The Canadian government recently published its proposed Regulations Amending the Patented Medicines Regulations (the “Regulations”) for coming into force January 1, 2019. The proposed Regulations are currently open for public consultation. The Office of Pharmaceuticals Management Strategies, Strategic Policy Branch, Health Canada will receive comments from interested persons until February 15, 2018.

The Regulations are pursuant to provisions of the Patent Act which are administered by the Patented Medicines Prices Review Board (“PMPRB”) The PMPRB is best known for its mandate relating to its patented drug price reporting requirements and protecting consumers against excessive pricing of patented medicines. The proposed Regulations:

(i) change the list of comparator countries under section 4(1)(f)(iii) of the Regulations by removing the United States and Switzerland and by adding Australia, Belgium, Japan, Netherlands, Norway, Republic of Korea and Spain. France, Germany, Italy, Sweden and the United Kingdom remain on the list.

The PMPRB’s position is that the selected countries are “better” comparators to the Canadian market and the increase of the number of countries in the Schedule minimizes the impact of outlier countries or when pricing information is not available for a particular jurisdiction. The removal of the United States and absence of Mexico, two of Canada’s largest trading partners is notable, as is the selection of countries that in general have lower drug prices than Canada without regard to impact on accessibility to new medicines in those jurisdictions.

(ii) modify reporting requirements to enable the PMPRB to assess the price net of all domestic price adjustments (i.e. the “actual” price or revenue obtained by the Patentee). So rebates and discounts to any third parties (e.g. public and private insurers, including any rebates/discounts pursuant to any product listing agreements (PLAs)) must be factored into the reported price.

The PMPRB notes that due to confidential price negotiations between manufacturers and payors, there is an increasing discrepancy between the list price and actual price of a drugs in the market. The PMPRB states that it would keep this information confidential. This is consistent with the practices of the provincial rulings regarding agreements with the provinces, however, there should be assurances that the information would not be inadvertently accessible through, for instance, Section 21.1(3) of the Food and Drugs Act, where the “Minister” may disclose confidential business information about a therapeutic product without notifying the person to whose business or affairs the information relates or obtaining their consent, if the purpose of the disclosure is related to the protection or promotion of human health or the safety of the public and the disclosure is to...or (c) a person who carries out functions relating to the protection or promotion of human health or the safety of the public.

(iii) add GDP (gross domestic product) in Canada, size of the market in Canada and other countries and pharmacoeconomic value into the consideration of excessive price. Cost-utility analysis prepared by a publicly funded Canadian organization (e.g. CADTH), if published, that report cost per quality-adjusted life year must be provided within 30 days of first sale or if not published within 30 days from publication. For drugs on the market on January 1, 2019, any such published analysis must be provided within 30 days of the coming into force of the regulations or if not yet published within 30 days of publication. Further, market size information must be provided within 30 days of the first offer for sale in Canada and kept up to date. Any modification must be provided within 30 days of the modification. Similarly, for medicines first offered for sale in Canada between January 1, 2016 to December 31, 2018, the most recent market size information must be provided within 30 days of January 1, 2019 with similar obligations to update the information if there are any changes.

PMPRB states that adding these factors, better enables them to assess the value of a medicine to a patient, the number of patients who may benefit and the ability of a country to pay.

It would be useful for the PMPRB to provide working examples of how these new factors will impact their price determinations.

Further, these changes to the Regulations increase reporting requirements and may open up drug prices that were compliant prior to the Regulations to reassessment.

(iv) reduce reporting requirements for patented veterinary and over-the counter medicines which would only need to report price and sales and identity information at the request of the PMPRB (within 30 days of the request and for each six month period for two years following the request) and extends this to medicines that comprise a controlled substance or are a radiopharmaceutical and/or a biologic and to patented generic medicines (approved by means of an ANDS). Such drugs are similarly exempt from the continual reporting of cost-utility analysis information unless requested by the Board.

The PMPRB’s position is that excessive pricing is not as much of concern with the drugs they have exempted. It is interesting to note that this is in light of the fact that Canadian generic drug prices are some of the highest in the world, even by the PMPRB’s own study[1]. The carve out is inconsistent with the wide net that the PMPRB has cast with regard to their jurisdiction over patented medicines (even a patent with the “slenderest thread” would be caught). On the one hand they are assuming a diminished value of a patent to a generic manufacturer but on the other hand not providing the same consideration to the value of a patent to a brand name manufacturer. While drugs that have patents that are listable or are listed on the Patent Register under the Patented Medicines (Notice of Compliance) Regulations may be more valuable and may have a greater impact on price, a patent on a product that has gone generic, irrespective of whether the drug was approved through a “New Drug Submission” (NDS) or an “Abbreviated New Drug Submission” (“ANDS”), is likely to have less of an impact. There are other situations where a patent to a brand name manufacturer may have diminished value or impact on pricing yet they are not afforded the same lessening of reporting requirements under the Regulations.

To summarize, the proposed Regulations increase reporting requirements of brand name patentees while lessening the reporting obligations of generic manufacturers. Further, the PMPRB may take the new Regulations as an opportunity to reassess the price of a previously price compliant drug exposing a company to an excessive price determination. Manufacturers will need to adapt their internal reporting systems to the new regime and would be well advised to reassess and confirm the price of their drugs prior to coming into force of the Regulations.