Legal news and trends for Canadian in-house counsel and c-suite executives
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is not onside when it comes to patent infringements. "It takes years and years and years to get any damages from an infringement. There's no meaningful deterrent." He suggests something in the order of triple damages might pre- vent such situations. All counsel interviewed for this story agree Canada is in need of a stronger strat- egy to deal with orphan drugs, medica- tions used to treat rare disorders. Among BIOTECanada's priorities is urging Health Canada to provide incentives for domestic patent-busting legislation in a province that wants to pride itself on protection of intellectual property. It doesn't send a very good message to anybody outside Canada." It's not that Rudolph is against generics. "They play an important role," he says. "Society should get full benefit of innovation once it's paid for." BIOTECanada is also encourag- ing the federal government to secure Canada's place in the global bio- economy by providing a minimum of $100 million per year to Sustainable It takes years and years and years to get any damages from an infringement. There's no meaningful deterrent. JOHN R. RUDOLPH, Eli Lilly Canada Inc. improvement were three things: com- panies cut expenditures in the current financial climate, loss-making compa- nies were acquired or wound up, and significant writeoffs of intangible assets abated as few companies now carry any sizable intangible assets on balance sheets. However, much of the cost-cutting research and a clearly defined regulatory pathway recognizing the unique nature of rare disorders treated with costly medi- cations. Because the number of those with such disorders is small, so too is the potential market for new drugs to treat them, which makes research and development at times prohibitive. Steps have already been taken by government regulatory agencies in the U.S. and the European Union to reduce this disparity. Rudolph says it doesn't seem to be the case in Canada. "There seems to be no clear or present interest in orphan drug legislation in Canada," he says. No matter what the drug at issue is, counsel also agree there is a need for a co- ordinated approach between the federal and provincial governments toward pric- ing and availability of biotech products. Rudolph says getting products listed is also a time-consuming process for com- panies. "Oftentimes, it's the same data that is being reviewed and considered but it's inconsistent in how it's reviewed across the country," he says, adding there has been a further thorn in the indus- try's side with Ontario allowing generics to challenge invalid patents. He calls it a step in the wrong direction. "That's Development Technology Canada to continue support for the next genera- tion of industrial biotechnology and clean-tech innovations, and expand the fund to include more diverse bio- based technologies and bio-chemicals. BIOTECanada also suggests maintain- ing investment for vaccines to treat Canadians through continued support for the National Immunization Strategy program by creating a permanent fund with a minimum of $100 million and by working with the provinces and ter- ritories to establish a sustainable fund- ing mechanism to ensure adoption of new recommended vaccines in public health programs within six months of their approval. The Ernst & Young report notes public pharmaceutical companies in Canada, like their U.S. and European counterparts, have had to engage in major cost-cutting to survive. These efforts have delivered results on the bottom line, where the publicly traded industry's net loss fell an astounding 94 per cent to only US$70 million in 2009 from $1.2 billion in 2008 — the industry's lowest overall net loss in the last decade. Driving that bottom line has come at the expense of research and development spending, which fell 44 per cent in 2009. Given that research and development is the driver of future growth in this sector, Ernst & Young says this sharp decline could have long-term repercussions for the Canadian industry. Without incentives or other cash-raising mechanisms, things might not change, say in-house lawyers at biotech compa- nies. Despite the cost-cutting measures, there was no appreciable improvement in the industry's survival index. Ernst & Young says while the amount of capital raised by Canadian firms rose signifi- cantly during the year, the vast majority of these funds went to a small group of companies, leaving 57 per cent of com- panies with less than one year of cash on hand. Lievonen says Canadian government bodies are huge purchasers of biotech products. But, he says, decisions need to be made to protect the industry. It could well determine if Canada will be an importer or an exporter of biotech products, Lievonen says. And that could come down to what government does to ease pressure on the industry. "They're not thinking about how to drive innova- tion and reward innovation." There is help available through gov- ernment offerings such as the scientific research and experimental develop- ment program and through the Canada Revenue Agency. But, put together, the challenges facing the biotech industry are putting Canada at a disadvantage. "It may be nice if the provinces and the feds could co-ordinate on some issues," says Clark. "You're all over the map. It's really in Canada's best interest to be open to biotech. A lot of countries are competing to be the place to do bio- tech. If we co-ordinate efforts, we could smooth the way." IH INHOUSE FEBRUARY 2011 • 37