Speech of the PMPRB Chairperson to the Canadian Association for Healthcare Reimbursement

December 4, 2023 at Ottawa,ON

Good morning

Thank you Wayne [Critchley] for the invitation to be here, and the kind introduction. 

I’ve known Wayne for several years, but I confess I was not familiar with the CAHR until your invitation arrived a few weeks ago.   Having looked at your website, I can see immediately the value of your networking and education programs in the field of pharmaceutical market access.  You are an essential gateway for translating the global pharmaceutical business into actual drugs for Canadians, and I very much respect your mission. 

I want to acknowledge that I am speaking today as an uninvited guest on the unceded territory of the Algonquin Anishinaabe people.  The Algonquin Anishinaabe have been stewards of this land since time immemorial.  I ask you to join me in learning about the legacies of colonialism.  And I ask you to join me on the journey of truth and reconciliation with indigenous peoples in Canada.

Today I’m honoured to be making my first official comments on behalf of the Patented Medicine Prices Review Board, which for short I call the PMPRB, or the Board.  The Board is unique in the world, there really is no comparable organization in any other country.  The uniqueness flows from the Canadian constitution which gives much of the responsibility for drug pricing to the provinces, and limits the role of federal government.  All comparable countries including the US, UK, and Europe have much more federal - or nation-wide - drug pricing authorities.  Due to this uniqueness, you, as market access professionals will sometimes need to explain to your international counterparts – and head offices – just what the PMPRB is all about.  On our side we have always believed that clear Guidelines and a healthy discussion with our stakeholders will go a long way to co-existing in this space. And that’s what brings me here today.

Je suis très fier d’avoir été nommé Président du Conseil le février dernier. Je suis appuyé dans mes fonctions  par quatre membres très compétents. Trois ont été nommés au cours des derniers mois, et une est membre du CEPMB depuis plus de neuf ans. Cela fournit un équilibre solide d’expérience, d’expertise et de nouvelles perspectives.

Nous sommes, à notre tour, merveilleusement soutenus par une équipe de quatre-vingt-cinq personnes, principalement basées ici à Ottawa. Je comprends que certains d’entre vous avez rencontré le directeur exécutif par intérim, Guillaume Couillard, qui est à l’emploi du CEPMB depuis près d’une décennie.

My own journey to this podium is somewhat peculiar.  If you’ll indulge me briefly, as this is my first speech, I’d like to touch on it.

• Yes, it’s true as Wayne said that I knew the former PMPRB Chair Dr. Bob Elgie.  In fact, I was friends with his kids back in elementary school, in Toronto.  Dr. Elgie was a well known Minister in the Ontario government.  Later, he did a stint at Dalhousie Law School where he supervised my major paper in health law.  That year we had a season of engaging conversations about law, science and politics.  And while I am not an expert in any of those things, I did learn that I have a talent at translating and explaining across them.  Over time we both progressed to other things. In 1995, he took on the role of Chair the PMPRB.  That curiosity buzzed in my mind over the decades.  And, in part because of that, here I am today.
• Unlike Bob, I am new to government.  I’m learning about constraints and opportunities which come with this role, as it is quite distinct from my previous legal and business engagements.
• As Chair of the PMPRB, I am hired only on a part-time basis.  But I am the CEO, and formally I have the authority of a Deputy Minister.  But I don’t know any other DM who is part-time.  So, off the top you can see the situation is uncommon.
• I’m a US and Canadian qualified lawyer. 
• And I have masters degree in molecular biology.  My particular fascination is with DNA and RNA, and if you ever want to talk about molecular evolution, especially of the human species, I’ll be happy to engage.
• I have had a 30 year career managing intellectual property strategy and transactions in biotech and pharmaceuticals.  My work has always been in what some of us call the “bio/pharmaceutical ecosystem”.  You can define the bio/pharmaceutical ecosystem many ways, but in my definition, it refers to the collaborative network which innovates and sustains the provision of pharmaceuticals and treatments to Canadians.  This starts with high-risk innovation partners – such as universities, start-ups, early-stage biotechs, and venture capital – where drugs are discovered and developed.  It includes governments, federal, provincial and territorial, who set the framework for pharmaceutical innovation and delivery.  It includes industry, by which I mean the global pharmaceutical industry, which is a critical and distinct component of the pharmaceutical ecosystem.  It includes all the clinical trial centres.  And the payors, it includes the very important public and private insurers and pharmacy benefit managers with whom market access professionals like yourselves are constantly engaged.  There are pharmaceutical distributors and pharmacies.  Still more, there is a huge field of generic drug companies who deliver the majority of drugs to Canadians, and, of course the broader civil society of patient advocacy groups, academics, healthcare NGOs, and media. 
• So, you can see, this is the ecosystem where I have focused my work for 30 years, and it is a large and global one.
  • 20 of those years, I have spent in the early stage life sciences ecosystem in Canada.  Typically, I work at the transition point between university and early start up research.
  • And for 10 of those years, I got called up to big pharma.  I did the same early stage patents and transaction work at the research headquarters of Novartis Pharmaceuticals in Cambridge Massachusetts, and for three years at the corporate headquarters in Basel, Switzerland. 
• I returned to private practice in Vancouver, with my family, 7 years ago, in 2016.  Currently, along with my part time role at the PMPRB, I make my living as a lawyer working with a small group of early stage drug discovery companies who are based in the US and Canada.  For the record, none of my clients have products which are subject to PMPRB jurisdiction.  In fact, at this early stage of development, none of them even consider Canada a priority for market access as they are focused on the US, Europe and other foreign markets. Nonetheless they can all be said to be part of the bio/pharmaceutical ecosystem I referred to previously.

The reason I’m here today is twofold. First, I’d like to share my thoughts on the role of the PMPRB. Secondly, and perhaps more importantly, I want to invite you to engage, over the next two days, with a public Roundtable consultation the Board is hosting, on themes relevant to new Guidelines that we intend to draft and present to Canadians during 2024. 

Our Roundtable is designed to bring diverse sectors from across Canada to our table for a productive conversation about the prices of drugs.  In particular, as our mandate allows, we are studying the question of how to determine when a drug’s list price is excessive. 

There’s going to be a lot of different perspectives.  Staff has made a bold effort to reach out to different groups and organizations who are directly and indirectly impacted by drug prices, and especially those who do not have the resources or capacity to easily engage.  In this category I am aware of patient advocacy groups, rare-disease groups, and other non-profit groups interested in the sustainability of healthcare in Canada.  We’ve reached out to academics and economists.  We’ve reached out to health care practitioners.  We are seeking input from the major players who help determine drug prices in Canada, namely CADTH, INESSS, the pCPA, and private drug insurance plans.  And of course, we want to hear from the rights-holders of patented medicines who are deeply engaged with the PMPRB and are required to report the list prices of their drugs to us every 6 months.

I’m afraid the event is sold out and all the speaking slots are taken.  But if you don’t have a spot, I want to extend an invitation to you to follow along live online because the Roundtable promises to cover incredibly diverse issues relating to pharmaceutical pricing in Canada.

And why are we doing this Roundtable now?

The main reason is because the federal Cabinet promulgated new regulations for us which took effect July 1, 2022. 

The new Regulations implemented changes in the international price information that rights holders have to file with the PMPRB, which can affect how the Board determines whether the price of patented medicine is excessive.

But the Roundtable is not about the Regulations.  The Roundtable is about how the Board will interpret the Regulations through our non-binding Guidelines. 

You see, Guidelines are what staff use to make an assessment of whether they should recommend to the Chair that a list price might be excessive.  They provide a set of codified procedures that frame how staff interprets the complex price and volume data coming in from the rights-holders.  Equally important, the rights holders can use the Guidelines to assess their risk when they are setting or adjusting the list price of their drugs.  The Guidelines are not binding on rights-holders.  But in the ordinary course of business, where every major action requires a risk assessment, Guidelines which are clear, predictable and procedurally fair provide an efficient way to manage risk.

In short, we are holding this Roundtable in order to prepare the ground for new Guidelines. 

And we think that the best way to open the discussion is to have a conversation with Canadians about six main themes relating to the new Guidelines.  These themes were selected by the Board members in close conversation with the staff.  Presenters are not obliged to stick to the six themes, but they are encouraged to recognize that the Board feels these items are of highest priority to our future decisions.

I want to give a bit of detail to the six themes for the Roundtable…

….but first I think it perhaps useful to provide a bit more background for those who are unfamiliar with the PMPRB, and about who we are and what we do.

We are a federal statutory body created under the Patent Act.   The Board’s role, as reinforced by recent court cases is:

1. to prevent “excessive pricing”^{Footnote 1}
2. to “police excessive pricing”^{Footnote 2},
3. and/or to “ensure that the patent monopoly is not used to charge excessive prices for patented medicines”^{Footnote 3}.

Let’s focus on the first phrase: to “prevent excessive pricing” 

It goes a long way to explain what the Board is, and what it is not.

What we do do is examine prices provided to us in confidential disclosures by pharmaceutical companies, to determine if they may be deemed “excessive”. What we do not do is act as a general price regulator.  As the Federal Court of Appeal recently said “pure price regulation or price setting is invalid”^{Footnote 4}.  We are not authorized to set any list price for any pharmaceutical, except in the rare context of a formal hearing process, which I will get to in a minute.

Any news reporter in the audience:  I beg you to avoid the simple description of the PMPRB as “Canada’s drug price regulator”.  We are not.  We are only the federal agency that “prevents excessive pricing of pharmaceuticals”.  It may seem like a slim difference, but there’s a world of constitutional law that lives in the gap.

We also have a related role, which sometimes confuses things, about reporting on drug prices across Canada.  This reporting role is equally important to us, but it is not, as it were, the sharp point of the stick.  It is a role that informs and educates Canadians, and allows other decision makers to plan policy outcomes, based on quality information.  But we have no responsibility for setting general policy outcomes relating to average drug prices across Canada.

As you are all market access professionals, you are aware that most of the heavy lifting on setting actual negotiated drug prices is done at the private and provincial levels. 

In the public sector, there is INESSS (in Quebec) and CADTH (in the rest of Canada) who do respected evidence based health technology assessment and make non-binding assessments about the clinical effectiveness, and cost-effectiveness, of a drug, as well as patient and clinician perspectives on the drug.  There is also the pan Canadian Pharmaceutical Alliance, or pCPA, which is organized by the provinces, which, based on CADTH and INESSS assessments, does comprehensive confidential price negotiations for placing drugs on provincial and public formularies.  In the private sector there are health insurance companies who negotiate drug prices for their networks based on their own health technology assessments, sometimes relying on CADTH and INESSS.  As you can see, almost all of the heavy lifting on drug price negotiations, setting rebates and supply arrangements, is done entirely confidentially, at these private and provincial levels. 

At the federal level we have only this one limited tool, the PMPRB, with our role to prevent excessive pricing.

So what does “excessive” mean? 

I’m sure you’re on the edge of your seats.   Professionals in the field often wonder about this.  A simple short answer would be very helpful, no doubt.

Well, I’m sorry to disappoint you.  In its wisdom, Parliament did not provide us with a simple short definition for that word. 

But it did provide us a path to figure it out. 

Essentially, section 85(1) of the Patent Act provides three factors to evaluate whether or not a given price for a given drug is excessive. 

On the one hand, you take the price of the medicine and its different dosage forms and sizes;

And you compare it to three statutory factors which are

1. The prices of other medicines in the same therapeutic class;
2. The prices at which the medicine has been sold in countries other than Canada; and
3. Changes in the Consumer Price Index.

I can provide a little colour on these three factors

• The easiest category to understand is the second one:  the price at which the medicine has been sold in countries other than Canada
  • This category introduces the famous PMPRB11. 
  • The PMPRB11 is the group of countries for which the list prices of the medicine must be reported by rights holders;
  • Under this factor, the list price of a patented medicine in Canada is compared to the list price for the same drug in those 11 countries.   
• The next category, which is prices of other medicines in the same therapeutic class, requires some explanation.
  • Under the 2010 Guidelines, this factor required a determination of what the comparable drugs are, and what is the level of therapeutic improvement of the medicine in question relative to those other drugs. 
  • To achieve this, we have historically done a scientific review with the help of an internal panel of leading Canadian pharmacists and doctors.  We call this panel our Human Drug Advisory Panel – or HDAP for short. 
  • HDAP assessed what the comparable drugs are, if any, and where the new medicine falls in terms of therapeutic improvement compared to those comparable drugs.  HDAP did not consider the price or cost of the drug in any way.
  • The HDAP assessment then returned to Board staff for review against pricing.  As a general theory, if the HDAP assessment was that the medicine provides slight or no improvement compared to comparable drugs, then a list price that was much higher than those comparable drugs triggered greater scrutiny by the staff.   By contrast, a remarkable breakthrough drug with no comparators was less constrained by this factor.
  • I will observe here that in the past 10 years, less than 1% of new medicines brought to HDAP have been deemed breakthroughs, while 76% have been deemed slight or no improvement^{Footnote 5}.  The rest are in-between.  I want to repeat that these assessments are made by a fully independent panel of leading Canadian pharmacists and doctors.
• The third factor is changes in the Consumer Price Index
• You will recall that this item was a big concern in the 1980s, which had seen years of galloping inflation, when the legislation came into effect.  It had a relatively modest impact for the ensuing 30 years or so because inflation was relatively tamed.  But the issue suddenly returned to relevance in the past 2 years or so, as inflation took off post-pandemic.  CPI is a focus of major concern for rights holders in this current environment.

Based on the three factors - the staff arrives at a view of whether a price is potentially excessive and makes a recommendation to the Chair^{Footnote 6}.

Each case is highly fact-specific.  As we say at the Board, every drug has its story.  But our expert staff is highly trained in making these assessments and recommendations , and do so for over 1100 approved drugs per year. 

And here’s how they do it.

Board staff do the initial evaluation of price information sent to us.  Prices that do not raise concerns based on the three factors, alone or in combination, are considered reviewed.  Prices that may be excessive based on one or more of the factors are considered and subject to a more in-depth review.  This review may result in an investigation letter sent out by Board staff to the rights holder. 

A period of factual clarification often ensues where price information and volume numbers are reviewed (and sometimes corrected) by rights holders.  We consider this an investigation. 

By the way – I have been using the phrase “rights holders” throughout these comments.  We used to call our regulated parties “patentees”.  However, with the Canada-Europe free trade agreement which took effect in 2017, also known as CETA, Parliament agreed to grant an extension of patent exclusivity rights in certain cases.  The extension is called a CSP – or a Certificate of Supplementary Protection.  Since it is not technically a patent, we decided to drop the word “patentee” in favour of “rights holder” which captures both patents and CSPs. 

To return to investigation process, eventually staff completes a detailed internal review and makes a recommendation to the Board Chairperson, about whether a particular list price for a particular drug is potentially excessive. 

The Chairperson at that point decides whether to close the matter, or to trigger a hearing.

A hearing? 

Yes, a hearing is the formal “tribunal” aspect of the Board.  It’s a critical part of the Board’s function.  A rights holder who does not voluntarily lower a potentially excessive list price will be granted a hearing before a panel of Board members to make their case. 

I’m not going to explain the details of tribunal activity, but suffice it to say that the tribunal is a fully independent tribunal, and it has final and binding authority to determine if a price is excessive.  It may also order that the maximum list price be lowered to a price that in the panel’s opinion is non-excessive.  The tribunal is typically composed of two or more members of the Board, and does not normally include the Chair, being myself.

In recent years, the Board Chairperson has received over 100 investigations per year, and pushed between 1 to 4 cases per year into hearings.  So you can see it is a rarely used but powerful tool.  Rights holders are welcome to assert their rights, and to take their chances, through the independent hearing process if they believe that their drug list price is
non-excessive.

One more important point to clear up.

By “prices”, the word I have mentioned throughout this discussion, I have been referring to “list prices” and am not referring to final negotiated prices with payers.  Typically, those final prices are confidential, and negotiated under product listing agreements, or PLAs, with individual payers.  You folks in this room are experts in this process.  PLAs virtually always result in lower actual prices to payers, based on discounts from list, rebates, or other mechanisms, all of which are confidential to the parties.

The Board is largely precluded from monitoring or investigating the confidential final negotiated price.  This was recently reiterated in the decisions of the Federal Court of Appeal in IMC v. Canada and, in February 2022, of the Quebec Court of Appeal, in the case of Merck v. Canada. 

As a result of these decisions, which were not appealed to the Supreme Court of Canada, the federal Cabinet promulgated the new Regulations which took effect on July 1, 2022.  The Regulations do not require disclosure of confidential rebates negotiated in PLAs.

Ok, that was a very lengthy introduction.  I’m grateful for those of you who have followed along so far.  I hope I didn’t lose too many people. 

And I’m sure you’ll be delighted to know that I’m now ready to get started on the actual title of my talk, “Next steps for the PMPRB Guidelines.”

I will try to keep this brief.

For the Roundtable tomorrow and Wednesday, six themes rose to the top for Board members.  These seem to be the most interesting and challenging questions before us in preparation of new Guidelines.

The first theme is a general guiding theme which asks about the monitoring function of the board which we frame as

1. Efficient Monitoring of Prices without Price Setting

The questions listed under this theme highlight situations where the Board might provide a lighter touch, expedited reviews, and greater certainty for rights holders.

The next three themes relate to the product lifecycle of drugs, and transitional steps.

2. Transition to PMPRB11 – New versus Existing Medicines
3. Price Reviews during Product Life Cycle
4. Investigations and Referral to Hearing

Regarding the transition, you will see by the data in Box 1 of the Scoping Paper, that the list prices of 28% of existing medicines are currently above the highest international price of the PMPRB11.  We want to hear perspectives on whether we have any discretion to allow this to continue, and, if we do, whether we should use such discretion as we may have, to allow this to continue. 

The fifth theme seeks perspectives on where the PMPRB fits in relative to other drug pricing bodies in Canada.  It asks about our

5. Relation to pan-Canadian Health Partners, Insurers (Private and Public); and Alignment with Broader Government Initiatives

Is there a way timing of PMPRB reviews could be optimized to synchronize with other drug pricing bodies, which could presumably provide greater efficiency for rights holders?

And the last theme considers broader civil society by asking about the best way of

6. Engaging with Patients, Health Practitioners, Pharmacy, and other Stakeholders (who are not Rights Holders)

Here, we want to hear from many members of the bio/pharmaceutical ecosystem who are not rights holders but who are more or less directly impacted by the decisions made by the Board.

As I’m drawing to a close here, I want to highlight that with this Roundtable approach, the Board is taking a fresh and open mind towards our new Guidelines.  We want to hear from diverse partners from across Canada about the best way to approach the Guidelines.  Perhaps here again I can emphasize that 4 of the Board members are completely new to the Board and bring a wealth of experience from in and outside of the pharmaceutical sector.

As a reminder,

• Tomorrow and Wednesday will be available live online, and later, in recorded format; and
• Written submissions on the six themes are welcome up to the December 20 deadline.

You can find all of that information on our website or on X - formerly Twitter.

Follow up towards new Guidelines in 2024

OK, so that’s the Roundtable.

After this Roundtable, the Board will turn to the next phase of our consultation where we will prepare to issue new draft Guidelines in 2024. 

With new draft Guidelines we will return for further consultations before hopefully finalizing them and setting a date for implementation.

To conclude, I want to apologize that I did tell Wayne I was not able to take questions today about the upcoming Guidelines from the audience members.  I hope you understand I am in Ottawa this week to hear from stakeholders, not to provide my views on what the Board may decide in drafting its new Guidelines.

And to be honest, were it up to me, I would be the one asking you the questions, and you would be giving me the answers. 

This is because there are so many challenging questions about drug pricing in Canada that really the only way I can think to solve it is to crowd source the solutions by asking Canadians, expert and non-expert alike, to provide their best answers in an open and productive discussion.

And as you will have observed, this is precisely how we arranged the Roundtable for tomorrow and Wednesday. 

We get to ask the questions.  And partners from across Canada, including yourselves at the CAHR, are asked to give us your best suggestions for answers.  

We look forward to the ongoing discussion.

Thank you very much.