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Commissioner of Competition discusses intellectual property and competition at conference on Competition Issues Facing the Pharmaceutical Industry

Bureau Releases Paper on Patent Litigation Settlement Agreements in Canada

September 23, 2014 — OTTAWA, ON — Competition Bureau

Commissioner of Competition John Pecman today addressed a conference on Global Antitrust Challenges for the Pharmaceutical Industry at George Mason University, where he discussed the Bureau’s enforcement approach to potentially anti‑competitive patent litigation settlement agreements and announced the release of a white paper that provides a Canadian perspective on the issue.

Entitled "Patent Litigation Settlement Agreements: A Canadian Perspective", the paper provides background information on the regulatory system that governs the entry of generic drugs in Canada, the role of competition legislation in Canada, and the Bureau’s preliminary views on how Canadian competition law could be applied to potentially anti‑competitive patent litigation settlement agreements in Canada.

Patent litigation settlement agreements allow parties to avoid costly litigation, but also may have the potential to prevent or delay timely entry of lower cost, bio-equivalent generic drugs and result in consumers paying higher prices and having less choice.

In his remarks, Commissioner Pecman told participants that the Bureau would review potentially anti‑competitive patent litigation settlement agreements under the criminal conspiracy provision or the civil agreements or abuse of dominance provisions in the Competition Act. The Commissioner added that decisions on whether to pursue alleged anti‑competitive behaviour under the criminal or civil provisions of the Act would be based on the facts and evidence available.

The full version of the Commissioner’s remarks can be found on the Bureau’s website.

Quick Facts:

  • According to the Canadian Institute for Health Information, pharmaceuticals are the second largest category of health care spending by the public and private sector, accounting for just over 16 percent of such spending.
  • A significant percentage of pharmaceutical spending is for prescription drugs (approximately 85 percent in 2011), which, for the most part, comes from the private sector through private health insurance plans and spending by individuals on pharmaceutical drugs.
  • Among Canadian prescription drugs in 2013, generic drug companies were estimated to have a 66 percent share of retail prescriptions, but represented only 23.5 percent of total prescription drug expenditures.

Quote

"Given the importance of pharmaceuticals to Canada’s health care sector, changes in the pharmaceutical industry are of interest to the Bureau. As a result, the Bureau has taken a keen interest in reverse-payment settlements and product hopping issues, given the possibility that they may delay generic entry."

John Pecman,
Commissioner of Competition

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