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