Proposed Amendments to the Patented Medicines Regulations

Proposed regulations amending the Patented Medicines Regulations (“Regulations”) were published on December 2, 2017, in the Canada Gazette Part 1 for a 75-day public consultation.

According to the Regulatory Impact Analysis Statement (“RIAS”), the proposed amending regulations would amend the Regulations so that the regulatory framework of the Patented Medicines Prices Review Board (“PMPRB”) includes new price regulatory factors and patentee price information reporting requirements that will help the PMPRB to protect Canadian consumers from excessive prices.

The PMPRB was created in 1987 as the consumer protection “pillar” of a major set of reforms to the Patent Act (“Act”), which were designed to encourage greater investment in medicine R&D in Canada through stronger patent protection. The Act sets out the period of time that patentees of a medicine are provided the exclusive rights granted by a patent. It also establishes the PMPRB as a quasi-judicial body with a price regulatory mandate to ensure that patentees do not abuse their patent rights by charging consumers excessive prices during this statutory monopoly period.

The Act and the Regulations together form the patented medicines price regulatory framework of the PMPRB. Regulations with respect to patented medicine prices and information are made pursuant to the Minister of Health’s (“Minister”) recommendation. However, the PMPRB carries out its regulatory mandate at arm’s length from the Minister.

Despite significant changes in the medicine market, the Regulations have not been substantively changed in over two decades. Canada’s patented medicines are among the highest in the world and, as such, Health Canada believes that the current regulatory framework that the PMPRB uses falls short of its mandate to protect Canadian consumers from excessive prices for patented medicines. It is believed that the Regulations need to be modernized to provide the PMPRB with more relevant and effective regulatory tools in order to better protect Canadians from excessive prices for patented medicines.

The proposed amending regulations have five elements:

New Price Regulatory Factors and Updating the Schedule of Comparator Countries

(1) Providing the PMPRB with three new price regulatory factors to enable it to consider the price of a patented medicine in relation to its value to patients and impact on the health care system.

(2) Updating the schedule to the Regulations that sets out the countries (now the PMPRB7) on which patentees report pricing information to include countries with similar consumer protection priorities, economic wealth and marketed medicines as Canada. This would provide the PMPRB with the information needed to regulate prices based on comparisons that are more closely aligned with the PMPRB’s mandate and Canada’s domestic policy priorities.

New Reporting Requirements

(3) Reducing reporting obligations for patented veterinary, over-the-counter and “generic” medicines (i.e., those authorized for sale by the Minister through an Abbreviated New Drug Submission [ANDS]). As these products pose a lower risk of asserting market power and charging excessive prices, this reduction would enable the PMPRB to focus on medicines at higher risk of excessive pricing.

(4) Amending patentee price information reporting requirements to include reporting in relation to the new factors.

(5) Requiring patentees to report price and revenue information net of all price adjustments such as direct or indirect third party discounts or rebates. This would ensure that the PMPRB is fully informed of the actual prices for patented medicines in Canada and enhance the relevance and impact of domestic price comparisons.

Interested persons may make representations concerning the proposed Regulations within 75 days from December 2, 2017, the date of publication of the notice of proposed amendment. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Karen Reynolds, Executive Director, Office of Pharmaceuticals Management Strategies, Strategic Policy Branch, Health Canada, 10th Floor, Brooke Claxton Building, 70 Colombine Driveway, Tunney’s Pasture, Ottawa, Ontario K1A 0K9 (tel.: 613-957-1692; email: PMR-Consultations-RMB@hc-sc.gc.ca).

The proposed Regulations would come into force on January 1, 2019. This would allow patentees time to prepare for implementation of the new price regulatory factors and information reporting requirements on prices. Once the amended Regulations are published in the Canada Gazette, Part II, responsibility for implementation, enforcement and service standards would be passed to the PMPRB. This is anticipated to include the finalization of a PMPRB-led stakeholder consultation on a revised Compendium of Policies, Guidelines and Procedures that will be used to reach an understanding of how the revised framework would be embodied in the form of specific price tests and qualifying information to be reported by patentees.