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