The document summarizes proposed changes to Canada's regulations for pricing patented medicines. It discusses: - The role of the Patented Medicine Prices Review Board (PMPRB) in regulating drug prices. - Proposed changes including adding new economic factors, updating comparator countries, and requiring reporting of discounts. - Potential consequences like reduced drug launches in Canada, delays in drug availability, and price erosion over time. - Questions around whether the changes will actually lower public drug prices significantly or risk reducing patient access to innovative therapies.

1. Federal patented medicines regulations
Update on Health Canada’s proposed regulations and
patient perspectives
January 18, 2017

2. What is the PMPRB?
• Quasi-judicial federal agency
• Regulates medication prices while
they are under patent
• Reports to the federal health minister
• Twofold mandate
o Regulatory – Ensures that prices charged by patentees for patented
medicines sold in Canada are not “excessive”
o Reporting – Tracks pricing trends related to all medicines and the
research and development spending of patentees
• Classifies medicines based on level of therapeutic
improvement
• Ex-factory price regulated – not consumer price
• PMPRB approval of price not required before sale
2

3. Drug Development
Health Canada
Review
Patented Medicine
Prices Review Board
Patient Access
Late 1980’s:
PMPRB was the
only organization
reviewing drug
prices
3

4. Drug Development
Health Canada
Review
Patented Medicine
Prices Review Board
Health Technology
Assessment
Hospitals
Patient Access
Private Drug PlansPublic Drug Plans
Today:
dozens of
organizations
review prices
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5. Global market dynamics – reference pricing
Source: WHO Workshop on Differential Pricing
PMPRB’s question: “Given that it is standard industry
practice worldwide to insist that public prices not
reflect discounts and rebates, should the PMPRB
generally place less weight on international public list
prices when determining the non-excessive price
ceiling for a drug?”
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6. Pricing regulation – PMPRB Tests
International
Comparisons
(7 comparator countries)
FRANCE UK
GERMANY ITALY
SWEDEN USA
SWITZERLAND
Level of
Clinical
Improvement
Price Test
All Patented
Medicines
Breakthrough Median International Price
Prices of patented
medicines can never
exceed the
International
Maximum Price (i.e.,
the highest price
among the PMPRB7
comparator countries
Substantial
improvement
Higher of the Therapeutic
Class Comparison (TCC)
and the International
Median
Moderate
improvement
Midpoint of the
Therapeutic Class
Comparison and
International Median (but
not lower than the TCC)
No or little
improvement
Therapeutic Class
Comparison or
Reasonable Relationship
Test
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7. Pricing regulation – monitoring by PMPRB
• Price can never be higher than
highest international price
• Maximum allowable price set at
launch
• Annual price increases limited to
inflation
• Regular reporting requirements by
manufacturers
• Four market segments - retail,
distributor, pharmacy and hospital
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8. Pricing Regulation - Enforcement
• Investigations
• Non-compliance options
o Board orders
o Voluntary compliance
undertakings (VCUs)
• Federal court
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9. Key changes in draft regulations
• Three new factors are proposed as criteria for price
evaluations:
- Pharmacoeconomic (P/E) evaluations – with a QALY
threshold likely to be included in PMPRB guidelines
- Size of market
- Gross Domestic Product in Canada
• Requirement to report to support new factors
• Revised list of comparator countries – closer to OECD
median price with proposed changes
• Information on discounts/rebates – requirement to report
rebates to PMPRB
• No active monitoring of patented generics
No changes made to the initial proposal introduced by the
Health Minister in May 2017, despite over 100 submissions
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10. List of Comparator Countries
Current list: Proposed list (May 2017):
FRANCE UK
GERMANY ITALY
SWEDEN USA
SWITZERLAND
FRANCE UK
GERMANY ITALY
SWEDEN AUSTRALIA
BELGIUM
JAPAN
NORWAY
S. KOREA
NETHERLANDS SPAIN
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11. Guidelines
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12. May 2017
CONSULTATION
DOCUMENT
released –
6 weeks
stakeholder input
(Over 100
stakeholder
submissions)
Dec. 11, 2017
Scoping document on
new PMPRB
guidelines
75-day consultation
Dec. 2, 2017
DRAFT
REGULATIONS pre-
published in Canada
Gazette Part-1 along
with regulatory impact
analysis statement
Timeline for regulation development
Aug. 2017
New Health
Minister
Feb. 14, 2018
Deadline for
stakeholder
input on draft
regs
Oct. 2017
PMPRB’s 2016
Annual Report
is released
Consultations on PMPRB scoping document and guidelines
Dec. 2017 Fall 2018
Spring 2018
(TBC)
Release of
new PMPRB
guidelines
Spring 2018
Final PMPRB
regs to be
published in
Canada
Gazette Part-2
Jan 1, 2019
Implementation
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13. Patent Act Regulation Changes
Why should Patients Care ?
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14. Context
• Health care jurisdiction in Canada is
divided between the federal
government and the
provinces/territories
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15. Federal jurisdiction
Funding
Canada Health Act
• Transfers funds to the provinces/territories to
ensure for basic hospital and doctor coverage
• Drugs provided in hospital from the hospital
list of medications covered are free
15

16. Federal jurisdiction ( cont’d )
Approvals
Food and Drugs Act
• Health Canada approves clinical trials, approves drugs,
biologics and medical devices for sale in Canada and
monitors them post market
Patent Act
• Patented Medicine Prices Review Board determines if
the price a manufacturer wants to sell a product for is
“excessive”
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17. Provincial jurisdiction
Coverage and Reimbursement
• Each province/ territory determines whether
drugs/biologics have a value in the treatment
armamentarium that makes them worth
spending taxpayers dollars from public drug
budgets to provide them to eligible residents in
the province
• In some cases provinces also have
reimbursement plans for eligible drugs (e.g.,
Trillium in Ontario)
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18. Provincial jurisdiction (cont’d)
Mechanism for Determination of Value for Public Plans
• Canadian Agency for Drugs and Technologies in
Health (CADTH) uses health technology assessment
processes to advise governments about value and
therefore reimbursement
• The CDIAC of CAPCA makes recommendations to the
provinces/territories regarding cancer drug coverage
• pan-Canadian Pharmaceutical Alliance (pCPA)
negotiates prices for the provinces
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19. Private insurers
• Individual and group insurance are available
through private insurers
• The price they pay for the drugs/biologics they
cover are either the PMPRB price or a
negotiated price with the manufacturer
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20. Individual payers
• Some people have neither eligibility for public
coverage nor private coverage
• Others have inadequate coverage
• They pay for drugs/biologics out of pocket
• They pay the PMPRB price + mark ups for
added costs
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21. Coverage split
• Public plans cover approximately <41 % of
Canadians
• Private plans cover < 34% of Canadians
• It is estimated that < 23 % of Canadians are
paying out of pocket for all or some of their
drug coverage
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22. Price, cost and value
• Non-excessive ex-factory price monitoring is the
jurisdiction of PMPRB
• Cost refers to the additional amount added to the
manufacturer’s price to get a drug to market e.g.
distribution costs, dispensing fees, administration
costs.
• This is the jurisdiction of the provinces/territories
• Value refers to the determination of whether to cover
and fund a drug from public drug budgets rather than
spending on other drugs for the same or a different
disease or condition .
• This is the jurisdiction of the provinces/territories
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23. So why the Patent Regulation changes ?
Assumptions
1) The federal government has determined that
2) drug spending is increasing as a total health expenditure
from 10% to 16%, the second highest expenditure in the total
health budget
3) innovative drug therapies including biologics and genetic
therapies are higher priced and costlier than previously and
used more prevalently than in the past
4) Canada pays higher drug prices than most other developed
5) limited public drug budgets mean less overall access to drugs
for Canadians
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24. Assumptions (cont’d)
6) There is a growing discrepancy exists between
public list prices and lower actual market prices due
to the increased use of confidential rebates and
discounts
7) There has been no corresponding increase in R&D
spending in Canada
8) F/P/T Minsters of Health need to work together to
improve affordability, accessibility and appropriate
use of drugs
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25. How does the Federal Government
Plan to do This ?
1) Add a new economics-based price regulation factor
that will ensure prices reflect Canada’s willingness
and ability to pay for drugs that provide demonstrably
better health outcomes
2) Update the list of countries used by Canada for
comparison so that it aligns with PMPRB’s consumer
protection mandate and median OECD country prices
3) Move to a complaints based system for patented
generic drug products that are lower risk of excessive
pricing
4) Require patentees to provide information about third
party rebates and discounts
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26. New Economic-Based Price Factor
What is it ?
• An economic-based drug assessment identifies, measures and
compares the cost and benefits of a given drug to the patients and
the payers, particularly the public healthcare system
• CADTH does this through a health technology assessment process
based on measuring the Quality of Adjusted Life Years
• Patients are not necessarily satisfied that even this approach
captures value as determined through patient reported outcome
measures
• In any case this is not the same as saying the price is fair, reasonable
or non-excessive
• It is saying that at this price public or private payers do or do not
want to invest taxpayers or plan sponsor dollars in this way
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27. Will a new economics-based price factor
lower actual public drug prices ?
• This is the millions of dollars question
• CADTH is already doing a value-based economic price
assessment- Why the duplication ? Is it even within
PMPRB’s jurisdiction to determine “value” ?
• Price and value are not the same
• Even a “non-excessive” price does not guarantee that
public plans consider a drug good value for a limited
drug budget
• The drug should still be available to those who wish to
purchase it
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28. Will a new economics-based price factor
lower actual public drug prices ?
• PMPRB’s hypothesis is that if the entry level price is
lower, then the pCPA negotiated price for public plans
will end up lower. Will it ?
• PMPRB argues that it has a duty of consumer
protection. It has said that the real problem in this
regard is with new innovative drugs where there are no
comparators in the same class. This is only about 10%
of the drugs that PMPRB reviews. Why not focus on a
process for solving that problem ?
• Economic-based factors are about relative value for
money, not price. If neither public or private payers
consider a drug of value they will not purchase it.
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29. Proposed List of countries in the NEW PMPRB12
Europe
France
UK
Germany
Belgium
Italy
Netherlands
Spain
Sweden
Norway
Asia Pacific
Japan
Korea
Australia
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30. Comparing to OECD
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31. Potential Consequences
• Reducing list prices by the expected 20% or so by adopting
the median price of the proposed 12 comparator countries
may have profound and unwanted consequences for
Canadians.
– Companies not launching products in Canada
– Delay in drug being submitted to HC
– Wait for all of the 12 countries to have a price
– Negative impact on Health Outcomes
• There will be winners and losers – Private and public payers
• Med-low priority category – price erosion of further entries…
why bother
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32. Health Canada offers a reassurance
• Health Canada has issued Q&As to the proposed
Amendments to the Patented Medicines
Regulations and to the question: Would
Companies still bring their medicines to Canada if
prices were lower?
• Its answer is: Prices are currently significantly
lower in several countries economically
comparable to Canada. Companies still bring
medicines at rates that are equal or better than
the rates that Canada enjoys. … Canada would
remain a sizable market for patented medicines.
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33. Summary of Conclusions
• PMPRB is responsible to determine if a proposed price is
excessive, It is up to the provinces to negotiate a price
together through pCPA, with the advice of CADTH and
CAPCA, that will determine if the purchase of the drug will
be a good value proposition for the payer
• CADTH has the jurisdiction for recommendations to the
provinces/territories regarding value, not PMPRB
• The big winners in these changes are private insurers. Will
the savings to them result in savings to plan sponsors eg
employers, unions, individual plan holders ? If not, where
will the new big savings come
• Lower entry level prices may lower the negotiated price but
by how much ?
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34. Summary of Conclusions
• Patients need access to innovative life –saving
and life enhancing therapies. This new
approach does not guarantee enhanced
access or even the level of access presently
available.
• If the problem is with the 10% of drugs that
do not have comparators why not find a
solution to that problem e,g, a dispute
resolution mechanism.
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35. What can you do to ensure
accountability ?
1) Respond to the consultation, either individually
or collectively
2) Meet with your MP, federal Health Canada
bureaucrats and politicians, PMO
3) Write to the bureaucrats and politicians
4) Raise this issue with provincial politicians
For further information: louise.binder@rogers.com
Martine?
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36. Themes for discussion and Qs and As
• Process and consultations
• Substance of the proposed regulations
• Expected and potential impacts
• Alternative approaches
• What patients are expecting from their
governments and other stakeholders
• What can patients and other stakeholders do?
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37. Thank you!
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