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 four potential risks to the achievement of results for its core responsibility. The first such risk is that the lower price ceilings that will result from the application of the new regulatory factors may influence patentees’ decisions whether and when to introduce new medicines to Canada. The PMPRB is currently soliciting feedback from its stakeholders on how to mitigate that risk as part of its consultation process on the new Guidelines.  The PMPRB will also convene experts to help it develop a comprehensive plan for monitoring and evaluating the impact of the new pricing framework on access to medicines, among other important metrics.

The second risk is that implementation of the new regulatory framework may cause confusion for patentees about what data to file and how to transition between the old and the new regulatory regimes. To mitigate this risk, the PMPRB will make every effort to assist patentees in understanding the new framework and its application. In addition, under subsection 98(4) of the Act, the Board may provide advance guidance to a patentee on its price if there is sufficient information to do so.

A third risk is that patentees may refuse to comply with the PMPRB’s new Guidelines, resulting in more investigations and hearings into prices of patented medicines. Through Budget 2017, the PMPRB received additional funding to ensure it would have sufficient resources to implement the new framework and contend with any corresponding increase in contested pricing matters. Completing construction of the PMPRB’s own dedicated hearing room will ensure that it has the capacity to accommodate multiple parallel hearings.

A fourth and final risk is that patentees may challenge the new Regulations and/or Guidelines in court and seek to have them quashed or overturned. However, this risk is considered to be intrinsic to reform of the PMPRB’s regulatory framework.  The PMPRB is working with the federal Attorney General to ensure that any such challenges are properly defended.