Backgrounder on the Board’s decision resulting from the consultation on the definition of Gap medicines and the timeline for compliance

On January 15, 2021, the PMPRB initiated a Notice and Comment period, which closed on February 15, inviting stakeholders to make submissions on two proposed consequential amendments to the new PMPRB Guidelines (“Guidelines”). The first such amendment relates to the definition of Gap medicines in the Guidelines and the second to the number of filing periods patentees have under the Guidelines to comply with the new Maximum List Price (MLP) ceiling for Grandfathered and Gap medicines.  The amendments are required in order for the Guidelines to adjust to the change in the coming-into-force (“CiF”) date of the Regulations Amending the Patented Medicines Regulations from January 1, 2021 to July 1, 2021.

The PMPRB received 48 submissions during the month-long comment period and has made these available to the public on the PMPRB website. The majority of the submissions (35 or 73%) were from patentees or their trade associations, with an assortment of other stakeholders accounting for the remainder.

Definition of Gap Medicines

Under the Guidelines, Gap medicines are those for which a DIN was assigned on or after August 21, 2019 and were first sold in Canada prior to January 1, 2021. In its January 15 notice to stakeholders, the PMPRB proposed to extend the date of first sale to the new CiF date of July 1, 2021.

Summary of Stakeholder Feedback

Only one stakeholder who submitted feedback on this proposal was not in general agreement with it. BIOTECanada, a trade association representing Canada’s biotechnology sector, noted that the intent of the proposal could be made more clear by specifying that, to qualify as a Gap medicine under the amended definition, the product must have not only been sold prior to July 1, 2021, but have been assigned a DIN from Health Canada before that date as well (and after August 21, 2019).   

Analysis and Decision

Given the broad consensus in favour of the proposed amendment, the Board has adopted it as part of the Guidelines, with one small change to clarify that a Gap medicine must have a DIN assigned to it prior to July 1, 2021.

Compliance Timelines for Grandfathered and Gap Medicines

Under the Guidelines, compliance with the MLP for Grandfathered and Gap medicines would be assessed after two filing periods, on January 1, 2022. In its notice to stakeholders, the PMPRB proposed to have this done after one filing period only, so as to retain January 1, 2022 as the operative date for assessing compliance.

Summary of Stakeholder Feedback

Patentees, their trade associations, and a number of other industry affiliated stakeholders were opposed to the shorter compliance period, arguing that it runs counter to the government’s rationale for delaying the CiF date of the Regulations until July 1, 2021.  In addition to objecting to the compressed compliance period as an insufficient amount of time for patentees to inform their parent company and make the necessary changes to their internal business practices, opponents of the proposal maintained that there are a number of downstream factors outside of the control of patentees that would simply not enable even the speediest list price reductions to be reflected in the market within one six-month filing period. For example, it was claimed that updates to public drug plan formularies require significant lead time and occur on a prescribed schedule that may or may not coincide with the PMPRB’s July to December reporting period.

Submissions from the Canadian Life and Health Insurance Association (CLHIA), the association representing private insurers in Canada, and the British Columbia (BC) Ministry of Health expressed strong support for the proposal to retain the January 1, 2022 compliance date for the MLP and urged the government not to further extend the CiF date.  These views were echoed in a February 8, 2021, letter to the Minister of Health from the Best Medicines Coalition^{Footnote 1}, a national alliance of 29 patient advocacy organizations, which exhorted the government to move forward with the implementation of the new basket of comparator countries to “bring down list prices, without delay.”^{Footnote 2}

Analysis and Decision

According to the Regulatory Impact Analysis Statement (RIAS) that accompanied publication of the Order-in-Council amending the coming into force date of the Regulations to July 1, 2021^{Footnote 3}, its purpose was to provide patentees with additional time to prepare for the new reporting obligations and to further familiarise themselves with the PMPRB’s final Guidelines, which were issued on October 23, 2020. No mention is made in the RIAS of an intent to provide industry with further time to actually comply with the requirements of the amended Regulations once in force.  As this is the second six-month delay from the original CiF date of July 1, 2020, patentees will have had ample time to prepare and familiarize themselves with the regime and will have been aware of the January 1, 2022, MLP compliance date since at least as far back as October 2020.

While the Board appreciates that there are certain steps that must be taken to give effect to list price reductions, it is not convinced from the information submitted by patentees and other opponents of the proposed amendment that it is not operationally feasible for patentees to bring themselves into compliance within one reporting period.  In so far as public drug plan formularies are concerned, it is the Board’s understanding that, unlike list price increases which can only occur on prescribed timelines at certain intervals throughout the year, there are no such strictures applicable to list price decreases, which are accepted at any time, with no set deadlines to submit these types of price change notifications. The administrative process involved is quite simple and changes to formularies can be made in a matter of days and publicly posted within a month or two.  Similarly, the Board is of the view that pharmaceutical distributors in Canada have the logistical capacity and wherewithal to have these price changes reflected in their internal tracking systems and in their transactions with retailers and other buyers in relatively short order.   

After two successive six month delays to the CiF date of the Regulations, the Board feels impelled to heed the call of patients groups and public and private payers to implement the new basket of comparator countries as soon as practicable.  The Board has weighed these considerations against the industry’s claims about the operational feasibility of giving effect to the list price reductions in one filing period and believes that these challenges can be managed effectively. In instances where there are circumstances beyond the patentee’s control that prevent it from complying with the MLP within the prescribed time period, the Board is confident PMPRB Staff will exercise its discretion in a reasonable and even handed manner.     

Accordingly, the Board has adopted the proposed amendment as part of the Guidelines without any change in wording.

For ease of reference, the following table compares the wording of the relevant provisions in the Guidelines to that of the proposed amendments and to the provisions as they now are as a result of the Board’s decision:

Issue	Final Guidelines October 2020	Notice and Comment January – February 2021	Amended Guidelines March 2021
Definition of Gap Medicines	35. Gap medicines are medicines for which a DIN was assigned on or after August 21, 2019 and first sold in Canada prior to January 1, 2021.	35. Gap medicines are medicines for which a DIN was assigned on or after August 21, 2019 and first sold in Canada prior to July 1, 2021.	35. Gap medicines are medicines for which a DIN was assigned on or after August 21, 2019 and prior to July 1, 2021 and first sold in Canada prior to July 1, 2021
Compliance Timelines for Grandfathered and Gap Medicines	76. Patentees must comply with the MLP within one (1) reporting period of the MLP being set for Line Extension medicines and within two (2) reporting periods for Grandfathered or Gap medicines.	76. Patentees must comply with the MLP within one (1) reporting period of the MLP being set for Line Extension medicines and for Grandfathered or Gap medicines.