Canada: Canada Releases Final Amendments To Patented Medicines Pricing Regulations; In Force July 1, 2020

Last Updated: September 26 2019
Article by Abigail Smith and Daphne Lainson

This morning, Health Canada announced the final amendments to the Patented Medicines Regulations (see news release here and RIAS here). These amendments represent the first substantive revision to the Regulations since their introduction in 1987, and a significant departure from the existing framework. The amended Regulations will come into force on July 1, 2020 and are expected to be formally published in the coming weeks.

Changes relative to pre-published regulations

There are a number of notable changes to the regulations relative to the draft version published December 2, 2017 (see our article here):

  1. The amendments will come into force July 1, 2020, 18 months later than previously proposed.
  2. Medicines for which a DIN was assigned prior to the publication of the Amendments in the Canada Gazette, Part II will be exempt from the new section 85 price regulatory factors (pharmacoeconomic value, market size, and GDP and GPD per capita in Canada) and all information reporting obligations that are associated with those factors, but will otherwise be subject to the amended regulations.
  3. Reporting on pharmacoeconomic value will only be required for high-cost medicines.
  4. The Republic of Korea is not in the final list of comparator countries.
  5. The reduced reporting obligation will not be extended to non-prescription vaccines or biologics (i.e. Schedule D medicines not requiring a prescription).
  6. Reporting on cost-utility analysis will only be required if both published and communicated to the patentee; cost-utility analyses prepared by CADTH and INESSS will always satisfy this condition.
  7. The pharmacoeconomic language of the new s. 85 price regulatory factors was narrowed: it no longer refers to the pharmacoeconomic value of other medicines in the same therapeutic class.

Context

Together with the Patent Act (sections 79-103), the Patented Medicines Regulations provide the framework and authority by which the Government of Canada, through the Patented Medicine Prices Review Board ("PMPRB"), regulates the prices of patented medicines in Canada to avoid excessive prices. The regulatory framework is supplemented by the Compendium of Policies, Guidelines and Procedures, which explains the policies and procedures that the PMPRB normally applies in reviewing the prices of patented medicines sold in Canada. The Compendium will be replaced with new Guidelines.

Section 85 of the Patent Act lists the factors that the PMPRB must take into account in determining if a medicine has been sold at an excessive price, including such factors as specified in the Patented Medicines Regulations.

Summary of changes

  1. New Price Regulatory Factors (new s. 4.4): The amendments will provide the PMPRB with three new price regulatory factors: i) pharmacoeconomic value, ii) market size, and iii) gross domestic product (GDP) in Canada and GDP per capita in Canada. These factors are said to enable the PMPRB to consider the price of a patented medicine in relation to its value to patients and impact on the health care system.
  2. Updated Reference Countries (revised Schedule): The amendments will update the schedule that lists the countries for which patentees must report pricing information. The proposal adds Australia, Belgium, Japan, Netherlands, Norway and Spain; maintains France, Germany, Italy, Sweden and the United Kingdom; and removes Switzerland and the United States. The updated countries are said to provide the PMPRB with the information needed to regulate prices based on comparisons that are more closely aligned with the PMPRB's mandate and Canada's domestic policy priorities.
  3. Changes in Reporting Requirements


a. Reduced Reporting Requirements for Specific Medicines (new s. 3(3.1), amended s. 4(3) and new s. 4.3(1): The amendments will reduce the reporting obligations for patented veterinary, over-the-counter (apart from non-prescription schedule D drugs such as vaccines and insulin) and generic medicines. Absent a specific request, the reporting requirements would not apply.

b. Added Reporting Requirements Related to the New Price Regulatory Factors (new s. 4.1 and 4.2): The amendments will revise the price information reporting requirements to extend to two of the new price regulatory factors:

  1. pharmacoeconomic value: "every cost-utility analysis prepared by a publicly funded Canadian organization, if published and communicated to the patentee, for which the outcomes are expressed as the cost per quality-adjusted life year for each indication that is the subject of the analysis"; and,
  2. market size: "the estimated maximum use of the medicine in Canada, as measured by the total quantity of the medicine in final dosage form expected to be sold".

Information regarding the final new factor, the GDP in Canada and the GDP per capita, will be obtained from Statistics Canada.

c. Reporting of Third Party Price Rebates (amended s. 4(4)): The amendments will require patentees to report price and revenue information that is net of all price or other adjustments, including discounts, rebates and free goods and services made by the patentee or "any party that directly or indirectly purchases the medicine or reimburses for the purchase of the medicine".

Transition

Pursuant to new s. 2.1, medicines that have been assigned a drug identification number (DIN) prior to publication of the amendments in the Canada Gazette, Part II (expected in the coming weeks) are exempt from the three new price regulatory factors (pharmacoeconomic value, market size, and GDP in Canada and GDP per capita in Canada). Such medicines are otherwise subject to the amended regulations.

Guidance

It is expected that the Board will publish draft Guidelines in early Fall followed by a consultation period.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

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