As we have previously reported, controversial amendments to the Patented Medicines Regulations changing the basket of comparator countries considered by the Patented Medicine Prices Review Board (“PMPRB”) took effect July 1, 2022.[1]

On October 6, 2022, the PMPRB published Draft Guidelines incorporating the PMPRB11 schedule countries.[2] The Draft Guidelines also contain substantive changes to the regulatory framework and price tests for determining whether a patented medicine is being sold at an “excessive” price in Canada. The Draft Guidelines propose a significant departure from the PMPRB’s current framework, which regulates the annual average price increase of patented medicines, to one that regulates annual list prices instead. The Board’s proposed price tests and regulatory framework are summarized below.

• Triggers for Price Investigation: the PMPRB may open an investigation into the price of a patented medicine if any of the following criteria apply: (i) a complaint is received; (ii) the list price increased by more than the changes in the Consumer Price Index; or (iii) no international prices were filed by the rights holder. These criteria apply to all medicines.[3]
• Different Triggering Criteria for “Existing” vs. “New” Medicines: The triggering criteria for opening a price investigation will depend on the medicine’s classification:
  • “Existing medicines” are defined as (i) all dosage forms and strengths approved by an NOC prior to July 1, 2022; (ii) new dosage forms and strengths of these medicines for which an NOC issued on or after July 1, 2022; and (c) all dosage forms and strengths approved under the Special Access Programme prior to July 1, 2022.
    • For Existing medicines, an investigation may be triggered if the list price of any dosage form or strength of the medicine exceeds the highest international price among the PMPRB11.
  • “New medicines” are all other dosage forms and strengths of medicines that are not Existing medicines.
    • For New medicines, an investigation may be triggered if (i) the list price exceeds the median international price for the PMPRB11; (ii) The list price falls between the median and the lowest international price for the PMPRB11, but exceeds the top of the domestic therapeutic class comparator prices (“dTCC”); or
    • The list price exceeds the midpoint between the top of the dTCC and lowest international price for the PMPRB11, and the top of the dTCC is more than 50% lower than the lowest international price
  • For biosimilars and vaccines an investigation may be opened only when a complaint is received.
    • Once an investigation is opened, all medicines are evaluated based on the pricing criteria, namely the factors provided in section 85 of the Patent Act for determining whether a medicine is being sold at an excessive price.[4]

The PMPRB advises these changes are intended to streamline how the PMPRB monitors and reviews drug prices and reduce administrative burden on rights holders.^[5]

Next Steps

Consultation on the Draft Guidelines is currently underway. Stakeholders are invited to submit comments by December 5, 2022. As previously indicated by the PMPRB, its goal is to arrive at a final set of guidelines by the end of this year.

For more information, please contact the McCarthy Tétrault Intellectual Property Litigation group in Toronto.

[1] These amendments replaced the schedule of PMPRB7 countries with the PMPRB11 schedule, which (i) maintains France, Germany, Italy, Sweden, and the UK; (ii) adds Australia, Belgium, Japan, Netherlands, Norway, and Spain; and (iii) removes Switzerland and the US.

[2] The Draft Guidelines are intended to read in conjunction with the PMPRB’s Backgrounder document, summarizes what is new and different compared to the existing Guidelines.

[3]https://www.canada.ca/en/patented-medicine-prices-review/services/consultations/2022-proposed-updates-guidelines.html at para 33.

[4] Pursuant to section 85 of the Patent Act, the PMPRB considers the following factors in determining whether a patented medicine is being sold at an excessive price in Canada: (i) the prices at which the medicine has been sold in the relevant market; (ii) the prices at which other medicines in the same therapeutic class have been sold in the relevant market; (iii) the prices at which the medicine and other medicines in the same therapeutic class have been sold in countries other than Canada; (iv) changes in the Consumer Price Index; and (v) such other factors as may be specified in any regulations made for the purposes of this subsection.

[5]https://www.canada.ca/en/patented-medicine-prices-review/services/consultations/2022-proposed-updates-guidelines.html