Canadian Lawyer InHouse

31 canadianlaWyermag.com/inhouse june 2014 in Canada. But there are signifi cant regulatory and legal differences between the two countries. For example, in the U.S., generic drug manufacturers cannot claim s. 8 damages. "In our system, the innovator faces the risk that if they lose they have to pay money. It could be very signifi cant [amounts of ] money," says Vanveen. This is an important distinction, he argues, as the exposure to potential damages creates more of a legiti- mate rationale for some payment from a patentee to a generic. Lenczner Slaght Royce Smith Griffi n LLP partner Andrew Skodyn, who focuses on patent litigation, agrees. "There's a much greater incentive to be ahead, and maybe to settle [in the U.S.]," he says. In any case, there are fewer pay-for- delay settlements in Canada than in the U.S., he adds. Another practice the bureau is already looking into is "product switching." This is where a branded pharmaceutical company — faced with the prospect of a generic entering the market — produces a newer version of the drug that will be covered by a long-term patent. The branded drugs company may try to "habituate" doctors and patients towards the newer product. Pharmacists are generally required to substitute branded drugs with a generic product where available. As a result, some critics claim "product switching" is more about generating prescriptions for a medi- cine that has no generic equivalent than put- ting out a genuinely innovative new drug. The practice is also feared to lead to sup- ply interruptions of pharmaceutical drugs. The bureau is currently investigating al- legations that Alcon Canada Inc. abused its market dominant position in the supply of eye drops used to treat allergic conjunctivitis. In 2012, Alcon allegedly put an older ver- sion of the eye drops on back order, while encouraging doctors and pharmacists to switch to a newer type. The bureau is look- ing into whether Alcon disrupted the supply of the older drug in the face of competition from Apotex Inc., which had received approval to start selling a generic version. Vanveen argues strongly that product switching can be a valid business strategy. "The generics could go out to doctors and spend money on marketing their products. But they don't want to do that. They have a lazy marketing system," he states. Norton Rose Fulbright Canada LLP partner Kevin Ackhurst agrees companies "should be able to develop new products and be allowed to switch people over to the new product," though not necessarily if this involves "intentionally disrupting the supply chain." Vanveen also questions whether it is the bureau's role to fi ght to support the generic drugs companies' business models. He says: "If you really care about competition, shouldn't the answer be the generics should go out there and compete [and] make the argument that the old variety is as good as the new variety?" Instead of creating an entirely new prod- uct, pharmaceutical companies may decide to vary the dosage, strength, or delivery method of a drug, and obtain additional patents to cover the changes. Generics wishing to enter the market would need to address these additional pat- ents. Some have complained that endless tweaks to drugs are made simply to exclude competitors from the market, giving rise to the phrase "evergreening." The bureau may choose to look into ever- greening, though an inquiry into the prac- tice in 2003-04 concluded the Competition Act was "not the appropriate vehicle" for resolving "what amounts to a patent dispute between two fi rms." One change widely thought to be in the cards is a revision of intellectual property enforcement guide- lines, which help the bureau to interpret patent rights. IPEGs are being modernized in two phases. The fi rst phase will involve administrative and technical changes to the 2000 IPEG to ensure they comply with 2009 legislative amend- ments and enforcement guide- lines. The second phase will assess whether further changes are required. But, in general, Skodyn thinks the bureau's previous work makes it unlikely its current focus will have a signifi cant impact on the pharmaceutical sector. "I think it's safe to say that the regulations in place have been seen to be effi cient to protect the interests of the Canadian public," he says. Even if the bureau is inclined to delve into particular pay-for-delay settlements, it may face hurdles in obtaining suffi cient information. Ackhurst highlights that if you really care about competition, shouldn't the answer be the generics should go out there and compete [and] make the argument that the old variety is as good as the new variety? KeVin ACKHurST, norton rose Fulbright Canada llP '' '' I n d u s t r y S p o t l i g h t

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