In its Discussion Paper issued on January 31, 2008, the Patented Medicine Prices Review Board (PMPRB) has made proposals to review prices in "any market" under specified circumstances and to establish new ground rules for "re-setting" the maximum non-excessive (MNE) price of a patented medicine. These proposals arise from the Board's ongoing consultations on its Excessive Price Guidelines begun in May 2006.

Unlike the "options" presented in the same paper on the response to the LEO Pharma decision on the treatment of rebates in the Average Price calculation, the proposals with respect to "any market" and "re-setting the MNE price" represent the Board's proposals to change its guidelines or practices. It should be assumed that the Board intends to implement these proposals unless it is persuaded by submissions to abandon or amend them.

"Any Market"

The PMPRB has traditionally used the Average Price for Canada as a whole (previously referred to by the Board as the Average Transaction Price, or ATP) for price review purposes. The Discussion Guide of May 2006 showed that the average prices for patented drugs to each class of customer and in each province and territory tended to be similar. There were differences in some cases though and, according to the PMPRB:

As a result, some stakeholders are concerned that if some provinces/territories and/or classes of customer negotiate price concessions below the MNE price, the offset may be that other provinces/territories and/or classes of customer may pay higher prices (above the MNE price).

In its Stakeholder Communiqué of May 31, 2007, the PMPRB stated that it agreed with the views of stakeholders that, if price reviews are conducted at the level of any market, they should be undertaken, on a case-by-case basis, where appropriate. In its current proposals, the Board appears to have gone further by identifying broad sets of circumstances where it would like to review prices on a market-by-market basis:

  • During the introductory sales period, the PMPRB would review the Average Price in each market (i.e., for each class of customer and for each province/territory) to ensure it does not exceed the MNE price;
  • In any future period, if the Average Price for Canada appears to exceed the MNE price, Board Staff will review the price in each market to determine in which market(s) the price appears to be excessive;
  • In the event of a VCU or Board Order with respect to the medicine, the PMPRB will review prices in each market for all periods covered by the VCU or order to ensure that the price in any market does not exceed the MNE price; and
  • The PMPRB will review prices in each market in the event of a substantiated complaint of apparent excessive price.

Re-Setting the MNE Price

During the consultations, the Board asked if, and under what circumstances it may be appropriate to re-set the MNE price (formerly referred to as "re-benching"). Currently, the Guidelines provide for re-setting the MNE price when a drug sold under the Special Access Program (SAP) receives a Notice of Compliance and in certain cases when the drug was sold in fewer than five comparator countries when introduced in Canada. (It appears that Board Staff have not always applied these provisions in recent years.)

After consideration of submissions on this question, the Board is proposing the following circumstances when it would be appropriate to consider re-setting the MNE price on a case-by case basis:

  • When the MNE price can be shown to not cover the patentee's cost of making and marketing the drug:
    • One scenario identified by the Board is a drug supplied under the SAP "at an artificially low price [that] is actually approved for sale and launched on the Canadian market and it can be shown that that the actual costs of making and marketing the approved drug product are higher than the MNE price allowed under the current existing price tests."
    • Other scenarios include circumstances where cost increases due to government regulations or shortages raise the costs of making and marketing the medicine to levels greater than the MNE price;
  • When new evidence suggests the initial categorization was inappropriate;
  • When the median of the International Price Comparison is the pivotal test and the medicine is sold in too few countries at introduction. Currently, the Guidelines provide that the price may be adjusted when the drug is sold in five countries or within three years, whichever comes first. The Board is proposing to amend this provision to three countries and sets out three further options, including removal of the time limit.

The discussion paper also reports on the status of the remaining issues raised by the Board in its review of the guidelines. Several working groups are expected to report in the coming months and the Board will put forward further proposals to amend its guidelines.

The PMPRB has asked stakeholders to submit comments on the discussion paper to the Secretary of the Board by March 3, 2008.

For a copy of the PMPRB Discussion Paper, Options for Possible Changes to the Patented Medicines Regulations, 1994 and the Excessive Price Guidelines, please visit: