PMPRB Strips Off Stringiest Policies Initially Proposed

January 05, 2021

Canada pr brief

The new PMPRB guidelines will go into effect in July, but only after removing some of the more stringent price control measures initially proposed.

In August of 2019, the Government of Canada approved the final amendments to the Patented Medicines Act, with the goal of giving the Patented Medicine Prices Review Board (PMPRB) the tools to reduce drug prices. Since then, the PMPRB published three versions of the guidelines that are meant to operationalize the amendments, with each new version reflecting changes based on public consultations (submissions were received from provincial payers, patient groups, and the pharmaceutical industry). The latest version published in October of 2020 was set to come into effect this January 1st but is again delayed until July 1st, 2021. While the goal of these guidelines was to significantly lower drug prices, the PMPRB ended up cutting back or removing some of its most stringent initial proposed regulations.

For instance, list prices of medicines approved before August 2019 and their line extensions will only be limited by the highest international price of the new basket (PMPRB11: Australia, Belgium, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden, UK) instead of the median which was initially proposed. PMPRB now estimates about 34% of these medicines will require a price decrease and overall expect a decline of the average list prices by 5%.

On the other hand, the amendments introduced for the first time the role of PMRPB in monitoring net prices. While initial guidelines sought to monitor this on a regular basis, after some legal challenges the latest guidelines state the maximum rebated price (MRP) will no longer be grounds for initiating an investigation; an investigation into a product’s list and average rebated price will only be triggered if the maximum list price is exceeded.

The MRP was introduced as an additional regulation for medications considered at “higher risk” of excessive pricing (determined as Category I products). However, the new guidelines have made it harder for medications to classify as Category I compared to the initial versions. Category I products are now defined as those with sales above $50M CAD (“high” market size, up from the $25M initially proposed) or a “high” yearly treatment cost (1.5x GDP per capita [~$90k CAD yearly cost]). Now, the “high cost” medications will also need to meet a $12M yearly sales threshold to be considered Category I. All other medicines are considered Category II and are not subject to a MRP. 

Schematic of Draft Guidelines

Even the way the MRP is calculated has evolved, resulting in higher pharmacoeconomic thresholds than initially proposed. Assuming a cost-effectiveness report for a Category I product is available from one of the Canadian HTA bodies (e.g., CADTH or INESSS), the MRP is calculated based on value thresholds that range from $100K CAD/QALY to $200k CAD/QALY, depending on the “therapeutic criteria level”. It is still uncertain how the PMPRB will be determining the therapeutic criteria level and how much overlap there is with the previous “Scientific Review Process”. In the initial guidelines however, this threshold was fixed at $60k CAD/QALY, with a possible adjustment for therapies with a total prevalence of 1 in 2,000 across all indications, but this has since been removed. Also introduced in the final guidelines, after consultation, was the possibility to adjust the MRP downward or upward (all the way up to the MLP) depending on the revenue evolution.

Although the PMPRB made a lot of concessions on their ambitious initial plan, new regulations are expected to have a meaningful impact on Canadian drug prices. The overall impact to Canadian expenditure on prescription drugs is expected to be gradual, however, as the largest impact is only to new molecular entities, and not existing marketed products. Overall the PMPRB expects potential savings estimated at $6.2B CAD over the next ten years, leading to important savings for the Canadian healthcare system.