[Ip-health] Canada PMPRB Pricing Changes

[Sean Flynn]

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Canada: PMPRB Issues Discussion Paper On Options To Address The Federal
Court Decision In LEO Pharma

























11 February 2008
Article by Wayne Critchley

http://www.mondaq.com/article.asp?articleid=57032&email_access=on



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 programs.



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 implications.



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 drug plans);



    * 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 Average Price;



    * 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 appropriate.



The Board has asked stakeholders to submit comments on the discussion
paper to the Secretary of the Board by March 3, 2008.



For a copy of the PMPRB Discussion Paper, Options for Possible Changes
to the Patented Medicines Regulations, 1994 and the Excessive Price
Guidelines, please visit:

http://www.pmprb-cepmb.gc.ca/CMFiles/PMPRB_Discussion_Paper_-_Jan_31_083
8NBV-1312008-5967.pdf