In a decision dated December 21, 2009 (and published on the PMRPB website on January 28, 2010) the Patented Medicine Prices Review Board ("PMPRB") decided the merits of the matter of Sanofi Pasteur Limited and the medicines Quadracel and Pentacel, which are multi-component vaccines designed to protect against multiple diseases. In its decision, the Panel found that the prices of the two medicines were excessive based on the application of the PMPRB's Guidelines. However, the Panel also found it necessary to depart from the Guidelines on two issues which resulted in a reduction of the total amount of excess revenues alleged to be owed by Board Staff.
In this case, Board Staff's primary allegation was that the prices of the two medicines were increased by amounts greater than that permitted under the Guidelines' CPI-Adjustment Methodology. The patentee argued that the Guidelines did not properly implement subsection 85(1) of the Patent Act with respect to the pricing of vaccines and that the unique nature of vaccines and the particular circumstances surrounding the market for, and sales of, the vaccines Quadracel and Pentacel supported variances from the Guidelines.
In its decision, the Panel commented on the role and onus established by the Guidelines. Notably, the Panel stated that in a price review hearing, the hearing panel must determine whether the medicine under review has been excessively priced within the meaning of the Patent Act alone. The Panel also held that if Board Staff rely on the Guidelines to establish the medicine is excessively priced and the Panel is not convinced the Guidelines are an appropriate implementation of the Act, Board Staff 's case will fail.
In this case, the Panel found that Board Staff, while relying on the Guidelines, also presented evidence and argument on the appropriateness of their application. To this end, the Panel accepted the appropriateness of applying the CPI-Adjustment Methodology in the manner contemplated by the Guidelines, without the alterations proposed by the patentee. The Panel also did not accept any price averaging methodology. The Panel found that "banking” of CPI increases would remove the protection from sudden and significant price increases and was inconsistent with the Board's mandate to protect consumers. The Panel also concluded that section 85(1)(a) of the Patent Act did not permit an inquiry into the price at which Quadracel and Pentacel were sold based on the unique aspects of the development and marketing of vaccines, nor that such considerations would be persuasive in this case if permitted under any part of section 85(1).
While the Panel made the above findings against the patentee on the basis of the Guidelines, it also found two instances where deviations from the Guidelines were necessary. In the first instance, the Panel deviated from the application of the Guidelines to accommodate a discounted contract to provide the medicines to the province of Ontario. The Panel indicated it was mindful of circumstances where the PMPRB should consider encouraging patentees to provide benefits to purchasers without patentees being prejudiced by reductions in their MNEs. In this case, the patentee had entered into a five year contract with the province of Ontario to provide the medicines on the basis of discounted prices. However, Ontario understood that when the contract was renewed the pricing of Quadracel and Pentacel would revert to the undiscounted levels. The Panel recognized that on the basis of the Guidelines the prices of the two medicines would exceed the MNE when the contract with Ontario was renewed. To avoid this result, the Panel held that the prices of Quadracel and Pentacel should be deemed to be based on the prices at which these medicines would have been sold without the applicable discounts. The Panel stated that this would eliminate any excessive revenues that would otherwise be generated by the discounts.
In the second instance, the Panel found that the provisions of the Guidelines that require each medicine identified by a new Drug Identification Number (DIN) to be treated as a new medicine should be not be applied to Pediacel, the medicine which replaced Pentacel in Canada. While under the Guidelines, Pediacel was considered a new medicine, the Panel held that Pediacel should be deemed to have inherited the MNE of Pentacel on the basis that the two medicines were virtually identical and as the sales of Pediacel continued under the contracts for Pentacel. However, on the basis of the Panel's other findings this result did not have an impact on the outcome.
The Panel had ordered that the parties submit a draft order implementing its decision by February 3, 2010. However, as advised in the PMPRB’s January 2010 NEWSletter, released today, judicial review of the decision was filed on January 19, 2010.
The decision may be found at: http://www.gowlings.com/resources/enewsletters/drugpricingreimbursement/pdfs/QuadracelPentacel-Merits-Reasons.pdf
The PMPRB’s January NEWSletter may be found at: http://www.pmprb-cepmb.gc.ca/english/view.asp?x=271&id=174