Orphan Drugs in Canada: A “One Size Fits All” Regulatory Regime
By Eileen McMahon and Denise Ramsden
Medicines targeting rare diseases, also known as orphan drugs, once faced an uphill battle for research funding and market approval. The need for robust commercial incentives to create rare disease treatments spurred the establishment of international orphan drug regulations—first in the United States with the passage of the 1983 Orphan Drug Act, and later in the European Union (EU), Japan, Singapore, and elsewhere. Today, there are over 400 designated orphan drugs in the global marketplace and dozens of orphan-specific regulatory initiatives to drive investment and ensure public access to orphan medicines.
These specialized orphan drug frameworks stand in contrast to Canada’s regulatory regime. While Canada has considered implementing an orphan drug framework, such a step has never been taken. Instead, Canada relies on generally applicable mechanisms in its domestic drug approval regime to drive market entry of orphan drug therapeutics. For example, “innovative drugs” are eligible for data protection in Canada. Additional patent term protection in the form of Certificates of Supplementary Protection (CSPs) and measures such as patent listing under the Patented Medicines (Notice of Compliance) framework (analogous to patent listing in the Orange Book) also offer certain rights to innovators.
Based on recent policy announcements, a specialized orphan drug regulatory regime is not likely coming to Canada in the near future. Instead of crafting a specialized regulatory regime, in the first quarter of 2021, the Canadian federal government formally announced its proposal to develop a National Strategy for High-Cost Drugs for Rare Diseases. While consultations are ongoing, the government’s strategy is targeted at creating a framework that provides consistent and cohesive drug cost funding for patients with rare diseases, rather than driving market availability of such orphan drugs through regulatory incentives.
Orphan Drug Regulation in the United States and Europe
On most life sciences regulatory matters, Canada aims to align itself with the United States and the EU. Although Canada does offer certain incentives to orphan drug manufacturers (e.g., accelerated review of drug submissions, fee waivers, tax credits), which are similar to the pre-market economic incentives available in the U.S. and EU, when it comes to the protection for the orphan drug products themselves, Canada has fallen substantially out of alignment with the international community.
In the United States, drugs targeting rare diseases are eligible for several specifically targeted economic incentives, including market exclusivity, fee waivers, direct funding for research and development, and tax credits. There is no government oversight for pricing of orphan drugs or other medicines. Similarly, in the EU, orphan drugs are eligible for a range of economic incentives, comparable to those available in the United States, including market exclusivity, administrative assistance, and fee waivers. The price of orphan drugs, and all other medicines, is subject to national laws and policy instruments in each member state.
Canada’s Efforts to Regulate Orphan Drugs
The absence of a Canadian orphan drug framework has been a conscious decision on the part of the Canadian government, as such a framework has been considered over the years.
Over the past several decades, as other jurisdictions implemented orphan drug frameworks, Health Canada (Canada’s version of the FDA and EMA) considered whether such a framework might be beneficial but ultimately concluded that an orphan drug framework was not needed because Canadians already had access to the majority of orphan drugs approved in the United States, either because the drugs had been approved for sale or were available through the Canadian Emergency Drug Release Program (now known as the Special Access Programme or “SAP”). Others dispute Health Canada’s position on accessibility of orphan drugs.
In 2012, Health Canada revisited the decision to forego an orphan drug policy and proposed a draft regulatory framework. The draft framework may have been motivated by a desire to harmonize Canada’s regulatory regime with its international trading partners. Canadians were also lagging behind their United States counterparts in temporal access to orphan drugs. However, Health Canada’s plan was abandoned in 2017, when Health Canada indicated it would continue to pursue the interests of rare disease patients through other means.
The Current Status of Orphan Drugs in Canada
Given that Canada lacks a regime that protects orphan drugs specifically, the current regulatory scheme presents several key considerations for orphan drug manufacturers.
1. Data Protection
Data protection in Canada is available only if the manufacturer’s new drug is considered an “innovative drug.” The statutory definition of “innovative drug” is restricted to new medicinal ingredients not previously approved by Health Canada and that are not variations of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate, or polymorph. This means that a previously approved drug with a new, promising rare disease application will not be eligible for data protection in Canada. In contrast, in the U.S. and EU, orphan drug designation (and the corresponding exclusivity) can be received for a new drug or an already marketed drug with a new use. Unlike the U.S., in Canada, a manufacturer will not be eligible for data protection where it has conducted trials to support the safety and efficacy of a new use, new formulation, new dosage form, or new dosing regimen of an orphan drug (or indeed any drug) previously approved by Health Canada.
Should an orphan drug qualify as an “innovative drug” in Canada, it will be eligible for an eight-year period of data protection. Generic and biosimilar manufacturers are barred from filing for a marketing authorization (a Notice of Compliance or “NOC”) on the basis of a direct or indirect comparison to the qualifying innovative drug for the first six years, and Health Canada cannot issue an NOC for eight years. If the innovative drug manufacturer files clinical trial data “conducted for the purpose of increasing knowledge about the use of the pediatric populations” within the first five years of the data protection period, the innovative drug may also be eligible for a six-month data protection extension.
2. Price Regulation Issues
Canada’s unique pricing regime for patented medicines, overseen by the Patented Medicines Price Review Board (PMPRB), is also an area which frequently impacts orphan drug manufacturers. The PMPRB can exercise price control over drugs sold in Canada, including orphan drugs, where there is at least one Canadian patent which “pertains to” the medicine. If the PMPRB determines that the price of a patented medicine is excessive, the PMPRB can order a price reduction based on factors specified in the Patented Medicines Regulations. To date, the PMPRB’s price regulation framework has not approached orphan drugs any differently than other therapeutic products.
However, amendments to the Patented Medicines Regulations are expected to come into force on July 1, 2021, after several delays due to COVID and a series of court challenges. The amendments add new factors to the PMPRB’s excessive pricing analysis which may impact orphan drugs, including the medicine’s pharmacoeconomic value in Canada and the size of the market for the medicine in Canada.
Updated PMPRB Guidelines, which provide details of the complex tests the PMPRB uses when assessing whether a drug is excessively priced, will also come into effect to support the amended Regulations. Early drafts of the updated Guidelines did not specifically address orphan drugs. Following significant stakeholder feedback, the updated Guidelines were further revised and the PMPRB has included a specific carveout for high-cost medicines that are expected to realize below a certain minimum amount in annual revenue. Medicines which realize less than $12 million in annual revenue will not be subject to the most stringent price test, even if they exceed the cost threshold which would normally trigger such review. Specifically, such high cost medicines will not be subject to a “maximum rebated price” ceiling even where the annual treatment cost would otherwise require such a price ceiling. As a result, a high cost medicine with annual revenues under $12 million may be subject to a higher price ceiling than another similarly priced medicine, with greater annual sales.
The Canadian government has acknowledged that this concession was specifically included in the further revised, updated Guidelines to ensure that manufacturers of orphan drugs are “not discouraged from coming to Canada out of concern that their net price will be substantially reduced by regulation.” Prior to the release of the further revised, updated Guidelines, the PMPRB had maintained that the current regulatory regime, and the absence of an orphan-drug-specific framework, had not impacted Canadians’ access to orphan medicines. The dispensation for drugs with a smaller market cap, reflected in the final updated Guidelines, is one of the first acknowledgements from the PMPRB that Canadian price regulation may be having a dampening effect on the availability of orphan drugs in Canada. Until these updated pricing Guidelines are applied in practice, it is unclear whether these concessions will provide sufficient comfort to orphan drug manufacturers to launch their orphan drugs in Canada.
3. Standard Patent-Derived Protections
Like all other therapeutic products in Canada, orphan drug manufacturers may seek protections derived from patents. In Canada, the standard term of a patent is twenty years from the Canadian filing date of the application. Drugs with patents pertaining to a medicinal ingredient, or a combination of medicinal ingredients, may be eligible for a two-year extension to the patent term through a Certificate for Supplementary Protection (CSP), provided the medicinal ingredient or combination of medicinal ingredients has not been previously authorized for sale in Canada.
Patent protected drugs may also benefit from additional rights under the Patented Medicines (Notice of Compliance) (PM(NOC)) Regulations. If there is a patent that claims what is approved in a New Drug Submission (NDS) or in a supplemental NDS—such as a claim to the medicinal ingredient, its use, formulation, or dosage form—and subject to certain timing requirements, the patent may be listed on Health Canada’s Patent Register (Canada’s version of the Orange Book). The rights of a manufacturer who has listed a patent on Canada’s Patent Register kick in if another manufacturer directly or indirectly compares its drug with, or makes reference to, the drug in respect of which the patent list was submitted. Subsequent entry is permissible if the patent expires, with the permission of the original manufacturer or sponsor, or once proceedings under the PM(NOC) Regulations have run their course.
Canada’s approach to orphan drugs is likely to face further scrutiny in the coming years. The newly announced National Strategy for High-Cost Drugs for Rare Diseases will not likely be implemented for several years, so changes to the funding patients receive for orphan drugs will be slow to materialize. Further, the true impact of the new PMPRB pricing rules on orphan drugs will not be known until those rules have been applied in practice.
In the interim, orphan drug patient advocacy groups and the PMPRB remain at odds. Orphan drug patient advocacy groups have been critical of the PMPRB’s reluctance to specifically relax price regulation on orphan drugs. From their perspective, the specific price regulation exceptions that have been created for COVID-19 vaccines are an acknowledgement that “the [pricing] rules block speedy access to medicines” in Canada. At the same time, the PMPRB remains adamant that their price regulation is not impacting Canadians’ access to new drugs as new drugs have continued to enter Canada at a steady rate over the last five years.
Add to this dynamic the widespread criticism of the Canadian government and Health Canada in relation to the COVID-19 vaccine rollout, characterized by media as “utterly botched,” “bungled,” and “lagging.” As Tracey Lindeman of The Atlantic recently reported, “Canadians—usually so smug about our universal health care—are looking on [the United States] with jealousy.” Per capita vaccination numbers lag behind more than forty-five other countries (vaccinations per 100 people). The pandemic has shone a light on Canada’s lack of domestic manufacturing capabilities. As a result, the federal government is focusing its attention on a national biomanufacturing strategy.
Against this backdrop, it is unlikely that Canada’s approach to regulating orphan drugs and offering market exclusivities to encourage orphan drug manufacturers to launch orphan drugs in Canada will change in the short term. Instead, the federal government’s focus is more likely to continue to be domestic manufacturing and procurement.
If efforts to manage orphan drug access through patient funding and pricing regulation are not successful in the coming years and orphan drug manufacturers become increasingly reluctant to launch orphan drugs in Canada, the Canadian government may re-consider the need for a bespoke orphan drug regulatory regime. However, at this point, the Canadian government has not signaled any intention to re-open that debate.
 The definitions of “rare disease” and “orphan drug” vary across jurisdictions, and given the absence of a bespoke orphan drug regulatory regime, Canada does not have a statutory definition. Health Canada refers to the European definition of a condition that afflicts no more than five in 10,000 people, and the U.S. definition of a condition that affects no more than 200,000 people in the U.S. See Health Canada, About orphan drugs and rare diseases (updated August 14, 2018), https://www.canada.ca/en/health-canada/services/licences-authorizations-registrations-drug-health-products/regulatory-approach-drugs-rare-diseases/about-drugs-rare-diseases.html.
 Todd Gammie, Christine Y. Lu & Zaheer Ud-Din Babar, Access to Orphan Drugs: A Comprehensive Review of Legislations, Regulations and Policies in 35 Countries, 10 PLOS One 10 (2015).
 FAQs About Rare Diseases, National Institutes of Health, Genetic and Rare Disease Information Center (updated January 26, 2021), https://rarediseases.info.nih.gov/diseases/pages/31/faqs-about-rare-diseases.
 National Strategy for High-Cost Drugs for Rare Diseases Online Engagement, Health Canada (updated January 28, 2021), https://www.canada.ca/en/health-canada/programs/consultation-national-strategy-high-cost-drugs-rare-diseases-online-engagement.html.
 Canada’s regulatory approach to drugs for rare diseases: orphan drugs, Health Canada (updated July 3, 2020), https://www.canada.ca/en/health-canada/services/licences-authorizations-registrations-drug-health-products/regulatory-approach-drugs-rare-diseases.html.
 Panos Kanavos, Alessandra Ferrario, Sotiris Vandoros & Gerald F. Anderson, Higher US Branded Drug Prices and Spending Compared to Other Countries May Stem Partly from Quick Uptake of New Drugs, 4 Health Affairs 758 (2013).
 Pricing and reimbursement of medicinal products, European Commission (retrieved June 8, 2020), https://ec.europa.eu/growth/sectors/healthcare/competitiveness/products-pricing-reimbursement_en.
 Matthew Herder & Timothy Mark Krahn, Some Numbers Behind Canada’s Decision to Adopt an Orphan Drug Policy: US Orphan Drug Approvals in Canada, 1997-2012, 11 Healthcare Policy 72 (2016).
 Hugh J. McMillan & Craig Campbell, We Need a “Made in Canada” Orphan Drug Framework, 189 CMAJ E1274 (October 16, 2017), https://www.cmaj.ca/content/189/41/E1274. Emma Jones, Canada May Fall Behind Without an ‘Orphan’ Drug Strategy, Healthing (December 8, 2020), https://www.healthing.ca/policy/canada-needs-a-separate-orphan-drug-strategy-says-rare-disease-group.
 Office of Legislative and Regulatory Modernization, Initial Draft Discussion Document for a Canadian Orphan Drug Regulatory Framework (December 13, 2012), www.orpha.net/national/data/CA-EN/www/uploads/Initial-Draft-Discussion-Document-for-A-Canadian-Orphan-Drug–Regulatory-Framework.doc.
 Matthew Herder & Timothy Mark Krahn, Some Numbers Behind Canada’s Decision to Adopt an Orphan Drug Policy: US Orphan Drug Approvals in Canada, 1997-2012, 11 Healthcare Policy 70 (2016).
 Id. at 78.
 Maura Forrest, Health Canada Gives ‘Kiss of Death’ to Planned Policy for Rare-Disease Drugs, National Post (October 16, 2017), https://nationalpost.com/news/politics/health-canada-gives-kiss-of-death-to-planned-policy-for-rare-disease-drugs.
 “Innovative drug” means a drug that contains a medicinal ingredient not previously approved in a drug by the Minister and that is not a variation of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate, or polymorph. C.08.004.1 (1), Food and Drug Regulations, C.R.C., c. 870.
 21 C.F.R. § 316.20(a); Regulation (EC) No 141/200.
 A manufacturer is required to have generated data to support the approval of the medicinal ingredient under consideration and the generation of that data must have required considerable effort. See Health Canada, Guidance Document: Data Protection under C.08.004.1 of the Food and Drug Regulations (updated April 8, 2021), https://www.canada.ca/en/health-canada/services/drugs-health-products/drug-products/applications-submissions/guidance-documents/guidance-document-data-protection-under-08-004-1-food-drug-regulations.html.
 Id. at § 2.1, https://www.canada.ca/en/health-canada/services/drugs-health-products/drug-products/applications-submissions/guidance-documents/guidance-document-data-protection-under-08-004-1-food-drug-regulations.html#a21.
 Section 79(1) of the Patent Act, in relation to patented medicines, defines “patentee” as follows: “in respect of an invention pertaining to a medicine, means the person for the time being entitled to the benefit of that invention and includes, where any other person is entitled to exercise any rights in relation to that patent other than under a licence continued by subsection 11(1) of the Patent Act Amendment Act, 1992, that other person in respect of those rights.” Patent Act, R.S.C. 1985, c P-4.
 The amendments to the Regulations have been subject to several court challenges, but the majority of the amendments have withstood these challenges. Innovative Medicines Canada v. Canada (Attorney General), 2020 FC 725; Merck et al. v. Canada (Attorney General), Court File No. 500-17-109270-192. See Torys’ Bulletin for further discussion: Yael Bienenstock, Teresa A. Reguly, Marie-Ève Gingras & Sylvie Rodrigue, A Decision and a Delay: PMPRB News for the New Year, Torys LLP (January 5, 2021) https://www.torys.com/insights/publications/2021/01/a-decision-and-a-delay.
 Patented Medicines Regulations, SOR/94-688, https://laws-lois.justice.gc.ca/eng/regulations/sor-94-688/nifnev.html.
 Government of Canada, PMPRB Guidelines (updated March 17, 2021), https://www.canada.ca/en/patented-medicine-prices-review/services/legislation/about-guidelines/guidelines.html.
 The new Guidelines are currently being challenged in Federal Court. Innovative Medicines Canada et al. v. Canada (Attorney General), Court File No. T-1419-20.
 Government of Canada, PMPRB Guidelines, paragraphs 39, 57–59, 61, 64, Appendix D, (updated March 17, 2021), https://www.canada.ca/en/patented-medicine-prices-review/services/legislation/about-guidelines/guidelines.html.
 Government of Canada, PMPRB Guidelines, section V, Appendix D (updated March 17, 2021), https://www.canada.ca/en/patented-medicine-prices-review/services/legislation/about-guidelines/guidelines.html.
 Government of Canada, PMPRB Draft Guidelines Consultation (updated January 4, 2021), https://www.canada.ca/en/patented-medicine-prices-review/services/consultations/draft-guidelines.html#bgsec1.
 Government of Canada, PMPRB, Orphan Drug Launch Monitor (ODLM) (updated May 9, 2016), http://www.pmprb-cepmb.gc.ca/view.asp?ccid=1257&lang=en.
 Canadian Organization of Rare Disorders, New PMPRB guidelines can’t fix flaws in regulations that will stall new treatments for Canadian patients (October 23, 2020), http://www.raredisorders.ca/new-pmprb-guidelines-cant-fix-flaws-in-regulations-that-will-stall-new-treatments-for-canadian-patients/.
 Government of Canada, PMPRB, New drugs entering Canada at steady rate over past 5 years (February 20, 2021), https://www.canada.ca/en/patented-medicine-prices-review/news/2021/02/new-drugs-entering-canada-at-steady-rate-over-past-5-years.html.
 Tristin Hopper, How Ottawa utterly botched Canada’s COVID vaccine acquisition, National Post (February 5, 2021), https://nationalpost.com/news/how-ottawa-utterly-botched-canadas-covid-vaccine-acquisition; Tracey Lindeman, Canada’s vaccine mess, The Atlantic (April 6, 2021), https://www.theatlantic.com/international/archive/2021/04/canada-vaccine-rollout-problems/618516/; Why Canada is falling behind in Covid vaccinations, BBC News (February 19, 2021), https://www.bbc.com/news/world-us-canada-56035306; Jaime Watt, Lagging vaccine rollout could cost Liberals in a big way, Toronto Star (February 7, 2021), https://www.thestar.com/opinion/contributors/2021/02/07/lagging-vaccine-rollout-could-cost-liberals-in-a-big-way.html?rf.
 Tracey Lindeman, Canada’s vaccine mess, The Atlantic (April 6, 2021), https://www.theatlantic.com/international/archive/2021/04/canada-vaccine-rollout-problems/618516/.
 Our World in Data, Cumulative COVID-19 vaccinations per 100 people, https://ourworldindata.org/grapher/covid-vaccination-doses-per-capita?tab=table.
 Prime Minister of Canada, Justin Trudeau, Prime Minister announces Canada’s plan to mobilize industry to fight COVID-19 (March 20, 2020), https://pm.gc.ca/en/news/news-releases/2020/03/20/prime-minister-announces-canadas-plan-mobilize-industry-fight-covid.