Eli Lilly files for NAFTA arbitration in $500M drug patent dispute with Ottawa

OTTAWA – U.S. drug company Eli Lilly has escalated a $500-million patent dispute with the federal government and filed a notice of arbitration under the North American Free Trade Agreement.

The company is demanding compensation for court decisions that invalidated its patents for Stattera, a treatment for, attention-deficit/hyperactivity disorder, and for Zyprexa, which is used for the treatment of schizophrenia and bipolar disorder.

Canadian courts struck down the disputed patents under the “promise doctrine,” which Eli Lilly said violates the standard required under NAFTA.

Under the Canadian standards, a drug’s usefulness must be demonstrated or soundly predicted as of the date the patent application is filed.

“Patent decisions in Canada over the last decade not only fly in the face of long-established international standards, but they’re subjective and completely unpredictable,” said Doug Norman, Eli Lilly’s general patent counsel.

“The standard seems to be that there is no standard.”

The Department of Foreign Affairs, Trade and Development said Friday it was assessing the notice of arbitration.

“Our government’s actions will continue to reflect our commitment to ensure Canadians continue to have access to the affordable drugs they need, while promoting innovation and job creation,” spokeswoman Caitlin Workman said in a statement.

The challenge comes amid ongoing debate regarding investor protection rights in Canada’s trade agreements with China and Europe. Critics have raised concerns the deals will give foreign corporations the ability to challenge Canadian policy decisions.

The request for arbitration, which will likely take years to resolve, follows a 90-day period of negotiations between the government and the company in an attempt to resolve the dispute.