Canada: PMPRB Departs From Its Guidelines In Determining Price In Recent Decision

In a significant decision dated April 10, 2008, a Hearing Panel of the Patented Medicine Prices Review Board (PMPRB) has ruled that it is not appropriate to apply the PMPRB's Excessive Price Guidelines to assess the pricing of once-daily drugs used to treat attention deficit hyperactivity disorder (ADHD). Referring to its decision as a "departure from the Guidelines," the Hearing Panel stated:

Where it is determined that the Guidelines do not result in a reasonable implementation of the factors in section 85 of the [Patent] Act, the panel must apply its judgment to those factors in the Act and apply them appropriately to the price of the medicine in question.

The decision is the result of a proceeding commenced by the Board in January 2006 into the prices of Adderall XR, a patented medicine sold in Canada by Shire BioChem Inc. (now, Shire Canada Inc.) Board Staff had alleged that the prices of the various strengths of once-daily Adderall XR were excessive under the Act because they exceeded the prices of multiple daily dose ADHD drugs. Subsequently, the Board also commenced proceedings with respect to the medicines Concerta, sold in Canada by Janssen-Ortho Inc. and Strattera, sold in Canada by Eli Lilly Canada Inc. Janssen-Ortho intervened in the Shire proceeding.

From a scientific perspective, the principal issue in the case was whether the newer drugs to treat ADHD like Adderall XR and Concerta, which among other things provide dosing on a once a day basis, represented a significant improvement over existing drugs that had to be taken several times a day. An important question was whether the benefits of once-daily medications warranted establishment of a higher maximum non-excessive (MNE) price than would otherwise be the case under the Guidelines.

Board Staff had argued that any added benefits of Adderall XR would only constitute a moderate improvement that, under the Guidelines, did not warrant a higher MNE price. Counsel for Shire and Janssen-Ortho argued that the benefits were indeed substantial and significant enough to warrant a higher price than the comparator ADHD drugs that must be taken several times a day.

The PMPRB Guidelines currently establish categories of new medicines that include, among other things, drugs that provide moderate, little or no improvement, and drugs that provide a substantial improvement over existing medications. In the decision, the panel concluded that Adderall XR falls midway between moderate improvement and substantial improvement, thus constituting "a fourth category that, on the findings of this panel, is unique to once-daily medicines for ADHD."

Applying what is essentially an adaptation of the current price tests under the Guidelines, the Hearing Panel concluded that the MNE price for Adderall XR would be the greater of:

(a) the MNE price generated by the domestic therapeutic class comparison composed of existing multiple daily dose drugs, and
(b) the midpoint between that MNE and the median international price for Adderall XR as calculated under the Guidelines.

Although a final decision in the Concerta matter has not yet been released by the Board, the same Hearing Panel was assigned to both cases and in the Adderall XR decision, the panel stated that it has concluded that Concerta is in the same therapeutic class as Adderall XR and that the MNE prices for Concerta should be "increased by operation of the same principles that have been applied to Adderall XR in this decision."

The panel noted that before Concerta's launch, the only sales of Adderall XR were pursuant to the Special Access Program. The panel held that it had jurisdiction over these sales but that if a Court should subsequently determine that it did not, then the same principles would apply to Concerta as the "first" once-daily ADHD treatment classified as a "fourth category" drug as with Adderall XR.

The PMPRB Hearing Panel has asked the parties to agree on the terms of an order to implement its decision and to refer a proposed order to the Board on or before May 10, 2008.

While the Hearing Panel specified that its findings in this matter are specific to once-daily medicines for ADHD, it also stated:

There could be other medicines that otherwise represent more than a moderate improvement, but less than a substantial improvement, over existing medicines, and thus arguably warrant pricing tests that are more liberal than those applicable to Category 3 medicines [i.e., those that offer moderate, little or no improvement].

The Hearing Panel recognized that the PMPRB's price guidelines review currently underway could result in the incorporation of this new category into the Guidelines, but that "Absent or pending such amendments, patentees and Board Staff may consider voluntary compliance undertakings when dealing with other medicines that are considered to belong in the fourth category described above."

In its decision, the Hearing Panel also made a number of observations on the relevance of the PMPRB's Guidelines and the roles of Board Staff and hearing panels. In summarizing the relevance of the Guidelines, the panel stated: " & section 85 of the Act governs, as particularized by the Guidelines & unless, in a matter brought to price review hearing, Board Staff is unable to satisfy the Board as to the reasonableness of the Guidelines in the circumstances of that case." The Panel appears to conclude that the weighing of the reasonableness of the Guidelines in a particular case is a process that can only be carried out by a panel in the context of a hearing:

It should be noted that the Panel has concluded that Board Staff correctly applied the Guidelines in establishing the MNE for Adderall XR, and that it was Board Staff's obligation to approach the pricing of Adderall XR in this manner. Board Staff does not have the discretion to depart from the Guidelines in the manner indicated by the conclusions of this Panel.

Gowlings represented Shire Canada Inc. and Janssen-Ortho Inc. in these proceedings.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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