Responses to comments received on the consultation on the proposed agreement for data compensation at re-evaluations and special reviews under section 66 of the Pest Control Products Act

The pest control product data compensation program is supported by three instruments: the statutory provisions of the Pest Control Products Act that authorize the Minister to permit applicants and registrants to use or rely on information provided by other registrants; the Pest Control Products Regulations (“the Regulations") that establish the circumstances and conditions under which the Minister may permit such use or reliance; and the Agreements to be entered into by applicants and registrants for the purpose of determining the compensation payable for the right to use or rely on information provided by a data holder (known as “section 66 Agreements”). An agreement has to be entered into when an applicant or registrant wishes to follow the process specified in the Regulations to rely on a data holder's test data in respect of which compensation may be payable to either register a pest control product or to meet the re-evaluation or special review test data requirements.

On 7 June 2023, amendments to the Regulations were published in Canada Gazette, Part II (CGII), and are scheduled to come into force on 4 December 2023.

The amendments were pre-published in the Canada Gazette, Part I (CGI) on 11 June  2022. To coincide with the CGI publication, on 26 July 2022 the PMRA published for comment the proposed Agreement for Exclusive Rights and Compensable Data under section 66 of the Pest Control Products Act  for Re-evaluations and Special Reviews. On 28 July 2022, the PMRA also held a stakeholder webinar and conference call to discuss the proposed section 66 Agreement and regulatory amendments, in advance of the CGI comment period ending on 25 August 2022. Approximately 59 stakeholders participated in the webinar and conference call, representing the pesticide industry, growers, and non-government organizations.

The six written comments received represented approximately 42 of these stakeholders. One comment was received from CropLife Canada, representing developers, manufacturers and distributors of plant science innovations for pest control products and products of modern plant breeding, and four from individual innovator registrants who are also CropLife members. Written comments were also received from the Generic Crop Protection Group of Canada, representing 10 generic product manufacturers and regulatory partners. Only one comment resulted in one correction to the section 66 Agreement. However, a variety of topics were raised with respect to exclusive rights and compensable data in the context of re-evaluations and special reviews, and those directly related to the section 66 Agreement for use with the Regulations are discussed below.

Stakeholder Comments and PMRA Responses:

1. It was indicated by CropLife that the proposed Regulations published in CGI suggest that both the timeline to deliver the section 66 Agreement and the initial negotiation period begin the day after the final decision (Re-evaluation Decision or Special Review Decision) is published under subsection 28(5) of the Pest Control Products Act. However, the proposed section 66 Agreement indicates that the 120-day negotiation period begins the day after receipt of the section 66 Agreement. CropLife Canada is seeking clarity on the intended delivery and negotiation timelines.

   PMRA Response: The PMRA has clarified the text in the finalized section 66 Agreement to reflect the wording in the final regulation publication in CGII (in other words, that pursuant to subsection 17.15(2) of the Regulations, the registrant and data holder must reach a negotiated settlement in respect of the compensation payable within 120 days after the day on which the re-evaluation decision or special review decision is made public).

2. The Generic Crop Protection Group of Canada indicated that 60 days to deliver the proposed section 66 Agreement is too short, and instead suggested that 90 days with a reminder from the PMRA at day 75 is preferred.

   PMRA Response: As parties will have access to the proposed re-evaluation or special review decision, and up to 60 days to review the final decision including the list of data that may require compensation, 60 days is considered to be sufficient time for either the data holder or registrant to deliver the proposed section 66 Agreement. As the timelines are expressly provided for in the Regulations, a reminder to parties to send the section 66 Agreement is not being considered. As such, no changes were made to the section 66 Agreement as a result of this comment.

3. An innovator registrant suggested there be additional language inserted into the section 66 Agreement that clarifies that in the event that a registrant requests to discontinue their registration prior to the renewal date, they remain obligated to pay compensation for their use or reliance on the data for the period of time that their product was registered, and on the market, following the final re-evaluation or special review decision. Should a registrant wish to discontinue their registration, this action should be taken at the time when a commitment is required to supply the data or share in the cost of generating the data.

   PMRA Response: Neither the Regulations nor the section 66 Agreement prevent a registrant from seeking to discontinue the registration of its registered pest control product pursuant to section 22 of the Pest Control Products Act.

   If the parties enter into a negotiated settlement, the terms of the settlement agreement will be binding upon the parties. If the parties proceed to binding arbitration, then the arbitral award will be enforceable as set out in Article 7 of the section 66 Agreement.

   A registrant’s request to discontinue its registration during negotiation will not terminate the negotiation period, and if no settlement is reached at the end of that period, the determination of compensation payable may be submitted to arbitration. Further, the section 66 Agreement provides that during arbitration where a registrant has notified the Minister of its intention to discontinue pursuant to subsection 22(1) of the Pest Control Products Act, and has also provided written notice of the same to the data holder and Arbitral Tribunal, the part of the arbitral award addressing compensation payable will not be binding and enforceable. Details on discontinuation and use of existing stocks are to be set out in PMRA guidance. As such no changes were made to the section 66 Agreement as a result of this comment.

4. An innovator registrant commented that as there are specific consequences outlined for the data holder if the letter of access (LOA) is not provided in a timely manner and in accordance with the Regulations it compels the data holder to adhere to timelines and outcomes as there is a financial cost associated with non-compliance. The innovator requested that the same principles be applied to data holders and applicants who do not compensate the data holder for reliance on their test data. These data holders and applicants should also be compelled to participate in good faith and if payment for use or reliance on data is not received in the specified time, the agreement should become null and void and the registrant’s registration be cancelled immediately. It was indicated that having similar compelling consequences for both the data holder and the registrant aims to level the playing field and not provide a competitive advantage to either registrant.

   PMRA Response: If a registrant that uses or relies on a data holder’s test data does not comply with the terms of a settlement agreement or the binding arbitral award, the data holder could seek to enforce the settlement agreement or arbitral award in court. Further, the PMRA will require an LOA at the next renewal of the registrant’s product. If an LOA is not provided, the product’s registration will not be renewed if they cannot demonstrate they are actively negotiating, at arbitration, or provide evidence that the data holder did not provide an LOA as per the settlement or award. As such, no changes were made to the section 66 Agreement because of this comment. Currently, an applicant who seeks to use or rely on a data holder’s test data to support their application to register a pest control product must provide an LOA or evidence that the data holder did not provide an LOA as per the settlement agreement or arbitral award.

5. An innovator registrant suggested removing section 3.3 of Appendix C of the proposed section 66 Agreement and mandating the final offer pursuant to the negotiation procedure. Their position is that the current proposal conflicts with the requirement to provide final offers in a settlement and this provision has the potential to create incentives to not negotiate and could lead to increased conflicts and costs.

   PMRA Response: The Regulations do not require that a last offer be made at the end of the negotiation. Subsection 17.16(2) requires that the notice submitting the matter of compensation payable to arbitration contain a last offer if one was presented in writing at the end of the negotiation. As the consequence of not negotiating and reaching a settlement is to submit to binding arbitration, the approach is meant to encourage parties to negotiate and settle. As such, no changes were made to the section 66 Agreement because of this comment.

6. An innovator registrant indicated concerns regarding section 11.2 (allocation of costs) in Appendix C of the proposed section 66 Agreement over registrants exiting the market prior to the requirement to submit an LOA to the PMRA or pay compensation to the data holder. It was explained that if a registrant decides to discontinue their registration under section 22 of the Pest Control Products Act it should be clarified that the use of or reliance on the test data called in through re-evaluation or special review requires compensation and that compensation is owed regardless of when the registrant exits the market. It was suggested that language in the proposed section 66 Agreement that states that the part of the arbitral award dealing with compensation payable is not binding and enforceable following the discontinuance of the registrant’s registration should be removed. According to the commenter, removing the proposed language from the agreement would preclude registrants from entering into, participating in the arbitration process and subsequently discontinuing their registration should the arbitration decision be in favour of the data holder, and thus provide a mechanism to ensure good faith.

   PMRA Response: The section 66 Agreement provides that the part of the award dealing with compensation payable by the registrant to the data holder for use or reliance on the data holder’s data is not binding and enforceable if the registrant provides written notice to the data holder and the Arbitral Tribunal that they will discontinue their registration, during the arbitration or within 30 days of the issuance of the arbitral award, and has notified the Minister of its intention to discontinue pursuant to subsection 22(1) of the Pest Control Products Act. The Arbitral Tribunal can consider the conduct of the parties prior to and during the arbitration period in awarding costs pursuant to section 11 of Appendix C, including the possibility that the registrant pursued arbitration without the intent to stay on the market.

   Article 1 of the section 66 Agreement makes it clear that this agreement does not prevent the registrant from discontinuing the registration of its pest control product, however, the terms of the section 66 Agreement continue to apply to that party, even after the registration is cancelled.

   As such no changes were made to the section 66 Agreement because of this comment.

7. The Generic Crop Protection Group of Canada requested the proposed section 66 Agreement clearly call for an equitable sharing of the costs, where the Arbitral Tribunal would consider any previous compensation received by the data holder for the data in question. Further, it was indicated that no reason was given for removing the cost-sharing principle that appears in Appendix E of the Agreement for Data Protection under section 66 of the Pest Control Products Act on 5 April 2019.

   PMRA Response: As set out in Appendix E of the proposed section 66 Agreement, compensation should be determined on the basis of the cost of the test data rather than the value of the test data. Despite the removal of the cost-sharing principle from the updated Section 66 Agreement, parties can continue to include available information demonstrating payments made for the data in Canada or in other jurisdictions for consideration by the Arbitral Tribunal. As such, no changes were made to the section 66 Agreement because of this comment.

8. An innovator registrant suggested that the two section 66 Agreement documents be merged into one document, and the registrant, applicant, or data holder would pick the language pertaining to which program (pest control product applications or re-evaluations and special reviews) being considered part of the section 66 Agreement.

   PMRA Response: Although there may be benefits to having one section 66 Agreement, to avoid any potential confusion between the terms that apply to product applications and the terms that apply to re-evaluations and special reviews, at this time two separate agreements will be made available for use under the Regulations.

9. An innovator registrant indicated that the Appendix E Compensation Principles part of the section 66 Agreement needs to include a statement that for re-evaluations and special reviews, all studies outlined in the list of data provided at the end of the re-evaluation or special review are considered in the final assessment and that there is no mechanism to selectively cite the data listing or study content.

   PMRA Response: The list of test data considered by the Minister in support of the re-evaluation or special review decision will be made available to data holders and other registrants on the day the Minister makes public the final re-evaluation or special review decision in accordance with subsection 28(5) of the Pest Control Products Act. Registrants will be required to provide an LOA to the Minister for the test data they are using or relying on from that list at their next renewal. As such, no changes were made to the section 66 Agreement because of this comment.

10. An innovator registrant recommended that the Compensation Principles in Appendix E of the proposed agreement should be better defined and have a stronger statement on how they are to be used in negotiations. According to the commenter, guidance or a stronger statement about the Compensation Principles that removes the ambiguity regarding their use is very important. The commenter indicated that in a re-evaluation or special review situation all registrants would have the same test data list. More robust principles would lead to a more consistent and predictable outcome for all the registrants relying on that data. Following re-evaluations or special reviews, there may be times when a data holder is negotiating with 10 or so registrants. According to the commenter, while some registrants follow/use the principles in negotiations, others disregard the principles. In order to achieve a fair and equitable process all registrants should be strongly encouraged to use the same principles without allowing for different interpretation of the principles. It was proposed that a change in wording would help accomplish this.

    PMRA Response: The compensation principles in Appendix E of the section 66 Agreement are intended as a tool for use by an Arbitral Tribunal in rendering a decision with respect to the amount of compensation to be awarded during the arbitration process as well as to aid parties in reaching a negotiated settlement. The principles are not binding on any party. The Arbitral Tribunal will retain discretion under the final offer binding arbitration process in deciding which party's compensation offer to accept. No changes were made to Appendix E Compensation Principles as a result of this comment.

11. An innovator registrant requested that in addition to the Arbitral Tribunal having the discretion to award costs against a registrant if they seek to discontinue their registration during the arbitration period, the Arbitral Tribunal should also be granted authority to consider compensation payable for the period that the registrant maintained its registration since the re-evaluation or special review initiation and the date that the registrant withdraws its registration. In addition, the commenter indicated that a data holder should be permitted to serve the proposed section 66 Agreement in the event that the registrant seeks to discontinue its registration at the completion of the re-evaluation or special review. Otherwise, registrants are provided a “free ride” through the re-evaluation or special review process.

    PMRA Response: Pursuant to the Regulations, called-in data becomes compensable data when it is considered by the Minister in support of the final re-evaluation or special review decision.

    Article 7 of the section 66 Agreement provides that the part of an arbitral award for compensation payable, including for use or reliance on test data for the time period from the date of the final re-evaluation or special review decision to the discontinuation date, is not binding and enforceable if a registrant decides to leave the market.

12. An innovator registrant requested that the requirement for the data holder or registrant to enter into the proposed section 66 Agreement within 60 days of the final re-evaluation or special review decision being published, should commence after the Minister issues the final list of compensable data and following any administrative process that allows for the data holder to comment upon or appeal the list.

    PMRA Response: Section 17.13 of the Regulations requires that the list of test data for which compensation may be payable will be made available at the time of publishing the final re-evaluation or special review decision. The process to establish the list of test data requiring compensation will be set out in guidance. As such, no changes were made to the section 66 Agreement because of this comment.

13. An innovator registrant commented that the PMRA Information Note – “Questions and Answers Related to Data Requirements and Data Protection during Re-evaluation and Special Review” (June 2021), clearly requires data compensation for products that remain registered at the time that the final re-evaluation or special review decision is published. However, within this proposal, there are no provisions set to encourage registrants to enter negotiations before a re-evaluation or special review is finalized. Moreover, according to the commenter, the PMRA’s proposal could enable registrants to maintain an active ingredient (and its associated end-use products) registration past re-evaluation until renewal.

    PMRA Response: The online Questions and Answers were intended as a tool to assist in implementing compensation requirements under the previous regulations respecting the protection of test data. This tool does not apply to the Regulations. Under the Regulations, the PMRA will require an LOA at the next renewal of the registrant’s product. If an LOA is not provided, the product’s registration will not be renewed if the registrant cannot demonstrate that they are actively negotiating, at arbitration, or provide evidence that the data holder did not provide an LOA as per the settlement agreement or arbitral award. Further, if a registrant that uses or relies on a data holder’s test data does not comply with the terms of a settlement agreement or the arbitral award, the data holder could seek to enforce the settlement agreement or arbitral award in court. As such, no changes were made to the section 66 Agreement because of this comment.

14. An innovator registrant encouraged greater transparency on data ownership and obligations, indicating that it is important for data holders to know which registrants committed to use or rely on a data holder’s data during re-evaluations or special reviews. It is also important for registrants to have a clear understanding as to which studies they need to use or rely on, including to determine if cancellation is needed before a re-evaluation or special review is finalized to avoid potential data compensation obligations. The innovator requested that the PMRA provide data holders and registrants with information regarding the called-in data and the re-evaluation and special review commitments before a re-evaluation or special review is finalized.

    PMRA Response: The list of test data considered by the Minister in support of the re-evaluation or special review decision will be made available to data holders and other registrants on the day the Minister makes public the final re-evaluation or special review decision. The process to establish the list of test data requiring compensation will be set out in guidance. As such, no changes were made to the section 66 Agreement because of this comment.

15. An innovator registrant objected with respect to section 11 of Appendix B and section 10.4 of Appendix C of the proposed section 66 Agreement to the disclosure of the “amount, method and security of the compensation payable” of the settlement agreement and arbitral award. The amount of compensation paid by any party is the result of confidential negotiations and concessions made by both parties. These negotiations are unique to the parties and their relationships, and should not be made public. If such information is disclosed, this would have the effect of stifling commercial negotiations. As well, the innovator strongly objects to the disclosure of the arbitral award to assist future Arbitral Tribunals as set out in section 5(e) of Appendix D.

    PMRA Response: The disclosure of information in section 11 of Appendix B to PMRA is to allow the agency to administer the Regulations and the information would be subject to the confidentiality provisions of the Pest Control Products Act. The disclosure of information under section 10.4 of Appendix C by the Arbitral Tribunal is only to both parties to the arbitration, who can decide pursuant to section 10.5 of Appendix C to share that information with the PMRA. The disclosure of the award information to future Arbitral Tribunal is an existing provision and that information would be subject to the confidentiality requirements of that proceeding. As such, no changes were made to the section 66 Agreement because of this comment.