ARCHIVED - Patented Medicine Prices Review Board Canada

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Section II — Analysis of Program Activities by Strategic Outcome

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 Activities

Program Activity 1: Compliance and enforcement of non-excessive pricing for patented medicines
Human Resources (FTEs) and Planned Spending ($ thousands)
2009–2010		2010–2011		2011–2012
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
45	7,045	45	7,645	45	7,645

Program Activity Expected Results	Performance Indicators	Targets
Prices charged by Patentees for patented medicines in Canada are not excessive according to the factors of the Patent Act.	Percentage of patented medicines that are within the guidelines	95% of patented medicines are within Guidelines.

Program Activity Summary for PA 1:

The PMPRB is responsible for ensuring that the prices that patentees charge, the “factory-gate” price, for 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 whenever 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 http://www.pmprb-cepmb.gc.ca, under Legislation, Regulations, Guidelines.

The PMPRB reviews introductory and ongoing pricing information, as filed within 30 days of the first day of sale and thereafter semi-annually, pursuant to the Regulations, for all patented drugs sold in Canada, to ensure that they are not excessive.

The Guidelines outline the general approach to operationalizing the price determination factors in section 85 of the Act. They weredeveloped 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 Act), and other stakeholders. The Guidelines are used by Board staff to conduct price reviews but are not binding on the Board or patentees in the context of a hearing.

Due to renewed stakeholder attention to drug prices and cost trends, and in order to respond to concerns about high introductory drug prices and other issues, the Board initiated a process in 2005, to review its Guidelines, including consulting with key stakeholders as required by the Act.

As a result of stakeholder input through consultation meetings and written submissions, significant progress in identifying issues, options and proposals for modifying the Guidelines has occurred. One final round of consultations on the final Guidelines proposals is planned for the spring of 2009. Next steps would include implementation of the revised Guidelines.

The PMPRB also plans to strengthen policy and economic analysis in order to:

• complete the review and modernization of the Guidelines;
• monitor the implementation of the revised Guidelines to ensure desired outcomes are being achieved;
• assess the impact on Canadian price trends; and
• enhance monitoring and impact assessment of legislative, regulatory and policy changes, both in Canada and in comparator countries, as well as changes in pharmaceutical innovation.

It is essential that price reviews and investigations be conducted in a timely fashion so as to ensure excessive prices are reduced with the least delay possible. In order to meet these objectives, the PMPRB will:

• strengthen internal scientific capacity and expand the membership of the Human Drug Advisory Panel to meet workload increases;
• enhance outreach activities to facilitate understanding by patentees of the regulatory reporting requirements and application of the Guidelines;
• undertake a process reengineering to improve the timelines and effectiveness of the price review process and investigations.

Another component of Program Activity 1 is the conduct of hearings into the prices of patented drugs. A significant increase in the number of hearings has created workload pressure on the Secretary to the Board, who manages the hearing process and provides Registrar Services, and the Legal Services Branch that provides internal legal research and advice and provides direction to external counsel in the prosecution function in hearings. The PMPRB will increase capacity in these areas to ensure timeliness of hearings, as required by statute.

Program Activity 2: Pharmaceutical trends
Human Resources (FTEs) and Planned Spending ($ thousands)
2009–2010		2010–2011		2011–2012
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
13	1,593	13	1,593	13	1,593

Program Activity Expected Results	Performance Indicators	Targets
Stakeholders are more aware of pharmaceutical trends and cost drivers.	Number of requests for PMPRB publications Number of events where the PMPRB participates	5% increase in requests over previous year 10 events per year

Program Activity Summary for PA 2:

The PMPRB is responsible for ensuring that Canadians are informed about pharmaceutical trends. This program activity includes reporting annually on the PMPRB’s major activities, on analyses of pharmaceutical prices and price trends, and Research and Development (R&D) expenditures as reported by patentees. 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.

Patentees are required, under the Regulations, to report their total sales of drugs and R&D expenditures 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 customer⁵ 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 2001, the Minister directed 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 plans⁶, advises the PMPRB on the development of NPDUIS priorities for analytical studies.

Through the NPDUIS initiative, the PMPRB plans to produce updated editions of the Pharmaceutical Trends Overview Report (which analyses data from seven public drug plans and examines the trends of drug expenditures, price levels, per-unit costs, and drug utilization) and the New Drug Pipeline Monitor (which identifies drugs currently under development that may have an impact on F/P/T drug plan expenditures in the near future).

The NPDUIS’ future priorities include:

• the long term impact of population ageing on drug plan expenditures;
• the applicability of various international standards of drug use in the analysis of Canadian drug utilization;
• developing a cost driver methodology in the context of Canadian drug plan expenditures;
• the forecasting of drug plan expenditures;
• professional fees across jurisdictions;
• the impact of a generic launch on drug utilization; and
• price trends for non-patented prescription drugs

In order to enhance the continued relevance and timeliness of the analytical studies under the NPDUIS, the PMPRB will:

• strengthen internal capacity by staffing vacant positions; and
• ensure the priorities and results of analytical studies are relevant and timely for federal/provincial/territorial drug plan managers in terms of their decision-making needs.

Program Activity 3: Internal Services
Human Resources (FTEs) and Planned Spending ($ thousands)
2009–2010		2010–2011		2011–2012
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
18	2,720	18	2,745	18	2,370

Program Activity Summary for PA 3:

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

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