Pangaea Express: What to Make of the Latest Announcements re: PMPRB?

Two major announcements have been made in the last couple of weeks pertaining to the PMPRB:

1. The Federal Court of Appeal has squashed PMPRB’s decision in the Alexion case for SOLIRIS and has directed to remit the matter to the PMPRB for redetermination, to examine the evidence, interpret the legislation and ensure a reasoned explanation for its outcome.

Back in 2017, the PMPRB found SOLIRIS was priced excessively and ordered Alexion to forfeit excess revenues earned between 2009 – 2017. Alexion then went to the Federal Court who dismissed Alexion’s application for judicial review as it found the Board’s decision was reasonable. Fast forward to July 29, 2021, the Federal Court of Appeal has found the Board went beyond the limits of its power to find excessive pricing under Section 85 of the Patent Act and instead tried to ensure reasonable pricing, an exercise outside of section 85. The Federal Court of Appeal stated, “Over and over again, authorities have stressed that the excessive pricing provisions in the Patent Act are directed at controlling patent abuse, not reasonable pricing, price-regulation or consumer protection at large”.

As well, this ruling speaks to “one of the most controversial parts of the Board’s decision” the fact that it found the price of SOLIRIS excessive based on the lowest international price, a departure from the Guidelines — which normally refer to the highest international price as a key comparator. The Board had stated in their review that “at no time in the future should Canadians be paying a higher price for SOLIRIS than the price in the lowest priced comparator country”. The Federal Court of Appeal found “Statements like these, unless explained against the statutory standard, smack as price control, not policing for excessiveness.”

This ruling could have vast implications on the new Guidelines in their endeavour to regulate pricing beyond their mandate of excessive pricing as per Section 85.

2. On a separate but related note, last month the PMPRB published their Notice and Comment - On the change to the definition of Gap medicines, the references to the comparator countries and the international price tests for Grandfathered medicines and their line extensions. Their proposed updates to the Guidelines include the date of implementation, the definition of Gap medicines, reference to the PMPRB11 countries as “scheduled countries” and new factors for establishing MLP for Grandfathered/line extension.

The factors for establishing MLP for Grandfathered/line extensions were proposed as:

• For medicines with sales filed with PMPRB in the reporting period ending June 30, 2021 the MLP use the lower of the median international price (MIP) of the PMPRB7 and the ceiling price under the current Guidelines
• For Grandfathered medicines/line extensions that are first filed with PMPRB for the reporting period ending December 31, 2021, or later, the MLP would be set by the HIP

The PMPRB states “There will be no change to the compliance date”. This is a very interesting statement, if we go back in time to follow the bouncing ball...

• October 2020: The original Guidelines identify 2 reporting periods to comply for Grandfathered and Gap medicines

• March 17, 2021: Following the delay of the Regulations and Guidelines to July 1, 2021, the PMPRB posted their Notice and Comment: On the change to the definition of Gap medicines and the timeline for compliance reducing the compliance of Grandfathered and Gap medicines to only 1 reporting period

• April 16, 2021 in a Message from the Board, the compliance timelines for Grandfathered and Gap medicines were revisited and moved back to 2 reporting periods

• July 15, 2021: Following the further delay of the Regulations and Guidelines to January 1, 2022, the PMPRB issues another Notice and Comment: On the change to the definition of Gap medicines, the references to the comparator countries and the international price tests for Grandfathered medicines and their line extensions and invites stakeholders to comment on the proposed changes that include line 76 of the attached Guidelines “Patentees must comply with the MLP within one reporting period of the MLP being set for Line Extension medicines and for Grandfathered or Gap medicines”

Why did the timeline for compliance of Grandfathered and Gap medicines move from the promised 2 reporting periods in April 2021 to 1 reporting period in the most current form of the Guidelines? The deadline for stakeholder feedback on these proposed changes was extended from August 15 to August 31, 2021. These proposed changes may have further implications on price decreases for Grandfathered medicines and their line extensions as well as reduced timelines for implementation. The PMPRB has promised a Q&A document to provide more details around this change.

What Might This Mean Going Forward? The prices of some Grandfathered medicines may be lower than first expected given the latest change to the use of MIP vs HIP. Is this an example of the PMPRB leveraging the delay to further reduce prices in Canada?

As the Federal Court of Appeal ruled in the SOLIRIS case, the PMPRB’s mandate is limited to excessive prices to control patent abuse and not to determine reasonable pricing. Although the new Guidelines state, “any methods or tests deemed appropriate and consistent with the Act and Regulations may be used by the PMPRB, regardless of whether they are addressed in the Guidelines”, would this provide any protection for the Board in the court of law or would the Board be seen as going beyond their mandate of excessive pricing? Of course, all these changes are taking place January 1, 2022, following the unknown outcome of a federal election.

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