PATENTEES' GUIDE TO REPORTING

Forms 1, 2 and 3

of the

Patented Medicines Regulations, 1994

Patented MedicinePrices Review Board

Issued: May 1995Posted on the PMPRB website: February 2003

Patentees' Guide to ReportingTable of Contents

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(paper copy: white section)

Background and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Purpose, Scope and Limitations of the Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Layout of the Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Confidentiality of Reported Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Alternative to the Reporting Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Where to Get Help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Mailing List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Mailing List Amendment Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

FORM-1 MEDICINE IDENTIFICATION SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5(paper copy: grey section)

General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Block-1 Names and Use(s) of the Medicine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Block-2 Notice of Compliance (NOC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Block-3 Drug Identification Number (DIN or General

Public (GP) Number) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Block-4 Patent Numbers of Patentee's or Former Patentee's

Inventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Block-5 Patentee or Former Patentee Name, Address and Status . . . . . . . . . . . . . 9Block-6 Certifying Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

FORM-2 IDENTITY AND PRICE OF MEDICINES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11(paper copy: pink section)

General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Block-1 Reporting Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Block-2 Names of the Medicine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Block-3 Reporting Patentee or Former Patentee . . . . . . . . . . . . . . . . . . . . . . . . . . 13Block-4 Sales of the Medicine by the Patentee or Former Patentee

in Final Dosage Form in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Block-5 Ex-Factory Prices for Canada and Other Countries . . . . . . . . . . . . . . . . . 16

TABLE OF CONTENTS PMPRB

FORM-3 LICENSEES, REVENUES AND EXPENDITURES . . . . . . . . . . . . . . . . . . . . . . . . . . 18(paper copy: green section)

General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Block-1 Year to which Information Applies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Block-2 Identification of Patentee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Block-3 Licensees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Block-4 Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Block-5 Non-Capital Expenditures of the Patentee . . . . . . . . . . . . . . . . . . . . . . . . . 22Block-6 Total Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Block-7 Type of Research and Development -

Medicine for Human Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Block-8 Type of Research and Development -

Medicine for Veterinary Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Block-9 Source of Funds for R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Block-10 Information for R&D in Each Province . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Block-11 Certifying Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29(paper copy: blue section)

APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35(paper copy: yellow section)

List of Codes

APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37(paper copy: white section)

Sample Copies of Reporting Forms

FORM-1 Medicine Identification Sheet

FORM-2 Information on the Identity and Prices of the Medicine

Sales of the Medicine by the Patentee or Former Patentee in FinalDosage Form in Canada

Ex-Factory Prices for Canada and Other Countries

FORM-3 Revenues and Research and Development Expenditures ProvidedPursuant to Subsection 88(1) of the Patent Act

Notification of Intent to Sell - pursuant to Subsection 82(1) of the Patent Act(as published in the Compendium of Guidelines, Polices and Procedures)

Issued 95/05 1

Patentees' Guide to ReportingIntroduction

Introduction

Background and Authority

The 1987 amendments to the Patent Actestablished the Patented MedicinePrices Review Board (hereafter referredto as the PMPRB). The PatentedMedicines Regulations, 1994 (hereafterreferred to as the Regulations), asprovided for by the Patent Act, establishthe data reporting requirements to whichthis Guide is addressed.

This reporting Guide has been preparedunder the authority of the PMPRB, which isresponsible for ensuring compliance withthe Patent Act and the Regulations.

Purpose, Scope and Limitations ofthe Guide

This Guide is a reference document tohelp patentees complete Forms 1, 2 and 3. The Guide explains each element ofinformation to be reported, how andwhen the information is to be submitted tothe PMPRB.

This Guide is intended as a reference tool,not an exhaustive interpretation of thereporting requirements of the Regulations. The instructions and definitions areintended to assist patentees; they have nolegal force and for the formal definitions,reference to the legislation must be

made. While every attempt has beenmade to explain the three reporting forms,it may be necessary to consult directly withPMPRB staff for further guidanceregarding complex situations orparticular cases. Patentees areencouraged to contact the complianceofficer assigned to their company.

In the event of a discrepancy between thisGuide and the Regulations, theRegulations shall, in all cases, prevail. Further, the PMPRB has the right to applysuch definitions as it considers necessaryto administer the Patent Act and achieveits purpose and intent in accordance withthe law.

This Guide will be revised from time to timeto reflect changes in reportingrequirements, and to further clarify currentrequirements.

Layout of the Guide

The Guide consists of five sections: thisintroduction, three sections relating tothe reporting forms, and a glossary. Theappendix includes the blank reportingforms and the list of codes to be used tocomplete Form-1 and Form-2.

Blank reporting forms included in this guidemay be photocopied for reportingpurposes. Additional forms may beobtained from the PMPRB offices.

INTRODUCTION PMPRB

2 Issued 95/05

Interpretations

For the purposes of this Guide, pleasenote the following:

PersonFor reporting purposes the word "person"means an individual, a company orcorporation, or any other legal entitysuch as a partnership, trust, jointventure or other form of businessenterprise.

Singular/PluralAll references in the singular case shallinclude the plural, and references to theplural shall include the singular.

Confidentiality of ReportedInformation

Section 87 of the Patent Act states thatinformation gathered by means of thesereporting forms is privileged, and will not(except when permitted by that section) becommunicated, disclosed or madeavailable to any party not legally entitled tosuch information.

Alternatives to the Reporting Forms

While the forms are not legally prescribed,the information therein is, and the PMPRBstrongly urges their use given the benefitthe patentees will receive in the conduct ofa more expeditious review. That beingsaid, however, the PMPRB stronglyencourages electronic reporting usingdiskettes. The PMPRB has availableon diskette Lotus 1-2-3 spreadsheettemplates of the reporting forms. These diskettes are available fromthe PMPRB at no charge and providean interactive, menu-driven methodof completing the reporting forms. These templates require an IBM-compatible microcomputer and Lotus

1-2-3 (Release 2.0). There are norestrictions on copying or distributing thesetemplates. Patentees who wish to reporton diskette using a method other than thePMPRB supplied templates should checkwith PMPRB staff in advance, to ensurethat the submitted data will be acceptable inlayout and hardware/software compatibility.

If patentees still prefer to report on paper,the PMPRB will consider informationsubmitted in other formats. These couldinclude printouts or other printed reportsgenerated by the patentee. To beconsidered by the PMPRB, these printoutsor other reports should maintain the samegeneral layout as the reporting forms. At aminimum, use the same headings, in thesame order, as the official reporting forms. Each page should contain information forno more than one drug product or reportingperiod. Patentees should consult PMPRBstaff about the layout of alternative-formatreports or printouts prior to submission. Patentees are responsible for ensuringthat these include all the informationrequired under the Regulations.

Certain reporting formats are notacceptable:

• Photocopies of price lists that donot have the same general layoutand headings of the official reportare not acceptable for the Block 5publicly available prices.

• Price lists in languages other thanEnglish or French are notacceptable.

• Reports that show information formore than one reporting period ona single page are not acceptable.

PMPRB INTRODUCTION

Issued 95/05 3

Where to Get Help

Please direct questions regardingcompletion of the reporting forms to thePMPRB by mail, telephone or fax:

Address:

Patented Medicine Prices Review BoardBox L40Standard Life Center333 Laurier Avenue WestSuite 1400Ottawa, OntarioK1P 1C1

Telephone:

(613) 952-7360 Secretary to the Board

Facsimile:

(613) 952-7626

Communications may be in either officiallanguage.

Mailing List

If you would like to be added to thePMPRB's mailing list please complete thefollowing sheet and either mail or fax therelevant information.

INTRODUCTION PMPRB

4 Issued 95/05

MAILING LIST AMENDMENT FORM

Please make the following change to your mailing list:

Addition [ ]Deletion [ ]Revision [ ]

Name:

Company/Organization:

Title:

Address:

Postal Code:

Telephone: ( ) -

Facsimile: ( ) -

Please send this completed form to:

Patentees' Guide to ReportingPatented Medicine Prices Review BoardBox L40Standard Life Centre333 Laurier Avenue WestSuite 1400Ottawa, OntarioK1P 1C1

Tel: (613) 952-7360Fax: (613) 952-7626

Issued 95/05 5

Patentees' Guide to ReportingForm-1 - Medicine Identification Sheet

General Information

Purpose

Form-1 is to be used by patentees toreport information on patented drugproducts for which a Notice of Compliance(NOC) has been issued, or which arebeing offered for sale in Canada. ThePMPRB uses the reported information toidentify patentees and patented drugproducts that are subject to the reportingrequirements of the Regulations.

Definitions of key terms used in theseforms are included in the Glossary.

Submit a separate Form-1 for eachpatented drug product within thirty days of itbeing issued a NOC or being offered forsale in Canada, whichever comes first. Also use Form-1 to report any changes,additions or deletions to informationpreviously submitted on Form-1.

Intent to sell in a new market

The 1993 amendments to the Patent Actrequire patentees to notify the PMPRB, assoon as this is possible, of an intention tosell a patented drug product in a newmarket in Canada, and the date on whichthe patentee intends to offer the drugproduct for sale. The form for providingthe required information can be found inthe Compendium of Guidelines, Policiesand Procedures, Schedule 6, page SCH6:2, as well as at the back of this Guide.

Who should provide information?

(a) PatenteeSection 79(1) of the Patent Actprovides the definition of theword "patentee":

"in respect of an inventionpertaining to a medicine, means theperson for the time being entitled tothe benefit of the patent for thatinvention and includes, where anyother person is entitled to exerciseany rights in relation to that patentother than under a licencecontinued by subsection 11(1) ofthe Patent Act Amendment Act,1992, that other person in respectof those rights."

In other words the word "patentee" is usedto mean not only the patent holder, but alsoany person acting for the patent holder asa seller or otherwise entitled to the benefitsof the patent (other than by compulsorylicence). Patent rights may includemanufacturing, distributing, marketing andselling the medicine. The interpretation of"patentee" will depend on the situation; itwill generally be the corporate entity thatsells the medicine into the distributionchain.

(b) Former PatenteeA patentee is referred to as aformer patentee once therelevant patents for a particulardrug product expire. TheRegulations require that a Form-1 be filed, for drug products not

FORM-1 PMPRB

6 Issued 95/05

previously filed, and only for theperiods under which the drugproducts were patented. TheBoard can request thisinformation within three years ofthe patent's expiry, if it hasreason to do so.

The patentee completing Form-1 is the"reporting patentee" or "former patentee".

Which drug products should bereported?

Once a patentee is issued a NOC for adrug product that has one or morerelated patents in force, the patenteehas 30 days to submit a Form-1. Thepatent(s) may be for (among otherthings) formulation of the medicine,processes involved in making the drugproduct, dosage forms, preparation ofdosage forms, or delivery systems of thedrug product. The patent(s) may or maynot be used in producing the drug product.

Patented drug products considered byHealth Canada to be "investigationaldrugs" (including drug products providedunder the "Emergency Drug Release"program), that are being offered for salecommercially or otherwise, and for whichno NOC has been issued, should alsobe reported on a Form-1 within thirtydays of first being offered for sale.

Changes/Additions/Deletions

Use another Form-1 to forward to thePMPRB any changes, additions anddeletions to information previously

submitted for a drug product on Form-1. Indicate in the check box at the top of theform that the submission amends anearlier submission. It is not necessary toresubmit all the information submitted onthe original Form-1. Block-1, Block-3 and Block-6 should always becompleted, as well as amended informationin the remaining blocks.

Forward any change to the identity (i.e.,name and/or address) of the reportingpatentee or former patentee to thePMPRB in writing.

Direct any questions about changes,additions and deletions that cannot beresolved by these guidelines to theofficer assigned to your company.

Due Dates

Form-1 should be submitted to the PMPRBnot later than:

i. 30 days after the Notice ofCompliance is issued or

30 days after a patented drugproduct has been offered for salein Canada, whichever comesfirst; or

ii. 30 days after any changes,additions or deletions are madeto the information originallysubmitted to the PMPRB on aForm-1.

Filing Information

In the appropriate box at the top of theform, specify whether it is an originalfiling or an amendment.

PMPRB FORM-1

Issued 95/05 7

BLOCK-1 Names and Use(s)of the Medicine

State the Brand Name and Generic Nameof the drug product to be identified by thisform. For example:

Brand Name... ...ValiumTM

Generic Name... ...diazepam

Therapeutic Use of the Medicine

State the therapeutic use(s) (not theindications) of the medicine asapproved by Health Canada. If thespace provided is not sufficient, add aseparate sheet. The Compendium ofPharmaceuticals and Specialties (CPS)1

provides acceptable therapeutic usedescriptions in bold italic at thebeginning of each product monograph. For example, the therapeutic uses ofValiumTM are listed as:

AnxiolyticSedativeMuscle Relaxant

Human/Veterinary Use

Indicate in the boxes provided whetherthe drug product is intended for humanor veterinary use. If the drug product isintended for both human and veterinaryuses, complete a separate Form-1 foreach. Veterinary drug products includefeed additives (e.g., antibiotics, vitamins)which have been classified as drugproducts.

Patentees should provide along witheither Form-1 or with the notification

of intended sale a copy of the productmonograph. This material will assist thestaff in its review of the new drugproduct and can expedite the reviewprocess by eliminating delays caused bythe need to request this information fromthe patentee at a later date.

BLOCK-2 Notice ofCompliance (NOC)

Introduction

The date given for the "Patentees' FirstNOC" should always be the earlier of:

- the date an NOC was issued tothe drug product named inBlock-1

- the date the drug product wasfirst offered for sale

Patentees' First NOC

Indicate the date on which the first NOCwas issued to the reporting patentee orformer patentee for the drug productnamed in Block-1.

Emergency Drug Release Program orInvestigational New Drug

If applicable, use the provided boxes toindicate whether the drug productnamed in Block-1 is being providedunder the Emergency Drug ReleaseProgram or the Investigational New DrugProgram.

1 The Compendium of Pharmaceuticals and Specialties (CPS) is published andcopyrighted by the Canadian Pharmaceutical Association.

FORM-1 PMPRB

8 Issued 95/05

BLOCK-3 Drug IdentificationNumber (DIN or GeneralPublic (GP) Number)

Drug Identification Number (DIN orGP Number)

Enter the DIN (or GP Number) thatapplies to the drug product identified inBlock-1. Enter only the DIN or GPnumber that identifies a form of the drugproduct to which the reporting patenteehas rights to sell, distribute, etc. If noDIN has been issued, indicate insteadwhen the drug product was first offeredfor sale in Canada. If the spaceprovided is not sufficient, attach aseparate sheet.

Dosage Form

Enter the dosage form that correspondsto the DIN (or GP number) entered inthe first column. Write out the dosageform in full - do not use codes. Examples of dosage forms include:

tablets, capsulesvialsinjectable ampoules, oralampoules

liquid, solution, syrupsuspensionsdropslotions, creamssprays, aerosolssuppositories

For a complete list of dosage forms,please refer to the Appendix. TheAppendix provides the list of dosageforms and is not intended to be used forthe purpose of identifying comparabledosage forms. The Compendium ofGuidelines, Policies and Procedures,Schedule 7, identifies comparabledosage forms.

Strength/Unit

For the DIN (or GP number) in the firstcolumn, indicate the correspondingstrength of the drug product. Strength isdefined as the amount of activeingredient, expressed in milligrams (mg),micrograms (:g or mcg) or asappropriate per unit of medicine.

The unit of medicine is expressed inunits of the dosage form such as tablets,millilitres, vials, etc. Be sure to state theunits being used. For example:

Dosage Form Strength

Tablets 10mg / tablet

Oral Liquid 10mg / ml

Injectable 10mg / vial

Cream 10mg / gram

Inhaler 10:g / metered dose

PMPRB FORM-1

Issued 95/05 9

Do not use percentages; use the styleshown above. For example, instead ofreporting an oral liquid with 1% of activeingredient, report 10 mg/ml.

For drug products with more than oneactive ingredient, report as above, butwith the amounts of active ingredientslinked by a "+" sign. For example:

Dosage Form Strength

Tablet 10mg of active ingredient A +20mg of active ingredient B / tab

Oral Liquid 10mg of active ingredient A +40mg of active ingredient B / ml

BLOCK-4 Patent Numbers ofPatentee's or FormerPatentee's Inventions

Patent Number

State the patent numbers for Canadianpatents that pertain to the drug productnamed in Block-1. Patents can berelated to (among other things) thechemical formulation of the medicine,processes involved in making the drugproduct, dosage forms, preparation ofdosage forms, or delivery systems forthe drug product. List those patentsowned by the reporting patentee orformer patentee, assigned to thereporting patentee or former patentee, orfor which the reporting patentee orformer patentee holds a licence (otherthan a compulsory licence).

Date Granted

For each patent listed in the first column,enter on the corresponding line in themiddle column the date(year/month/day) the patent wasgranted.

Expiry Date

For each patent number listed in the firstcolumn, enter on the corresponding linein the third column the correspondingexpiry date. Until recently, patentsexpired seventeen (17) years after thedate the patent was granted. Patentsgranted under the revised section 44 ofthe Patent Act will expire twenty (20)years from the date of the filing of theapplication of the patent in Canada2.

BLOCK-5 Patentee or FormerPatentee Name, Address andStatus

State the name and address of thereporting patentee or former patentee. Unless indicated otherwise, questionsregarding completeness, accuracy, etc.,will be directed to the individual signingthe form at the address recorded here. If some other individual or addressshould receive such communications,complete the "Address forCorrespondence" area at the bottom ofBlock-5.

2 For patent applications filed before October 1, 1989, the life of the Canadian patent is 17

years from the date the patent was granted. For patent applications filed after October 1,1989, the life of the Canadian patent is 20 years from the date of the filing of theapplication of the patent in Canada.

FORM-1 PMPRB

10 Issued 95/05

Status of Reporting Patentee orFormer Patentee

In the boxes provided, check off thedescription that best describes thestatus of the patentee completing thisform.

The patent holder is the person("person" is defined in the Interpretationssection at page 2) that owns the patent.

A person holding a licence is a person("person" is defined in the Interpretationssection at page 2) who is licensed by thepatent holder to exercise certain rights ofthe patent. This category excludes aperson who has a compulsory licence,as previously defined under section39(4) of the Patent Act amended in1993.

If the status of the reporting patenteedoes not fit into either of the situationsdefined above, then the category "other"should be indicated and the specificstatus of the patentee should bedescribed.

BLOCK-6 Certifying Signature

This form should be signed by thepatentee or former patentee (if anindividual) or corporate officer3 (if acorporation).

Signature

The individual signing should indicate ifhe/she is the patentee, former patentee,or its corporate officer. The individualsigning should have the authority torepresent the patentee, and beknowledgeable about informationreported on the form. Type or print thename of the person signing below thesignature.

Date Signed

State the date (year/month/day) the formwas signed.

Telephone and Facsimile Numbers

Provide telephone and facsimilenumbers for the reporting patentee,former patentee or the corporate officerwho signed above.

3 Corporate officer should be interpreted in the broad sense as meaning any corporateofficial or employee authorized to sign on behalf of the corporation.

Issued 95/05 11

Patentees' Guide to ReportingForm-2 - Identity and Prices of Medicines

General Information

Purpose

Form-2 is a multi-page reporting form onwhich the patentee provides informationon the prices of patented drug products. Submit a separate Form-2 semi-annuallyfor each patented drug product,according to the reporting periods anddue dates described on page 12.

When returning sheets, fill in the pagenumbers in the blanks at the top of eachpage. It is especially important to do sowhen returning multiple sheets for any ofthe blocks (generally Block-4 and Block-5).

Definitions of key terms used in theseforms are included in the Glossary.

Who should provide information?

(a) PatenteeSection 79(1) of the Patent Actprovides the definition of the word"patentee":

"in respect of an inventionpertaining to a medicine, meansthe person for the time beingentitled to the benefit of thepatent for that invention andincludes, where any other personis entitled to exercise any rightsin relation to that patent otherthan under a licence continued

by subsection 11(1) of the PatentAct Amendment Act, 1992, thatother person in respect of thoserights".

In other words the word "patentee" isused to mean not only the patent holder,but also any person acting for the patentholder as a seller or otherwise entitled tothe benefits of the patent holder (otherthan by compulsory licence). Patentrights may include manufacturing,distributing, marketing and selling themedicine. The interpretation of"patentee" will depend on the situation; itwill generally be the corporate entity thatsells the medicine into the distributionchain.

(b) Former PatenteeA patentee is referred to as aformer patentee once therelevant patents for a particulardrug product expire. TheRegulations require that a Form-2 be filed, for drug products notpreviously filed, and only for theperiods under which the drugproducts were patented. TheBoard can request thisinformation within three years ofthe patent's expiry, if it hasreason to do so.

The patentee completing Form-2 is the"reporting patentee" or "formerpatentee".

FORM-2 PMPRB

12 Issued 95/05

EXAMPLE:

If a new drug product is first offered for sale on March 15, 1995, a completed Form-2 would be due on May 15, 1995. The Form-2 report would cover the period March 15, 1995 to April 14, 1995. The next Form-2 would be due on July 30 and would cover the period March 15 to June 30 (it is recognized that some information will be reported twice).

Submission # Reporting Period Due Date

1 March 15 - April 14 May 15

2 March 15 - June 30 July 30

Which drug products should bereported?

Complete a Form-2 for each drugproduct for which at least one patentrelated to the medicine pertains. Patent(s) may be for (among otherthings) formulation of the medicine,processes involved in making the drugproduct, dosage forms, preparation ofdosage forms, or delivery systems forthe drug product. The patent(s) may ormay not be used in the production of thedrug product.

Patented drug products considered byHealth Canada to be "investigationaldrugs" (including drug products providedunder the "Emergency Drug Release"program), that are being offered for salecommercially or otherwise, and for whichno NOC has been issued, should alsobe reported on a Form-2.

Reporting Periods and Due Dates

Report Form-2 information semi-annually. Reporting periods and duedates will be as follows:

Reporting Period Due Date*

1 January 1 to June 30 July 30

2 July 1 to December 31 January 30

* If a due date falls on a weekend or statutory holiday the due date shall be the next business day.

Reporting Periods and Due Dates -New Drug Products

When a drug product is first offered forsale in Canada by, or on behalf of, thepatentee, the following reportingrequirements apply:

a) A completed Form-2 should befiled with the PMPRB not later

than sixty (60) days after the firstsale date in Canada of the newdrug product.

b) The information provided in thecompleted Form-2 should coverthe thirty (30) day periodfollowing the first sale date inCanada of the new drug product.

PMPRB FORM-2

Issued 95/05 13

BLOCK-1 Reporting Period

Enter the beginning and ending dates ofthe period to which the informationapplies. For example:

From: 1995/01/01(year/month/day)

To: 1995/06/30 (year/month/day)

BLOCK-2 Names of theMedicine

Brand Name and Generic Name of theMedicine

In this section enter the Brand Nameand the Generic Name of the drugproduct identified on this form. Forexample:

Brand Name... ...ValiumTM Generic Name... ...diazepam

BLOCK-3 Reporting Patenteeor Former Patentee

State the reporting patentee's name andaddress; in other words, the name andaddress of the company or individualcompleting this form.

Certifying Signature

This form should be signed by thepatentee or former patentee or thecorporate officer. Indicate in the blankthe number of pages returned. This willensure that PMPRB staff have receivedall the information.

Signature

The individual signing should indicate ifhe/she is the patentee, former patentee,or its corporate officer. The individualsigning should have the authority to

represent the patentee, and beknowledgeable of information reportedon the form. Type or print the name ofthe person signing below the signature.

Date Signed

Enter the date (year/month/day) the formwas signed.

Telephone and Facsimile Numbers

Provide telephone and facsimilenumbers for the reporting patentee,former patentee or the corporate officerwho signed the above.

BLOCK-4 Sales of theMedicine by the Patentee orFormer Patentee in FinalDosage Form in Canada

Introduction

The detailed information requested inBlock-4 relates to quantity and revenuesof Canadian sales, in final dosage form,of the drug product named in Block-2. Figures are required by province andclass of customer for each format(strength, dosage form and packagesize) of the medicine. (Use the codeslisted in the Appendix). Use a separateline to report each strength, dosage formand package size.

Drug Identification Number (DIN orGP Number)

Enter the DIN (or GP number) that applyto the drug product identified in Block-2. If no DIN has been issued, state insteadwhen the drug product was first offeredfor sale in Canada.

Format (Strength/DosageForm/Package Size)

(1) Strength/Unit

FORM-2 PMPRB

14 Issued 95/05

Indicate the strength of this drugproduct. Strength is defined as theamount of active ingredient,expressed in milligrams (mg),micrograms (:g or mcg) or asappropriate per unit of medicine. The unit of medicine is

expressed in units of the dosage formsuch as tablets, millilitres, vials, etc. Besure to indicate the units being used. For example:

Dosage Form Strength/Unit

Tablets 10mg / tablet

Oral Liquid 10mg / ml

Injectable 10mg / vial

Cream 10mg / gram

Inhaler 10:g / metered dose

Avoid using percentages; For example,instead of reporting an oral liquid with 1%of active ingredient, report 10 mg/ml.

Drug products with more than one activeingredient should be reported as above,but with the amounts of activeingredients linked by a "+" sign. Forexample:

Dosage Form Strength

Tablet 10mg of active ingredient A + 20mgof active ingredient B / tab

Oral Liquid 10mg of active ingredient A + 40mgof active ingredient B / ml

(2) Dosage FormUsing the codes that appear in theAppendix4, enter in the appropriatecolumn the dosage

form that corresponds to the strength andDIN information entered in the first twocolumns. For example:

Dosage Form Dosage Form Code

Tablet S1

Oral Liquid Solution L1

4 For a complete list of dosage forms, please refer to the Appendix. The Appendixprovides the list of dosage forms and is not intended to be used for the purpose of

PMPRB FORM-2

Issued 95/05 15

identifying comparable dosage forms. The Compendium of Guidelines, Policies andProcedures, Schedule 7, identifies comparable dosage forms.

(3) Package SizeIn the appropriate space, enterthe number of "units" perpackage. The package size

units must be the same as thoseindicated in the strength of the drugproduct. For example:

Dosage Form Strength Package Size

Tablets 10mg / tablet 200 (tablets)

Oral Liquid 10mg / ml 100 (millilitres)

Injectable 10mg / vial 12 (vials)

Cream 10mg / gram 100 (grams)

Inhaler 10:g / metered dose 200 (metered doses)

Inhaler 2mg / inhaler 1 (inhaler)

Quantity Sold (Number of PackagesSold)

Indicate for each DIN the total number ofpackages sold (including quantitiesdistributed for promotions, rebates, freegoods, etc.) during the reporting period. On a separate line, identify, the quantityof products provided under acompassionate program. The date ofsale is considered to be the date theproduct was shipped, not the datepayment was received. Returns (i.e.,product returned to the patentee forwhich a refund was provided) are to beincluded with the data of the reportingperiod in which reporting patenteereceived the return. Report onlyCanadian sales of the drug product infinal dosage form.

Net Revenues or Average Price perPackage

Record the Net Revenues wheneverpossible, otherwise provide theAverage Price per Package thatcorresponds to the number of packagessold. Report in dollars and cents - donot round up to the nearest dollar.

Net revenues consist of actual salesrevenues (excluding federal sales tax)received for the drug product sold (i.e.,shipped) during the reporting period lessamounts disbursed for rebates, refunds,or other such discounts.

Average price per package is defined asnet revenues (excluding federal salestax) divided by the total number ofpackages sold (or distributed as part of apromotion, rebate, etc.), indicated in the"quantity sold" column.

FORM-2 PMPRB

16 Issued 95/05

BLOCK-5 Ex-Factory Pricesfor Canada and OtherCountries

Information in Block-5 covers publiclyavailable ex-factory prices in Canadaand in the seven countries listed in theRegulations (France, Federal Republicof Germany, Italy, Sweden, Switzerland,United Kingdom, United States), for allfinal dosage forms of the medicinenamed in Block-2. List figures by"country or province" and "class ofcustomer" for each format (dosageform, strength and package size) of themedicine. Use the codes listed in theAppendix.

The Canadian patentee must supplyforeign ex-factory price data for allpatented drug products that theCanadian patentee sells or offers forsale in Canada. This is necessary evenif the Canadian patentee does not sellthe product in any of the seven foreigncountries listed in the Regulations. Ifany dosage form of the medicine isbeing sold or offered for sale in Canada,the patentee must report the ex-factoryprices of all dosage forms sold in eachof the seven foreign countries. Patentees who are unsure of, or havedifficulty acquiring, foreign ex-factoryprice data should contact PMPRB stafffor advice.

Restrict reporting of foreign ex-factoryprices to the seven countries listed in theRegulations. Use a separate line toreport each combination of"strength/dosage form/package size,""country/province" and "class of

customer" that applies to sales of thisdrug product. If there is only one ex-factory price for all of Canada (i.e., if theex-factory price is the same in eachCanadian province) use the provincecode "13" to signify all of Canadainstead of listing each provinceseparately.

Generic Name of Drug Product

Provide the generic name of the drugproduct named in Block-2.

Drug Identification Number

Enter DIN (or GP Number) that apply tothe drug product identified in Block-2. Ifthe drug product is not sold in Canada,provide the generic name of the drugproduct instead of the DIN. Ensure thatyou record the correct DIN numbers.

Format (Strength/DosageForm/Package Size)

Report format in the same manner as inBlock-4. There is detailed explanation ofhow to record strength, dosage form andpackage size in the instructions forBlock-4 on pages 14 to 16 of this Guide.

Ex-factory Price per Package

Enter the publicly-available ex-factoryprice per package at which the drugproduct was sold during the reportingperiod indicated in Block-1. State theex-factory price in the currency of thecountry in which it was sold. If there ismore than one ex-factory price for areporting period, use the most recent ex-factory price for the reporting period.

PMPRB FORM-2

Issued 95/05 17

The ex-factory price is the price at whicha drug product is first offered for sale "atarm's length" to distributors,wholesalers, hospitals, pharmacies, etc. This price excludes sales taxes and

wholesale mark-ups if the wholesalefunction is not carried out by thepatentee. The ex-factory price isgenerally the "list price" for these drugproducts.

18 Issued 95/01

Patentees' Guide to ReportingForm-3 - Licensees, Revenues and Expenditures

General Information

Purpose

Under section 88 of the Patent Act, apatentee of an invention pertaining to amedicine is required to provide to thePatented Medicine Prices Review Board(hereafter referred to as the Board)information on scientific research andexperimental development (SR&ED). Form-3 is a two-page reporting formdesigned to collect from the patenteeinformation on the names and addressesof licensees; sales revenues; andexpenditures for SR&ED pertainingto medicines.

Who must report

All patentees of medicines sold inCanada must report revenues andSR&ED expenditures on Form-3. If youare no longer a patentee but were duringall or part of the year Form-3 covers, youare required to report. Under section79(1) of the Patent Act the word"patentee" is used to mean not only thepatent holder, but also any person actingfor the patent holder as a seller, orotherwise exercising the rights of thepatent holder (other than by compulsorylicense). Patent rights may includemanufacturing, distributing, marketingand selling the medicine. Theinterpretation of "patentee" will dependon the situation; it will generally be themanufacturer who sells the medicine

into the distribution chain. The patenteecompleting this form is the "reportingpatentee".

Foreign persons holding Canadianpatents

Foreign residency does not remove theresponsibility to report on Form-3. Foreign persons should report theirrevenues from sales in Canada andexpenditures on SR&ED in Canada. These foreign persons should reporttheir SR&ED expenditures as if theywere Canadian taxpayers. Foreignpersons who hold a Canadian patent fora medicine but who had no Canadianrevenues or SR&ED expendituresshould still report.

Can non-patentees report?

Yes. The Board has a mandate toreport on market trends and researchand development activities for thepharmaceutical industry as a whole. Canadian individuals or corporationswho manufacture, distribute or sellmedicines in Canada are encouraged toreport. Of particular interest arecompulsory licensees and otherpharmaceutical companies who areactive in the Canadian marketplace.

Non-patentees should follow the sameguidelines as patentees when reporting. The term "patentee" refers to thereporting party (i.e., the company orindividual completing the form).

PMPRB FORM-3

Issued 95/01 19

Subsidiaries vs Head Office

Where a foreign parent company carrieson SR&ED in Canada but a subsidiaryresident in Canada is the seller anddistributor, the subsidiary should reportthe SR&ED on its Form-3, attaching anote with details of its particularsituation. The parent should send aletter to the Board, stating that thesubsidiary has claimed the SR&EDexpenditures. This situation canbecome more complex when a numberof subsidiaries sell and distribute theproduct in Canada and one parentcarries on the SR&ED. Board staff willreview each situation to determine themost appropriate reporting method.

Reporting Periods and Due Dates

Reporting periods: The information onForm-3 should be reported by calendaryear.

Due dates: All patentees must submit,to the offices of the Board, a completedForm-3 no more than sixty days after thecalendar year ends. Generally, this duedate will be March 1.

BLOCK-1 Year to whichInformation Applies

Information for Form-3 should bereported for the calendar year. Only acalendar year should be indicated in the"reporting period" block on Form-3.

BLOCK-2 Identification ofPatentee

Name and Address of Patentee

This should be the name and address ofthe reporting patentee forcorrespondence in Canada.

BLOCK-3 Licensees

Patentees should provide names andaddresses of all licensees who, bymeans of a license or other formalarrangement, sell or distribute medicinesfor which the patentee holds a patent. The names and addresses of voluntaryand compulsory licensees should bereported. If necessary, place this list ona separate sheet and attach it to thecompleted Form-3.

BLOCK-4 Revenues

Total Revenues from all Sales ofMedicines in Canada by Patentee

Which revenues should be included? Ingeneral, report revenues from sales ofmedicines5 that have a DrugIdentification Number (DIN) or GeneralProduct (GP) number. This includesmedicines not under patent and "overthe counter" products. There may besome uncertainty as to whetherrevenues from certain proprietaryproducts should be included. Ifuncertain, patentees should contactBoard staff for advice. Other revenues,such as those from investment or realestate, should not be included onForm-3.

5 Consult Glossary for definition of 'medicine' as it applies to Form-3.

FORM-3 PMPRB

20 Issued 95/01

EXAMPLE:

During 1988, Company-X sold Medicine-A under license from Company-Z. For 1988, Company-X had revenues of$100,000 from sales of Medicine-A. Company-X paid Company Z $25,000 as a royalty for the 1988 sales of Medicine-A,of which $7,000 was actually paid in 1989. Company-X should include sales revenues of $100,000 in its report for 1988.Company-Z should include $25,000 under revenues from licensees in the 1988 report if using the "accrual" method.Under the "cash" method Company-Z should include $18,000 under revenues from licensees in its 1988 report and$7,000 for its 1989 report. The following table illustrates this:

Company-X Company-Z

Revenues from: 1988 1989 1988 1989

Sales of medicines100,000 0 0 0

Licensees "accrual"0 0 25,000 0

or

Licensees "cash" 0 0 18,000 7,000

Revenues from the sales of medicinesshould be reported on an accrual basis,i.e., in the year the product was shippedor left the plant gate.

Total Revenues from Licensees fromSales of Medicines in Canada

On a separate sheet, list total revenues(including royalties and license fees)

from sales of medicines in Canada foreach licensee (including compulsorylicensees) you have listed in Block-3. Revenues from licensees may bereported on an accrual or cash basis(i.e., in the year the royalties wereactually paid) but reporting should beconsistent. Note that you must report"revenues from all sales of medicines"using the "accrual" method only.

Research and DevelopmentPertaining to Medicines

General Note on Research andDevelopment - (Blocks 5-10)

Criteria of Eligibility

R&D expenditures reported on Form-3must meet the criteria for claiming aninvestment tax credit with respect toScientific Research and ExperimentalDevelopment as set out in sections 37(1)and 127(9) of the Income Tax Act andsection 2902 of the Income TaxRegulations as they read onDecember 1, 1987. The term "Researchand Development" (R&D) as it appears

on the reporting forms should beinterpreted as meaning ScientificResearch and Experimental Development(SR&ED).

It does not matter if the patentee actuallyfiles an income tax return for thereporting year in question, or if any ofthe research and development taxcredits are actually claimed. Individualsand corporations who are not Canadiantaxpayers should complete Form-3 as ifthey were Canadian taxpayers.

Revenue Canada publishes guidelinesto claiming an investment tax credit forSR&ED expenditures. Wheneverpossible, the guidelines outlined in thesematerials should be used to report

PMPRB FORM-3

Issued 95/01 21

SR&ED expenditures on Form-3. Referto6:

Sections 37(1) and 127(9) of the IncomeTax Act*Sections 2900 and 2902 of the IncomeTax Regulations*Revenue Canada Form T661*Interpretation Bulletin No. IT-151R3*Information Circular No. 86-4R2*.

* As they read on December 1, 1987.

Definition - Scientific Research andExperimental Development

Scientific Research and ExperimentalDevelopment may be defined as a"systematic investigation or searchcarried out in the field of science ortechnology by means of experiment oranalysis". There are three maincategories:

Basic researchWork undertaken to advance scientificknowledge without a specific applicationin view;

Applied researchWork undertaken to advance knowledgewith a specific practical application inview;

DevelopmentUse of results of basic or appliedresearch to create new materials,

devices, products or processes, orimprove existing ones.

Activities such as engineering or design,operations research, mathematicalanalysis or computer programming andpsychological research are eligible onlyif such activities directly support basic orapplied research, or eligibledevelopment activities. Examples ofactivities that cannot be included asSR&ED include:

- market research or salespromotion

- quality control or routine testingof materials, devices or products

- research in the social sciencesor humanities

- prospecting, exploring or drilling- commercial production of a new

or improved material, device orproduct, or the commercial useof a new or improved process

- style changes- routine data collection

Expenditures - Scientific Researchand Experimental Development

Note that only expenditures relatingto SR&ED in Canada are allowed; toqualify as SR&ED expenditures onForm-3, the expenditures shouldconform to criteria for claiming the

6 These documents are available by contacting the Secretary to the Board or theCompliance Officers.

FORM-3 PMPRB

22 Issued 95/01

investment tax credit for scientificresearch and experimental developmentas set out in sections 37(1) and 127(9)of the Income Tax Act and section 2902of the Income Tax Regulations as theyread on December 1, 1987.

Amounts that would normally qualify fora deduction (but not an investment taxcredit) under section 37(2) as it read onDecember 1, 1987 (Research outsideCanada) should not be included onForm-3. Foreign travel expenditures,including the salaries and benefits of aCanadian employee undertaking foreigntravel, and any other expenditures thatrelate to SR&ED carried on outsideCanada are all deemed to be "Researchoutside Canada". Therefore theseshould not be included with SR&EDexpenditures on Form-3. This is thecase even if the expenditures weremade in Canada, for example to aCanadian sub-contractor. Patenteeswho are uncertain as to whether toinclude certain expenditures as SR&EDexpenditures on Form-3 should callBoard staff for advice.

BLOCK-5 Non-CapitalExpenditures of the Patentee

Non-capital expenditures do not includegeneral administrative expenses orfactory overhead expenses that wouldhave been incurred even if SR&ED hadnot been carried out. Expenses mustall, or substantially all, be linked toSR&ED. All, or substantially all, meansat least 90% of the time. For example, if a reporting party rents a photocopymachine that will be used approximately50% of the time for SR&ED, no portionof the rental payments is considered tobe an expenditure that is directlyattributable to SR&ED. Certain othertypes of expenditures cannot beincluded as non-capital expenditures inBlock-5 under any circumstances, even

if they are in support of a qualifiedSR&ED activity. The following cannotbe included as non-capitalexpenditures:

- capital expenditures ordepreciation expenses (seeBlock-6)

- entertainment expenses- advertising or selling expenses- convention expenses- legal or accounting expenses- membership dues or fees- fines or penalties- expenditures made to acquire

rights in, or arising out of,research and development (e.g.,patent or registration fees)

Break out allowable non-capitalexpenditures into the followingcategories:

A. Wages and salaries

Only wages and salaries (andother related costs such asbenefits) paid to employees who:

- are actually doingresearch work

- are directly supervisingresearch work, or

- are directly supportingresearch work.

These expenditures must:

- include employeebenefits

- exclude bonuses or otherremuneration based onthe profits of thecompany.

B. Direct material

All costs should be the net laid-down price after deducting tradediscounts, etc.

PMPRB FORM-3

Issued 95/01 23

C. Contractors and sub-contractors

This category only coverscontractors hired to carry outSR&ED on the reporting party'sbehalf. The expression "on thereporting party's behalf"distinguishes contractors fromother expenditure categoriessuch as payments to universitiesand granting councils.

D. Other direct costs

Includes only the incrementalgeneral administrative and/orfactory overhead costs incurredsolely as a result of carrying onSR&ED activities. Provide abreakdown of these costs on aseparate sheet.

E. Payments to designatedinstitutions

Under this category, reportpayment to an approveduniversity or other similarinstitution, to be used by thatinstitution for SR&ED related tothe reporting party's class ofbusiness. Amounts paid to carryout SR&ED on the reportingparty's behalf should not beincluded here, but under "C"(Contractors…) above.

Approved institutions include:

- universities- colleges- research institutes- other similar institutions

F. Payments to granting councils

A granting council is an approvedorganization that pays anassociation, institution orcorporation to do SR&ED related

to the reporting party's class ofbusiness. Approved grantingcouncils include:

- Natural Sciences andEngineering ResearchCouncil

- Medical ResearchCouncil

- Social Sciences andHumanities ResearchCouncil

G. Payments to otherorganizations

Payments to other organizationsfor SR&ED related to thereporting party's class ofbusiness and not included under"E" (designated institutions) or"F" (granting councils) above. Provide a list of the organizationsto which payments were made.

BLOCK-6 Total CapitalExpenditures

Buildings - Annual Depreciation

Patentees should report annualdepreciation of buildings used forSR&ED in Canada. The annualdepreciation should be calculated at therate of 4% of the qualifying capital costper year over a maximum of twenty-fiveyears. Depreciation is applied beginningwith the year in which the building waspurchased or acquired. Patenteesshould attach details of the calculation ofannual depreciation.

If a building was built or purchased partlyfor SR&ED and partly for otherpurposes, and a specific area within thebuilding is allocated solely for SR&ED, areasonable portion of the building'soriginal cost can be used to calculateannual depreciation. Calculate the

FORM-3 PMPRB

24 Issued 95/01

For example, a 1000 square metre building originally costing $400,000 has a 250 square metre wing allocated entirelyfor SR&ED activities. As 25% (250 of 1000) of the total floor-space is devoted to SR&ED. Calculate annual depreciationbased on $100,000 (25% of $400,000). Annual depreciation would be 4% of $100,000 = $4,000.

applicable portion of the building's cost byapplying the proportion of SR&ED

floor-space to total floor-space to the totaloriginal cost of the building.

If a building was originally used forpurposes other than SR&ED, but isconverted for SR&ED use, the cost ofthe conversion should be depreciated asabove. However, do not include anypart of the building's original cost in thereported annual depreciation.

To calculate the total annualdepreciation of all buildings (and eligibleconversion costs) dedicated to SR&ED,the annual depreciation of each shouldbe calculated separately, and thentotalled.

Total Capital Expenditures in the Year(buildings)

This line refers to capital expendituresmade on buildings. Report total capitalexpenditures made during the reportingyear on buildings in Canada to be usedfor SR&ED. Do not include capitalexpenditures made on land.

If a building was built or purchased to beused partly for SR&ED and partly forother purposes, and a specific areawithin the building is allocated solely forSR&ED, a reasonable portion of thebuilding's total cost can qualify as acapital expenditure on SR&ED. If part orall of an existing building is converted forSR&ED, the conversion costs mayqualify as a capital expenditure onSR&ED. However, no part of thebuilding's original cost or of its un-depreciated capital cost is eligible.

Equipment (capital expenditures)

Capital expenditures on equipment mustbe made in Canada. When an asset ispurchased from a supplier outsideCanada and is imported and used forSR&ED in Canada, the expenditure isconsidered to be made in Canada. Normal accrual accounting principles willapply to capital expenditures forSR&ED.

Expenditures on equipment partly usedfor SR&ED and partly used for otherpurposes may not be included unless itcan be demonstrated that all, orsubstantially all of the equipment's useis for SR&ED, where "all, or substantiallyall" means at least 90% of the timeduring the useful life of the equipment.

BLOCK-7 Type of Researchand Development - Medicinefor Human Use

List expenditures (non-capital only) onSR&ED in Canada for medicines forhuman use according to "type ofresearch" and "who carried out theresearch". The following definitions mayhelp in interpreting the meaning of thecategories of "type of research" and"who carried out the research". Thesedefinitions also apply to Block-8.

PMPRB FORM-3

Issued 95/01 25

Type of R&D

Basic - chemicalSystematic investigation undertaken toadvance knowledge in chemistry bymeans of experimentation or analysis,without any practical application in view.

Basic - biologicalSystematic investigation undertaken toadvance knowledge in biology by meansof experimentation or analysis, withoutany practical application in view.

Manufacturing processes Experimentaldevelopment of new or improvedmanufacturing processes in support ofbasic or applied research.

Note: Preclinical and Clinical Trials

Generally, preclinical trials involveanimal testing while clinical trials involvehuman subjects. However, clinical andpreclinical trials often overlap. Somedrug evaluations may not follow thephases of evaluation described here. Reporting parties should strive to reportaccording to the phases defined below.

Preclinical Trials I

- Acute toxicity - singleadministration to two or moreanimal species

- Detailed pharmacological studies(main effect, side effects,duration of effect, etc.)

- Specifications or analysis ofactive substance

- Stability of active substance- Specifications of inactive

substances

Preclinical Trials II

- Pharmacokinetics- Chronic toxicity (two animal

species)- Reproduction toxicological

studies

- Mutagenicity and carcinogenicitystudies

- Synthesis of active substance ontechnical scale

- Development of final dosageform(s)

- Analytical evaluation of finaldosage form(s)

- Stability of final dosage form(s)- Production of clinical samples- Sub-chronic (sub-acute) toxicity

(other animal species)- Supplementary animal

pharmacology- Carcinogenicity trials- Supplementary animal

pharmacology

Clinical Trials Phase I

- Tolerance in healthy volunteers- Pharmacokinetics in humans

Clinical Trials Phase II

- First controlled trials on safetyand efficacy in patients

- Chronic toxicity

Clinical Trials Phase III

- Therapeutic large scale trial atseveral trial centres for finalestablishment of therapeutic andsafety profiles

- Proof of efficacy and safety inlong term administration

- Demonstration of therapeuticadvantages, if any

- Clarification of any interactionswith concomitant medication

- Chronic toxicity (if required)

Other Qualifying R&D

This includes eligible research anddevelopment expenditures that cannotbe classified into any of the precedingcategories of "type of research anddevelopment." Provide details of allexpenditures included in this category.

FORM-3 PMPRB

26 Issued 95/01

Categories Describing Who CarriedOut Research

PatenteeFor Form-3, patentee refers to thereporting party completing this form. If you are no longer a patentee but wereduring part or all of the year Form-3covers, you are required to report. Because all pharmaceutical companiesand drug manufacturers are encouragedto complete Form-3, some reportingparties will not hold a patent on amedicine. Therefore, the reporting partyis not necessarily a true patentee asdefined for Form-1 and Form-2.

Other companiesIncludes corporations, resident inCanada, undertaking research on behalfof the reporting party, or research in thesame class of business as the reportingparty. Corporations carrying out theresearch do not have to be at arm'slength from the reporting party.

UniversitiesIncludes universities, colleges and otherapproved under Income Tax Actinstitutions such as research institutes.

HospitalsA facility licensed, approved ordesignated as such by a federal,provincial or territorial government.

Note: Hospital vs University

There may be some uncertainty as towhether to classify by hospital oruniversity for research carried out in ateaching hospital or when scientistsdoing the work are affiliated with both ahospital and a university. Theseconsiderations may be useful: If it canbe ascertained where the monies for theresearch are being handled/managed(i.e., through the university or throughthe hospital) then these amounts shouldbe assigned to reflect this. Whenpayment is made directly to a scientist or

other researcher with dual affiliations,the amounts should be included underthe category that best describes thesetting where the research took place.

OthersThis category is reserved forexpenditures that do not logically fit intoany of the other categories. Patenteesshould attach details on expenditures.

BLOCK-8 Type of Researchand Development - Medicinefor Veterinary Use

Expenditures (non-capital only) onSR&ED in Canada, pertaining tomedicines for veterinary use, should belisted according to "type of research"and "who carried out the research". Thedefinitions in Block-7 above may helpyou interpret the categories of "type ofresearch" and "who carried out theresearch".

BLOCK-9 Source of Fundsfor R&D

Detail sources of funds for non-capitalexpenditures and capital equipmentexpenditures according to the categoriesdescribed below. The source of fundstotal reported in this block shouldcorrespond to the total of non-capitalexpenditures and capital equipmentexpenditures (Block-5 and Block-6(Equipment)).

Internal Funds

Refers to the internal corporate funds ofthe patentee. It does not include moniesfrom parent or subsidiary companies ifthese companies are distinct corporateentities in their own right. Monies fromparent or subsidiary companies shouldbe included under "not arm's length".

PMPRB FORM-3

Issued 95/01 27

Arm's Length PersonAn "arm's length person" is an individual,corporation or other legal entity that isnot related to the patentee. If in doubt,refer to the Income Tax Act for adefinition of "arm's length". Examples of"not arm's length" relationships are givenin the following section.

Not Arm's Length PersonA "not arm's length person" is anindividual, corporation or other legalentity that is related to the patentee. There are many types of "not arm'slength" relationships. It is beyond thescope of this document to list them all. However, some examples of "not arm'slength" relationships of corporationsfollow.

Corporations are related (i.e., not atarm's length) to each other if:

- one is controlled by the other- one corporation is a member of a

related group that controls theother

- they are controlled by the sameperson or persons ("person" canmean an individual or acorporation)

The above list is a small sample only. Patentees should consult the IncomeTax Act if there is doubt as to whether arelationship is, or is not, at arm's length.

Federal Government

This category includes all moniesreceived during the year fromdepartments and agencies of the federalgovernment of Canada. These moniesinclude, among other things, allassistance paid during the year to apatentee under the terms of anAppropriation Act for SR&EDexpenditures. Such assistanceincludes, among other things, any grant,subsidy, reimbursement or forgivableloan (including a contingently repayable

loan) received by the patentee. Theamount reported should be the net ofamounts repaid to the federalgovernment during the year.

Provincial Government

Include all monies received fromprovincial or territorial governmentdepartments or agencies.

Other

Include all monies received by thepatentee from sources that do notlogically fall into any of the abovecategories. Attach a list detailing these"other" sources and amounts to thecompleted Form-3.

BLOCK-10 Information forR&D in Each Province

Provide a provincial distribution ofSR&ED expenditures (non-capital only),by each of the "who carried out theresearch" categories. Definitions of the"who carried out the research"categories are in the definitions forBlock-7. The total expenditures reportedin Block-10 should correspond to totalnon-capital expenditures (Block-5).

BLOCK-11 CertifyingSignature

This block is for the signature of thepatentee (or authorized corporateofficial). The individual signing shouldbe knowledgeable about the informationreported on the form.

Reconciling Expenditures andSources of Funds

To verify the accuracy of informationreported on Form-3, ensure that the"expenditures" and "source of funds"figures can be properly reconciled.

FORM-3 PMPRB

28 Issued 95/01

The sum of all non-capital expenditures(Block-5) should be equal to the sum ofBlock-7 and Block-8, as well as to thetotal of the expenditures provided in theprovincial breakdown in Block-10. The

sum of non-capital (Block-5) and capitalequipment expenditures (Block-6equipment only) should equal the totalsource of funds (Block-9).

In summary:

[Block-5] = [Block-7] + [Block-8]

[Block-5] = [Block-10]

[Block-9] = [Block-5] + [Block-6 (equipment only)]

Columns reconciliation:

Patentee [Block-7] + [Block-8] = Patentee [Block-10]

Other companies [Block-7] + [Block-8] = Other companies [Block-10]

Universities [Block-7] + [Block-8] = Universities [Block-10]

Hospitals [Block-7] + [Block-8] = Hospitals [Block-10]

Others [Block-7] + [Block-8] = Others [Block-10]

Issued 95/05 29

Glossary(Patentees' Guide to Reporting)

Note to Reader: This glossary isincluded for the convenience of thereader. For more detailed informationand definitions please refer to the PatentAct, the Patented Medicines Regulationsand the Compendium of Guidelines,Policies and Procedures, or contact thePMPRB.

Accrual accounting: Under the"accrual" accounting method, revenuesshould be reported in the year in whichthey are earned, regardless of whenpayment is received. Expendituresshould be reported in the year in whichthey were incurred, whether or not theywere paid in that period. With theexception of "Revenues from licensees"on Form-3, all revenues andexpenditures must be reported usingnormal accrual accounting methods.

Active Ingredient: Chemicalresponsible for the claimedpharmacologic effect of a drug product.

Arm's length person: An "arm's lengthperson" is an individual, corporation orother legal entity (see also: definition of"Person") that is not related to thereporting patentee. If in doubt,patentees should refer to the IncomeTax Act for a definition of "arm's length". Generally, "arm's length" persons(individuals or corporations) are personsthat have no corporate or other directconnections with each other, and thusact each in their own self-interest. Examples of "not arm's length"relationships are given in the definitionof "not arm's length" on page 28.

Persons normally operating at "arm'slength" may have a "not arm's length"relationship for a particular contract.

However, if outside this contract there isnot special duty, obligation orrelationship to each other, then the twopersons may be considered to be at"arm's length".

Assignee: An assignee is a person(individual or corporation or other legalentity) that enjoys some or all of apatentee's rights with respect to apatented medicine. Such rights mayinclude manufacturing, distributing orselling a patented medicine. Theassigned rights may have time and geographic limitations. The assignedrights are generally the outcome of acontractual agreement between thepatentee and the assignee. Compulsorylicensees are not considered to beassignees.

Average price per package: Averageprice per package is defined as netrevenues divided by the total number ofpackages sold (or distributed as part ofpromotion, rebate, etc.) when netrevenues consist of actual salesrevenues (excluding sales tax) less anyamounts disbursed for benefits orpromotions such as rebates, refunds, orgifts.

Cash Accounting: Under the cashaccounting method revenues arereported in the year in which they areactually received. Only "Revenues fromLicensees" on Form-3 may be reportedusing the cash method; all otherrevenues and all expenditures must bereported using normal accrual accountingmethods.

Clinical Trial Stages:Generally, preclinical trials involveanimal testing while clinical trials involve

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30 Issued 95/05

human subjects. However, there isoften overlap of the clinical andpreclinical trials. Some drug evaluationsmay not have followed the phases ofevaluation described in these definitions. Reporting parties should strive to reportaccording to the phases defined underthe headings "clinical trials" and"preclinical trials".

Clinical Trials Phase I: - Tolerance in healthy volunteers- Pharmacokinetics in humans

Clinical Trials Phase II:- First controlled trials on safety

and efficacy in patients- Chronic toxicity

Clinical Trials Phase III:- Therapeutic large-scale trial at

several trial centres for finalestablishment of therapeutic andsafety profiles

- Proof of efficacy and safety inlong term administration

- Demonstration of therapeuticadvantages, if any

- Clarification of any interactionswith concomitant medication

- Chronic toxicity (if required)

Corporate officer: For reportingpurposes, corporate officer is interpretedin the broad sense as meaning acorporate official or employee authorizedto sign on behalf of the corporation. Corporate officials signing the reportingforms on behalf of their corporationshould be knowledgeable about thecontents of the forms.

Drug Identification Number (DIN): Aregistration number that HealthProtection Branch of Health Canadaassigns to each prescription andnon-prescription drug product marketedunder the Food and Drug Regulations. The DIN is assigned using information inthe following areas: manufacturer of the

product; active ingredient(s); strength ofactive ingredient(s); pharmaceuticaldosage form; brand/trade name; androute of administration.

Drug Product: A particular presentationof a medicine characterized by itspharmaceutical dosage form and thestrength of the active ingredient(s).

Efficacy: The ability of a medicine toproduce the purported effect asdetermined by scientific methods.

Emergency Drug Release (EDR)Program: A program operated byHealth Canada to provide access topractitioners to drugs that are notapproved or otherwise available for salein Canada for the treatment of patients. Health Canada may authorize the saleof a quantity of drug for human orveterinary use in the treatment of apatient under the care of thatpractitioner.

Ethical (medicine): Generally, the term"ethical" is used in the pharmaceuticalindustry to describe products thatrequire a prescription and are notusually advertised to the public. Bycontrast, the term "proprietary" is used to describe products for which noprescription is required and which maybe promoted directly to the public.

Ex-factory price: The price establishedfor the first sale (during the reportingperiod) of the product "at arm's length"to distributors, wholesalers, hospitals,pharmacies, etc. This price alwaysexcludes sales taxes, and wholesalemark-ups when the wholesale function isnot carried out by the patentee. The ex-factory price is generally the "list price"for medicines. The ex-factory price canalso be the price that is agreed onbetween the patentee and the regulatorybody of the country in which it is sold bythe patentee.

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Issued 95/05 31

Format (of medicine): Also referred toas the "presentation". The format of amedicine is the particular combination ofactive ingredient strength, dosage formand package size (i.e., units of medicineper package).

Former patentee: A patentee isreferred to as a former patentee oncethe relevant patents for a particular drugproduct expire. The Regulations requirefiling of information for drug products notpreviously filed. The filing should onlycover the periods during which the drugproduct was patented. The Board canrequest this information within threeyears of the patent's expiry, if it hasreason to do so.

Generic Product: A pharmaceuticalproduct that is a copy (i.e., the sameactive ingredient, strength and dosageform) of a brand-name drug product.

General Public (GP) number: Anumber that Health Protection Branch ofHealth Canada assigns to proprietarymedicines which are registeredaccording to the requirements ofDivision 10 of the Food and DrugRegulations. These products may besold in non-pharmacy outlets in certainprovinces.

Hospital: A health care institutionlicensed, approved or designated as ahospital by a provincial or territorialgovernment or is owned or operated bythe Government of Canada to providecontinuing medical care and supportingdiagnostic and therapeutic services.

Indication: An indication is a specificcondition, manifested by the presence ofdisease or medical signs or symptomsthat the medicine treats or cures, asapproved by the Health ProtectionBranch of Health Canada.

Investigational New Drugs (IND): Adrug that has been approved for clinical

evaluation (i.e., testing on humans) butthat is not yet approved for sale for theindication under study.

In vitro: In relation to a medicine orpatented medicine, the use orapplication of such medicine or patentedmedicine in a laboratory or otherenvironment that is not associated withits direct application to, or use for,humans or animals.

In vivo: In relation to a medicine or apatented medicine, the application oradministering of such medicine orpatented medicine, as the case may be,into or upon the living body of humans oranimals.

Licence, Compulsory: A licencegranted by the Commissioner of Patentsthat permits the licensee to import,make, use or sell a patented inventionpertaining to a medicine. Thecompulsory licensee pays licence feesor royalties to the patent holder for useof the patented invention.

With the exception of those compulsorylicences issued prior to December 20,1991, which continue to be in effect, the1993 amendments to the Patent Actrepealed the compulsory licensingregime effective December 20, 1991. Accordingly all compulsory licencesissued after December 20, 1991 ceaseto have effect.

Licence, Voluntary: A contractualagreement between a patent holder anda licensee under which the latter ispermitted to exploit certain of theotherwise exclusive patent rights of thepatentee, usually for some consideration(i.e., royalties in the form of a share ofthe licensee's sales).

Manufacturing: All operations involvedin the production of a medicine,including processing, compounding,formulating, filling, packaging, and

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32 Issued 95/05

labelling.

Medicine: Any substance or mixture ofsubstances made by any means,whether produced biologically,chemically, or otherwise, that is appliedor administered in vivo in humans or inanimals to aid in the diagnosis,treatment, mitigation or prevention ofdisease, symptoms, disorders, abnormal physical states, or modifying organicfunctions in humans and or animals,however administered.

For greater certainty, this definitionincludes vaccines, topical preparations,anaesthetics and diagnostic productsused in vivo, regardless of deliverymechanism (e.g., transdermally, capsuleform, injectable, inhaler, etc.). Thisdefinition excludes medical devices, invitro diagnostic products anddisinfectants that are not used in vivo.

Net Revenues: Net revenues consist ofactual sales revenues (excluding salestax) for medicine sold (i.e., shipped)during the reporting period less amountsdisbursed for benefits or promotionssuch as rebates, refunds, or gifts.

Not arm's length person: A "not arm'slength person" is an individual,corporation or other legal entity that isrelated to the patentee. For example, aforeign owned corporation and itsCanadian subsidiary do not have anarm's length relationship with eachother. However, there are many typesof "not arm's length" relationships. It isbeyond the scope of this document tolist them all. However, some examplesof ways in which corporations may haverelationships that are not at arm's lengthare:

- if one corporation is controlled bythe other

- if one corporation is a member ofa related group that controls theother

- if they are controlled by the same

person or persons ("person" canmean individual or corporation)

The list is a small sample only. Ifthere is any doubt as to whether arelationship is, or is not, at arm's length,patentees should consult the IncomeTax Act.

Notice of Compliance (NOC): A noticein respect of a medicine issued by theHealth Protection Branch of HealthCanada under section C.08.004 of theFood and Drug Regulations. Theissuance of an NOC indicates that adrug product meets the required HealthCanada standards for use in humans oranimals and that the product is approvedfor sale in Canada.

Patent: An instrument issued by theCommissioner of Patents in the form ofletters patent for an invention thatprovides its holder with a monopolylimited in time, for the claims made within the patent. A patent gives the patenteethe exclusive right to make, sell orotherwise exploit the invention for theterm of the patent.

Patented Medicines Regulations: Afederal regulatory instrumentpromulgated under the authority of thePatent Act on September 15, 1988, andamended effective November 7, 1994and published in Part II of the CanadaGazette on November 30, 1994. TheRegulations specify the informationpatentees must report to the Boardrelating to the medicine, price and salesof the medicine, revenues and researchand development expenditures as wellas the timing of the filing.

Patentee: For purposes of subsection79 to 103 of the Act, "the person for thetime being entitled to the benefit of thepatent for that invention (pertaining to amedicine) and includes, where any otherperson is entitled to exercise any rightsin relation to that patent other than under

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Issued 95/05 33

a licence continued by subsection 11(1)of the Patent Act Amendment Act, 1992,that other person in respect of thoserights;"

Pharmacokinetics: The rate of drugaction, particularly with respect toabsorption, distribution, metabolism andexcretion of the drug and its metabolites.

Pharmacy or Drugstore: Anestablishment licensed by a provinciallicensing body to dispense or sell drugs,pharmaceuticals, patented medicines anddrug sundries to patients.

Preclinical Trials I: - Acute toxicity - single

administration to two or moreanimal species

- Detailed pharmacological studies(main effect, side effects,duration of effect, etc.)

- Specifications or analysis ofactive substance

- Stability of active substance- Specifications of inactive

substances

Preclinical Trials II: - Pharmacokinetics- Chronic toxicity (two animal

species)- Reproduction toxicological

studies - Mutagenicity and carcinogenicity

studies- Synthesis of active substance on

technical scale- Development of final dosage

form(s)- Analytical evaluation of final

dosage form(s)- Stability of final dosage form(s)- Production of clinical samples- Sub-chronic (sub-acute) toxicity

(other animal species)- Supplementary animal

pharmacology- Carcinogenicity trials

- Supplementary animalpharmacology

Proprietary Drug: The term"proprietary" is used to describeproducts for which no prescription isrequired and which may be promoteddirectly to the public.

Quality control: All measures designedto ensure the output of uniform batchesof drugs that conform to establishedspecifications of identity, strength, purity,and other characteristics.

Research and Development (R&D): Basic or applied research for thepurpose of creating new, or improvingexisting materials, devices, products orprocesses (e.g., manufacturingprocesses).

Research and Development —Applied Research: Work thatadvances scientific knowledge with aspecific practical application in viewsuch as creating new or improvedproducts or processes throughmanufacturing processes or throughpreclinical or clinical studies.

Research and Development — BasicResearch: Work that advancesscientific knowledge without a specificapplication in view.

Research and Development —Clinical Research: The assessment ofthe effect of a new medicine on humans. It typically consists of three successivephases, beginning with limited testing forsafety in healthy humans thenproceeding to further safety and efficacystudies in patients suffering from thetarget disease.

Research and Development —Preclinical Research: Tests onanimals to evaluate the pharmacologicaland toxicological effects of medicines.

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34 Issued 95/05

Research and DevelopmentExpenditures: For the purposes of thePatented Medicines Regulations 1994,in particular sections 5 and 6, researchand development includes activities forwhich expenditures would have qualifiedfor the investment tax credit for scientificresearch and experimental developmentunder the Income Tax Act as it read onDecember 1, 1987.

Sale: A "sale" is the transfer of propertyrights from one person to another formoney, money's worth, or otherconsideration. On Form-2, informationis requested on the revenues from salesof patented medicines only, while onForm-3, information is requested onrevenues from the sales of allmedicines.

More specifically, the sales to bereported are for any product for which aDIN has been issued under the Foodand Drug Regulations or which has been

approved for sale to qualifiedinvestigators under the said regulations; ANDthat is used in the diagnosis, treatment,mitigation or prevention of disease,disorder, abnormal physical state or thesymptoms thereof, or in the modificationof organic functions in human or animal;ANDthe sale of which is promoted by anymeans to physicians, dentists,veterinarians, hospitals, drug retailers orwholesalers or manufacturers of ethicalpharmaceutical products.

Wholesaler: An person (individual,corporation or other legal entity) primarilyengaged in buying merchandise forresale to retailers; to industrial,commercial, institutional, farm orprofessional business users; to otherwholesalers or in acting as an agent orbroker in buying merchandise for, orselling merchandise to, such persons orcompanies for a commission.