Canada: Update On Recent PMPRB Activities

The Patented Medicine Prices Review Board (PMPRB) has recently issued two further Notices of Hearing, bringing to eight the total number of hearings commenced by the Board in the past 15 months. Insight into the Board's view of the recent surge in enforcement activity can be seen in the remarks of Board Chairperson Dr. Brien Benoit before the House of Commons Standing Committee on Health, to address budget issues, explaining that the Board's substantial increase in its annual budget is needed to cover the cost of the increased number of hearings and the Board's ongoing public consultations on its price guidelines.

One Notice of Hearing issued on March 26 involves the drug Penlac Nail Lacquer which is sold in Canada by Sanofi-Aventis Canada Inc. Penlac is indicated as part of a comprehensive nail management program in immunocompromised patients with mild to moderate onychomycosis of fingernails and toenails without lunula involvement. Penlac was introduced in 2004 by Dermik Laboratories Canada Inc., which subsequently merged with other companies to become Sanofi-Aventis.

The Board Staff alleges that the price of Penlac has exceeded the Board's guidelines since it was introduced in 2004. The Board's Human Drug Advisory Panel recommended that Penlac be reviewed as a category 3 new medicine, i.e., one that offers moderate, little or no improvement over existing medicines. The HDAP did not recommend any comparable medicines for Penlac for price comparison purposes and, as a result, the price was reviewed with reference to international prices for Penlac and not to the prices of other drugs that treat the same indication. Board Staff alleges that the price of Penlac in 2004 exceeded the median of international prices prevailing at that time and the price has continued to exceed the price that would be permitted under guidelines since then.

The Board Staff is seeking an order to require a reduction in the price of Penlac and a payment to the Government of Canada of an amount to offset the excess revenues alleged to have been received during that time period.

The other Notice of Hearing, issued on March 27, involves two vaccines, Quadracel and Pentacel, used in the immunization of infants and children. Both are sold in Canada by Sanofi Pasteur Limited.

According to the Statement of Allegations filed by Board Staff, both Quadracel and Pentacel were introduced in 1997 and have been subject to the Board's jurisdiction since then. The introductory prices in 1997 were found to be within the PMPRB's guidelines as they did not exceed the prices of other drugs in the therapeutic class comparison.

In 2004, Aventis Pasteur, now known as Sanofi Pasteur, filed amended price and sales information for both Quadracel and Pentacel for the years 1997 to 2003. Board Staff allege that the prices of both drugs have exceeded the guidelines since 2002 in that the average price in each year exceeded the CPI-adjusted price calculated under the guidelines. The Statement of Allegations does not disclose the amount by which the prices are alleged to have exceeded the guidelines.

Notably, in this case, Board Staff have also alleged that the patentee has engaged in a "policy" of selling Quadracel and Pentacel at excessive prices since 2002. More specifically, it is alleged that the patentee knew or ought to have known that the prices exceeded the guidelines and "has failed and/or refused to lower the prices" to comply with the guidelines. If, following the hearing, the Board's Hearing Panel agrees with the Staff submissions, it may order Sanofi Pasteur to lower the prices of these vaccines and to make a payment to the Government of Canada equal to twice the excess revenues calculated by the Board since 2002.

The Board's budget has increased substantially in recent years. For fiscal year 2007-2008, it has requested an increase to $11.5 million from $6.5 million in 2006-2007. The PMPRB, in appearing before the Standing Committee on Health on March 28, 2007, addressed the increase in budget, and the recent spate of hearings. Dr. Benoit stated:

With respect to the matter of public hearings, it is perhaps worth recalling, as I mentioned earlier, that I have taken decisions to issue eight Notices of Hearing in the last 18 months. By way of comparison, this number is equal to the total of the Notices of Hearing issued by the Board going back to its inception in 1987 through to 2005. Of those previous eight, one full hearing was held, five were resolved through Voluntary Compliance Undertakings, while two others are pending.

Dr. Benoit further noted that the significant increase in the number of hearings "may not necessarily represent a longer term trend but is a departure from the previous history of the Board." He also offered, as a possible reason for the increased hearings, "the shift in the drug pipeline away from blockbuster new chemicals to more incremental innovations."

Dr. Benoit also said that the shift toward more hearings was one of the factors that led the Board to undertake the current comprehensive review of the price guidelines. The Board received written submissions from stakeholders and conducted five public meetings across Canada in late 2006 and is expected to announce the next steps in the near future.

The Notice of Hearing and relevant documents in both new cases can be found at the following links:

For the hearing in respect of PENLAC:
http://www.pmprb-cepmb.gc.ca/english/view.asp?x=271&id=85

For the hearing in respect of QUADRACEL and PENTACEL:
http://www.pmprb-cepmb.gc.ca/english/view.asp?x=271&id=86

The speaking notes for the PMPRB's appearance before the Standing Committee on Health can be found at:
http://www.pmprb-cepmb.gc.ca/english/View.asp?x=844&mp=122

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