In a nutshell: PMPRB’s new drug pricing rules

Proposed changes to pricing rules for patented medicines in Canada are sweeping in their scope, although timing remains to be finalized.

Elena Lungu, Manager, National Prescription Drug Utilization Information System, Patented Medicines Prices Review Board (PMPRB), provided an overview of the modernization of the PMPRB’s regulatory framework, at the TELUS Health annual conference in Toronto, in April. The proposed changes to Canada’s Patented Medicines Regulations would see, for the first time in 30 years, significant reforms in how the PMPRB sets ceilings for the prices of patented medicines, in three main ways:

1. Pricing will be benchmarked against countries that are more like Canada economically, and from the standpoint of consumer price protection.

The PMPRB’s basket of comparator countries would increase to twelve from the current seven. Seven new countries would be added, while the U.S. and Switzerland, described as “outliers,” would be removed as they do not have national pricing containment measures in place, and are less aligned to Canada economically.

2. Regulatory price review will be based on actual prices paid in Canada.

The new framework would provide a mechanism for manufacturers of patented medicines to report discounts and rebates that they provide to third-party payers. The PMPRB will use this information, which will remain confidential, to calculate a true transaction price as part of its price review.

3. The maximum price will consider the value and overall affordability of a medicine.

The PMPRB will assess factors beyond price comparisons with other countries, or other therapeutic comparators. These factors include: pharmacoeconomic analysis to ensure payers do not pay more for a drug than the value it offers; a consideration of market size, and its reassessment over time (e.g., a larger-than-expected market size could trigger a “re-benching,” or lowering, of the maximum price); and an assessment of the affordability of a drug for both payers and patients based on a country’s GDP and GDP per capita.

“All of these proposals are applying international best practice in the Canadian context, and will bring us in line with the policies and practices prevailing in most other developed countries,” summarized Lungu.

To make more efficient use of PMPRB resources and streamline compliance for patented medicine manufacturers, the Board is contemplating a risk-based approach to price regulation.

The first step would be a price comparison with the 12 comparator countries and the determination of an initial maximum list price (MLP). Then, the Board would assign the drugs into high-priority (Category 1) or a low-priority (Category 2) groups, based on criteria that are under development in consultation with a wide range of stakeholders.

To operationalize these proposed regulatory changes, the PMPRB is consulting with a Steering Committee and a Technical Working Group to modernize its Guidelines. The Steering Committee represents payers, health technology assessment bodies, manufacturers, patient groups, pharmacists and physicians, while the Technical Working Group is composed of experts in health technology assessment and other economic and scientific matters. Based on their recommendations, the PMPRB aims to produce draft Guidelines this spring for consultations, following the publication of the proposed amendments as part of Canada Gazette II (CG II, the federal government’s repository of all enacted regulations). Any changes to the CG II amendments may warrant changes to the proposed framework and/or a further round of consultations on the Guidelines.

Click here to download the full presentation, entitled “PMPRB Framework Modernization,” delivered at the TELUS Health annual conference.