Canada’s PMPRB: draft Guidelines to ring in the New Year

On December 19, 2024, the PMPRB published new draft non-binding guidelines (Guidelines) for consultation with stakeholders¹. The Guidelines will operationalize the requirements of the Patented Medicines Regulations (PMR) that were amended and came into force in 2022 following judicial decisions on their scope. A key amendment to the PMR was to include a basket of 11 countries (the PMPRB11)², whose list prices are used as comparators to determine whether the price of a patented medicine in Canada is excessive.

What you need to know

• The PMPRB has been operating under interim guidance as a temporary measure while new guidelines are being developed, and no price reviews have been conducted during this interim period.
• Due to amendments to the PMR (effective as of July 1, 2022) and recent case law, updated Guidelines are needed to implement the regulatory scheme for the PMPRB’s price review.
• Unlike the prior guidelines, which were addressed to rights holders, the new Guidelines are intended to guide PMPRB staff and provide transparency, fairness and consistency to stakeholders regarding the process used to determine which medicines are recommended for hearings.
• New medicines (those sold on or after July 1, 2022) will have their prices reviewed immediately after the Guidelines come into effect. Existing medicines (those sold before July 1, 2022) will have their prices reviewed starting one year after the Guidelines come into effect.
• The Guidelines propose a two-step review. Medicines priced above the highest international price (HIP) threshold of PMPRB11 will be subject to the second step, known as an In-Depth Review.
• Complaints will also trigger an In-Depth Review and possibly a hearing, but complaints can only be launched by Ministers of Health, provincial drug programs and life and health insurance companies.
• Stakeholders are invited to submit comments on the draft Guidelines until March 19, 2025.
• After considering the feedback it receives during this consultation process, the PMPRB intends to finalize the Guidelines in 2025.

Current state

The PMPRB is a quasi-judicial body that regulates the cost of patented medicines in Canada by determining whether they are being sold at an excessive price. The Patented Medicines Regulations (PMR) were amended on July 1, 2022, creating a new basket of 11 comparator countries to reference when assessing whether a proposed list price in Canada is excessive. These changes to the PMR have necessitated the development of new Guidelines for the PMPRB to use in price reviews.

The PMPRB adopted interim guidance in 2023 to provide the industry with some predictability regarding the status of list price reviews while the new Guidelines were under development³.

Overview of the review process under the draft Guidelines

The draft Guidelines propose a two-step process for the review of the prices of patented medicines. The first step is an Initial Review or Annual Review, which will apply to all patented medicines. The second step is an In-Depth Review, which will only apply to certain medicines pending the outcome of the Initial Review.

First step

For an Initial Review, PMPRB staff will review the patented medicine’s first semi-annual price filing against the highest international price (HIP) among the PMPRB11. This assessment is performed if one or more list prices are filed for the medicine in any of the PMPRB11 countries; if the medicine is not available in the PMPRB11, then the Canadian price is considered to be reviewed and will not be assessed again until the Annual Review. The draft Guidelines state that if one drug identification number (DIN) of a medicine meets the criteria for an In-Depth Review, then all DINs associated with the medicine will be considered for further review.

An Annual Review of the list price will be conducted every January for both new and existing medicines. Existing medicines are those that were sold before July 1, 2022, when the amended PMR came into force. New medicines will be reviewed immediately after the final Guidelines come into effect, while existing medicines will be reviewed one year from the date that the final Guidelines come into effect. During the Annual Review, changes in the price of the medicine as compared to the Consumer Price Index (CPI) will also be assessed and may lead to an In-Depth Review.

In addition to the Initial Review and Annual Review, a medicine will automatically undergo an In-Depth Review if a complaint is received about its price from the Federal or Provincial health ministries, publicly-funded drug programs, or private insurance companies and their trade associations. The In-Depth Review would commence following a complaint even if the medicine did not meet the criteria for an In-Depth Review following its Initial or Annual Review.

Second step

During an In-Depth Review, PMPRB staff will consider all the factors under section 85 of the Patent Act to consider whether to recommend a hearing before the PMPRB. Section 85 factors include the prices at which the medicine and other medicines in the same therapeutic class have been sold in Canada and in the PMPRB11, as well as changes in CPI.

PMPRB staff will identify comparators for a Therapeutic Class Comparison (TCC) based on the approved indications of the patented medicine. According to the draft Guidelines, all medicines with the same indication will be identified and comparators will be assigned a degree of comparability based on a qualitative assessment of available data and how the medicine is used in therapy. PMPRB staff may consult with the Human Drug Advisory Panel (HDAP), a body of independent health care professionals, on an ad hoc basis if they have specific questions. Rights holders will have the ability to comment on comparators selected by staff, and the comparators selected will have a significant impact on whether the price of a patented medicine is regarded as excessive.

PMPRB staff will perform domestic TCC (dTCC) and international TCC (iTCC) tests once comparators have been identified. The draft Guidelines note that generics or biosimilars (patented or otherwise) may be included in the dTCC depending on the available evidence. PMPRB staff will consider the highest publicly available list price of each comparator based on its review of public sources, but at a hearing, all available prices—not just the highest price—may be considered by the PMPRB hearing panel.

Outcome

PMPRB staff will consider all information collected during this In-Depth Review and prepare a recommendation to the Chairperson of the PMPRB. The In-Depth Review will either be closed (with or without an undertaking from the rights holder), or staff may recommend that a hearing be held before the PMPRB to determine whether the rights holder has sold its medicine at an excessive price.

The Guidelines provide various case studies as examples to guide staff on when to recommend an In-Depth Review or a hearing to the PMPRB hearing panel. The Guidelines recognize that a rights holder may undertake to lower the price of the medicine under review or repay excess revenue earned through a payment to the Federal government, known as an “undertaking”. A rights holder can propose an undertaking any time during an In-Depth Review and up to two months after being informed that staff recommend a hearing. Undertakings cannot be made once a Notice of Hearing is issued, but rights holders can propose a settlement.

The In-Depth Review is estimated to take 12 to 28 months to complete, depending on the complexity of the file.

What’s next?

Stakeholders are encouraged to provide feedback on the draft Guidelines until March 19, 2025. Historically, the PMPRB has not made significant changes from its draft and final versions of guidelines and other notices. The PMPRB has indicated that, once it reviews the feedback, it will publish the final Guidelines in 2025. As in the past, it intends to make written submissions received publicly available on its website after the consultation period closes.