Discussion Paper Invites Comments on Prices of Patented Medicines in Canada

In a Discussion Paper released on March 8, 2005, Canada's Patented Medicines Prices Review Board (PMPRB) has raised the question of whether Canada is on the verge of a experiencing a major shift in the pricing of patented medicines. Since its establishment as an independent, quasi-judicial tribunal in 1987, the PMPRB has been responsible for regulating the prices of patented drugs to ensure they are not excessive. The PMPRB determines whether the price of a patented medicine should be limited under the Patent Act and the Excessive Price Guidelines (Guidelines). The activities of the PMPRB, together with the various cost containment strategies developed by the provincial and territorial drug programs, have resulted in the price stability of patented medicines that Canadians have enjoyed over the past decade. The Discussion Paper observes a number of recent developments suggesting this price stability may be under some strain. In 2004, for example, the PMPRB was advised that a significant number of manufacturers of patented medicine products under its jurisdiction (approximately 35%) had informed customers of proposed price increases. Under the current regulatory framework, manufacturers are not required to notify the PMPRB in advance of price increases, making it difficult to assess whether a change would be within the Guidelines. Regulatory amendments have been considered as a separate initiative to address such issues. The purpose of the Discussion Paper, by contrast, is not to make specific proposals or changes but to initiate dialogue on policies governing price increases. Specifically, the PMPRB invites comments from stakeholders on three frameworks of price regulation:

1. Reviewing changes after the fact and readjusting prices found to be excessive (the current framework);
2. Allowing price increases up to a maximum limit but requiring patentees to notify the PMPRB in advance to ensure that new prices remain within the Guidelines; and
3. Requiring patentees to notify the PMPRB in advance and provide justification for the proposed increase.

Noting that pharmaceutical utilization is a major cost driver in the health care system, the Discussion Paper observes the importance of reviewing policies governing price increases to ensure their appropriateness to the current environment. Comments must be submitted by May 9, 2005. To access the Discussion Paper, see: http://makeashorterlink.com/?I545217CA Summary by: Rosa Kim