I'm Still Your Baby: Canada's Continuing Support of U.S. Linkage Regulations for Pharmaceuticals

ABSTRACT INTRODUCTION I. REVIEW OF EMPIRICAL STUDIES A. Study 1 B. Study 2 C. Study 3 D. Interpretation II. ARE THE REGULATIONS A SUCCESS? A. Debate Preceding Bill C-91 B. "Original Policy Intent" C. "Patent-Specific" Analysis D. Statutory Interpretation E. Revisiting the Empirical Data III. IMPLICATIONS FOR PHARMACEUTICAL LAW AND POLICY A. Theory of Linkage-Based Drug Development B. Globalization of Pharmaceutical Linkage SUMMARY & CONCLUSIONS INTRODUCTION The Patented Medicines (Notice of Compliance) Regulations (NOC Regulations) (1) came into force in 1993 as part of Canada's perceived obligations under TRIPS and NAFTA to support the domestic pharmaceutical industry. (2) The original policy intent of the regulations, as outlined in successive government Regulatory Impact Analysis Statements (RIAS), was to encourage the development of new and innovative drugs and facilitate the timely market entry of generic drugs, and thus, to balance the goals and objectives of food and drug law with those of patent law. Prior to the linkage regime coming into force, drug regulation and drug patenting represented distinct goals and policy objectives. (3) This balancing exercise is a familiar one to the intellectual property bar owing to the quid pro quo of the traditional patent bargain. Thus, under the terms of the linkage regime, there must be a specific functional legal nexus between approved drugs and patent protection for those drugs pursuant to the NOC Regulations. As appreciated in the early literature on topic, (4) it was not output metrics but a combination of lobbying by the U.S. pharmaceutical industry, its hopeful domestic university funding partners, and a federal government bent on harmonizing the Canadian system of intellectual property with that of the United States that led to enactment of the NOC Regulations. Once the domestic U.S. policy environment was recalibrated away from nascent support for a Canadian-based system of price controls and towards preventing nations such as Canada from having systems of intellectual property law that were perceived to be based on "rights piracy," (5) stronger patent protection in Canada was inevitable. However, with one notable exception,6 few independent observers would have guessed during the debate on patent reform that the linkage regime would potentially tip so far to the rights-protection end of the spectrum. It has now been almost two decades since the regulations were enacted subsequent to Canada's perceived obligations under NAFTA and TRIPS. Given the continuing public debate over high drug prices, (7) the large fraction of research and development carried out by publicly-funded institutions that is ultimately enveloped within commercialized products, (8) and wide criticism of the failings of the patent system to promote innovation, (9) it is an excellent time to assess whether the NOC Regulations have satisfied the twin policy goals of encouraging new and innovative drug development and the timely market entry of generic drugs. We have chosen as the vehicle of our investigation, the growing field of empirical legal research. The empirical work reviewed and discussed here was designed to investigate whether and how the NOC Regulations have encouraged the development of new and innovative drugs since being enacted. The importance of empirical studies to assessing the efficiency and effectiveness of policy levers such as intellectual property law and regulations cannot be overstated. As noted by some of the most prominent economists, innovation scholars, and patent scholars over the last decades, (10) robust conclusions regarding the consequences for technological innovation of changes in patent law and policy are few and far between. This is due primarily to a fundamental lack of relevant empirical data. The same applies in the reverse, as governments have specific legal and policy goals in mind when drafting law and regulations, which are then reviewable by the courts in judicial review proceedings. …