The Patented Medicine Prices Review Board and Pharmaceutical Price Regulation in Canada

1
The Patented Medicine Prices Review Board and
Pharmaceutical Price Regulation in Canada

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• Sylvie Dupont
• Secretary of the Board
• MEDIUM Workshop
• Toronto
• June 9, 2008

2
Summary

• Health Care System in Canada
• History of the Pharmaceutical Provisions of the
  Patent Act
• PMPRB Mandate
• Price Regulatory Regime
• Regulations and Guidelines
• Pharmaceutical Trends

3
Health Care System in Canada

• To protect, promote and restore the physical and
  mental well-being of residents of Canada and to
  facilitate reasonable access to health services
  without financial or other barriers
• Shared roles and responsibilities between the
  federal and provincial-territorial governments
• For Health
• Canada Health Act
• Canada Health Transfer
• For Pharmaceuticals
• Federal Health Canada Patented Medicine Prices
  Review Board
• Provinces-Territories Drug Plans
• Federal-Provincial-Territorial Common Drug
  Review (CDR)

4
Pharmaceuticals - Federal Responsibilities

• Health Canadas responsibilities include
• market authorization (product reviews/approvals)
• surveillance of safety and effectiveness after
  products reach the market
• implementation of the Patented Medicines (Notice
  of Compliance) Regulations
• provision of drug plan benefits to special
  populations (e.g., First Nations and Inuit)
• leadership for health care renewal, including
  initiatives to improve prescribing and
  utilization, control costs and expand drug plan
  coverage
• Patented Medicine Prices Review Board
• Independent quasi-judicial administrative agency,
  responsible for regulating the prices patentees
  charge for their patented medicines to ensure
  that they are not excessive

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Pharmaceuticals - Provincial-Territorial
Responsibilities

• Provincial-territorial responsibilities
• provision of drug plan benefits to provincial
  populations
• drug plan management
• Federal/Provincial/Territorial partnership
  Common Drug Review
• evidence-based clinical and pharmacoeconomic
  reviews of new drugs and new indications for old
  drugs, for potential coverage by participating
  F/P/T drug benefit plans
• F/P/T drug plans have final authority over
  listing decisions

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Access to Drugs in Canada
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History of the Pharmaceutical Provisions of the
Patent Act

• 1960s Restrictive Trade Practice Commission
  and others
• 1969 Introduction of compulsory licensing
• 1985 Eastman Commission
• 1987-1993 Bills C-22 and C-91, amending the
  Patent Act
• Increased patent protection eliminated
  compulsory licensing
• Introduced direct price controls
• in 1987 Canadian prices were 20 higher than the
  median prices of other industrialized countries
  and 2nd highest only to the U.S.
• RD commitments 10 of sales

8
Median International Prices to Canadian Prices
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PMPRB

• Created in 1987 as consumer protection pillar
  of drug patent law reform
• Arms-length agency now in health portfolio
• No involvement in federal policy-making
• Quasi-judicial tribunal
• Remedial orders provided for in the Patent Act
  enforceable in the Federal Court
• Unique structure both investigative and
  adjudicative functions
• 5 part-time Board members
• 62 employees 2007-08
• Budget 11.6 million

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PMPRB Mandate

• Two-fold
• 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

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Parameters of the Regulatory Mandate

• PMPRB does not set prices for patented drug
  products
• PMPRB
• Reviews/limits the introductory price of new
  patented drugs set by patentees to ensure that
  they are not excessive
• Limits the price increases of existing drugs
• Patentee does not require prior price approval
  before selling in Canada

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Key Stakeholders

• Provincial and Territorial Ministers of Health
• Consumers
• Consumers Association of Canada
• Seniors groups
• Pharmaceutical industry
• RxD Canadas Research Based Pharmaceutical
  Companies
• CGPA Canadian Generic Pharmaceutical
  Association
• BIOTECanada

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Other Stakeholders

• Private Insurers
• Health associations
• Canadian Pharmacists Association
• Canadian Society of Hospital Pharmacists
• Canadian Health Coalition
• Canadian Healthcare Association
• Disease groups patient advocacy groups

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• Overview of the
• Price Regulatory Regime

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Jurisdiction of the PMPRB

• Over price charged by the patentee (factory-gate
  price) for
• prescription and non-prescription patented drugs
  sold in Canada to wholesalers, hospitals,
  pharmacies or others, for human and veterinary
  use
• the price of each patented drug product,
  including each strength of each dosage form, sold
  in Canada, at the level of the Drug
  Identification Number (DIN).

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Legislated Pricing Factors

• The Patent Act - ss. 85(1) - dictates the factors
  the PMPRB takes into consideration when reviewing
  prices of patented medicines
• (a) the prices at which the medicine has been
  sold in the relevant market
• (b) the prices at which other medicines in the
  same therapeutic class have been sold in the
  relevant markets
• (c) the prices at which the medicine and other
  medicines in the same therapeutic class have been
  sold in countries other than Canada
• (d) changes in the Consumer Price Index and
• (e) such other factors as may be specified in any
  regulations made for the purposes of this
  subsection

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Legislated Pricing Factors

• If the Board is unable to make a determination
  using paragraph 85(1) factors, the Board may take
  into account
• (a) the costs of making and marketing the
  medicine and
• (b) such other factors as may be specified in any
  regulations made for the purposes of this
  subsection or as are, in the opinion of the
  Board, relevant in the circumstances

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Patented Medicines Regulations

• Identify the specific reporting requirements of
  patentees
• Set out the seven comparator countries used in
  the price review France, Germany, Italy, Sweden,
  Switzerland, United Kingdom and United States
• Price and sales in Canada to be filed for each
  class of customer (hospital, pharmacy,
  wholesaler, other) in each province and territory

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Excessive Price Guidelines

• Under the Act, the Board can establish price
  guidelines
• in consultation with the provinces, consumers and
  the industry
• 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

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Patented Drug Products (DINs) for Human Use
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The Scientific Review

• Purpose To determine
• the primary indication/use of the new medicine,
  and dosage regime
• the category (i.e., breakthrough/substantial
  improvement provides modest, little or no
  improvement over other medicines for same
  indication line extension)
• therapeutically comparable medicines, and their
  respective comparable dosage regimes

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The Price Review

• Application of price tests
• Reasonable Relationship
• Association between strength of the medicine and
  price
• Therapeutic Class Comparison
• Price of the drug compared to that of clinically
  equivalent drugs sold in same market at
  non-excessive price
• International Price Comparison
• Price of the drug compared to that of the same
  dosage form and strength of the drug sold in
  countries listed in the Patented Medicines
  Regulations
• Highest International Price Comparison
• Canadian price cannot be the highest in the world
  (i.e., 7 comparator countries)

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Introductory Price Review
Drug Categorization
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Existing Drug Price Review
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Investigations

• Where a price appears to exceed the Guidelines,
  the patentee may make further written submissions
  to substantiate price
• Meetings of patentee and Board Staff take place
  to discuss materials submitted
• May result in revisiting of science, i.e.,
  appropriate comparators, etc.

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Possible Outcomes of Investigations

• Price not excessive and investigation closed
• Price excessive under the Guidelines
• Patentee given opportunity to provide a Voluntary
  Compliance Undertaking (VCU) (i.e., comply with
  the MNE price and agree to repay excess revenues)
• Requires approval of Board Chairperson
• OR
• Board Staff refers the matter to the Chairperson
• Decides whether it is in the public interest to
  issue a Notice of Hearing

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Separation of Investigation and Decision-Making
Functions

• Conflict Wall between Board Staff and
  Board/Panels
• Essential to ensure Board remains unbiased
• Board never aware of investigation details
• Board Staff and Patentees both parties before
  Hearing Panel
• All communications by one party to the Board are
  served on the other party

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Hearings

• 11 hearings initiated since January 2006
• Adderall XR Airomir1 Apotex Concerta
  Copaxone Penlac Quadracel and Pentacel
  Risperdal Consta1 Strattera Thalomid / Celgene
  Zemplar1
• One older ongoing hearing (Nicoderm), initiated
  in 1999
• 1 Resolved through VCUs

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Voluntary Compliance Undertakings (VCUs)

• 47 VCUs approved to-date price reductions and
  offset of excess revenues
• Over 33M in total since 1993
• In 2007 and 2008, a total of 9 VCUs
• Three were submitted in the context of a hearing
• Airomir payment of excess revenues of
  485,498.58
• Risperdal Consta price reduction and payment of
  excess revenues of 4,386,172.99
• Zemplar price reduction and payment of excess
  revenues of 58,741.67
• One following the issuance of a Board Order
• - Dovobet 870,425.68 (for 2006 period)
• Denavir offset excessive revenues of 61,021.80
• Forteo offset excessive revenues of 333,629.25
• Lantus price reduction and payment of excess
  revenues of 694,239.50
• OctreoScan price reduction and payment of excess
  revenues of 387,181.87
• Vaniqa payment of excess revenues of 70,860.59

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• Current Review of the
• Boards Excessive Price Guidelines
• and
• Regulations

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Impetus for Review

• Changing environment
• 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 significant price
  increases
• Shifting regimes in Canada and internationally
• Health Canada progressive licensing
• Certain Provinces-Territories changes in
  legislation, reimbursement and listing agreements
• Internationally U.S. Medicare, Part D UK move
  away from PPRS

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Objectives of Review

• To ensure that Excessive Price Guidelines remain
  relevant and appropriate
• Concerns since 2006 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 calculation of average net price

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Extensive Consultations Ongoing

• Written submissions
• Multi-stakeholder meetings
• Bilateral Board meetings with stakeholders
• Staff-level Working Groups with stakeholders
• Board Communiqués

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Review Considerations

• In reviewing / amending the Guidelines, the Board
  must consider
• Consistency with the statutes
• Public / consumer interest focus
• Impact on patentees
• Transparency and predictability
• Overall timeliness
• Target completion date December 2008

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• Reporting Mandate

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Scope

• Annual Report
• Pursuant to sections 89 and 100 of the Patent Act
• Provided to Minister of Health on May 31 for
  tabling in House
• Includes overview of
• PMPRB activities
• Price trends patented and all medicines
• RD expenditures by patentees
• National Prescription Drug Utilization
  Information System (NPDUIS) Reports
• Non-Patented Prescription Drug Prices (NPPDP)
  Reports
• Quarterly NEWSletter
• Web site

37
PMPI and the CPI 2006
38
Patented Medicines Average Foreign-to-Canadian
Price Ratios
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RD Expenditures by Patentees
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National Prescription Drug Utilization
Information System (NPDUIS)

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

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NPDUIS

• Potential 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

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Non-Patented Prescription Drug Prices (NPPDP)

• Pursuant to section 90, in support of the
  National Pharmaceuticals Strategy
• Publications to-date
• Non-patented Single-source Drugs in Canada,
  December 2007
• Market for New Off-Patent Drugs, June 2007
• Trends in Canadian Sales and Market Structure,
  October 2006
• Canadian and Foreign Price Trends, June 2006

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Generics Average Foreign-to-Canadian Price Ratios
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• pmprb_at_pmprb-cepmb.gc.ca