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ARCHIVED - RPP 2007-2008
Patented Medicine Prices Review Board


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Section I - Overview

Chairperson's Message

I am pleased to present the 2007-2008 Report on Plans and Priorities for the Patented Medicine Prices Review Board (PMPRB).

The PMPRB is an independent, quasi-judicial body established by Parliament in 1987 under the Patent Act. Its mandate is two-fold: the regulatory mandate is to protect consumers and contribute to Canadian health care by ensuring that the prices of patented drugs sold in Canada are not excessive; and the reporting mandate is to contribute to informed decisions and policy-making through reports on pharmaceutical trends, and on research and development spending by pharmaceutical patentees.

From its creation, the PMPRB has been able to carry out its mandate with limited recourse to public hearings. This fact was not a sign of any reluctance on the part of the PMPRB to apply the law, but rather a measure of the success of the Board's Excessive Price Guidelines (Guidelines) and its Voluntary Compliance Policy. In 2006, the Board issued six Notices of Hearing into prices charged by patentees for patented medicines, potentially signaling a new trend.

Recent initiatives such as, the Transparent Drug System for Patient Act, 2006, in Ontario, and the federal/provincial/territorial National Pharmaceuticals Strategy, have brought renewed attention to drug prices and cost trends. At the same time, the PMPRB has heard concerns from many of its stakeholders about high introductory drug prices and other issues. To respond to these concerns, the Board initiated a process to review its Guidelines, including consulting with key stakeholders as required by the Patent Act. The intent of the consultations is to ensure that the Guidelines remain relevant and appropriate in the context of the modern pharmaceutical environment, and that the price review process continues to be transparent and predictable.

In the context of the National Pharmaceuticals Strategy, the PMPRB received direction from the federal Minister of Health to monitor and report on non-patented prescription drug prices. The PMPRB began publishing quarterly reports in July 2006.

The PMPRB is also working in collaboration with the Canadian Institute for Health Information (CIHI) and federal/provincial/territorial jurisdictions to produce analyses and reports under the National Prescription Drug Utilization Information System (NPDUIS). Through critical analyses of price, utilization and cost trends, the PMPRB provides Canada's health system with more comprehensive, timely and accurate information on prescription drug trends and cost drivers.

The PMPRB remains committed to fairness and transparency in the fulfilment of its mandate.

Brien G. Benoit

Brien G. Benoit, M.D.
Chairperson

 

Management Representation Statement

I submit, for tabling in Parliament, the 2007-2008 Report on Plans and Priorities (RPP) for the Patented Medicine Prices Review Board.

This document has been prepared based on the reporting principles contained in the Guide for the Preparation of Part III of the 2007-2008 Estimates: Reports on Plans and Priorities and Departmental Performance Reports:

  • It adheres to the specific reporting requirements outlined in the Treasury Board Secretariat guidance;
  • It is based on the PMPRB's Strategic Outcome and Program Activity Architecture (PAA) that were approved by the Treasury Board Secretariat;
  • It presents consistent, comprehensive, balanced and accurate information;
  • It provides a basis of accountability for the results achieved with the resources and authorities entrusted to it; and
  • It reports finances based on approved planned spending numbers from the Treasury Board Secretariat in the RPP.

Brien G. Benoit

Brien G. Benoit, M.D.
Chairperson

 

Program Activity Architecture (PAA) Crosswalk


PAA Old New - 2007-2008
Strategic Outcome Price charged by manufacturers for patented medicines sold in Canada are not excessive 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 Description The Patented Medicine Prices Review Board (PMPRB) is responsible for regulating the prices that patentees charge, the factory-gate price, for prescription and non-prescription patented drugs sold in Canada to wholesalers, hospitals or pharmacies for human and veterinary use to ensure that they are not excessive. The PMPRB reports annually to Parliament through the Minister of Health on its major activities, analyses of the prices of patented medicines and of the price trends of all drugs, and reports on the research and development expenditures as reported by patent-holding manufacturers. The Patented Medicine Prices Review Board (PMPRB) is responsible for regulating the prices that patentees charge, the factory-gate price, for prescription and non-prescription patented drugs sold in Canada to wholesalers, hospitals, or pharmacies for human and veterinary use to ensure that they are not excessive. The PMPRB reports annually to Parliament through the Minister of Health on its major activities, analyses of prices of patented medicines and of the price trends of all drugs, and reports on the research and development expenditures as reported by pharmaceutical patentees.

The PAA Strategic Outcome was changed firstly, to clearly reflect the dual role of the PMPRB: the protection role; and the reporting role. The second reason for the change was to clarify the PMPRB jurisdiction with respect to patentees as defined in Patent Act (Act).

As per the Act:

“patentee”, in respect of an invention pertaining to a medicine, means the person for the time being entitled to the benefit of the patent for that invention and includes, where any other person is entitled to exercise any rights in relation to that patent other than under a licence continued by subsection 11(1) of the Patent Act Amendment Act, 1992, that other person in respect of those rights.

Subsection 11(1) referred to compulsory licensing arrangements that were in force at the time the legislation was passed - December 1992.

 

Summary Information


Reason for Existence - The PMPRB has a dual role:

Regulatory - To protect consumers and contribute to Canadian health care by ensuring that prices charged by patentees for patented medicines are not excessive;

Reporting - To contribute to informed decisions and policy making by reporting on pharmaceutical trends and on the R&D spending by pharmaceutical patentees.



Financial Resources ($ thousands)
2007-2008 2008-2009 2009-2010
11,475.0 4,989.01 4,989.0


Human Resources
2007-2008 2008-2009 2009-2010
62.0 39.01 39.0


PMPRB Priorities Type
1. Compliance and enforcement Ongoing

2. Report on pharmaceutical trends

  1. Information on trends in patentees' prices of patented medicines sold in Canada and on patentees' research-and-development expenditures;
  2. Reports under the National Prescription Drug Utilization Information System; and
  3. Monitoring and reporting on non-patented prescription drug prices.
Ongoing

Program Activities by Strategic Outcome

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 for patented medicines are not excessive, and by reporting on trends in pharmaceutical prices and R&D spending by patentees.


  Planned Spending
($ thousands)
 
  Expected Results 2007-2008 2008-2009 2009-2010 Contributes to the following priority

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.
Patented Medicine Prices Review

All patentees' prices for new and existing patented medicines sold in Canada are reviewed in a timely manner and in accordance with the PMPRB's Excessive Price Guidelines.

8,589.52 3,435.32 3,435.32 Priority No. 1
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. 989.12 997.22 997.22 Priority No. 2(a)
Federal/provincial/territorial (F/P/T) drug plans and Canada's health system have more accurate information on prescription drug trends and cost drivers 1,339.93 - - Priority No. 2(b)
F/P/T Governments and other stakeholders have critical analyses on non-patented prescription drug price trends. 556.53 556.53 556.53 Priority No. 2(c)

 

PMPRB Plans and Priorities

Priority # 1 Compliance and enforcement

The Patented Medicine Prices Review Board (PMPRB) is an independent, quasi-judicial body created by Parliament as a result of revisions to the Patent Act in 1987 (Bill C-22) which increased patent term protection for pharmaceuticals. The PMPRB represents the strategic component of the federal government's policy to protect consumers and contribute to affordable health care in view of other measures designed to protect intellectual property.

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.

Board Staff reviews the prices of patented medicines sold in Canada to ensure that they are within the Board's Excessive Price Guidelines (Guidelines).4 When it finds that the price of a patented drug product appears to exceed the Guidelines, and the circumstances meet the criteria for commencing an investigation, Board Staff will conduct an investigation to determine the facts.5 An investigation could result in:

  • its closure, where it is concluded that the price was within the Guidelines; or
  • a Voluntary Compliance Undertaking (VCU) by the patentee to reduce the price and offset excess revenues it received during the period the price was excessive; or
  • a recommendation to the Chairperson that it is in the public interest to hold a public hearing to determine if the price is excessive and, if so, for the Board to make a remedial order.

In March 2005, the Board initiated a dialogue with stakeholders on price increases for patented medicines. In response, stakeholders indicated there were pressing issues related to introductory prices for new patented medicines. Further analysis of and consultation on a range of issues is being undertaken by the Board.

In 2006, with the release of its Discussion Guide for the Consultations on the Board's Excessive Price Guidelines, the Board invited stakeholders to focus their comments on the following key issues: the categorization of new drugs; introductory price tests for new drugs; and, how the Board should address the issue of the “any market” clause of the Patent Act in the price review process. Over 40 stakeholders commented on the questions in the Guide. This was followed by stakeholder meetings held in five cities across Canada during November 2006 to hear further views on selected issues flowing from and in addition to the feedback on the Discussion Guide.

Board Staff is currently reviewing the information obtained through written submissions and the consultation meetings. An analytical and stakeholder engagement work plan has been developed encompassing a comprehensive range of issues related to the current Guidelines and price review process. The intent is to ensure that the Guidelines remain relevant and appropriate in the context of the modern pharmaceutical environment and that the price review process continues to be transparent and predictable.

Work also continued on the development of proposed amendments to the Patented Medicines Regulation, 1994 (Regulations) which prescribe what information will be filed to the Board as well as the deadlines for doing so. The original proposed amendments to the Regulations were published in the Canada Gazette, Part I on December 31, 2005. Since then, stakeholder comments were analyzed and further revisions were made. Following final publication in the Canada Gazette, Part II, the Regulations will come into force on the day they are registered. At that time, Board Staff will advise patentees of all changes to the filing requirements and will provide revised forms to ensure appropriate implementation of all amendments to the Regulations.

Since January 2006, the Board has issued six Notices of Hearing. These hearings must be conducted in a fair and expeditious manner.

In fiscal year 2006-07, through the Supplementary Estimates, the PMPRB received additional financial resources to conduct public hearings and modernize the Guidelines. This funding, which continues in 2007-2008, is reflected in the Financial Tables in Section III of this report.

Priority # 2 Report on pharmaceutical trends

The PMPRB reports annually to Parliament through the Minister of Health. The PMPRB's Annual Report, which covers the calendar year, includes: a review of its major activities; analyses of prices of patented medicines and price trends of all drugs; and R&D expenditures as reported by patentees. The PMPRB also reports through its quarterly NEWSletter and various studies on both its activities and pharmaceutical trends.

In addition, pursuant to an agreement by the Federal/Provincial/Territorial (F/P/T) Ministers of Health, and at the request of the federal Minister of Health, the PMPRB conducts research under the National Prescription Drug Utilization Information System (NPDUIS). The purpose of the PMPRB's role in the NPDUIS, a partnership initiative with the Canadian Institute for Health Information (CIHI), is to provide critical analyses of price, utilization and cost trends 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.

In 2006-07, the PMPRB, through its work under the NPDUIS, released the Pharmaceutical Trends Overview Report – Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, and First Nations and Inuit Health Branch of Health Canada, 1997-1998 to 2003-2004 . PMPRB Staff is currently finalizing Guidelines for Budget Impact Analysis and a report on the new drug pipeline.

In October 2005, the Federal Minister of Health, on behalf of himself and his P/T colleagues, directed the PMPRB to monitor and report on the prices of non-patented prescription drugs in Canada. The PMPRB released the first two quarterly reports in June 2006 and October 2006, respectively. In 2007-2008, the PMPRB will continue to produce quarterly reports on: Canadian and foreign non-patented prescription drug price trends; trends in the Canadian market structure for non-patented prescription drugs; trends in market entry of generic prescription drugs, when brand-name products go off-patent; and special studies focussing on topics of interest to F/P/T drug plans.