On December 18th, the Patented Medicine Prices Review Board (the “PMPRB”) published its Draft Guidelines for PMPRB Staff outlining the Administrative Process for Excessive Price Hearing Recommendation (the “Draft Guidelines”). A consultation period is now open to stakeholders until March 19, 2025.
The Draft Guidelines are a follow-on to the Discussion Guide for PMPRB Phase 2 Consultations on New Guidelines (the “Discussion Guide”). The Draft Guidelines intend to operationalize the framework for price reviews proposed in the Discussion Guide, including initial and annual price reviews (both based on an International Price Comparison (“IPC”)), special provisions for complaints and a process for in-depth price reviews, taking into account commentary received from stakeholders during the prior consultation.
The role of the Draft Guidelines, when finalized, will be to provide a review process to be used by the PMPRB staff (the “Staff”) to identify drugs that could be considered for an excessive price hearing. Since the Staff cannot review in-depth the prices of every patented drug, the guidelines, when finalized, are supposed to provide an administrative process that can help identify drugs that are more at risk to be potentially priced too high compared to their prices in other countries or to similar treatments. The Draft Guidelines are intended to provide a transparent, predictable, and procedurally fair process around price review for those who sell drugs in Canada.
We summarize the Draft Guidelines’ notable points below.
1. Initial Reviews
When a patented drug is first sold in Canada, the Staff will conduct an Initial Review to compare the Canadian price to the highest price of the same drug sold in the following 11 countries (the “PMPRB11”):
- Australia
- Belgium
- France
- Germany
- Italy
- Japan
- Netherlands
- Norway
- Spain
- Sweden
- United Kingdom
The Staff will use a patented medicine’s first semi-annual price filing to compare the Canadian list price against the highest international price among the PMPRB11 as filed by the Rights Holder (“HIP”).
If the comparison cannot be conducted during the Initial Review because no list prices are filed for the medicine in any of the PMPRB11 countries, the list price is considered reviewed for the purpose of the Initial Review and is not reviewed again until the Annual Review.
Patented medicines whose prices are above the HIP threshold are subject to an In-Depth Review.
2. Annual Reviews
3. In-Depth Reviews
An In-Depth Review is the process by which Staff analyzes and balances all the information related to the section 85 factors in the Patent Act to prepare a recommendation to the Chairperson on whether a drug pricing matter should be brought to a hearing.
According to the Draft Guidelines, the selection of the HIP as an identification criterion during Initial and Annual Reviews is based on administrative efficiency and resource prioritization and does not pre-suppose that prices above or below the HIP are excessive or not excessive. As such, Staff will consider all s. 85 factors at the in-depth review stage in determining whether a medicine should be recommended for a hearing. S. 85 factors will be considered individually and weighted against one another.
4. Other Notable Mentions
a. Deferral Letters
The Draft Guidelines indicate that, in the event of resource constraints, the Staff will prioritize medicines with list prices significantly above the HIP or whose list price increases are significantly above the CPI; other medicines may receive deferral letters. It is possible that some medicines with list prices above the HIP may be deferred multiple times. Deferral letters do not provide relief from reimbursement of excess revenue gained during the period of deferral.
b. The Impact of Recent Court Decisions
It appears that the Draft Guidelines do not take into account the most recent decision of the Federal Court of Appeal in relation to the PMPRB’s jurisdiction (2024 FCA 208). In this decision, the Court limited the PMPRB’s jurisdiction to the question of whether a medicine is still protected by a patent, an approach which will likely require formal claim construction to show that a medicine falls within the scope of a patent. This omission may be due to the time constraints for publication of the Draft Guidelines before year end and the recency of the Court of Appeal decision. The finalized guidelines would be expected to reflect the most recent case law.
We reported on this recent decision in our previous bulletin: Federal Court of Appeal Rules That PMPRB Has No Jurisdiction Over Unpatented Medicine Prices: The End of the “Slender Thread” Test.
c. Coming Into Force
Section 55 of the Draft Guidelines provides that “existing medicines will be reviewed starting one year from the date these Guidelines go into effect. New medicines will be reviewed immediately after these Guidelines come into effect.” It remains to be seen if the pricing of new medicines will be expected to immediately comply with the new approach upon the coming into force of the finalized guidelines.
The Draft Guidelines mark a significant step towards clarifying the approach to patented medicine prices in Canada. Rights Holders now face a critical period of commentary, expiring on March 19, 2025.
