Timing may be everything: Health Canada ordered to reconsider availability of CSP protection in the context of a drug re-submission

In Merck Canada Inc. v. Canada (Health)¹, the Federal Court of Canada undertook the judicial review of a refusal of the Minister of Health to issue a Certificate of Supplementary Protection (CSP) to Merck Canada Inc. (Merck) in respect of the drug BELSOMRA^® (suvorexant) and Canadian Patent No. 2,670,892 (the 892 Patent). The Minister denied the CSP application on the basis that the Notice of Compliance (NOC)—the Canadian marketing authorization—for BELSOMRA specified in the CSP application was not issued in respect of the New Drug Submission (NDS) identified in the CSP application. An earlier, timely-filed NDS had been withdrawn, with the NOC resulting from a later-filed NDS. The Minister rejected the CSP application on the basis that this later NDS was out of time to serve as the basis for a CSP application.

What you need to know

• The Court held that the refusal to grant the CSP was unreasonable as the Minister failed to consider the context and purpose of the CSP provisions of the Patent Act, which were enacted to implement Canada’s obligations under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
• A CSP provides up to two years of “patent-like” exclusivity for new drug products protected by an eligible patent from the expiry of the patent. Canada’s CSP legislation was enacted for Canada to meet its obligations with respect to the implementation of CETA into domestic law.
• The Court held that the Minister must adequately consider the purpose and object of Canada’s CSP regime when interpreting Canada’s CSP regime and Merck’s arguments about that purpose: the Minister failed to do this.
• The Court did not consider that the question before it was so clear that it should conclude that there was room for only a single reasonable interpretation: to issue the CSP. As a result, the Court sent the CSP application back to Health Canada for a re-determination.
• The case confirms that material arguments made by CSP applicants that are neither considered nor addressed by the Minister may expose the decision to an unreasonableness attack.
• It remains to be seen whether the Minister’s redetermination of the CSP application will again conclude that a CSP application must be issued from the same NDS associated with the NOC referenced in the CSP application.
• If the Minister were to appeal the Court’s decision, the deadline to file an appeal is October 29, 2021.
• This is the third judicial review of the refusal of a CSP in Canada (see our latest bulletins on the other judicial reviews here and here).

Canada’s CSP regime

Canada’s CSP regime was introduced in 2017 through legislation implementing the Canadian-European Union Comprehensive Economic and Trade Agreement (CETA), which among things, requires the parties to the agreement to provide a period of additional patent protection for new patented pharmaceutical products.

Section 106(1) of the Patent Act sets out the eligibility requirements for obtaining a CSP. Paragraphs 106(1)(c) and (f) of the Patent Act require that:

1. the “authorization for sale” (e.g., NOC) specified in the CSP application be the first authorization for sale that has been issued in Canada with respect to the medicinal ingredient; and
2. an “application for an authorization for sale” (e.g., an NDS) must be filed in Canada within 12 months after a first application for marketing approval was submitted for the medicinal ingredient in certain prescribed jurisdictions (including the US, the EU, Australia, Switzerland and Japan).

A key issue in this case was whether the “authorization for sale” must be issued in respect of the same “application for an authorization for sale” for a CSP to be granted. This requires an understanding of the facts of the case.

The CSP application for BELSOMRA

On November 15, 2012, Merck filed an NDS for approval in Canada of BELSOMRA. This NDS (assigned no. 160233) was filed less than three months after a New Drug Application was filed for BELSOMRA in the United States. In 2013, Health Canada issued a Notice of Deficiency (NOD) for NDS 160233, on the basis that it required additional clinical trial data to assess the safety of the drug. Merck withdrew NDS 160233 in February 2014.

In 2016, Merck filed a second NDS for BELSOMRA (assigned no. 196367), after Health Canada indicated that other post-market data, rather than an additional clinical trial, could satisfy the need for additional safety evidence. The second NDS contained largely the same data and information as the first NDS, along with further safety data.

The Minister issued a NOC to Merck for BELSOMRA on November 29, 2018. BELSOMRA was the first drug approved in Canada containing suvorexant.

On March 26, 2019, Merck filed a CSP application for BELSOMRA and the 892 Patent. In the CSP application, Merck identified the “NDS Number” as 160233 (the first NDS) and the “NOC Date” as November 29, 2018 (the date it received a NOC arising from the second NDS). The Minister denied the CSP application, stating that since the NDS 160233 (the first NDS) was withdrawn and did not receive a NOC, the “authorization for sale” requirement had not been met. The Minister further concluded that NDS 196367 (the second NDS) would also not support the grant of a CSP, since it was filed more than 12 months after the U.S. New Drug Application was filed. In the Minister’s view, a NOC is “inextricably linked” to its associated NDS and therefore the NOC date specified on a CSP application must be the date of marketing authorization issued to the same NDS specified in the CSP application.

Merck brought an application for judicial review of the Minister’s decision.

Analysis

On judicial review, Justice McHaffie set aside the Minister’s decision as being unreasonable on the basis that it failed to consider a “pertinent aspect” of the context and purpose of the CSP regime as set out in the Patent Act. In particular, Justice McHaffie held that the Minister’s failure to consider the purpose of the CSP provisions of the Patent Act in the context of Canada’s obligations under the Canada-European Union Comprehensive Economic Trade Agreement (CETA) was unreasonable.

Applying the Supreme Court of Canada’s decision in Vavilov², the Court noted that the interpretation of legislation requires consideration of the “text, context and purpose” of the legislation. In the context of Canada’s CSP regime, Justice McHaffie remarked that the purpose of the CSP provisions of the Patent Act, and their purpose in implementing Canada’s CETA obligations, is a pertinent aspect of their interpretation. The Court found that the Minister’s failure to consider the specific purpose of the CSP provisions raised doubt as to whether the Minister’s interpretation of the Patent Act was undertaken in a manner consistent with the “text, context and purpose” of the legislation.

Additionally, the Court noted that the Minister’s reasons did not acknowledge or respond to Merck’s arguments regarding the object and purpose of the legislation. In its submissions to the Minister, Merck provided extensive arguments that the object and purpose of Canada’s CSP legislation is to promote innovation and investment of drug products in Canada by providing an additional period of patent protection to partly compensate for the time spent obtaining marketing approval. The Court held that Merck’s dedicated material arguments relating to the purpose of Canada’s CSP legislation should have been addressed in the Minister’s decision-making process. As a result, the Court found the Minister’s decision to be unreasonable because it has failed to consider a relevant aspect of the interpretive context that was expressly raised in argument by Merck.

The Court did not direct the Minister to issue the CSP to Merck for BELSOMRA as requested by Merck. Instead, the Court sent the case back to the Minister for redetermination and refused to comment on whether it otherwise approved or disapproved of the Minister’s interpretation of the CSP provisions of the Patent Act. The Court remarked that the Minister is “best positioned” to undertake an interpretive analysis of the CSP legislation, and that the Court should “generally pause before definitively pronouncing upon the interpretation of a provision entrusted to an administrative decision maker”. This is a typical form of relief in judicial review applications and is consistent with the deferential approach to reasonableness set out by the Supreme Court of Canada in Vavilov³.

This case continues the trend of the Minister in interpreting the CSP provisions very strictly, and the courts reverting the matter back to the Minister with direction to consider Canada’s obligations under international trade agreements when making decisions that impact a manufacturer’s rights.

What’s next?

If the Minister wishes to appeal this decision to Federal Court of Appeal, the appeal must be filed October 29, 2021.

The resolution of the case will be of interest to manufacturers faced with challenges during the review of drug submission and considerations for withdrawal and resubmission of an NDS. It will also be relevant when Health Canada accepts “rolling” submissions. A rolling submission is a submission that remains pending and to which data is added on a rolling basis to expedite review. (In contrast, the submission under consideration in Merck was withdrawn and then refiled.) Rolling submissions have been accepted by Health Canada, and other regulators, for COVID-19 vaccines and therapeutics, and Health Canada has indicated flexibility with respect to submission types for the future. Clarity is needed not only on the precise question at issue for Merck, but also on what constitutes a first application for marketing approval in Canada and in a foreign jurisdiction in the context of a rolling submission.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

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