2020 Year in Review—Canada’s Top 10 Drug and Vaccine Regulatory Updates
By Eileen McMahon, Teresa Reguly, Yolande Dufresne, and Sue Fei
2020 was an eventful and challenging year. With the pandemic, all eyes are on the life sciences industry for innovation and products. In Canada, the regulators, legislature, and the courts played a role in effecting change. Below is our list of the top 10 drug and vaccine regulatory issues in Canada in 2020 and what to watch for in 2021.
1. COVID-19 Measures – Drugs and Vaccines
Topping our list are measures implemented by Health Canada to facilitate access to vaccines and drugs in relation to COVID-19. In particular, Health Canada issued the Interim Order Respecting the Importation, Sale and Advertising of Drugs for Use in Relation to COVID-19 on September 16, 2020, and the accompanying Guidance Document on September 17, 2020.
The Interim Order provides expedited authorization pathways for access to drugs and vaccines for use in relation to COVID-19 (“COVID-19 drugs”). In particular, the Interim Order provides that:
- Drugs that are not authorized in Canada or elsewhere are subject to modified application and administrative requirements. Information for such applications may be submitted on a rolling basis throughout the course of the application review.
- Drugs that are authorized by a foreign regulatory authority (and listed on the associated List of Foreign Drugs) benefit from an abbreviated application by levering the foreign regulatory approval.
- Currently authorized drugs whose indications are to be expanded to include COVID-19 indications must be listed on the List of New Drugs for Expanded Indication. Drugs are to be added to the list based on environmental scanning by Health Canada.
Health Canada may impose terms and conditions on authorizations issued under the Interim Order at any time, which can be found on Health Canada’s webpage specific to each authorized product.
The Interim Order facilitates expedited review of Drug Establishment License (“DEL”) applications in relation to COVID-19 drugs and provides broad discretionary authority to Health Canada to add terms and conditions to DELs issued under this Interim Order. The Interim Order further allows early importation of promising COVID-19 drugs prior to market authorization, provided that Canada’s Chief Public Health Officer has notified Health Canada of such need and the government has a procurement agreement for the drug.
The Interim Order is set to expire on September 16, 2021, and Health Canada recently published its proposal to amend the Food and Drug Regulations (FDR) to transition Interim Order drugs/vaccine to permanent approvals under the FDR.
2. COVID-19 Measures – Clinical Trials
Health Canada issued the Interim Order respecting clinical trials for medical devices and drugs relating to COVID-19 on May 23, 2020, and the accompanying Guidance Document on May 27, 2020. The Interim Order provides an alternate authorization pathway for clinical trials for drugs represented for use in relation to COVID-19, aimed at reducing regulatory burden while upholding strong patient safety requirements and validity of trial data. Several requirements of the FDR still apply to clinical trials authorized under this pathway, including those related to serious unexpected adverse drug reactions reporting and Good Clinical Practices.
To provide greater flexibility to conduct decentralized trials, the Interim Order expands eligible individuals who may conduct clinical trials by broadening the criteria to include qualified health professionals (in addition to physicians and dentists). The Interim Order further allows alternative forms of informed consent when participants cannot consent in person or in writing.
Health Canada may impose terms and conditions on COVID-19 drug clinical trial authorizations issued under this pathway at any time to ensure appropriate oversight and risk mitigation. Post clinical trial authorization, there are reduced reporting requirements and only certain significant changes are required to be submitted to Health Canada prior to implementation (e.g., changes to the original protocol, chemistry, or manufacturing information of the drug). The Interim Order further permits partial suspension or revocation of clinical trials, to suspend one arm or treatment group of a multi-arm trial, while allowing the rest of the trial to continue. For clinical trials assessing possible COVID-19-related use of a marketed product, there are reduced administrative requirements where the tested use aligns with standard medical practice. According to Health Canada’s list of authorized clinical trials, nine clinical trials have been approved for COVID-19 vaccines, and seventy-five for COVID-19 treatments, as of March 1, 2021.
3. PMPRB Regulation Amendments
Drug pricing continues to be a contentious issue in Canada. Canada’s Patented Medicine Prices Review Board (PMPRB) is a federal administrative body created under the Patent Act with a mandate of ensuring that the prices of patented medicines sold in Canada are not “excessive.” Significant amendments to the Patented Medicines Regulations were enacted in August 2019. The implementation of these amendments was originally set for July 1, 2020, subsequently delayed to January 1, 2021, and again to July 1, 2021. The amended Regulations provide the PMPRB with new tools to monitor and control the Canadian price of patented medicines—some key elements of the amended Regulations are:
- Comparator countries: Pricing in Canada is currently compared to a set of seven countries (PMPRB7), including the United States, and the PMPRB has established a price test whereby the Canadian price of a patented medicine can never be the highest of the countries within the basket. The amended Regulations now refer to eleven countries (PMPRB11), excluding the U.S. and Switzerland.
- New regulatory factors: New factors can be used by the PMPRB to assess whether the price of a patented medicine is excessive—i.e., pharmacoeconomic value, the size of the market in Canada, and the gross domestic product (GDP) and GDP per capita of Canada. These factors allow for the PMPRB to consider “ability to pay” in its assessment.
- Assessment of rebated prices: New reporting requirements have been introduced relating to rebates provided to purchasers or reimbursing bodies, such as public or private drug plans. This is aimed at requiring the reporting of rebates given to public and private payors, which are currently kept confidential.
While the Regulations provide the general framework for price control of patented medicines, the PMPRB issues Guidelines that operationalize the Regulations with particular tests for determining if a price is excessive. The Guidelines are not law and state that they do not bind the PMPRB. After several rounds of drafts and comments, the final Guidelines were published on October 23, 2020, which are also expected to take effect on July 1, 2021.
These new Guidelines categorize patented medicines based on the risk that a medicine will be subject to excessive pricing—e.g., medicines with high treatment costs or large market size drugs are considered “high risk.” The Guidelines indicate that medicines that were marketed prior to the implementation of the new Regulations (i.e., before August 21, 2019) will be grandfathered from assessments based on the new price regulatory factors; however, all medicines will be subject to an assessment that compares the Canadian price to the PMPRB11 pricing.
Of note, the Guidelines indicate that absent a complaint, COVID-19 patented medicines will not undergo an introductory price review as long as they are subject to the Interim Order Respecting the Importation, Sale and Advertising of Drugs for Use in Relation to COVID-19. Once the Interim Order has expired, the medicine’s price will be reviewed “based on the prevailing international and domestic list prices, and not on the introductory discounted prices in Canada.”
The amendments to Canada’s patented medicine pricing regime have been riddled with challenges since introduction. Beyond the extensive comments the industry and stakeholders provided on the proposed amendments and Guidelines, various court proceedings were launched to challenge their validity.
Federal Court Challenge
In 2019, Innovative Medicines Canada (IMC) and sixteen industry participants brought an application in Federal Court to judicially review the regulation amendments on the basis that they exceeded the scope of the regulation-making power contained in the Patent Act. In its decision of June 29, 2020, the Federal Court concluded that the requirement to report rebates given to public/private drug plans exceeded the scope of the regulation-making power in the Act. However, the Court dismissed the balance of the application and concluded that both the new regulatory factors and the revised set of comparator countries were consistent with the objective of curbing excessive prices and are therefore valid regulations. This decision is under appeal.
The validity of the Guidelines is also being challenged in the Federal Court by IMC in a separate proceeding.
Québec Superior Court Constitutional Challenge
In addition, a proceeding in the Québec provincial court was brought by seven pharmaceutical companies, challenging the constitutionality of the entire PMPRB regime on the grounds that it exceeded the Federal government’s authority over patents, and was instead a matter of provincial jurisdiction over property and civil rights, over hospitals, and over matters of a merely local or private nature, including health. The ultimate decision of the Québec court was very similar to the IMC decision—the constitutionality of the PMPRB regime was upheld, including the portions of the amendments relating to new regulatory factors and the revised set of comparator countries. The requirement to report rebates to drug plans was held to be beyond the scope of the federal patent power. This decision is also under appeal, so we will have more to report on drug pricing in 2021.
4. PMPRB’s Jurisdiction
In addition to proceedings discussed above, the Courts have also considered the jurisdictional reach of PMPRB in determining the scope of a “patented” medicine. The PMPRB has jurisdiction over a “patentee of an invention pertaining to a medicine” when the invention “is intended or capable of being used for medicine or for the preparation or production of medicine.” Previous case law has interpreted PMPRB’s reach broadly, indicating that a nexus between the invention and the medicine can be one of the “merest slender thread.”
An interesting case considered the difference between two products marketed by Galderma Canada Inc. (Galderma)—Differin, a 0.1% formulation of adapalene, and Differin XP, a sustained release 0.3% formulation. The PMPRB alleged that a patent directed to the 0.3% formulation should have been reported for Differin, the 0.1% formulation product, and Galderma sought judicial review of PMPRB’s decision. After making its way up to the Federal Court of Appeal (FCA), the FCA sent the matter back to PMPRB with instructions for PMPRB to re-assess the invention claimed by the patent at issue. The FCA invited the PMPRB to consider what clinical similarities between Differin and Differin XP would support a finding that a patented invention of 0.3% adapalene was intended or capable of being used for Differin.
On May 7, 2020, the PMPRB released its redetermination, again concluding that it has jurisdiction over the pricing of Differin. The PMPRB continues to assert that the phrase “pertains to a medicine” as used in the Patent Act is to be given a broad interpretation, consistent with the PMPRB’s consumer protection mandate. Upon considering the active ingredient, the fact that the two products share a single product monograph, the types of adverse reactions, and clinicians’ views on appropriate treatment, the PMPRB concluded that the invention pertains to Differin because the products work in the same way, using the same mechanism of action to treat the same disorder.
The practical implication of this decision is that if a manufacturer obtains a patent for a new dosage form, new formulation, new indication, or new combination medicine based on an active ingredient used in an older off-patent medicine, the PMPRB may re-assert jurisdiction over the off-patent medicine.
The PMPRB’s redetermination in the Differin case is again under judicial review by the Federal Court, and so the saga continues into 2021.
5. Restrictions on Drug Export and Drug Shortage Concerns
The COVID-19 pandemic has caused an unprecedented demand for certain drugs and contributed to drug shortages that were already an issue in Canada. The drug shortage concern was compounded by changes under U.S. law that could permit the importing of Canadian drugs as a cost-containment measure under specified conditions (Importation of Prescription Drugs published by the U.S. Department of Health and Human Services on October 1, 2020). To safeguard Canada’s drug supply from the impact of diversion, Health Canada issued the Interim Order Respecting Drug Shortages (Safeguarding the Drug Supply) on November 27, 2020.
In order to distribute drugs in Canada, a distributor must be issued a DEL by Health Canada. The Interim Order prohibits the exportation by a DEL holder of certain drugs intended for the Canadian market, unless there are reasonable grounds to believe that the exportation will not cause or exacerbate a shortage of the drug in Canada. Under this Interim Order, Health Canada also has the authority to require manufacturers and DEL holders to provide information to assess existing and potential drug shortages in Canada.
The Interim Order does not cover all drugs: over-the-counter drugs, natural health products, and veterinary drugs are excluded. Further, the export prohibition does not apply to: 1) consumer-level pharmacies that do not hold a DEL; 2) transshipments (i.e., drugs imported into Canada for the sole purpose of export); or 3) drugs manufactured in Canada solely for export purposes.
In line with the above Interim Order, the federal government introduced Bill C-14 on December 2, 2020, which, among other proposed measures dealing with COVID-19, introduces amendments to the Food and Drugs Act to provide the government additional regulation-making power to prevent drug shortages in Canada.
Evident from the above discussion, there is a concerted effort by the Canadian government to safeguard the drug supply in Canada for the health and safety of Canadians.
6. Access to Unapproved Drugs
Health Canada administers two programs to provide medically necessary access to unapproved drugs, the Special Access Program (SAP) for human drugs and the Emergency Drug Release Program (EDR) for veterinary drugs. The SAP and EDR programs require that prescribers file requests for access to unapproved drugs with Health Canada, and Health Canada has discretion to decide whether to fulfill the requests and allow for importation of the drugs. In September 2020, Health Canada enacted amendments to the FDR aimed at streamlining the request procedures for frequently requested drugs under these programs and reducing the amount of time and logistical hurdles in delivering such drugs to treating physicians and patients.
The changes to the SAP and EDR programs are intended to reduce administrative burdens on health care professionals by reducing the information that must be submitted with a request for drugs that have previously been approved under the SAP or EDR, if:
- the proposed use of the unapproved drug is the same as previously approved by Health Canada under the SAP or EDR;
- the drug has been approved for that same use by the European Medicines Agency or the U.S. Food and Drug Administration; and
- Health Canada has not previously revoked approval for sale of the drug in Canada for safety reasons.
The changes to the SAP and EDR programs also permit limited stockpiling of unapproved drugs in Canada in anticipation of future emergency requests under the programs. Physicians and veterinarians can now request unapproved drugs to keep on hand for emergency use and no longer need to refer to a particular patient’s case with each request under the SAP or EDR. Further, manufacturers may request permission from Health Canada to stockpile small quantities of unapproved drugs at licensed facilities in Canada, in anticipation of future requests under the SAP or EDR.
The new regulations permit drugs to be shipped directly to community pharmacies, another physician or veterinarian, or (for veterinary drugs) an authorized dealer of medicated animal feed. Previously, drugs could only be shipped to the requesting physician or veterinarian, and only to healthcare institutions and offices approved by Health Canada. The expansion of permitted shipment locations will improve and simplify patient access to drugs approved under the SAP and EDR.
7. Data Protection
Canada’s data protection mechanism prevents a subsequent entry manufacturer from filing a submission for drug approval with Health Canada for six years from the date of approval of the innovator drug (“no-file” period) and prevents that submission from being approved for a total of eight years from the date of approval of the innovator drug (“no-approval” period). The data protection regime is triggered if the subsequent manufacturer seeks an approval “on the basis of a direct or indirect comparison between the new drug and an innovative drug.” On July 24, 2020, the Federal Court provided further clarification on “indirect comparison” and the triggering of data protection.
In Natco Pharma (Canada) Inc. v. Canada (Health), Natco filed an abbreviated new drug submission (ANDS) for a drug containing two medicinal ingredients: TAF and emtricitabine. Natco’s ANDS compared its drug to Gilead’s DESCOVY (TAF and emtricitabine), which is not subject to data protection. However, TAF is contained in Gilead’s earlier-approved drug GENVOYA, which is an innovative drug subject to data protection. As such, Health Canada refused to accept Natco’s ANDS for filing on the basis of an active “no file” period in relation to GENVOYA. Natco sought judicial review of the refusal, arguing that it did not make a comparison to an innovative drug, and therefore, the data protection provisions do not prevent it from filing its ANDS.
The Court held that the decision to refuse Natco’s ANDS until the “no-file” period expired was reasonable because Natco’s ANDS indirectly compared its drug to the innovative drug GENVOYA (with data protection) via comparison to DESCOVY. The Court emphasized that even though the mechanism used in the data protection regulations is based on the existence of an “innovative drug,” that does not mean that the only product that can trigger data protection is a generic version of the innovative drug. Other products, including combination products that contain a different number of medicinal ingredients, compared to the innovative drug can also trigger the data protection regulations, provided that a direct or indirect comparison is made between the new drug and the innovative drug. The Court pointed out that the data protection scheme requires the reliance on data; in this case, the key determinant was the fact that the approval of DESCOVY relied on the data for GENVOYA.
8. Certificate of Supplementary Protection (CSP)
A CSP provides up to two years of sui generis protection, post patent expiry, for new drug products protected by an eligible patent. Canada’s CSP regime is relatively new and was implemented in response to Canada’s obligations under the Comprehensive Economic and Trade Agreement (CETA). Court decisions issued in 2020 have provided guidance on the scope of rights under this regime.
On July 10, 2020, the Federal Court released its decision in the judicial review of the refusal of CSP to ViiV Healthcare ULC (ViiV) in respect of JULUCA and Canadian Patent No. 2,606,282. JULUCA is a combination therapy that contains two medicinal ingredients. The patent in question has claims directed to one of the medical ingredients, but not the other. Health Canada was of the view that Canada’s CSP legislation requires that an eligible patent contain a claim for the combination of all the medicinal ingredients in the drug product.
The Court held that the refusal of CSP was unreasonable because Health Canada failed to adequately consider CETA in determining whether a patent must contain claims directed to all medicinal ingredients in order to be eligible for a CSP. The Court remarked that the text of CETA must be consulted to shed light on and determine the scope of protection applicable to Canada’s CSP regime. The Court also commented that although the patent in question only contains claims to one of the two medicinal ingredients, it does protect the drug as contemplated by CETA. In other words, a patent containing claims directed to only one medicinal ingredient may be eligible for a CSP with respect to a drug product that contains a combination of medicinal ingredients.
The matter has been remitted to Health Canada for redetermination.
Other CSP matters are before the courts, including a matter relating to the vaccine, Shingrix, and whether a patent covering the adjuvant of that vaccine could be considered to be directed to a “medicinal ingredient” and therefore CSP eligible.
Canada’s legal cannabis industry is still in its infancy, but as it continues to develop, so does the federal cannabis regulatory regime, and its latest evolution has been focused on the development of a clinical research framework. Currently, research activities involving human subjects, whether for therapeutic or non-therapeutic purposes, that meet the definition of a clinical trial must meet requirements of both the Cannabis Regulations and the FDR. In September 2020, Health Canada published guidelines clarifying the current obligations for clinical trial sponsors under the FDR for various types of cannabis-based clinical research (therapeutic and non-therapeutic purposes).
Subsequently, on December 12, 2020, Health Canada sought comments from stakeholders on the expansion of non-therapeutic cannabis research involving human participants. The consultation is an acknowledgement that the FDR requirements are not well-suited to regulate non-therapeutic cannabis research involving human participants. Rather, Health Canada is proposing to amend the Cannabis Act, the Cannabis Regulations, and the FDR so that non-therapeutic cannabis research involving human participants is regulated exclusively under the cannabis legislation. Regulatory changes would be made to the laws to include appropriate public health and public safety controls, as well as controls to ensure the integrity of research findings such as broadening adverse reaction reporting to include license holders conducting cannabis research.
In addition to cannabis research, other regulatory changes are under consideration by Health Canada, such as the public possession limit (its labelling and the limit for non-solid products), product labelling (whether labels should be required to include quantity and concentration of cannabinoids and terpenes), and micro class and nursery licensing issues (whether such producers are put at a competitive disadvantage and measures to address this). We can expect more changes to the regime as the government continues its efforts to reduce black market use of cannabis and to move consumers to the legal market.
10. Access to Information
Canada’s Access to Information framework (Canada’s version of the U.S. Freedom of Information Act) allows Canadians to access records of certain federal government institutions. There are also corresponding provincial legislations for records held by provincial governments. As part of a regulated industry in Canada that interacts with the government on various levels, information provided by pharmaceutical companies to the government is often subject to requests under such legislation.
An interesting development in 2020 on this topic is the case of Elanco Canada Limited v. Canada (Minister of Health). Elanco sought judicial review of Health Canada’s decision to release certain information contained in Elanco’s veterinary drug submission to a third-party requestor under the Access to Information Act. The Federal Court found Health Canada’s decision to disclose the records to be invalid and held that information may be exempt from disclosure under the Act even if similar information has been previously made public. In particular, the Federal Court held that information available to the public must be entirely the same as previously published information to be considered “publicly disclosed” and therefore subject to disclosure under the Act. Elanco presented evidence before the Court that was key in substantiating the applicability of the disclosure exemptions in the Act, such as confidentiality agreements, employee affidavits, and evidence of reasonable expectation of harm (the drug’s industry-leading status was used for inferring Elanco’s investment in research/development and the potential harm to its position in the marketplace).
This decision is considered a significant success for companies wishing to protect confidential information submitted to regulatory authorities in Canada. Health Canada is currently appealing this decision to the Federal Court of Appeal.
2020 was a year filled with regulatory changes for the life sciences industry. Many of these issues will continue to evolve in 2021. We anticipate 2021 will be another busy year for the Canadian regulators, legislature, and courts, and we will monitor any developments closely.
 See: https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/drugs-vaccines-treatments/interim-order-import-sale-advertising-drugs.html.
 See: https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/drugs-vaccines-treatments/interim-order-import-sale-advertising-drugs/guidance.html.
 See: https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/drugs-vaccines-treatments/authorization/foreign-drugs.html.
 See: https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/drugs-vaccines-treatments/authorization/expanded-indication.html.
 For example, see: https://covid-vaccine.canada.ca/pfizer-biontech-covid-19-vaccine/product-details.
 Food and Drug Regulations, C.R.C., c. 870.
 See: https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/drugs-vaccines-treatments/authorization/consultation-expedited-access-notice.html.
 See: https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/interim-order-respecting-clinical-trials-medical-devices-drugs.html.
 See: https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/interim-order-respecting-clinical-trials-medical-devices-drugs/drug-guidance.html.
 See: https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/drugs-vaccines-treatments/list-authorized-trials.html.
 Patent Act, R.S.C. 1985, c. P-4.
 Patented Medicines Regulations, SOR/94-688.
 For more information, please read our bulletin: https://www.torys.com/insights/publications/2019/08/drug-price-cooling-in-canadas-election-year.
 See: https://www.canada.ca/en/patented-medicine-prices-review/services/legislation/about-guidelines/guidelines.html.
 Innovative Medicines Canada v. Canada (Attorney General), 2020 FC 725; for more information, please read our bulletin: https://www.torys.com/insights/publications/2020/06/federal-court-on-amended-patented-medicines-regulations.
 Innovative Medicines Canada et al. v. AGC, Federal Court File No. T-1419-21.
 Merck et al. v. Attorney General of Canada, Québec Superior Court File No. 500-17-109270-192; for more information, please read our bulletin: https://www.torys.com/insights/publications/2021/01/a-decision-and-a-delay.
 Galderma Canada Inc v. Canada (Attorney General), 2017 FC 1023; for more information, please read our bulletin: https://www.torys.com/insights/publications/2017/11/galderma-successful-in-judicial-review-of-pmprb-decision-on-differin.
 Canada (Attorney General) v. Galderma Canada Inc., 2019 FCA 196; for more information, please read our bulletin: https://www.torys.com/insights/publications/2019/07/federal-court-of-appeals-ruling-on-the-judicial-review-of-pmprb-decision-on-differin.
 Reasons for Decision on Redetermination Ordered by the Federal Court of Appeal on June 28, 2019: https://www.canada.ca/content/dam/pmprb-cepmb/documents/hearings/decisions-and-orders/redetermination-decision-galderma-en.pdf.
 Galderma Canada Inc v. PMPRB and Attorney General of Canada, Federal Court File No. T-906-20.
 Regulations Amending Certain Regulations Made Under the Food and Drugs Act (Sale of a New Drug for Emergency Treatment), SOR/2020-212.
 Food and Drug Regulations, C.R.C., c. 870, C.08.004.1.
 Natco Pharma (Canada) Inc. v. Canada (Health), 2020 FC 788.
 ViiV Healthcare ULC v. Canada (Health), 2020 FC 756.
 Glaxosmithkline Biologicals S.A. v. Canada (Health), 2020 FC 397; appealed to the FCA: The Minister of Health v. Glaxosmithkline Biologicals S.A., Federal Court File No. A-138-20.
 Cannabis Regulations, SOR/2018-144.
 See: https://www.canada.ca/en/health-canada/services/drugs-health-products/drug-products/announcements/notice-clarification-requirements-conducting-clinical-research-cannabis.html.
 See: http://www.gazette.gc.ca/rp-pr/p1/2020/2020-12-12/html/notice-avis-eng.html#nb1.
 Cannabis Act, S.C. 2018, c. 16.
 Elanco Canada Limited v. Canada (Minister of Health), 2019 FC 1455.
 Access to Information Act, R.S.C. 1985, c. A-1.