Pangaea Express: The Final PMRPB Guidelines

The final PMPRB Guidelines have been published along with an "Overview of Final Changes" that differ from the June 2020 draft Guidelines:

1. Maximum Rebated Price (MRP) not a trigger to investigation: The PMPRB has adjusted the final Guidelines as per the Federal Court ruling in the case of Innovative Medicines Canada v. Canada (Attorney General), where the Court agreed that the requirement to report rebates and discounts provided by patentees to third-party insurers is outside the scope of the Patent Act, as they are unrelated to the “price” at which patented medicines are “sold”. As such, an investigation into the price of a Category I medicine will only be commenced by the PMPRB if the patentee has failed to comply with the Maximum List Price (MLP). However, the Guidelines state, the Staff will still calculate the MRP or MRP[A] and in the event of an investigation, Staff may consider the MRP or MRP[A] in deciding next steps. This if very different from the draft Guidelines that stated “Patentees must ensure that the patented medicine’s net price in Canada, is no higher than the MRP, failing which the price may be subject to additional review or investigation by Staff.”
2. Reduction in the Pharmacoeconomic Value Threshold (PVT) for Therapeutic Criteria Level IV: The PVT for Therapeutic Criteria Level (TCL) IV has been adjusted from $150/ QALY to $100K / QALY. The other PVT thresholds for TCL I – III remain the same at $200K /QALY for TCL I and $150K / QALY for TCL II and III.
3. Vaccines to be subject to the same complaints-based investigation criteria as patented biosimilars and generics: Vaccines will now be subject to the same investigation criteria as biosimilars, veterinary medicines and patented generics in that they will only be subject to a price review and investigation upon a complaint to the PMPRB. In an investigation, a vaccine that meets the Category I criteria will be assessed accordingly (in contrast to biosimilars and generics which will always be Category II medicines).
4. The reassessment for Grandfathered and Line Extension Medicines limited to HIP: The list price ceiling for Grandfathered and Line Extension medicines is set at the lower of (i) the highest international price (“HIP”) for the PMPRB11 countries for which the patentee has provided information; or (ii) the patented medicine’s ceiling under the Guidelines applicable prior to the issuance of these Guidelines. The final Guidelines also provide for the reassessment of these medicines in the cases in which the prevailing HIP is lower than the list price ceiling for two consecutive reporting periods. In such cases, the list price ceiling will be reset by the prevailing HIP. The final Guidelines has removed the extra reassessment provision that would have required these medicines to further reduce their prices to the median international price (“MIP”) if in two consecutive subsequent periods, the prevailing MIP was lower than the list price ceiling by more than 10%. Note: this reassessment still prevails for New and Gap medicines.
5. Allowing for increases in the Maximum Rebated Price for Category I new medicines to the Maximum List Price level: Given that a medicine’s market size, therapeutic class comparators and cost-effectiveness may change, the Final Guidelines allow for an adjustment in MRP both downwards and upwards, as sales expand or contract. Accordingly, under the Guidelines, it is possible for the MRP to increase back to the MLP if sales fall to $12 million or less for High Cost medicines, or to $50 million or less for High Market size medicines.
6. Development of Guidelines Monitoring and Evaluation Plan (GMEP): The PMRPB will also be developing a comprehensive Guidelines Monitoring and Evaluation Plan (GMEP) that will be implemented to assess the impact of the Guidelines. Trends prior to and post implementation of the new pricing regulatory framework will be evaluated based on A. Impact on Prices (list and net), B. Impact on Access (clinical trials, drug approval, HTA and pCPA negotiation) C. Impact on the ecosystem (R&D, economic footprint, supply chain) and D. Impact on PMPRB processes (operational, administrative burden, outreach etc.). Information will be posted on the PMPRB’s website re: involvement in the GMEP development process.

As the new Regulations come into force January 1, 2021, the PMRPB will be organizing a number of outreach webinars for November and December 2020. In addition, the PMPRB will hold a public webinar for all its stakeholders to communicate the key elements of the final pricing Guidelines and address questions.

The question of how the two court cases may impact the amended Regulations and PMPRB Guidelines lingers as well. The decision regarding the constitutional challenge of the Regulations before the Quebec Superior Court has not been rendered and the outcome of the Federal Court ruling may be appealed. All of which means it may be years before any final judgement for each case is determined.

With respect to the fact that the maximum rebated price CANNOT trigger an investigation, the PMPRB does state they may revisit this approach depending on the outcome of the pending appeal. In addition, under “Investigation Criteria”, an investigation is not just dependent on a patentee failing to comply with the MLP but can also be commenced by Staff upon a complaint being received. This does not preclude PMPRB Staff or the Board from considering the MRP in the context of an investigation or in an excessive price hearing. So where exactly does this put the significance of the MRP in pricing decisions?

For more information, please contact Suzanne Solman or Marla Weingarten.