Health Canada Announces Amendments to Patented Medicines Regulations

On August 9, 2019, Health Canada announced the final amendments to the Patented Medicines Regulations (the “Regulations”), which will come into force on July 1, 2020. These amendments are expected to be published in the Canada Gazette, Part II, on August 21, 2019.

Together, the Regulations and the Patent Act provide the legislative framework for the Patented Medicine Prices Review Board (“PMPRB”) to regulate prices for patented medicines in Canada. The scheduled amendments will give the PMPRB more room to prevent drug manufacturers from setting excessive prices.

Below is a summary of the notable changes to the Regulations:

1. Changes to schedule of comparator countries

When considering if a price of a drug in Canada is excessive, the PMPRB considers, among other things, the price of the drug in Canada in comparison to the price of the same drug in the countries listed in the schedule to the Regulations.

The amendments update the schedule of countries that is to be considered by the PMPRB. The new schedule was selected to ensure that prices are compared against those in countries that are of comparable significance to global patented medicine sales.

The amended schedule removes the United States and Switzerland and now comprises Australia, Belgium, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden and the United Kingdom (the “PMPRB11”).

2. New factors to be considered for excessive prices

Three new factors will be considered by the PMPRB when assessing excessive prices: (a) the medicine’s pharmacoeconomic value in Canada; (b) the size of the market for the medicine in Canada; and (c) the GDP in Canada and the GDP per capita in Canada.

Note that these three new factors do not apply to drugs that received a drug identification number (DIN) before the day that the final amendments are published in the Canada Gazette, Part II. These drugs, however, are subject to all other changes to the amended regulations upon their coming-into-force.

3. Reporting of price adjustments

Patentees will be required to report the average price per package and the net revenue from sales, by taking into account any “adjustments that are made by the patentee or any party that directly or indirectly purchases the medicine or reimburses for the purchase of the medicine and any reduction given to any party in the form of free goods, free services, gifts or any other benefit of a like nature”.

4. Reduced reporting requirements for some non-prescription drugs and generic medicines

Reporting obligations for certain categories of medicines, such as veterinary medicines, generic medicines and non-prescription drugs that are not described in Schedule D to the Food and Drugs Act will be reduced as they are at a lower risk of excessive pricing.

Non-prescription Schedule D drugs (for example, non-prescription biologics) are still subject to the normal reporting obligations.

Looking Ahead

The new Regulations take effect on July 1, 2020. In the meantime, the PMPRB will be updating the previous guidelines in consultation with stakeholders. The guidelines are expected to be published early in the fall.

Authors: Jaclyn Tilak and Meg King