Michelle Boudreau, Executive Director 4 th Annual Market Access Summit November 21, 2012 Toronto Patented Medicines Prices Review Board (PMPRB): Regulatory.

Michelle Boudreau, Executive Director4th Annual Market Access SummitNovember 21, 2012 Toronto

Patented Medicines Prices Review Board (PMPRB): Regulatory Issues and Trends

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Outline________________________________________________ Canadian market and market trends Role of PMPRB and Overview of Price Regulation Regime Revised Guidelines - Major Changes Regulatory Stats & Guidelines Monitoring and Evaluation Plan Update on Hearings -Anticipated Developments Looking Forward Annex

Pharmaceutical Trends Data Changes and Clarifications to Guidelines Since 2010

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Market trends - Canada Compared to the World ________________________________________________ In 2005 and 2011, Canadian drug sales accounted for 2.4% and

2.6%, respectively, of the global market

Small, but significant market

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Market trends - share of total prescriptions* by segment, 2005/06 to 2010/11________________________________________________

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Market trends - Canada Compared to the World________________________________________________ Growth in drug sales outpacing comparator countries

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After introduction, monitor Average Transaction Price (ATP) relative to Non-Excessive Average Price (NEAP), subject to CPI based limit

Average Ratio of 2011 Price to Introductory Price, by Year of Introduction

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.85

0.90

0.95

1.00

1.05

1.10

1.01

1.06

0.94

1.01

1.06

1.02

0.97

1.03

0.98

1.06

0.99

0.93

1.00

0.93

0.99

1.04

Source: PMPRB

Ra

tio

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Canada Compared to 21 EU Members - 2010

IMS Health Data, 2010

Czech RepublicEstonia

SlovakiaSlovenia

ItalyPortugal

PolandHungaryFinlandGreece

United KingdomNetherlands

FranceSpain

AustriaBelgium

LuxembourgSwedenIreland

DenmarkCanada

Germany

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05

AVERAGE BILATERAL FOREIGN-TO-CANADIAN PRICE RATIOS

0.93

1.000.98

0.890.87

0.60-0.70

0.70-0.80

0.84

Average Price Ratio for 21 EU Members 0.79

1.06

Based on top 300 selling oral solids in Canada

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Overview of the PMPRB________________________________________________ Established in 1987 as consumer protection pillar via

amendments to Patent Act The PMPRB is an independent quasi-judicial body with a dual

mandate: Regulatory: To ensure that prices charged by patentees for patented

medicines sold in Canada are not excessive Reporting: To report on pharmaceutical trends of all medicines and on R&D

spending by pharmaceutical patentees Jurisdiction

Regulate prices patentees charge (i.e. factory-gate price) for patented drug products sold in Canada, to wholesalers, hospitals or pharmacies, for human and veterinary use

PMPRB Price Regulation Regime________________________________________________ Jurisdiction:

Drug products patented and sold in Canada Instruments:

Patent Act (s. 79–103) Patented Medicines Regulations Compendium of Policies, Guidelines and Procedures

Price approval not required before sale PMPRB establishes a price ceiling, but DOES NOT set selling

price of drug product Regular price reviews to monitor compliance with Guidelines

combined with enforcement mechanisms (investigations, Voluntary Compliance Undertakings, hearings, orders)

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PMPRB Price Regulation Regime _______________________________________________ Factors to be considered by Board:

Price of medicine sold in Canada Prices of other medicines in same therapeutic class sold in Canada Prices of medicines sold in comparator countries Changes in CPI

Reference based 7 comparator countries: FR, DE, IT, SE, CH, UK, US

Open and transparent price regulation Hearings are public VCUs publicly disclosed MAPP publicly available* BUT, pricing data filed is confidential (s. 87)

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PMPRB Price TestsBlend of Therapeutic Improvement and International Reference Pricing_________________________________________________

Recognize incremental pharmaceutical innovation At introduction, price premium aligned with degree of therapeutic

improvement: Four new levels of therapeutic improvement:

1) Breakthrough – Median of International Price Comparison (MIPC)2) Substantial Improvement – Higher of top of Therapeutic Class

Comparison (TCC) and the MIPC3) Moderate Improvement – Higher of mid-point between top of TCC test

and the MIP, and top of TCC (primary & secondary factors apply here)4) Slight/No Improvement – Top of TCC

Reference pricing at introduction and for existing drugs based on 7 comparator countries - France, Germany, Italy, Sweden, Switzerland, UK, and US

Policy changes in these countries could impact prices in Canada

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Investigation Criteria and Outcome________________________________________________ Investigation into the price of a patented medicine commenced when a complaint

is filed or any of the following criteria are met: New Drug Products

– 5% above the maximum average potential price (MAPP); or – Cumulative excess revenues are $50,000 or more; or

Existing Drug Products – Cumulative excess revenues are $50,000 or more over the life of the

patent Patentee given opportunity to make further written submissions to Board Staff to

substantiate the price If price within the Guidelines

Investigation closed If price outside the Guidelines

Patentee given an opportunity to submit a Voluntary Compliance Undertaking (VCU); or

Board Staff refers the matter to the Chairperson

Revised Guidelines - January 2010

________________________________________________

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Guideline Changes

Rationale for Change

Observations

Overall Implementation

Ongoing monitoring, evaluation, and resolution of issues Proactive outreach and education

Overall Restructuring of Price Tests

Price premium to reflect therapeutic value

Board Staff proactive in publishing clarification via NEWSletter (see Annex for summary) Board Staff continue to monitor issues

New Levels of Therapeutic Improvement

Recognizing incremental therapeutic innovation

Successfully applied by HDAP members

DIP Methodology Avoid creating disincentives for offering benefits

Evidence requirements clarified to ensure feasible and easily applied

Any Market Ensuring that no sub-national market is paying excessive prices

Applies only to drugs sold after January 2010

Guidelines Monitoring and Evaluation Plan (GMEP) -2010____________________________________________

GMEP monitors and evaluates the application and impact of major changes to the Guidelines on an ongoing basis

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Major Change Observation

New Level of Therapeutic Improvement

19% of new drug products classified as “moderate improvement”

Overall Restructuring of Price Tests

15% of new drug products classified as “moderate improvement” priced at premium (above old Guidelines ceiling)

Any Market Applied at intro and when investigation triggered<2% overall cases where market specific price higher than national average transaction price

DIP Methodology Since pilot, 60 DINs successful DIP application:• 46 Simple • 14 Regular

Regulatory Statistics

Of the 109 New Drug Products introduced in 2011: 79% within Guidelines; 9% outside of Guidelines but do not trigger an investigation 12% under investigation 69% were of slight or no improvement; 25% of moderate improvement; 5%

of substantial improvement and 1% breakthrough

Between 2000 and 2009, average of 86 new patented drug products/year

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2011 2010

New Drug Products Introduced

109 68

Number of Investigations

69 87

Regulatory Statistics: Voluntary Compliance Undertakings and Board Orders – 2008-2012 ________________________________________________

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Year # VCUs # Board Orders

Paymentsof Excess Revenues

2008 6 1 $25.5M

2009 10 1 $37.3M

2010 12 3 $13.2M

2011 9 1 $0.9M

2012(September 2012)

7 2 $14.7M

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Update on Hearings________________________________________________ Matters before the Board

Tactuo – Oct 1, 2012 - Notice of Hearing issued Ongoing

Apotex Inc. (Failure to File) Apo-Salvent CFC

Matters before the Federal Court – Judicial Review ratiopharm Inc.; ratio-Salbutamol HFA; Copaxone Redetermination Sandoz Inc.

Matter decided by the Supreme Court of Canada in 2011 Celgene Corporation (sale of Thalomid under Special Access Programme)

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Anticipated Developments___________________________________________________________________

Judicial Review

Expected Guidance on..

Copaxone and ratio-Salbutamol

• how to weigh ss 85(1) factors• the interpretation of the calculation of the ATP pursuant to ss 4(4) of the Patented

Medicines Regulations and the obligation of a patentee to file “product specific” information

• “sufficiency of reasons”

ratio-Salbutamol, ratiopharm and Sandoz

• whether the Board can regulate the price of patented medicines sold by generic pharmaceutical companies or has the Board engaged in pure price regulation

• the scope of “patentee” as per 79(1) of the Patent Act:• the Board’s jurisdiction with respect to the first “sale” and the supply chain• Interpretation of licencing/supply agreements negotiated at arm’s length• whether the corporate relationship between a parent company and its affiliate can

allow the Board to conclude that the affiliate is a “patentee” in the absence of a written agreement

• defining the scope of “patent pertain” as per s 79(1) of the Patent Act

Timing of Judicial Reviews__________________________________________ Copaxone Redetermination

Awaiting Hearing Date most likely in winter ratio-Salbutamol and ratiopharm to be heard together

Applicant and Respondent Records filed Request for Hearing Date to be filed Anticipated that it will be heard in late winter/early spring

Sandoz Applicant and Respondent to file respective Records Request for Hearing Date to be filed Anticipated that it will be heard in late spring/early summer

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Looking Forward________________________________________________ Ongoing engagement and outreach with stakeholders Continued focus on consumer protection while not creating

disincentives to innovation/approaches that benefit consumers/payers

Board adopted two priorities for 2012/13: alternate dispute resolution (“ADR”) to further enhance compliance reducing regulatory burden

PMPRB response to recently conducted program evaluation Continuing engagement with int’l organizations/regulators Commitment to Guidelines that are responsive to a changing

environment

Thank you.Merci.

michelle.boudreau@pmprb-cepmb.gc.ca

www.pmprb-cepmb.gc.ca

Twitter: @PMPRB_CEPMB

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Annex - A

Pharmaceutical Trends Data

Market trends - Canadian Public Drug Plan* Spending on Rx Drugs, Rates of Growth and Annual Totals, 2005/06 to 2010/11

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* Does not include all drug plans. The totals include drug cost, retail/wholesale mark-ups as well as dispensing fees.

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Canada Compared to a Number of OECD Countries2010

S.Korea Ita

ly UK

Australi

a

France

Spain

Austria

Belgium

Swed

en

Switz

erlan

d

Denmark CAN

German

y

Mexico

Japan USA

0.00

0.50

1.00

1.50

2.00

2.50

Avg. Bilateral Foreign-to-Canadian Price Ratios: Top 300 selling oral solids in Canada

IMS Health Data, 2010

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Annex -B

Changes/Clarifications to Guidelines Since 2010

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Changes/Clarifications to Guidelines since 2010________________________________________________

Issue Change/Clarification When Change Made

Triggering Investigation

Eliminated 5% investigation trigger at national level for existing patented drug products

May 2012

Offset Excess Revenues

Replaced 3-year period to offset de minimus excess revenue with a VCU with requirement to offset in a timely manner

May 2012

Any Market

Clarified that Any Market Price Review would not be applied retroactively

April 2012

DIP Methodology

Pilot administration of the DIP methodology with streamlined processes developed with a working group

Recommendations of DIP working group accepted

April 2011 / February 2012

Existing drug products subsequently sold by another patentee

Patented DINs acquired and sold by persons other than the initial patentee are bound to the Guidelines, and continue to be treated as an existing drug product (no change from earlier Guidelines)

January 2011

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Changes/Clarifications to Guidelines since 2010 (cont’d)________________________________________________

Issue Change/Clarification When Change Made

Offset of Excess Revenue

Clarified that prices of existing patented drug products are reviewed on an annual basis. Therefore, for Jan-June period:

1) Existing drug products will not be initially identified as “Does Not Trigger”

2) Board Staff will not calculate any offset

October 2010

Policy on Use of Non-Patented Comparator Drug Products in Price Tests

price of relevant non-patented drug products included in the price tests, unless Board Staff conclude the price of the medicine is excessive, based on absence of competition or other market conditions

October 2010

International Therapeutic Class Comparison Test (ITCC)

Missing text inserted and description of ITCC test updated

April 2010