Intellectual property lawyers say that Health Canada's May 2025 decision to eliminate routine phase III efficacy trials for biosimilar drugs could accelerate competition while increasing the importance of intellectual property strategy.
Lawyers who advise both innovator and biosimilar companies say the change is expected to reduce development costs, shorten approval timelines and potentially increase access to lower-cost biologic medicines.
At the same time, practitioners caution that while the regulatory pathway may be becoming more streamlined, the legal and commercial challenges surrounding biosimilars remain substantial. Patent disputes, data protection, reimbursement policies and market-access considerations are likely to become even more important as biosimilar manufacturers move more quickly toward commercialization.
The revised guidance reflects a growing international consensus that sophisticated analytical testing can often provide sufficient evidence of biosimilarity without requiring costly and time-consuming efficacy trials involving hundreds or thousands of patients.
What makes a biosimilar different
"A biosimilar is often described as the biologic equivalent of a generic drug," says Adam Heckman, who practises with Gowling WLG (Canada) LLP in Ottawa. "However, because biologics are much larger and more complex products made using living organisms, a biosimilar is not an exact copy of the original biologic. Instead, it must be shown to be highly similar."
Kristin Wall of Norton Rose Fulbright Canada LLP in Toronto notes that biologics include products such as growth hormones and monoclonal antibodies that are derived from living systems. "A biologic drug is particularly a large molecule," Wall says. "They're often made from living organisms or cells.” Examples of biologic drugs include insulin, growth hormones, and antibodies.
Because of the complexity of those manufacturing processes, creating an exact copy is effectively impossible. This complexity fundamentally shapes both regulation and intellectual property considerations.
Urszula Wojtyra, a principal at Smart & Biggar LLP in Toronto, emphasizes the magnitude of the difference between traditional small-molecule pharmaceuticals and biologics.
"One analogy I've seen is that a traditional small-molecule drug is the size of a tennis ball, while a biologic drug is the size of a hot-air balloon," she says.
Nisha Anand, with the IP litigation firm Anand & Siu LLP in Toronto, explains: "When a biosimilar manufacturer uses a different cell line, production process or starting material than the innovator company, additional variability is introduced," she says.
A faster pathway, but the science still applies
Historically, biosimilar manufacturers seeking approval in Canada were generally required to conduct comparative clinical efficacy studies, often large phase III trials involving hundreds or thousands of patients. Under Health Canada's updated guidance, those studies are generally no longer required.
Jordan Scopa, a partner in the litigation and dispute resolution group at Goodmans LLP in Toronto and co-chair of Goodmans' intellectual property group, says biosimilar approval can now be based on comparative pharmacokinetic (and potentially pharmacodynamic) studies.
“While these 'PK' and 'PD' studies are not necessarily the same as the bioequivalence studies used to approve ‘small-molecule’ generic drugs, they are more akin to those types of studies,” he says. “They are smaller, shorter and relatively less expensive than phase III clinical trials.”
The shift reflects more than a decade of experience reviewing biosimilars.
"We now have around 90 approved biosimilars in Canada and many more globally," says Wojtyra. "Health Canada has stated these changes stem from its substantial experience evaluating these products.”
Anand agrees that regulators are increasingly comfortable relying on evidence demonstrating similarity at a molecular and functional level.
"Health Canada is essentially saying that, based on current scientific understanding, demonstrating high similarity to a proven biologic is sufficient evidence in many cases," Anand says.
Scopa at Goodmans adds that the biosimilar no longer needs a scientific justification or rationale to support its approval for each use of the reference biologic drug. Instead, if the biosimilar is demonstrated to be “highly similar,” then the presumption will be that it can be approved for every indication of the reference biologic drug.
For example, he says that if the reference biologic drug is approved to treat rheumatoid arthritis and Crohn’s disease, then, if high similarity is established, the biosimilar can be approved for both indications without further scientific justification. Previously, such a scientific justification was required and could have included the need to conduct a clinical study, depending on the circumstances.
Along with regulators concluding that “the extensive comparative evidence for biosimilars already submitted is often sufficient,” Wall points to a second rationale behind the change: international harmonization.
"The European Union has been operating under similar principles, and the United States has also been implementing comparable changes," she says. The revised guidance, therefore, places Canada squarely within a broader international trend.
The elimination of phase III efficacy trials could also substantially reduce development costs. According to a 2021 report in JAMA Internal Medicine, a typical phase 3 trial for a biosimilar drug enrolled 538 patients, treated them for 55 weeks, and cost an estimated US$28 million (median values from 29 trials).
Wojtyra notes: "Time and cost are two of the biggest factors in drug development."
Reducing those burdens may encourage additional manufacturers to enter the biosimilar market and increase competition, says Heckman. "The goal is to accelerate the approval process and bring biosimilars to market more quickly and at lower cost," he says.
Anand similarly notes that for governments and drug plans facing rising healthcare costs, increased biosimilar competition could generate meaningful savings.
Despite the removal of routine efficacy studies, lawyers caution against viewing biosimilars as approaching the generic-drug approval model. The scientific burden remains considerable.
Wojtyra says analytical and quality requirements remain extensive. Manufacturers must demonstrate that a biosimilar is highly similar to the reference biologic, including its structural and functional characteristics, and must provide evidence addressing immunogenicity concerns.
Anand emphasizes that sponsors must still demonstrate how the biosimilar behaves in the body and ensure that it does not trigger unexpected immune responses.
Patent strategy in a biosimilar market
Although Health Canada's guidance has changed, Canada's intellectual property framework has not.
Wall notes that biosimilars and generic drugs are subject to the same legal regime under the Patent Act and the Patented Medicines (Notice of Compliance) Regulations.
"From an intellectual property perspective, biosimilars and generic drugs are treated the same way in Canada," she says.
Under the patent-linkage system, biosimilar manufacturers must address patents listed on the Patent Register before obtaining approval.
Heckman explains that companies seeking approval must either wait for listed patents to expire or challenge them through the regulatory process.
In light of these changes, Scopa says brand-side patentees should likely expect increased regulatory filings by biosimilar manufacturers and, potentially, increased patent litigation. Biosimilar manufacturers should similarly expect increased competition from other biosimilar manufacturers, thereby creating an even greater incentive to be the first to obtain marketing approval.
Although the legal framework is familiar, biologic patent portfolios are often far more complex than those associated with conventional pharmaceuticals.
Biologics may be protected by numerous patents covering the product itself, manufacturing methods, formulations and therapeutic uses.
"Biosimilar manufacturers must often navigate what is sometimes called a 'patent thicket' to get their products approved," Anand says.
Wall says disputes between innovators and biosimilar manufacturers almost always revolve around patents. "The key question is whether a biosimilar can enter the market without infringing patents held by the originator company," she says.
The revised guidance may accelerate those disputes. Heckman notes that earlier biosimilar filings could trigger patent litigation sooner than innovators previously expected.
As a result, both innovators and biosimilar manufacturers may need to develop litigation strategies earlier in the product lifecycle.
One less obvious consequence of eliminating phase III trials may be reduced visibility into future competition.
"Previously, biosimilar manufacturers had to register phase III clinical trials, which provided visibility into potential future competitors," says Wojtyra, adding that innovator companies may need to become more proactive in managing their intellectual property portfolios.
Patent applications must be filed and prosecuted efficiently so that key patents are issued and listed on the Patent Register before biosimilar competitors arrive.
Interchangeability, reimbursement and data protection
Regulatory approval does not necessarily determine how a biosimilar will be used in practice. Unlike generic drugs, biosimilars are not automatically interchangeable with reference biologics.
Wall notes that biologics are more complex products and patients may respond differently when switching therapies. Additional clinical oversight may therefore be required.
Heckman explains that Health Canada does not issue declarations of equivalence for biosimilars in the same way it does for generics. Instead, provincial reimbursement policies often drive practical outcomes.
Many provinces have adopted biosimilar transition programs that require or strongly encourage patients receiving publicly funded biologics to switch to biosimilar alternatives. Wojtyra says these policies are largely motivated by the potential savings biosimilars can generate for public drug plans.
At the same time, reimbursement decisions can become complicated where biologics are approved for multiple indications and different patent considerations apply to different uses.
Unlike the United States, Canada has not adopted a separate patent litigation regime specifically designed for biologics. There appears to be little appetite for such a change at this time.
"I don't see a significant push for separate patent litigation legislation here," says Wojtyra.
Anand reaches a similar conclusion, noting that Canada's existing framework already provides effective mechanisms for enforcing patent rights and resolving disputes.
While few practitioners see a need for biosimilar-specific patent legislation, several identify data protection as an area where future policy debates may emerge.
That said, says Scopa, “as more patent proceedings relating to biosimilars are litigated, it is always possible that unique issues may arise that are not apparent today.”
Wall notes that Canada currently provides eight years of data protection for biologics, compared to 12 years in the US. Heckman adds that European jurisdictions generally provide approximately 10 or 11 years of protection, and some stakeholders argue that longer exclusivity periods are justified given the complexity and cost of biologic development.
The bottom line, says Heckman, is that "everyone needs to think about intellectual property much earlier in the product lifecycle."
Anand suggests policymakers could also consider incentives for first biosimilar entrants, noting that Canada currently offers little advantage to the first manufacturer to navigate the patent landscape successfully.
For now, however, the focus remains on Health Canada's revised approval framework and its potential impact on competition.
As biosimilar development becomes faster and less expensive, lawyers expect both innovators and biosimilar manufacturers to adapt their regulatory, commercial and intellectual property strategies accordingly. The result could be a more competitive biologics market – one that delivers lower costs for healthcare systems while testing the balance between innovation and access that lies at the heart of pharmaceutical regulation.