2021-22 Operating context

In August 2019, Treasury Board approved Health Canada’s amendments to the Patented Medicines Regulations (Regulations). Passage of the amendments was necessary to give effect to the Government’s commitment to improve the affordability of prescription medicines by making the following three changes to the way in which the PMPRB sets ceiling prices for patented medicines:

1. Having the PMPRB compare Canadian list prices to list prices in countries that are more like Canada from a health system standpoint (i.e, removing Switzerland and the US from the group and adding countries with similar consumer protection priorities, economic output and access to medicines as Canada)
2. Introducing factors beyond just domestic and international list prices that the PMPRB can consider in determining whether the Canadian price of a patented medicine is excessive (i.e, pharmacoeconomic value, market size and GDP/GDP per capita [Gross Domestic Product])
3. Providing the PMPRB with information it needs to calculate the true price pharmaceutical companies are charging public and private payers (i.e., net of confidential rebates)

Significant changes to the PMPRB’s pricing Guidelines are necessary in order to implement the Regulations.  In November 2019, the PMPRB published new Draft Guidelines^{Footnote 1} and is currently seeking feedback on them from stakeholders and interested members of the public.  The Guidelines must be finalized prior to the July 2020 coming into force date of the Regulations.

This is a time of unprecedented change in the pan-Canadian pharmaceutical and pricing reimbursement ecosystem in Canada. The past several years have seen a sustained effort on the part of the PMPRB and its health partners to better align and integrate their respective roles, responsibilities and processes in order to ensure a more sustainable Canadian health system.  In addition, Budget 2019 and the Minister’s mandate letter identify a number of important commitments for the Government of Canada to pursue on the road to implementing national universal pharmacare. 

The PMPRB has identified five potential risks to the achievement of results for its Core Responsibility. The first risk is that coming into force of the new Regulations will be further delayed because of the COVID-19 pandemic. The PMPRB has no control over the timing of coming into force as this is a decision of the Minister of Health and the Governor in Council. However, in the event of further delay the PMPRB will continue to conduct price reviews under the old Guidelines and Regulations to achieve the best possible result for Canadians. It will also continue to focus its enforcement resources on cases that are most relevant to consumers.

The second risk is that implementation of the new regulatory framework mid year may cause confusion for patentees about what data to file and how and when that data will be used for ceiling price calculation and compliance purposes. To mitigate this risk, the PMPRB has implemented an outreach strategy so that patentees understand the new Guidelines and has developed tools to help them comply. In addition, under subsection 98(4) of the Act, the Board may provide advance guidance to a patentee on its price if there is enough information to do so.

The third risk is that the new regulatory framework may have unintended consequences on patient access to innovative new medicines or clinical trial activity in Canada. While the data does not support claims by opponents of the reforms that this is already happening, the PMPRB will implement a comprehensive plan for monitoring and evaluating their effect on price, access, research and development in Canada, and on the PMPRB’s processes so that corrective action can be taken quickly if warranted. However, the expectation and intent is that the cost savings achieved by public and private drug plans as a consequence of these reforms will enable public and private drug plans to pay for new, innovative medicines that might otherwise not be affordable given current budget constraints.

The fourth risk is that voluntary compliance with the PMPRB’s non-binding Guidelines may decline initially as patentees test the boundaries of the new regime. This may result in more investigations and potentially more hearings into the prices of patented medicines. Through Budget 2017, the PMPRB received additional funding which it has used to ensure it will have enough resources to implement the new framework and contend with any corresponding increase in contested pricing matters. The recently completed construction of the PMPRB’s own dedicated hearing facilities will ensure that it has the capacity to accommodate multiple parallel hearings, if necessary.

The fifth and final risk is that legal challenges to the new Regulations and Guidelines brought by patentees will result in court decisions that affect some or all of the legislative changes. The PMPRB is working with the federal Attorney General to ensure that any such challenges are properly defended, and the risk of an adverse judgement(s) is mitigated.