- Health Canada has once again decided to delay the implementation of the Patented Medicine Prices Review Board (PMPRB) regulatory reforms due to the COVID-19 Pandemic, after they were scheduled to take effect July 1, 2021
- The final PMPRB Guidelines take aim at all patented medicines and propose a pharmaco-economic value be applied to drugs with high costs/sales, and PMPRB will rely on an updated reference basket in which two countries where drug prices tend to be higher – the United States and Switzerland – have been swapped out for markets where drug prices tend to be lower; as such, the PMPRB11 will be composed of France, Germany, Italy, Sweden, and the UK, as well as newcomers Australia, Belgium, Japan, the Netherlands, Norway, and Spain
- Besides the impact on drug prices, which EVERSANA Data Analysts found to be “significant,” industry and patient groups, among others, have warned that the implementation of these new regulations means innovative new medicines will not launch in Canada, the number of clinical trials in Canada will be further reduced, and the life sciences sector will lose out on critical investments
Health Canada has once again decided to delay the implementation of the Patented Medicine Prices Review Board (PMPRB) regulatory reforms due to the COVID-19 Pandemic, after they were scheduled to take effect July 1, 2021. This is the third time their implementation has been stalled—it was pushed back to January 1, 2021 from July 1, 2020, then to this July, and now finally, until January 1, 2022. The final PMPRB Guidelines take aim at all patented medicines and propose a pharmaco-economic value be applied to drugs with high costs/sales to gauge how much improvement they offer over existing therapies.
Reference Basket Shake-Up, Costs and Sales Thresholds
Notably, Canada’s PMPRB will rely on an updated reference basket in which two countries where drug prices tend to be higher – the United States and Switzerland – have been swapped out for markets where drug prices tend to be lower. Canada’s new basket, the PMPRB11, will be composed of France, Germany, Italy, Sweden, and the UK, as well as newcomers Australia, Belgium, Japan, the Netherlands, Norway, and Spain.
Drugs with a 12-month treatment cost surpassing 150% of GDP per capita and treatments with estimated or actual sales of more than CA$ 50 million per year will be required to undergo additional review, with the potential for substantial price reductions off list prices. PMPRB specified that its new guidelines would be applicable to a medicine depending on when it first received its eight-digit Drug Identification Number (DIN)—products that received a DIN before a certain date will be grandfathered in, whereas those that obtain the DIN after this date will be subject to PMPRB review. However, grandfathered and gap medicines are still subject to review, but under somewhat different rules (e.g. no pharmacoeconomic assessment, regardless of cost/market size).
In August 2019, the amendments to the Patented Medicines Regulation were announced, which seeks to strengthen and modernize Canada’s pricing framework for patented drugs and more significantly empower the PMPRB. PMPRB’s mandate is to regulate excessive price, the agency wielding the power to contest the list price of any patented drug by declaring some prices to be an “illegal abuse of patent rights” and challenge drugmakers at an internal tribunal.
Former Canadian Minister of Health, Ginette Petitpas Taylor, called these reforms “the biggest step to lower drug prices in a generation,” adding these changes “will lay the foundation” for universal drug coverage under Canada’s Pharmacare program.
EVERSANA Analysis | PMPRB11 Impact
As an example, the reference country basket shake-up alone will significantly impact both the highest international price and the median international price comparison metrics, and although Canada is a relatively small market for major drugmakers, lower prices in Canada could potentially spread into the U.S.; a major market for pharma companies.
When the PMPRB amendments were first announced, EVERSANA Data Analysts found the change in reference basket means that future manufacturer prices (MNF) of the 10 highest revenue drugs across all provinces in Canada, including Bayer’s Eylea (aflibercept) and MSD’s Keytruda (pembrolizumab), could be slashed by over half in some cases.
“We examined a selection of the top revenue generating drugs globally and applied the proposed IRP rule based on current global ex-manufacturer prices derived from Pricentric,” explains Max Klietmann, Senior Consultant and Manager of EVERSANA’s PriceXpress. “On a cursory level, the impacts in Canada are significant (~20% drop in price for the products considered). This is a massive potential impact in Canada alone, not to mention the potential spillover effect into other markets that either reference Canada formally or look at Canadian prices as a basis for price negotiations.”
Industry, Patient Groups Urge Against Amendments
The finalized PMPRB guidelines, which were published at the end of October 2020, ahead of the abandoned January 2021 implementation date, underwent consultation twice, each time garnering negative criticism from the pharmaceutical industry and patient advocacy groups.
Innovative Medicines Canada (IMC), the country’s innovative pharmaceutical company bloc, has been the most opposed to their implementation. Engaged in litigation against the amendments, IMC is arguing their roll-out will “have a negative impact on Canadian patients,” because innovative new medicines will not launch in Canada, the number of clinical trials in Canada will be further reduced, and the life sciences sector will lose out on critical investments. IMC was successful in pushing back against the requirement to disclose confidential rebates and it was removed before final guidelines were issued.
With these amendments, drugs could not be launched in Canada, or Canada will be late in the launch sequence. Charity and patient advocacy groups likewise argued that the implementation of these guidelines will have repercussions for patient access, leading to patients missing out on new, innovative therapies, as well as the opportunity to partake in clinical trials. Further, patient groups fear that fewer clinical trials in Canada will result in wider inequalities, and without new drugs arriving on the market, doctors will use cheaper, older, and less effective drugs to treat patients.
The industry’s swift response to the COVID-19 Pandemic underscored the need to nurture and protect the industry. IMC noted, “As the COVID-19 crisis has shown, Canada’s innovative medicines companies are vital to the health and well-being of all Canadians, and we need a regulatory environment that encourages it to grow and thrive.”
The bloc further stated, “If Canada wants a vibrant and competitive life sciences sector that ensures access to innovative medicines, a suspension in the PMPRB’s regulatory changes would provide the appropriate time and process to consider that the price of innovative medicines are not the primary cost drivers for Canadian public and private drug plans.”
IMC has stated that the third delay is “a renewed opportunity to examine the potential impact of these reforms, as well as affording time to generate more effective, alternative solutions.” The group has proposed a Guideline Monitoring and Evaluation Plan (GMEP) to assess their impact, with the following key recommendations:
- Prioritize resources to address COVID-19 and stop the PMPRB regulatory reforms given the ongoing pandemic.
- Given the impact of two judicial decisions, PMPRB needs to reconsider and revise its final Guidelines.
- Ensure that the impact of the PMPRB changes is assessed by an independent third party.
- Concentrate on reporting metrics within the PMPRB’s mandate.
- Limit PMPRB reporting data resources to regulatory filing information only.
- Replace or supplement the PMPRB’s outdated 1987 definition of industry R&D with the more credible alternative recently used by Statistics Canada.
EVERSANA has been actively engaging with several clients to assess potential global price impacts resulting from this regulatory change and is able to offer high-level impact studies via PriceXpress, our tactical price consulting and analysis offering. EVERSANA uniquely has the people, methods, tools, and rapidly developed ready-to-go models and approaches to assist businesses in navigating Canadian and Global Pricing changes and interdependencies. This expertise is built on our combined decades of experience solving problems in and building tools for global pricing intelligence, price referencing tools, global visibility, and product launch expertise put us in a trusted position to advise clients on how to handle these changes.