PMPRB Update
Pharma Symposium Canada
March 31, 2015
Canadian pricing and reimbursement regime
 Canada is the only developed country in the world with a universal public health
insurance program that excludes coverage for prescription drugs.
 As such, Canada is fairly unique in that it does not have a national pharmaceutical
negotiator and formulary for its population.
 Federally, the PMPRB reviews patented drugs and sets price ceilings based on level of
therapeutic improvement, domestic prices and prices in the “PMPRB7”.*
 At the provincial level, CADTH reviews drugs for therapeutic benefit and cost
effectiveness and makes reimbursement recommendations to participating public payers.
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Pricing and reimbursement (continued)
 Provincial and territorial health ministries negotiate prices directly with manufacturers,
either individually or under the auspices of the pCPA.
 Private insurers manage employer-sponsored drug plans and also negotiate prices with
manufacturers, but wield less purchasing power than provinces.
 Uninsured Canadians (mainly the working poor) pay for prescription drugs at “list” prices.
 One in ten Canadians said to be unable to afford to fill their prescriptions (CMAJ 2012).
Payer
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Share of drug costs
Public insurance
42%
Private insurance
35%
Out-of-pocket (uninsured)
23%
Pharmaceutical Regulation in Canada is Shared
PMPRB
Jurisdiction covers patented drug products sold in Canada, whether through market approval or
under Health Canada’s Special Access Program (SAP)
Over Life of Patent(s)
Health Canada
Review For Safety, Efficacy & Quality
Health Canada
Post-Market Surveillance
Market Approval
Private Drug Plan Reimbursement
Public Drug Plan Reimbursement
CADTH Common
Drug Review
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Individual Federal/Provincial
Public Drug Plan Listing
Drug share of total health spending (2012)
Total Canadian
Other
Professionals
10%
Public Health
5%
Other
6%
Other
Institutions
10%
Capital
5%
Drugs
16%
Physicians
15%
Hospitals
30%
Out-of-pocket (uninsured)
Other
4%
Admin
3%
Prescription
14%
Nonprescription
2%
Other
Professionals
32%
Prescription
22%
Drugs
39%
Other
Institutions
20%
Physicians
2%
Nonprescription
17%
Hospitals
3%
 Drugs are the second/third (depending on year) largest health cost for Canada, but they
are by far the largest health cost for uninsured Canadians .
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PMPRB 101
 The PMPRB is an independent, quasi-judicial consumer protection agency with a
regulatory and reporting mandate.
 We are 60 civil servants on “staff” and 5 Cabinet-appointed Board members.
 On the regulatory side, staff review patented drug prices to ensure they are not excessive
as per the Patent Act and corresponding Regulations and Guidelines.
 Where staff considers the price of a drug to be excessive, a patentee can agree to pay
back excess revenues and/or lower its price through a voluntary settlement (VCU).
 If the patentee refuses a VCU, a hearing will be held before a panel of Board members if
the Chairperson considers it in the public interest.
 If the panel decides a drug is excessively priced, it can order the patentee to reduce its
price and/or pay back excess revenues.
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Regulatory mandate
 At intro, a drug’s price ceiling is set based on its category of therapeutic improvement,
the price of domestic comparators and its price elsewhere in the PMPRB7.*
 Four therapeutic categories, with descending price ceilings (in theory):
1.
2.
3.
4.
Breakthrough
Substantial Improvement
Moderate Improvement
Slight/No Improvement
 After introduction, an existing drug is eligible for CPI-based price increases.
 At no time can a drug’s price exceed the highest in the PMPRB7 (HIPC rule).
* France, Germany, Italy, Sweden, Switzerland, the UK and the US.
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Reporting mandate
Annual Report
 Analysis of prices of patented drugs, price trends of all drugs, and R&D spending:
http://www.pmprb-cepmb.gc.ca/en/reporting/annual-reports
National Prescription Drug Utilization Information System (NPDUIS)
 Established in 2001 as an F/P/T research initiative to provide policy makers and drug
plan managers with analyses of price, utilization and cost trends
 The NPDUIS Advisory Committee advises the PMPRB and provides expert oversight
and guidance for the analytical reporting of the initiative
 The Committee is composed of BC, AB, SK, MB, ON, NB, NS, PEI, NL, YK, NIHB & HC,
CIHI and CADTH.
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NPDUIS
Reports published in 2014/15
 CompassRx, 2012-13
 Generic Drugs in Canada, 2013 – December 11, 2014
 New Drug Pipeline Monitor, 6th edition – December 2013
 Utilization of Prescription Opioids in Canada's
Public Drug Plans, 2006/07 to 2012/13 – April 2014
Research agenda
 Private Drug Plans in Canada: Generic Drug Market, 2013
 International Retail Price Comparison, 2013
 Compass Rx, 2013-14
 Private Drug Plans in Canada: Cost Driver Analysis, 2013
 Utilization and Cost of Biologics, 2005/06 to 2012/13
 Private Drug Plans in Canada: High-Cost Drugs, 2013
 New Drug Launch Monitor, 2014
 New Drug Pipeline Monitor, 7th edition
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New NPDUIS flagship report
Comprehensive analysis of cost
drivers in public drug plans:
•
•
•
•
Price effects
Demographic effects
Volume effects
Drug-mix effects
Release date is today!
http://www.pmprb-cepmb.gc.ca/
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Compass Rx – “push-pull” drug spending effect
Total Push Effects
8.5%
Demographic
Volume
Drug-Mix
 Although net growth in drug spending
has been low in recent years because of
the “pull effect” of increased generic
substitution and generic price reductions,
that phenomenon appears to have run its
course.
 In the coming years, the cost drivers
behind the “push effect” are expected to
pose a challenge to the sustainability of
Price change
both public and private drug plans, for
example, in 2014:
 Spending on high cost biologics
Generic Subs
grew by 10.4%;
 Spending on high cost oncology
drugs grew by 12.3%.
Total Pull Effects
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-9.2%
Has Canada already turned the corner?
Canadian Drug Spending Growth Rate
11.6%
14.0%
4.4%
0.6%
0.6%
0.2%
0.0%
2.0%
0.6%
1.7%
4.0%
1.8%
6.0%
5.0%
0.0%
2011
2012
2013
-0.6%
-2.0%
2010
-0.5%
2009
-0.9%
Year over year growth rate
8.0%
6.5%
10.0%
5.6%
8.6%
12.0%
-5.2%
-3.4%
-4.0%
2014
-6.0%
-8.0%
Total Market
Brands
Generics
Source: IMS Brogan. Canadian Drug Stores and Hospitals Purchases, MAT December 2014
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Latest data on drug-mix effect
High-cost product launches
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300
10
250
8
200
6
150
4
100
2
50
0
Spending per Product Launched (million C$)
Spending on New Active Substances (million C$)
350
0
2007
2008
2009
2010
Total Spending
2011
2012
2013
2014
Per Product Launched
Source: IMS Brogan. Canadian Drug Stores and Hospitals Purchases, MAT December 2014
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Canada’s performance is not strong within PMPRB7…
PMPRB7 Drug Sales (AGR 2005-2013)
5.0%
4.5%
4.3%
Average Growth Rate (% per year)
4.0%
3.7%
3.8%
3.4%
3.5%
3.2%
2.9%
3.0%
2.6%
2.5%
2.0%
1.5%
1.0%
1.0%
0.5%
0.0%
France
Switzerland
Sweden
Germany
Italy
UK
Canada
US
Source: IMS MIDAS, 2013
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… nor within the OECD
Drug Expenditure (PPP/c), OECD 2012
OECD Average: $498
USA
Canada
Belgium
Japan
Germany
France
Australia
Hungary
Switzerland
Austria
Slovakia
Spain
Slovenia
Iceland
Sweden
Finland
Portugal
Korea
Netherlands
Czech Rep
Norway
Luxembourg
UK
Poland
Estonia
New Zealand
Denmark
Israel
Mexico
$1,010
$771
$736
$718
$668
$651
$588
$574
$562
$561
$535
$523
$513
$512
$478
$473
$473
$454
$450
$439
$414
$399
$367
$321
$311
$297
$295
$274
$70
$0
15
$200
$400
$600
$800
$1,000
$1,200
Source: OECD, 2012
… and price is clearly a contributing factor
Average PMPRB7-to-Cdn Price Ratios
2.25
2.07
2.00
1.83
1.75
1.50
1.21
1.25
1.00
0.75
1.11
1.05
0.99
0.72
0.78
0.88
0.79
0.90
0.95
1.00 1.00
1.15
1.04
2005
2013
0.50
0.25
0.00
France
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UK
Italy
Sweden
Switzerland
Canada
Germany
US
Why are prices going down in other countries?
 Over the 2010-2012 period, 23 European countries began planning or executed a major
reform of their pharmaceutical price regulatory framework.
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Country
Year
Type of Reform
UK
2014
Annual, per company, public expenditure ceilings – 0% growth for next two years.
Sweden
2014
7.5% price reduction for drugs >15 years old not subject to generic competition.
Switz
2013
Legislated negotiated price reduction of 2500 drugs.
Italy
2013
Expenditure ceiling, performance based reimbursement, 2-year price re-evaluation.
France
2012
Mandatory price review every 5 years, reimbursement rates cut for low innovation
medicines, new stringent therapeutic evaluations.
Germany
2011
Consolidation of regulatory roles, mandatory rebates to public plans.
Germany: impact of AMNOG
Germany-to-Canada Drug Price Ratio
1.25
1.20
1.15
1.10
1.05
Canada
1.00
0.95
0.90
2005
2006
2007
2008
2009
2010
2011
2012
2013
 2011 “AMNOG” reform is expected to save €2 billion per year and has already reduced the
price of the 25 top-selling brand drugs by an average of 23%.
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As prices go up, R&D is going down
126.2%
R&D-to-Sales Ratio, Canada and PMPRB7
140%
102.5%
120%
100%
80%
2000
19.4%
18.4%
40.5%
35.1%
25.3%
6.2%
6.2%
17.3%
20.4%
17.4%
16.8%
20.4%
21.7%
5.6%
10.1%
40%
20%
2011
44.4%
60%
0%
Canada All Comparators France
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Germany
Italy
Sweden
Switzerland
UK
US
Why is this happening?
R&D
 Evidence does not support purported link between price, IP and R&D.
 Other factors, such as head office location, science base, clinical trial infrastructure,
population density, etc. appear to be better predictors of locus of pharmaceutical R&D
Price
 As noted, EU countries are taking aggressive action to control drug costs.
 No national purchasing authority in Canada, and key decisions impacting price are made
independently of one another by different F/P/T players.
 PMPRB regime not keeping up with international or industrial trends.
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Payers are concerned about sustainability
“The (provincial drug plan) programs are starting to face extreme financial
constraints. The growth that we’re seeing in some categories of drugs is far
beyond what were ever anticipated four or five years ago.”
– Fred Horne, Alberta Minister of Health, speaking at April 7, 2014 CADTH
symposium
“We’re now at a point where ongoing sustainability of meaningful prescription drug
coverage is threatened for a vast number of Canadians. In the past few years alone,
the number of very-high-cost medications for genetic disorders, cancer and autoimmune diseases has increased substantially -- and this trend is expected to
continue.
– Frank Swedlove, President of CLHIA, speaking at the October 30, 2013
Conference Board 2nd Summit on Sustainable Health Care
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What’s next for the PMPRB?
 In 1987, Canada signalled its willingness to pay its “fair share” of international drug
development costs with enactment of present day drug patent policy – Bill C-22.
 Bill C-22 also created PMPRB as consumer protection “pillar” of that policy.
 PMPRB7 selected on basis of assumption that by offering comparable “fair” prices and
patent rights, Canada would come to “emulate” R&D levels in these countries.
 With Canadian prices approaching second highest of PMPRB7 and R&D at record lows,
that assumption now being questioned, as is relevance of PMPRB.
 Timing opportune for fresh look at PMPRB framework in light of current CETA changes,
sustainability concerns and GoC priorities (eg. price gap, defending consumers).
PMPRB to publish new three year strategic plan in spring 2015 – stay tuned…
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Thank you.
Merci.
www.pmprb-cepmb.gc.ca
Twitter: @PMPRB_CEPMB
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