Latest Update on the Patented Medicine Prices Review Boards Activities

1
Latest Update on the Patented Medicine Prices
Review Boards Activities

• This presentation will probably involve audience
  discussion, which will create action items. Use
  PowerPoint to keep track of these action items
  during your presentation
• In Slide Show, click on the right mouse button
• Select Meeting Minder
• Select the Action Items tab
• Type in action items as they come up
• Click OK to dismiss this box
• This will automatically create an Action Item
  slide at the end of your presentation with your
  points entered.

• Barbara Ouellet
• Executive Director
• Drug Pricing Reimbursement in Canada
• Toronto, Ontario
• May 24, 2008

2
Overview of Presentation

• PMPRB Mandate and Overview
• Current Environment
• Challenges and Recent Decisions
• Compliance and Enforcement
• Review of the Regulations and Guidelines
• 2007 Pharmaceutical Trends

3

• PMPRB Mandate and Overview

4
PMPRB Overview

• Created in 1987 as consumer protection pillar
  of drug patent law reform
• Arms-length agency in health portfolio
• No involvement in federal policy-making
• Quasi-judicial tribunal
• Unique structure both investigative and
  adjudicative functions
• Remedial orders provided for in the Patent Act
  enforceable in the
• Federal Court
• Structure and budget
• 5 part-time Board Members
• 62 employees
• Budget 11.5 million

5
PMPRB Overview (contd)

• Two-fold mandate
• Regulatory - To ensure that prices charged by
  patentees (ex-factory prices) for patented
  medicines sold in Canada are not excessive,
  thereby protecting consumer interests and
  contributing to Canadian health care
• Reporting - To report on pharmaceutical trends
  and on RD spending by pharmaceutical patentees,
  thereby contributing to informed decisions and
  policy-making
• Key principles
• Openness
• Transparency
• Fairness
• Timeliness
• Efficiency

6
Current Environment

• Health Canadas Blueprint for Legislative Renewal
• Progressive licensing
• Openness and transparency
• Competition Bureau
• Canadian Generic Drug Sector Study
• Provincial public drug plan legislation and
  policies
• e.g., Ontarios Transparent Drug System for
  Patients Act
• Changes to historically frozen prices
  Reimbursement/listing agreements

7
PMPRB Challenges and Recent Decisions

• Constitutional challenge
• Federal role in regulating prices provincial
  jurisdiction
• Reporting
• Failure-to-File
• Not on time or incomplete
• Refusal to file based on April 2000 Board policy
  (compassionate use programs, expenditure
  limitation agreements, trial prescription
  programs)
• Sales under Health Canadas Special Access
  Programme (SAP) under PMPRB jurisdiction
• January 21, 2008 Board Decision in the matter of
  Celgene Corporation and the medicine Thalomid
  (currently subject to Judicial Review)

8

• Compliance and Enforcement

9
(No Transcript)
10
Enforcement Activities

• 9 Voluntary Compliance Undertakings in 2007-2008
• Airomir (concluding the proceedings initiated in
  2006) Denavir Dovobet (following the September
  2007 Board Order) Forteo Lantus OctreoScan
  Risperdal Consta (completing the proceedings
  initiated in 2006) Vaniqa Zemplar (concluding
  the proceedings initiated in 2006)
• Combination of price reductions and reimbursement
  of excessive revenues totalling over 7M
• Since 1993, 49 VCUs have been approved
• Price reduction price reduction of other
  patented medicines payments of excess revenues
  totalling 34M

11
Hearings since 2006

• 11 Hearings initiated since January 2006
• Adderall XR Airomir1 Apotex Concerta
  Copaxone Penlac Quadracel and Pentacel
  Risperdal Consta1 Strattera Thalomid / Celgene
  Zemplar1
• Dovobet matter, initiated in 2004
• March 21, 2007 Federal Court decision on
  judicial review (Board decision of April 19,
  2006)
• September 17, 2007 Board Order LEO Pharma
  offset excess revenues of 3,736,398.71 (for
  period 2002 to 2005) 870,425.68 (VCU for 2006
  period)
• One older ongoing hearing, the Nicoderm matter,
  initiated in 1999
• 1 Resolved through VCUs

12
Ongoing Hearings

• Adderall XR (decision issued - Board Order
  pending)
• Apotex (October 6)
• Concerta (decision pending)
• Penlac (resumes July 14)
• Quadracel-Pentacel (resumes November 25)
• Strattera (to be scheduled)
• And
• One older ongoing hearing, the Nicoderm matter,
  initiated in 1999 (resumes on July 3)

13

• Possible Options for the Review of the
• Patented Medicines Regulations
• and the
• Boards Excessive Price Guidelines

14
Impetus for Review

• Changing environment
• International and Canadian developments
• Developments within the pharmaceutical industry
  globalization, mergers, partnerships
• Changes in nature of new patented medicines
  fewer breakthroughs, more incremental innovation
• High (over 90) but declining voluntary
  compliance with current Excessive Price
  Guidelines
• Third party reports to PMPRB of price increases

15
Impetus for Review (contd)

• Need to ensure that its Excessive Price
  Guidelines remain relevant and appropriate
• Concerns in 2006 especially regarding
• Categorization of new medicines not consistent
  with Health Canada priority review and dont
  adequately reflect incremental innovation
• Introductory prices seen as cost-driver
• Additional issue
• March 2007 Federal Court of Canada decision
  overturned Boards April 2000 policy permitting
  discretion in inclusion of certain customer
  benefits in average net price

16
Excessive Price Guidelines

• Ss. 96(4) of Patent Act permits Board to issue
  guidelines
• Used by Board Staff to conduct price
  reviews/investigations
• Provide transparency and predictability to
  patentees and other stakeholders
• Not binding on Board or patentee in a Hearing
• But, Federal Court ruled Board can use Guidelines
  in a hearing for rationale, approach or
  methodology in considering price factors (ICN
  Pharmaceuticals Inc. LEO Pharma Inc.)
• Ss. 96(5) requires Board to consult with the
  F/P/T Health Ministers, consumers and the
  pharmaceutical industry
• Last major changes made in 1994

17
Extensive Consultations To Date

• Discussion Guide, May 2006
• Multi-stakeholder meetings, November 2006
• Board Stakeholder Communiqué setting out an
  action plan, May 2007
• Bilateral meetings with industry (brand name,
  biotech, generics), provinces and consumers,
  September 2007
• Industry/Board Staff Working Groups
• 6 meetings to date with RxD representatives
• 3 meetings with BIOTECanada representatives
• 2 meetings with CGPA representatives
• Working Groups industry, governments, consumers
• Therapeutic Improvement
• International Therapeutic Class Comparison
• Making and Marketing
• Price Tests

18
January 2008 Discussion Paper

• Next steps on overall Guidelines review
• Scenarios for conducting Any Market reviews
• Scenarios for possible Re-setting of the
  Maximum Non-Excessive (MNE) Price
• Progress updates on other issues in May 2007
  Stakeholder Communiqué
• Potential options to mitigate FCC decision
• Possible changes to Patented Medicines
  Regulations
• Further changes to Guidelines

19
Working Group Reports Highlights

• Therapeutic Improvement
• 4 levels of improvement
• Expanded set of secondary criteria
• International Therapeutic Class Comparison
• Comparators and dosage regimens same as domestic
  TCC
• Test only for information in cases of dispute

20
Working Group Reports Highlights(contd)

• Cost of Making and Marketing (Subsection 85(2))
• Cost-based price regulation should be a last
  resort
• In the case of price increases, it can be
  confined to demonstrable medically-related
  product improvements and demonstrable,
  significant, unanticipated and non-transitory
  cost increases beyond the control of the firm
  involved
• Price Tests
• New tests aligned to 4 levels of improvement

21
Next Steps

• Entering final deliberations
• Holding one further bilateral consultation with
  Board of Directors of RxD and of BIOTECanada on
  June 26
• Upcoming release of Stakeholder Communiqué
  outlining the process to complete the review.

22

• Reporting Mandate

23
Scope

• Annual Report
• Pursuant to Sections 89 and 100 of the Patent Act
• 2007 Report just released on June 18, 2008
• Includes overview of
• PMPRB activities
• Price trends patented and all medicines
• RD expenditures by patentees
• National Prescription Drug Utilization
  Information System (NPDUIS), including
  Non-Patented Prescription Drug Prices
• Quarterly NEWSletter
• Web site

24
Trends in Sales

• Sales of patented drugs increased by only 3.0 to
  12.3B from 12.0B in 2006
• However, patented drugs now account for 66.0 of
  total sales, down from 68.1 in 2006

25
(No Transcript)
26
Patented Medicine Price Index

• PMPI decreased by 0.1
• Consumer Price Index CPI increased by 2.1

27
(No Transcript)
28
(No Transcript)
29
Price Change by Class of Customer and
Jurisdiction

• PMPI varied by class of customer, i.e.,
  hospitals, pharmacies, wholesalers, others and
  by province/territory
• Overall PMPI decrease due to price declines for
  hospitals, which more than offset price increases
  to pharmacies and wholesalers
• Five jurisdictions (Yukon, NB, NS, ON and MB) saw
  small price drops, while others, including QC,
  experienced small price increases

30
(No Transcript)
31
(No Transcript)
32
Prices in Comparator Countries

• Five of the seven comparator countries saw price
  increases in 2007 only Switzerland and France,
  like Canada, experienced a small decline
• For much of the last decade, Canadian prices, on
  average, have been in the middle of the pack
  relative to comparator countries. However in
  2007, average Canadian prices appeared to be
  slightly higher than all countries except the US.
  This is the first time Canada has been second
  highest to the US since PMPRB began reporting
  bilateral foreign-to-Canadian price comparators
  in 1997. The appreciating Canadian dollar is
  likely the main cause
• As well, as a result, foreign Median
  International Prices dipped slightly below those
  in Canada for the first time since 1993

33
(No Transcript)
34
(No Transcript)
35
(No Transcript)
36
(No Transcript)
37
(No Transcript)
38
(No Transcript)
39
(No Transcript)
40
RD Expenditure in 2007

• Patentees reported total RD expenditures of
  1.32 B in 2007, an increase of 9.5 from 2006
• The RD-to-sales ratio increased
• All patentees 8.3 - up from 8.1 in 2006
• RxD members 8.9 from 8.5

41
(No Transcript)
42
(No Transcript)
43
National Prescription Drug Utilization
Information System (NPDUIS)

• Pursuant to section 90 of the Patent Act
• In partnership with the Canadian Institute for
  Health Information (data custodian and some
  analyses)
• Responsive to priorities of F/P/T drug plans
  (Steering Committee)
• Publications
• Guidelines for conducting pharmaceutical budget
  impact analyses
• New Drug Pipeline Monitor
• Pharmaceutical Trends Overview

44
NPDUIS (contd)

• Research priorities for 2008-2009
• Financial implications for public drug plans of
  long-term demographic shifts
• High-cost claimants
• Methodologies to identify prescribing patterns
  and track up-take of new drugs
• Indices to measure trends in drug therapy costs
  for major health problems
• Drug utilization relative to expenditure
  limitation arrangements
• Pharmacy dispensing fees
• Rapid-response for ad hoc requests

45
Non-Patented Prescription Drug Prices

• Pursuant to section 90, in support of the
  National Pharmaceuticals Strategy
• Upcoming Publications
• Price Trends and International Price Comparisons
• Market Structure - Trends and Impacts
• As of April 1, 2008, NPPDP studies are conducted
  under the umbrella of the NPDUIS

46

• Contact us
• at pmprb_at_pmprb-cepmb.gc.ca
• or at 1-877-861-2350