Life Sciences 2019 Comparisons

Last Updated March 27, 2019

Contributed By Torys LLP

Law and Practice

Authors



Torys LLP is an international business law firm with an enviable record of experience in Canada and globally, operating from offices in Toronto, Calgary, Montréal, New York and Halifax. The life sciences practice is led by Eileen McMahon and Cheryl Reicin, and is ranked as one of the premier life sciences practices in Canada and the USA. A team of 42 lawyers and patent agents – most of whom have a PhD, an MSc or an engineering degree in a relevant life sciences discipline – provides all the services required by life sciences companies and their partnering organisations, including inventors and start-ups, multinational pharmaceutical and biotech companies, life sciences investors, venture capitalists and investment bankers. The firm represents 12 of the world's top 20 pharmaceutical and biotechnology companies, ranked by healthcare revenue. The key areas of practice in relation to the life sciences sector are pharmaceuticals, biologics and devices; food and drug regulatory; retail and consumer products; IP; licensing; M&A; corporate commercial; and tax.

All aspects of the manufacture, import, labelling, distribution and sale of pharmaceuticals and medical devices are regulated federally by the Food and Drugs Act (FDA), the Food and Drug Regulations (FDR) and the Medical Devices Regulations (MDR). The Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations), enacted under the Patent Act, establish a link between the marketing approval of subsequent entry pharmaceuticals (eg, generic pharmaceuticals and biosimilars) and patent protection of the reference product (see 10 Patents for more information). The PM(NOC) Regulations are Canada’s version of the US Hatch-Waxman Regulations. In addition, the handling of controlled substances, such as opioids, is governed by the Controlled Drugs and Substances Act (CDSA).

As of October 2018, medical and recreational cannabis is regulated under the Cannabis Act and regulations enacted under the Act. This regulatory framework governs the production, importation, distribution, packaging and labelling, promotion and sale of cannabis. Amendments permitting the sale of edible cannabis, cannabis topicals and cannabis extracts are expected to come into force by October 2019. Distribution and sale of recreational cannabis is governed by provincial legislation; provinces may further restrict certain federal limits, including the minimum age for obtaining and using cannabis.

Regulators with jurisdiction over pharmaceuticals and medical devices have published robust publicly available guidance, which is not law but provides insight into how regulators interpret and apply law.

The Therapeutic Products Directorate (TPD) of Health Canada is the regulatory body that applies and enforces the FDA and its accompanying regulations (FDR and MDR) in regulating pharmaceuticals and medical devices. Health Canada's Biologics and Genetic Therapies Directorate (BGTD) specifically regulates biological drugs (eg, innovative biologics and biosimilars) and radiopharmaceuticals. The objective of Health Canada is to ensure the safety, effectiveness and quality of the pharmaceuticals and medical devices offered for sale. The TPD also administers Fees in Respect of Drugs and Medical Devices Regulations, enacted under the Financial Administration Act. The TPD administers the PM(NOC) Regulations and assesses whether pharmaceutical submissions seeking marketing approval are eligible to support a patent listing on Canada’s patent register (Canada’s version of the US Orange Book and Purple Book). The Office of Controlled Substances of Health Canada is responsible for authorising the handling of controlled substances through licences, permits and exemptions. The Cannabis Legalization and Regulation Branch (CLRB) is responsible for overseeing commercialisation of cannabis for recreational and medical use, and administering the Cannabis Act.

Health Canada’s decisions can be challenged through judicial review applications to the Federal Court; Health Canada also provides internal dispute resolution or appeal procedures to challenge original decisions. When faced with a negative decision related to a pharmaceutical submission, a sponsor may formally request the appropriate Health Canada Directorate to reconsider. There are two levels of appeal procedures for decisions related to medical device submissions: a manufacturer may appeal a decision to the bureau director responsible for the original decision and following the first appeal, a manufacturer may appeal the bureau director's decision to the director general.

Sponsors seeking reconsideration must file a Letter of Intent within 30 days of the original decision and not file a Notice of Application to the Federal Court to challenge the decision. No new data will be considered as part of the reconsideration and only the following decisions are eligible:

  • Rejection of a Priority Review Request under the Priority Review Policy;
  • Rejection of a Request for Advance Consideration under the Notice of Compliance with Conditions Policy;
  • Screening Rejection Letter (SRL) (including New Drug Letter);
  • Notice of Deficiency – Withdrawal Letter (NOD/W);
  • Notice of Non-compliance – Withdrawal Letter (NON/W);
  • Not Satisfactory Notice (NSN);
  • Notice of Insufficient Information Withdrawal; and
  • Notice of Refusal.

The following decisions are not eligible for reconsideration:

  • decisions based on submissions containing documented falsified information;
  • allegations of bias; and
  • complaints regarding service delivery.

To be eligible for the first-level appeal of a medical device submission, the manufacturer must file a Letter of Intent within ten days of the original decision. The appeal can only take place at the Rejection Letter, Refusal Letter or Additional Information Letter stages of the application review process. The manufacturer must file a document stating its position and provide full supporting information, but it cannot contain new material unavailable for review in the original decision. To be eligible for the second-level appeal, the manufacturer must submit a Letter of Intent to the director general within 30 days of the first appeal decision. The letter must include a copy of the document submitted at first appeal and the first appeal decision. A second-level appeal may only occur at the Rejection Letter or Refusal Letter stages of the application process.

Borderlines between pharmaceuticals and other life sciences products are governed by the FDA and the Natural Health Products Regulations (NHPR). A “drug” is classified as a substance, including “any substance or mixture of substances manufactured, sold or represented for use in:

  • the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or its symptoms, in human beings or animals,
  • restoring, correcting or modifying organic functions in human beings or animals, or
  • disinfection in premises in which food is manufactured, prepared or kept.”

This definition would include biologic pharmaceuticals as well as chemical pharmaceuticals.

In contrast, a “medical device” is an apparatus used for diagnosis, treatment, mitigation, disease prevention and symptom reductions. It also includes any apparatus used for restoring, modifying or correcting body structure or the functioning of a body part. Instruments used for pregnancy or newborn care would fall under this definition, as would contraceptives.

Although a “cosmetic” is also a substance, it is “manufactured, sold or represented for use in cleansing, improving or altering the complexion, skin, hair or teeth, and includes deodorants and perfumes.” Cosmetic products cannot be represented for therapeutic uses.

“Natural health products” are regulated as a subset of “drugs” or pharmaceuticals. An NHP is also defined as a substance used for diagnosis, treatment, mitigation, disease prevention, symptom reduction and restoration or modification of organic functions. What distinguishes a NHP from other “drugs” is that the active agent is set out on a specific schedule under the NHPR (eg, vitamins, amino acids, probiotics), or it is a homeopathic or traditional medicine.

Classification of a product is part of the regulatory review process and there is guidance and recommendations for classification at the device-pharmaceutical or cosmetic-pharmaceutical interfaces. Whenever there is uncertainty on how and whether a product is regulated, Health Canada will provide opinions on classification for a particular product.

Functional foods, similar to conventional foods, are foods consumed as part of a usual diet and provide physiological benefits or reduce the risk of chronic disease beyond basic nutritional functions. All foods and pharmaceuticals are governed by the FDA and its regulations. Nutraceuticals are products isolated from foods sold in medicinal forms and provide physiological benefits or protection against chronic disease. Nutraceuticals are typically referred to as NHPs in Canada (and would be equivalent to dietary supplements offered for sale in the USA).

Canada does not have regulation specifically dealing with functional foods – the FDR and applicable guidance address the regulation of functional foods. The NHPR and applicable guidance address the regulation of nutraceuticals. If uncertainty around classification arises, a manufacturer can seek regulatory opinion.

All foods and pharmaceuticals are governed by the FDA and its regulations. The classification of medicated food or special nutrition products can be confusing, as such products are often at the interface of food-NHPs. An NHP is defined as a substance used for diagnosis, treatment, mitigation, disease prevention, symptom reduction and restoration or modification of organic functions. NHPs are homeopathic or traditional medicines with a specified list of possible ingredients that includes vitamins, minerals, amino acids and essential fatty acids, and plant, algal, bacterial, fungal or non-human animal materials and extracts. Health Canada has published guidance on products at the food-NHP interface, with a list of factors to be considered in classification, including risk to public health and safety, product composition, representation, format, public perception and history of use.

Health Canada categorises pharmaceuticals as prescription; non-prescription (OTC); or, as with certain dangerous prescription pharmaceuticals, controlled drug. Prescription pharmaceuticals can be chemical or biologic. Biologic pharmaceuticals include innovator biologics and biosimilars, both of which are classified as 'new drugs' and follow a new drug submission (NDS) regulatory pathway. Manufacturers can also request their pharmaceutical product be considered for non-prescription sale (ie, 'switch submissions').

Prescription pharmaceuticals include medicinal ingredients listed on the Prescription Drug List or CDSA Schedules. In addition to Health Canada classification, the National Association of Pharmacy Regulatory Authorities (NAPRA) implements additional guidelines relating to location of sale of pharmaceuticals. The NAPRA administers the National Drug Schedules programme, which consists of four categories of pharmaceuticals (generally excluding NHPs and medical devices): requiring a prescription for sale, requiring pharmacist intervention at point of sale, those sold under a self-selection area operated under a pharmacist’s direct supervision (OTC) and pharmaceuticals sold without professional supervision. Pharmacy and pharmacist regulation is under provincial/territorial jurisdiction and, in general, each pharmacy authority has adopted the National Drug Schedules into its legislation.

Medical devices are categorised and regulated by Health Canada according to their risk, from Class I (lowest perceived risk) to Class IV (highest perceived risk). Each classification has certain regulatory obligations that must be met, including obtaining licences to sell, advertise and offer the device for sale in Canada, as well as labelling requirements, problem-reporting obligations and having documented policies and procedures to deal with recalls. The packaging and labelling for a medical device may include a limitation, “[b]y or on the order of a physician,” signalling that either the manufacturer or the regulator has concluded that there should be a physician interface before the medical device is sold to a patient.

Clinical trials of pharmaceuticals and medical devices are governed by the FDA and its regulations. Authorisation for trials must be obtained from the appropriate Health Canada directorate/bureau prior to commencement.

Authorisation for clinical trials of pharmaceuticals is obtained through clinical trial applications (CTAs). Health Canada approval is required for clinical trials using pharmaceuticals not authorised for sale and for trials of marketed pharmaceuticals where the proposed use is outside the marketing authorisation. Physician-sponsored trials of marketed pharmaceuticals that are within the marketing authorisation do not need Health Canada approval and it is not necessary for a drug manufacturer to seek approval for Phase IV clinical trials, where the trial falls within the parameters of the marketing approval ('on-label'). Clinical trials must proceed in accordance with Part C, Division 5 of the FDR.

Authorisation for clinical trials of medical devices is obtained through Investigational Testing Applications (ITAs). Health Canada approval is required for trials involving the use of Class II, III and IV medical devices, but not for Class I (low-risk) medical devices.

In addition, Research Ethics Boards (REBs) oversee clinical trials and REB approval is required for each trial site prior to commencing. Health Canada and the REB monitor safety data and assess serious adverse reactions filed throughout the trial. An REB may impose conditions on the conduct of trials and may require informed consent to be amended to address ethical concerns of the REB. Health Canada may conduct site inspections to verify whether a trial meets good clinical practices requirements.

Prior to filing for clinical trial authorisation, a sponsor may request a pre-CTA consultation meeting with Health Canada, which allows the sponsor to present relevant data, discuss concerns regarding pharmaceutical development and receive guidance. Requests for pre-CTA consultation meetings are submitted to the appropriate Health Canada directorate.

To undertake a clinical trial of a pharmaceutical, the sponsor must file a CTA, which is sent directly to the appropriate Health Canada Directorate for review; the CTA should be submitted to the lead directorate/bureau if the clinical trial uses a combination of pharmaceuticals and biologics or radiopharmaceuticals, a medical device and pharmaceutical combination that is classified as a pharmaceutical, or a NHP and a pharmaceutical. Health Canada will issue a No Objection Letter (NOL) allowing the import of the drug product into Canada if the CTA is deemed acceptable.

To undertake a clinical trial of a medical device, the manufacturer/sponsor must submit an ITA to the Device Evaluation Division of the Medical Devices Bureau of Health Canada for approval.

If trial protocol involves a pharmaceutical and use of an unlicensed Class II, III or IV medical device that is not a combination product, both an ITA and a CTA must be filed. Both authorisations need to be obtained before the trial.

The proposed trial protocol must also be reviewed and approved by an REB and there must be a Qualified Investigator for Phase I, II and III clinical trials involving a pharmaceutical. The Qualified Investigator is responsible to the sponsor for the conduct of the clinical trial at the trial site and is entitled to provide healthcare under the laws of the province where the clinical trial site is located. Typically, the manufacturer and the Qualified Investigator enter into a contract that addresses the obligations and responsibilities of the Qualified Investigator and the sponsor.

Health Canada maintains a public Clinical Trials Database, which lists specific information relating to Phase I, II and III clinical trials of pharmaceuticals. Only the following information is published: protocol number, title, pharmaceutical name, medication condition, study population, date of NOL, sponsor name, control number, study start and end date, and trial status. The Database does not contain clinical trials on healthy volunteers, NHP or medical device clinical trials, or Phase IV trials, nor does it contain comprehensive information about each clinical trial, and not all trials are necessarily registered within the Database. Sponsors are encouraged to register trials on publicly accessible registries that accept international clinical trial information and are recognised by the World Health Organization. Canada does not mandate disclosure of trial results. However, Health Canada has taken steps in its Public Release of Clinical Information initiative, which proposes public release of clinical information included in pharmaceutical submissions and medical device applications that have completed the regulatory review process. The proposed rules are for non-commercial purposes only and reflect Canada’s intention to align its disclosure policies with those of the European Medicines Agency (EMA) and the US Food and Drugs Administration (US FDA).

The Health Canada Clinical Trials Database is not meant to be a patient-recruitment tool; using online tools to recruit for clinical trials is generally acceptable, provided the recruitment complies with the FDA, FDR and applicable guidance.

Data from clinical trials would be considered personal or sensitive data to the extent that it includes identifiable information about participants. The Tri-Council Policy Statement on Ethical Conduct For Research Involving Humans (TCPS) expects researchers to assess whether information collected is identifiable and provides methods of safeguarding data.

The TCPS states that researchers shall not provide results that could identify an individual to the authorities without a participant’s written consent. However, aggregate data from clinical trials may be provided if it cannot be anonymised. It can be inferred that similar rationale on the transfer of data to third parties or affiliates would apply: participant consent would govern the transferability of identifiable data and aggregate, anonymised data should be freely transferrable. Institutions have their own clinical data transfer policies on sharing and access.

The creation of a database containing personal or sensitive data would require fully informed consent from the owner of such data and other requirements under privacy laws. Health Canada has developed draft guidance for procedures to prepare information for release, categories of information that may be redacted as confidential business information (CBI) and anonymisation of personal information prior to public disclosure. Redactions proposed by manufacturers require justification and are reviewed by Health Canada.

See 1.4 Borderlines Between Pharmaceuticals and Other Life Sciences Products.

Health Canada grants the following types of marketing authorisation for pharmaceuticals and medical devices:

  • Notice of Compliance (NOC) or NOC with Conditions (NOC/c);
  • drug identification number (DIN);
  • natural health product number (NPHN); and
  • Medical Device Licence (MDL).

NOCs are issued to pharmaceutical manufacturers following the satisfactory review of a submission. To obtain authorisation for sale, a New Drug Submission is filed with the Health Products and Food Branch (HPFB) of Health Canada. NDSs contain pre-clinical and clinical results to support the safety, efficacy and quality; therapeutic claims and side-effects; and details of the production, packaging and labelling of pharmaceuticals. An NOC is issued if HPFB determines that the benefits outweigh the risks.

An NOC/c is issued to a sponsor who agrees to undertake additional studies to confirm clinical benefit. Once all conditions are satisfied, the conditions will be removed. Pharmaceuticals eligible for NOC/c consideration are those that promise new pharmaceutical therapies intended for treatment, prevention or diagnosis of serious, life-threatening or severely debilitating diseases, or conditions for which there is no alternative therapy available in Canada, or where the new product represents a significant improvement in the benefit/risk profile over existing products. This is a mechanism used by Health Canada to provide early market access to potentially life-saving pharmaceuticals. It also allows the pharmaceutical to be monitored through enhanced post-market surveillance.

An eight-digit DIN is issued with the NOC for official approval to market the pharmaceutical; it must appear on the label of each pharmaceutical.

For marketing authorisation for biologic medicinal products (innovative biologics or biosimilars), more detailed chemistry and manufacturing information to ensure product purity and quality must be included. Because slight variations in manufacturing can produce a different product, sponsors must include details of manufacturing in its NDS Product Specific Facility Information section. Facilities are inspected through an On-Site Evaluation (OSE) to assess production process and facility. Furthermore, through its Lot Release Process, Health Canada may test certain biological products before and after issuing a marketing authorisation. This process allows Health Canada to monitor the safety, efficacy and quality of biologics. Health Canada has published guidance on information and submission requirements for biosimilars.

MDLs are issued to the manufacturers of Class II, III and IV medical devices following satisfactory review of an application (Class I medical devices are monitored through an Establishment Licence). To obtain authorisation for sale in Canada, manufacturers must submit an MDL Application to the Medical Devices Bureau of the Therapeutic Products Directorate (TPD) of Health Canada. Information required for application will vary depending on the class of the device. An MDL is issued if TPD is satisfied the application meets the requirements of the MDR, including having quality systems manufacturing certifications.

Marketing authorisations have to be renewed annually, for pharmaceuticals and medical devices. There are circumstances when a marketing authorisation can be revoked; for example, failure to comply with the FDA, FDR and MDR, or a prolonged failure to commercialise in Canada, despite having the marketing authorisation.

The FDA, FDR and MDR set out requirements for marketing authorisation for pharmaceuticals and medical devices. There is no mandatory requirement to conduct paediatric clinical trials, although data protection for innovative pharmaceuticals can be extended for six months if they are undertaken. To vary a marketing authorisation for a pharmaceutical, a supplemental new drug submission (SNDS) – or, in the case of generic pharmaceuticals, an abbreviated supplemental new drug submission (ANDS) – must be filed with Health Canada. The new therapeutic indication, formulation or dosage form cannot be marketed until Health Canada issues a notice of compliance for the SNDS (or ANDS). Other changes can be made through a supplemental submission or a notifiable change filing, depending on the extent of the proposed change.

Market authorisation can transfer from one marketing authorisation holder to another. Health Canada has guidance on the process; it also allows a reasonable period for inventory under the name of the former marketing authorisation-holder to be depleted, even though the marketing authorisation is in the name of a new holder.

It is possible for a physician to provide pharmaceuticals or medical devices to patients through special access. The FDR and MDR describe the conditions and procedure for special access. Typically, there is an unmet medical need that requires a physician to have special access to treat the patient. The physician applies for special access authorisation through a process set out in Health Canada guidance. This is a physician-driven request and the physician deals directly with Health Canada. Manufacturers cannot promote special access to patients.

Ongoing obligations for a marketing authorisation-holder for a pharmaceutical or medical device include adverse event reporting, annual review and updates under the marketing authorisation, compliance with legislation and compliance with marketing authorisation terms. Obligations can also be imposed through a notice of compliance with conditions, where the manufacturer must meet certain conditions described in the NOC, imposed as a condition of obtaining the marketing authorisation. In certain circumstances, these obligations can include Phase IV trials.

Canada has its version of the US Freedom of Information Act (FOIA), known as the FederalAccess to Information Act (ATIA). Each province and territory has similar legislation that applies to its government agencies. There are protections available in ATIA for confidential business and other information submitted to the government as part of the regulatory process. The federal government has moved towards greater transparency and now discloses certain information regarding pending applications for marketing authorisations, providing a summary basis of decision for approving pharmaceuticals after the marketing authorisation has been obtained, which summarises the clinical data in the application. A person residing in Canada can request the information the government does not disclose. Before disclosing such information, the information-owner may object to the disclosure on one or more grounds set forth in ATIA.

No response provided.

Various laws address the falsification or illegal distribution of medicines and/or medical devices, including the FDA, FDR, MDR and Canada’s Competition Act.

There are border measures available to tackle counterfeited pharmaceuticals and medical devices, available under IP laws and other applicable laws, like trade and criminal laws.

Canada’s Patented Medicine Prices Review Board (PMPRB) controls the pricing of patented pharmaceuticals, whose regulatory authority is established by the Patented Medicines Regulations under Canada’s Patent Act. The PMPRB is a regulatory board unique to Canada. Proposed amendments to the Patented Medicine Regulations were published for comment in 2017 and introduce new factors in determining the value of a medicine, remove the USA and Switzerland as comparator countries for pricing reference and modify reporting requirements so rebates and discounts to third parties (eg, public and private insurers) must be factored into the reported price.

Various other regulatory bodies are involved in the pricing of pharmaceuticals that are publicly funded.

The pricing of medical devices sold to hospitals is controlled through requests for proposals (RFPs), or by group purchasing organisations (GPOs) who negotiate pricing on behalf of the member hospitals.

Each province has its own legislation on pharmaceutical pricing, legally permitted upcharge, dispensing fees, and rebates and professional allowances to pharmacies.

Approximately 40% of pharmaceuticals sold in Canada are publicly funded; the remainder is privately funded under less regulated pricing.

Pharmaceutical and medical device suppliers have to follow procedures established by the public payor, whether public formulary, hospital or group purchasing organisation.

A health technology assessment (HTA) is performed for newly launched pharmaceuticals. For patented medicines, the PMPRB has regard to the pricing for the same product in other countries (see 4.1 Controlling Prices). The 'basket' of countries and methodology for determining whether pricing is excessive is currently under review by the PMPRB. Draft regulations changing the regulations (Patented Medicines Regulations) were published for comment in 2017; consultations and working group meetings were ongoing through 2018, with an implementation date of January 2019 now delayed.

There are fewer restrictions on launch price for medical devices, except for constraints negotiated or imposed by public or private payers.

The public market can amount to a significant portion (eg, 40% or more) of revenue from the sale of pharmaceuticals. Public payors are under significant cost constraints and initiatives are under way by them to control the increasing costs of pharmaceuticals reimbursed from public funds. Similar initiatives are under way to control costs of medical devices reimbursed from public funds.

HTA analysis is applied and is a significant determining factor in assessing the price to be paid by public payors for pharmaceuticals. As part of this, cost-benefit analysis is considered.

Provinces curb pharmaceutical spending by deciding which pharmaceuticals get 'listed' or reimbursed on their formulary, a list of pharmaceuticals reimbursed by the province for eligible patients. The province will not reimburse for products prescribed outside therapeutic use; not all patients are eligible for reimbursement as eligibility varies across provinces, although typically includes seniors and persons with income below certain thresholds. Provinces can also impose restrictions in formularies (ie, which pharmaceuticals are to be offered as first-line therapy, etc). Physicians discuss prescription options with patients and consider ability to pay.

Promotion and advertising of pharmaceuticals and medical devices is regulated by several pieces of legislation, including the FDA, the FDR, the MDR and the Competition Act.

A pharmaceutical or medical device cannot be labelled or advertised in a manner that is “false, misleading or deceptive or is likely to create an erroneous impression regarding its character, value, quantity, composition, merit or safety.” Advertising prescription pharmaceuticals directly to patients is prohibited. Exceptions include vaccines, which can be advertised to promote public health.

Advertising is also guided by the Pharmaceutical Advertising Advisory Board (PAAB), an independent review agency that monitors healthcare product communication for prescription, non-prescription, biological and natural health products to healthcare professionals, and provides feedback on direct-to-consumer materials for prescription pharmaceuticals. PAAB has published a Code, which includes a dispute resolution procedure for manufacturers alleging that other manufacturers are advertising contrary to the Code.

The FDA prohibits advertising a pharmaceutical prior to market authorisation and prohibits 'off-label' promotion of approved pharmaceuticals, on the basis that such promotion is misleading because it would be outside marketing authorisation terms. Only pharmaceutical products with authorisation in the form of a Notice of Compliance and Drug Identification Number from Health Canada, and medical devices with a licence by the Medical Device Bureau (a department within Health Canada) may be marketed. Further promotion and advertising of the products, once approved, must comply with the FDA, the FDR, the MDR and the Competition Act.

Innovative Medicines Canada (IMC) is a voluntary industry association of pharmaceutical companies. The IMC advocates for its members with respect to regulatory policies, but also regulates activities of members through their Code of Ethical Practices.

Advertising is also guided by the Pharmaceutical Advertising Advisory Board (PAAB), an independent review agency that monitors healthcare product communication to healthcare professionals and provides feedback on direct-to-consumer materials for prescription pharmaceuticals. Similarly, medical device companies have Canada’s Medical Technology Companies (MEDEC); unlike the IMC, MEDEC’s activities focus on industry advocacy rather than self-regulation.

The Therapeutic Products Directorate of Health Canada is the regulatory body that applies and enforces the FDA and its accompanying regulations (FDR and MDR) in regulating pharmaceuticals and medical devices. Health Canada’s Biologics and Genetic Therapies Directorate regulates biological pharmaceuticals and radiopharmaceuticals specifically. Sanctions are set out in the FDA, FDR, MDR and the Competition Act. Typically, the regulator approaches the manufacturer who has breached the regulations and discusses the alleged non-compliance to attempt to achieve a satisfactory resolution. The IMC and PAAB can also initiate non-compliance rulings against a manufacturer.

While regulators will respond to complaints from the general public and consumer groups, most complaints originate from competitors.

The IMC and PAAB can initiate non-compliance proceedings and issue rulings against a pharmaceutical manufacturer. Written complaints made to the IMC for a breach of the Code of Ethical Practices by competitors are reviewed quarterly by the IMC’s Industry Practices Review Committee, typically rendering a decision within 20 days of initial review. The IMC will publish the violators’ infraction on its website and impose a monetary fine. Repeat offenders may appear before the IMC board of directors.

Complaints against pharmaceutical and medical device advertising can be made to PAAB. Dialogue between the complainant and the advertiser is encouraged in the early stages of the complaint resolution procedure; if that fails, the PAAB commissioner will review the complaint and issue a ruling, setting out penalties according to the violation’s severity.

Sanctions are set out in the FDA, FDR and MDR, and Health Canada also provides guidance on activities that advertise pharmaceuticals in violation of applicable laws. Health Canada will approach the advertiser/manufacturer regarding alleged non-compliance to resolve any issues. If public safety is an issue, the regulator can take immediate action and issue a stop sale order, compel a recall, compel other corrective action and issue a press release. Proceedings rarely go to court.

Activities of pharmaceutical manufacturers are also subject to the Competition Act if the manufacturer has a significant market share. Potential penaltiesinclude criminal fines, administrative monetary penalties, imprisonment, damages arising from private civil actions, and court orders to stop or modify conduct. There is also potential director and officer liability under the Competition Act.

Pharmaceutical and medical device manufacturers are prohibited from offering gifts or sponsorships to physicians, pharmacists and other healthcare professionals. These prohibitions are found in provincial health professional legislation or professional college by-laws and restrict physicians from conflicts of interest by accepting 'perks' from manufacturers.

The province of Québec goes further: a non-healthcare professional can be sanctioned for knowingly inducing a healthcare professional to breach professional obligations. Offering gifts and sponsorships can also trigger non-compliance rulings against physicians, or potentially against the manufacturer, by IMC and PAAB.

Ontario’s Health Sector Payment Transparency Act, 2017 requires drug and health product manufacturers to disclose transfers of value made to healthcare professionals, organisations and other recipients. The Act was passed in 2017 but implementation is delayed due to a change in provincial government. Ontario is the first province or territory to enact legislation of this kind.

Advertising prescription pharmaceuticals directly to patients is prohibited. Pharmaceutical and device manufacturers commonly run into issues when distinguishing between advertising to promote the sale of a pharmaceutical and activities primarily intended for education, scientific or other non-commercial purposes. Other common issues include advertising a pharmaceutical prior to market authorisation, promoting 'off-label' uses of approved pharmaceuticals and regulating interactions with healthcare professionals in accordance with the law and all professional college by-laws. Manufacturers must ensure therapeutic claims and labels associated with the product are not false, misleading or deceptive, or likely to create an erroneous impression regarding their character, value, quantity, composition, merit or safety.

Activities of pharmaceutical and medical device companies are also subject to the Competition Act.

The Medical Device Bureau has guidance on when online platforms and/or medical apps are regulated as a medical device. Software is regulated as a medical device if it provides the only means to capture or acquire data from a medical device, or aids or replaces a diagnostic or treatment decision made by a physician. Health Canada intends to establish the Digital Health Review Division of the Medical Device Bureau, which would be responsible for more targeted pre-market review of digital health technologies.

In 2019, Health Canada released proposed draft guidance regarding the regulation of Software as a Medical Device (SaMD); in it, software would only be regulated as a medical device if it has a direct impact on the diagnosis, treatment or management of an individual’s disease, disorder or symptoms and is used for those purposes without being part of a hardware medical device. All software classified as a SaMD would be further classified as a Class I, II or III device depending on its intended use.

Rules governing telemedicine are found in provincial health professional legislation or professional college by-laws and policies, and vary across the provinces. Most provincial colleges have specific requirements, including to register with the college as a telemedicine-provider, restrictions on interjurisdictional telemedicine and specific obligations to ensure telemedicine is appropriate in given circumstances.

The same promotion and advertising rules and restrictions that apply to traditional forms of advertising also apply to the promotion of medicines and medical devices through online platforms and social networks (see 5 Promotion and Advertising).

There are no federal regulatory barriers to electronic prescription in Canada; the implementation of electronic prescription is regulated provincially, through provincial health professional legislation and professional colleges. Most provinces have not yet established province-wide electronic platforms, where prescriptions are transmitted between the prescriber and the patient’s pharmacy of choice. Electronic Medical Record (EMR) generated paper prescriptions are more commonly used across Canada.

Overarching federal requirements exist for any sale of medicines, while operational aspects of online sales are regulated by provincial health professional legislation and provincial professional colleges. Some provinces permit licensed pharmacies to sell medicines online. Registered pharmacies operating online platforms are often subject to specific requirements; eg, the existence of a bricks-and-mortar licensed pharmacy in the province.

Online sale of many medical devices is permitted, provided it is compliant with regulatory and legal requirements. If required, Health Canada licences must be held by the manufacturers, importers and distributors.

To the extent that electronic health and medical records include personal information, the handling of that information is regulated under federal and provincial privacy legislation. Some provinces have legislation and regulations or provisions specific to electronic health records.

Manufacturers in Canada must hold a Drug Establishment Licence (DEL) issued by Health Canada if they conduct activities with pharmaceuticals. To obtain a DEL, the manufacturer must file an application with Health Canada and include information on the facility, substance, source, processes and active ingredients processed at the facility. The manufacturer will be subject to inspections by Health Canada. The licensable activities under a DEL are fabrication, packaging/labelling, testing, importing, distributing and wholesale. DELs are renewed annually.

A licence for a facility that manufactures, imports or distributes a medical device is a Medical Device Establishment Licence (MDEL). Healthcare facilities such as hospitals do not require an MDEL to import a device into Canada. Manufacturers of Class II, III and IV medical devices that have a medical device licence (product licence) do not need an MDEL to sell directly to healthcare facilities; however, wholesalers or distributors to whom manufacturers sell need an MDEL. An applicant must give Health Canada information on the procedures followed by the facility and confirm that distribution records, complaint handling, recalls and mandatory problem reporting are in place. MDELs are renewed annually.

Quality control certificates are required to obtain medical device licences. The quality control certificates establish compliance with applicable International Organization for Standardization standards.

See 7 Manufacturing.

See 1.4 Borderlines Between Pharmaceuticals and Other Life Sciences Products.

The FDA, FDR and the MDR contain provisions relating to the import and export of pharmaceuticals and medical devices.

Health Canada and the Canada Border Services Agency (CBSA) work to administer and enforce Health Canada legislation relating to the importation of pharmaceuticals and medical devices.

Pharmaceutical and device manufacturers, wholesalers and distributors can act as the importer of record. To act as the importer of record for pharmaceuticals, a Drug Establishment Licence issued by Health Canada is required and must include importation as an authorised activity. Similarly, a Medical Device Establishment Licence issued by Health Canada is also required. An MDEL is not required for healthcare facilities such as hospitals to import a device into Canada.

Importation of pharmaceuticals and medical devices is subject to prior authorisation. Since all pharmaceuticals must be approved by Health Canada prior to sale or import in Canada, approved pharmaceuticals must be labelled with a Drug Identification Number at the time of import. Commercial pharmaceutical importers must also hold a valid establishment licence and the foreign exporter must be listed on that licence. Medical devices must be licensed prior to sale and most importers of medical devices must hold an MDEL, with some exceptions. Pharmaceuticals and medical devices unauthorised for sale in Canada may still be imported in emergency situations under Health Canada’s Special Access Programme or the clinical trial provisions of the FDR or the MDR.

Canada is party to the United States-Mexico-Canada Agreement (USMCA) and the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU, among other international agreements and treaties.

No response provided.

Patents are governed by the Patent Act (PA) and accompanying regulations, including the Patent Rules (PR), the PM(NOC) Regulations and the Certificate of Supplementary Protection Regulations (CSP Regulations). The PA and PR set out the criteria for patentability, the process for obtaining a patent and the enforcement of rights granted by a patent. The PM(NOC) Regulations establish a link between the marketing approval of subsequent entry pharmaceuticals and the reference product’s patent protection. As part of Canada’s effort in implementing CETA, the CSP Regulations were enacted, extending the term of patent protection by a maximum of two years.

See 4.1 Controlling Prices for a discussion of the PMPRB.

In addition to the long-existing tension between the need for effective patent enforcement over innovative products and the timely entry of their cheaper generic competitors, other issues encountered by pharmaceutical and medical device products under the legislation include rules surrounding utility and methods of medical treatment. A uniquely Canadian Promise of the Patent doctrine was created by jurisprudence over a decade, which is hinged on the criterion that an invention needs to be useful. In its most extreme rendition, the doctrine turned any statement in the description of the patent about what the invention does or could do into a utility threshold. The Promise Doctrine has primarily been applied in the pharmaceutical industry and was frequently used to invalidate patents on the basis that they lacked utility. In 2017, the Supreme Court of Canada overturned the Promise Doctrine in AstraZeneca Canada Inc v Apotex Inc and set out a new approach to assessing utility that is more consistent with the objective of the PA.

Methods of medical treatment are not patentable to avoid monopoly over treatment methods that could interfere with physicians’ skills and judgement. However, use claims can be patentable in Canada, but it is often contentious whether a dosing regimen is considered a method of medical treatment, which makes such patent claims difficult to obtain. The Canadian Patent Office has published guidance on what types of claims are and are not patentable.

In the absence of patentability requirements specific to pharmaceuticals or medical devices, applicants should pay careful attention to satisfying utility criteria and requirements regarding diagnostic methods.

Second and subsequent medical uses of a known product can be patented as long as they satisfy the requirements of being novel, useful and inventive. This applies to new dosage regimens, as well as new or selected patient populations. The selling of a generic product could constitute infringement if it goes to market after the innovator product loses its original patent protection but the patent to the subsequent medical use remains in place. Although the generic product may only be marketed for the original indication for which patent protection has expired, off-label use in accordance with the subsequent patented medical use can be quite common.

The mechanism of patent term extension for pharmaceuticals is quite new and is governed by the CSP Regulations. The CSP extends the term of a pharmaceutical patent by a maximum of two years. The patent needs to include a claim to the medicinal ingredient contained in the pharmaceutical, the medicinal ingredient as obtained by a specified process, or a use of the medicinal ingredient. Only one CSP will be issued with respect to a medicinal ingredient contained in a pharmaceutical. Marketing authorisation must be the first authorisation for sale to the claimed medicinal ingredient. A CSP application must be filed before the end of 120 days after the day on which an authorisation for sale to which the certificate is sought is issued, or the day on which the patent is granted, whichever is later. If an application for marketing approval for the medicinal ingredient has been filed in a foreign country, the applicant must seek Canadian marketing authorisation within twelve months to be eligible for CSP. A CSP or any claim in the patent referred to in such CSP may be declared invalid or void by the Federal Court.

The Canadian definition of infringement is quite broad and is not substantively modified when applied to pharmaceuticals or medical devices. Infringement occurs when an act during the patent’s life interferes with the exclusive right granted by that patent, without the patentee’s consent. There is no prima facie case for patent infringement solely by applying for marketing authorisation. Pharmaceuticals cannot be marketed without Health Canada’s authorisation and this should not occur if there is an issue of infringement.

The threat of infringement is actionable and there is a requirement of imminent infringement. Patent infringement is actionable on the basis of quia timet (ie, threatened or imminent but not yet commenced). To initiate quia timet proceedings, there must be an allegation of an imminent, deliberate and expressed intention to engage in an activity that carries a high likelihood of infringement that will result in substantial and potentially irreparable damage to the plaintiff.

A few defences and exemptions are available to patent infringement. Typical defences to infringements include denial of infringement, denial of plaintiff’s title to the patent, expiry or revocation of the patent, invalidity of the patent and the existence of a licence or estoppel. A defence of experimental use or fair dealing is also available, which applies to situations where the infringing product was made through bona fide experiment; there must be no intention of selling and making use of the product commercially. The Patent Act also provides an exemption to patent infringement (the 'Bolar provision'), which allows a person to make, construct, use or sell the patented invention solely for uses reasonably related to the development and submission of information required under any law that regulates the manufacture, construction, use or sale of any product. A similar exemption exists at common law.

Compulsory licences are available under the Patent Act in very limited circumstances.

The patentee and all persons claiming under the patentee can bring a proceeding for patent infringement under the Patent Act. Such persons can sue for damage sustained after the grant of the patent as a result of the infringement. The patentee in a proceeding may include any assignees, joint owners, or joint patentees.

Remedies available for patent infringement include:

  • damages (pursuant to the Patent Act);
  • accounting of profits (equitable remedy);
  • an injunction (typically a permanent injunction if the plaintiff is successful) restraining the defendant from further invading the exclusive privilege granted by the patent;
  • a court order requiring the defendant to deliver up or destroy in the plaintiff’s presence the infringing articles; and
  • legal costs and interest.

An action for patent infringement can be brought at provincial or federal court level and is typically brought by the patentee or a person claiming under the patentee against the defendant infringer. The defendant will argue non-infringement and may counterclaim for a declaration of invalidity. The action may also include standard aspects of civil procedure, before proceeding to trial and judgment (eg, requests for particulars, interlocutory proceedings and discovery). Invalidity is an available defence to patent infringement, invoked on grounds that the invention is not a patentable subject matter, novel, useful or inventive.

Prior to market entry, generic manufacturers need to submit an Abbreviated New Drug Submission (ANDS) to Health Canada to obtain marketing authorisation by referencing a marketed pharmaceutical (innovator pharmaceutical).

In its submission, the generic entrant must address the patents listed on the Patent Register that are related to the pharmaceutical. The entrant can make a statement indicating that the patent-owner has consented to the generic entrant’s use, or accepting that the marketing authorisation will not be issued until patent protection expires. Alternatively, the entrant can allege that the listed patent is invalid, void, expired, ineligible for listing, or would not be infringed by the generic entrant’s actions. In such cases, the entrant must serve a Notice of Allegation (NOA) on the innovator.

Upon receiving an NOA, the PM(NOC) Regulations now require the innovator to decide whether to defend the patent by bringing an action against the generic entrant. Should the innovator decide not to bring a PM(NOC) proceeding against the entrant, the innovator cannot subsequently sue for infringement through a separate action. Furthermore, the amendments replaced the previous PM(NOC) summary proceedings with full actions, which would make a final determination of patent infringement and validity. Once all the related patents have been addressed and Health Canada deems the ANDS acceptable, the generic pharmaceutical would be declared bio-equivalent to a Canadian reference product.

The above framework is Canada’s patent linkage system. The second entrant must address all related patents on the Patent Register with respect to the reference pharmaceutical, or the marketing authorisation will not be issued to the second entrant. There is no similar system for medical devices.

General criteria and restrictions for trade marks set out in the Trade-marks Act apply to pharmaceuticals and medical devices. To be eligible for registration, a trade mark must be distinctive and cannot be confusingly similar to the mark of another manufacturer, clearly descriptive or deceptively misdescriptive, an official mark, or primarily merely the name of a person. Major amendments to the Trade-marks Act are expected to come into force in June 2019, including that 'use' of the proposed mark will no longer be a prerequisite for registration. This will allow companies to secure trade marks ahead of pharmaceutical approval.

In addition to trade mark law and pursuant to the FDR, the TPD of Health Canada must approve the brand name. Although Health Canada also assesses whether the proposed name creates confusion with another marketed product, its focus is on health and safety.

Parallel importing is considered legal under trade-mark law. In Consumers Distributing Co v Seiko, the Supreme Court of Canada held that, with respect to trade mark rights, there is no distinction between goods sold through authorised versus unauthorised distributors because the trade mark-owner was the one who first placed the goods on the market.

The trade dress or design of pharmaceuticals and medical devices (eg, shape and colour) are considered non-traditional marks and can be registered under the Trade-marks Act. However, such registration for pharmaceutical and medical device manufacturers may be challenging due to a higher evidentiary burden required in establishing distinctiveness for this industry. Courts have held that shape and colour of a pharmaceutical or medical device are not perceived as indicators of source by consumers despite the large sales, advertising and reputation of the product. The relevant consumer base for the purpose of establishing the distinctiveness of pharmaceutical products is patients, physicians and pharmacists.

Canada has a data protection regime for innovative pharmaceuticals, which is governed by the FDR. Health Canada maintains a register of innovative pharmaceuticals. This regime prevents the approval of a new pharmaceutical based on submitted data of an innovative pharmaceutical for eight years (and another six months if paediatric trials have been conducted), effectively providing a longer period of market exclusivity to innovative pharmaceuticals.

No response provided.

The competition regime is governed federally by the Competition Act. The Competition Bureau conducts inquiries into criminal and civil matters related to pricing pharmaceuticals and devices, or providing rebates to customers. Activities and practices subject to review by the competition tribunal include bid-rigging, conspiracies to lessen competition, price discrimination, tied selling, abuse of dominance, refusal to deal, exclusive dealing, market restriction and delivered pricing.

There are no reported instances of a patent settlement having been challenged on the basis of antitrust concerns, such as pay-for-delay. However, the Competition Bureau highlights patent settlements as a key area of focus in its 2016 Intellectual Property Enforcement Guidelines (IPEGs).

There are no examples of life cycle management strategies having exposed a patent owner to liability for an antitrust violation. However, a relatively recent investigation into product switching and the inclusion of product-switching examples in the 2016 IPEGs indicate that life cycle management strategies are increasingly under scrutiny by the Competition Bureau and have the potential to expose a patent-owner to antitrust liability under Section 79 of the Competition Act as a possible abuse of dominance.

The Competition Bureau conducts inquiries into criminal and civil matters: bodies that impose penalties for anti-competitive conduct are the Competition Tribunal with respect to civil matters; and the courts with respect to criminal matters. Applications to the Competition Tribunal are initiated by the commissioner and – with respect to certain civil matters (not including abuse of dominance or mergers) – by private parties. Criminal prosecutions are initiated by the Director of Public Prosecutions of Canada, based, in part, on the recommendation of the commissioner.

A private right of action for a person that has suffered loss or damage as a result of conduct contrary to the criminal provisions of the Competition Act (or breach of a civil prohibition order) is established by Section 36. The affected person may sue for damages from the person who engaged in the conduct. The recoverable amount is equal to the loss or damage proved, together with costs. Unlike in the USA, Canada does not provide the ability to sue for treble damages. Often, Section 36 proceedings are class action proceedings where applicants claim damages for losses resulting from conduct contrary to Section 45 of the Competition Act (price-fixing, etc).

Canada provides a limited private right of application to the Competition Tribunal in respect of certain reviewable matters. Monetary damages are not available for such applications and applicants are limited to prohibition orders as a remedy.

The Competition Bureau has determined that restricting the supply of pharmaceuticals by manufacturers (eg, seeking to prevent lower-priced Canadian pharmaceuticals from entering the US market) complies with Canada’s Competition Act, which generally recognises that suppliers may set the terms and conditions of sales, provided that they have a reasonable business justification for doing so. If an export would contravene the destination law’s country, a company has a reasonable business justification for blocking exports while continuing to supply the Canadian market.

In 2018, the Competition Bureau announced it had discontinued an inquiry into whether certain branded pharmaceutical manufacturers were restricting or delaying generic pharmaceutical manufacturers’ access to samples of branded products contrary to the abuse of dominance provisions of the Competition Act. The inquiry and the Bureau’s comments in its position statement confirm it is focused on ensuring that generic manufacturers come to market as soon as permissible and the Bureau is prepared to undertake enforcement or advocacy action in future.

Agreements under share-purchase transactions, asset-purchase transactions, joint ventures, licence agreements and other commercial agreements should address facility licences to operate the business and product licences to sell the goods. Other regulatory issues depend on the transaction’s structure and include permissibility of licence transfers and consequences of change of control, operating entities and licence-holders, tax structuring and restrictions on ownership for professional corporations.

Earn-out clauses are among the most common deal terms used to bridge valuation gaps between buyers and sellers, often based on the achievement of clinical, regulatory and sales milestones after closing, or may be linked to the development of new technology by the target business or the successful integration of the target’s technology with the buyer’s.

While earn-out payments are often lump sums based on achieving specific milestones, they may also be structured as a percentage of net sales of relevant products, or as a percentage or multiple of other financial metrics. Earn-out payments are typically based on target performance for a few years after closing and will be subject to a limit. In some cases, the maximum earn-out will be a small proportion of the base purchase price, while in other transactions the ultimate purchase price may be several times the base amount. Key issues to be negotiated are obligations of the buyer to support the target after closing and the freedom of the buyer to operate the target in the manner it chooses. 

Sellers will usually want specific contractual commitments from the buyer to support the target’s operations to allow sellers to maximise the earn-out; whereas buyers will aim to retain flexibility. The use of earn-out provisions may help to get deals done that may have never happened on the basis of a fixed price. Contingent value rights are similar to earn-out clauses, providing for post-closing payments if certain milestones are achieved. Typically structured as standalone financial instruments or securities that involve no post-closing commitment of the buyer, they are more commonly used in public company transactions.

A working capital adjustment is the most common purchase price adjustment at closing. In setting deal terms, parties will typically agree on a 'target' amount of working capital, often based on historical working capital levels. Deviations from the target amount of working capital at closing will result in an adjustment to the purchase price and a threshold will apply so adjustments are only implemented if the deviation from target working capital involves a significant amount. 

Working capital adjustment provisions often involve detailed procedures relating to closing date working capital statements, as well as procedures for the resolving disputes that may arise. Parties should address which items should be included as assets or liabilities in working capital calculation (including items that may arise between signing and closing). 

Except in an auction or similar bidding process, parties will commonly enter into an exclusivity arrangement whereby they agree to negotiate only with each other for a certain period of time leading up to the signing of a deal. Upon signing, the purchase agreement will contain its own exclusivity provisions obliging the target to stop all solicitation and communications with all other parties. The target is usually required to inform the buyer if it receives any offers or expressions of interest prior to closing. 

With public targets, the purchase agreement normally contains 'fiduciary out' provisions allowing a target’s board to consider unsolicited proposals from other potential buyers. Buyers will be given the right to be informed of the superior proposal and a right to provide a better offer, and if they do not raise their bid, the target will normally terminate the purchase agreement to accept the better offer. In that case, the purchase agreement will usually require the target to pay a break fee to the initial buyer. 

The amount of this break fee is negotiated, but is limited by law so that it is not so large as to inhibit significantly the potential of the target to receive other bids. Purchase agreements may also include reverse break fees (payable to the seller or target if the buyer fails to close) in circumstances where there is risk that the buyer may not be able to complete the transaction.

No response provided.

No response provided.

There is the risk that a licence may be rejected by a licensor through a licensor’s bankruptcy process. There are limited rights of protection for licensees in such scenarios. For example, a bare usage right is protected in favour of the licensee (including any grant of exclusivity) but the licensee may otherwise be exposed as a result of the disclaimer of the licence. There is also a risk that the licensor will sell its assets and business through a bankruptcy or insolvency sale process and the buyer of the IP will obtain a court order for the transfer of title to the IP to the buyer free and clear of any and all claims and encumbrances. The granting of a security interest in the background IP may be helpful but will not eliminate these risks.

The FDA is a criminal statute. The regulator will focus on issues of safety and misleading representations, but Health Canada rarely exercises its rights in relation to fines and imprisonment, and will engage businesses to bring them back into compliance. The Canadian Criminal Code and Corruption of Foreign Public Officials Act (CFPOA) prohibits bribery and corruption of Canadian public officials, and among private parties.

Prepare for an investigation before it happens, establish a standard operating procedure and train appropriately. Consider whether to involve a litigator at the outset to assist during investigation and in reviewing communications (to minimise liability exposure). Check contractual and insurance obligations, and caution employees regarding communications that could be damaging in litigation. If a potential product liability issue exists, companies should collaborate with the regulator and manage public relations.

No response provided.

Health Canada investigations are similar to those of the FDA and other regulators. If safety is at issue, Health Canada acts quickly. If an investigation involves product liability, a company must work with Health Canada to determine corrective action. If there are concerns regarding public safety, the company – with assistance from Health Canada –  must issue a recall and/or take corrective actions.

Sale of pharmaceuticals and medical devices is regulated by Health Canada. Product liability is governed by common law principles in all provinces except Québec, where it is governed by civil law, under the Civil Code of Québec, and in certain circumstances the Québec Consumer Protection Act. Product liability claims are typically framed as actions in tort in common law provinces or extra-contractual liability in Québec, although they may also be framed as claims in contract. Typical tort/extra-contractual liability-based claims include negligent design, negligent manufacture and breach of a duty to warn. Breach of warranty is the most common claim based in contract.

In Québec, pharmaceuticals and medical devices are also subject to an extra-contractual regime specifically applicable to safety defects and two contractual regimes: a general regime relating to contractual undertakings and a specific regime relating to the guarantee of quality of a sold property (ie, that it is free of latent defects).

At common law, product liability claims – including those relating to pharmaceuticals and medical devices – are assessed against a negligence standard, rather than a strict liability standard. To succeed in a claim for negligence, a plaintiff must establish that:

  • the defendant(s) owed a duty of care to the plaintiff;
  • the defendant(s) breached that duty;
  • the plaintiff suffered damages; and
  • damages were caused by the defendant's breach of duty of care to the plaintiff.

Negligence may be alleged against any party in the distribution chain of a pharmaceutical product or medical device. The standard of care against which a defendant’s actions is assessed is the use of reasonable care in the circumstances. Relevant factors include the defendant’s position in the distribution chain; eg, manufacturers will typically be held to a higher duty of care than retailers.

To succeed in establishing extra-contractual liability in Québec, a plaintiff must prove fault, injury and causation on a preponderance of evidence. In product liability cases relating only to an alleged safety defect – including pharmaceuticals and medical devices – the plaintiff must establish the safety defect, an injury and a causal link between the two. A claim in extra-contractual liability may be instituted against the manufacturer of the product, the distributor of the product and any supplier, all of whom are held to the same standard.

In contractual cases where the guarantee of quality applies, the plaintiff must establish that:

  • the defect renders the product unfit for its intended use or diminishes the product’s usefulness to a point where the buyer would not have bought it or paid so high a price;
  • the defect existed at the time of the sale;
  • the defect was hidden; and
  • they were not aware of the defect at the time of the sale.

This guarantee of quality applies equally to all parties in the distribution chain.

Outside Québec, the standard of proof for determining causation in negligence claims in Canada is the 'but for' test: a plaintiff must establish, on a balance of probabilities, that the plaintiff would not have suffered damages 'but for' the defendant’s breach of its duty of care.

In Québec, the standard of proof is the preponderance of evidence. In extra-contractual cases relating to an alleged safety defect, once the plaintiff proves the existence of the safety defect, the injury and the causal link, the burden shifts to the defendant to rebut the presumption that it knew of the safety defect. In contractual cases relating to guarantee of quality of a sold property, plaintiffs benefit from the presumption that the alleged defect existed at the time of the sale and the presumption the seller knew of the defect.

Defences available to manufacturers of pharmaceuticals and/or medical devices are the same as those available to other manufacturers and include:

  • expiry of the relevant limitation period;
  • failure to prove the elements of the alleged cause of action;
  • voluntary assumption of risk;
  • product misuse or alteration;
  • contributory negligence; and
  • intervening act.

In failure to warn allegations, a defendant pharmaceutical or medical device manufacturer can also rely on the 'learned intermediary' defence (ie, the warning was directed to and adequate for the trained professional who dispensed the product to their patient).

In Québec, defences available in circumstances where the burden shifts to the defendant include that the plaintiff knew of the defect or could with reasonable diligence have known of the defect, or could have foreseen the injury. Other defences include:

  • proof of the victim’s fault;
  • the state of knowledge at the time the product was manufactured, designed or distributed was such that the existence of the defect could not have been known and the defendant was not negligent in providing the information once it became known; or
  • the injury was caused by an unforeseeable event.

All Canadian courts do not recognise compliance with regulatory requirements as a bar to liability. However, while regulatory compliance will not displace the requirement to act with reasonable care in the circumstances, in common law provinces it may be relevant to determining the standard of care and whether the defendant breached its duty of care.

Market share liability has not been recognised in Canadian law, other than in specific statutes for market share liability for tobacco manufacturers. For other products, including pharmaceuticals and medical devices, if a plaintiff cannot establish a link between damages and the defendant’s allegedly wrongful conduct, their action will not succeed.

In Québec, if all pharmaceuticals taken by the plaintiff are found to contain safety defects causing injury, all defendants will be found liable, even if the proportion of injury caused by each product is difficult or impossible to ascertain.

Limitation periods are creatures of statute and the time for commencing actions varies across provinces. Typically, limitation periods relevant to product liability claims range from two to six years, with shorter periods for claims against government entities. Limitation periods commence when the act giving rise to the claim occurred and may be extended to when the plaintiff’s claim became reasonably discoverable. Limitation periods do not run while a plaintiff is a minor (except in Québec, unless the plaintiff is an unborn child) and/or incapable of commencing a proceeding due to physical or mental incapacity, and are 'tolled' (frozen) on the commencement of a class action.

Health Canada is subject to the federal Access to Information and Privacy Act (ATIP). Citizens and permanent residents of Canada may submit requests for information under ATIP online. The head of the government agency receiving the ATIP request (eg, Health Canada) must determine whether documents responsive to the request (i) contain third-party trade secrets, or scientific or technical information treated consistently in a confidential manner by the third party; (ii) could result in material financial loss or gain, or prejudice the competitive position of a third party; or (iii) could interfere with contractual or other negotiations of a third party. If any of these conditions are met, the receiving agency must provide the affected third party (eg, the pharmaceutical or medical device manufacturer) with notice of the request for information and the agency’s intention to disclose responsive documents. The third party may then make representations to the agency as to why the information should not be disclosed.

Canadian law recognises claims for general damages (ie, damages for “pain and suffering”), similar to “moral damages” in Québec, and compensatory damages. Claims for punitive damages are also recognised, but are rare and limited to situations where a defendant’s conduct is determined to be “high-handed, malicious, arbitrary or highly reprehensible.”

Canadian law also recognises claims for restitution and claims for aggregate damages. These claims are most often advanced in the context of product liability class actions. In Québec cases, an award for punitive damages can only be granted if specifically provided for by law; for example, when there is a charter violation by the defendant, or in certain circumstances as provided under the Québec Consumer Protection Act.

Medical monitoring claims have been certified as common issues in Canadian class actions, but courts have not yet determined whether they are available and, if so, in what circumstances. However, in Québec, in cases of bodily injury, a judge may reserve the right of the victim to apply for additional damages if the course of his or her physical condition may not be determined with sufficient precision at the time of the judgment, for a period of up to three years.

General damages are capped by a trilogy of 1978 decisions of the Supreme Court of Canada including Andrews v Grand & Toy Alberta Ltd, [1978] 2 SCR 229 (SCC), with the cap indexed to inflation; as of the end of 2018, the cap is approximately CAD380,000. Aside from the general damages cap, there is no limit on the amount of damages that may be awarded against one manufacturer.

Most product liability actions involving pharmaceuticals and medical devices are brought via class action proceedings. Only one action relating to medical devices, Andersen v St Jude Medical Inc (2012 ONSC 3660), and one relating to pharmaceuticals, Brousseau c Laboratoires Abbott ltée (2016 QCCS 5083), have proceeded to trial. In both cases, judgment was granted in favour of the defendant.

Product liability trials are typically heard by judges, although civil jury trials are available in all provinces except Québec.

Common-law litigants must produce all documents relevant to any matter at issue in the action, as well as relevant documents withheld on the basis of privilege, and state the basis of the claimed privilege. Manyprovinces allow parties to delineate scope of production through a discovery plan that is negotiated or settled by court order.

In Québec, parties obtain document production through requests made orally during the pre-trial examination of the opposing party’s witness, or in writing in advance of the pre-trial examination. Documents may not be withheld on the basis of relevance, although relevance objections may be made at the time of production, to be determined by the court at trial or subject to court approval during a pre-trial hearing. Over-broad requests may be challenged and adjudicated by the court prior to production. As in the common law provinces, documents may be withheld on the basis of privilege.

No response provided.

The Federal Personal Information Protection and Electronic Documents Act (PIPEDA) regulates the collection, use and disclosure of personal information in the course of commercial activities. Certain provinces have enacted their own legislation similar to PIPEDA applying to organisations operating wholly within that province. Most provinces have privacy legislation concerning personal health information applying to persons and organisations that perform healthcare services.

Canada's Federal Office of the Privacy Commissioner of Canada (OPC) applies and enforces PIPEDA. Each province has a corresponding provincial commissioner with the same function.

PIPEDA requires personal information to be protected and safeguarded in accordance with its sensitivity, and health information is considered to be sensitive. PIPEDA is not prescriptive in how different types of personal information are regulated, but it states that organisations should seek express consent when the information is likely to be considered sensitive; implied consent is generally appropriate for non-sensitive personal information.

Contraventions of PIPEDA and provincial privacy legislation can result in monetary penalties. Organisations may also become subject to a 'consent agreement' whereby the OPC can place specific requirements on the organisation’s personal information practices.

PIPEDA contains a private right of action provision, so class actions are a significant risk to organisations subject to a privacy breach.

There is no prohibition against private-sector transfer and storage of personal information in a cloud platform. Safeguarding obligations apply to processing and storage platforms. A 2018 amendment to PIPEDA implemented a mandatory privacy breach reporting mechanism requiring organisations to notify individuals of privacy breaches, report such breaches to the OPC and maintain records on every breach of security safeguards involving personal information.

Individuals receive notice if their personal information will be transferred or stored outside Canada, including on a cloud platform, and must be informed that their information becomes subject to the laws of the jurisdiction where it is stored. Certain public sector privacy legislation includes restrictions on transfer of personal information outside the province and so may be applicable to a cloud platform.

Torys LLP

79 Wellington St. W.
33rd Floor
Box 270, TD South Tower
Toronto, Ontario
M5K 1N2 Canada

+ 416 865 0040

+ 416 865 7380

emcmahon@torys.com www.torys.com
Author Business Card

Law and Practice

Authors



Torys LLP is an international business law firm with an enviable record of experience in Canada and globally, operating from offices in Toronto, Calgary, Montréal, New York and Halifax. The life sciences practice is led by Eileen McMahon and Cheryl Reicin, and is ranked as one of the premier life sciences practices in Canada and the USA. A team of 42 lawyers and patent agents – most of whom have a PhD, an MSc or an engineering degree in a relevant life sciences discipline – provides all the services required by life sciences companies and their partnering organisations, including inventors and start-ups, multinational pharmaceutical and biotech companies, life sciences investors, venture capitalists and investment bankers. The firm represents 12 of the world's top 20 pharmaceutical and biotechnology companies, ranked by healthcare revenue. The key areas of practice in relation to the life sciences sector are pharmaceuticals, biologics and devices; food and drug regulatory; retail and consumer products; IP; licensing; M&A; corporate commercial; and tax.

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.