These regulations implement Canada's obligations under the North American Free Trade Agreement (NAFTA) and the World Trade Organization's Agreement on Trade-related Aspects of Intellectual Property (TRIPS). Eli Lilly Canada Inc., and Canada's Research-Based Pharmaceutical Companies had intervened in the proceedings at the Federal Court, and were respondents in the appeal.
The appellants, in two separate proceedings, heard together at the Federal Court level, had challenged the Data Protection Regulations on a number of grounds, shortly after they came into force in 2006. The Federal Court decision, released on July 17, 2009, held that the regulations were valid as being within the regulatory authority under which they were created.
The Federal Court also found that the regulations were within the constitutional authority of the federal government, as they fell within the federal Government's federal trade and commerce power. However, the Federal Court did not find that the regulations fell under the federal criminal law power.
In writing for the Federal Court of Appeal, Mr. Justice Nadon held that the Data Protection Regulations were properly within the authority of the Governor in Council, and were in clear accord with the enabling provision of the Food and Drugs Act.
The Court held that "It is clear that the data which article 1711 of NAFTA and paragraph 3 of article 39 of TRIPS seek to protect is precisely the type of data in regard to which the DPR offers market protection, i.e. the data found in an innovator's NDS for an innovative drug." The regulations were held to be properly delegated by Parliament to the Governor in Council and held to be intra vires the Governor in Council.
In considering the constitutional issues, the Court of Appeal considered the purpose of the Data Protection Regulations, stating, at paragraph 114, that, "The true purpose of the DPR is not to balance the commercial interests of innovators and generic drug manufacturers, but rather to ensure that Canadians have reasonable access, at reasonable prices, to new safe and effective drugs.
In other words, the Regulations as a whole encourage the research and development of new medicines that save lives, prevent diseases, heal and cure, and improve the health of Canadians, who can only benefit from the discovery and development of new medicines after the information and data generated in extensive pre-clinical and clinical trials demonstrate the "innovative drug's" safety and efficacy to the satisfaction of the Minister."
In commenting on the purpose further, at paragraph 117, the Court held that, "The pith and substance of the DPR is to implement article 1711 of NAFTA and paragraph 3 of article 39 of TRIPS so as to encourage the development of new drugs, a valid public health and safety purpose."
In considering the constitutionality of the regulations, the Court held that their enactment was a valid exercise of the federal criminal law power contained in subsection 91(27) of the Constitution Act. Having found the regulations valid under the criminal law power the court held that it need not consider whether the regulations may also be upheld under another head of federal power such as trade and commerce.
The Court also commented that the Data Protection Regulations do not encroach on matters of provincial jurisdiction, since the provinces have no role whatsoever to play with respect to the approval of the safety and effectiveness of new drugs.