On 9 August 2019 Health Canada announced the final amendments to the Patented Medicines Regulations.(1) These amendments represent the first substantive revision to the regulations since their introduction in 1987 and are a significant departure from the existing framework. The amended regulations will come into force on 1 July 2020 and are expected to be formally published in the coming weeks.
Changes relative to pre-published regulations
There are a number of notable changes to the regulations relative to the draft version which was published on 2 December 2017 (for further details please see "Canada releases proposed amendments to patented medicines pricing regulations"):
- The amendments will come into force 1 July 2020, 18 months later than previously proposed.
- Medicines for which a drug identification number (DIN) was assigned before the publication of the amendments in Part II of the Canada Gazette will be exempt from the new Section 85 price regulatory factors (pharmacoeconomic value, market size and gross domestic product (GDP) and GDP per capita in Canada) and all information reporting obligations that are associated with those factors, but will otherwise be subject to the amended regulations.
- Reporting on pharmacoeconomic value will be required only for high-cost medicines.
- South Korea is not in the final list of comparator countries.
- The reduced reporting obligation will not be extended to non-prescription vaccines or biologics (ie, Schedule D medicines not requiring a prescription).
- Reporting on cost-utility analysis will be required only if both published and communicated to the patentee; cost-utility analyses prepared by the Canadian Agency for Drugs and Technologies in Health and the National Institute of Excellence in Health and Social Services will always satisfy this condition.
- The pharmacoeconomic language of the new Section 85 price regulatory factors has been narrowed: it no longer refers to the pharmacoeconomic value of other medicines in the same therapeutic class.
Together with the Patent Act (Sections 79 to 103), the Patented Medicines Regulations provide the framework and authority by which the government, through the Patented Medicine Prices Review Board (PMPRB), regulates the prices of patented medicines in Canada to avoid excessive prices. The regulatory framework is supplemented by the Compendium of Policies, Guidelines and Procedures, which explains the policies and procedures that the PMPRB normally applies in reviewing the prices of patented medicines sold in Canada. The compendium will be replaced with new guidelines.
Section 85 of the Patent Act lists the factors that the PMPRB must take into account in determining whether a medicine has been sold at an excessive price, including such factors as specified in the Patented Medicines Regulations.
New price regulatory factors
The amendments will provide the PMPRB with three new price regulatory factors:
- pharmacoeconomic value;
- market size; and
- GDP in Canada and GDP per capita in Canada.
These factors are said to enable the PMPRB to consider the price of a patented medicine in relation to its value to patients and impact on the healthcare system.(2)
Updated reference countries
The amendments will update the schedule that lists the countries for which patentees must report pricing information. The proposal:
- adds Australia, Belgium, Japan, Netherlands, Norway and Spain;
- maintains France, Germany, Italy, Sweden and the United Kingdom; and
- removes Switzerland and the United States.
The updated countries are said to provide the PMPRB with the information needed to regulate prices based on comparisons that are more closely aligned with the PMPRB's mandate and Canada's domestic policy priorities.(3)
Changes in reporting requirements
Reduced reporting requirements for specific medicines
The amendments will reduce the reporting obligations for patented veterinary, over-the-counter (apart from non-prescription Schedule D drugs such as vaccines and insulin) and generic medicines. Without a specific request, the reporting requirements would not apply.(4) Added reporting requirements relating to new price regulatory factors
The amendments will revise the price information reporting requirements to extend to two of the new price regulatory factors:
- Pharmacoeconomic value – "every cost-utility analysis prepared by a publicly funded Canadian organization, if published and communicated to the patentee, for which the outcomes are expressed as the cost per quality-adjusted life year for each indication that is the subject of the analysis".
- Market size – "the estimated maximum use of the medicine in Canada, as measured by the total quantity of the medicine in final dosage form expected to be sold".
Information regarding the final new factor, the GDP in Canada and the GDP per capita will be obtained from Statistics Canada.(5)
Reporting of third-party price rebates The amendments will require patentees to report price and revenue information that is net of all price or other adjustments, including discounts, rebates and free goods and services made by the patentee or "any party that directly or indirectly purchases the medicine or reimburses for the purchase of the medicine".(6)
Pursuant to the new Section 2.1, medicines that have been assigned a DIN before the amendments were published in Part II of the Canada Gazette (expected in the coming weeks) are exempt from the three new price regulatory factors (ie, pharmacoeconomic value, market size and GDP in Canada and GDP per capita in Canada). Such medicines are otherwise subject to the amended regulations.
It is expected that the PMBRB will publish draft guidelines in early autumn, followed by a consultation period.
Endnotes
(1) The news release is available here and the regulatory impact analysis statement is available here.
(4) New Section 3(3.1), amended Section 4(3) and new Section 4.3(1).
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