Dexilant not an ‘innovative drug’ under Canada's Food and Drug Regulations

Authors: Emir Crowne (Faculty of Law, Associate Professor, University of Windsor) and Lida Moazzam (Faculty of Law, Law student, University of Windsor)

Takeda Canada Inc v Canada (Health), 2013 FCA 13, 18 January 2013

Journal of Intellectual Property Law & Practice (2013) doi: 10.1093/jiplp/jpt067, first published online: May 24, 2013

A majority of the Federal Court of Appeal refused to list Takeda's acid reflux drug, Dexilant, as an ‘innovative drug’ under Canada's Food and Drug Regulations.

Legal context

Canada's data protection regime provides a degree of market exclusivity for ‘innovative drugs’ against generic competition. As stated by Justice Near in the Federal Court decision below:
Once deemed eligible for listing on the Register, an ‘innovative drug’ receives data protection consisting of two formal restrictions. Firstly, a generic drug manufacturer cannot file a submission based on a comparison to an ‘innovative drug’ within the first six years of the eight-year period after the drug has received a NOC (subsection C.08.004.01(3)(a)). Secondly, the Minister may not issue a NOC to the generic drug manufacturer before the end of the eight-year period (subsection C.08.004.01 (3)(b)). (2011 FC 1444 at para 12.)
Under s C.08.004.1(1) of Canada's Food and Drug Regulations, CRC c 870, an ‘innovative drug’ must ‘[contain] a medicinal ingredient not previously approved in a drug by the Minister’; and not ‘[be] a variation of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate or polymorph.’


The medical ingredient in Dexilant is dexlansoprazole. The Minister, who had not previously approved dexlansoprazole in a drug product, refused to list Dexilant as an ‘innovative drug’ because the second limb of s C.08.004.1(1) of the Regulations had not been satisfied. As Justice Stratas noted in dissent at the Federal Court of Appeal: [
According to the Minister] DEXILANT was not an ‘innovative drug’ because its medicinal ingredient, dexlansoprazole is an enantiomer of lansoprazole. In her view, drugs containing any of the listed variations of a previously approved medicinal ingredient (here an enantiomer) can never be an ‘innovative drug’, regardless of the innovator's effort in developing the drug. Any drug containing a medicinal ingredient that is an enantiomer of a previously approved medicinal ingredient is automatically a ‘variation’. (ibid, para 17)
The Minister's refusal was upheld by Justice Near in the Federal Court (2011 FC 1444: application for judicial review dismissed).


A majority of the Federal Court of Appeal agreed with the Minister's refusal. The term ‘variation’, as used in s C.08.004.1(1)(b), is sufficiently precise as to allow its ‘ordinary meaning’ to govern its interpretation. At para 122, Justice Dawson, writing for the majority, stated:
To aid in the interpretation of what constitutes a ‘variation’ five examples are cited in the definition of ‘innovative drug’. Salts, esters, enantiomers, solvates and polymorphs are listed as examples of molecular structures that are variations of a previously approved medicinal ingredient. The Governor in Council would have created an incoherent scheme if the enumerated examples of variations are, in some unarticulated circumstances, not variations. The interpretation that all of the listed examples are variations avoids such incoherence.
In his dissent, however, Justice Stratas argued that the wording of s C.08.004.1(1)(b) was ambiguous. The use of the phrase ‘such as’, according to him, was quite open-ended (ibid paras 49–52). According to Justice Stratas:
The more open meaning imported by the words ‘such as’ can be shown by an example. Suppose a particular regulation is aimed at reducing emissions that pollute. The regulation applies to ‘vehicles such as cars, trucks and buses’. Are all cars caught by the regulation? It may be that electric cars or hybrid cars are not covered by the regulation. Although they are literally ‘cars’, they may not be ‘vehicles’ for the purposes of the emissions regulation because they do not emit pollution or emit much less pollution than other cars. (ibid para 52)
The majority took a different approach. Substituting vehicle emissions with dog shedding, the majority noted that:
The New Shorter Oxford English Dictionary (1993 edition) defines the phrase ‘such as’ to mean ‘for example’. This is consistent with the common usage of the phrase. To illustrate, ‘I like dogs that do not shed, such as Kerry Blue and Soft Coated Wheaten terriers.’ Kerry Blue and Soft Coated Wheaten terriers are examples of non-shedding dogs. (ibid para 120).
The by-products of vehicles and canines aside, the majority then rely on the Regulatory Impact Analysis Statement (RIAS) (which accompanied the Regulations) to bolster their analysis. The RIAS states that:
The definition of ‘innovative drug’ specifically prohibits innovators from obtaining additional terms of data protection for variations of medicinal ingredients. The list of variations is not exhaustive, but rather meant to give examples of the types of variations not considered for protection. The exclusion of variations of a previously approved medicinal ingredient from the scope of protection was introduced to avoid the granting of an additional eight years of protection where an innovator seeks approval for a minor change to a drug. For other arguable variations not included in the list, such as metabolites, an assessment will be made as to whether or not approval is being sought primarily on the basis of previously submitted clinical data (i.e. without the support of new and significant clinical data) or not. This position is consistent with both NAFTA and TRIPS which only require the granting of protection for undisclosed data, the origination of which involved a considerable effort. (emphases added by the court) (ibid para 124)
According to the majority, the five enumerated substances in s C.08.004.1(1)(b) of the Regulations must therefore be considered variations of a previously approved medical ingredient (ibid para 125).

In his dissent, however, Justice Stratas would have adopted a more open-ended approach. Where the ‘controlling idea’ in s C.08.004.1(1)(b) is not whether the medicinal ingredient falls within the five categories of substance, but whether a medicinal ingredient is a ‘variation’ or not (ibid paras 57–59). What is a ‘variation’ would then depend on the circumstances surrounding the data submitted when seeking regulatory approval. Justice Stratas gives the example of an enantiomer that requires ‘little testing’ versus ‘much testing’. At para 68 he writes:
If the safety and efficacy of an enantiomer is established after only a little testing, there is a sense in which it is not all that different from the previously approved medicinal ingredient. If, on the other hand, much testing has to be done, there is a sense in which it is quite different or new when compared with the previously approved medicinal ingredient. These concepts—considerable effort in testing and difference/newness—ie at the heart of the concept of what is and is not a minor variation under subsection C.08.004.1(1).
Practical significance

The current data protection regime was enacted to implement Canada's obligations under the North American Free Trade Agreement (NAFTA) and the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). NAFTA signatories are obligated to protect pharmaceuticals which utilize ‘new chemical entities’. The majority argue that these obligations required the Governor in Council to determine what constitutes ‘new chemical entities’ when crafting the Regulations. Any under inclusiveness of the regime must be remedied by the Governor in Council, and not the courts. At para 131 the majority states that
It was open to the Governor in Council to decide, as a matter of policy, that salts, esters, enantiomers, solvates and polymorphs were not sufficiently different to be ‘new chemical entities’. If, as the appellant argues, the data protection regulations are under inclusive, this is a matter for the Governor in Council to remedy. This Court ought not to thwart the decision of the Governor in Council as expressed in the definition of ‘innovative drug’ and in its rejection of the request by the innovative drug industry that data protection be extended to salts, esters, enantiomers, solvates and polymorphs.
In his dissent, Justice Stratas argues that the Minister's interpretation of s C.08.004.1(1)(b) as to make the five categories of substance mandatory and absolute examples of ‘variations’ will run counter to Canada's NAFTA and TRIPS obligations (ibid para 96). Instead, he refers to two particular aspects of TRIPS and NAFTA, which ensure that innovators get data protection only where the public will benefit: namely, ‘considerable effort’ and ‘new chemical entity’. He writes that:
Neither TRIPS nor NAFTA define these terms. However, the concept behind them can be seen from the foregoing analysis. Trivial efforts, such as perfunctory and simple testing, do not warrant protection. Similarly, engaging in considerable efforts to test enantiomers which differ little from a racemic mixture or each other in safety or efficacy—in every relevant sense, old chemical entities—does not warrant protection. In both cases, an innovator would receive the large reward of protection in circumstances where it incurred little risk. That is not what the TRIPS and NAFTA provisions are aimed at. Instead, they are aimed at altering the risk-reward equation for innovators, giving them an incentive to undertake considerable effort in circumstances where the safety and efficacy of a candidate drug are uncertain.
‘Considerable effort’ within the drug approval process, consistent with the purposes of the relevant provisions of TRIPS and NAFTA, must mean new and significant evidence bearing upon the safety and efficacy of the drug. ‘New chemical entity’ must mean that the medicinal ingredient in the drug is ‘new’ in the sense that it has qualities of safety and efficacy materially different from a previously approved medicinal ingredient. Both these meanings implement the purposes of the relevant provisions of TRIPS and NAFTA: they alter the risk-reward equation for innovators, create appropriate incentives, and ensure that data protection is afforded only where the risk undertaken merits it. (ibid paras 83 and 84).

In the end, the decision is unsatisfactory. The majority have embraced the Minister's literalist approach, at the expense of Justice Strata's more responsive and reflexive open-ended interpretation. Dexilant may settle one's stomach, but it has done quite the opposite to the jurisprudence.

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