The Patented Medicine Prices Review Board (PMPRB) has issued
a discussion paper outlining a series of options to address the
implications of the Federal Court of Canada decision in the
LEO Pharma case. In the Board's view, LEO
Pharma requires changes in the practices used by the PMPRB
regarding the calculation of the Average Price of a patented
medicine for both filing and price review purposes. (See
Drug Pricing & Reimbursement @ Gowlings, Issue 1,
Nos. 6, 7, and 10.)
The discussion paper represents the next stage in
consultations between the Board and its stakeholders on this
issue. The Board has taken the view that the Federal Court
interpreted the Patented Medicines Regulations, 1994
(Regulations) to require patentees to include all discounts,
rebates and other benefits in the calculation of the Average
Price of the medicine for price review purposes. This
interpretation reverses a previous policy of the Board and has
attracted considerable criticism from patentees and other
stakeholders. In particular, they believe that it discourages
patentees from supplying drugs at low or no cost for
compassionate purposes. In addition, they have expressed
concern with the Board's position, announced at the
same time, that patentees ought to report payments to
governments that have been negotiated in regard to public drug
The discussion paper outlines eight options including some
options to amend the Regulations and others to amend the
Excessive Price Guidelines. The Board has not indicated a
preference for any of the options.
None of the options presented by the Board include a return
to the previous policy which gave patentees the flexibility to
either include or exclude benefits provided under compassionate
release programs and other special programs in the calculation
of the average price, provided that they did so on a consistent
basis. As some of the options appear to be directed towards
establishing more elaborate rules that would apply to all
patented medicines in future, it will be important for
stakeholders and the Board to fully assess their
The six regulatory options can be summarized as follows:
Apply the Board's interpretation of the LEO
Pharma decision as set out in its April 2007 Newsletter;
Amend the Regulations to specifically exempt the
reporting of payments to third party payers (including public
Amend the Regulations to exclude some or all "free
goods" from the Average Price;
Amend the Regulations to change "free services"
to "services (free or partially subsidized)" in the
Amend the Regulations to exclude "gifts" from
the Average Price; and
Amend the Regulations to permit the Board, in a hearing,
to exclude benefits provided for the purpose of lowering the
patentee's liability for excessive pricing.
The two options for changes to the guidelines would address
situations where the Average Price in one year declines due to
a new or increased benefit. In the first option, the MNE price
in the year following the price decline would be the highest
previous non-excessive Average Price. The second option offers
a variation on the first by providing that the MNE price may be
the higher of introductory MNE price and the highest previous
non-excessive Average Price if the Average Price declines due
to a new or increased benefit.
The second option is intended to address situations where
sales in the introductory period include some discounts or free
goods. Under both options, the Board considers that some
constraint on one-year price increases would be
The Board has asked stakeholders to submit comments on the
discussion paper to the Secretary of the Board by March 3,
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