PRIORITY WATCH COUNTRY

Canada

Intellectual Property Protection

For many years, PhRMA has worked with USTR in efforts to ensure that Canada would provide world-class patent protection and fully comply with its international obligations. PhRMA and its member companies have been gratified by steps that Canada has taken since 1992 to afford stronger protection to the patents that are the lifeblood of research-based pharmaceutical companies. Some of our member companies have made significant investments in Canada as the protection of our intellectual property has strengthened.

Notwithstanding that, as a developed country, Canada has been obligated to have its laws in conformity with the TRIPs agreement on January 1, 1996, yet it is still in violation of its basic TRIPs obligations. Article 33 of the TRIPs agreement obligates Canada to provide a 20-year term of protection for all patents, counted from the time of filing. Article 70.2 establishes that the 20-year term of protection applies to all patents that existed at the time that the TRIPs agreement took effect, that is, on January 1, 1996. Canada amended its patent law in 1987 to provide 20-year protection from the date of filing for all patent applications filed on or after October 1, 1989. However, despite the clear language of TRIPs, Canada never extended the 20-year patent term to those patents which had been filed before October 1, 1989, and which took less than three years to obtain. Unless Canada's violation is rectified, many important pharmaceutical products will be denied the full length of protection required by TRIPs and will be prematurely forced off patent in the coming months.

Every other developed country, including the United States, which had less than 20-year patents in force on January 1, 1996, has met its Article 33 obligation to provide the 20-year patent protection to all products in force on that date, as required. In early 1996, USTR successfully pressed Portugal to meet that obligation, and other countries followed suit. Canada simply cannot be permitted to pick and choose which TRIPs obligations it is willing to meet. PhRMA urges USTR to consult with Canada on this issue and to pursue a WTO case against Canada if this clear violation of TRIPs is not rectified immediately.

In addition, Canada has for some years allowed generic companies to have access to patented pharmaceuticals, for the purpose of having the product registered in Canada, as well as for starting up commercial-scale manufacture and export. Recently, the European Union has filed a WTO dispute settlement case against Canada, and the first consultation took place in early 1998. Canada also gives generic copiers the benefit of "Springboarding" by allowing the copier to rely on the originator's proprietary data during the statutory five-year period of data exclusivity, for the purposes of product registration. This violates Article 39.3 of the WTO TRIPs agreement, as it essentially eliminates the non-reliance requirement of TRIPs. The significance of this issue is not limited to Canada, as it constitutes a major negative precedent.

Potential Exports / Foreign Sales

It is not possible at this time to determine the impact on sales for PhRMA member company affiliates in Canada if these issues were to be resolved.

For all the aforementioned reasons, PhRMA believes that Canada should be listed as a Priority Watch Country under Special 301 in 1999.