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15 January 2018
On December 2 2017 the governor in council published the proposed Regulations Amending the Patented Medicines Regulations. The 75-day consultation period ends on February 15 2018 and the proposed coming into force date is January 1 2019. This follows the release of a consultation document in May 2017 (for further details please see "Patented Medicines Prices Review Board update").(1)
The proposed regulations represent a significant overhaul of the Patented Medicines Regulations and are estimated by Health Canada to result in savings of C$12.6 billion net present value over 10 years. While the regulations have yet to be adopted, companies should be factoring these potential changes into their business planning now.
Together with Sections 79 to 103 of the Patent Act, 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 in order 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.
Section 85 of the Patent Act lists the factors that the PMPRB must take into account in determining if a medicine has been sold at an excessive price, including such factors as specified in the Patented Medicines Regulations.
According to the Regulatory Impact Analysis Statement accompanying the draft regulations, "it is anticipated that the implementation of these amendments by the PMPRB would lead to lower prices for patented medicines in Canada that are more closely aligned with their value to patients and the health care system, and Canadians' willingness and ability to pay".
The proposed regulations include new price regulatory factors and patentee price information reporting requirements. The key elements of the regulations incorporating the proposed amendments are as follows.
New price regulatory factors
Under the new Section 4.4, the PMPRB has three new price regulatory factors:
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.
Updated reference countries (revised schedule)
The amendments would update the schedule that lists the countries for which patentees must report pricing information to include:
The proposal maintains:
Further, the proposal 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.
Reduced reporting requirements for specific medicines
Under new Section 3(3.1), amended Section 4(3) and new Section 4.3(1), the reporting obligations for patented veterinary, over-the-counter and generic medicines have been reduced. Absent a specific request, the reporting requirements would not apply.
Added reporting requirements concerning new price regulatory factors
New Sections 4.1 and 4.2 extend the price information reporting requirements to two of the new price regulatory factors:
Information regarding the final new factor, GDP in Canada and GDP per capita, would be obtained from Statistics Canada.
Reporting of third-party price rebates
Amended Section 4(4) would 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 or reimburses for the purchase of the medicines".
The new factors would apply to existing patented medicines, but be limited to sales that occur after the coming into force date of January 1 2019. However, the reporting requirements would apply to new and existing medicines. Transitional provisions would limit the reporting requirements regarding estimated maximum use to drugs first sold by January 1 2016, unless such information is updated on or after that date (eg, approval of a new use), presumably on the basis that the balance of the medicines would be assumed to be selling at maximum use three years after launch. The earliest that any information would be required to be reported under the amendments is 30 days after their coming into force.
For further information on this topic please contact Jeffrey Coles or Daphne Lainson at Smart & Biggar/Fetherstonhaugh's Ottawa office by telephone (+1 613 232 2486) or email (firstname.lastname@example.org or email@example.com). Alternatively, please contact Nancy Pei at Smart & Biggar/Fetherstonhaugh's Toronto office by telephone (+1 416 593 5514) or email (firstname.lastname@example.org). The Smart & Biggar/Fetherstonhaugh website can be accessed at www.smart-biggar.ca.
(1) Further information is also available here.
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