Canadian Regulators Cracking Down on Generic Pay-for-Delay Deals

Canadian regulators plan to ratchet up scrutiny of patent litigation settlements between brand and generic drugmakers that delay generic competition.

The Competition Bureau, the equivalent of the U.S. Federal Trade Commission, also will push for a mandatory reporting requirement similar to one already in place in the U.S., where litigants in patent lawsuits must notify regulators of any settlement that could amount to a pay-for-delay deal, said Commissioner John Pecman in a speech last week.

As of now, drug companies that settle disputes in Canada are under no obligation to notify the bureau of such a deal, said Pecman, who is under pressure from critics who say Canada is not as tough on pay-for-delay deals as regulators in the U.S. and Europe.

Under the new approach, the agency will scrutinize deals, even if they allow for generic launch prior to expiration of the drug’s patent, Pecman said.

Details of the initiative still need to be fleshed out. For instance, how will the bureau decide which deals to investigate and what will the agency seek if it takes these cases to court, be it fines or a mandated generic launch, Shashank Upadhye, a partner at law firm Seyfarth Shaw and former global head of intellectual property at Canada-based Apotex, said.

Pecman did provide an example of the kind of settlement that would violate antitrust laws. If a generic agreed to delay a product beyond the expected expiry date of the patent in exchange for a payment, “we would likely interpret this as a clear payment for delayed entry,” Pecman said in his address in Virginia at a conference on antitrust challenges facing the global pharmaceutical industry.

Such a case would be considered under the criminal conspiracy laws, he said. Canadian law allows for civil or criminal penalties in antitrust cases. Criminal penalties apply if an agreement amounts to price fixing, market allocation or restriction of output, Pecman said. Lesser violations could still face civil penalties, he added. — Bryan Koenig

Originally appeared in Drug Industry Daily, the pharmaceutical industry’s number one source for regulatory news and information. Click here for more information.