Federal patented medicines regulations

Update on Health Canada’s proposed regulations and patient perspectives

January 18, 2017

What is the PMPRB?

• Quasi-judicial federal agency

• Regulates medication prices while they are under patent

• Reports to the federal health minister

• Twofold mandate

o Regulatory – Ensures that prices charged by patentees for patented medicines sold in Canada are not “excessive”

o Reporting – Tracks pricing trends related to all medicines and the research and development spending of patentees

• Classifies medicines based on level of therapeutic improvement

• Ex-factory price regulated – not consumer price

• PMPRB approval of price not required before sale

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Drug Development

Health Canada Review

Patented Medicine Prices Review Board

Patient Access

Late 1980’s: PMPRB was the

only organization

reviewing drug

prices

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Drug Development

Health Canada Review

Patented Medicine Prices Review Board

Health Technology Assessment

Hospitals

Patient Access

Private Drug Plans Public Drug Plans

Today: dozens of

organizations

review prices

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Global market dynamics – reference pricing

Source: WHO Workshop on Differential Pricing

PMPRB’s question: “Given that it is standard industry

practice worldwide to insist that public prices not

reflect discounts and rebates, should the PMPRB

generally place less weight on international public list

prices when determining the non-excessive price

ceiling for a drug?”

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Pricing regulation – PMPRB Tests

International

Comparisons

(7 comparator countries)

FRANCE UK

GERMANY ITALY

SWEDEN USA

SWITZERLAND

Level of

Clinical

Improvement

Price Test All Patented

Medicines

Breakthrough Median International Price

Prices of patented

medicines can never

exceed the

International

Maximum Price (i.e.,

the highest price

among the PMPRB7

comparator countries

Substantial

improvement

Higher of the Therapeutic

Class Comparison (TCC)

and the International

Median

Moderate

improvement

Midpoint of the

Therapeutic Class

Comparison and

International Median (but

not lower than the TCC)

No or little

improvement

Therapeutic Class

Comparison or

Reasonable Relationship

Test

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Pricing regulation – monitoring by PMPRB

• Price can never be higher than

highest international price

• Maximum allowable price set at

launch

• Annual price increases limited to

inflation

• Regular reporting requirements by

manufacturers

• Four market segments - retail,

distributor, pharmacy and hospital

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Pricing Regulation - Enforcement

• Investigations

• Non-compliance options

o Board orders

o Voluntary compliance

undertakings (VCUs)

• Federal court

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Key changes in draft regulations • Three new factors are proposed as criteria for price

evaluations:

- Pharmacoeconomic (P/E) evaluations – with a QALY

threshold likely to be included in PMPRB guidelines

- Size of market

- Gross Domestic Product in Canada

• Requirement to report to support new factors

• Revised list of comparator countries – closer to OECD

median price with proposed changes

• Information on discounts/rebates – requirement to report

rebates to PMPRB

• No active monitoring of patented generics

No changes made to the initial proposal introduced by the

Health Minister in May 2017, despite over 100 submissions

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List of Comparator Countries

Current list: Proposed list (May 2017):

FRANCE UK

GERMANY ITALY

SWEDEN USA

SWITZERLAND

FRANCE UK

GERMANY ITALY

SWEDEN AUSTRALIA

BELGIUM

JAPAN

NORWAY

S. KOREA

NETHERLANDS SPAIN

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Guidelines

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May 2017

CONSULTATION

DOCUMENT

released –

6 weeks

stakeholder input

(Over 100

stakeholder

submissions)

Dec. 11, 2017

Scoping document on

new PMPRB

guidelines

75-day consultation

Dec. 2, 2017

DRAFT

REGULATIONS pre-

published in Canada

Gazette Part-1 along

with regulatory impact

analysis statement

Timeline for regulation development

Aug. 2017

New Health

Minister

Feb. 14, 2018

Deadline for

stakeholder

input on draft

regs

Oct. 2017

PMPRB’s 2016

Annual Report

is released

Consultations on PMPRB scoping document and guidelines

Dec. 2017 Fall 2018

Spring 2018

(TBC)

Release of

new PMPRB

guidelines

Spring 2018

Final PMPRB

regs to be

published in

Canada

Gazette Part-2

Jan 1, 2019

Implementation

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Patent Act Regulation Changes

Why should Patients Care ?

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Context

• Health care jurisdiction in Canada is divided between the federal government and the provinces/territories

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Federal jurisdiction

Funding

Canada Health Act

• Transfers funds to the provinces/territories to ensure for basic hospital and doctor coverage

• Drugs provided in hospital from the hospital list of medications covered are free

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Federal jurisdiction ( cont’d )

Approvals

Food and Drugs Act

• Health Canada approves clinical trials, approves drugs, biologics and medical devices for sale in Canada and monitors them post market

Patent Act

• Patented Medicine Prices Review Board determines if the price a manufacturer wants to sell a product for is “excessive”

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Provincial jurisdiction

Coverage and Reimbursement

• Each province/ territory determines whether drugs/biologics have a value in the treatment armamentarium that makes them worth spending taxpayers dollars from public drug budgets to provide them to eligible residents in the province

• In some cases provinces also have reimbursement plans for eligible drugs (e.g., Trillium in Ontario)

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Provincial jurisdiction (cont’d)

Mechanism for Determination of Value for Public Plans

• Canadian Agency for Drugs and Technologies in Health (CADTH) uses health technology assessment processes to advise governments about value and therefore reimbursement

• The CDIAC of CAPCA makes recommendations to the provinces/territories regarding cancer drug coverage

• pan-Canadian Pharmaceutical Alliance (pCPA) negotiates prices for the provinces

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Private insurers

• Individual and group insurance are available through private insurers

• The price they pay for the drugs/biologics they cover are either the PMPRB price or a negotiated price with the manufacturer

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Individual payers

• Some people have neither eligibility for public coverage nor private coverage

• Others have inadequate coverage

• They pay for drugs/biologics out of pocket

• They pay the PMPRB price + mark ups for added costs

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Coverage split

• Public plans cover approximately <41 % of Canadians

• Private plans cover < 34% of Canadians

• It is estimated that < 23 % of Canadians are paying out of pocket for all or some of their drug coverage

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Price, cost and value

• Non-excessive ex-factory price monitoring is the jurisdiction of PMPRB

• Cost refers to the additional amount added to the manufacturer’s price to get a drug to market e.g. distribution costs, dispensing fees, administration costs.

• This is the jurisdiction of the provinces/territories

• Value refers to the determination of whether to cover and fund a drug from public drug budgets rather than spending on other drugs for the same or a different disease or condition .

• This is the jurisdiction of the provinces/territories

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So why the Patent Regulation changes ?

Assumptions

1) The federal government has determined that

2) drug spending is increasing as a total health expenditure from 10% to 16%, the second highest expenditure in the total health budget

3) innovative drug therapies including biologics and genetic therapies are higher priced and costlier than previously and used more prevalently than in the past

4) Canada pays higher drug prices than most other developed

5) limited public drug budgets mean less overall access to drugs for Canadians

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Assumptions (cont’d)

6) There is a growing discrepancy exists between public list prices and lower actual market prices due to the increased use of confidential rebates and discounts

7) There has been no corresponding increase in R&D spending in Canada

8) F/P/T Minsters of Health need to work together to improve affordability, accessibility and appropriate use of drugs

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How does the Federal Government Plan to do This ?

1) Add a new economics-based price regulation factor that will ensure prices reflect Canada’s willingness and ability to pay for drugs that provide demonstrably better health outcomes

2) Update the list of countries used by Canada for comparison so that it aligns with PMPRB’s consumer protection mandate and median OECD country prices

3) Move to a complaints based system for patented generic drug products that are lower risk of excessive pricing

4) Require patentees to provide information about third party rebates and discounts

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New Economic-Based Price Factor What is it ?

• An economic-based drug assessment identifies, measures and compares the cost and benefits of a given drug to the patients and the payers, particularly the public healthcare system

• CADTH does this through a health technology assessment process based on measuring the Quality of Adjusted Life Years

• Patients are not necessarily satisfied that even this approach captures value as determined through patient reported outcome measures

• In any case this is not the same as saying the price is fair, reasonable or non-excessive

• It is saying that at this price public or private payers do or do not want to invest taxpayers or plan sponsor dollars in this way

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Will a new economics-based price factor lower actual public drug prices ?

• This is the millions of dollars question

• CADTH is already doing a value-based economic price assessment- Why the duplication ? Is it even within PMPRB’s jurisdiction to determine “value” ?

• Price and value are not the same

• Even a “non-excessive” price does not guarantee that public plans consider a drug good value for a limited drug budget

• The drug should still be available to those who wish to purchase it

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Will a new economics-based price factor lower actual public drug prices ?

• PMPRB’s hypothesis is that if the entry level price is lower, then the pCPA negotiated price for public plans will end up lower. Will it ?

• PMPRB argues that it has a duty of consumer protection. It has said that the real problem in this regard is with new innovative drugs where there are no comparators in the same class. This is only about 10% of the drugs that PMPRB reviews. Why not focus on a process for solving that problem ?

• Economic-based factors are about relative value for money, not price. If neither public or private payers consider a drug of value they will not purchase it.

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Proposed List of countries in the NEW PMPRB12

Europe

France

UK

Germany

Belgium

Italy

Netherlands

Spain

Sweden

Norway

Asia Pacific

Japan

Korea

Australia

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Comparing to OECD

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Potential Consequences

• Reducing list prices by the expected 20% or so by adopting the median price of the proposed 12 comparator countries may have profound and unwanted consequences for Canadians. – Companies not launching products in Canada

– Delay in drug being submitted to HC

– Wait for all of the 12 countries to have a price

– Negative impact on Health Outcomes

• There will be winners and losers – Private and public payers

• Med-low priority category – price erosion of further entries… why bother

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Health Canada offers a reassurance

• Health Canada has issued Q&As to the proposed Amendments to the Patented Medicines Regulations and to the question: Would Companies still bring their medicines to Canada if prices were lower?

• Its answer is: Prices are currently significantly lower in several countries economically comparable to Canada. Companies still bring medicines at rates that are equal or better than the rates that Canada enjoys. … Canada would remain a sizable market for patented medicines.

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Summary of Conclusions

• PMPRB is responsible to determine if a proposed price is excessive, It is up to the provinces to negotiate a price together through pCPA, with the advice of CADTH and CAPCA, that will determine if the purchase of the drug will be a good value proposition for the payer

• CADTH has the jurisdiction for recommendations to the provinces/territories regarding value, not PMPRB

• The big winners in these changes are private insurers. Will the savings to them result in savings to plan sponsors eg employers, unions, individual plan holders ? If not, where will the new big savings come

• Lower entry level prices may lower the negotiated price but by how much ?

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Summary of Conclusions

• Patients need access to innovative life –saving and life enhancing therapies. This new approach does not guarantee enhanced access or even the level of access presently available.

• If the problem is with the 10% of drugs that do not have comparators why not find a solution to that problem e,g, a dispute resolution mechanism.

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What can you do to ensure accountability ?

1) Respond to the consultation, either individually or collectively

2) Meet with your MP, federal Health Canada bureaucrats and politicians, PMO

3) Write to the bureaucrats and politicians

4) Raise this issue with provincial politicians

For further information: louise.binder@rogers.com

Martine?

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Themes for discussion and Qs and As

• Process and consultations

• Substance of the proposed regulations

• Expected and potential impacts

• Alternative approaches

• What patients are expecting from their governments and other stakeholders

• What can patients and other stakeholders do?

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Thank you!

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