Patented Medicines Prices Review Board
(PMPRB)
to
Canadian Association of Healthcare Reimbursement
Healthcare and Biopharmaceuticals in Canada: Federal
Perspective and Beyond
Michelle Boudreau, Executive Director
Ottawa Convention Centre
September 25, 2012
Outline
________________________________________________
 Market trends
 Getting to know the PMPRB
 How does it really work?
 Concluding Remarks
2
Market trends - Canada Compared to the World
________________________________________________
 In 2005 and 2010, Canadian drug sales accounted for 2.4% and 2.7%,
respectively, of the global market
 Small, but a growing market
3
Market trends - Canada Compared to the World
________________________________________________
 Growth in drug sales outpacing comparator countries
4
Market trends - Canada Compared to the World
________________________________________________
 Canadian prices comparatively higher than a number of OECD
countries
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
5
Market trends - share of total prescriptions* by segment,
2005/06 to 2010/11
________________________________________________
6
Getting to know the PMPRB - key quotes and court
pronouncements
______________________________________________
“…changes (to Bill C-22) will also ensure consumer protection by
creating a drug prices review board to monitor drug prices. . .”
7

The Honourable Harvie Andre made this comment upon
introducing Bill C-22 for second reading on November 20,
1986.

The protection of consumer interests was one of the “Five
Pillars” of public policy addressed by amendments to the
Patent Act creating the PMPRB.
Getting to know the PMPRB - key quotes and court
pronouncements
______________________________________________
8

“…The Board’s interpretation of its mandate under the relevant
provisions was consistent with its consumer protection purpose
and should not be disturbed.”

Supreme Court of Canada’s decision in the Celgene/Thalomid
matter, January 2011
Getting to know the PMPRB - key quotes and court
pronouncements
______________________________________________
“…the merest slender thread” - ICN Pharmaceuticals Inc. [1997]
(Virazole)

Defines three-part test for PMPRB’s Jurisdiction
–
–
–

patentee of an invention
invention must pertain to the medicine
sale of the medicine in Canada
Defines ‘patent pertains’ concept
–
–
–
a rational connection between the invention and the medicine – the
merest slender thread
no need to go beyond the face of a patent to establish the required
nexus
no requirement that the patent be used
* Jurisdiction - all patents whether used or capable of being used
9
How does it really work - price regulation
______________________________________________
Jurisdiction

Regulates prices patentees charge (i.e. factory-gate price) for patented
drugs, to wholesalers, hospitals or pharmacies
Factors to be considered by Board in determining a nonexcessive price

Patent Act and Patented Medicines Regulations – class tests and
reference-based framework



Prices of other medicines in same therapeutic class sold in Canada
Prices of medicines sold in comparator countries*
Changes in CPI
*7 comparator countries: France, Germany, Italy, Sweden, Switzerland, UK and the US
10
How does it really work - price tests
________________________________________________
 Blend of therapeutic improvement & international referencing
 Recognize incremental pharmaceutical innovation

At introduction, price premium aligned with therapeutic improvement:

Four levels of therapeutic improvement:
1)
2)
3)
4)
Breakthrough – Median of International Price Comparison (MIPC)
Substantial Improvement – Higher of top of Therapeutic Class Comparison
(TCC) and the MIPC
Moderate Improvement – Higher of mid-point between top of TCC test and the
MIP, and top of TCC (primary & secondary factors apply here)
Slight/No Improvement – Top of TCC
 After introduction, monitor Average Transaction Price (ATP)
subject to CPI based price increases and cannot be greater
than HIPC
11
How does it really work - price tests
________________________________________________


Price tests are applied in accordance with therapeutic
improvement
Based on specific circumstances, price ceilings at intro
may be set differently

For example, in 2011, within the “slight or no improvement
category” (70% of new drugs)


12
the highest international price (HIPC) test set the Maximum Average
Potential Price (MAPP) 30% of the time because the TCC was higher
than HIPC, or a TCC could not be conducted
the therapeutic class comparison set the MAPP 40% of the time
How does it really work - Biologics
________________________________________________
 Biologics treated like any other drug
 Some biologics represent a breakthrough (eg. Enbrel in 2000)
and get the MIPC
 Others may fall under moderate or no improvement
therapeutic categories (eg. Humira, Cimzia, Simponi)
 Looking at vaccines, Gardasil was a breakthrough in 2006, but
Cervarix was categorized as slight or no improvement in 2010
13
How does it really work - MAPP compared with public
price
________________________________________________
Drug
Cat
IntroMIP
Intro HIPC
Pivotal
Test
MAPP
Intro
Bench
Price
(ATP)
Publicly
available
price
Brand-X
SNI
1.15
2.95
TCC
2.45
0.68
0.69
Brand-Y
SNI
1.40
1.85
TCC
1.52
1.50
1.50
Generic-A
SNI
0.85
1.50
TCC*
0.65
0.42
0.33
* Brand price sets the MAPP – brand price $0.65
14
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
15
2005
2006
2007
2008
2009
2010
Concluding Remarks
________________________________________________
 Very dynamic market with many factors at play
 On average, Canadian prices are lower than prices in certain EU countries
and lower than US prices
 Recognizing innovation and ensuring a non-excessive price is a delicate
balance
 Highly compliant industry
 Continue to promote compliance
 Commitment to Guidelines that are responsive to a changing environment
16
Thank you.
Merci.
michelle.boudreau@pmprb-cepmb.gc.ca
www.pmprb-cepmb.gc.ca
Twitter: @PMPRB_CEPMB
17
Annex – additional information, stats
and NPDUIS overview
18
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.
19
PMPRB Price Tests - How Does it Really Work?
________________________________________________
 Of the 109 New Drug Products introduced in 2011:
20

12% under investigation

69% were of slight or no improvement

25% of moderate improvement

5% of substantial improvement 1% breakthrough
PMPRB Price Tests - International Referencing
________________________________________________
 Reference pricing at introduction and for existing drugs based on 7
comparator countries - France, Germany, Italy, Sweden, Switzerland, UK, and US

Policy changes in these countries could impact prices in Canada
 Over last three years, Germany has most often been the highest
referenced price for PMPRB price tests, followed by US

Recent cost containment measures by reference countries may lead to lower prices
in Canada (e.g., Germany)
8
Frequency in setting Highest International Price Comparison
test at introduction
7
7
6
6
5
4
4
3
2
1
0
21
3 3
2
2
1 1
1
2008
2009
2010
Regulatory Statistics
High level of compliance - On average, 93-95% overall compliance
2011
2010
New Drug Products
Introduced
109
68
Number of
Investigations
69
87
Between 2000 and 2009, average of 86 new patented drug
products/year
 Of the 109 new drug products introduced in 2011:
 79% within Guidelines
 13% under investigation
 8% outside of Guidelines but do not trigger an investigation
22
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
6
1
$12.1M
(May 31)
23
NPDUIS
________________________________________________
 National Prescription Drug Utilization Information System




24
Established in 2011, in partnership with the Canadian Institute on
Health Information (CIHI), at the request of F/P/T Ministers of Health
Provides critical analyses of price, utilization, and cost trends to
support drug plan policy decision-making for participating jurisdictions
Steering Committee composed of F/P/T representatives provides
PMPRB with advice regarding research needs and priorities
Since December 2010, eight publications have been released
Some Recent and Forthcoming Studies
________________________________________________
 Generic Drugs in Canada: International Price Comparisons
and Potential Cost Savings
 The Impact of Generic Entry on the Utilization of the
Ingredient
 Public Drug Plan Dispensing Fees: A Cost-Driver Analysis
2001/02 to 2007/08
 Wholesale Up-charge Policies of Canada’s Public Drug Plans
And Soon to Come…
 New Drug Pipeline Monitor – Fourth Edition
 Diabetes Test Strips: Actual Utilization vs. Recommendations
25