The document summarizes the changes made by the Patented Medicine Prices Review Board (PMPRB) to lower drug prices in Canada. It analyzes the impact of replacing reference countries in the price test with lower-cost nations. It presents a case study showing a rare disease drug may no longer be price compliant under new rules. It concludes drug companies face greater uncertainty and risk in launching new medicines in Canada, which could delay access for patients and the potential for a national pharmacare program.

1. What’s Next for the Patented
Medicine Prices Review Board?
Nigel Rawson, PhD
Affiliate Scholar, Canadian Health Policy Institute
Senior Fellow, Macdonald-Laurier Institute

2. What does the PMPRB do?
 Federal government’s quasi-judicial agency tasked to
prevent time-limited drug patents from being abused
 Uses an external reference pricing test: company’s
intended list price for a new patented medicine in
Canada compared with list prices in France, Germany,
Italy, Switzerland, Sweden, the UK and the US
 Advisory panel provides scientific advice on new
patented medicines and categorizes as breakthrough,
substantial improvement, moderate improvement, or
slight/no improvement

3. Original Proposed PMPRB Changes
 Replace higher drug price countries (US and
Switzerland) in external reference price test with lower
price countries (Australia, Belgium, Japan, Netherlands,
Norway, Spain)
 Use pharmacoeconomic evaluations from health
technology assessments (HTAs) to set prices
 Reduce prices based on Canada’s per capita gross
domestic product and the magnitude of the drug’s sales
in Canada
 Divulge confidential information about rebates
negotiated with insurers to the PMPRB

4. What is the Federal Government’s Aim?
 Forcibly reduce patented medicine prices
 Consistent with the governments antagonistic approach
to the pharmaceutical industry
 Part of a shift away from clinical evidence to cost-
containment
 A former BC Cancer president is quoted in the G&M:
“the whole emphasis [has shifted] away from medicine
and science leading into the future to budget
management–to make the medicine fit with the budget.”

5. Opposition and Concern
 Opposition from drug developers
 Concern among patients
 Legal challenges led to court rulings striking down the
use of HTAs to set prices, the other economic tests and
the requirement to divulge confidential information
about rebates negotiated with insurers
 In April, the federal minister of health announced that
the government would not proceed with these changes
 Only the change in the reference price test remains,
which came into play on July 1

6. Questions about New Rules
 Will the PMPRB use its reference pricing test with new
countries in the same way as in the past?
 Will a company’s target list price be PMPRB-compliant?
 Will changes in Canada impact a company’s business in
other countries, especially those that use Canada as a
comparator in their own reference pricing tests?
 Will the prices of some high-price medicines be
particularly reined in?
 What might change mean for a highly-specialized
breakthrough medicine?

7. Case Study
 Used list prices for a rare, severely debilitating genetic
disorder drug approved in Canada within last 5 years
 Innocel:
First-line, life-long therapy for disorder for which no effective
alternative exists
Effective treatment and classified as a breakthrough
 Perspective of global pharma executive
 List prices adjusted by consistent small percentage and
rounded to preserve medicine’s anonymity
 Maximum list price allowed for breakthrough drugs is
the median of list prices in reference countries

8. Current List Prices per Dose of Innocel in PMPRB7
Country Innocel price
France $22,191
Germany $22,085
Italy $20,028
Sweden Not available
Switzerland $25,659
United Kingdom $27,239
United States $35,246
Median of 3 countries at time of launch: $25,527

9. Current List Prices per Dose of Innocel in PMPRB11
Country Innocel price
France $22,191
Germany $22,085
Italy $20,028
Sweden Not available
United Kingdom $27,239
Australia $21,634
Belgium $26,408
Japan $21,726
Netherlands $26,662
Norway $23,501
Spain $22,191
Median of PMPRB11 countries: $22,191

10. Is Innocel’s List Price PMPRB-Compliant?
 List price when first sold was $25,016 – remains so
 List price did not exceed the median of the prices in the
three PMPRB7 countries available at the time of the
first sale of Innocel in Canada ($25,527) => PMPRB-
compliant
 Median of the prices in PMPRB11 countries with prices
is $22,191
 Current list price is not PMPRB11-compliant by at least
12.8%

11. What is a Global Pharma Executive to Decide?
 12.8% may not seem large, but could be sufficient to
deter a manufacturer from launching a new medicine in
Canada
 Extent to which a developer’s target Canadian price is
below PMPRB7 median but above PMPRB11 median
will make the difference between deciding whether to
launch in Canada or not

12. Medicines submitted in Canada as % of submission to FDA or EMA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year of submission to first agency (FDA or EMA)

13. Medicines submitted in Canada as % of submission to FDA or EMA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year of submission to first agency (FDA or EMA)

14. Medicines submitted in Canada as % of submission to FDA or EMA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year of submission to first agency (FDA or EMA)
All medicines
Oncology

15. Medicines submitted in Canada as % of submission to FDA or EMA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year of submission to first agency (FDA or EMA)
All medicines
Oncology
2011-15 2016-20
All 82% 58%
Oncology 92% 71%

16. Re-Iterating Questions about New Rules
 Will PMPRB use its reference pricing test with new
countries in the same way as in the past?
 Will a company’s target list price be PMPRB-compliant
both at launch and over patent life?
 Will changes in Canada impact a company’s business in
other countries, especially those that use Canada as a
comparator in their own reference pricing tests?
 Will prices of some high-price medicines be particularly
reined in?
 What might change mean for a highly-specialized
breakthrough medicine?

17. What Does This Mean for Patients?
 The federal government has not relinquished its
objective of reducing Canadian drug prices
 Will the slowdown in drugs submitted in Canada
continue?
 What is the potential impact on patient access to new
innovative medicines, especially highly-specialized
breakthrough medicines?
 Is the government setting up for a basic universal
pharmacare scheme?

18. Conclusions
 Uncertainty about how prices will be regulated both at
launch and subsequently makes risk of launching
untenable until greater clarity about new guidelines
 Seems highly likely that drug developers’ decision will
be wait-and-see – at least until new PMPRB guidelines
are known
 If this decision occurs commonly, launches of new
medicines in Canada will, at best, be delayed and, at
worst, not happen

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