Proposed PMPRB Regulations Published for Comment

Government Estimates $12.6 Billion in Drug Cost Savings Over 10 years

Amendments to the Patented Medicine Regulations (Proposed Regulations) were published for comment on December 1. The Proposed Regulations are aimed at modernizing the drug pricing regime so the Patented Medicines Prices Review Board (PMPRB)1 can be more effective in its mandate of protecting consumers from excessive pricing.

What You Need To Know

  • The Proposed Regulations essentially mirror the provisions of the PMPRB consultation paper published earlier in 2017 by introducing new factors the PMPRB may consider in determining the value of a medicine, removing the United States as a comparator country for pricing reference, and modifying reporting requirements so rebates and discounts to any third parties (e.g. public and private insurers) must be factored into the reported price.
  • The Proposed Regulations would come into force on January 1, 2019. The new pricing factors would apply to any sales of patented drugs that occur after the coming into force date.
  • Stakeholders may provide comments on the Proposed Regulations until February 15, 2018.

Background

The Proposed Regulations will not be a surprise to the industry and reflect the key provisions of the May 2017 Consultation Paper.2 It is expected new pricing tests implementing these elements will be developed and incorporated into the PMPRB's Compendium of Policies, Guidelines and Procedures. There are five elements of the Proposed Regulations, which are explained in detail below.

  1. In assessing whether the price of a medicine is excessive, in addition to the factors currently set out in s. 85 of the Patent Act, the PMPRB may consider three additional factors: (a) the pharmacoeconomic value of the medicine and that of other medicines in the same therapeutic class; (b) the size of the market for the medicine in Canada and in other countries; and (c) the GDP of Canada and the GDP per capita in Canada.

    The PMPRB believes using these factors will enable it to assess the value of a medicine to Canadian patients and the health care system, which has been stated repeatedly by PMPRB to be a critical factor in determining whether a price is excessive. The PMPRB will be able to consider these new factors for any sales made after the coming into force date. As a result, medicines that have been sold for years in Canada in compliance with current PMPRB guidelines could be found to be excessive even where there has been no actual change to the average price.
     
  2. The United States price will no longer be considered in international price tests. Under the current Regulations, the pricing of seven countries, including the United States and Switzerland, is used to assess whether the Canadian price is excessive. The Proposed Regulations would consider the price in 12 different countries, excluding the United States and Switzerland, and including Australia, Belgium, Japan and South Korea. The PMPRB has justified removal of the United States on the basis it does not have pricing policies aligned with the consumer protection mandate of the PMPRB.
     
  3. Price and sales information for generic drugs, over-the-counter products and veterinary products will only need to be reported to PMPRB upon request. The PMPRB does not view these products as posing a high risk of excessive pricing and so ongoing reporting obligations are not necessary. Biosimilar products will not be subject to this exclusion.
     
  4. Patentees will be required to provide every cost-utility (pharmacoeconomic) analysis—which are generally prepared for publicly funded Canadian organizations—to PMPRB within 30 days of the earlier of the first sale of a medicine or publication of the analysis. Patentees will not be required to prepare an analysis if a published one does not exist.
     
  5. The Proposed Regulations would require the patentee to calculate the average price of a medicine by taking into account "any adjustments that are made by the patentee or any party that directly or indirectly purchases or reimburses for the purchase of the medicine." This is clearly aimed at requiring patentees to report confidential volume discounts currently given to public and private payors. Previous case law under the current Regulations held that these entities were not "customers" and so such discounts did not have to be factored into the reported price. PMPRB has stated this information would be treated as confidential.

Following the publication of the Proposed Regulations, Innovative Medicines Canada (IMC), the innovator drug industry association in Canada, made a statement reminding the industry of the contributions made to R&D in Canada by its members. IMC feels there is a clear connection between the price of innovative drugs and the pharmaceutical's ability to launch new drugs, referencing the fact that new product launches in Australia (40%) and South Korea (30%) are far less than the current Canadian percentage of 60%.

Stakeholders are invited to provide comments to Health Canada during the 75 day consultation period running to February 15, 2018.

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1 The Patented Medicines Prices Review Board (PMPRB) is an administrative board established by the Patent Act. Its mandate is to protect Canadian consumers of patented medicines from pricing of those medicines that is, in its opinion, "excessive." Together with the Patent Act, the Patented Medicines Regulations forms the regulatory framework within which the PMPRB operates to control pricing of patented medicines.

2 See: "Overhaul to Drug Pricing Regime Proposed in Canada"

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This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

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