Operating context

In December 2017, Health Canada pre-published proposed amendments to the Patented Medicines Regulations (Regulations) in Part I of the Canada Gazette. If passed, the amendments would 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 with lower pharmaceutical prices (i.e, removing Switzerland and the US from the group and adding countries with prices closer to the OECD [Organisation for Economic Cooperation and Development] median)

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, pharmacoeconomics, market size and GDP [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)

The manner in which the changes would improve the affordability of prescription medicines are complex but can be summarized in relatively simple terms. Changing the group of comparator countries would result in lower ceilings for list prices in Canada, which are currently third highest in the OECD countries. Allowing the PMPRB to consider pharmacoeconomics, market size and GDP addresses the two types of high priced medicines that are challenging sustainable spending on pharmaceuticals in Canada: 1) medicines for rare diseases that cost disproportionately more than other medicines that provide the same or greater health benefit (i.e. medicines that are not “cost effective”) and; 2) medicines for more common diseases that are cost effective but unaffordable because of the large number of patients that need them. Finally, providing the PMPRB with information about what companies are truly charging for their medicines would enable patentees to comply with the much lower confidential price ceilings which will result from the application of the new factors.

In 2018-19, the PMPRB pursued a two-track consultation process which involved striking a steering committee composed of key stakeholders to provide high level feedback on a proposed new Guidelines framework and a working group of experts to help sort through some of the technical issues associated with operationalizing the more obscure elements of Health Canada’s proposed regulatory amendments. In March 2019, the Working Group completed its report.

As this phase of the PMPRB’s consultation process closes, the Steering Committee on Guidelines Modernization will prepare a draft report of its deliberations. Once the Steering Committee report has been finalized and is made available on the PMPRB’s website and the regulatory amendments have been published in Part II of the Canada Gazette, the PMPRB will release new draft Guidelines for public consultation.

Key risks

Risks Risk response strategy and effectiveness Link to department’s Core Responsibilities Link to mandate letter commitments and any government-wide or departmental priorities (as applicable)
  • Achieving progress on making patented drugs more affordable

There is a risk the modernization of the PMPRB’s regulatory framework will be delayed and the PMPRB will not be able to operationalize the new excessive pricing factors contemplated under the Minister’s proposed amendments to the regulations in the expected timeframe.

In 2018-19, the PMPRB established a multi-stakeholder Steering Committee to discuss aspects of the new regulatory framework and assist in synthesizing stakeholder views on key technical and operational modalities of new draft Guidelines. This work was supplemented by an analysis and recommendations from a technical Working Group that examined certain issues the Steering Committee believed would benefit from a review by experts in health technology assessment and other economic and scientific matters.

The report of the technical Working Group, released in March 2019 is available on the PMPRB website.

The report by the Steering Committee, released July 2019 is also available on the PMPRB website.

Next step, draft new Guidelines for consultation.

The PMPRB has only one Core Responsibility: Regulate patented medicine prices

Minister of Health’s mandate letter commitment: Affordable prescription drugs

PMPRB priority: Framework modernization

  • Acquiring and maintaining infrastructure and hiring personnel for framework modernization

There is a risk that the PMPRB will not be able to attract/retain individuals with skill sets, and expertise, needed and/or have adequate office space to accommodate them, thereby delaying its ability to operationalize the new regulatory framework.

Through a flexible and pragmatic approach to staffing the PMPRB has successfully begun hiring individuals with the requisite education, background and experience to support its framework modernization initiative.

The PMPRB has developed a detailed plan for accommodations transformation and work to that end is on schedule (estimated completion date  of March 31, 2020).

The PMPRB has only one Core Responsibility: Regulate patented medicine prices

Minister of Health’s mandate letter commitment: Affordable prescription drugs

PMPRB priority: Framework modernization

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