In this post, we summarize the current status of reforms to the Patented Medicine Prices Review Board (PMPRB). These reforms commenced with August 2019 amendments to the Patented Medicines Regulations (the Amendments) and accompanying changes to the Board’s Guidelines.
Background of the proposed reforms
The Amendments were intended to lower the prices of patented medicines in Canada. They included three main features:
- The New Price Calculation, which required patentees to include confidential third-party rebates paid to insurers under listing agreements when reporting net prices to the PMPRB;
- The New Mandatory Factors, which required the Board to consider pharmacoeconomic value, market size, and Gross Domestic Product when determining whether the price of a medicine was “excessive”; and
- The PMPRB11, a revised “basket” of international comparator countries that removed the US and Switzerland while adding six countries with lower medicine prices.
The Amendments also introduced changes to the categories of medicine that benefit from reduced risk-based reporting obligations.
In October 2020, the PMPRB released new Guidelines setting out its approach to operationalize the Amendments for determining instances of “excessive” price. The new Guidelines featured two price tests:
- the Maximum List Price (MLP); and
- the Maximum Rebated Price (MRP), which incorporated the New Mandatory Factors and the New Price Calculation to set a second lower price ceiling for certain medicines determined by the Board to be at risk of “high-cost”.
A reduced package of Amendments comes into force
Following a pair of industry-led legal challenges, the government repealed the New Price Calculation and the New Mandatory Factors in June 2022. The New Price Calculation had already been declared ultra vires the Patent Act by the Federal Court in June of 2020, which caused the PMPRB to stop using the MRP test in the new Guidelines as a ceiling capable of triggering investigation. Both Amendments were then declared unconstitutional by the Quebec Court of Appeal. As a result of the government repeal, neither Amendment came into force.
On July 1, 2022, the balance of the Amendments came into force. These include the PMPRB11 and revised risk-based reporting requirements. A legal challenge to the PMPRB11 was argued in March–April 2022 and remains pending before the Federal Court of Appeal.
The PMPRB revokes October 2020 Guidelines and consults on new Guidelines
Following the government’s decision to repeal the New Price Calculation and the New Mandatory Factors, the PMPRB announced that it would no longer proceed with the implementation of the October 2020 Guidelines. The PMPRB acknowledged that these Guidelines were based in part on Amendments that did not come into force. Industry-led litigation challenging the validity of the October 2020 Guidelines was therefore subsequently discontinued in August of 2022. The PMPRB now intends to proceed with consultation on new Guidelines that reflect the July 1 Amendments.
The PMPRB also conducted a Notice and Comment consultation on interim guidance that will apply pending the release of new Guidelines. The final interim guidance was announced on August 18, 2022. Under this interim guidance, existing medicines will be monitored based on the most recent non-excessive average price provided to the patentee by Board Staff. With respect to new medicines, the Board provides:
Medicines without a MAPP (Maximum Average Potential Price) or NEAP as of July 1, 2022, will not be subject to price reviews by PMPRB Staff during the Interim Period. Furthermore, once new Guidelines are in place, no potentially excess revenues will be calculated by Staff retrospectively for any such medicines for sales made during the Interim Period.
In its interim guidance, the Board also indicated that publication of its new Guidelines is slated for the end of 2022. A draft version of the new Guidelines will be released for stakeholder consultation this fall.
In other related PMPRB news, as we reported, the Attorney General sought leave to appeal to the Supreme Court of Canada (SCC) in an excessive-pricing case on the drug SOLIRIS. As we reported, the Federal Court of Appeal had quashed the Board’s excessive pricing decision on SOLIRIS, taking issue with the Board’s overly broad interpretation of its “excessive price” mandate. The Attorney General’s leave to appeal to the SCC was denied on March 24, 2022. The Board subsequently began preparations to rehear the case in the Fall of 2022. The parties reached a settlement in June of 2022 and the matter is now concluded.