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23 November 2020
On 23 October 2020 the Patented Medicine Prices Review Board (PMPRB) published the final version of its guidelines (for further details please see "Final PMPRB guidelines released"). These guidelines operationalise the amendments to the Patented Medicines Regulations scheduled to come into force on 1 January 2021. The guidelines state that they are not binding and may be revisited by the PMPRB "in light of experience and changing circumstances".
The same price review factors are considered for all patented medicines, except that for new medicines, the medicine's pharmacoeconomic value in Canada, the size of the medicine's market in Canada and the gross domestic product in Canada and the gross domestic product per capita in Canada are also considered.
Price review process for new medicines
The overall price review process for new medicines is described in this schematic (and remains largely unchanged from the June 2020 draft):
The guidelines outline a two-step process for the price review of new medicines.
In the first step, an interim maximum list price (iMLP) will be set based on the median international publicly available ex-factory list price (MIP) for PMPRB11 countries. The list price cannot exceed the iMLP during the interim period. However, if the patentee has not filed PMPRB11 pricing after two reporting periods, the iMLP will be set by the top of the domestic therapeutic class comparison test (dTCC)(2) and if no domestic therapeutic class comparators are available, the MLP may be set by the median of the international therapeutic class comparison (iTCC).
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 list price and the MIP. If PMPRB11 prices are not filed by the end of the interim period, the MLP is set by the lower of the list price and the top of the dTCC and as above, if no domestic therapeutic class comparators are available, the MLP may be set by the median of the iTCC.
Prices for medicines classified as Category I will be considered in light of an additional pricing factor, but only in the context of an investigation (see discussion below) – the maximum rebated price (MRP) ceiling that may be further adjusted based on the size of the market (MRP[Adjusted] = MRP[A]). A medicine will be classified as Category I if either 12 months of treatment costs are greater than 150% of gross domestic product per capita or if the estimated or actual market size (sales) exceeds C$50 million annually. All other new medicines, biosimilars and generic medicines will be classified as Category II.
Price review process for grandfathered medicines, line extensions and gap medicines
Grandfathered and line extension medicines will be subject to an MLP, but not an iMLP. The MLP for such medicines will be the lower of:
Patentees must comply with the MLP within one reporting period of the MLP being set for line extension medicines and within two reporting periods for grandfathered or gap medicines.
Gap medicines will be subject to an iMLP assessed in the same manner as an iMLP for new medicines. The MLP for gap medicines will be the lower of:
The 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 new medicines, a reassessment may be conducted if the medicine is approved for a new indication or its cost-utility analysis is updated. Further, by way of example, a Category II medicine receiving a new indication may be recategorised to Category I if it meets the Category I screening criteria. As a further example, for grandfathered medicines and their line extensions, if the prevailing HIP is lower than the MLP for two consecutive reporting periods, the MLP will be reset by the prevailing HIP.
Changes relative to June 2020 draft guidelines
PMPRB will consider MRP only if an investigation is triggered
Under the June 2020 draft guidelines, patentees of Category I medicines were required to ensure that the medicine's average transaction price in Canada is no higher than the MRP ceiling, failing which the price may be subject to additional review or investigation by the staff.
Pursuant to the final guidelines, investigations into Category I medicines "will only be triggered by the patentee's failure to comply with the iMLP or MLP", although the board may consider MRP or MRP[A] in the context of such an investigation.
In its October 2020 NEWSletter, the PMPRB attributed this change to the 29 June 2020 Federal Court decision invalidating Subsection 3(4) of the amendments (for further details please see "Federal Court strikes price calculation provision of amendments to Patented Medicines Regulations"), which would have expanded price calculation requirements to include information beyond the first point of sale including third-party rebates. The newsletter notes that the PMPRB may revisit this approach based on the outcome of the pending appeal of the decision.
Revisions to maximum list price
Pursuant to the June 2020 draft guidelines, the MLP for new medicines was set as the MIP for the PMPRB11 countries where such prices were available, absent which the MLP was set by the top of the dTCC. In the final guidelines, the MLP is set as the lower of the list price and the MIP, and absent international prices, the MLP is similarly set as the lower of the list price and the top of the dTCC.
The MLP for grandfathered, line extension and gap medicines remains unchanged relative to the June 2020 draft guidelines.
Revisions to MRP
Various minor changes were also made to the MRP calculation. Most significantly, the pharmacoeconomic value threshold (PVT) used to calculate the MRP and MRP[A] of Category I medicines was reduced from C$150,000 per quality-adjusted life years (QALY) to $100,000 per QALY for Level IV medicines (ie, medicines which provide no or slight improvement relative to other medicines sold in Canada).
In addition, the MRP for medicines with an actual market size exceeding C$50 million was previously set as the median of the dTCC taking into account the applicable floor; in the final guidelines, the MRP is the lower of the MLP and the median of the dTCC.
Reassessment for grandfathered and line extension medicines limited to HIP
Under the June 2020 draft guidelines, the MLP for grandfathered and line extension medicines would be reset by:
The final guidelines drop the latter reassessment, such that only the former applies.
MRP may be decreased or increased based on market
The June 2020 draft guidelines would require a decrease to the MRP in response to increased sales, but had no corresponding provision to increase the MRP to account for decreased sales. Under the final guidelines, the MRP may be increased back to the MLP if sales fall to C$12 million or less for high-cost medicines, or to $50 million or less for high-market-size medicines.
Vaccines to be subject to the same complaints-based investigation criteria as patented biosimilars and generics
New patented vaccines will be subject to a price review and investigation only if a complaint is received by the PMPRB.
On 26 October 2020 the House of Commons Standing Committee on Health announced that it would undertake a study of the final guidelines. The committee invited stakeholders and individuals to submit requests to appear before the committee and written submissions to the clerk of the committee no later than 6 November 2020.
For further information on this topic please contact Abigail Smith or Nancy Pei at Smart & Biggar's Toronto office by telephone (+1 416 593 5514) or email (email@example.com or firstname.lastname@example.org). Alternatively, please contact Daphne Lainson at Smart & Biggar's Ottawa office by telephone (+1 613 232 2486) or email (email@example.com). The Smart & Biggar website can be accessed at www.smart-biggar.ca.
(1) See the PMPRB's October 2020 NEWSletter for the PMPRB's overview of the final changes.
(2) See Appendix A.
(3) Levels I–IV and the scientific review process as described in Appendix E.
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