On June 20, 2023, the Patented Medicine Prices Review Board ("PMPRB") published a Notice and Comment - Amendment to the Interim Guidance re: New Medicines which seeks to update the approach for conducting interim price reviews on new medicines (the "Proposed Update").

The PMPRB is inviting stakeholders to comment on the Proposed Update by August 21, 2023.

The Proposed Update will apply pending the development of the new guidelines, which "are anticipated to be finalized in 2024".

The Current State of the Guidelines

In 2016, the federal government announced its intention to amend the Patented Medicines Regulations to change how the PMPRB regulates the prices of such medicines. The ultimately amendments came into force on July 1, 2022 and notably provide for a new basket of comparator countries (the "PMPRB 11") to be used to assess whether the Canadian price of a medicine is excessive.

The PMPRB operationalizes thePatented Medicines Regulationsthrough price tests set out in its guidelines.

After the coming-into-force of the amendments, the PMPRB issued an Interim Guidance which was meant to apply until final guidelines were adopted. Final guidelines were expected in late 2022 / early 2023, however theyhave yet to be adopted.Consequently, the Interim Guidance has remained in effect, extending its application beyond its anticipated length.

The Interim Guidance provides that the price of a patented medicine will not trigger an investigation if: (i) its price remains at or below the ceiling established by the PMRPB (the Non-Excessive Average Priceor NEAP), and; (ii) its list price does not increase (other than an increase taken in accordance with the CPI-based price-adjustment factors during the first period of 2022)

According to the Interim Guidance, medicines for which a ceiling has not been established by the PMPRB as of July 1, 2022 ("New Medicines"), are simply not subject to price review by PMPRB Staff during the Interim Period.

This has resulted in a standard which requires a price freeze for existing medicines, despite increasing inflation, as well as uncertainty in how to price New Medicines. It likewise means that the new basket of comparator countries is not being utilized.

The Proposed Update

In the Proposed Update, the PMPRB seeks to address the latter two issues. It provides a price threshold for New Medicines based on the medium international price (MIP) of the PMPRB11 in a stated effort to provide patentees with predictability.

According to the PMPRB, the Proposed Update aims to expedite the assessment of New Medicines, while affording it more time to consult on guidelines. More specifically, the Proposed Update suggests that New Medicines be considered "reviewed" (and so presumably non-excessive) if their list price is below the median international price for the PMPRB11. Whereas those medicines that do not meet this criterion will continue to be "under review" until the final, permanent guidelines are in place.

The PMPRB notes that currently, 55% of New Medicines have list prices below the MIP of the PMPRB11 (and therefore, we can assume 45% of which have a list price above the MIP - which is not an insignificant number!).

Commentary

Based on a strict reading, it is not clear whether medicines priced at the MIP (i.e., not below) would be considered "reviewed". Industry may wish to seek clarification on this point during the consultation process (although in practice, patentees could simply price their products one penny below the MIP and be in compliance).

The PMPRB also proposes that no potential excess revenues will be calculated by staff retrospectively for any New Medicines for sales made during the interim period.

Accordingly, if a drug is priced above the MIP, then revenues from the interim period should be safe. However, depending on the relevant tests in the final guidelines, the price may be challenged once the interim period is over.

Practically speaking, the Board may be signaling that at its most aggressive, it will move to a MIP standard for the PMPRB11. This Interim Guidance would allow them to adopt that. It is of course still possible that a different standard be applied, including, e.g., the highest international price (HIP).

It is however perhaps surprising that the PMPRB did not address price increases, given the recent high inflation. The PMPRB's price freeze affects every patented product since it is a market-wide price freeze. This may therefore be an item to raise in the consultation.

Next Steps

The PMPRB has stated that the new guidelines "are anticipated to be finalized in 2024" - it remains to be seen if this means January 2024, or otherwise.

Fasken continues to monitor all PMPRB developments, and our pricing strategy team is available to discuss your consultation submission and the impact on pricing New Medicines.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.