The Role of the Patented Medicine Prices Review Board

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Transcript The Role of the Patented Medicine Prices Review Board

Price Regulation of Patented
Medicines in Canada
Presentation to the First Pan-American Seminar on
the Economic Regulation of Pharmaceuticals
Brasília, Brazil
March 17, 2009
Division of Responsibilities for Health Care and
Pharmaceuticals in Canada
Patented Medicine Prices Review Board (PMPRB)
Price Regulation
Guidelines Review
Reporting on Key Trends
Health Care System
Administration and delivery of insured primary health care through
physicians and hospitals
Public health insurance plans and some supplemental health benefits
Canada Health Act (principles of public administration, comprehensiveness,
universality, portability, and accessibility)
Canada Health Transfer ($24 billion in cash and $13.6 billion in tax transfers in
Health services to special populations (e.g., First Nations, veterans)
Public health (health promotion and prevention)
Provision of public drug plan benefits to provincial populations
Administration of provincial drug formularies
Health Canada reviews the safety, efficacy and quality of drug products and
approves them for sale and use under the Food and Drugs Act
Patented Medicines Prices Review Board (PMPRB) ensures prices of
patented medicines sold in Canada are not excessive
Canadian Agency for Drugs and Technologies in Health (CADTH) conducts
Common Drug Review (CDR)
Evidence-based clinical and pharmacoeconomic reviews of new drugs and
new indications for old drugs results in recommendation on listing
PMPRB – Origins
Created in 1987 as part of reforms to the federal Patent Act
Consumer protection pillar
Price controls to balance enhanced patent protection
Industry commits to invest 10% of sales in research and development
Arms-length body in the Federal Health Portfolio
5 person independent panel of Governor-in-Council appointees
Accountable to Parliament through the federal Minister of Health
Minister can seek policy advice but cannot interfere in decisions of the Board
Quasi-judicial tribunal
Remedial orders provided for in the Patent Act carry the force of the Federal Court
PMPRB – Mandate
 Regulatory: To ensure that prices charged by manufacturers for
patented medicines are not excessive, thereby protecting
consumers and contributing to the Canadian health care system.
 Reporting: To report on pharmaceutical trends and on the R&D
spending by pharmaceutical patentees, thereby contributing to
informed decisions and policy making.
 Key Principles: Openness, fairness, transparency, timeliness,
PMPRB – Jurisdiction
Authority to review prices charged by patentees (factory-gate price)
Prescription and non-prescription patented drugs sold in Canada to
wholesalers, hospitals, pharmacies or others, for human and
veterinary use
The price of each patented drug product, including each strength of
each dosage form, sold in Canada, at the level of the Drug
Identification Number (DIN).
PMPRB – Jurisdiction
No authority over:
 Prices of non-patented drugs
 Prices charged at the retail level to individual consumers
 Setting prices
PMPRB – Legislated Pricing Factors
Patent Act sets out factors to be considered by the Board in
determining whether a medicine is being or has been sold at an
excessive price:
The price of the medicine;
The prices of other medicines in the same therapeutic class;
The prices of the medicine and other medicines in the same
therapeutic class in countries other than Canada; and,
Changes in the Consumer Price Index
Patented Medicines Regulations
 Identify the specific reporting requirements of patentees
 Set out the seven comparator countries used in the price review:
France, Germany, Italy, Sweden, Switzerland, United Kingdom and
United States
 Price and sales in Canada to be filed for each class of customer
(hospital, pharmacy, wholesaler, other) in each province and
Excessive Price Guidelines
 Under the Act, the Board can establish price guidelines
In consultation with the provinces, consumers and the industry
Used by Board Staff to conduct price reviews/investigations
Provide transparency and predictability to patentees and other
 Not binding on Board in a hearing
Scientific Review
 Purpose – To determine
The primary indication/use of the new medicine, and dosage regime
The category (i.e., breakthrough/substantial improvement; provides modest,
little or no improvement over other medicines for same indication; line
Therapeutically comparable medicines, and their respective comparable
dosage regimes
Price Review
Application of price tests
 Reasonable Relationship
Association between strength of the medicine and price
 Therapeutic Class Comparison
Price of the drug compared to that of clinically equivalent drugs sold in
same therapeutic class at non-excessive price
 International Price Comparison
Price of the drug compared to that of the same dosage form and strength
of the drug sold in countries listed in the Patented Medicines Regulations
 Highest International Price Comparison
Canadian price cannot be the highest in the world (i.e., 7 comparator
Introductory Price Review
Drug Categorization
Excessive price tests
Maximum non-excessive price
Patentee's price
within/outside the PMPRB Guidelines?
Price Increases for Existing Drugs
Consumer Price Index (CPI) adjustment methodology allows the
lower of:
 Price three years ago adjusted for cumulative change in the CPI;
 One year “cap” – equal to 1.5* times the forecast change in the annual CPI
Again, Canadian price can never be the highest among
comparator countries
 Even if allowed by CPI methodology
* In periods of high inflation (over 10%), limit is 5% more than the forecast change in CPI
 Where price appears to exceed the Guidelines, patentee given
opportunity to make further written submissions to substantiate price
 Meetings of patentee and Board Staff take place to discuss material
 May result in revisiting of science (i.e., appropriate comparators)
Possible Outcomes of Investigations
Price not excessive and investigation closed
Price determined to be excessive under the Guidelines
Patentee given opportunity to provide a Voluntary Compliance
Undertaking (VCU) to reduce its price and repay excess revenues
Board Staff refers the matter to the Chairperson, who decides
whether it is in the public interest to issue a Notice of Hearing
Note: Even if hearing called, Board Staff still available to
negotiate VCU on a parallel track with the Hearing process
Separation of Investigation and Decision-Making
 “Conflict Wall” between Board Staff and Board/Panels
Essential to ensure Board remains unbiased
Board never informed of status of investigations of particular drugs
 Chairperson decides whether to call Hearing
 Board Staff and Patentees both “parties” before Hearing Panel
Any communication by one party to the Board served on the other party at
the same time
 11 hearings initiated since January 2006
Adderall XR; Airomir1; Apotex; Concerta; Copaxone; Penlac; Quadracel and
Pentacel; Risperdal Consta1; Strattera; Thalomid / Celgene; Zemplar1
 One older ongoing hearing (Nicoderm), initiated in 1999
1 Resolved through VCUs
Voluntary Compliance Undertakings (VCUs)
 47 VCUs approved to-date – price reductions and offset of excess revenues
Over $33M in total since 1993
 In 2007 and 2008, a total of nine VCUs
Three were submitted in the context of a hearing:
Airomir: payment of excess revenues of $485,498.58
Risperdal Consta: price reduction and payment of excess revenues of $ 4,386,172.99
Zemplar: price reduction and payment of excess revenues of $58,741.67
One following the issuance of a Board Order:
- Dovobet: $870,425.68 (for 2006 period)
Denavir: offset excessive revenues of $61,021.80
Forteo: offset excessive revenues of $333,629.25
Lantus: price reduction and payment of excess revenues of $694,239.50
OctreoScan: price reduction and payment of excess revenues of $387,181.87
Vaniqa: payment of excess revenues of $70,860.59
Current Guidelines Review
Initiated in 2005 due to changing environment:
 Developments within the pharmaceutical industry – globalization, mergers,
 Changes in nature of new patented medicines – fewer breakthroughs, more
incremental innovation
 High (over 90%) but declining voluntary compliance with current Excessive
Price Guidelines
 Third party reports to PMPRB of significant price increases
 Shifting regimes: in Canada and internationally
Health Canada: progressive licensing
Certain Provinces-Territories: changes in legislation, reimbursement and listing
Internationally: U.S. Medicare, Part D; UK – move away from PPRS
Objectives of Review
To ensure that Excessive Price Guidelines remain relevant and
 Concerns since 2006 regarding
Categorization of new medicines don’t adequately reflect incremental innovation
Introductory prices seen as cost-driver
The review has involved extensive consultation with the PMPRB’s
 Consumer groups, industry, and federal and provincial health ministries
Review Considerations
In reviewing / amending the Guidelines, the Board must consider:
 Consistency with the statutes
 Public / consumer interest focus
 Impact on patentees
 Transparency and predictability
 Overall timeliness
Key issues being considered
 Clarification of mandate
 Four levels of therapeutic improvement and associated price
Any market price reviews (national, class of customer,
province and territory) at and following introduction
DIP methodology following elimination of benefits
Clarifying policy on acceptable measures and timelines for
offsetting excess revenues
Appropriate use of prices of generic drugs in price tests
Publication of prices
Next Steps
 Release of revised Notice and Comment document in late
March 2009
Final round of consultations with industry, provincial and
territorial governments, consumer groups in April 2009
Board decisions on revised Guidelines in May 2009
Publication of proposed Guidelines and outreach with
stakeholders in June 2009
Implementation of new Guidelines in July 2009
Reporting Mandate
 Annual Report
Pursuant to sections 89 and 100 of the Patent Act
Provided to Minister of Health on May 31 for tabling in House
Includes overview of:
- PMPRB activities
- Price trends – patented and all medicines
- R&D expenditures by patentees
 National Prescription Drug Utilization Information System
(NPDUIS) Reports
 Non-Patented Prescription Drug Prices (NPPDP) Reports
 Quarterly NEWSletter and PMPRB Web site
Highlights from Annual Report 2007
 Sales of patented drugs increased by only 3% to $12.3 billion
Smallest increase since 1994
 Patented drugs account for 66% of all drug sales in Canada
 At an aggregate level, patented drug prices in Canada decreased
by 0.1% – decrease at hospital level offset increases at pharmacy
and wholesaler levels
 In relation to comparator countries, Canadian prices at 1.01% of
the Medial International Price (MIP)
 R&D-to-sales ratio in Canada up to 8.3% (all patentees) and 8.9%
(Rx&D members)
Prices in Comparator Countries
 Five of the seven comparator countries saw price
increases in 2007; only Switzerland and France, like
Canada, experienced a small decline
 In 2007, Canadian prices appeared to be slightly higher than all
countries except the US, a main cause expected to be the
appreciating Canadian dollar
As a result, foreign Median International Prices dipped slightly below those in
Canada for the first time since 1993
R&D Expenditure in 2007
 Patentees reported total R&D expenditures of $1.32 B in 2007, an
increase of 9.5% from 2006
 The R&D-to-sales ratio increased:
All patentees:
8.3% - up from 8.1% in 2006
Rx&D members: 8.9% - up from 8.5% in 2006
Contact Information
Gregory Gillespie
Director, Policy and Economic Analysis
Patented Medicine Prices Review Board
Box L40, 333 Laurier Avenue West, Suite 1400
Ottawa, Ontario, Canada, K1P 1C1
Tel: +1 (613) 952-3305
[email protected]