PMPRB NEWSletter: October 2020, Volume 24, Issue 1


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PMPRB Final Guidelines and Related Consultation

On October 23, 2020, the PMPRB published its new Guidelines. The Guidelines give effect to the amended Patented Medicines Regulations which come into force on January 1, 2021. Together, these two instruments strengthen and modernize Canada’s pricing framework for patented medicines so that the PMPRB can continue to fulfill its statutory mandate to protect Canadian consumers from excessive prices in an era where high-cost medicines account for a rapidly growing share of public and private spending on pharmaceuticals. These reforms have the potential to save Canadians billions of dollars over the next decade.

The Guidelines explain the steps that will typically be taken by Staff at the PMPRB in assessing whether a patented medicine appears to be priced excessively in Canada. The Guidelines also explain what information patent-holding pharmaceutical companies must provide to the PMPRB to enable that assessment.

The release of the Guidelines is the culmination of a five-year process that dates back to the publication of the PMPRB’s Strategic Plan in December 2015, when framework modernization was first identified as a key priority. A series of consultative steps ensued, commencing with the release of the PMPRB’s Discussion Paper on Guidelines Modernization in June 2016. This was followed by the dissemination of the PMPRB Guidelines Scoping Paper in December 2017, a companion piece to the pre-publication of the Minister of Health’s proposed amendments to the Patented Medicines Regulations in Canada Gazette Part I.  The basic framework described in the Scoping Paper was further fleshed out through the deliberations of a multi-stakeholder Steering Committee on Modernization of Price Review Process Guidelines which met from June 2018 to May 2019 (PMPRB Steering Committee on Modernization of Price Review Process Guidelines - Final Report), and the associated recommendations of a parallel Technical Working Group (Working Group to Inform the Patented Medicine Prices Review Board (PMPRB) Steering Committee on Modernization of Price Review Process Guidelines, Final Report).

Following the promulgation of the final regulatory amendments in Part II of the Canada Gazette in August 2019, the PMPRB  undertook a year-long consultation on its new Guidelines, commencing with the publication of the November 2019 Draft Guidelines. This document was subject to the most intensive and far reaching public consultation in our more than three decades long history. In addition to hosting multiple policy forums, webinars and bilateral meetings in Ottawa with key stakeholders, the PMPRB attended over 60 meetings across Canada, with more than 260 members of its stakeholder community, including bio-pharmaceutical companies, their trade associations, public agencies, federal and provincial health authorities, other government bodies, patients, patient advocacy groups, unions, academics, pharmaceutical distributors, pharmacists, consultants, academics, private insurers, clinicians and other health professionals. Over 120 written submissions were received at the close of this 85-day process.

In June 2020, following the Government’s announcement of its decision to postpone the coming into force of the amended Patented Medicines Regulations by six months, to January 1, 2021, due to the COVID-19 pandemic, the PMPRB published a second draft set of new Guidelines that reflected our understanding of the feedback we received on the first draft. This was followed by a 47-day written consultation period which ended August 4, 2020 and elicited well over 100 written submissions. For more details on the consultative process that led to the issuance of the final Guidelines, including access to the written submissions the PMPRB received in response to the November 2019 and June 2020 drafts and the corresponding presentations it gave to different stakeholder groups, both bilaterally and at the many forums and webinars it hosted, please visit the PMPRB’s consultation portal.

The PMPRB would like to acknowledge and thank the thousands of Canadians who shared their thoughts and perspectives on the modernization of its regulatory framework over the entirety of this 5-year period, and in particular those who took the time to submit their views in writing. As noted, a number of important changes were made to the Guidelines as a result of stakeholder feedback, the most recent of which differentiate the June 2020 draft from the final Guidelines. These changes are summarized below under “PMPRB Guidelines: Overview of Final Changes”.

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Next Steps, Outreach and Engagement Opportunities

The PMPRB’s efforts to ensure that its Guidelines are fair, functional and fit for their legislative purpose will not end with their final publication. The PMPRB is committed to developing and implementing a comprehensive Guidelines Monitoring and Evaluation Plan (GMEP) to assess the impact of the new Guidelines and inform future adjustments as necessary to ensure they are working as intended. More information on the GMEP can be found in the below article entitled “Guidelines Monitoring and Evaluation Plan (GMEP)”.

To ensure that patentees are fully up to speed on the content of the Guidelines and the tools to help them comply with the new regulatory framework, a number of outreach webinars will be organized during the months of November and December 2020, in anticipation of the coming into force of the regime on January 1, 2021. In addition, the PMPRB will hold a public webinar for all its stakeholders to communicate the key elements of the final pricing Guidelines and address questions.  

Information on the scheduling of these webinars will be communicated to patentees later in October. 

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PMPRB Approach to COVID-19

In keeping with our September 17, 2020 update on the price regulation of drugs authorized for use in COVID-19 (Update - PMPRB Price Regulation of Drugs Authorized for Use in COVID-19), the new Guidelines provide that the price of any patented medicine which appears on the List of Drugs for Exceptional Importation and Sale, set out in accordance with section 3 of the March 30, 2020 Interim Order Respecting Drugs, Medical Devices and Foods for a Special Dietary Purpose in Relation to COVID-19, or on the list(s) published by Health Canada pursuant to the September 16, 2020 Interim Order Respecting the Importation, Sale and Advertising of Drugs for Use in Relation to COVID-19, will only be subject to review or investigation by Staff if a pricing complaint is received from the federal Minister of Health or any of her provincial or territorial counterparts. This will be case for as long as the Interim Orders are in effect and the patented medicine remains listed. In the event that the requisite complaint is received, an investigation will take place and Staff will review the price of the patented medicine in accordance with the usual process and procedure under the Guidelines.  Upon the expiry or repeal of the Interim Orders or the removal of a patented medicine from the applicable list, absent a pre-existing complaint, price reviews for these medicines will be based on prevailing international and domestic list prices, and not on introductory discounted prices in Canada.

This policy has been adopted as part of a government wide effort to provisionally ease the regulatory pathway for drugs and medical devices urgently needed for COVID-19 diagnosis, treatment, mitigation or prevention. The PMPRB will continue to monitor the evolving situation regarding the COVID-19 virus in Canada and the appropriateness and feasibility of this policy. 

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Federal Court Decision on the Amended Patented Medicines Regulations

On June 29, 2020, Justice Manson of the Federal Court issued his decision in respect of Innovative Medicines Canada’s (“IMC”) application for judicial review of the recent amendments to the Patented Medicines Regulations.  IMC filed a Notice of Appeal of the decision before the Federal Court of Appeal on September 10, 2020 and the Attorney General of Canada filed a Notice of Cross-Appeal before the Federal Court of Appeal on September 21, 2020.

In his decision, Justice Manson upheld the new section 85(1) excessive pricing factors and the new Schedule of comparator countries. However, he found that subsection 3(4) of the amended regulations, which relates to the calculation of net prices, is outside the scope of the Patent Act and thus ultra vires the Governor-in-Council’s regulation-making authority.

The effect of this decision on the Guidelines is that, upon coming into force of the amended regulations in January 2021, the new excessive pricing factors will be used by the PMPRB to screen new medicines into either Category I or Category II and, for the those in the former Category, to calculate their applicable Maximum Rebated Price (MRP). However, absent a complaint of excessive pricing being filed, the PMPRB will only open an investigation into the price of a Category I medicine where it appears to be non-compliant with its applicable Maximum List Price (MLP) under the Guidelines. This does not preclude PMPRB Staff from considering the MRP in the context of an investigation once commenced, or the Board in an excessive price hearing. The PMPRB may revisit this approach depending on the outcome of the pending appeal.

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PMPRB Guidelines: Overview of Final Changes

As mentioned, there are number of differences between the June 2020 Draft and the final Guidelines issued on October 23, 2020. The associated changes, summarized below, were made in response to stakeholder feedback and in light of recent developments in the PMPRB’s operating environment.

The reassessment for Grandfathered and Line Extension medicines limited to HIP

The list price ceiling for Grandfathered and Line Extension medicines is set at the lower of (i) the highest international price (“HIP”) for the PMPRB11 countries for which the patentee has provided information; or (ii) the patented medicine’s ceiling under the Guidelines applicable prior to the issuance of these Guidelines. The final Guidelines also provide for the reassessment of these medicines in the cases in which the prevailing HIP is lower than the list price ceiling for two consecutive reporting periods. In such cases, the list price ceiling will be reset by the prevailing HIP.

In response to the feedback received on the June 2020 draft Guidelines, the Board decided to remove the extra reassessment provision that would have required these medicines to further reduce their prices to the median international price (“MIP”) if in two consecutive subsequent periods, the prevailing MIP was lower than the list price ceiling by more than 10%.

Vaccines to be subject to the same complaints-based investigation criteria as patented biosimilars and generics

In response to feedback from vaccine manufacturers and their trade association regarding the unique market dynamics surrounding vaccine provision in Canada, the final Guidelines provide that vaccines shall be subject to the same investigation criteria as patented biosimilars and patented generics. Accordingly, new patented vaccines will only be subject to a price review and investigation if a complaint is received by the PMPRB. In such an instance, a vaccine that meets the Category I criteria will be assessed accordingly (in contrast to biosimilars and generics which will always be Category II medicines). Generics approved through non-ANDS pathways, patented biosimilars and vaccines remain subject to the reporting requirements set forth in the Patent Act and the Patented Medicines Regulations.

Maximum Rebated Price (MRP) not a trigger to investigation

As explained, pending the Federal Court of Appeal’s ruling on IMC’s appeal of the decision of Justice Manson, absent a complaint being filed, the PMPRB will only commence an investigation into the price of a Category I medicine where it appears that the patentee has failed to comply with the Maximum List Price (MLP). Whether the patentee appears to be in compliance with the MRP will not be a relevant consideration in that regard.  However, the MRP may become a relevant consideration in an actual investigation or in the context of a hearing before the Board.

Allowing for increases in the Maximum Rebated Price for Category I new medicines to the Maximum List Price level

Both the November 2019 and June 2020 draft Guidelines only provided for downward adjustment to the MRP based on increases in a medicine’s market size. However, the final Guidelines allow the MRP to be adjusted both downwards and upwards, as sales expand or contract.  Accordingly, under the Guidelines, it is possible for the MRP to increase back to the MLP if sales fall to $12 million or less for High Cost medicines, or to $50 million or less for High Market size medicinesFootnote i.

Reduction in the Pharmacoeconomic Value Threshold (PVT) for Therapeutic Criteria Level IV

In order to align better with domestic and international norms and the sliding scale approach taken in many other countries, the PVT for Therapeutic Criteria Level (TCL) IV is $100K / QALY, as opposed to the $150K /QALY proposed in the June 2020 draft Guidelines.  As a result, the PVT thresholds are as follows: $200K /QALY for TCL I; $150K / QALY for TCL II and III, and $100K / QALY for TCL IV. While these thresholds may appear high to some, they apply to a select group of medicines that are very high-cost and are felt to be consistent with the PMPRB’s role as a regulator of ceiling prices, not a price setting body. 

Guidelines Monitoring and Evaluation Plan (GMEP)

The PMRRB is developing and implementing a comprehensive Guidelines Monitoring and Evaluation Plan (GMEP) to assess the impact of the Guidelines and inform any future adjustments required to ensure that they are working as intended. For those wishing to know more about the types of analyses the PMPRB is contemplating performing under the GMEP,  the results of our preliminary research webinars on this question are available on the PMPRB’s consultation portal. As currently envisaged, the GMEP will consist of four key areas of focus, identified and summarized below, each with multiple research objectives. Each area of focus will be monitored and evaluated by comparing trends prior to and post implementation of the PMPRB’s new regulatory framework. Baseline results (benchmarks) will be generated for the trends under the Guidelines as they were up to and including 2020. Starting in 2021, the trends under the new Guidelines will be monitored on an ongoing basis and compared against the established benchmarks. During the consultation process on the Guidelines, several stakeholders expressed a desire to be involved in the development and implementation of the GMEP. Accordingly, the PMPRB will seeking input in due course from the stakeholder community on the scope and methods to be used in the GMEP.

A brief summary of each of these areas follows.

A. Impact on Prices

This will include both list and net prices, and their corresponding ceilings, as well as any indirect impact on the prices of drugs not directly affected by the reforms.

B. Impact on Access

This will consider the access continuum, from the impact on the development of medicines (clinical trials), to drug approval and availability, Health Technology Assessment (HTA), pan-Canadian Pharmaceutical Alliance (pCPA) negotiations and formulary listings.

C. Impact on the ecosystem

This will focus on R&D and economic footprint, drug spending, and the supply chain.

D. Impact on PMPRB processes

This will look at the operational aspects of the price assessment, scientific review of medicines, administrative burden in terms of compliance activities, and outreach activities (specifically the number of engagement activities the PMPRB is undertaking to assist patentees in understanding the Guidelines and their application).

This fall, the PMPRB will organize a technical forum with key academics to further develop the scope and methodologies in each of these four areas. Informed by these discussions, the PMPRB will publish a draft GMEP as well as organize a public forum for interested stakeholders to further discuss the proposed plan and solicit feedback prior to finalizing the document. 

Information on how you can be a part of the GMEP development process will be posted on the PMPRB’s website and announced via the PMPRB’s twitter account at a later date.

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