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ARCHIVED - Patented Medicine Prices Review Board Canada
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SECTION II – ANALYSIS OF PROGRAM ACTIVITY BY STRATEGIC OUTCOME
Analysis by Program Activity
The PMPRB has one strategic outcome and two program activities.
Strategic Outcome
Canadians and their health care system are protected from excessive pricing for patented medicines sold in Canada and are informed on pharmaceutical trends.
Program Activity
1: Compliance and enforcement of non-excessive prices for patented medicines.
2: Pharmaceutical Trends.
Program Activity 1: Compliance and enforcement of non-excessive prices for patented medicines
| 2008-2009 | 2009-2010 | 2010-2011 |
| 3,194.0 | 3,194.0 | 3,194.0 |
| 2008-2009 | 2009-2010 | 2010-2011 |
| 25.5 | 25.5 | 25.5 |
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, or others, for human and veterinary use, are not excessive.
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 patentees in setting prices that are not excessive by providing transparent and predictable information on how the price review will be carried out. The Guidelines are published in the PMPRB’s Compendium of Guidelines, Policies and Procedures (Compendium) and are available on the Web site: www.pmprb-cepmb.gc.ca , under Legislation, Regulations, Guidelines.
The PMPRB reviews introductory and ongoing pricing information, as filed semi-annually pursuant to the Patented Medicines Regulations, 1994, for all patented medicines sold in Canada to ensure that they are not excessive.
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 the pharmaceutical industry, federal, provincial and territorial Ministers of Health, and consumer groups (pursuant to subsection 96(5) of the Patent Act), and other stakeholders as determined by the Board.
Section 85 of the Patent 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.
85. (3) In determining under section 83 whether a medicine is being or has been sold in any market in Canada at an excessive price, the Board shall not take into consideration research costs other than the Canadian portion of the world costs related to the research that led to the invention pertaining to that medicine or to the development and commercialization of that invention, calculated in proportion to the ratio of sales by the patentee in Canada of that medicine to total world sales.
The Guidelines set out how these factors will be assessed. They set out three categories for new medicines and price tests for each of the categories. There are also price tests for existing medicines.
The expected result of this program activity is that prices charged by patentees for patented medicines sold in Canada are not excessive according to the factors set out in the Patent Act . The indicator that shows the PMPRB is achieving its expected results and thus its strategic outcome is the percentage of patented medicines that are within the 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.
Program Activity 2: Pharmaceutical trends
| 2008-2009 | 2009-2010 | 2010-2011 |
| 2,648.0 | 2,648.0 | 2,648.0 |
| 2008-2009 | 2009-2010 | 2010-2011 |
| 20.5 | 20.5 | 20.5 |
The PMPRB is also responsible for ensuring that Canadians are informed about pharmaceutical trends. Within this program activity, the PMPRB has the responsibility to report annually on the 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 or revenue and volume information, by class of customer6 in each province and territory, for patented drugs sold in Canada . This information allows the PMPRB to analyze trends in sales, utilization and prices among patented drugs. Results of this analysis are presented in the PMPRB ’s Annual Report.
The PMPRB maintains the Patented Medicine Price Index (PMPI) to monitor trends in prices of patented medicines sold in Canada based on the Average Price across Canada . 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. The PMPRB uses this information to: 1) conduct the international price comparison tests specified in the Guidelines; and 2) compare the Canadian prices of patented drugs to those in other countries. The PMPRB uses this information to report on price changes by country.
Under the Patent Act, the PMPRB monitors and reports on R&D spending in Canada, but has no regulatory authority over the amount or type of research spending by patentees.
Another responsibility pertains to the Minister’s direction to the PMPRB, under section 90 of the Patent 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 the PMPRB on the development of NPDUIS priorities for analytical studies.
In 2008-2009, the PMPRB will produce a Price Trends Overview Report. It is intended that this report will be generated every other year. This report provides information on drug price and expenditure trends, price levels and cost drivers facing provincial/territorial drug plans.
In addition, the PMPRB will focus on studies that will involve the development of methodologies that can be used on an ongoing basis to address areas of concern for public drug plans and selected studies based on the priorities of public drug plans.
In 2007-2008, the PMPRB produced a New Drug Pipeline Monitor report. This will become a standard report published annually. The report summarizes information on new drugs that are in the later phases of research and could have a significant impact in terms of therapeutic value. Other studies include an Expenditures Forecast Methodology (in progress) and assistance to the F/P/T National Pharmaceuticals Strategy on the costing of catastrophic drug coverage.
Finally, the PMPRB reports on non-patented prescription drug prices. In the fall of 2005, F/P/T Health Ministers agreed that the PMPRB be asked to monitor and report on non-patented prescription drug prices. This is in support of the F/P/T and the National Pharmaceutical Strategy priority to achieve potential parity in non-patented prescription drug prices (NPPDP).
Funding for both of these initiatives (NPDUIS and NPPDP) was provided through reallocation of funds from Health Canada ’s budget.
As a result of a new Memorandum of Agreement with Health Canada, for 2008-2009 and beyond, studies under NPDUIS and on NPPDP will be merged under NPDUIS due to a reduction in funding for NPDUIS and the fact that Health Canada will no longer provide its own direct funding for data from IMS Health to support NPPDP. Instead, as a result of a Data Sharing Agreement between the PMPRB and the CIHI, the PMPRB will primarily use class level prescription drug information from participating F/P/T drug plans to carry out NPDUIS studies and, as resources permit, analyses of provincial drug prices and trends on non-patented prescription drugs.
The expected result of this program activity is that stakeholders are more aware of pharmaceutical trends and cost drivers. This information contributes to informed decisions and policy-making.
The indicators that show that the PMPRB is achieving this expected result are: 1) the number of requests for PMPRB publications; and 2) the number of events where the PMPRB participates .
This program activity supports the Government of Canada’s Social Affairs outcome of Healthy Canadians by ensuring that Canadians are more aware of pharmaceutical trends and cost drivers .