Proposed amendments to the Patented Medicines Regulations (the “proposed amendments”) were published in the Canada Gazette Part I on December 2, 2017. The proposed amendments would represent the first significant changes to the framework governing the Patented Medicine Prices Review Board (“PMPRB” or the “Board”) since its creation over 20 years ago. The goal of the proposed amendments is to provide the Board with more relevant and effective regulatory tools to better protect Canadians from excessive prices in respect of patented medicines. The publication of the proposed amendments marks the beginning of a 75 day consultation period whereby interested persons can make representations concerning the proposed amendments to Health Canada.

The PMPRB is a consumer protection agency with a mandate to ensure that patentees do not abuse their patent rights by charging consumers excessive prices during the lifetime of the patent. Established by the Patent Act, the Board has jurisdiction over any “patentee of an invention pertaining to a medicine” who intends to sell or is currently selling the medicine in Canada.

Various reporting obligations are imposed on patentees by virtue of the Patent Act and Patented Medicines Regulations (the “regulatory framework). The regulatory framework also provides the Board with powers to investigate and institute enforcement proceedings against a patentee where it believes a patented medicine has been sold at an excessive price. In the case of excessive pricing, the regulatory framework permits the Board to direct the patentee to reduce the market price of the medicine and/or pay a penalty in relation to the profits generated from excessive prices.

The proposed amendments concern the price regulatory factors used to assess the price of a patented medicine, and the price reporting requirements for patentees.

Price regulatory factors

The Board considers various pricing factors when assessing whether a price is excessive. Three new price regulatory factors will be introduced by the proposed amendments.

  • The pharmacoeconomic value of the medicine in Canada: This factor will incorporate both the value of the medicine, in terms of the benefits it provides to patients and the healthcare system, and the costs to supply it. By considering the cost to supply the medicine, the Board seeks to recognize the importance of continued investment in the production of new medicines.
  • The market size of the medicine in Canada and elsewhere: This factor recognizes that the impact of an excessive price is a function of both price and volume. The Canadian price should be assessed against international prices and prevalence levels to evaluate the price-volume relationship.
  • The total and per capita gross domestic product in Canada: The consideration of GDP (both gross and per capita) will provide the Board with a measure of the ability to pay for medicines at the national and individual level. This factor will also allow the Board to assess the impact of a medicine’s price on the finances of consumers and insurers.

In addition, the proposed amendments will update the schedule of countries used by the Board for international price comparisons. Currently, the Board uses publically available list prices of patented medicines sold in seven countries (the “PMPRB7”) to set maximum prices for the same patented medicines in Canada at introduction, and in the current market. The proposed schedule will be amended and expanded to include 12 countries in the basket, selected from the OECD, namely: Australia, Belgium, France, Germany, Italy, Japan, the Netherlands, Norway, South Korea, Spain, Sweden, and the United Kingdom (i.e. the “PMPRB12”).

According to Health Canada, the goal of the amended and expanded list is to promote a more balanced perspective of prevailing market prices and to provide a more stable sample median. However, a notable consequence of the amended basket of countries is that the United States and Switzerland, originally included in the PMPRB7, are no longer included in the PMPRB12. With the removal of two countries that typically have prices for patented drugs that are higher than those in Canada, this is expected to bring a corresponding drop in the Highest International Price Comparison (HIPC) and Median International Price Comparison (MIPC) metrics, likely requiring greater price reductions for compliance.

The new regulatory factors will apply after the coming into force of the proposed amendments.

Price reporting requirements

The proposed amendments will reduce the reporting requirements in certain contexts to avoid unnecessary regulatory burdens for medicines that pose a lower risk of excessive pricing. In particular, patentees of veterinary and OTC medicines will now only be required to report information upon request of the Board, including where the medicine contains a controlled substance or a radiopharmaceutical and/or a biologic. The obligation to report only upon request will now also extend to patented generic medicines.

In light of the proposed expansion of the regulatory price factors, patentees will be required to report information on pharmacoeconomic value and market size. With respect to pharmacoeconomic information, patentees will be required to provide all published cost-utility analyses that express the value of the medicine in terms of the cost per quality-adjusted life year. Reporting will be limited to information that has been prepared by a publically funded Canadian organization, given the cost of preparing such investigations. Although this factor will only apply to sales of patented medicines made after the coming into force of the proposed regulations, the obligation to submit the most recently published information extends to all patented medicines whether marketed before or after the coming into force of the regulations.

Regarding market size, patentees will be required to provide information on the estimated maximum use of the medicine in Canada by quantity of the medicine sold in final dosage form (for each dosage form and strength expected to be sold). This factor will be considered only in respect of sales made after the coming into force of the proposed amendments. However, in respect of medicines already on the market, information must be reported at the coming into force of the proposed amendments.

Patentees will not be required to report information regarding GDP as this will be obtained from Statistics Canada.

Finally, patentees will now be required to report price and revenue information that is net of any price or other adjustments, including discounts, rebates, and free goods and services, to any party that pays for, or reimburses, the medicine. This information will assist the Board in determining the actual prices charged in the market. Importantly, although this information will be considered the Board, it will be deemed privileged under the Patent Act.

The full text for both the RIAS and the proposed amendments can be found here.