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ARCHIVED - RPP 2006-2007
Patented Medicine Prices Review Board
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Section II - Analysis Of Program Activities By Strategic Outcome
Analysis by Program Activity
The PMPRB has one program, the Patented Medicine Prices Review. Its objective is to protect consumer interests and to contribute to Canadian health care by ensuring that the prices charged by manufacturers of patented medicines are not excessive and by reporting on trends in pharmaceutical prices and R&D.
Strategic Outcome:
Prices charged by manufacturers for patented medicines sold in Canada are not excessive.
Program Activity Name:
Patented Medicine Prices Review
| 2006-2007 | 2007-2008 | 2008-2009 |
| $6,512.0 | $6,480.0 | $4,948.05 |
| 2006-2007 | 2007-2008 | 2008-2009 |
| 48.0 | 47.06 | 39.05 |
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, pharmacies, and others for human and veterinary use, to ensure that they are not excessive.7
The PMPRB relies on voluntary compliance wherever possible since it is more effective, less time consuming, and less costly to all parties. Voluntary compliance by patentees is facilitated by published Guidelines intended to assist companies in setting prices that are not excessive.
The PMPRB reviews the pricing information for all patented medicines sold in Canada on an ongoing basis to ensure that the prices charged by patentees comply with the Excessive Price Guidelines established by the Board. The Guidelines are published in the PMPRB's Compendium of Guidelines, Policies and Procedures (Compendium) and are available on the website: www.pmprb-cepmb.gc.ca, under Legislation, Regulations, Guidelines.
The Guidelines are based on the price determination factors in section 85 of the Patent Act and have been developed and modified in consultation with stakeholders, including the provincial and territorial Ministers of Health, consumer groups and the pharmaceutical industry. The Guidelines reflect the expected results for the program activity. In summary, the Guidelines provide that:
- prices for most new patented drugs are limited such that the cost of therapy for the new drug does not exceed the highest cost of therapy for existing drugs used to treat the same disease in Canada;
- prices of breakthrough patented drugs and those which bring a substantial improvement are generally limited to the median of the prices charged for the same drug in other industrialized countries listed in the Regulations (France, Germany, Italy, Sweden, Switzerland, U.K. and U.S.);
- price increases for existing patented medicines are limited to changes in the Consumer Price Index (CPI); and
- the price of a patented drug in Canada may not, at anytime, exceed the highest price for the same drug in the foreign countries listed in the Regulations.
The expect result of the price review program activity is that all manufacturers' prices for new and existing patented medicines sold in Canada are reviewed in a timely manner and are in accordance with the Board's Excessive Price Guidelines; and that information on pharmaceutical prices and trends is reported to Canadians.
The program activity supports the Government's priority of healthy Canadians with access to quality health care by ensuring that Canadians have access to patented pharmaceutical products at prices that are not excessive.
The indicators that show the PMPRB is achieving its expected results and thus its strategic outcome are:
- prices of patented medicines sold in Canada are within the Guidelines;
- enforcement measures are used to correct prices that exceed the Guidelines;
- trends show that price increases for existing patented medicines are not higher than changes in the CPI; and
- trends show that Canadian prices of patented drugs are, on average, below the median international prices of the foreign countries in the Regulations.
The PMPRB reports annually to Parliament on its major activities, analyses of prices of patented medicines and of price trends for all drugs, and R&D expenditures as reported by patent-holding drug manufacturers.
Patentees are required, under the Regulations, to report their total sales of drugs in Canada, both patented and non-patented, to the PMPRB. Patentees are also required to submit detailed information, by product and class of purchaser, on their sales of currently patented drugs. This information allows the PMPRB to directly calculate sales of patented drugs for each patentee, and to infer the amount of each patentee's total drug sales attributed to non-patented drugs. To complete the calculations, the PMPRB obtains estimates of generic sales by members of the Canadian Generic Pharmaceutical Association (CGPA) from IMS Health.8
The PMPRB maintains the Patented Medicine Price Index (PMPI) to monitor trends in prices of patented drug products sold in Canada. It is updated annually using price and sales information reported by patentees.9
In accordance with the Patent Act, and the Regulations, patentees must also report all publicly available ex-factory prices of patented drugs in seven foreign countries: France, Germany, Italy, Sweden, Switzerland, the U.K. and the U.S.
The expected result of this key service is that Canadian consumers and other stakeholders have complete and accurate information on trends in manufacturers' prices of patented medicines sold in Canada and on patentees' research-and-development expenditures. This information will provide assurance to Canadians that the prices of patented drug products are not excessive.
The National Prescription Drug Utilization Information System (NPDUIS) provides critical analyses of price, utilization and cost trends so that Canada's health system has more comprehensive and accurate information on how prescription drugs are being used and on sources of cost increases. The Canadian Institute for Health Information (CIHI) and the PMPRB are partners in the NPDUIS. A steering committee, comprised of representatives of F/P/T public drug plans (excluding Quebec) and Health Canada, advises CIHI and the PMPRB on the development of NPDUIS and identifies priorities for analytical studies.
The expected result of this key service is that F/P/T drug plans and Canada's health system will have more accurate information on how prescription drugs are being used and on sources of cost indices through critical analyses of price utilization and cost trends. This information will contribute to informed decisions and policy making about affordable access to quality health care.
In the fall of 2005, F/P/T Health Ministers agreed that the PMPRB be asked to monitor and report on the prices of non-patented prescription medicines. In October 2005, the PMPRB entered into a Memorandum of Understanding with Health Canada to fund this work and in November, the Federal Minister of Health formally directed the PMPRB to undertake this work pursuant to section 90 of the Patent Act.
The PMRPB will produce four quarterly reports each year. These reports will cover a range of topics including a profile of the market for non-patented drugs in Canada, information on sales trends, Canadian price trends, notable price changes, new off-patent markets, generic versus brand comparisons, international price comparisons and market structure trends. The first quarterly report was released July 2006.
The expected result of this key service is that F/P/T Governments and other stakeholders will have critical analyses and comprehensive information on non-patented prescription drug prices.
The indicators that show the PMPRB is achieving its expected results in reporting pharmaceutical trends are:
- An annual report to Parliament on the PMPRB's major activities, analyses of prices of patented medicines and of the price trends of all drugs, and R&D expenditures as filed by patent-holding drug manufacturers;
- Studies completed under NPDUIS; and
- Reports on non-patented prescription drug prices.
