Interim pricing guidance adopted as Canada’s PMPRB continues to move towards new guidelines

On June 20, 2023, Canada’s Patented Medicines Prices Review Board (PMPRB) published a proposed interim guidance for the prices of new patented medicines (i.e., those that received marketing authorization from Health Canada after July 1, 2022), benchmarking prices to a median international price (MIP) of 11 comparator countries (referred to as the PMPRB11). The proposed interim guidance was subject to a consultation period which concluded on August 21, 2023. After consideration of the feedback that was received from stakeholders, the PMPRB announced last week that it will adopt the interim guidance, effective immediately.

This decision is stated to provide manufacturers of new medicines with some predictability regarding the status of their list price review during the interim period while the PMPRB continues to consult and develop full guidelines. It should also address the substantial backlog of reviews on the pricing of new patented medicines, none of which have been subject to price reviews by PMPRB staff.

It was also announced that a consultation relating to the new guidelines on the regulations implementing the PMPRB11 will be launched in the coming weeks.

What you need to know

• Interim guidance is different from guidelines. Neither has the force of law but both are intended to clarify the PMPRB’s views on when the pricing of patented medicines is likely to be regarded as excessive. The PMPRB cannot make any binding decisions regarding whether the price of a particular patented medicine is excessive outside the context of a hearing.
• Under the interim guidance that has now been adopted, new patented medicines that have Canadian list prices below the MIP of the PMPRB11 are considered “reviewed”. “Reviewed” means that such prices will not be subject to further price review during the interim guidance period. It does not mean that such prices are or will be regarded as non-excessive once final guidelines are adopted. Further, the adopted guidance does not clarify the impact if such prices are initially below MIP of PMPRB11 but later exceed MIP of PMPRB11 due to currency fluctuations.
• New medicines with Canadian list prices that are above this threshold will continue to be considered as “under review” until new guidelines are in place. The adopted guidance states that medicines whose prices are “under review” may be subject to further review during this interim guidance period.
• The pricing for existing patented medicines (those that were issued marketing authorizations before July 1, 2022) would be regarded as non-excessive if the price is at, or below, the non-excessive average price as communicated to patentees in 2021.
• The adopted guidance does not address changes in Consumer Price Index (CPI), despite feedback from stakeholders that the PMPRB should clarify that such prices with allowable CPI adjustments should be regarded as non-excessive.

Factors guiding the PMPRB decision

The PMPRB’s decision to adopt the proposed guidance was driven by the following considerations:

1. Duration
   • The interim guidance is intended as a temporary process. It does not constitute a binding decision. Given the short-term duration and the lack of other applicable guidelines at this time, the PMPRB took the view that adopting the interim guidance would give rights holders of new medicines some predictability and continue the status quo for existing patented medicines.
2. Administrative efficiency
   • The MIP is a criterion considered to be a simple tool to guide rights holders based on their filings. The interim guidance does not consider therapeutic class comparisons (TCC) or changes in the Consumer Price Index (CPI), each of which would add complexity to the guidance. The PMPRB’s internal data from 2022 suggests that approximately 55% of new patented medicines have Canadian list prices that are below the MIP of the PMPRB11. The PMPRB considers the MIP to be an appropriate tool to streamline its review process until new guidelines are in place in view of this data.
3. Jurisdiction
   • The interim guidance does not “set” price ceilings for rights holders, and it does not constitute a binding decision that prices above the MIP are excessive. The MIP is being used solely as an administrative tool for the interim guidance period.

It is important to note that a “reviewed” price can be reassessed after the interim guidance period ends and new final guidelines are in place. The PMPRB has indicated that there will be no clawback of potential excess revenues for sales of new medicines, whose list prices are below MIP of PMPRB11, during the interim period.

What’s next?

The PMPRB intends to consult on a new set of guidelines in the coming weeks. The new consultation will be an iterative process conducted in stages. The first stage will be based on themes relevant to the new guidelines, namely issues and trends that impact health care, pharmaceuticals, etc. The second stage of consultation, expected in 2024, will focus on the development of new guidelines, presumably with details on the price tests that will be used by the PMPRB going forward.

For additional information, please see our earlier bulletins on the interim guidance and the PMPRB generally.