On June 30th, the Patented Medicine Prices Review Board (the "PMPRB") published its Guidelines for PMPRB Staff outlining the 'Administrative Process for Excessive Price Hearing Recommendation' (the "Guidelines").
The Guidelines were years in the making and reflect 2019 regulatory amendments, multiple court challenges and numerous consultations with stakeholders.
The Question Now Is: How Long Will They Last?
54 submissions were received from various stakeholders on the draft guidelines published late last year, highlighting potential legal and policy concerns. Because the final Guidelines are almost identical to the draft guidelines published in December 2024, it is clear that not all concerns were addressed.
It remains to be seen how stakeholders will react to these Guidelines and whether a new legal challenge may be forthcoming.
We summarize the Guidelines' notable points below:
Price Reviews
The stated role of the Guidelines is to provide a review process for the PMPRB staff (the "Staff") to identify drugs that could be considered for an excessive price hearing. Since the Staff cannot review in-depth the prices of every patented drug, the Guidelines are intended to provide an administrative process that can help identify drugs that are at risk of excessive pricing compared to their prices in other countries or to similar treatments.
The PMPRB seeks to achieve this end by a "two-step" review process:
Step One
Initial Reviews
When a patented drug is first sold in Canada, the Staff will conduct an Initial Review to compare the Canadian price to the highest price of the same drug sold in the following 11 countries (the "PMPRB11"):
- Australia
- Belgium
- France
- Germany
- Italy
- Japan
- Netherlands
- Norway
- Spain
- Sweden
- United Kingdom
The Staff will use a patented medicine's first semi-annual price filing to compare the Canadian list price against the highest international price ("HIP") among the PMPRB11 as filed by the Rights Holder.
If the comparison cannot be conducted during the Initial Review because no list prices are filed for the medicine in any of the PMPRB11 countries, the list price is considered reviewed for the purpose of the Initial Review and is not reviewed again until the Annual Review.
Patented medicines whose prices are above the HIP threshold may be subject to an In-Depth Review or may have the In-Depth Review deferred.
In particular, the Guidelines indicate that, in the event of resource constraints, the Staff will prioritize medicines with list prices significantly above the HIP; other medicines may receive deferral letters. It is possible that some medicines with list prices above the HIP may be deferred multiple times. Deferral letters do not provide relief from reimbursement of excess revenue gained during the period of deferral.
"New Medicines" (i.e., patented medicines first sold on or after July 1, 2022) will be subject to the Initial Review process immediately after the Guidelines come into effect. "Existing Medicines" (i.e., patented medicines first sold before July 1, 2022) will be subject to the transitional measures outlined in the Annual Review process.
Annual Reviews
In January of each year, the Staff will conduct an Annual Review
of the list price for all patented drugs sold in Canada (New and
Existing Medicines) to determine whether an In-Depth Review is
warranted.
The Annual Review is conducted against the HIP as well as the
Consumer Price Index ("CPI"). For the HIP review, Staff
focus on the most recently filed domestic and international pricing
data. Because the comparison is based on current prices in the
PMPRB11, changes in the HIP could render the applicable threshold
lower or higher in subsequent years than at the time of the Initial
Review, depending on how the international landscape evolves.
During an Annual Review, Staff also compares the price change of
each patented medicine against changes in the CPI as a criterion to
prioritize medicines that warrant an In-Depth Review.
Patented medicines whose prices are above the HIP threshold or
whose prices increase more than the CPI may be subject to an
In-Depth Review. As above, the In-Depth Review may also be
deferred.
Existing Medicines will benefit from a two-year transition period
from when the Guidelines come into effect on January 1, 2026 (an
increase from the one year that had been proposed in the draft
guidelines). Existing Medicines will therefore only be subject to
an annual review as of January 1, 2028. According to the
Guidelines, the Staff will only apply the HIP criterion at the
first annual review (i.e. after the 2-year grace period) and only
begin applying the CPI criterion during subsequent annual reviews.
Note however that the Guidelines provide that an Existing Medicine
could be subject to an In-Depth review during the 2-year transition
period if there is a complaint or if the medicine is an associated
DIN of a medicine that is subject to an In-Depth Review.
Step Two: In-Depth Reviews
An In-Depth Review is the process by which Staff analyzes and balances all the information related to the section 85 factors in the Patent Act to prepare a recommendation to the Chairperson on whether a drug pricing matter should be brought to a hearing.
According to the Guidelines, the selection of the HIP as an identification criterion during Initial and Annual Reviews is based on administrative efficiency and resource prioritization and does not pre-suppose that prices above or below the HIP are excessive or not. As such, Staff are meant to consider all s. 85 factors at the in-depth review stage in determining whether a medicine should be recommended for a hearing. S. 85 factors will be considered individually and weighted against one another.
The Appendices to the Guidelines provide various scenarios
setting out when medicines are likely to be recommended for a
hearing or not. Notably, where pricing data is available for IPC
and Therapeutic Class Comparison ("TCC"), a medicine is
more likely to be recommended for a hearing when the price is above
both. As well, where there are no TCC comparators, a hearing is
more likely to be recommended if the list price is significantly
above HIP. Furthermore, if there are no IPC data, a hearing is more
likely to be recommended if there is a significant differential
between the list price and TCC. Conversely, the Staff is unlikely
to recommend a hearing where the list price is below both HIP and
TCC, or where there is a de minimis differential between list price
and either HIP (if TCC is not possible) or the price of the most
similar comparator (if IPC is not possible, but TCC can be
done).
It is only at the end of this extended analysis, if it indicates
that the drug price could be too high in Canada, that the Staff can
recommend a hearing to the PMPRB Chairperson. If not, the Staff
will recommend closure of the review, and will reanalyze the
drug's price during the next Annual Review.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
