Canada has a regulatory regime that can affect the pricing of
both small molecule and biologic medicines. The Patented Medicine
Prices Review Board (PMPRB) was put in place to protect consumers
from excessive medicine prices. Patentees must be aware of the
reporting and other requirements of this regime in order to avoid
potentially significant financial penalties.
The PMPRB is an independent, quasi-judicial body established
under the Patent Act. Its role is to ensure that prices charged for
patented medicines sold in Canada are not excessive.
Patentees of an invention pertaining to a medicine are obliged
by law to report all such medicines sold in Canada to the PMPRB.
This obligation has been interpreted very broadly. If a patent is
connected to a medicine by the "merest slender thread",
it must be reported. In addition, the "patentee" is
defined broadly to include any person who has the benefit of a
patent. The Supreme Court of Canada has interpreted this
jurisdiction broadly. Thus, in the past, this has included
licensees (both exclusive and non-exclusive) and assignees.
However, two recent lower court decisions have been less expansive,
particularly in respect of the PMPRB's jurisdiction in respect
of licensees, as the prices of an authorized generic drug and of
the drug of a company related to the patentee were held not to be
within the jurisdiction of the PMPRB.
In particular, in addition to the patents that directly relate
to a medicine, such as patents covering the compound, its use, its
dosage forms and its formulations, all patents relating to any
process, intermediate, use, or formulation of the medicine must be
reported to the PMPRB. This report must be made regardless of
whether the patent is being used by the patentee. Courts have found
that even if the process is not one that can be used commercially,
it must be reported to the PMPRB. The PMPRB is of the view that any
patent relating to a medicine in Canada can exclude others, and
thus can be used to increase the price. A patentee may not avoid
reporting a patent to the PMPRB by not listing it on the Patent
Register (the Patent Register is the Canadian equivalent to the
United States' Orange Book).
The PMPRB sets the maximum price at which a medicine can be sold
in any market in Canada. In setting this price, the PMPRB considers
a number of factors, including the price of the drug in other
markets; the price of other drugs in its therapeutic class in both
Canada and other markets; and the consumer price index. In
addition, if this information is not sufficient, the Board can also
consider the cost of making and marketing the medicine. These
factors result in a highly technical and fact-specific analysis. In
determining the maximum price of a medicine in Canada, patentees
can make representations to the Board about the relevant factors
that should be considered.
The PMPRB has jurisdiction over the price of a medicine sold in
Canada as long as there is a patent relating to it. This includes
medicines sold under the Special Access Program. Furthermore, once
a patent issues, the PMPRB will take jurisdiction over the price of
that medicine from the laid open date of the patent. This can bring
a medicine not previously subject to the PMRPB's jurisdiction
under its jurisdiction, or can bring a medicine back under the
PMPRB's jurisdiction if a new patent issues after all other
patents have expired. It is thus critical for companies to consider
PMPRB issues when deciding whether or not to issue a patent in
Canada pertaining to a medicine sold in Canada.
If the PMPRB finds that the price at which the medicine was sold
in Canada is excessive, then it can order the patentee to reduce
the price of the medicine, and can also order a repayment of the
excessive pricing. If the PMRPB finds there has been a policy of
selling at an excessive price, it can order a patentee to offset up
to twice the excessive revenues found to have been earned.
The initial reporting timelines for the PMPRB are tight. A
patentee is required to notify the PMPRB as soon as practicable of
its intention to sell a patented drug product in Canada, and the
date on which it intends to offer the product for sale. In
addition, a patentee must report a medicine subject to the
PMPRB's jurisdiction within 7 days after the first Notice of
Compliance is issued, or 7 days after the medicine is first offered
for sale in Canada (whichever is earlier). Where a medicine is sold
in Canada before a patent is issued, a report must be made upon
It is thus extremely important that patentees are aware of the
the full extent of their patent portfolios relating to their
products, and are vigilant in monitoring patent issuance in
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