Dormant DINs Revisited: MFN Pricing And The Evolving Impacts On Canada’s Patent Linkage Regime

On January 26, 2024, Health Canada issued a notice clarifying that drugs with a “dormant” Drug Identification Number (“DIN”) may not be considered “marketed” for the purposes of the Patented Medicines (Notice of Compliance) Regulations (the “PM(NOC) Regulations”). In our first bulletin on the subject, we reviewed the consequences of that position for innovators relying on Canada’s patent linkage framework to protect their innovative medicines.

Developments since then, including renewed U.S. attention to most‑favored‑nation (“MFN”) drug pricing have heightened the legal and policy concerns associated with that notice. In our view, those concerns merit renewed scrutiny.

A Brief Recap: Dormant DINs and PM(NOC) Protection

Health Canada assigns a DIN “dormant” status when a drug product has not been sold in Canada for 12 consecutive months. Dormancy is an administrative classification tied to sales activity, not a withdrawal of regulatory approval. It is also not a permanent status, since a dormant DIN can return to “active” status once a sale has occurred.

In its January 26, 2024 notice, Health Canada indicated that a dormant DIN may be treated as evidence that the drug is no longer “marketed” in Canada for PM(NOC) purposes. The notice does not purport to define “marketing” under the Regulations, nor does it state that dormancy is determinative in all cases. Rather, it suggests how Health Canada may determine whether there is an “other drug marketed in Canada” within the meaning of subsection 5(1) of the PM(NOC) Regulations.

That determination is critical for Canada’s patent linkage regime. Where no “other drug marketed in Canada” exists within the meaning of subsection 5(1) of the PM(NOC) Regulations, a generic drug company may obtain a Notice of Compliance without triggering the patent linkage regime - even where the reference product was previously approved, remains covered by unexpired patents and a better version of the reference product (although under a different DIN) is still available to Canadian patients.

On its face, the notice does not purport to eliminate PM(NOC) protection whenever a DIN becomes dormant. Nor does it amend the regulatory criteria for patent linkage. Instead, it introduces a practical risk: where an innovator’s product has not been sold for 12 months, dormancy may be cited as evidence that the product is no longer marketed, potentially enabling a generic applicant to obtain an NOC without engaging the linkage regime, without regard to the reason for such dormancy or whether the same sponsor for the dormant product continues to market different versions of the product (although under different DINs) for treating the same conditions.

Importantly, the potential impact of Health Canada’s notice is not limited to DINs that have formally transitioned to “dormant” status. Dormancy is an administrative classification reached after 12 months without recorded sales, but the statutory concept under subsection 5(1) of the PM(NOC) Regulations - whether an “other drug [is] marketed in Canada” - is not expressly tied to that threshold. It remains open to a subsequent entry applicant to argue that a drug is not “marketed” even before dormancy is triggered, based on the factual absence of sales, limited or sporadic availability, supply interruptions, or other indicia of non‑commercialization. On this view, dormancy operates not as a bright‑line rule but as one evidentiary signal among others that may be invoked in assessing marketing status. The logical extension is that the window of potential vulnerability may begin earlier than the 12‑month dormancy period, further increasing uncertainty for innovators managing launch timing, relaunches, or partial withdrawals of specific presentations.

This approach seems to have been inspired by brief comments in the Federal Court’s decision in AbbVie Corporation and AbbVie Biotechnology Ltd. v Canada (Health), 2022 FC 1209, that the PM(NOC) Regulations are intended to protect patent rights only in respect of drugs actually available to Canadians. The Court briefly referred to the dormant status of the DIN targeted by that litigation in deciding that it was “not marketed” in Canada.

In practice, the policy increases uncertainty for innovators whose Canadian approvals are maintained but whose products are not continuously sold for patient benefit, commercial or strategic reasons, or for those who only maintain approvals for certain indications or dosage types. While “dormancy” is not legally dispositive, it may influence the evidentiary balance in PM(NOC) eligibility assessments.

A further practical implication flows from the fact that DINs are assigned at the level of individual drug “presentations”, including specific strengths, dosage forms, and routes of administration. As a result, the PM(NOC) analysis is not conducted at the level of the medicinal ingredient as such, but by reference to the particular presentation against which a subsequent entry applicant makes its comparison.

This creates the possibility of fragmented linkage protection across a single product portfolio. An innovator may continue to actively market one or more presentations of a molecule in Canada (e.g., a tablet formulation or a higher strength), while another presentation (e.g., a lower strength, different dosage form, or legacy indication) becomes commercially inactive and ultimately dormant. In that circumstance, a generic drug company could seek to rely specifically on the non‑marketed presentation and argue that there is no “other drug marketed in Canada” for the purposes of subsection 5(1), potentially avoiding the patent linkage regime altogether.

Put differently, continued commercialization of one DIN does not necessarily preserve PM(NOC) protection for all DINs associated with the same medicinal ingredient. Where different presentations are separately approved and assigned distinct DINs, each may give rise to an independent “marketing” inquiry. This presentation‑level granularity materially heightens the practical significance of Health Canada’s dormancy position for lifecycle management strategies and product line optimization decisions.

Dormant Is Not Discontinued

One feature of Health Canada’s broader regulatory framework warrants closer attention: the distinction between “dormant” and “discontinued” products.

Under the Food and Drug Regulations, a DIN may become dormant for administrative or commercial reasons relating to sales activity. By contrast, “discontinued drugs” are subject to a separate regulatory regime, reflecting an affirmative decision to withdraw a product from the Canadian market with no intention to reintroduce it.

Treating DIN dormancy as determinative proof that a drug is no longer “marketed” in Canada for PM(NOC) purposes is problematic from a legal and practical perspective. First, it conflates two separate regulatory concepts, drawn from different statutory schemes and designed to serve different objectives. Second, even if analogies are to be drawn across distinct legal regimes (in this case, the Food and Drug Regulations and the PM(NOC) Regulations), dormancy is the wrong concept to select as analogous to “not marketed”; if any concept can legitimately be analogized, it would be discontinued DINs, not dormant ones, that are the closest analogue to the PM(NOC) concept of non-marketing.

The distinction becomes even more consequential when viewed through the lens of presentation‑specific approvals. Because discontinuation decisions are typically intentional and product‑wide, whereas dormancy may arise passively at the level of individual DINs, treating dormancy as a proxy for non‑marketing risks disproportionately affecting discrete presentations rather than entire product families - a result not obviously aligned with the structure or purpose of the PM(NOC) regime.

Considering CUSMA

More fundamentally, it is not at all clear that decisions of this nature can be made by Health Canada, or via a mere notice. The Patent Act expressly confers authority over most PMNOC-related to the regulation-making powers of the Governor in Council (i.e. the federal cabinet). That power to regulate this matter having been granted to a different decision-maker, and that power being exercisable only by regulation, it is whether Health Canada can purport to make rules on the same topic by mere notice posted to its website.

Under the CUSMA, Canada committed to providing “adequate and effective protection and enforcement of intellectual property rights” to American and Mexican patent holders. Canada specifically agreed to develop a system to provide such patent holders the opportunity to enforce their intellectual property rights when others undertake to market previously approved drugs. While Canada was afforded the discretion to determine the appropriate method of implementing its commitments under the CUSMA, nothing in the text of the agreement indicates that the protections are contingent upon sales activity.

Despite the apparent inconsistency between Canada’s domestic linkage regime and its CUSMA commitments, patent holders have struggled to challenge the regime on this basis. As is illustrated by the AbbVie decision, where the patent holder unsuccessfully sought judicial review of the decision to approve a biosimilar in formulations that were not actively marketed in Canada on the basis that the approval would be inconsistent with the CUSMA, courts will typically review approvals on a deferential standard, assessing only whether the decision falls within the range of possible, acceptable outcomes in the circumstances.

While patent holders may lack effective means to challenge Canada’s linkage regime, any potential nonconformity with the CUSMA may undermine Canada’s positioning as a reliable trade partner and leave Canada vulnerable to potential challenge under the State-to-State dispute settlement provisions of the CUSMA. Canada’s treatment of intellectual property rights has already become a point of contestation as the parties to the CUSMA meet to consider potential revisions to the agreement during the 2026 joint review.

MFN Pricing and Global Launch Sequencing

The timing of Health Canada’s dormancy notice is particularly noteworthy in light of renewed MFN pricing initiatives in the United States.

In May 2025, the White House issued an executive order directing U.S. agencies to implement MFN pricing for certain prescription drugs, tying U.S. prices to the lowest prices available in comparable foreign markets. While the operational details continue to evolve, the policy objective is clear: using foreign reference prices to cap domestic reimbursement.

For innovative manufacturers, MFN pressure heightens the strategic importance of launch timing and market sequencing. Lower‑priced markets may be delayed or deprioritized to avoid downward price spill‑over into the United States.

That dynamic interacts uneasily with Health Canada’s dormancy policy. Where a product has received regulatory approval in Canada but is not launched, or where certain DINs are not kept commercially active, innovators face a real risk that their products will be classified as dormant, potentially stripping PM(NOC) protection if and when competitors rely on those approvals.

The presentation‑specific nature of DINs amplifies this risk. Strategic decisions to defer or limit the commercialization of particular strengths or dosage forms - whether for pricing, reimbursement, or supply reasons - may expose those specific DINs to arguments of non‑marketing even where the core product remains available in Canada. In an MFN‑influenced environment, selective or staged launches across presentations may therefore carry unintended linkage consequences.

In effect, global pricing policy may now indirectly influence the availability of patent linkage protections in Canada.

The combined effect of these policies risks creating an unintended feedback loop:

• MFN pricing pressures discourage early or full Canadian launches;
• Non‑sale leads to DIN dormancy;
• Dormancy undermines PM(NOC) protection;
• Reduced effective IP protection further discourages market entry.

Over time, this may delay access to innovative medicines, reduce treatment options, and weaken Canada’s position as a priority market for life sciences investment.

Health Canada’s notice has not changed the text of the PM(NOC) Regulations. Nor can new eligibility criteria for patent linkage be created by policy announcement alone; under the Patent Act, such changes fall within the Governor in Council’s regulation‑making authority.

Against a backdrop of MFN pricing, evolving trade obligations, and market access pressures, the dormancy issue is no longer merely a technical administrative question. It is increasingly a structural issue at the intersection of IP protection, drug pricing, and international policy.

Innovators, generic manufacturers, and policymakers alike should be alert to the cumulative effects of these developments - and to whether Canada’s patent linkage framework continues to operate as intended in a rapidly changing global environment.

Particular attention should be paid to presentation‑level commercialization strategies and periods of limited or interrupted sales, as these may have disproportionate effects on the availability of PM(NOC) protection across a product’s lifecycle - even in advance of formal dormancy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.