Resolution Urging Canada’s Administration to Appropriately Value and Protect Intellectual Property Rights by Reassessing the Changes to the Patented Medicine Prices Review Board Regulations and Eliminating Section 8 Damages

Summary

Canada has long ranked surprisingly low among developed nations in the protection of intellectual property rights (IPR). A significant reason for this is Canada’s history of adopting policies that undermine and undervalue biopharmaceutical patents, whether through imposition of punitive damages on innovators that legitimately seek to enforce their patent rights (but who ultimately do not prevail in litigation), or through the application of discriminatory pricing policies that set ceiling prices solely for patented biopharmaceuticals. The Patented Medicines (Notice of Compliance) (PM(NOC)) Regulations allow a biopharmaceutical innovator in Canada to seek an order preventing a generic manufacturer from obtaining marketing approval on the basis that the innovator’s patent covers the product and is valid. However, if the innovator seeks such an order, but is ultimately unsuccessful, Section 8 of the Regulations grants the generic manufacturer the right to claim damages in the form of lost profits for the period of time they could have been selling the product, but for the innovator’s request to stay their approval. As such, Section 8 unreasonably prejudices the legitimate right of a biopharmaceutical patent owner to petition the government to enforce a patent which that government granted in the first place. Interpretation of and amendments to Section 8 have exacerbated this problem by (1) imposing damages in excess of 100 percent of the total generic market (despite holdings that Section 8 is meant to be compensatory and not punitive in nature); and (2) enabling competitors to claim indefinite future losses and to seek compensation for production “ramp-up” costs they may have incurred before the stay was granted and after it was lifted. In addition to these punitive damages, amendments to the Patent Act in 1987 resulted in the creation of the Patented Medicine Prices Review Board (PMPRB) with the sole task of ensuring that prices for patented medicines are not “excessive”, i.e., not set at a level that could be viewed as an abuse of the patent rights. No similar Board exists for any other patented product in Canada. Amendments to the PMPRB Regulations in 2019 that are now poised to go into effect from 2021 impermissibly expand the PMPRB’s mandate from ensuring that prices in Canada for patented biopharmaceuticals are not excessive to lowering the ceiling price to a level deemed by the PMPRB to be “affordable”. This is contrary to the PMPRB’s mandate under the Patent Act and an impermissibly broad exception to the IP rights that biopharmaceutical innovators should enjoy under Article 28 of the World Trade Organization Agreement (WTO) on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and parallel provisions in the U.S.-Mexico-Canada Agreement.

Draft

Resolution Urging Canada’s Administration to Appropriately Value and Protect Intellectual Property Rights by Reassessing the Changes to the Patented Medicine Prices Review Board Regulations and Eliminating Section 8 Damages

WHEREAS, the right to own property is a fundamental human right; and

WHEREAS, protection and enforcement of intellectual property rights (IPR) are crucial to the future of the innovation-based economy; and

WHEREAS, creating an environment where property rights are protected and legally enforced contributes to social and economic growth and stability; and

WHEREAS, scholarly research shows that the protection of intellectual property rights are key drivers for a country’s economic growth; and

WHEREAS, various studies and indexes show that there is a strong positive correlation between a country’s robust intellectual property rights enforcement and GDP per capita; and

WHEREAS, workers in IP-intensive earn an average weekly wage of $1,312, 46 percent higher than the $896 average weekly wages in non-IP-intensive industries; and

WHEREAS, the innovative pharmaceutical industry in Canada supports more than 30,000 high paying jobs with more than $1.19 billion per year invested in research; and

WHEREAS, Canada has a history as one of the most highly developed environments for promoting the advancement of the arts and business through the defense of intellectual property rights; and

WHEREAS, Canada has begun to lag behind other developed nations in protecting and enforcing intellectual property rights; and

WHEREAS, IPR advocates are concerned with “Section 8 Damages” which penalize biopharmaceutical innovators for legitimately seeking to defend and enforce their patents; and

WHEREAS, the Patented Medicine Prices Review Board (PMPRB) exists solely to determine whether the prices for patented biopharmaceuticals are excessive; and

WHEREAS, the 2019 amendments to the PMPRB Regulations will result in the imposition of ceiling prices that deprive biopharmaceutical innovators from the exclusive right to realize anticipated “economic returns” during the limited patent term as an inducement to innovation; and

WHEREAS, weakening IPR is not only detrimental to the economy, but can also place the public’s health and safety at risk; and

WHEREAS, the protection of intellectual property incentivizes lifesaving medicines, breakthrough consumer products and green technologies; and

WHEREAS, Section 8 damages and the changes to the PMPRB Regulations will hinder innovation and the access to medicine that accompanies strong IPR for both Canada and the United States; and

WHEREAS, Canadian patients may already be seeing the implications of decreased medical innovation as the number of clinical trials in Canada have reportedly decreased by 50 in late 2019 and early 2020; and

WHEREAS, the importance of secure intellectual property rights is recognized in international treaties and conventions; and

WHEREAS, Canada and the United States’ close trading partnership benefits from our IP-related fields; and

WHEREAS, Section 8 damages and the amendments to the PMPRB Regulations are at odds with international practices and with Canada’s World Trade Organization (WTO) and United States-Mexico-Canada Agreement (USMCA) obligations;

WHEREAS, the legislative chamber of [INSERT STATE/COMMONWEALTH] recognizes the importance to the market economy of protecting all forms of intellectual property, including trademarks, brands, logos;

NOW THEREFORE, BE IT RESOLVED that the legislative chamber of [INSERT STATE/COMMONWEALTH] calls upon the Prime Minister of Canada to uphold intellectual property rights in Canada and abroad by reassessing the amendments to the PMPRB Regulations and eliminating Section 8 damages; and

BE IT FURTHER RESOLVED, that the legislative chamber of [INSERT STATE/COMMONWEALTH) urges legislatures around the world to reject legislation it is asked to consider that threaten intellectual property rights; and

BE IT FURTHER RESOLVED that the legislative chamber of [INSERT STATE/COMMONWEALTH) will submit this resolution to the Ambassador of Canada to the United States, the United States Trade Representative and the office of the U.S. Intellectual Property Enforcement Coordinator.

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