Identifying the last line of defence for innovative Canadian drugs

Patents and data protection
A review of innovator drugs approved by Health Canada in 2015 and 2016 offers no clear winner between the legal protections offered by Canadian patents and data protection ‒ both are important. In some cases, a key patent expires after data protection; other times, data protection outlasts the initial patent.

For the majority of new innovative drugs approved in this two-year period, patent protection arguably offered longer-lasting exclusivity than data protection. However, data protection was the primary line of defence against generic market entry for roughly one-quarter of new drugs because no patents were listed with Health Canada.

Overview of exclusivities
Patent and regulatory exclusivities are crucial for protecting innovative drug companies from generic competition. The government created these windows of exclusive rights to recognise the considerable amounts of time, money and effort required to arrive at any single new drug approval. Generic drug companies can later provide the same drugs at a lower cost by (among other things) relying on the brand name drug company’s clinical trials. Therefore, innovator drug exclusivities are necessary to ensure that innovative companies can profit from their inventions and re-invest in future R&D.

In Canada, patent exclusivities typically provide a 20-year monopoly from the filing date (there is no patent term extension). The monopoly provides the exclusive right to make, use and sell an invention. The patent that covers an approved new drug compound or the initial approved indication is often the most commercially important. Later patents covering new uses or formulations are often easily designed around by generic companies. Quality matters more than quantity when it comes to patents.

Regulatory exclusivities, such as data protection, provide an eight-year basic exclusivity term in Canada where a generic drug company cannot rely on an innovator company’s approval to get its generic marketing approval. This effectively bars the generic company from the market, since it is unlikely to conduct its own clinical trials.

The review of new drugs approved in 2015 and 2016 is suggestive of whether innovative companies are more likely to rely on patents or data protection as the last defence against generic competition. Patents might initially appear to be more advantageous due to the 20-year term. However, much of the patent term is used up while the drug is still on the long road of drug development and approval.

Analysis
With only a few exceptions, almost all new active substances approved by Health Canada qualified for data protection (the exceptions also had no patents listed with Health Canada). In 2015, eight out of 36 new substances had data exclusivity but no patent on Health Canada’s Patent Register. Similarly, in 2016 it was nine out of 35. Therefore, data protection fills an important gap in a significant number of cases where there is no patent (or a time lag before listing the patents).

Where there was at least one patent on the Patent Register, patent exclusivities tended to last longer:

• Data protection was the last-expiring exclusivity in roughly 20% of cases in 2015 and 35% in 2016.
• The first patent on the Patent Register outlasts data protection almost 40% of the time for drugs approved in 2015 and 2016. The first-listed patent is often significant because it typically provides the broadest protection (eg, covering the compound or the approved indication).
• In the remaining cases, data protection outlasted the first patent, but not one or more later-filed patents. These later patents may have been improvement patents, which are typically narrower and easier for generic companies to circumvent. The effectiveness of improvement patents varies from case to case. Patents, particularly improvement patents, are sometimes invalidated in litigation, whereas data protection is infrequently challenged.

This analysis supports the conventional wisdom that innovative drug companies should continue to pursue patents and data protection whenever both are available; they provide complimentary protections.