended for human use, the relevant inquiry should be whether it contains a substance that had previously been approved for sale for human use i.e. the word "human" should be read in to qualify "drug" whenever the context requires. This interpretation is consistent with the overall purposes of the statutory scheme. When approval is being sought for a drug that has not been sold previously to treat a human disease, it is a "drug" for the purpose of this regulatory framework, even though it may have been sold previously to treat an animal disease. C.08.004.1 applies to drug X.
(2) The applicant submitted that the Minister will nearly always rely on information filed by the innovator of a drug when considering an ANDS because the Minister "relies" on the fact that an NOC has already issued as proof of the safety and effectiveness of the drug. C.08.004.1 must be read in the context of the overall scheme which is to facilitate the approval process for new drugs, thus reducing the cost of drugs. If the applicant's contentions were accepted, a delay of five years would be imposed on the issue of an NOC to a generic manufacturer. C.08.004.1 was not intended to create a protection analogous to a patent for the benefit of innovators. The Minister does not "rely" on the innovator's information for the purpose of C.08.004.1 when considering an ANDS for an NOC, when the Minister issues the NOC solely on the basis of the information contained in the ANDS. Given the overall purpose of the Regulations, the adverb "indirectly" should not be read into C.08.004.1(1) so as to broaden the scope of the verb "relies".
(3) The applicant submitted that the examination to which C.08.004.1 refers will already have occurred in the course of the Minister's examination of the innovator's NDS. The evidence established that normally the decision whether to issue an NOC on the basis of an ANDS is based exclusively on the information contained in the ANDS, and the information supplied by the innovator is not consulted. The only concern is to ensure only that the ANDS establishes the pharmaceutical equivalence and bioequivalence of the new drug to the "Canadian reference product". The use of the present tense of both "examines" and "relies" indicates that each occurs in the course of the Minister's consideration of the same submission, namely the ANDS. The reference in C.08.004.1 to the Minister's examination seems to be linked to the provision in C.08.003.1, which confers on the Minister a discretion to examine material filed previously by a manufacturer, in the course of examining another submission by a different manufacturer in order to establish the safety or effectiveness of the drug to which this latter submission relates. However, this would seem to be an exceptional procedure: in most cases, the Minister is asked to issue an NOC solely on the basis of information contained in the ANDS filed in support of the application.
The applicant submitted that Article 1711 does not require that the information supplied by the innovator be "examined" as a condition precedent to the manufacturer's entitlement to five years' protection from a generic manufacturer, and therefore the examination requirement in C.08.004.1 should not be interpreted as imposing an additional requirement beyond those in Article 1711. Article 1711 does not confer the right to five years' exclusive marketing of a new drug from the date of the issue of an NOC on the basis of the test data contained in the innovator's NDS in a situation such as that in issue in this case. Paragraph 6 appears to contemplate a situation in which a competitor "relies" on the data submitted by a manufacturer to obtain marketing approval. Indeed, it appears simply to provide a remedy when a party has failed to keep the data confidential by preventing the issue of an approval to a competitor for five years. This conclusion would be consistent with the general statement in paragraph 1 that each party is to provide the legal means for preventing the unauthorized disclosure and use of trade secrets "in a manner contrary to honest commercial practices". Had Article 1711 been intended to impose a delay of five years in most situations covered by the abbreviated submission process, this intention would have been expressed more precisely. Indeed, paragraph 7 deals specifically, but only in the international context, with a situation in which a party relied on a prior marketing approval. If paragraph 6 was intended also to apply the five years' delay to a situation where a party relies on a marketing approval that it had itself previously issued to a manufacturer that had been required to submit its undisclosed data in order to obtain approval, it would have said so more clearly. It is significant that paragraph 6 concludes by stating that "Subject to this provision, there shall be no limitation on any party to implement abbreviated procedures for such products". The Minister will only "examine" the data supplied by the applicant in connection with drug X, within the meaning of C.08.004.1, if, in the exercise of the discretion to examine material filed previously contained in C.08.003, for example, departmental officials go back to consult that material in the course of considering an ANDS submitted by another company seeking approval for a drug that is the functional equivalent of drug X. This interpretation of C.08.004.1(1) does not deprive the applicant of any legal protection to which it is entitled by virtue of Article 1711.
(4) The Minister may issue an NOC as soon as a generic manufacturer is able to establish on the basis of an ANDS submitted in compliance with the Regulations, that its product is the pharmaceutical equivalent and bioequivalent of drug X.
statutes and regulations judicially considered
Federal Court Rules, 1998, SOR/98-106, r. 216.
Food and Drug Regulations, C.R.C., c. 870, ss. C.08.001(c) "new drug", C.08.001.1 "Canadian reference product" (as enacted by SOR/95-411, s. 3), C.08.002 (as am. idem , s. 4), C.08.002.1 (as enacted idem, s. 5), C.08.003 (as am. idem, s. 6), C.08.003.1 (as enacted idem), C.08.004(1) (as am. idem), C.08.004.1 (as enacted idem).
Food and Drugs Act, R.S.C., 1985, c. F-27, s. 2 "drug" (as am. by S.C. 1993, c. 34, s. 71).
North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, [1994] Can. T.S. No. 2, Art. 1711.
cases judicially considered
applied:
National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324; (1990), 74 D.L.R. (4th) 449; 45 Admin. L.R. 161; 114 N.R. 81.
authors cited
Regulatory Impact Analysis Statement, SOR/95-411, (1995), 129 Canada Gazette Part II, No. 18.
MOTION for summary judgment declaring that Food and Drug Regulations, C.08.004.1 confers on the first manufacturer a five-year period free from competition from other manufacturers of drugs that are functionally identical to the drug that the first manufacturer has been authorized to sell in Canada. Motion dismissed.
appearances:
Ronald E. Dimock and Michelle L. Wassenaar for plaintiff.
Frederick B. Woyiwada for defendants.
solicitors of record:
Dimock Stratton Clarizio, Toronto, for plaintiff.
Deputy Attorney General of Canada for defendants.
The following are the reasons for order rendered in English by
Evans J.:
A. The Proceeding
This is a motion for summary judgment brought pursuant to the Federal Court Rules, 1998, [SOR/98-106], rule 216 by Bayer Inc., the plaintiff in a proceeding commenced by way of a statement of claim in which it seeks declaratory relief against the Minister of Health (hereinafter the Minister) in relation to the interpretation and application of C.08.004.1 of the Food and Drug Regulations, C.R.C., c. 870 [as enacted by SOR/95-411, s. 6] (hereinafter the Regulations).
The motion is made pursuant to Federal Court Rules, 1998, rule 216, which provides that:
216. . . .
(2) Where on a motion for summary judgment the Court is satisfied that the only genuine issue is
. . .
(b) a question of law, the Court may determine the question and grant summary judgment accordingly.
The Minister does not dispute the suitability of this matter for disposition by summary judgment. Since only questions of law remain to be decided, I shall dispose of the matter on this motion.
B. An Overview
This litigation concerns the process by which manufacturers of new drugs obtain the approval of the Minister to sell and advertise them in Canada, and the degree of protection from competition that the Regulations confer on a manufacturer who is the innovator of a new drug, and obtains the first approval to sell it. It is the plaintiff's position that, in most situations, and certainly in the instant case, the Regulations confer on the first manufacturer a five-year period free from competition from other manufacturers of drugs that are functionally identical to the drug that the first manufacturer has been authorized to sell in Canada.
The Minister, on the other hand, contends that the plaintiff's drug does not fall within the scope of the provision in the Regulations on which the plaintiff relies, and even if it does, the provision in question only confers the protection claimed by the plaintiff in highly unusual situations, and certainly not in the instant case.
The outcome of this dispute will be of potentially great significance for the pharmaceutical industry as a whole. If the plaintiff succeeds, companies that manufacture and market brand-name drugs stand to benefit from the absence of competition for five years from the time that they obtain approval to market a new drug. However, manufacturers of generic drugs, which do not conduct, analyse or finance the tests done to satisfy the Minister of the safety and effectiveness of the drug, will be commercially harmed if they are subject to this delay before they can be given approval by the Minister to market a drug that is the equivalent of a drug for which approval has already been given.
In addition, of course, this dispute is equally significant for the way that the balance is struck between the public interests in ensuring that, on the one hand, pharmaceutical innovation is encouraged through appropriate financial rewards and, on the other, that drugs are available at prices that are kept in check by competition.
I should note that the plaintiff did not serve notice of this motion on the Canadian Drug Manufacturers Association, which represents generic drug manufacturers. After the completion of argument, the Court was advised that counsel for two generic manufacturers had been instructed to move to intervene in, or to be made parties to, this litigation. I have decided that it would be inappropriate to delay this judgment pending the determination of those motions, or to dismiss this motion so that the proceedings may be recommenced with the participation of generic drug manufacturers.
C. The Regulatory Framework
(i) The Food and Drug Regulations
The current regulatory framework within which the scheme for the approval of drugs is administered was introduced in 1995 in Schedule No. 843 of SOR/95-411. One of the objectives of the scheme was to ensure that it was consistent with the obligations imposed on Canada by Article 1711 of the North America Free Trade Agreement [North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, [1994] Can. T.S. No. 2] (NAFTA). Essentially, the scheme provides that a manufacturer of a "new drug" is required to obtain a notice of compliance (NOC) from the Minister of Health before being allowed to sell and advertise it in Canada. The part of the definition of a "new drug" relevant to this case is contained in C.08.001(c ) of the Regulations. This provides that:
8.001. . . . "New Drug" means
. . .
(c) a drug, with respect to which the manufacturer prescribes, recommends, proposes or claims a use as a drug, or a condition of use as a drug, including dosage, route of administration, or duration of action and that has not been sold for that use or condition of use in Canada, for sufficient time and in sufficient quantity to establish in Canada the safety and effectiveness of that use or condition of use of that drug.
C.08.002 [as am. by SOR/95-411, s. 4] provides that, in order to obtain an NOC, a manufacturer must file with the Minister a "new drug submission" (NDS) containing the information needed by the Minister to assess the safety and effectiveness of the drug. The Regulations goes on to define the content of the NDS, which includes both a description of the drug and its proposed use, and full details of the tests carried out to establish its safety and effectiveness. The conduct of these tests, involving both animals and laboratory tests (pre-clinical tests) and humans (clinical tests), and the reporting of the results, are often very expensive. In this case, for example, the NDS submitted by the plaintiff ran to some 366 volumes of description, test data and other information, and includes the results of clinical tests conducted over eight years and involving 2,200 patients.
Not all applications for approval to sell and advertise a "new drug" need be so costly and time-consuming. C.08.002.1 [as enacted idem , s. 5] provides that a manufacturer of a "new drug" may file an abbreviated new drug submission (ANDS) which compares the drug in question to another drug for which the Minister has already issued an NOC, and which is marketed in Canada by the innovator of the drug. The drug to which the comparison is made in the ANDS is called the "Canadian reference product": C.08.001.1 [as enacted idem , s. 3].
The primary function of the ANDS is to establish that the drug to which it relates is the functional equivalent of the drug to which it is being compared. Accordingly, instead of containing the results of tests carried out to demonstrate the drug's safety and effectiveness, the ANDS contains "comparative studies" which are designed to prove that the drug is the pharmaceutical and bioequivalent of the "Canadian reference product". The length of a typical ANDS is very much less than that of a typical NDS. "Subject to C.08.004.1", C.08.004(1) [as am. idem , s. 6] provides that the Minister will grant an NOC if the manufacturer's ANDS is in compliance with the Regulations.
C.08.003.1 [as enacted idem] confers on the Minister a discretion in the course of the examination of an NDS or ANDS, to "examine any information or material filed [previously] with the Minister by any manufacturer" in an NDS or ANDS, in order to establish the safety and effectiveness of the new drug for which the second NDS or ANDS was filed.
This brings me to the aspect of the scheme that is at the heart of the dispute in this case. It is C.08.004.1(1), to which, as noted above, C.08.004(1) is made subject, and the parts relevant to this litigation read as follows:
C.08.004.1. (1) Where a manufacturer files a new drug submission, an abbreviated new drug submission, a supplement to a new drug submission or a supplement to an abbreviated new drug submission for the purpose of establishing the safety and effectiveness of the new drug for which the submission or supplement is filed, and the Minister examines any information or material filed with the Minister, in a new drug submission, by the innovator of a drug that contains a chemical or biological substance not previously approved for sale in Canada as a drug, and the Minister, in support of the manufacturer's submission or supplement, relies on data contained in the information or material filed by the innovator, the Minister shall not issue a notice of compliance in respect of that submission or supplement earlier than five years after the date of issuance to the innovator of the notice of compliance or approval to market that drug, as the case may be, issued on the basis of the information or material filed by the innovator for that drug.
(ii) NAFTA Article 1711
As already indicated, C.08.004.1(1) was included in the new regulatory framework for the approval of new drugs in order to ensure compliance with Canada's obligations under NAFTA. Article 1711 deals with various aspects of the protection of trade secrets from improper disclosure and use. Of particular relevance to this litigation are paragraphs 5 and 6 of Article 1711.
Article 1711: . . .
5. If a Party requires, as a condition for approving the marketing of pharmaceutical or agricultural chemical products that utilize new chemical entities, the submission of undisclosed test or other data necessary to determine whether the use of such products is safe and effective, the Party shall protect against disclosure of the data of persons making such submissions, where the origination of such data involves considerable effort, except where the disclosure is necessary to protect the public or unless steps are taken to ensure that the data is protected against unfair commercial use.
6. Each Party shall provide that for data subject to paragraph 5 that are submitted to the Party after the date of entry into force of this Agreement, no person other than the person that submitted them may, without the latter's permission, rely on such data in support of an application for product approval during a reasonable period of time after their submission. For this purpose, a reasonable period shall normally mean not less than five years from the date on which the Party granted approval to the person that produced the data for approval to market its product, taking account of the nature of the data and the person's efforts and expenditures in producing them. Subject to this provision, there shall be no limitation on any Party to implement abbreviated approval procedures for such products.
The plaintiff argues that, to the extent that there is any ambiguity in the interpretation of C.08.004.1, either patent or latent, it should be resolved in a way that is consistent with Article 1711. The Minister contends that there is no ambiguity in the meaning of C.08.004.1, and that Article 1711 is therefore irrelevant, although he also seemed to take the position that, in any event, there is no conflict between the Article and the Regulations.
D. The Facts
The relevant facts, on which the parties do not materially disagree, are as follows. The plaintiff, Bayer Inc., has filed with the Minister an NDS in respect of drug X to be used in connection with disease X. Bayer is the innovator of drug X, which is not the subject of a patent. The drug contains an active ingredient that has been used previously in drug Z, which has been marketed in Canada for use in connection with certain animal diseases. The same active ingredient has also been used in drug Y, which has been marketed outside Canada in connection with a human disease other than that for which its use is proposed in the NDS that Bayer has filed with the Minister.
I should point out that an order of this Court has provided for the confidentiality of the names of the drugs referred to above by letters, their active ingredients and the diseases for which they are used or are proposed to be used. Restrictions have accordingly been placed on documents filed in connection with this proceeding that contain references to matters that are subject to the confidentiality order. Hence, no further details will be provided in this judgment, which, in any event, are not material to the resolution of the issues in dispute.
Bayer filed as evidence a lengthy affidavit by Dr. Timothy Shannon, Vice-President, Medical and Scientific Affairs, Bayer Inc. It was not the subject of cross-examination, and the truth of its content has not been challenged by the Minister. Among other things, it outlines the process of new drug approval discussed above, and describes a meeting that took place on February 25, 1997 between representatives of Bayer, and officials of the Ministry of Health. The purpose of this meeting was to discuss the interpretation that the Minister placed on C.08.004.1. In particular, Bayer was anxious to know whether the Minister shared its view that, if an NOC was issued with respect to drug X, then an NOC could not be issued to another manufacturer of an equivalent drug within five years of the issue of Bayer's NOC. The Minister did not take this view. Hence, the issue of a statement of claim by Bayer asking the Court to make certain declarations about the meaning of C.08.004.1, and its applicability to drug X.
The Minister submitted as an affidavit a transcript of the examination for discovery of Ms. Dorothy Walker that was conducted by counsel for Bayer. Ms. Walker is Manager of the Submission Management Division of the Bureau of Pharmaceutical Assessment within the Ministry of Health, and as such she is familiar with, and was able to describe, the drug assessment process, including applications for an NOC contained in an NDS or an ANDS. Whether such a transcript could be admitted as evidence on a motion was the subject of some dispute between the parties, but since I have not found it necessary to rely on the portions of Ms. Walker's discovery to which Mr. Dimock, counsel for Bayer, objected, I need not decide this issue.
E. The Issues
Counsel for Bayer formulated four questions of law that he asked the Court to answer in this motion for summary judgment. In the course of oral argument, it was agreed that the first question in the plaintiff's memorandum of fact and law should be reformulated slightly and divided into two parts. With this modification and the reversal of the order of questions 3 and 4, the questions are as follows:
QUESTION 1
(a) Is drug X a "new drug" within the meaning of C.08.001?
(b) Does the fact that drug X contains a chemical or biological substance contained in a drug previously approved for sale in connection with an animal disease exclude it from the scope of C.08.004.1?
If Question 1(a) is answered in the affirmative and Question 1(b) is answered in the negative, then the following questions must also be answered. Cumulatively, they deal with the larger issue of whether C.08.004.1, in effect, confers a five-year monopoly in Canada on an innovator-manufacturer in respect of a new drug for which an NOC has been issued to it.
QUESTION 2
After the issuance of the Notice of Compliance for Drug X for use in the treatment of Disease X, would the Minister of Health (the —Minister—) need to rely on data contained in or derived from the Plaintiff's New Drug Submission for Drug X, to establish the safety and effectiveness of a drug product of a second manufacturer who files an Abbreviated New Drug Submission or Abbreviated Supplemental New Drug Submission comparing its drug product to the Plaintiff's Drug X?
QUESTION 3
Is the Minister prohibited from issuing a Notice of Compliance to a second manufacturer who files an Abbreviated New Drug Submission or Abbreviated Supplemental New Drug Submission comparing its drug product to the Plaintiff's Drug X only if he examines the information or material filed in the New Drug Submission of the Plaintiff in the course of considering the Abbreviated New Drug Submission?
QUESTION 4
Is the Minister prohibited from issuing a Notice of Compliance to a second manufacturer who files an Abbreviated New Drug Submission or Abbreviated Supplemental New Drug Submission comparing its drug product to the Plaintiff's Drug X, until five years after the issuance of the Notice of Compliance for Drug X for use in the treatment of Disease X to the Plaintiff?
F. Analysis
QUESTION 1(a)
There was no dispute between the parties that drug X was a "new drug" within the meaning of C.08.001, and fell within the definition contained in paragraph (c ), which I have set out at paragraph 8. The significance of this conclusion is that C.08.004.1 only applies when a submission has been made by a manufacturer for the purpose of establishing the safety and effectiveness of a "new drug". Accordingly, I answer this question in the affirmative.
QUESTION 1(b)
Paradoxically, whether drug X is "a drug" for the purpose of C.08.004.1 is a more difficult question. The parties agreed that the relevant definition is contained in section 2 of the Food and Drugs Act , R.S.C., 1985, F-27 [as am. by S.C. 1993, c. 34, s. 71], which is the enabling statute for the Regulations on which this litigation is based. Section 2 provides as follows:
2. . . .
"drug" includes any substance or mixture of substances manufactured, sold or represented for use in
(a) the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or its symptoms, in human beings or animals. [Emphasis added.]
C.08.004.1 only applies in respect of "a drug that contains a chemical or biological substance not previously approved for sale in Canada as a drug" [emphasis added]. The problem is that drug X does contain an active ingredient that is found in drug Z, which has been approved for sale in Canada, but only in connection with certain animal diseases. Counsel for the Minister maintains that, since "a drug" is defined as a substance sold for use in the treatment of diseases in "human beings or animals" [emphasis added], then drug X contains a substance that has been previously approved for sale in Canada, and accordingly C.08.004.1 does not apply to the NDS filed by Bayer for an NOC for drug X.
Counsel for Bayer argued that this result made little sense in the context of the statutory scheme: how could the fact that a drug contains a substance that had been approved for use in connection with animals, he asked, have any bearing on whether it should be regarded as previously approved for sale so that it may safely be used in connection with humans? Counsel for the Minister replied, in effect, that he had no answer to that question, but the result was dictated by the plain meaning of the Food and Drugs Act. Mr. Dimock suggested that a better reading of the provision would be that, when material is filed by the innovator of a drug intended for human use, the relevant inquiry should be to ask whether it contains a substance that had previously been approved for sale for human use. In other words, he wished to read in the word "human" to qualify "drug", whenever the context so required.
This seems to me an interpretation that is more consistent with the overall purposes of the statutory scheme than the literal, acontextual approach urged by Mr. Woyiwada for the Minister. Accordingly, when approval is being sought for a drug that has not been sold previously to treat a human disease, it is a "drug" for the purpose of this regulatory framework, even though it may have been sold previously to treat an animal disease. I therefore answer Question 1(b) in the negative.
Having found that the applicant has crossed the threshold, and brought drug X within the scope of C.08.004.1, I must now address the remaining questions posed by the applicant in this motion on the interpretation of C.08.004.1. These questions raise issues of much wider potential significance.
I should say at the outset that, since the principal purposes of this part of the Food and Drug Regulations are to ensure that drugs marketed in Canada are safe and effective, and to introduce a simpler and more cost effective process for the approval of generic drugs, Bayer's contention that it also confers on innovators the right to market a drug in Canada for five years without competition is somewhat surprising. Rights of this kind are normally conferred with respect to products that are protected by a patent.
Nonetheless, counsel for Bayer maintains that if questions 2 and 3 are answered as he contends that they should be, this is precisely the effect of C.08.004.1. Any doubt about the meaning of this provision is to be resolved, counsel argues, by referring to Article 1711 of the NAFTA, with which C.08.004.1 was intended to comply, and which is designed to protect manufacturers who have made a significant investment in testing the safety and efficacy of a new drug from being subject to unfair competition as a result of the improper disclosure and use of the secret information that they have had to file with the Minister in order to obtain approval to market the drug that they have developed.
QUESTION 2
The issue here is whether, in considering an ANDS, the Minister "in support of the manufacturer's submission . . . relies on data contained in the information or material filed by the innovator" [emphasis added]. Counsel for Bayer asks the Court to rule that, if Bayer is granted an NOC for drug X, and a second manufacturer files an ANDS naming drug X as the "Canadian reference product", it is inevitable that, in assessing the ANDS of the second manufacturer, the Minister "relies" on data contained in the information or material filed in its NDS by Bayer as the innovator of drug X. This is because the only information that the Minister has on the safety and efficacy of the drug is that contained in Bayer's submission. The second manufacturer's abbreviated submission will merely purport to establish that its drug is the pharmaceutical equivalent and bioequivalent of drug X, and will not contain any independent evidence of the safety and effectiveness of this new drug.
Accordingly, the plaintiff's argument goes, even though it may be said that the Minister "relies" on the fact that an NOC has already issued in respect of drug X as proof of the safety and effectiveness of the drug, the NOC will only have been issued to Bayer on the strength of the proof of drug X's safety and effectiveness contained in the information in Bayer's NDS. Hence, in a substantive sense, the Minister will nearly always rely on information filed by the innovator of a drug when considering an ANDS filed by a second manufacturer of a functionally equivalent drug.
Counsel argued that it was not possible for the Minister to rely on the fact that "the Canadian reference product" was being marketed in Canada as proof of its safety and effectiveness. For one thing, a second manufacturer could file an ANDS a day after the NOC had been issued for the "Canadian reference product", in which case there would have been no time for the drug to be tested by marketing. Furthermore, it is apparent from a "Policy Issues" document, dated August 21, 1991, and emanating from the Drugs Directorate of the Ministry, that the Minister only considers that the safety and effectiveness of a drug has been established by the market after it has been marketed for seven years. The document states:
. . . `sufficient time' for a new drug, as defined in section C.08.001 of the Food and Drug Regulations, will be interpreted as a minimum of seven years from the date of the initial marketing in Canada (drug notification). After this time, the drug product will no longer be regarded as a new drug. [Emphasis added.]
In response, Mr. Woyiwada insisted that, in the normal case, the Minister did not "rely" on the information in the innovator's NDS when considering the issuance of an NOC to a second manufacturer on the basis of an ANDS naming the innovator's drug as the "Canadian reference product". Rather, the Minister "relies" on the information contained in the ANDS in deciding whether to grant an NOC, and does not refer to the material previously filed by the innovator.
At first blush, the Minister's argument may seem very formalistic, in the sense that, in granting approval to a generic drug manufacturer because its product is the functional equivalent of a drug for which the Minister has already issued an NOC on the basis of the information supplied by the innovator, the Minister is indirectly, at least, "relying" on that information to establish the safety and effectiveness of the generic drug manufacturer's product. The NOC, on which the Minister says that he relies, was itself issued on the basis of the confidential test data compiled by the innovator-manufacturer.
However, it is also important that this provision of the Regulations be read in the context of the overall scheme, which is to facilitate the approval process for new drugs when sought by manufacturers other than the innovators, and thus to reduce the cost of drugs to provincial governments and members of the public: see the Regulatory Impact Analysis Statement filed with the Regulations in Canada Gazette Part II, vol. 129, No. 18.
If Bayer's contention were accepted, then it would effectively undermine the efficacy of the ANDS provisions by imposing a delay of five years on the issue of an NOC to a generic manufacturer. The scheme of the Regulations does not suggest that the issue of an NOC is normally so delayed: if this had been the intended result, the wording of C.08.004.1 is a very oblique way to express it.
The explanation of the intended scope of application of C.08.004.1 given in the Regulatory Impact Analysis Statement, which was issued contemporaneously with the Regulations, is certainly quite narrow in scope.
This provision may provide the innovator with additional market protection in cases where the patent is near expiry. The following example is used to illustrate this point:
The patent on an innovator's product A expires in 1997. The NOC for product A is issued in 1995 and contains a new chemical or biological substance. An abbreviated new drug submission is filed in 1996 for a second entry product B. If in order to assess the safety, efficacy and quality of product B, the Minister relies upon information contained in the innovator's submission for product A, a NOC for product B would not be issued until the year 2000, thus giving the innovator an additional 3 years market protection for product A.
In the case where the Drugs Directorate intends to rely on the data of the innovator to support safety and efficacy claims, and this would result in a delay in the issuance of the NOC, the Drugs Directorate will notify the second-entry manufacturer in advance of the review. The Drugs Directorate will give the second-entry manufacturer the option of supplying additional information to support the claim without relying on the data previously submitted by the innovator. If the manufacturer wishes to supply the required information directly, in accordance with the policy on management of information, the manufacturer will avoid the application of this provision.
This explanation provides a useful aid to the interpretation of C.08.004.1, and supports my initial view that this provision was not intended to create a protection analogous to a patent for the benefit of nearly all innovators of new drugs who have obtained an NOC. Accordingly, I do not accept the submission that the Minister "relies" on the innovator's information for the purpose of C.08.004.1 when considering an ANDS for an NOC, when the Minister issues the NOC solely on the basis of the information contained in the ANDS. Given the overall purpose of the Regulations, the adverb "indirectly" should not be read into C.08.004.1(1) so as to broaden the scope of the verb "relies".
Having answered this question in the negative, it is not strictly necessary for me to consider the other questions, since the plaintiff can only obtain the protection that it seeks if each question is answered in its favour. However, in case I am wrong in my answer to Question 2, and because I heard full arguments from counsel on all the issues, I shall address the other questions as well.
QUESTION 3
The question here is whether, for the purpose of C.08.004.1, the Minister will "examines any information or material filed with the Minister" [emphasis added] in its NDS by Bayer as the innovator of drug X. If so, then C.08.004.1 will apply and, if other requirements of the provision are satisfied, the Minister may not issue an NOC to a generic manufacturer of an equivalent drug until five years have elapsed since the issue of the NOC to Bayer.
The undisputed evidence was that, in the normal case, officials of the Department of Health do not consult the information supplied by the innovator when they are deciding whether to issue an NOC on the basis of an ANDS. Their decision is based exclusively on the information contained in the ANDS, and their concern is to ensure only that it establishes the pharmaceutical equivalence and bioequivalence of the new drug to the "Canadian reference product". Therefore, counsel for the Minister argued, since the Minister does not physically open and consult the material previously filed by the innovator, it cannot be said that the Minister "examines" this material when considering a second manufacturer's ANDS.
Counsel for Bayer made two submissions on this point. First, he argued that the examination by the Minister referred to in C.08.004.1 is the examination that the Minister made of the information filed by the innovator manufacturer at the time that it filed its NDS. Accordingly, he said, whether or not the Minister examines that material in the course of examining the generic drug manufacturer's ANDS is irrelevant: the examination to which C.08.004.1 refers will already have occurred in the course of the Minister's consideration of the innovator's NDS.
Based solely on the text of C.08.004.1 this seems an implausible interpretation. First, since the Minister must of necessity always examine the material filed by an innovator in deciding whether to issue an NOC, the clause in dispute is superfluous. Second, the past tense would have been required if the drafter had intended to refer to the prior examination of the innovator's information. On counsel's construction, the Minister's examination of the innovator's test data contained in its NDS must have occurred by necessity before the Minister "relies" on it in the course of considering an ANDS. The use of the present tense of both verbs, "examines" and "relies", indicates that the person who drafted C.08.004.1 envisaged that each would occur in the course of the Minister's considering the same submission, namely, the ANDS.
The reference in C.08.004.1 to the Minister's examination seems to be linked to the provision in C.08.003.1, which confers on the Minister a discretion to examine material filed previously by a manufacturer, in the course of examining another submission by a different manufacturer in order to establish the safety or effectiveness of the drug to which this latter submission relates. However, this would seem to be an exceptional procedure: in most cases, the Minister is asked to issue an NOC solely on the basis of the information contained in the ANDS filed in support of the application.
The second argument advanced by counsel for Bayer was based on paragraph 6 of Article 1711 of the NAFTA, which C.08.004.1(1) was intended to implement. In particular, he pointed out that Article 1711 does not include a requirement that the information supplied by the innovator-manufacturer be "examined" as a condition precedent to the manufacturer's becoming entitled to five years' protection from competition from a generic manufacturer. And since C.08.004.1(1) was introduced in order to comply with Canada's obligations under the NAFTA, and Article 1711 in particular, counsel argued that the "examination" requirement should not be interpreted as imposing an additional requirement beyond those clearly contained in paragraph 6. Hence, the interpretation proposed by counsel for Bayer should not be rejected simply because it does not add another requirement before C.08.004.1 can apply.
In response, counsel for the Minister relied on the plain meaning of C.08.004.1(1) and submitted that, since it contained no ambiguity, Article 1711 was irrelevant, even though the Regulations had been amended in order to comply with NAFTA. I should note that counsel for Bayer did not argue that, if counsel for the Minister was correct, then C.08.004.1(1) was invalid in so far as it provided less protection to innovator-manufacturers than that contained in Article 1711.
Counsel for the Minister also noted that paragraph 6 of Article 1711 ends by stating that:
Subject to this provision, there shall be no limitation on any Party to implement abbreviated approval procedures for such products on the basis of bioequivalence and bioavailability studies.
He submitted that the argument advanced by Bayer would effectively undermine the ANDS procedure contained in C.08.004.1(1) by imposing a five-year delay on the issue of an NOC to a second manufacturer of a drug, and that this was clearly not the intention of Article 1711.
Counsel for the Minister may have taken too narrow a view of the use that should be made of the terms of a treaty when interpreting a provision of domestic law that was intended to implement Canada's obligations under that treaty. In National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324, at page 1371, Gonthier J. stated the relevant principles as follows:
In interpreting legislation which has been enacted with a view towards implementing international obligations, as is the case here, it is reasonable for a tribunal to examine the domestic law in the context of the relevant agreement to clarify any uncertainty. Indeed where the text of the domestic law lends itself to it, one should also strive to expound an interpretation which is consonant with the relevant international obligations.
Second, and more specifically, it is reasonable to make reference to an international agreement at the very outset of the inquiry to determine if there is an ambiguity, even latent, in the domestic legislation. The Court of Appeal's suggestion that recourse to an international treaty is only available where the provision of the domestic legislation is ambiguous on its face is to be rejected. [Emphasis added.]
It thus becomes necessary to consider the scope of the obligations imposed on the parties by Article 1711 of the NAFTA, and in particular by paragraph 6. The general subject-matter of Article 1711 is indicated by its heading, "Trade Secrets", and its overall objective is contained in paragraph 1, which states:
Article 1711: . . .
1. Each Party shall provide the legal means for any person to prevent trade secrets from being disclosed to, acquired by, or used by others without the consent of the person lawfully in control of the information in a manner contrary to honest commercial practices,
The more specific paragraphs that follow should be interpreted against the background of this statement of the general duty imposed by Article 1711.
Paragraph 5 provides that "the Party shall protect against disclosure of the data of persons making such submissions, where the origination of such data involves considerable effort", where, as here, domestic legislation requires "the submission of undisclosed test or other data necessary to determine whether the use of such products is safe and effective" as a precondition for obtaining approval to market new drugs. In this case, there is no suggestion that the confidential data provided by Bayer in its NDS for drug X will be disclosed when an ANDS is filed by a generic drug manufacturer's naming drug X as "the Canadian reference product".
Paragraph 6 states that each Party shall provide that "no person other than the person that submitted" the undisclosed test data referred to in paragraph 5 shall "rely on such data in support of an application for product approval during a reasonable period of time after their submission". The paragraph goes on to say that "a reasonable period" shall normally be no less than five years from the date when the Party granted approval to the person who produced the data. It ends, as we have already seen, by providing that "Subject to this provision, there shall be no limitation on any Party to implement abbreviated approval procedures for such products on the basis of bioequivalence and bioavailability studies".
Paragraph 7 of Article 1711 deals with a situation that is not relevant to this case, although it may shed some light on the proper interpretation of paragraph 6. It provides that, "Where a Party relies on a marketing approval granted by another Party" the reasonable period of exclusive use shall commence from the date of the first marketing approval.
The first question to be asked is whether, as interpreted by the Minister, the statutory framework contained in Division 8 of the Food and Drug Regulations fails to provide the protection for Bayer conferred by Article 1711, paragraph 6.
In my opinion, Article 1711 does not confer the right to five years' exclusive marketing of a new drug from the date of the issue of an NOC on the basis of the test data contained in the innovator's NDS in a situation such as that in issue in this case.
Paragraph 6 appears to contemplate a situation in which a competitor "relies" on the data submitted by a manufacturer to obtain marketing approval. Indeed, following on from paragraph 5, which enjoins the parties to "protect against disclosure" of such data, paragraph 6 appears simply to provide a remedy when a Party has failed to keep the data confidential by preventing the issue of an approval to a competitor for five years. This conclusion would be consistent with the general statement in paragraph 1 that each Party is to provide the legal means for preventing the unauthorized disclosure and use of trade secrets "in a manner contrary to honest commercial practices".
The operation of the ANDS process prescribed by C.08.003 [as am. by SOR/95-411, s. 6] does not in my opinion involve conduct that is prohibited by paragraph 6. In a situation such as that contemplated by this litigation, the Minister will not have failed to protect Bayer from the unauthorized disclosure of its test data, and a generic manufacturer will not "rely" on that data in an ANDS filed to obtain an NOC for a drug that is the pharmaceutical equivalent and bioequivalent of drug X. Rather, the manufacturer will rely on its comparative studies and bioavailability tests.
If Article 1711 had been intended to impose a delay of five years in most situations covered by the abbreviated submission process, this intention would surely have been expressed more precisely. Indeed, as noted above, paragraph 7 of Article 1711 does deal quite specifically, but only in the international context, with a situation in which a Party relies on a prior marketing approval. It provides:
Article 1711: . . .
7. Where a Party relies on a marketing approval granted by another Party, the reasonable period of exclusive use of the data submitted in connection with obtaining the approval relied on shall begin with the date of the first marketing approval relied on.
If paragraph 6 were intended also to apply the five years' delay to a situation where a Party relies on a marketing approval that it had itself previously issued to a manufacturer that had been required to submit its undisclosed data in order to obtain approval, the text would surely have said so much more clearly. Indeed, it is significant in my opinion that paragraph 6 concludes by stating that, "Subject to this provision, there shall be no limitation on any Party to implement abbreviated approval procedures for such products." It is true that Bayer's interpretation of paragraph 6 would not formally prevent the use of abbreviated new drug submissions, but merely delay the grant of an NOC. However, in the pharmaceutical industry, new drugs are being developed all the time, and a period of five years is a long time to grant a de facto monopoly for a drug that is not protected by a patent. After five years, many drugs will have been superseded by more effective products.
Thus, an examination of Article 1711 does not lead me to conclude that the Minister's interpretation of C.08.004.1 is in breach of any obligation imposed by Article 1711. Accordingly, the text of the Treaty neither reveals a latent ambiguity in C.08.004.1, nor resolves a patent ambiguity in its language.
My conclusion is, therefore, that the Minister will only "examine" the data supplied by Bayer in connection with drug X, within the meaning of C.08.004.1, if, in the exercise of the discretion contained in C.08.003, for example, departmental officials go back to consult that material in the course of considering an ANDS submitted by another company seeking approval for a drug that is the functional equivalent of Drug X. Moreover, this interpretation of C.08.004.1(1) does not deprive Bayer of any legal protection to which it is entitled by virtue of Article 1711.
QUESTION 4
In the fourth question, the plaintiff asks me to decide that the Minister is prohibited from issuing an NOC on the basis of an ANDS filed in respect of a drug that is the pharmaceutical equivalent and bioequivalent of drug X, until five years have elapsed from the issue of the NOC to Bayer for drug X. The answer to this question follows automatically from the answers given to questions 2 and 3.
Since I have found that, in the normal course of considering an ANDS, the Minister does not usually "examine", nor "rely" on, the data supplied by the innovator, it follows that the Minister may issue an NOC as soon as a generic manufacturer is able to establish on the basis of an ANDS submitted in compliance with the Regulations, that its product is the pharmaceutical equivalent and bioequivalent of drug X.
G. Conclusion
I summarize my answers to the questions posed in this motion as follows:
QUESTION 1(a): Yes
(b): No
QUESTION 2: No
QUESTION 3: Yes
QUESTION 4: No
Accordingly, the plaintiff's motion for summary judgment is dismissed with costs.