An assessment of Canada’s revised Patented Medicines (Notice of Compliance) Regulations

Canada has high rates of generic usage, but the mechanisms of ensuring timely generic entry are dysfunctional. Unlike most other countries with a linkage regime in which regulatory approval depends on clearing patent hurdles, Canada does not offer temporary generic exclusivity. Instead, it grants the generic kept out of the market by a patent that is ultimately found invalid or not infringed the opportunity to seek its lost profits from the patentee. The system is unbalanced in that patentees find it profitable to litigate even very weak patents since they sustain a monopoly; while the incentives for generic firms to litigate, even if they expect to win, are very weak. This paper analyzes the incentives of the parties, and proposes possible policy fixes to help rebalance the system.