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### Viewing cable 06OTTAWA2021, POTENTIAL FOR IPR PROGRESS: CANADA'S PROPOSED

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06OTTAWA2021 | 2006-06-29 19:57 | 2011-04-28 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Ottawa

`

    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

`