Following the Quebec Court of Appeal’s decision in Merck Canada v Canada, Health Canada has announced that it will abandon two of the three proposed amendments to the Patented Medicines Regulations (the “PMPRB Regulations”). These two elements were the same two elements that were found to be unconstitutional by the Quebec Court of Appeal. Health Canada’s announcement came just one working day before the expiry of the leave-to-appeal deadline to the Supreme Court of Canada. Fasken successfully represented the Appellants before the Quebec Court of Appeal.

According to Health Canada’s announcement, the federal government will not proceed with the new pharmacoeconomic price regulatory factors, nor with the requirements to file information net of all price adjustments, including product listing agreements (PLAs).

Instead, according to the Minister of Health, new amendments to the PMPRB Regulations will be issued in “late Spring 2022” which include only a new basket of comparator countries. The coming-into-force date for the amendments remains July 1, 2022 (see, the Statement from Minister of Health on the Coming-into-Force of the Regulations Amending the Patented Medicines Regulations).

This new basket will mostly likely consist of the so-called “PMPRB11” which removes the U.S. and Switzerland, and consists of 11 countries that all regulate the price of medicines. This amendment could still have a significant impact on the prices of patented medicines. However, the recent court decisions, notably Merck Canada v Canada and Alexion Pharmaceuticals v Canada, may mitigate this impact. As previously discussed, the Quebec Court of Appeal limited the mandate of the PMPRB to the regulation of excessive pricing which result from the negative effect of the patent monopoly. This would exclude mere price regulation.

How these constraints and the amended PMPRB Regulations will work out in practice is yet to be seen. Notably, the PMPRB has yet to adopt new guidelines which reflect the abandonment of the price regulatory factors and the “Maximum Rebated Price” concept (which was based on disclosure of PLA discounts). New guidelines could use the PMPRB11 in various ways, ranging from a median price test to a maximum price test.

Even once adopted, it remains to be seen how the PMPRB Board as well as the courts will react to these new guidelines. Courts can be expected to apply the constitutional guardrails set out by the Quebec Court of Appeal to quash PMPRB decisions that appear to disregard the guidance provided in Merck Canada v Canada.

The Fasken PMPRB team will closely monitor upcoming Board hearings to assess whether there is a corresponding shift in the PMPRB’s approach. Fasken is currently representing Alexion Pharmaceuticals in a re-hearing before the PMPRB following its successful appeal in the Federal Court of Appeal. Thus, providing our team with unique in-depth insight into the new legal environment.