An Opportunity to Reshape Patented Medicines Regulation in Canada

The Patented Medicine Prices Review Board (the “PMPRB” or the “Board”) is currently canvassing stakeholder input on its Discussion Paper¹ released on June 24, 2016, as part of an initiative to reform and modernize its regulatory framework.

1. The PMPRB

The PMPRB is an independent quasi-judicial body, which derives legal authority from the Patent Act and the Patented Medicines Regulations. The Board gathers information about the industry, conducts investigations, holds hearings, and orders remedial action if a manufacturer of a patented medicine has charged an excessive price based on a number of indicia laid out in section 85 of the Patent Act (the “Section 85 Factors”).

A set of guidelines known as the Compendium of Policies, Guidelines and Procedures (the “Guidelines”) provides non-binding guidance as to how the PMPRB is to exercise this authority and how the public is to comply. The Guidelines assign ceiling prices for new patented medicines based on their therapeutic benefit relative to existing drugs and allow annual price increases based on the Consumer Price Index (“CPI”), among other things. It is these Guidelines that the Board is looking to modernize.

2. Nature of the Reform

The PMPRB was established in 1987 to provide a consumer protection counterweight to regulatory reforms that strengthened patent protection for drugs. The prevailing belief at the time was that price and patent protection were the key drivers of R&D investment. However, in response to rising patented drug prices relative to prices in France, Germany, Italy, Sweden, Switzerland, the UK and the US (the “PMPRB7 Countries”) and record low investment in pharmaceutical R&D, the Board has revisited assumptions regarding its operating environment. For example, instead of price and patent protection, the Board has argued that factors such as head office location, clinical trials infrastructure and scientific clusters are central determinants of where pharmaceutical investment takes place in a global economy.

The main areas of potential reform identified by the Board in its Discussion Paper include:

1. Conducting initial screenings on drugs based on potential for abuse of statutory monopoly rather than therapeutic benefit;²
2. Revisiting the manner in which international price comparisons are made, either by changing the composition of the PMPRB7 Countries or changing how price ceilings are set relative to the PMPRB7 Countries;³
3. Changing the way that drugs in the “slight or no improvement” category are priced;⁴
4. Re-evaluating the role of the CPI in determining whether a drug is excessively priced;⁵ and
5. Considering whether the price of a drug “in any market” should be given greater weight in determining whether a drug is priced excessively.⁶

3. Stakeholder Feedback

In December 2015, following a year-long strategic review, the PMPRB released a Strategic Plan for 2015 to 2018, detailing specific objectives designed to ensure the Board remains effective and relevant in a changing environment.⁷ These objectives include promoting consumer-focused regulation and reporting, modernizing the framework, building strategic partnership and public awareness, and cultivating employee engagement.

The Discussion Paper seeks to implement a number of the objectives outlined in the Strategic Plan and provides a framework for consultation on Guidelines reform. In the Discussion Paper, the Board is also soliciting stakeholder feedback and comments on a number of broadly framed questions about, for instance:

• What the word “excessive” means in relation to drug pricing;
• The amount of weight to be placed on international public list prices when determining price ceilings for drugs;
• The relative weighting that should be given to the Section 85 Factors;
• The perceived relationship between research and development conducted in Canada and excessive price ceilings; and
• Any other aspects of the Guidelines that may warrant reform.⁸

4. The Next Steps

The current comment period for feedback and comments on Guidelines reform will last until October 24, 2016. Following receipt of written comments on the questions in the Discussion Paper, the PMPRB will host a Public Policy Hearing before publishing proposed changes to the Guidelines for comment through a Notice and Comment Process in Spring/Summer 2017.

Stakeholders who wish to have a role in steering the PMPRB’s new course should consider submitting a comment by October 24, 2016. We will keep you posted on the consultation and reform process as it continues.

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¹ Patented Medicine Prices Review Board, “PMPRB Guidelines Modernization Discussion Paper” (June 2016), online. 

² Ibid at pg 14.

³ Ibid at pg 17.

⁴ Ibid at pg 17.

⁵ Ibid at pg 19.

⁶ Ibid at pg 19.

⁷ Patented Medicine Prices Review Board, “Strategic Plan 2015-2018” (December 2015), online. 

⁸ Discussion Paper, supra, at pg 22.