Patented Medicine Prices Review Board
Regulatory Affairs and Outreach Branch
Regular DIP Methodology – a refresher
Ottawa, May 16, 2013
Overview
 Preparing for a successful Regular DIP Application


Benefits
Block 5 Canadian price list
 Invoking the Regular DIP Methodology


Administrative forms
Application-Related Issues and Solutions
 Understanding what happens after successfully
invoking the Regular DIP


2
CPI Methodology
Dealing with future increases
Preparing for a successful
DIP application
3
Benefits at Introduction
Q: How to apply the DIP Methodology when benefits
exist at introduction?
A: Report customers with and without benefits as
separate lines in the Form 2 Block 4 at introduction
and as long as benefits are given. The ATP
excluding the benefits will be used to calculate the
IBP*.
4
Benefits at Introduction
Example : customers with and without benefits within the same
class
2010: Drug product X introduced to Canadian market on September 1
DIN 1234567; strength/unit 1 MG/TAB; dosage form S1; pack size 10;
1000 packages sold only to hospitals, in Ontario
Price to some hospitals: $20.00/tablet
Price to other hospitals: $15.00/tablet (contract).
MAPP is $20.00$/tablet
N-ATP is $17.50/tablet
H-ATP is $17.50/tablet

2012: Contract ends. Same quantities sold as in 2010 but price is now
$20.00 to all hospitals. N-ATP is now $20/tablet
5
Benefits at Introduction
Form 2 Block 4 September-December 2010
4 SALES OF THE MEDICINE BY THE PATENTEE IN FINAL DOSAGE FORM IN CANADA
Drug Identification Number
(DIN) or Assigned Number
Strength/Unit
Dosage Form
Package Size
Number of
Packages Sold
(2)
(3)
(3,4)
(3,5)
(5)
1
INDICATE EITHER (6)
Province
(4)
Class of
Customer
1234567 1 MG/TAB
S1
10.00
500.00
100000.0000
6
(4)
1
1234567 1 MG/TAB
S1
10.00
500.00
75000.0000
6
1
Net Revenue
AVG Price/Package
N-ATP = $17.50 ; H1-ATP (class without benefits) = $20.00; H2-ATP (class with benefits) = $15.00
Form 2 Block 4 January-June and July-December 2012
4 SALES OF THE MEDICINE BY THE PATENTEE IN FINAL DOSAGE FORM IN CANADA
Drug Identification Number
(DIN) or Assigned Number
Strength/Unit
Dosage Form
Package Size
Number of
Packages Sold
(2)
(3)
(3,4)
(3,5)
(5)
1
INDICATE EITHER (6)
Province
1234567 1 MG/TAB
S1
10.00
500.00
100000.0000
6
(4)
1
1234567 1 MG/TAB
S1
10.00
500.00
100000.0000
6
1
Net Revenue
AVG Price/Package
N-ATP = $20.00; H1-ATP = $20.00; H2-ATP = $20.00
When invoking the Regular DIP Methodology, the H1-ATP in 2010
(class without benefits) will be used to calculate the IBP* in 2012
6
(4)
Class of
Customer
Block 5 Canadian list price
Are you selling above your list price?
Form 2 Block 5 Canada
ATP
2009
$20.00
$20.00
2010
$20.00
$19.00
2011
$20.00
$19.00
2012
$20.00
$21.00
Patentees are reminded to ensure
that the reported Block 5 and Block 4
data are accurate. An ATP cannot be
higher than the list price.
7
Block 5 Canadian list price
Block 5 prices as originally filed
No more benefits in 2012 – investigation
Regular DIP Methodology not successful; ATP>IBP*
Form 2 Bl5 Canada
8
2007
2008
$20.0000
$20.6000
2009
$20.6000
2010
$20.6000
2011
$20.6000
2012
$20.9000
% Bl5 increase
3.0%
% annual CPI
2.4%
0.3%
1.8%
2.9%
1.5%
1.4%
IBP/IBP*
$20.0000
$20.4800
$20.4800
$20.4800
$20.4800
$20.7664
N-ATP
$20.0000
$19.0000
$18.0000
$17.0000
$17.0000
$21.0000
MAPP/N-NEAP
$20.0000
$20.4800
$19.0950
$18.4860
$17.7480
$17.3910
Block 5 Canadian list price
Prices reported in Part B (copies of list prices provided)
No more benefits in 2012 – investigation
Regular DIP Methodology successful; ATP<IBP*
Prices reported in Part B
2007
2008
2009
2010
2011
2012
$20.0000
$20.6000
$20.6000
$20.6000
$20.9000
$21.2000
1.5%
1.4%
(and substantiated)
9
% Bl5 increase
3.0%
% annual CPI
2.4%
0.3%
1.8%
2.9%
1.5%
IBP/IBP*
$20.0000
$20.4800
$20.4800
$20.4800
$20.7872
$21.0782
N-ATP
$20.0000
$19.0000
$18.0000
$17.0000
$17.0000
$21.0000
N-NEAP
$20.0000
$20.4800
$19.0950
$18.4860
$17.7480
$17.3910
Invoking the Regular
DIP Methodology
10
Application forms
APPLICATION FORM TO INVOKE THE DIP METHODOLOGY
Which methodology are you invoking: Simplified DIP
Regular DIP
(Please complete Part A only)
(Please complete Part A and Part B)
PART A
Product Information
Brand Name:
DIN:
Generic Name:
Strength/Unit:
Period of Review:
Background Information: Please describe the circumstances that support the application of the DIP
methodology to this DIN
11
Application forms
Description of the benefit: Please indicate when the benefit commenced and was terminated, the type
and value of the benefit, customer classes that received it, whether there are on-going benefits, etc.
Certified by
I hereby certify that the information presented is true and correct.
Signature of duly authorized person for the reporting patentee:
Name:
Title:
Organization:
Date:
Tel Number: ( )
Fax Number: ( )
E-mail:
Please send the completed Form to the PMPRB Senior Regulatory Officer assigned to your company
12
Application forms
Part A: as described previously
 Part B

PART B
Price Increase Chart
Year 1
List Price (price/unit)
% List Price Increase
Maximum Selling Price/Unit
Effective Date of List Price increase
13
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Regular DIP application
 Patented drug product has been sold to various
customers since April 1, 2007. Its price became
under investigation in 2012. Patentee believes that
Regular DIP Methodology can be applied.
 Only one List Price
$20.00/tab in 2007, 2008 and 2009
$21.00/tab in 2010, 2011 and 2012
 Price increase was effective as of April 1st 2010
 Maximum selling price was list price
14
Regular DIP application
PART A
Drug product information, background and description of
benefit to be provided as required in the Form
PART B
Price Increase Chart
2007
List Price (price/unit)
20.00
2008
20.00
20.00
2009
20.00
Effective Date of List Price increase
21.00
2011
2012
21.00
21.00
21.00
21.00
5.00%
% List Price Increase
Maximum Selling Price/Unit
2010
20.00
20.00
20.00
20.00
21.00
1-Apr-10
Copies of the List Price to be provided for each year
reported in the Price Increase Chart
15
Regular DIP application
 Patented drug product has been sold to various customers
since April 1, 2007. Its price became under investigation in
2012. Patentee believes that Regular DIP Methodology can be
applied.
 Two List Prices: Wholesaler $20.00/tab in 2007, 2008 and 2009
Quebec
$21.00/tab in 2010, 2011 and 2012
$15.00/tab in 2007, 2008 and 2009
$15.60/tab in 2010, 2011 and 2012
 Price increases were effective as of April 1st 2010
 Maximum selling price was list price:
16
Regular DIP application
PART A
Drug product information, background and description
of benefit to be provided as required in the Form
PART B
Price Increase Chart
2007
List Price (price/unit)
20.00
2008
20.00
20.00
2009
20.00
20.00
20.00
20.00
20.00
List Price (price/unit)
2007
15.00
2008
15.00
15.00
2009
15.00
Effective Date of List Price increase
21.00
21.00
21.00
21.00
21.00
2010
15.60
2011
15.60
15.60
15.00
15.00
15.00
15.00
15.60
15.60
15.60
1-Apr-10
Copies of the List Price to be provided for each year
reported in the Price Increase Chart
17
2012
4.00%
% List Price Increase
Maximum Selling Price/Unit
2012
1-Apr-10
Effective Date of List Price increase
Quebec
21.00
2011
5.00%
% List Price Increase
Maximum Selling Price/Unit
2010
Regular DIP Methodology: Calculation of IBP*
To calculate the IBP*, Board Staff applies the lower of
the
1) CPI Methodology and
2) The Block 5 increases
*Subject to the Highest International Price
However there are two “Quick tips”.
18
Regular DIP Methodology: Calculation of IBP*
Quick Tip 1: Block 5 Canada price increase vs. annual
(one year) CPI
Use lower of :
 annual (one year) CPI and
 % increase of Form 2 Block 5 Canada price
Form 2 Bl5 Canada
2008
$20.0000
$20.6000
% Bl5 increase
3.0%
% annual CPI
2.4%
IBP/IBP*
19
2007
$20.0000
$20.4800
Regular DIP Methodology: Calculation of IBP*
Quick Tip 2: No increase in Form 2 Block 5 Canada
price for at least 3 years
Use lower of:
 Cap
 % increase in Form 2 Block 5
Form 2 Bl5 Canada
2007
2008
2009
2010
2011
2012
$20.0000
$20.0000
$20.0000
$20.0000
$20.0000
$20.5000
2.5%
% Bl5 increase
Cap
IBP/IBP*
20
$20.0000
3.6%
0.5%
2.7%
4.4%
2.3%
$20.0000
$20.0000
$20.0000
$20.0000
$20.4600
Regular DIP Methodology: Calculation of IBP*
When Form 2 Block 5 Canada price increases every year, CPIAdjustment Methodology considered.
2007
2008
2009
2010
2011
2012
$20.0000
$20.5000
$20.5615
$20.8700
$21.2875
$21.6068
% Bl5 increase
2.5%
0.3%
1.8%
2.0%
1.5%
% annual CPI
2.4%
0.3%
1.8%
2.9%
1.5%
% Cap
3.6%
0.5%
2.7%
4.4%
2.3%
% CPI Adj. Factor
2.4%
2.7%
4.5%
5.1%
6.3%
Form 2 Bl5 Canada
IBP/IBP*
$20.0000
$20.4800
$20.5414
$20.9000
$21.3180
$21.6378
N-ATP
$20.0000
$19.5000
$19.0000
$18.5000
$18.0000
$21.5000
N-NEAP
$20.0000
$20.4800
$19.5975
$19.5130
$19.3140
$18.4140
2010 CPI
CAP
% Bl5 increase
21
20.0000 X 1.045 = 20.9000
20.5414 X 1.027 = 21.0960
20.5414 X 1.018 = 20.9111
Regular DIP Methodology: Calculation of IBP*
Block 5 Canada price decrease
Form 2 Bl5 Canada
2007
2008
$20.0000
$19.5000
% Bl5 increase
2.4%
% annual CPI
IBP/IBP*
22
$20.0000
$19.5000
DIN previously sold
Q: In cases involving the acquisition of a patented
drug product prior to January 1, 2010, what is the
appropriate Introductory Benchmark Price (IBP)
where a patentee acquires a DIN(s) that had been
previously sold by another patentee?
A: The IBP for the product sold by the second
patentee would be equal to the IBP for the product
sold by the first patentee provided the second
patentee receives this information from the first
patentee.
23
Understanding what happens after
successfully invoking the
Regular DIP
24
What happens after successfully invoking the
Regular DIP Methodology?
A: Change the year in which the Regular DIP is
applied to year 1 for the purposes of the CPIAdjustment Methodology.
YR 1 - DIP successfully applied and N-NEAP = N-ATP

Excess revenue = 0
YR 2 - N-NEAP = YR 1 N-NEAP/N-ATP + CPI methodology
25
Regular DIP Methodology
Regular DIP applied in 2010 (Year 1)
List Price Canada
26
2007
2008
2009
2010 – Yr. 1 2011 –
$20.0000
$20.5000
$20.5000 $20.5000
$20.5000
1.5%
% list price increase
2.5%
% annual CPI
2.4%
0.3%
1.8%
Cap
3.6%
0.5%
2.7%
IBP/IBP*
$20.0000
$20.4800
$20.4800 $20.4800
N-ATP
$20.0000
$19.0000
$18.0000 $20.0500
N-NEAP
$20.0000
$19.4560
$18.4860 $20.0500
Yr. 2
$20.4800
$20.3508
Regular DIP Methodology: Scenario 1
Scenario 1 – Year 2 N-ATP < Year 2 N-NEAP
List Price Canada
27
2007
2008
2009
2010 – Yr. 1 2011 –
$20.0000
$20.5000
$20.5000 $20.5000
$20.5000
1.5%
% list price increase
2.5%
% annual CPI
2.4%
0.3%
1.8%
Cap
3.6%
0.5%
2.7%
Yr. 2
IBP/IBP*
$20.0000
$20.4800
$20.4800 $20.4800
$20.4800
N-ATP
$20.0000
$19.0000
$18.0000 $20.0500
$20.2500
N-NEAP
$20.0000
$19.4560
$18.4860 $20.0500
$20.3508
Regular DIP Methodology: Scenario 2
Scenario 2 – Year 2 N-ATP > Year 2 N-NEAP,
But < IBP*
List Price Canada
28
2007
2008
2009
2010 – Yr. 1 2011 –
$20.0000
$20.5000
$20.5000 $20.5000
$20.5000
1.5%
% list price increase
2.5%
% annual CPI
2.4%
0.3%
1.8%
Cap
3.6%
0.5%
2.7%
Yr. 2
IBP/IBP*
$20.0000
$20.4800
$20.4800 $20.4800
$20.4800
N-ATP
$20.0000
$19.0000
$18.0000 $20.0500
$20.4500
N-NEAP
$20.0000
$19.4560
$18.4860 $20.0500
$20.3508
Regular DIP Methodology: Scenario 2
Post Regular DIP application in Year 2
Scenario 2 – Year 2 N-ATP > Year 2 N-NEAP,
But < IBP*
List Price Canada
29
2007
2008
2009
2010 – Yr. 1 2011 –
$20.0000
$20.5000
$20.5000 $20.5000
$20.5000
1.5%
% list price increase
2.5%
% annual CPI
2.4%
0.3%
1.8%
Cap
3.6%
0.5%
2.7%
Yr. 1
IBP/IBP*
$20.0000
$20.4800
$20.4800 $20.4800
$20.4800
N-ATP
$20.0000
$19.0000
$18.0000 $20.0500
$20.4500
N-NEAP
$20.0000
$19.4560
$18.4860 $20.0500
$20.4500
Regular DIP Methodology: Scenario 3
Scenario 3 – Year 2 N-ATP > N-NEAP,
and > IBP* - no list price increase in Year 2
List Price Canada
30
2007
2008
2009
2010 – Yr. 1 2011 –
$20.0000
$20.5000
$20.5000 $20.5000
$20.5000
1.5%
% list price increase
2.5%
% annual CPI
2.4%
0.3%
1.8%
Cap
3.6%
0.5%
2.7%
Yr. 2
IBP/IBP*
$20.0000
$20.4800
$20.4800 $20.4800
$20.4800
N-ATP
$20.0000
$19.0000
$18.0000 $20.0500
$20.7500
N-NEAP
$20.0000
$19.4560
$18.4860 $20.0500
$20.3508
Regular DIP Methodology: Scenario 4
Scenario 4 – Year 2 N-ATP > N-NEAP and > IBP*,
However - list price increase in Year 2
List Price Canada
31
2007
2008
2009
2010 – Yr. 1 2011 –
$20.0000
$20.5000
$20.5000 $20.5000
Yr. 2
$20.8075
% list price increase
2.5%
% annual CPI
2.4%
0.3%
1.8%
1.5%
Cap
3.6%
0.5%
2.7%
2.25%
1.5%
IBP/IBP*
$20.0000
$20.4800
$20.4800 $20.4800
N-ATP
$20.0000
$19.0000
$18.0000 $20.0500
$20.7500
N-NEAP
$20.0000
$19.4560
$18.4860 $20.0500
$20.3508
Regular DIP Methodology: Scenario 4
Scenario 4 – Year 2 N-ATP > N-NEAP and > IBP*,
However - list price increase in Year 2
List Price Canada
32
2007
2008
2009
2010 – Yr. 1 2011 –
$20.0000
$20.5000
$20.5000 $20.5000
Yr. 1
$20.8075
% list price increase
2.5%
% annual CPI
2.4%
0.3%
1.8%
1.5%
Cap
3.6%
0.5%
2.7%
2.25%
1.5%
IBP/IBP*
$20.0000
$20.4800
$20.4800 $20.4800
$20.7872
N-ATP
$20.0000
$19.0000
$18.0000 $20.0500
$20.7500
N-NEAP
$20.0000
$19.4560
$18.4860 $20.0500
$20.7500
Considerations and General Reminders
 DIP has to be applied for – the forms must be filled out
 Pay attention and consider changes to CPI
 Product must be sold at list price – Block 4 sale
 Pay attention to your Block 5 data and your MAPP at
introduction
 HIPC is always a factor
 Your SRO (Senior Regulatory Officer assigned to your
company) is always available for discussion on specific
issues
33
QUESTIONS ?
34