Canada releases proposed amendments to Regulations governing patented medicines pricing

On December 2, 2017 Canada’s Governor-in-Council published proposed Regulations Amending the Patented Medicines Regulations (“the proposed Regulations”). The 75-day consultation period ends February 15, 2018. The proposed coming into force date is January 1, 2019.  This follows the release of a consultation document in May 2017 (see our articles here and here).

The proposed Regulations represent a significant overhaul to the Patented Medicines Regulations and are estimated by Health Canada to result in savings of $12.6 billion net present value over 10 years. While still yet to be adopted, in order to be prepared, companies should be factoring these potential changes into their business planning now.

Together with the Patent Act (sections 79-103), the Patented Medicines Regulations provide the framework and authority by which the Government of Canada, through the Patented Medicine Prices Review Board (“PMPRB”), regulates the prices of patented medicines in Canada to avoid excessive prices. The regulatory framework is supplemented by the Compendium of Policies, Guidelines and Procedures, which explains the policies and procedures that the PMPRB normally applies in reviewing the prices of patented medicines sold in Canada. 

Section 85 of the Patent Act lists the factors that the PMPRB must take into account in determining if a medicine has been sold at an excessive price, including such factors as specified in the Patented Medicines Regulations.

According to the regulatory Impact Analysis Statement accompanying the draft regulations, “It is anticipated that the implementation of these amendments by the PMPRB would lead to lower prices for patented medicines in Canada that are more closely aligned with their value to patients and the health care system, and Canadians’ willingness and ability to pay”.

Included in the proposed Regulations are new price regulatory factors and patentee price information reporting requirements. We have prepared an unofficial consolidated version of the Regulations incorporating the proposed amendments. There are five elements which are summarized here:

1. New Price regulatory Factors (new s. 4.4): The amendments would provide the PMPRB with three new price regulatory factors:  i) pharmacoeconomic value, ii) market size, and iii) gross domestic product (GDP) in Canada and GDP per capita in Canada.  These factors are said to enable the PMPRB to consider the price of a patented medicine in relation to its value to patients and impact on the health care system.
   
   
2. Updated Reference Countries (revised Schedule): The amendments would update the schedule that lists the countries for which patentees must report pricing information.  The proposal adds Australia, Belgium, Japan, Netherlands, Norway, Republic of Korea and Spain; maintains France, Germany, Italy, Sweden and United Kingdom; and removes Switzerland and the United States. The updated countries are said to provide the PMPRB with the information needed to regulate prices based on comparisons that are more closely aligned with the PMPRB’s mandate and Canada’s domestic policy priorities.
   
   
3. Reduced Reporting Requirements for Specific Medicines (new s. 3(3.1), amended 4(3) and new 4.3(1): The amendments would reduce the reporting obligations for patented veterinary, over-the-counter and generic medicines. Absent a specific request, the reporting requirements would not apply.
   
   
4. Added Reporting Requirements Related to the New Price regulatory Factors (new s. 4.1 and 4.2):  The amendments would revise the price information reporting requirements to extend to two of the new price regulatory factors:
   
   
   1. pharmacoeconomic value: “every cost-utility analysis prepared by a publicly funded Canadian organization, if published, for which the outcomes are expressed as the cost per quality-adjusted life year for each indication that is the subject of the analysis”; and,
      
      
   2. market size: “the estimated maximum use of the medicine in Canada, by quantity of the medicine in final dosage form, for each dosage form and strength that are expected to be sold”. 
   
   Information regarding the final new factor, the GDP in Canada and the GDP per capita, would be obtained from Statistics Canada.
   
   
5. Reporting of Third Party Price Rebates (amended s. 4(4)): The amendments would require patentees to report price and revenue information that is net of all price or other adjustments, including discounts, rebates and free goods and services made by the patentee or “any party that directly or indirectly purchases or reimburses for the purchase of the medicines”. 

Transition. The new factors would apply to existing patented medicines, but limited to sales that occur after the coming into force date, January 1, 2019. However, the reporting requirements would apply to new and existing medicines.  Transitional provisions would limit reporting requirements regarding estimated maximum use to drugs first sold by January 1, 2016, unless such information is updated on or after that date (e.g. approval of a new use), presumably on the basis that the balance of the medicines would be assumed to be selling at maximum use three years after launch. The earliest that any information would be required to be reported under the amendments is 30 days after their coming into force.

If you have questions concerning the changes and their impact, or would like assistance in submitting comments please contact any member of our life sciences practice group.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.