Angered by Canadian court decisions that invalidated patents on two drugs, Eli Lilly is striking back by urging Washington to pressure Canada to change its stance toward intellectual property. Its efforts underscore growing frustration the pharmaceutical industry has toward some foreign governments over patent rights, although much of the vitriol has often been directed toward India.
The drug maker wants the U.S. Trade Representative to place Canada on its Priority Watch list for countries that provide insufficient patent protection or enforcement, and is lobbying Capitol Hill for support. Last week, a bipartisan group of 32 lawmakers obliged the drug maker by writing to the U.S. Trade Representative to reinforce Lilly’s request. Seven of the lawmakers are from Indiana, where Lilly is based.
“We’ve been unsuccessful in bringing about change by other means,” said Lilly chief executive John Lechleiter. “It’s an issue right at our back door. And unfortunately, we’re afraid it can lead to other countries attempting to undermine intellectual property.” He added that talks were recently held with the U.S. Trade Representative. An agency spokesman says the process for compiling Watch Lists includes a public hearing, a public comment period and opportunities for meetings.
The moves come several weeks after the Pharmaceutical Research and Manufacturers of America trade group also asked the U.S. Trade Representative to elevate Canada’s status in its upcoming annual report about trading partners and intellectual property rights. A PhRMA spokesman, however, declined to say which, if any, other drug makers singled out Canada before the trade group submitted its views. Canada’s Department of Foreign Affairs, Trade and Development did not respond to a request for comment.
Lilly has been battling Canada for some time. Last fall, the drug maker filed for arbitration under the rules of the North American Free Trade Agreement and sought $500 million in damages in hopes of forcing Canada to alter the way patent rights are administered. The drug maker is pursuing an investor-state dispute which, under international trade treaties, allows companies to initiate claims against foreign governments.
Lilly argues that Canada violated obligations not only under NAFTA, but also the Trade-Related Aspects of Intellectual Property Agreement and the Patent Cooperation Treaty by allowing generic rivals to challenge patents without providing sufficient evidence of utility or usefulness.
The patents in question pertain to the Strattera attention-deficit disorder pill and the Zyprexa antipsychotic treatment, which were invalidated by Canadian courts in 2010 and 2011, respectively, after Canada implemented a doctrine for determining intellectual property rights. In its filing, Lilly contends the doctrine produced “absurd results”and also accused Canada of expropriation.
The next annual review by the U.S. Trade Representative of intellectual property rights enforced by trading partners is due later this month. In the 2013 report, Canada had actually been downgraded to “Watch List” status, a notch below the “Priority” level, its previous designation. The downgrading was made after Canada introduced a bill to strengthen intellectual property protection.
Consumer advocates maintain the investor-state system unfairly elevates companies to the same level as sovereign governments, which effectively enables them to circumvent domestic laws and courts by seeking extrajudicial arbitration. In doing so, they argue the system gives a green light to companies to directly challenge a nation’s public interest policies.
“Each country has the prerogative, as recognized by the World Trade Organization, to define its own criteria for granting medicine patents to pharmaceutical corporations, a prerogative that is essential for ensuring that monopoly patent protections for [drug makers] do not trample access to affordable medicines,” says Ben Beachy, research director at Public Citizen Global Trade Watch.
“By using the expansive privileges that NAFTA grants to foreign firms, Lilly is now asking a three-person tribunal to order Canada to pay $500 million for daring to define its own patent standards.”