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ARCHIVED - RPP 2007-2008
Patented Medicine Prices Review Board
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Section II - Analysis of Program Activities By Strategic Outcome
Analysis by Program Activity
The PMPRB has one strategic outcome and one program activity. Its objective is to protect consumer interests and contribute to Canadian health care by ensuring that the prices charged by patentees of patented medicines are not excessive and by reporting on trends in pharmaceutical prices and R&D spending by patentees.
Strategic Outcome
Prices charged by patentees for patented medicines sold in Canada are not excessive and Canadians are informed on pricing trends of medicines, as well as the R&D spending of pharmaceutical patentees.
Program Activity
Patented Medicine Prices Review
| 2007-2008 | 2008-2009 | 2009-2010 |
| 11,475.0 | 4,989.06 | 4,989.0 |
| 2007-2008 | 2008-2009 | 2009-2010 |
| 62.0 | 39.06 | 39.0 |
The PMPRB is responsible for ensuring that the prices that patentees charge, the “factory-gate” price, for prescription and non-prescription patented drugs sold in Canada to wholesalers, hospitals, pharmacies, and others for human and veterinary use, are not excessive.7
The PMPRB relies on voluntary compliance wherever possible since it is more effective, less time consuming, and less costly to all parties. Voluntary compliance by patentees is facilitated by published Guidelines which are intended to assist companies in setting prices that are not excessive by providing transparent and predictable information on how the price review will be carried out.
The PMPRB reviews the pricing information for all patented medicines sold in Canada on an ongoing basis to ensure that the prices charged by patentees comply with the Excessive Price Guidelines established by the Board. The Guidelines are published in the PMPRB's Compendium of Guidelines, Policies and Procedures (Compendium) and are available on the website: www.pmprb-cepmb.gc.ca, under Legislation, Regulations, Guidelines.
The Guidelines provide a means of operationalizing the price determination factors in section 85 of the Patent Act and have been developed and modified in consultation with stakeholders, including consumer groups, provincial and territorial Ministers of Health, the pharmaceutical industry and others. Section 85 of the Act states:
85. (1) In determining under section 83 whether a medicine is being or has been sold at an excessive price in any market in Canada, the Board shall take into consideration the following factors, to the extent that information on the factors is available to the Board:
- the price at which the medicine has been sold in the relevant market;
- the prices at which other medicines in the same therapeutic class have been sold in the relevant market;
- the prices at which the medicine and other medicines in the same therapeutic class have been sold in countries other than Canada;
- changes in the Consumer Price Index (CPI); and
- such other factors as may be specified in any regulations made for the purposes of this subsection.
85. (2) Where, after taking into consideration the factors referred to in subsection (1), the Board is unable to determine whether the medicine is being sold in any market in Canada at an excessive price, the Board may take into consideration the following factors:
- the cost of making and marketing the medicines; and
- 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.
The Guidelines set out how these factors will be assessed and, include a scientific review to determine to which of the three categories the new medicine belongs and a price review using the price tests established for the medicine category.
The first priority and expected result of the price review program activity is that all patentees' prices for new and existing patented medicines sold in Canada are reviewed in a timely manner and in accordance with the Board's Excessive Price Guidelines
The program activity supports the Government of Canada's Social Affairs outcome of Healthy Canadians by ensuring that Canadians have access to patented pharmaceutical products at prices that are not excessive.
The indicators that show the PMPRB is achieving its expected results and thus its strategic outcome are:
- prices of patented medicines sold in Canada are within the Guidelines;
- compliance and enforcement measures are used to reduce prices that are found to be excessive;
- trends show that price increases for existing patented medicines are not higher than changes in the CPI; and
- trends show that Canadian prices of patented drugs are, on average, below the median international prices in the foreign countries listed in the Patented Medicines Regulations, 1994 (Regulations).
The second priority is that Canadians are informed about pharmaceutical trends. Within this priority the PMPRB has three main responsibilities.
The first responsibility is to report regularly on PMPRB's major activities, on analyses of pharmaceutical prices and price trends, and on research and development expenditures as reported by pharmaceutical patentees.
Patentees are required, under the Regulations, to report their total sales of drugs in Canada, both patented and non-patented, to the PMPRB. Patentees are also required to submit detailed price and volume information, by province/territory and class of customer, on their sales of patented drugs.
The PMPRB maintains the Patented Medicine Price Index (PMPI) to monitor trends in prices of patented drug products sold in Canada based on the average transaction price across Canada.8 It is updated annually using price and sales information reported by patentees.
In accordance with the Patent Act, and the Regulations, patentees must also report all publicly available ex-factory prices of patented drugs in seven foreign countries: France, Germany, Italy, Sweden, Switzerland, the U.K. and the U.S. These data are used to compare patented drug prices in Canada with the median of the foreign prices.
The expected result of this portion of priority two is that Canadian consumers and other stakeholders have complete and accurate information on trends in patentees' prices of patented medicines sold in Canada and on patentees' research-and-development expenditures. This information contributes to informed decisions and policy-making.
The indicator that shows that the PMPRB is achieving this expected result is a comprehensive annual report to Parliament on the aforementioned subjects.
The second major responsibility under priority two pertains to the Minister's direction to the PMPRB under Section 90 of the Act to play a role in the National Prescription Drug Utilization Information System (NPDUIS). This initiative involves preparing critical analyses of prescription drugs so that Canada's health system has more comprehensive and accurate information on how prescription drugs are being used and on sources of cost increases. The Canadian Institute for Health Information (CIHI) and the PMPRB are partners in the NPDUIS. A steering committee, comprised of representatives of F/P/T public drug plans (excluding Quebec) and Health Canada, advises CIHI and the PMPRB on the development of NPDUIS and identifies priorities for analytical studies.
The expected result of this aspect of priority two is that F/P/T drug plans and Canada's health system will have more accurate information on prescription drug price trends, and cost drivers. This information will contribute to informed decisions and policy making about affordable access to quality health care particularly for public drug plans.
The indicator that shows that the PMPRB is achieving this expected result is the number of studies completed under the NPDUIS and how well they are received by F/P/T drug plans.
The third and final responsibility under priority two involves reporting on non-patented prescription drugs. In the fall of 2005, F/P/T Health Ministers agreed that the PMPRB be asked to monitor and report on the prices of non-patented prescription medicines. In October 2005, Health Canada entered into a Memorandum of Understanding with the PMPRB to fund this analysis and in November 2005, the Federal Minister of Health formally directed the PMPRB to undertake this work pursuant to section 90 of the Patent Act.
The PMRPB will produce four quarterly reports each year. These reports will cover a range of topics including sales and price trends in Canada and internationally; a profile of the market structure; entry of generics when brand-name drugs go off-patent; and selected priority topics of interest to F/P/T drug plans.
The expected result of this component of priority two is that F/P/T Governments and other stakeholders will have critical analyses and comprehensive information on non-patented prescription drug prices and market trends.
The indicator that shows the PMPRB is achieving this expected result is completed quarterly reports on non-patented prescription drug prices that are useful in policy analysis for the non-patented drug sector.
