Canada’s Patented Medicine Prices Review Board – Moving Forward

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					Canada’s Patented Medicine Prices
Review Board – Moving Forward with the
Board’s Policies and Excessive Price
Brien G. Benoit, MD, MSc, FRCSC, FACS

The Canadian Institute's 3rd Annual Drug Pricing & Reimbursement in
Toronto, Ontario
June 16, 2009

     Pharmaceutical Provisions of Patent Act
     Evolving pharmaceuticals environment
     Review of Excessive Price Guidelines
     Key changes to Compendium & Guidelines
     Moving Forward

               Pharmaceutical Provisions of Patent Act
     1987 – PMPRB created as a quasi judicial body
       Tied to Consumer Protection pillar; other pillars were:
            Principles of intellectual property
            Relationship to industrial policy
            Canada’s multilateral relations
            Health care of Canadians
       s.85(1) & (2) laid out excessive price factors
       Remedial powers
          Price reduction
          Reinstatement of compulsory licensing
       Regulations enacted; defined price to be filed
     1993: Further amendments
       Elimination of compulsory licensing
       New remedial power to collect excess revenues
       New sanctions for failure to comply
    Patented Medicines Prices Review Board

                                PMPRB Mandate

     Patent Act sets out dual mandate:
        Regulatory: ensure prices charged by patentees for patented drugs sold in
         Canada are not excessive
        Reporting: report on overall pharmaceutical trends and on research and
         development (R&D) spending by patentees
     Excessive Price Guidelines:
        Provide transparency and predictability of price review methodology

               Evolving Pharmaceutical Environment

     Few breakthrough drugs – more incremental innovation

                                                  Total # of
                                                  New Active
          60                                      Breakthrough
                                                  / Substantial


               2004   2005   2006   2007   2008

               Evolving Pharmaceutical Environment

     Price variability among customers/provinces
     “Patented generics”
     Mandatory requirement to report average prices net of all benefits
      (subject of judicial review in Federal Court)


     More investigations, voluntary compliance undertakings (VCUs),
         125 ongoing investigations; vs 52 investigations in 2005
         17 VCUs from 2006 to date; vs. 34 VCUs from 1993 – 2005
         15 Notice of Hearings from 2006 to date; vs. 8 from 1993 – 2005

                             Review of the
                       Excessive Price Guidelines
     To ensure relevancy and appropriateness
     Extensive consultations:
        Discussion papers / Notice and Comments in 2005, 2006, 2008, and 2009
        5 working groups (Therapeutic Improvement, International Therapeutic
         Class Comparison, Price Tests, Generic Industry, Cost of Making and
        Bilateral and multilateral meetings/calls with:
              Industry (brand, biotech, generic)
              Federal/Provincial/Territorial Governments
              Consumer/patient groups
              Third party payers
        Board meetings with Rx&D, BIOTECanada, CGPA, Ontario
        CEO/Board level Rx&D/PMPRB Ad Hoc Group
                   Key Changes to the Compendium of
                   Policies, Guidelines and Procedures
      Clearer and more transparent
      Structural changes include:
           New section on Legal Framework
           New Policies section
           Guidelines aligned with review process

                     Regulatory Mandate Statement

      Mirrors language in Patent Act
      Consumer interest rationale outlined – Legal Framework

                                  New Board Policies:

                    Modified Terminology for MNE Price

      More transparent
          Regulations require reporting of average prices
      New terms:
          Maximum Average Potential Price (MAPP)
               Introductory price ceiling for all markets: national, pharmacies, hospitals,
                wholesalers, and provinces/territories
          Non-Excessive Average Price (NEAP)
               Based on actual pricing in each market

                  Maximum Average Potential Price
      Will publish MAPP for new drugs in New Medicine Summary
      Will not publish CPI-inflated MAPP

                        Domestic Price Comparisons

      Clarity and predictability of public prices used in TCC and RR tests
      Applies both when comparator sold by same or different patentee
      Sources:
           Association québécoise des pharmaciens propriétaires (AQPP);
           IMS Health;
           McKesson Canada;
           Ontario Drug Benefit (ODB) Programs;
           PPS Pharma; and,
           Régie de l'assurance maladie du Québec (RAMQ)
      For each comparator, lowest public price selected
      TCC test – highest priced comparator
                Publicly Available International Prices

      Patented Medicines Regulations direct patentees to provide
       publicly available ex-factory prices when completing Form 2,
       Block 5
      Commercially sensitive confidential prices are not to be reported

     Use of Patented and Non-Patented Drug Products in the
                          Price Tests
      Historical policy and practice
      All pivotal comparators assessed against price tests in Guidelines
      Exclude any comparator, patented or non-patented, being sold at
       an excessive price

               Policy on Offsetting Excess Revenues

      Actual price reduction below previous year’s NEAP
      Once excess revenues offset by price reduction, ATP may return
       to market-specific NEAP
      VCU required to resolve excess revenues below investigation
       criteria after 3 consecutive years

     Excessive Price Guidelines

                New Levels for Therapeutic Comparison

      Recognize incremental pharmaceutical innovation
      Four new levels of therapeutic improvement:
           Breakthrough
           Substantial improvement
           Moderate improvement
           Slight or No Improvement
      Primary and secondary assessment factors
      Secondary factors can only result in moving to moderate

                    Factors for Therapeutic Comparison
      Primary factors:
           Increased efficacy
           Reduction in important adverse effects
      Secondary factors:
           Duration of usual treatment course
           Success rate
           Percentage of affected population treated
           Time required to achieve optimal therapeutic effect
           Route of administration
           Patient convenience
           Compliance improvements leading to improved therapeutic efficacy
           Caregivers convenience
           Disability avoidance/savings
                           Introductory Price Tests

      Price premium aligned with degree of therapeutic improvement:
          Breakthrough – Median of International Prices (MIP)
          Substantial Improvement – Higher of top of Therapeutic Class Comparison
           (TCC) and the MIP
          Moderate Improvement – Higher of mid-point between top of TCC test and
           the MIP, and top of TCC
          Slight/No Improvement – Top of TCC

                        Limited Comparators for
                        Patented Generic Drugs
      Limit comparators of patented generics to reference
       (bioequivalent) drug or licensing brand’s drug product

                  Reasonable Relationship (RR) Test

      Clarify language
      Maintain pricing for new lower strength at price of existing higher
      New Guidelines for unforeseen circumstances

                 Highest International Price Comparison
                               (HIPC) Test

      For all patentees, HIPC test conducted:
           At national level
           For pharmacy and hospital customer classes
           For each province and territory
      HIPC test not applied to wholesaler class of customer

              International Therapeutic Class Comparison
                               (ITCC) Test
      Not pivotal price test – for information only
      Focus on median price
      Two methods:
           Ratio Approach
           Straight Class Approach
      Only generics of companies selling in Canada included

                             Any Market Price Review

      Intent of statute - ensure prices not excessive in “any market” or
       “relevant market”
      At introduction:
           Both national and “market-specific” ATPs will be investigated if trigger criteria
      After introduction:
           Monitor National ATP
           Review specific markets only if national ATP triggers investigation criteria
      Submarkets:
           Pharmacies, hospitals, wholesalers
           Provinces/Territories
      Excess revenue calculated at national level

                                 “DIP Methodology”
      If price increase due solely to end or reduction of a benefit,
       patentee not held to allowable CPI increases
      Type of Benefit:
           Must conform to ss. 4(4) or 4(5) of the Regulations – “price reduction given
            as a promotion or in the form of rebates, discounts, refunds, free goods, free
            services, gifts or any other benefits of a like nature”
      Evidence of Benefit:
           Form of evidence (e.g., agreement/contract, data requirements) not specified
            to allow flexibility given newness of DIP methodology
      Price
           If evidence of benefit, ATP of market could increase to highest NEAP of
            another market
      Rationale:
           Remove disincentives to offering benefits
                                Re-setting the NEAP

      Interim MIP if too few comparator countries; may be reviewed
       when sold in 5 countries or after 3 years
      Recognition of possible “cost of making and marketing”
           e.g., once NOC obtained after drug first sold as Investigational New Drug,
            through Clinical Trial Application, or under the Special Access Programme

                                  Moving Forward

      Final revised Guidelines published June 9, 2009
      Information sessions and outreach events planned:
            June 17th – Toronto
            June 18th – Montreal
            Possibly others in Fall - tbd
      New Guidelines implemented on January 1, 2010
      Ongoing evaluation:
            Workability and impact of new Guidelines
            New/emerging issues


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