Quarterly Financial Report for the Quarter Ended June 30, 2025: Patented Medicine Prices Review Board

Management Statement for the Quarter Ended June 30, 2025

1. Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates.

1.1 Authority, Mandate and Program Activities

The Patented Medicine Prices Review Board (PMPRB) is an independent, quasi-judicial body created by Parliament as a result of amendments to the Patent Act (Act) in 1987 (Bill C-22) and its remedial powers were supplemented by further amendments in 1993 (Bill C-91). The amendments were intended to balance stronger patent protection for pharmaceutical patentees with the need to protect consumers from excessively priced patented medicines.

PMPRB’s mandate is to monitor the price at which rights holders sell their patented medicines in Canada to ensure that this price is not excessive. The PMPRB is also responsible for reporting annually to Parliament through the Minister of Health on its activities for the previous year, pricing trends of all patented medicines, and research and development expenditures reported to the PMPRB by pharmaceutical rights holders.

The PMPRB is composed of “Staff”, who are public servants responsible for carrying out the organization’s day to day work, and Board Members, Governor-in-Council appointees who serve as hearing panel members in the event of a dispute between Staff and a patentee over the price of a patented medicine.

If the price of a patented medicine appears to be excessive, Staff will first try to reach a consensual resolution with the patentee. Failing this, the Chairperson^{Footnote 1} can decide that the matter should proceed to a hearing. The Chairperson decides the composition of a panel. Provincial and territorial ministers of health have a statutory right to appear before the panel as parties, and other interested parties or groups may participate as interveners.

At the hearing, a panel composed of Board Members acts as a neutral arbiter between Staff and the patentee. If a panel finds that the price of a patented medicine is excessive, it can order a reduction of the price to a non-excessive level. It can also order a patentee to make a monetary payment to the Government of Canada in the amount of the excess revenues earned and, in cases where the panel determines there has been a policy of excessive pricing, it can double the amount of the monetary payment.

Further details on the PMPRB’s authority, mandate and program activities may be found in the Departmental Plan and the Main Estimates.

1.2 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the PMPRB’s spending authorities granted by Parliament and those used by the organization, consistent with the Main Estimates and Supplementary Estimates for the 2024-25 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government.  Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund (CRF). A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

As part of the departmental performance reporting process, the PMPRB prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian Generally Accepted Accounting Principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

The quarterly report has not been subject to an external audit or review.

2. Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results

This quarterly financial report reflects the results of the current fiscal year in relation to the Main Estimates. When comparing to last fiscal year results, the PMPRB’s Q1 spending increased by $0.4 million (17%), from $2.3 million in 2024-25 to $2.7 million in 2025-26.

The money reported in the PMPRB’s Annual Financial Statements as non-respendable revenue is a result of payments to the Government of Canada made by patentees through Voluntary Compliance Undertakings (VCUs)^{Footnote 2} or Board Orders to offset excess revenues.  The Minister of Health may enter into agreements with any province respecting the distribution to that province of amounts received by the Receiver General, less any costs incurred in relation to the collection and distribution of those amounts. The PMPRB did not receive repayments of excess revenues in Q1 of 2025-26 or 2024-25.

Revenues that are non-respendable are not available to discharge the PMPRB’s liabilities. While the Chairperson is expected to maintain accounting control, they have no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are not therefore presented as a reduction to the entity's total gross budgetary expenditures.

2.1 Significant Changes to Authority

As shown in the Statement of Authorities of this document, total authorities available for 2025-26 have increased by $0.4 million (2.2%) over 2024-25, from $17.7 million to $18.1 million.

The increase is attributable to funding for compensation adjustments resulting from collective agreements.

2.2 Significant Changes to Budgetary Expenditures by Standard Object

This section elaborates on variances in expenditures, statutory items and Vote 1 by standard object to explain changes in spending trends from the same quarter of the previous year.

Overall, Q1 spending has increased by $392 thousand (17%).

For “Personnel”, Q1 spending increased by $199 thousand due to signed collective agreements resulting in an increase in salary and additional FTEs.

For “Information”, Q1 spending increased by $216 thousand due to timing differences of purchases of patented medicine related information upon which our reports are partly based made in a later quarter of 2024-25.

For “Professional and special services”, Q1 spending decreased by $66 thousand mainly due to the MOU with Health Canada for SAP hosting cost being paid in Q1 of 2024-25 and in a later quarter of 2025-26.

There were no significant variances to report in the other standard objects.

3. Risks and Uncertainties

The PMPRB’s funding includes a Special Purpose Allotment (SPA) to conduct Public Hearings, in Vote 1 (Program expenditures) of $4.5 million. The SPA can only be used to cover the costs of public hearings, such as external legal counsel and expert witnesses, etc. Any unspent amount is returned to the Consolidated Revenue Fund (CRF). The PMPRB’s expenditures are influenced by the number and complexity of investigations into the prices of patented medicines, the number of investigations that result in hearings and the number of hearing decisions that form the basis of judicial review applications, all of which are inherently unpredictable.

The PMPRB’s most significant expenditure is “Personnel”, representing 62% of its annual planned expenditures (83% excluding the SPA). Given the highly specialized nature of its consumer protection mandate, the PMPRB must continue to attract and retain subject matter experts. Given the organization’s small size, the departure or hiring of a handful of employees in one quarter can have a significant impact on the quarter’s expenditures.

The PMPRB has limited capacity to hold hearings, and issues Guidelines as a mechanism to narrow down the number of medicine prices that are subject to a hearing. To mitigate the effects of this transition, the PMPRB is preparing internally with a collaborative review of internal processes. This review is aimed at efficient, effective, and well-documented procedures for all aspects of the price monitoring process, from data collection to potential hearings.

4. Significant changes in relation to operations, personnel and programs

Changes to Key Senior Personnel

There have been no significant changes in relation to operations, personnel and programs.

Changes to Programs

There have been no significant changes in relation to programs.

Approval by Senior Officials
Approved by:

Ottawa, Canada
August 26, 2025

Statement of authorities (unaudited)

¹ Includes only Authorities available for use and granted by Parliament at quarter-end
(S) Statutory vote

Table 1: Departmental budgetary expenditures by Standard Object

¹ Includes only Authorities available for use and granted by Parliament at quarter-end