The Patented Medicine Prices Review Board (PMPRB) has a mandate to ensure that patented medicines are not priced excessively during their period of market exclusivity, whilst recognising the need for manufacturers to maximise the value of their assets. In order to provide transparency to manufacturers around what constitutes excessive pricing the PMPRB work to a set of published guidelines. These guidelines are in the process of being updated with the new guidelines due to come into force in July 2021.
What has changed:
Changes include an update on the basket of comparator countries “PMPRB11” used for the maximum list price (MLP) calculation: USA and Switzerland have been removed and Australia, Belgium, Japan, Netherlands, Norway and Spain have been added. The new basket of international prices therefore comprises Australia, Belgium, Japan, Netherlands, Norway, Spain, the UK, Sweden, France and Italy.
The new guidelines also include a screening process to identify “category I” medicines that are more likely to be excessively priced and new mechanisms for calculating maximum acceptable prices.
How will it work:
Patented medicines will be classified into category I and II. Category I includes drugs with a cost above 150% of Canada’s GDP/capita (high-cost drugs) per year and/or with expected sales above $50million per year (high market size drugs). Medicines that do not meet any of those requirements will be classified as category II. Both categories will be subjected to a maximum list price (MLP), but only category I drugs will have a maximum rebated price (MRP). In addition, medicines that have annual sales less than $12 million will not be subject to an MRP even if they exceed the 150% of GDP threshold. This is to ensure that medicines for rare diseases are not discouraged from launching in Canada.
The MLP will be set as the median price among the PMPRB11 countries. In the absence of international prices, the MLP will be set using the top of the domestic Therapeutic Class Comparison (“dTCC”), calculated from the highest cost of treatment across the comparator medicines.
The MRP for category I high-cost drugs will be set using Therapeutic Criteria Levels (TCL), which reflect the unmet need, clinical added benefit and quality of clinical data. A better TLC translates into higher cost-effectiveness thresholds used to set the MRP, which range from C$200k to C$100k per QALY gained, and limit discounts to between 20% and 50% of the MLP. For category I medicines that do not meet the annual treatment cost threshold but do exceed the $50 million market size cap, the MRP will be set as the lower of the MLP and the median dTTC.
Expected impact of the guidelines:
The new guidelines are extremely complicated, and many will question whether this level of complexity is necessary. Undoubtedly, the new reference country basket will impact the prices of patented medicines in Canada. The potential pharmaceutical expenditure savings are estimated at C$8.8B over the next 10 years, but industry estimates this loss to be as high as C$19.8b. Consequently, there is a risk that these changes may result in less investment in the Canadian market, delayed product launches and reduced patient access.