The Patented Medicines Prices Review Board (PMPRB) recently released new draft guidelines for consultation and a corresponding backgrounder.(1) The new guidelines aim to operationalise the amended Patented Medicines Regulations, which come into force on 1 July 2020. The deadline for providing written submissions is 20 January 2020.
The guidelines introduce the following for drugs that received marketing approval (ie, that have been assigned a drug identification number (DIN)) before 21 August 2019 (ie, grandfathered medicines) or on or after 21 August 2019 (ie, all medicines):
- an updated list of reference countries (revised schedule), notably excluding the United States and Switzerland (the PMPRB11);
- reporting requirements relating to price and revenue net of adjustments including third-party price rebates (amended Section 4(4) of the regulations); and
- reduced reporting requirements for drugs considered at low risk of excessive pricing (new Section 3(3.1), amended Section 4(3) and new Section 4.3(1) of the regulations).
The guidelines introduce the following for drugs that received a DIN on or after 21 August 2019 only (ie, non-grandfathered medicines):
- three new price regulatory factors (new Section 4.4): pharmacoeconomic value, market size and gross domestic product (GDP) in Canada and GDP per capita in Canada; and
- new reporting requirements relating to the new price regulatory factors (new Sections 4.1 and 4.2).
The Federal Court proceeding has been scheduled to be heard in April 2020 (for further details please see "Canada releases final amendments to patented medicines pricing regulations", "Countdown begins: getting ready for new patented medicines pricing regime" and "Innovators commence court challenges regarding recent amendments to Patented Medicines Regulations").
For medicines assigned a DIN on or after 21 August 2019, the draft guidelines provide a schematic (Figure 1) showing the circumstances under which a list price or average transaction price (ATP) may be subject to investigation (shown with added yellow highlighting).
The draft guidelines outline a two-step process for non-grandfathered medicine price reviews. First, an interim maximum list price (iMLP) will be set based on the median international list price (MIP) for PMPRB11 countries. The ex-factory price of the medicine in Canada cannot exceed the iMLP during the interim period.
In the second step, following the defined interim period, the iMLP will be replaced by the maximum list price (MLP). The MLP will be the lower of the MIP or the result of the median domestic Therapeutic Class Comparison (dTCC) test (Appendix A) but is subject to a floor set by the lowest international price (LIP).
Category I medicines will be subject to an additional pricing constraint – the maximum rebated price (MRP), which takes into account the pharmacoeconomic value and market size for the medicine. A medicine will be classified as Category I if either 12 months of treatment costs greater than 50% of GDP per capita (currently approximately $28,000) or if the estimated or actual market size exceeds $25 million annually. Category II covers all medicines not in Category I and includes line extensions of grandfathered medicines receiving a DIN on or after 21 August 2019 where the DIN does not relate to a new indication.
The MRP is calculated as follows:
- the pharmacoeconomic price (PEP) is calculated by determining the price at which the medicine's incremental cost-effectiveness ratio (ICER) would be equivalent to the pharmacoeconomic value threshold of $60,000 in cost per quality-adjusted life years (Appendix C);
- the PEP may be adjusted for market size if, priced at the MRP set by the PEP, annual revenues would be more than $25 million (Appendix D);
- for drugs for rare diseases (ie, prevalence across all indications less than 1 in 2,000), the MRP will initially be calculated by applying an increase of 50% to the PEP, but will be adjusted for market size if, priced at the MRP set by the PEP, annual revenues would be more than $12.5 million (Appendix D); and
- if the above results in an MRP greater than the MLP, the MRP will be set at the MLP.
Medicines assigned a DIN before 21 August 2019 are subject to an MLP, but not an MRP. The MLP for such medicines will be the lower of:
- the MIP for the PMPRB11 countries for which the patentee has provided information; or
- the medicine's price ceiling under the February 2017 version of the Guidelines.
The draft guidelines also provide a number of circumstances in which categories (ie, whether a medicine falls into Category I or Category II) or price ceilings may be reassessed. For example, for non-grandfathered patented medicines, a reassessment may be conducted if the medicine is approved for a new indication or its cost-utility analysis is updated. Further, a Category II medicine receiving a new indication may be re-categorised to Category I if it meets the Category I screening criteria.
The details of the proposed process are complex and should be reviewed in the draft guidelines. In addition to considering written submissions, the PMPRB will also hold a policy forum and strike working groups to discuss the draft guidelines.
(1) For further details see this news release.
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