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July 2, 2010

Health Canada Provides Pesticide Manufacturers with Exclusive Use Data Rights Protections for New Products and Minor Uses

The ACTA Group

On June 23, 2010, Health Canada issued final regulations to set forth new “rules on how the scientific data used to support a pesticide registration is protected from reliance by another applicant or registrant.” The regulations are available online. Health Canada states: “These Regulations are designed to provide a legally enforceable and fair process of pesticide data protection. They are intended to benefit pesticide users, particularly in the agricultural sector, by encouraging the registration of new, innovative and minor uses and facilitating the timely and predictable entry of competitively priced generic pesticides via a clear negotiation and arbitration process.”

More specifically, the regulations provide:

  • Exclusive Use Protection: Health Canada’s regulations now provide ten years of exclusive use protection for data used to support the Canadian registration of a new pesticide that contains a new active ingredient (i.e., a substance that has never been an ingredient in a registered pest control product). Test data that are subject to exclusive use protection include: (a) test data that were provided in support of the initial application to register the active ingredient; (b) test data that were provided in support of a concurrent application to register a pest control product that contains that active ingredient; and (c) test data that were included in any additional information that was reported to the Minister under Pest Control Products Act (PCPA) Section 12 in relation to those applications. The exclusive use period begins at the time of registration. During this exclusive use period, an applicant may use or rely on test data of a registrant in an application to register a pest control product or amend a registration only if the registrant provides the applicant with a letter of access.
  • Extension of Exclusive Use Protection for Minor Uses: The exclusive use period can be extended by up to five years (i.e., to a maximum of 15 years) if a minor use of significance is added to the original registration. A minor use is defined as “a use the demand for which originates with a grower or a group of growers and which product is intended to be used on a particular pest in connection with a particular host organism, in all of the following circumstances: (a) the use is for an agricultural purpose; (b) a federal or provincial agricultural authority supports the use; and (c) the use is supported by crop residue data or dislodgeable foliar data.” These additional five years of protection are applied at the rate of one additional year for three minor uses. Health Canada states: “This minor use incentive provision is designed to encourage pesticide companies to register pesticides for use on minor use crops in return for extended data protection for these pesticides.”
  • Data Compensation Protection: Data that support registrations and amendments to registrations, but that do not qualify for exclusive use protection, receive a 12-year compensatory protection status. During the compensatory period, a follow-on applicant can use or rely on previously submitted data provided the applicant complies with the regulatory requirement to compensate the registrant.
    • Compensable Data: Health Canada will be involved in determining the compensable data as the regulations provide that “the Minister must provide the applicant with a list of the compensable data that they may use or rely on and in respect of which they will need to enter into an agreement with the registrant.” The regulations define “compensable data” as test data other than the following: (1) test data that were submitted to support the registration of a new active ingredient and the pest control products associated with that ingredient, including any test data that were part of the additional information reported under PCPA Section 12 in relation to that ingredient and those products; (2) test data that are included in a scientific study that has been published; and (3) test data that are generated by a scientific study that is fully funded by a government or one of its institutions.
    • Compensable Periods: For data that support an application to register a pest control product whose active ingredient is already registered and for data that support an application to amend a registration, the compensable protection period begins at the time of application. For data submitted in response to a notice delivered to the registrant under PCPA Sections 16(3), 18(1), or 19(1) (e.g., re-evaluation, special review), the compensable protection period begins after the date on which the Minister receives the data. For foreign test data considered by the Minister in the course of a re-evaluation or special review, the compensable protection period begins after the date on which the Minister initiates the re-evaluation or special review.
    • Negotiation and Arbitration: Health Canada states that the “companies will be expected to determine the amount of data compensation owed through time-limited negotiation (and, if necessary, time-limited binding arbitration) without Health Canada being involved in determining the value of the data.” The regulations provide that the negotiation period will be limited to 120 days, unless the parties agree to extend the period. If the parties are unable to reach an agreement through negotiations, the applicant can initiate binding, final-offer arbitration. An arbitrator will have 120 days of the commencement of the arbitration period to issue an award unless the parties agree to extend the timeframe. Once the amount of compensation has been determined, through a negotiated settlement or arbitration award, the registrant that generated the data is required to provide a letter of access to the data granting the follow-on applicant the right to rely upon the data as determined by the settlement or award. If the registrant that generated the data fails to provide a letter of access despite the follow-on applicant’s compliance with the terms of the settlement or award, that applicant may use or rely on the compensable data without having to comply further with the negotiated settlement or arbitral award.
    • Timing of Applicant’s Registration: If the settlement or award provides for a schedule of compensation payments, the follow-on registrant will be granted a one-year registration, with the validity of this registration determined at renewal. A follow-on applicant can receive its registration before a letter of access is received if the applicant enters into an escrow agreement and deposits with a third party funds sufficient to meet the registrant’s last offer made at the end of the negotiation period. If the registrant does not put its last offer in writing, the applicant may make the request to register its product in the absence of a letter of access without establishing an escrow account. Health Canada states that it selected this procedure “since it provides flexibility and balance by guaranteeing payment while facilitating the timely market entry of competitively priced generic pesticides.”
  • Formulator’s Exemption: The regulations provide that the exclusive use and data compensation regulations do not apply when an applicant wishes to use or rely on test data of a registrant to register a pest control product that is equivalent to the registrant’s product, using a pest control product provided by that registrant, and (1) the registrant provides the Minister with a “letter of confirmation of source,” defined as “a document that is signed by a registrant in which the registrant confirms that they have agreed to provide an identified registered pest control product to a named person”; and (2) the only pest control product used in the manufacture of the applicant’s product is the one provided by that registrant.

The regulations “apply to an application to register a pest control product or to amend a registration made on or after August 1, 2007 and before the day on which these Regulations come into force, if the applicant wishes to use or rely on compensable data of a registrant and the Minister has requested in writing that the parties negotiate the amount of compensation payable for that use or reliance.”