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SECTION III - SUPPLEMENTARY INFORMATION

Financial Table 1: Comparison of Planned to Actual Spending (including FTEs)

($ thousands)	2005-2006 Actual	2006-2007 Actual	2007-2008
			Main Estimates	Planned Spending	Total Authorities	Total Actuals
Patented Medicine Prices Review Board	5,326.5	7,365.3	11,475.0	11,475.0	11,924.8	7,432.4
Total	5,326.5	7,635.3	11,475.0	11,475.0	11,924.8	7,432.4
Less: Non Respendable revenue(1)	(1,413.3)	(210.0)	-	-	-	(10,566.5)
Plus: Cost of services received without charge	791.6	807.9	933.2	933.2	933.2	899.8
Total Departmental Spending	4,704.8	7,963.2	12,408.2	12,408.2	12,858.0	7,963.2
Full Time Equivalents	42	43	62	62	62	50

⁽¹⁾ The money reported as non-respendable revenue does not represent revenues generated by the PMPRB. This money is a result of payments made by patentees to the Government of Canada through Voluntary Compliance Undertakings (VCUs) or Board orders to offset excess revenues. The Minister may enter into agreements with any province respecting the distribution to that province of amounts received by the Receiver General, less any costs incurred in relation to the collection and distribution of those amounts.

Financial Table 2: Voted and Statutory Items

Vote or Statutory Item	Truncated Vote or Statutory Wording	2007-2008
		Main Estimates	Planned Spending	Total Authorities	Total Actuals
25	Operating expenditures	10,584.0	10,584.0	11,033.8	6,722.5
(S)	Contributions to employee benefit plans	891.0	891.0	891.0	709.9
	Total	11 ,475.0	11 ,475.0	11,924.8	7,432.4

Financial Table 3: Sources of Non-respendable Revenue

For supplementary information on the PMPRB's source of non-respendable revenue, please visit http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Financial Table 4: Financial Statements of the Patented Medicine Prices Review Board

Statement of Management Responsibililty

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2008 and all information contained in these statements rests with management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Board's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Board's Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Board.

The financial statements of the Board have not been audited.

The original version was signed by Brien G. Benoit, MD	The original version was signed by Barbara Ouellet
Brien G. Benoit, M.D. Chairperson Patented Medicine Prices Review Board Date: August 6 2008	Barbara Ouellet Executive Director & Senior Financial Officer Patented Medicine Prices Review Board Date: August 5 2008

Statement of Operations (unaudited)

for the year ended March 31	2008	2007
(in dollars)
Expenses
Salaries and employee benefits	5,293,726	4,815,847
Professional and special services	1,481,908	1,951,204
Accommodation	587,873	489,894
Utilities, material and supplies	422,397	484,531
Travel and relocation	141,263	181,186
Information	127,129	122,086
Purchased repair and maintenance	101,343	124,330
Communication	100,790	83,510
Rentals	12,107	16,014
Amortization	0	3,101
Other	47,557	55,634
	8,316,093	8,327,337
Revenues
Voluntary compliance undertakings	10,566,629	210,043
Net cost of operations	(2,250,536)	8,117,294
The accompanying notes are an integral part of the financial statements

Statement of Financial Position (unaudited)

As at March 31	2008	2007
(in dollars)
Assets
Financial assets Accounts receivable and advances (Note 4)	971,299	108,595
	971,299	108,595
	971,299	108,595
Liabilities and Equity of Canada
Liabilities Accounts payable and accrued liabilities Vacation pay and compensatory leave (Note 6) Employee severance benefits (Note 7)	601,416 245,549 754,113	784,600 266,437 733,660
	1,601,078	1,784,697
Equity of Canada	(629,779)	(1,676,102)
	971,299	108,595
The accompanying notes are an integral part of the financial statements

Statement of Equity (unaudited)

As at March 31	2008	2007
(in dollars)
Equity of Canada, beginning of year	(1,676,102)	(1,259,759)
Net cost of operations	2,250,536	(8,117,294)
Current year appropriations used (Note 3)	7,432,416	7,365,303
Revenues not available for spending	(10,582,172)	(218,605)
Change in net position in the Consolidated Revenue Fund (Note 3)	1,045,787	(253,685)
Services received without charge by other government departments (Note 8)	899,756	807,938
Equity of Canada, end of year	(629,779)	(1,676,102)
The accompanying notes are an integral part of the financial statements

Statement of Cash Flow (unaudited)

For the year ended March 31	2008	2007
(in dollars)
Operating activities
Net cost of operations	(2,250,536)	8,117,294
Non-cash items: Amortization of capital assets (Note 5) Services provided without charge by other government departments (Note 8)	0 (899,756)	(3,101) (807,938)
Variations in Statement of Financial Position: Increase (decrease) in accounts receivable and advances Decrease (increase) in liabilities	862,703 183,620	72,776 (486,018)
	(2,103,969)	6,893,013
Financing activities
Net cash provided by Government of Canada	2,103,969	(6,893,013)
	2,103,969	(6,893,013)
The accompanying notes are an integral part of the financial statements

Notes to the Financial Statements (unaudited)

1. Authority and purpose

The Patented Medicine Prices Review Board (PMPRB) is an independent quasi-judicial body established by Parliament in 1987 under the Patent Act (Act).

Although the PMPRB is part of the Health Portfolio, it carries out its mandate at arms-length from the Minister of Health. It also operates independently of other bodies such as Health Canada, which approves drugs for safety and efficacy, and public drug plans, which approve the listing of drugs on their respective formularies for reimbursement purposes.

The PMPRB has a dual role:

• Regulatory: To ensure that prices charged by patentees for patented medicines sold in Canada are not excessive thereby protecting consumers and contributing to Canadian health care;
• Reporting: To report on pharmaceutical trends and on the R&D spending by pharmaceutical patentees, thereby contributing to informed decisions and policy making.

Jurisdiction

Regulatory - The PMPRB is responsible for regulating the prices that patentees charge, the "factory-gate" price, for prescription and non-prescription patented drugs sold in Canada, to wholesalers, hospitals or pharmacies, for human and veterinary use to ensure that they are not excessive. The PMPRB regulates the price of each patented drug product, including each strength of each dosage form of each patented medicine sold in Canada. This is normally the level at which Health Canada assigns a Drug Identification Number (DIN).

The PMPRB has no authority to regulate the prices of non-patented drugs, including generic drugs sold under compulsory licenses, and does not have jurisdiction over prices charged by wholesalers or retailers nor over pharmacists' professional fees. Also, matters such as distribution and prescribing are outside the purview of the PMPRB.

2. Significant accounting policies

The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

(a) Parliamentary appropriations

The Board is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the Board do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

(b) Net Cash Provided by Government

The Board operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Board is deposited to the CRF and all cash disbursements made by the Board are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

(c) Change in net position in the Consolidated Revenue Fund

The change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by the Board. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF (See note 3(c) for a reconciliation between net cash provided by Government and current year appropriations used).

(d) Revenues

Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues. Patented Medicine Prices Review Board revenues represent monies collected as a result of payments made by patentees to the Government of Canada through Voluntary Compliance Undertakings (VCUs) or Board orders to offset excess revenues.

(e) Expenses

Expenses are recorded on an accrual basis:

• Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
• Services provided without charge by other government departments for accommodation and the employer's contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer administered by the Government of Canada. The Board's contributions to the Plan are charged to expenses in the year incurred and represent the total obligation to the Plan by the Board. Current legislation does not require the Board to make contributions for any actuarial deficiencies of the Plan.
2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(g) Accounts receivable

Accounts receivable are stated at amounts expected to be ultimately realized. They are mainly comprised of amounts to be recovered from other gorvernment Departments and the recovery is considered certain. As a result, no provision has been recorded as an offset against these amounts.

(h) Tangible Capital Assets

All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. The Board does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

Amortization of capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Asset Class	Sub-asset Class	Amortization Period
Machinery and equipment	Computer equipment	3-5 years

(i) Measurement uncertainty

The preparation of these financial statements in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Appropriations

The Board receives most of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Board has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year appropriations used:	2008	2007
(in dollars)
Net cost of operations	(2,250,536)	8,117,294
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Revenues not available for spending	10,582,172	218,605
Services provided without charge by other government departments	(899,756)	(807,938)
Amortization	0	(3,101)
Legal services recovered by Justice Canada	0	(4,979)
Proceeds from disposals of crown assets	101	26
Allowance for vacation pay accrual	9,783	(54,429)
Allowance for time-off in lieu accrual	11,105	(11,589)
Allowance for severance benefits	(20,453)	(88,586)
	9,682,952	(751,991)
Current year appropriations used	7,432,416	7,365,303
(b) Appropriations provided and used:	2008	2007
(in dollars)
Program expenditures - Vote 30	10,584,000	10,978,025
Statutory Amounts	710,011	622,760
Transfer from Treasury Board - Vote 15	42,000	0
Transfer from Treasury Board - Vote 22	275,000	0
Transfer from Treasury Board - Vote 23	132,753	0
Less:
Lapsed	(4,311,348)	(4,235,482)
Current year appropriations used	7,432,416	7,365,303
(c) Reconciliation of net cash provided by Government to current year appropriations used	2008	2007
(in dollars)
Net cash provided by Government	(2,103,969)	6,893,013
Revenue not available for spending	10,582,172	218,605
	8,478,203	7,111,618
Change in net position in the Consolidated Revenue Fund Variation in accounts receivable and advances Variation in accounts payable and accrued liabilities Other Adjustments	(870,782) (183,184) 8,179	(72,776) 331,414 (4,953)
	(1,045,787)	253,685
Current year appropriations used	7,432,416	7,365,303

4. Accounts receivable and advances

(in dollars)	2008	2007
Receivables from other Federal Government departments and agencies	205,700	0
Receivables from external parties	765,099	108,095
Employee advances	500	500
	971,299	108,595

5. Tangible capital assets

Cost (in dollars)	Opening Balance	Acquisitions	Disposals and write-offs	Closing balance
Machinery and equipment	91,242	0	0	91,242
	91,242	0	0	91,242
Accumulated Amortization (in dollars)	Opening Balance	Acquisitions	Disposals and write-offs	Closing balance
Machinery and equipment	91,242	3,383	0	91,242
	91,242	3,383	0	91,242
Net book value	0	0	0	0

6. Vacation pay and compensatory leave

(in dollars)	2008	2007
Allowance for vacation	243,317	253,100
Allowance for compensatory leave	2,232	13,337
	245,549	266,437

7. Employee benefits

(a) Pension benefits

The Board's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Board contribute to the cost of the Plan. The expense presented below represents approximately 2.1 times (2.2 in 2006-07) the contributions by employees.

(in dollars)	2008	2007
Expense for the year	517,524	458,955
	517,524	458,955

The Board's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

(b) Severance benefits

The Board provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

(in dollars)	2008	2007
Accrued benefit obligation, beginning of year	733,660	645,076
Expense for the year	95,116	147,991
Benefits paid during the year	(74,663)	(59,407)
Accrued benefit obligation, end of year	754,113	733,660

8. Related party transactions

The Board is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Board enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the Board received services which were obtained without charge from other Government departments as presented in part (a).

(a) Services provided without charge

During the year the Board received without charge from other departments. These services without charge have been recognized in the Board's Statement of Operations as follows:

(in dollars)	2008	2007
Accommodation	587,873	489,894
Employer's contribution to the health and dental insurance plans	300,612	299,709
Justice Canada	11,271	18,335
	899,756	807,938

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General , are not included as an expense in the Board's Statement of Operations.

(b) Payables and receivables outstanding at year-end with related parties:

(in dollars)	2008	2007
Accounts payable to other government departments and agencies	45,251	32,043

9. Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.

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