PMPRB Overhauls Approach to Calculating Ceiling Prices for Patented Medicines

  • January 14, 2020
  • Abigail Smith, Smart & Biggar LLP

On November 21st, the Patented Medicines Prices Review Board (“PMPRB”) released draft Guidelines outlining its proposed methodology for assessing whether Canadian patented medicines are excessively priced, together with a backgrounder. The Guidelines are intended to operationalize the amended Patented Medicines Regulations, which come into force on July 1, 2020.

Health Canada projects that its revised approach to regulating the price of patented medicines will result in a 10-year total savings to public, private, and out of pocket payers of $8.8 billion present value. Innovative pharmaceutical companies have challenged the amended Regulations in both Federal and Quebec Superior Court.

Significant changes to the Regulations include:

  • An updated list of reference countries, notably excluding the United States and Switzerland (the “PMPRB11”);
  • Reporting of price and revenue net of adjustments including third party price rebates;
  • Reduced reporting requirements for drugs considered at low risk of excessive pricing;
  • Three new price regulatory factors: pharmacoeconomic value, market size, and gross domestic product (GDP) in Canada and GDP per capita in Canada; and
  • Added reporting requirements relating to the new price regulatory factors.

The Guidelines indicate that the PMPRB’s method of assessing excessive pricing will vary depending on when the drug received marketing approval from Health Canada.