Pharmaceutical companies express concerns about Canada revoking drug patents over their usefulness

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Pharmaceutical companies are expressing growing concerns about a trend in Canadian courts where patents on medicines are being revoked over challenges of their usefulness.

Since 2005, Canadian courts have made 21 decisions denying patent utility to 18 products made by 10 companies, allowing Canadian companies to manufacture the drugs before the end of the 20-year patents, according to a document obtained by The Hill.

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A source with Eli Lilly told The Hill said a pattern has emerged where patents for innovative medicines are being challenged on the grounds that the inventions are not useful by Canadian companies that already have started producing and selling their cheaper generic versions domestically.

The Lilly source argued that if the drug wasn’t useful why would a Canadian company want to produce the generic version.

So, if the product is being used successfully customers, it should be more difficult to demonstrate that the invention is not useful and never should have been patented.

“That is why it is so hard to wrap my head around,” the source said.  

The trend is violating the World Trade Organization’s (WTO) agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the North America Free Trade Agreement (NAFTA), providing protections for intellectual property, the source said.

But a March 2013 report by the Canadian Generic Pharmaceutical Association argued that Canada has gotten it right with its court decisions by ensuring an improvement in patent quality by holding companies “to the promises they made when applying for their patents in the first place."

“This just means that patent applicants should think twice before over-promising in their patents,” the report said.

The report argued that the standard of proof for usefulness in Canadian law is not onerous and that the standard is “easily met, as long as the patent is soundly based in science and not speculative in nature.”

“The pharmaceutical industry suggests that the Canadian approach will undermine pharmaceutical investment,” the report says.

“In truth, however, Canada’s courts elevate sound investment over speculative investment.”

A broad range of well-known companies and drugs have been affected from Lilly to Pfizer and Viagara, Valtrex and Zyprexa.

Lilly fought a five-year battle over their drug, Zyprexa, first patented in 1992, beginning in 2007, with the courts telling the company that the patent application had not proven that the drug was useful.

After the initial verdict, Lilly didn’t think the decision would stand but, instead, Canada chose to stay the course.

He said it may take Canadian lawmakers to better define and clarify patent law for usefulness.

But he argued that language in the Trans-Pacific Partnership (TPP) does not allow for the liberal interpretation of patent law.

The Lilly source said that Canadian courts have merged two tests — one for usefulness for purposes of patent approval and the other for effectiveness for approval by health regulators.

The heightened test applied by Canada is substantially different from the test required under TRIPS and NAFTA, according to Lilly.

Eli Lilly has threatened to bring a NAFTA challenge against the Canadian Federal government for the decisions.

"They would seemingly prefer that Canadian courts behave more like the courts in the United States, which find an invention useful as long as the invention is useful for something," the Canadian report says.

"They believe patentees should be allowed to promise liberally, with their patent sustainable as long as part of what they say is true."