Canada: The PMPRB – Canada's Patented Medicines Pricing Controls

Last Updated: June 27 2014
Article by Kirsten Crain and Beverley Moore

Most Read Contributor in Canada, September 2016

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 issuance.

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 Canada.

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