Canada’s PMPRB Guidelines: Many a winding turn

As the Hollies’ song indicates, “[t]he road is long, with many a winding turn”¹. This is an apt phrase vis-à-vis Canada’s Patented Medicine Prices Review Board (PMPRB) guidelines.

On June 26, 2024, the PMPRB published a consultation document called Shaping the Future: A Discussion Guide for PMPRB Phase 2 Consultations on New Guidelines (the Discussion Guide). Feedback on the topics addressed in the Discussion Guide will be used by the PMPRB to develop non-binding guidelines (Guidelines) that will operationalize the requirements of the Patented Medicines Regulations (PMR). The new Guidelines are intended to give effect to amendments to the PMR, reflect judicial decisions and increase efficiency. Notably, the PMR now includes a basket of 11 countries (the PMPRB11)², whose list prices are used as comparators to determine whether the price of a patented medicine in Canada is excessive.

What you need to know

• Due to amendments to the PMR (effective as of July 1, 2022) and recent case law, updated Guidelines are needed to implement the regulatory scheme for the PMPRB’s price review. The PMPRB is using interim guidance as a temporary measure while new Guidelines are being developed.
• The Discussion Guide invites stakeholders to consider specific topics, including how the price of patented medicines in 11 comparator countries will be used in price assessments, as well as provide comments on the overall framework for the price review proposed by the Discussion Guide.
• Stakeholders are invited to submit comments on the Discussion Guide until September 11, 2024.
• After considering the feedback it receives during this consultation process, the PMPRB intends to publish new draft Guidelines by the end of 2024. These draft Guidelines will be subject to another consultation period before finalization and implementation, which is anticipated in 2025.

Current state

The PMPRB is a quasi-judicial body that regulates the cost of patented medicines in Canada by determining whether they are being sold at an excessive price. The PMR were amended on July 1, 2022, creating a new basket of 11 comparator countries to reference when assessing whether a proposed list price in Canada is excessive. These changes to the PMR have necessitated the development of new guidelines for the PMPRB to use in price reviews.

The PMPRB adopted interim guidance in 2023 to provide the industry with some predictability regarding the status of list price reviews while the PMPRB continues to consult and develop new Guidelines³.

Overview of the Discussion Guide

Price review framework

The Discussion Guide describes the structure of the new price review process in four parts:

• Initial Price Review. PMPRB staff would perform a first assessment to triage patented medicines at a greater risk of excessive pricing for an in-depth review. At this stage, the first submitted list price of the patented medicine under review would be assessed against the “International Price Comparison” (IPC) criteria that use the PMPRB11.
• Post-Initial Price Review. Once the initial price review has been completed, a patented medicine would be subject to ongoing price monitoring where PMPRB staff (i) compare a patented medicine’s list price to the IPC criteria of the initial price review; and (ii) compare the changes in the list price against the Consumer Price Index (CPI). Prices would be assessed on an annual basis. Patented medicines that are assessed and provided with a maximum average potential price (MAPP) or projected non-excessive average price (NEAP) as of July 1, 2022 (Existing Medicines—i.e., medicines marketed prior to July 1, 2022) and those without a MAPP or projected NEAP as of July 1, 2022 (New Medicines) would be subject to the same ongoing assessment criteria; however Existing Medicines would be afforded a transition period to adapt to the new Guidelines before being subjected to further review.
• Special Provisions. Patented medicines could be subject to additional assessments outside of the initial and post-initial review process described above if the price of the medicine is subject to a complaint.
• In-Depth Review. After an initial⁴ or annual⁵ price review or after having received a complaint, PMPRB staff may determine that the price of a patented medicine warrants an in-depth review. An in-depth review by PMPRB staff would take into account all the factors set forth in Section 85(1) of the Patent Act. It would include an analysis of scientific and pricing information, as well as consideration of domestic comparator medicines.

Patented medicines that are not flagged by PMPRB staff in the initial or annual price review as being at greater risk for excessive pricing (because such medicines comply with IPC/PMPRB11/CPI increases) would be considered as having been reviewed. The patented medicine would not undergo any further assessment until its price is reviewed in the following year or if a complaint is received. The PMPRB proposes to continuously monitor prices throughout the lifetime of a patent.

The takeaway here is that, with continuous price reviews, a price previously regarded as non-excessive could later be regarded as excessive (i.e., by considering domestic and international therapeutic class comparisons).

Request for feedback

Key topics on which stakeholder feedback is sought include the following:

• Transition period for existing medicines. As noted, the PMPRB proposes that there would be no distinction between Existing Medicines and New Medicines in the post-initial review process. However, Existing Medicines would be given the benefit of a transition period of either one, two or three years, to give patentees the opportunity to change prices so that they are not regarded as excessive once the Guidelines are implemented. The PMPRB is seeking feedback on the duration of that transition period.
• IPC criteria for price review comparisons. The Discussion Guide seeks feedback from stakeholders on what the IPC criteria (in relation to the PMPRB11) should be for the price review, suggesting the options of the Median International Price (MIP), the Highest International Price (HIP) or the midpoint between the MIP and HIP. In earlier consultations, some stakeholders indicated that they consider a price below the HIP to not be excessive. The Discussion Guide countered this by identifying instances where a price below HIP was regarded as excessive, pointing to two cases—Shire BioChem Inc. (Adderall XR, 2008) and Horizon Pharma (Procysbi, 2022)—as examples. There, the PMPRB found that a price above the midpoint between the therapeutic class comparison (TCC) and the MIP was excessive. We note that both hearings were conducted under the pre-2022 regime: that is, before the amendment of the PMR that introduced the PMPRB11.
• Therapeutic Class Comparison (TCC). Section 85 (1) of the Patent Act indicates that “the prices at which other medicines in the same therapeutic class have been sold in the relevant market”, known as the therapeutic class comparison (TCC), is a factor that the PMPRB can consider in determining whether a patented medicine is priced excessively. The PMPRB is not proposing to change how medicines will be identified for a TCC and will continue to use previously applied methods to perform domestic list-to-list price comparisons. The PMPRB won’t consider the cost-effectiveness of a medicine in determining excessive pricing, but it will take TCC into account in in-depth reviews. The PMPRB has asked stakeholders for feedback on how it should assess the similarity between a patented medicine and a comparator. One option is to assess the degree of similarity of the patented medicine to a group of comparators. Another option is to assign each potential comparator a similarity grade, allowing for a ranking of the individual comparators. The PMPRB has indicated that a TCC will not be conducted if a patented medicine is the only medicine in Canada that effectively treats a particular illness or indication. Similarity would be used to give PMPRB insight into the degree of comparability of pricing information. We note that stakeholders may wish to comment on whether, if Health Canada has granted a new medicine a priority review, that should obviate the requirement for a TCC.
• Using CPI in reviews. The CPI will be considered in the PMPRB’s annual price reviews to assess whether to proceed to an in-depth price review. The PMPRB has asked for feedback on how it should use the CPI: for example, whether it should consider proceeding to an in-depth price review if (i) the list price increase is above a one-year CPI increase; or (ii) the cumulative increase in list price over the last two years is above the combined CPI for the past two years (i.e., no increase in list price in the first of the two years, followed by an increase on the second year). We note that the Discussion Guide does not address the impact of currency exchange changes over time. Stakeholders may wish to provide input on this issue.
• Complaints. The PMPRB has proposed that complaints should be one of the triggers for an in-depth review. The PMPRB has asked for feedback on (i) whether complaints should be limited to federal and provincial/territorial governments and, if so, whether complaints should be limited to public payors or can include private payors (as the affected party triggering a complaint by the government); (ii) whether complaints should be limited to anyone except those with a direct commercial interest; or (iii) whether complaints should be unlimited.
• Expanding list of low-risk products. The PMPRB has asked for feedback on whether to expand the list of products that would not be subject to an initial price review to include patented biosimilars and patented vaccines. Such products would only be subject to an in-depth review following a complaint.
• Human Drug Advisory Panel (HDAP). The Human Drug Advisory Panel (HDAP) is an advisory body of health professionals who are engaged by the PMPRB to assist with scientific evaluations during the price review process. The PMPRB is seeking feedback on whether it should engage the HDAP when seeking additional advice on TCC, or whether the HDAP should be eliminated altogether. If stakeholders recommend the continuation of the HDAP, the PMPRB proposes to engage with it on an ad hoc basis, such as when the PMPRB identifies specific issues or questions necessitating additional scientific advice.
• Transparency. The PMPRB proposes to be transparent regarding its timelines and process. If PMPRB staff signal that they regard a price as excessive, patentees will have the right to submit a voluntary undertaking to attempt to avoid a hearing. While the PMPRB indicates it will not calculate potential excess revenues as part of its in-depth pricing review, potential excess revenues included in voluntary undertakings will continue to be based on the average price per package and/or net revenue information, and not on list prices.

What’s next

Once it considers stakeholder feedback on the Discussion Guide, the PMPRB has indicated that it will publish draft Guidelines by the end of 2024. The PMPRB intends to have another consultation period on the draft Guidelines before finalizing and implementing them in 2025. In the meantime, the PMPRB’s interim guidance continues to be in effect.

Stakeholders can provide feedback on the PMPRB’s proposed approach to the new Guidelines until September 11, 2024.