Patented Medicines Prices Review Board
(PMPRB): Regulatory Issues and Trends
Michelle Boudreau, Executive Director
4th Annual Market Access Summit
November 21, 2012
Toronto
Outline
________________________________________________
 Canadian market and market trends
 Role of PMPRB and Overview of Price Regulation Regime
 Revised Guidelines - Major Changes
 Regulatory Stats & Guidelines Monitoring and Evaluation Plan
 Update on Hearings -Anticipated Developments
 Looking Forward
 Annex
 Pharmaceutical Trends Data
 Changes and Clarifications to Guidelines Since 2010
2
Market trends - Canada Compared to the World
________________________________________________
 In 2005 and 2011, Canadian drug sales accounted for 2.4% and
2.6%, respectively, of the global market
 Small, but significant market
3
Market trends - share of total prescriptions* by segment,
2005/06 to 2010/11
________________________________________________
4
Market trends - Canada Compared to the World
________________________________________________
 Growth in drug sales outpacing comparator countries
5
After introduction, monitor Average Transaction Price (ATP) relative to Non-Excessive
Average Price (NEAP), subject to CPI based limit
Average Ratio of 2011 Price to Introductory Price, by Year of Introduction
1.10
1.06
1.06
1.06
1.05
1.04
1.03
1.02
1.01
1.01
1.00
1.00
Ratio
0.99
0.99
0.98
0.97
0.94
0.95
0.93
0.93
0.90
0.85
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Source: PMPRB
6
2005
2006
2007
2008
2009
2010
Canada Compared to 21 EU Members - 2010
AVERAGE BILATERAL FOREIGN-TO-CANADIAN PRICE RATIOS
1.06
Germany
Canada
Denmark
Ireland
Sweden
Luxembourg
Belgium
Austria
Spain
France
Netherlands
United Kingdom
Greece
Finland
Hungary
Poland
Portugal
Italy
Slovenia
Slovakia
Estonia
Czech Republic
0.93
1.00
0.98
0.89
0.87
0.84
0.70-0.80
0.60-0.70
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05
Average Price Ratio for 21 EU Members 0.79
Based on top 300 selling oral solids in Canada
7
IMS Health Data, 2010
Overview of the PMPRB
________________________________________________
 Established in 1987 as consumer protection pillar via
amendments to Patent Act
 The PMPRB is an independent quasi-judicial body with a dual
mandate:


Regulatory: To ensure that prices charged by patentees for patented
medicines sold in Canada are not excessive
Reporting: To report on pharmaceutical trends of all medicines and on R&D
spending by pharmaceutical patentees
 Jurisdiction

8
Regulate prices patentees charge (i.e. factory-gate price) for patented drug
products sold in Canada, to wholesalers, hospitals or pharmacies, for human
and veterinary use
PMPRB Price Regulation Regime
________________________________________________
 Jurisdiction:
 Drug products patented and sold in Canada
 Instruments:



Patent Act (s. 79–103)
Patented Medicines Regulations
Compendium of Policies, Guidelines and Procedures
 Price approval not required before sale
 PMPRB establishes a price ceiling, but DOES NOT set selling
price of drug product
 Regular price reviews to monitor compliance with Guidelines
combined with enforcement mechanisms (investigations,
Voluntary Compliance Undertakings, hearings, orders)
9
PMPRB Price Regulation Regime
_______________________________________________
 Factors to be considered by Board:
 Price of medicine sold in Canada
 Prices of other medicines in same therapeutic class sold in Canada
 Prices of medicines sold in comparator countries
 Changes in CPI
 Reference based
 7 comparator countries: FR, DE, IT, SE, CH, UK, US
 Open and transparent price regulation
 Hearings are public
 VCUs publicly disclosed
 MAPP publicly available
* BUT, pricing data filed is confidential (s. 87)
10
PMPRB Price Tests
Blend of Therapeutic Improvement and International Reference Pricing
_________________________________________________
Recognize incremental pharmaceutical innovation
 At introduction, price premium aligned with degree of therapeutic
improvement:
 Four new levels of therapeutic improvement:
Breakthrough – Median of International Price Comparison (MIPC)
2) Substantial Improvement – Higher of top of Therapeutic Class
Comparison (TCC) and the MIPC
3) Moderate Improvement – Higher of mid-point between top of TCC test
and the MIP, and top of TCC (primary & secondary factors apply here)
4) Slight/No Improvement – Top of TCC
Reference pricing at introduction and for existing drugs based on 7 comparator
countries - France, Germany, Italy, Sweden, Switzerland, UK, and US
1)


11
Policy changes in these countries could impact prices in Canada
Investigation Criteria and Outcome
________________________________________________
 Investigation into the price of a patented medicine commenced when a complaint
is filed or any of the following criteria are met:
New Drug Products
– 5% above the maximum average potential price (MAPP); or
– Cumulative excess revenues are $50,000 or more; or
 Existing Drug Products
– Cumulative excess revenues are $50,000 or more over the life of the
patent
 Patentee given opportunity to make further written submissions to Board Staff to
substantiate the price
 If price within the Guidelines
 Investigation closed
 If price outside the Guidelines
 Patentee given an opportunity to submit a Voluntary Compliance
Undertaking (VCU); or
 Board Staff refers the matter to the Chairperson

12
Revised Guidelines - January 2010
________________________________________________
Guideline
Rationale for
Observations
Changes
Change
Overall
Implementation
13
 Ongoing monitoring, evaluation, and resolution of
issues
 Proactive outreach and education
Overall Restructuring
of Price Tests
 Price premium to reflect  Board Staff proactive in publishing clarification via
therapeutic value
NEWSletter (see Annex for summary)
 Board Staff continue to monitor issues
New Levels of
Therapeutic
Improvement
 Recognizing
incremental therapeutic
innovation
 Successfully applied by HDAP members
DIP Methodology
 Avoid creating
disincentives for offering
benefits
 Evidence requirements clarified to ensure feasible
and easily applied
Any Market
 Ensuring that no subnational market is paying
excessive prices
Applies only to drugs sold after January 2010
Guidelines Monitoring and Evaluation Plan (GMEP) -2010
____________________________________________
 GMEP monitors and evaluates the application and impact of major
changes to the Guidelines on an ongoing basis
Major Change
14
Observation
New Level of Therapeutic
Improvement
19% of new drug products classified as
“moderate improvement”
Overall Restructuring of
Price Tests
15% of new drug products classified as
“moderate improvement” priced at premium
(above old Guidelines ceiling)
Any Market
Applied at intro and when investigation triggered
<2% overall cases where market specific price
higher than national average transaction price
DIP Methodology
Since pilot, 60 DINs successful DIP application:
• 46 Simple
• 14 Regular
Regulatory Statistics
2011
2010
New Drug Products
Introduced
109
68
Number of
Investigations
69
87
 Of the 109 New Drug Products introduced in 2011:




79% within Guidelines;
9% outside of Guidelines but do not trigger an investigation
12% under investigation
69% were of slight or no improvement; 25% of moderate improvement; 5%
of substantial improvement and 1% breakthrough
 Between 2000 and 2009, average of 86 new patented drug products/year
15
Regulatory Statistics: Voluntary Compliance
Undertakings and Board Orders – 2008-2012
________________________________________________
Year
# VCUs
# Board
Orders
Payments
of Excess
Revenues
2008
6
1
$25.5M
2009
10
1
$37.3M
2010
12
3
$13.2M
2011
9
1
$0.9M
2012
7
2
$14.7M
(September 2012)
16
Update on Hearings
________________________________________________
 Matters before the Board
Tactuo – Oct 1, 2012 - Notice of Hearing issued
 Ongoing
 Apotex Inc. (Failure to File)
 Apo-Salvent CFC
 Matters before the Federal Court – Judicial Review
 ratiopharm Inc.; ratio-Salbutamol HFA; Copaxone Redetermination
 Sandoz Inc.
 Matter decided by the Supreme Court of Canada in 2011
 Celgene Corporation (sale of Thalomid under Special Access Programme)

17
Anticipated Developments
___________________________________________________________________
Judicial
Review
Copaxone
and ratioSalbutamol
Expected Guidance on..
•
•
•
ratio•
Salbutamol,
ratiopharm •
and Sandoz •
•
•
•
18
how to weigh ss 85(1) factors
the interpretation of the calculation of the ATP pursuant to ss 4(4) of the Patented
Medicines Regulations and the obligation of a patentee to file “product specific”
information
“sufficiency of reasons”
whether the Board can regulate the price of patented medicines sold by generic
pharmaceutical companies or has the Board engaged in pure price regulation
the scope of “patentee” as per 79(1) of the Patent Act:
the Board’s jurisdiction with respect to the first “sale” and the supply chain
Interpretation of licencing/supply agreements negotiated at arm’s length
whether the corporate relationship between a parent company and its affiliate can
allow the Board to conclude that the affiliate is a “patentee” in the absence of a
written agreement
defining the scope of “patent pertain” as per s 79(1) of the Patent Act
Timing of Judicial Reviews
__________________________________________
 Copaxone Redetermination
 Awaiting Hearing Date most likely in winter
 ratio-Salbutamol and ratiopharm to be heard together
 Applicant and Respondent Records filed
 Request for Hearing Date to be filed
 Anticipated that it will be heard in late winter/early spring
 Sandoz
 Applicant and Respondent to file respective Records
 Request for Hearing Date to be filed
 Anticipated that it will be heard in late spring/early summer
19
Looking Forward
________________________________________________
 Ongoing engagement and outreach with stakeholders
 Continued focus on consumer protection while not creating
disincentives to innovation/approaches that benefit
consumers/payers
 Board adopted two priorities for 2012/13:


alternate dispute resolution (“ADR”) to further enhance compliance
reducing regulatory burden
 PMPRB response to recently conducted program evaluation
 Continuing engagement with int’l organizations/regulators
 Commitment to Guidelines that are responsive to a changing
environment
20
Thank you.
Merci.
michelle.boudreau@pmprb-cepmb.gc.ca
www.pmprb-cepmb.gc.ca
Twitter: @PMPRB_CEPMB
21
Annex - A
Pharmaceutical Trends Data
22
Market trends - Canadian Public Drug Plan* Spending on Rx
Drugs, Rates of Growth and Annual Totals, 2005/06 to 2010/11
* Does not include all drug plans. The totals include drug cost, retail/wholesale mark-ups as well as dispensing fees.
23
Canada Compared to a Number of OECD Countries
2010
2.50
Avg. Bilateral Foreign-to-Canadian Price Ratios: Top 300 selling oral solids in Canada
2.00
1.50
1.00
0.50
0.00
IMS Health Data, 2010
24
Annex -B
Changes/Clarifications to Guidelines Since 2010
25
Changes/Clarifications to Guidelines since 2010
________________________________________________
Issue
Change/Clarification
Triggering
Investigation
 Eliminated 5% investigation trigger at
national level for existing patented drug
products
 Replaced 3-year period to offset de minimus
excess revenue with a VCU with
requirement to offset in a timely manner
 Clarified that Any Market Price Review
would not be applied retroactively
 Pilot administration of the DIP methodology
with streamlined processes developed with a
working group
 Recommendations of DIP working group
accepted
 Patented DINs acquired and sold by persons
other than the initial patentee are bound to
the Guidelines, and continue to be treated
as an existing drug product (no change from
earlier Guidelines)
Offset Excess
Revenues
Any Market
DIP
Methodology
Existing drug
products
subsequently
sold by another
patentee
26
When
Change
Made
May 2012
May 2012
April 2012
April 2011 /
February
2012
January
2011
Changes/Clarifications to Guidelines since 2010 (cont’d)
________________________________________________
Issue
Change/Clarification
Offset of Excess  Clarified that prices of existing patented
Revenue
drug products are reviewed on an annual
basis. Therefore, for Jan-June period:
1) Existing drug products will not be initially
identified as “Does Not Trigger”
2) Board Staff will not calculate any offset
Policy on Use of  price of relevant non-patented drug
Non-Patented
products included in the price tests, unless
Comparator
Board Staff conclude the price of the
Drug Products in
medicine is excessive, based on absence
Price Tests
of competition or other market conditions
International
 Missing text inserted and description of
Therapeutic
ITCC test updated
Class
Comparison
Test (ITCC)
27
When
Change
Made
October 2010
October 2010
April 2010