Déjà vu: Another delay in implementation of Canada’s PMPRB Regulations

The coming-into-force of amendments to the Patented Medicines Regulations, overseen by the Patented Medicine Prices Review Board (PMPRB), has been delayed for a third time and is now scheduled for January 1, 2022. The announcement was made at the eleventh hour as industry was preparing for implementation of July 1, 2021.

What you need to know

  • The PMPRB is a federal administrative body created under the Patent Act with the mandate of ensuring that the price of patented medicines sold in Canada is not “excessive”.
  • Initially enacted in August 2019, the amendments to the Regulations will now come into force on January 1, 2022 (delayed from July 1, 2021 and, before then, January 1, 2021). The Guidelines of the PMPRB which operationalize the Regulations are also expected to take effect as of January 1, 2022.
  • As a result of the delay, the PMPRB has also published notice of a proposed update to the Guidelines that, if implemented, would impact the maximum permissible list price for certain patented medicines that were approved prior to August 21, 2019 (Grandfathered Medicines) and their line extensions.
  • The decisions of two court proceedings challenging the amendments are under appeal, and it is unclear whether there will be a decision in either appeal before the Regulations come into force.
  • While the Regulatory Impact Analysis Statement (RIAS) attributed the delay to the impact of the pandemic, speculation on other reasons for the delay includes the possibility of a federal election; the ongoing litigation challenging the Regulations; media attention and commentary; provincial governments opposing the Regulations; the federal government’s interest in developing an innovative biomanufacturing industry in Canada; challenges in procuring products during the pandemic; and the voice of industry and patient organizations.

Analysis

New date of January 1, 2022 for PMPRB changes

The final amendments to the Regulations were published on August 21, 20191. The recently announced delay in implementation to January 1, 2022 is the third time that the coming-into-force date has been pushed forward.

According to the Regulatory Impact Analysis Statement (RIAS) that accompanied the announcement of the delay, the reason for moving the coming-into-force date to January 1, 2022 is “…in consideration of the unexpected impact of the third wave of the COVID-19 pandemic and the ongoing efforts related to the pandemic response, additional time is required for patentees to prepare for and comply with the changes…” to the regime. The RIAS is silent on whether another delay may be considered if the pandemic has not subsided at the end of this year.

Innovative Medicines Canada (IMC), the industry association of innovative pharmaceutical manufacturers in Canada, commented that the delay is “a renewed opportunity to examine the potential impact of these reforms, as well as affording time to generate more effective alternative solutions”2.

Proposed update to Guidelines

In view of the delay in the coming-into-force of the amendments to the Regulations, the PMPRB has published a “Notice and Comment”3, inviting stakeholders to provide feedback on proposed updates to the Guidelines that would come into effect on January 1, 2022 (the 2022 Guidelines). The PMPRB indicates that the proposed updates address the need for further clarity where patentees are facing different international price information requirements and a widening “Gap” period due to the further delay to the amendments.

The PMPRB proposes to define “Gap” medicines as those for which a DIN was assigned on or after August 21, 2019 up until January 1, 2022 and sold in Canada before January 1, 2022.

In addition, one of the factors to be used in establishing the maximum list price (MLP) for certain Grandfathered Medicines/line extensions would change from highest international price (HIP) to median international price (MIP):

For medicines that have sales filed with PMPRB in the reporting period ending June 30, 2021, the 2022 Guidelines would establish the MLP for Grandfathered Medicines/line extensions using the lower of the:

  1. median international price (MIP) of the PMPRB7, and
  2. the ceiling price under the current Guidelines.

However, for Grandfathered Medicines/line extension medicines that are first filed with PMPRB for the reporting period ending in December 31, 2021, or later, the MLP would be set by the HIP.

In contrast, under the current form of the Guidelines that would have come into effect on July 1, 2021 (if not for the delay), the maximum list price (MLP) for all Grandfathered Medicines and their line extensions would be set by the lower of the i) highest international price (HIP) of the PMPRB11, and ii) the medicine’s ceiling price under the current Guidelines.

No change to the compliance date is being proposed, so patentees will have one reporting period (six months) to comply with the MLP requirements of the 2022 Guidelines.

Some of the proposed updates are administrative in nature; for example, the PMPRB will refer to the comparator countries used for price assessments as “scheduled countries” instead of using the term “PMPRB11”.

The PMPRB will accept written feedback on the Notice and Comment until August 15, 2021.

Ongoing court challenges

The decisions in two separate proceedings challenging the validity of the amendments to the Regulations are under appeal and cross-appeal and continue to make their way through the courts. One proceeding involving IMC is under appeal in the Federal Court of Appeal and the other involving a group of pharmaceutical manufacturers is under appeal in the Québec Court of Appeal. Lower court rulings in each proceeding from last year upheld the majority of the amendments, except for the mandatory reporting of third-party rebates (e.g., to public or private insurers under product listing agreements) which was determined to be outside of the scope of PMPRB’s authority to regulate.

According to the public records, no hearing date has been in either matter so it is unclear at this time whether any decision would be rendered before the January 1, 2022 implementation date.

Also note that IMC has launched a separate proceeding in Federal Court, challenging the PMPRB Guidelines which continue to include pricing tests relating to “maximum rebated price” even though the requirement to report rebates was struck down in both the federal and Québec lower court rulings. No hearing date has been set in this matter at this time.

Next steps

As concerns of COVID-19 variants and a “fourth wave” continue to swirl and the potential for a federal election looming for the fall, Canadian drug pricing will surely be top of mind for stakeholders for the remainder of this year. Patent rights holders will want to continue to assess the impact of the Regulations on their patented medicines that are sold and to be sold in Canada. As noted, comments on the proposed updates to the 2022 Guidelines will be considered by the PMPRB until August 15, 2021, and can be submitted to pmprb.consultations.cepmb@pmprb-cepmb.gc.ca. We will continue to monitor the status of the court proceedings and developments relating to the implementation of the amendments to the Regulations.

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1 See our previous bulletins for more information on the amendments to the Regulations:

https://www.torys.com/insights/publications/2021/01/a-decision-and-a-delay

https://www.torys.com/insights/publications/2020/06/federal-court-on-amended-patented-medicines-regulations

https://www.torys.com/insights/publications/2020/06/delay-in-canadas-drug-pricing-reforms-to-2021

https://www.torys.com/insights/publications/2019/08/drug-price-cooling-in-canadas-election-year

2 PMPRB delay provides opportunity for meaningful consultation; Posted on June 29, 2021: http://innovativemedicines.ca/pmprb-delay/

3 https://www.canada.ca/en/patented-medicine-prices-review/services/consultations/notice-comment-references-comparator-countries.html

To discuss these issues, please contact the author(s).

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.

For permission to republish this or any other publication, contact Janelle Weed.

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