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Regulatory Focus™ > News Articles > 2020 > 6 > Canada’s drug price reforms delayed to 2021

Canada’s drug price reforms delayed to 2021

Posted 02 June 2020 | By Kari Oakes 

Canada’s drug price reforms delayed to 2021

Amendments to Canada’s Patented Medicines Regulations will now be put in place 1 January 2021, delaying implementation of the sweeping drug pricing reforms by six months.
 
The new timeline represents a further adjustment from the schedule laid out in 2017, when Health Canada first proposed overhauling its drug pricing review process.
 
Draft pricing guidelines promulgated by the government of Canada’s Patent Medicine Prices Review Board (PMPRB) have been available for stakeholder and public consultation since November 2019. Based on this feedback, the PMPRB will release a final set of revised guidelines the week of 15 June 2020, with a 30-day period of public written consultation to follow.
 
The proposed guidelines change the reference countries the PMPRB will use for price-setting – “so that prices here are judged against countries that actually look like Canada in terms of population, economy and approach to health care,” explained Health Canada when the guidelines were made available for consultation in 2019. The pricing changes are part of the larger Health Canada goal of implementing a “National Pharmacare” program.
 
The amendments will also give PMPRB access to Canadian market prices of medicines, rather than just list prices.  
 
The pricing review algorithm proposed in the guidelines grandfathers medicines that received a Drug Information Number (DIN) for a medicine’s particular strength and form before 21 August 2019, distinguishing them from those that did not have a DIN by that date.
 
For grandfathered patented medicines, the pricing review considers past pricing, pricing of that medicine and of medicines of the same therapeutic class in Canada and in other countries, and consumer price index changes.
 
For medicines that are not grandfathered, additional factors to be considered in the pricing review include the medicine’s pharmacoeconomic value in Canada, the Canadian market size, and Canada’s gross domestic product (GDP) and GDP per capita.
 
The pricing review process for non-grandfathered medicines breaks out “Category I” drugs, with an annual cost and estimated market size that fall above a certain threshold, from all other patented medicines, which fall into “Category II.”
 
Non-grandfathered patent medicines can undergo pricing reassessment if approved for a new indication, among other factors.
 
The proposed guidelines also provide for staff investigations of medicine pricing that can be triggered by pricing appearing to exceed the applicable price ceiling by greater than 5%, by an apparent potential excess revenues from the above-ceiling pricing that appears to exceed CAD $50,000 per year, or if a complaint is filed.
 
An investigation may result in a Voluntary Compliance Undertaking, a hearing, or closure of the investigation. According to the draft guidelines, a patentee is not admitting that their patented medicine price is excessive by engaging in a Voluntary Compliance Undertaking. However, neither does the PMPRB’s consideration of an undertaking mean that the price is not excessive. All undertakings will be publicly reported.
 
“The final Guidelines will include transitional measures which will provide patentees sufficient time to take the necessary steps to come into voluntary compliance with the relevant price ceilings for both new and existing patented medicines,” according to a message from Mitchell Levine, the chairperson of the Patented Medicine Prices Review Board (PMPRB).
 
In announcing the proposed updates to the guidelines, Health Canada noted that over the course of a decade, the changes are projected to save Canadians over CAD $13 billion in the cost of patented drugs.
 

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