Scoping paper for the consultations on the Board's Guidelines

Introduction

The Patented Medicine Prices Review Board (PMPRB), established by Parliament in 1987 under the Patent Act (the Act), is a quasi-judicial administrative agency with a dual price review and reporting mandate. Through its price review mandate, it ensures that the prices of patented medicines sold in Canada are not excessive.

The amendments to the Patented Medicines Regulations (“Regulations”), published in the Canada Gazette, Part II, came into force on July 1, 2022, and resulted in an updated schedule of eleven comparator countries (“PMPRB11”)^{Footnote 1} and reduced reporting requirements for medicines believed to be at the lowest risk of excessive pricing. Changes to the PMPRB’s Guidelines are now necessary to implement the regulatory amendments, and to give effect to the Board’s commitment to modernize and simplify its administrative framework.

This Scoping Paper is intended to serve as a catalyst for a more informed, focused, and productive consultation process in developing new Guidelines by outlining themes and specific questions the PMPRB is seeking feedback on. This paper is for discussion purposes only, and it is not intended as a definitive articulation of the PMPRB’s position on these issues.

Participation in the Consultation

The PMPRB is launching the first phase of consultations on its new Guidelines by inviting stakeholders to participate in a Policy Round Table scheduled for December 5 (English session) and December 6 (French session). Both sessions will be held in person and virtually. The intent of these meetings is to foster a productive conversation, where all parties can voice their opinions and concerns regarding future Guidelines.

Interested parties are invited to make presentations to the PMPRB and/or submit written submissions on any of the questions raised in this Scoping Paper as well as on any other topics they consider to be relevant to the discussion.

Stakeholders can voice their opinions at the sessions as well as through written submissions by December 20, 2023. A What We Heard document will be released in early 2024.

Themes for Discussion

The PMPRB is interested in hearing stakeholders’ views on the following themes to inform the development of final PMPRB Guidelines. Comments on other related issues are also welcome.

1. Efficient Monitoring of Prices without Price Setting
2. Transition to PMPRB11 – New versus Existing Medicines
3. Price Reviews during Product Life Cycle
4. Investigations and Referral to Hearing
5. Relation to pan-Canadian Health Partners, Insurers (Private and Public); and Alignment with Broader Government Initiatives
6. Engaging with Patients, Health Practitioners, Pharmacy, and other Stakeholders

Theme 1: Efficient Monitoring of Prices without Price Setting

The purpose of the Guidelines is to explain the procedures used by staff at the PMPRB when monitoring the prices of patented medicines. In particular, the Guidelines explain the criteria staff will consider in determining whether the price of a patented medicine warrants a more in-depth review in the form of an investigation. As recently reiterated by the Courts, while the Board has the power to order that the price of a medicine be reduced to a non-excessive level following a public hearing, the Board does not set or mandate prices for patented medicines and Guidelines are not intended to be read as pricing guidelines. Board orders on excessive pricing can only be issued after a public hearing.

The PMPRB does not have the capacity nor the need to conduct hearings for each patented medicine under its jurisdiction.  Therefore, the PMPRB seeks to develop an administrative review system that allows for the most efficient monitoring of cases of potential excessive pricing. The aim is to provide the transparent guidance sought by rights holders during this administrative review while clearly delineating the respective roles and responsibilities of the Board and staff. In particular, rights holders should be provided with sufficient information to allow them to evaluate their risk of being subject to a hearing by explaining how staff analyses price information and makes recommendations to the Chairperson regarding whether an investigation should be closed, closed subject to an undertaking, or lead to a Notice of Hearing.

In accordance with s. 85(1)(c) of the Patent Act, the PMPRB evaluates and compares the pricing of patented medicines in Canada with other international markets. International price comparisons are often the simplest and earliest type of price review that the PMPRB can perform, since all of the relevant information is provided by rights holders in their semi-annual filings, and no additional external information (e.g., scientific reviews, public prices of other medicines) is needed.

Box 1: Canadian list prices of patented medicines within the PMPRB11.

1. 28% of all patented medicines had Canadian list prices higher than the highest international price (HIP) of the PMPRB11 in 2022, representing 22% of the total sales.
2. 69% of all patented medicines had Canadian list prices higher than the median international price (MIP) of the PMPRB11 in 2022, representing 75% of the total sales.

Figure description

This bar chart depicts the share of all patented medicines (top) and their corresponding share of sales (bottom) in 2022. The bars are subdivided into three bands to show the shares of medicines and sales for Canadian list prices: below or equal to the MIP (dark blue); above the MIP and below or equal to the HIP (grey); and greater than the HIP (light blue).   

	List <= MIP	MIP < List <= HIP	List > HIP
Share of Medicines	31%	41%	28%
Share of sales	25%	54%	22%

 

Theme 2: Transition to PMPRB11 – New versus Existing Medicines

In July of 2022, the Schedule of comparator countries in the Regulations changed from the PMPRB7 to the PMPRB11. The change did not include any grandfathering clauses; thus, all information has to be filed using the PMPRB11, regardless of the original date of introduction of the medicine.

Box 2: Respective shares of Existing medicines versus New medicines with their Canadian List Prices below or equal to the Median International Price (MIP) of the PMPRB11 in January to June 2023. 

1. 24% of existing patented medicines had Canadian list prices below or equal to the MIP of the PMPRB11 in January to June 2023, representing 16% of the total existing medicine sales.
2. 34% of new patented medicines had Canadian list prices below or equal to the MIP of the PMPRB11 in January to June 2023, representing 15% of the total new medicine sales.

Figure description

This bar chart depicts the share of Existing (top) and New (bottom) patented medicine with their Canadian list prices below or equal to the MIP of the eleven comparator countries (PMPRB11) and their corresponding share of sales in January to June 2023.

	Share of medicines (%)	Share of sales (%)
Existing Medicines	24%	16%
New Medicines	34%	15%

 

Theme 3: Price Reviews during Product Life Cycle

According to the Patent Act, the PMPRB’s duty to monitor excessive pricing extends during the duration of the patent^{Footnote 2} or certificate of supplementary protection.

It is common in many countries for the list prices of medicines to decrease over time. Canadian list prices, on the other hand, tend to remain static or increase. The combination of these trends leads Canadian prices to increase relative to their foreign counterparts, towards the higher end of the PMPRB11 basket over time. As reported in the PMRPB Annual Report, in 2021, Canadian list prices of patented medicines were the third highest in the Organisation for Economic Co-operation and Development (OECD), behind only the US and Switzerland.

Box 3: Pricing trends in Canada versus the PMPRB11

Over the 2012 to 2022 period, list prices of patented medicines increased slightly by 5% in Canada, while the prices decreased by 15%, on average in the PMPRB11.

Patented Medicine Price Index, 2012-2022

Figure description

This line graph gives the indexed rate of growth of patented medicine sales for Canada and the eleven PMPRB11 comparator countries over a 2012 to 2022 period.

Country	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Norway	1.00	0.96	0.99	1.04	1.06	1.11	1.09	1.11	1.10	1.13	1.12
Canada	1.00	1.01	1.02	1.01	1.02	1.02	1.03	1.02	1.04	1.05	1.05
United Kingdom	1.00	1.00	1.00	0.99	0.99	0.99	0.99	0.99	0.99	0.99	0.99
Italy	1.00	1.00	1.00	1.00	0.99	0.97	0.95	0.94	0.94	0.93	0.93
Sweden	1.00	0.98	0.96	0.96	0.94	0.94	0.95	0.92	0.91	0.90	0.90
Spain	1.00	0.99	0.98	0.96	0.96	0.95	0.93	0.92	0.90	0.90	0.89
PMPRB11	1.00	0.99	0.97	0.97	0.95	0.94	0.91	0.89	0.87	0.86	0.85
Germany	1.00	1.00	0.97	0.94	0.92	0.91	0.87	0.85	0.83	0.82	0.81
Netherlands	1.00	0.99	0.98	0.98	0.97	0.94	0.92	0.87	0.84	0.79	0.80
Belgium	1.00	0.97	0.95	0.93	0.92	0.90	0.88	0.84	0.82	0.80	0.76
Japan	1.00	0.98	0.97	0.97	0.92	0.85	0.82	0.79	0.76	0.74	0.71
France	1.00	0.98	0.96	0.92	0.89	0.85	0.82	0.76	0.74	0.73	0.70
Australia	1.00	0.98	0.96	0.94	0.90	0.88	0.83	0.76	0.73	0.71	0.70

 

As the pharmaceutical landscape continues to evolve, it is important to consider how the Guidelines and its associated price reviews remain relevant at all stages of a medicine’s life cycle. Finding a balance that allows for ongoing monitoring without undue administrative burden while maintaining predictability is essential.

Theme 4: Investigations and Referral to Hearing

Investigations are an administrative process that consists of an in-depth review of the information provided by the rights holders and any relevant information obtained from other sources. The purpose of these administrative investigations is to prioritize cases that may be brought to the attention of the Chairperson and could potentially lead to a hearing. Staff will recommend to the Chairperson that a hearing be commenced, or to close the investigation. The Chairperson makes the final decision to send a case to a hearing.

The Board previously used a combination of Guidelines price ceilings along with additional criteria to determine whether an investigation should be opened. The publication of these criteria in the Guidelines improved transparency and provided rights holders with greater certainty as to their risk of being considered for a hearing. For example, investigations were only triggered where prices exceeded the Guidelines ceiling by a set percentage, where potential excess revenues were above a set amount, or where complaints were received.

As previously mentioned, the PMPRB does not have the capacity to conduct hearings for each patented medicine under its jurisdiction. As a result, the PMPRB has historically relied on voluntary action by rights holders by providing them an opportunity to take remedial action (e.g., voluntary price reductions and repayment of potential excess revenues) that could result in the closure of an investigation instead of being sent to a hearing.

Theme 5: Relation to pan-Canadian Health Partners, Insurers (Private and Public); and Alignment with Broader Government Initiatives

The PMPRB strives to align with and complement the priorities and objectives of other health partners in the Canadian pharmaceutical landscape including broader healthcare and innovation objectives.

The PMPRB’s role is part of a larger complex system that governs how medicines are approved, regulated, and distributed to Canadians across the country. The development of new guidelines presents an opportunity for the PMPRB to reduce the uncertainty of the path to market for innovators, and to coordinate with and offer better support to existing regulatory and pricing bodies, as well as support initiatives of federal, provincial, and territorial activities within the pharmaceutical sector.

Theme 6: Engaging with Patients, Health Practitioners, Pharmacy, and other Stakeholders

The objective is to seek feedback from stakeholders who are not rights holders.

The PMPRB acknowledges the importance of soliciting input from a range of non-industry and non-institutional stakeholders who represent diverse voices in the broader consumer community that is affected by the PMPRB. This discussion is essential for gaining insight into public perspectives on patented medicines and their pricing, especially in the context of rare diseases and evolving clinical evidence.

Box 5: High-cost medicines dominate the pharmaceutical landscape.

• High-cost medicines represent an increasing share of the total sales of patented medicines, rising from 17.3% in 2012 to 57.1% in 2021.
• Despite accounting for over half of all sales in 2021, less than 1% of the population use these medicines.

Share of Sales for High-Cost Patented Medicines by Annual Treatment Cost, 2012 to 2021

Figure description

This bar graph depicts the high-cost medicine share of total patented medicine sales per year by annual treatment cost from 2012 to 2021. The bars are subdivided into four bands based on average annual treatment cost: $10 to $20 thousand; $20 to $50 thousand; $50 to $100 thousand; and greater than $100 thousand.

Year	Share of sales for medicines costing $10 to $20 thousand	Share of sales for medicines costing $20 to $50 thousand	Share of sales for medicines costing $50 to $100 thousand	Share of sales for medicines costing greater than $100 thousand	Total share of sales of high-cost medicines
2012	7.9%	7.7%	1.1%	0.6%	17.3%
2013	9.1%	10.5%	1.4%	0.8%	21.8%
2014	9.8%	11.7%	3.2%	1.0%	25.7%
2015	11.0%	13.4%	7.7%	1.2%	33.3%
2016	12.9%	15.6%	6.9%	1.4%	36.8%
2017	14.4%	20.2%	5.2%	1.5%	41.3%
2018	15.1%	19.4%	5.8%	1.8%	42.1%
2019	17.6%	18.7%	8.6%	3.4%	48.3%
2020	19.2%	18.4%	10.4%	4.1%	52.1%
2021	19.9%	19.8%	12.4%	5.0%	57.1%

 

Conclusion and Follow-Up

The PMPRB thanks all parties for their interest and engagement with this Policy Roundtable. 

It is our ambition to finalize new Guidelines during 2024, again following an appropriate consultation process. 

Submissions

Below are the submissions the PMPRB received during consultation period.

The PMPRB is launching the first phase of consultations on its new Guidelines by inviting stakeholders to participate in a Policy Roundtable scheduled for December 5 (English session) and December 6 (French session). Both sessions will be held in person and virtually. The intent of these meetings is to foster a productive conversation, where all parties can voice their opinions and concerns regarding future Guidelines.