Federal Court Reviews Pricing Decisions of PMPRB

The Federal Court of Canada recently reviewed a decision of the Patented Medicine Prices Review Board (PMPRB) which had ruled that the combination psoriasis medicine Dovobet was being sold at an excessive price by Leo Pharma Inc (Leo Pharma). Dovobet contains two active ingredients: antipsoriadic calcipotriol and betamethasone dipropionate. The individual components are marketed separately as Dovonex and Diprosone (or Diprolene), respectively. In bringing the application for review, Leo Pharma argued that the PMPRB inappropriately placed Dovobet into the wrong "˜therapeutic class'. When assessing the appropriateness of a price for a drug, the PMPRB compares the cost of the drug to other drugs within the same therapeutic class. In reviewing the price for Dovobet, the PMPRB had compared its price to the sum of the prices for the individual marketed components. The Federal Court held that, on balance, such a comparison was justified. (In its decision the PMPRB noted that such a comparison may not be valid when there is evidence that the combination medicine has a materially different clinical effect than the use of the separate medicines in combination. Pharmaceutical manufacturers will want to be aware of this evidentiary requirement for a materially different clinical effect when making pricing decisions and, more importantly, when designing clinical studies). Leo Pharma also contested the PMPRB's decision not to consider the impact on the calculation of the average transaction price of the applicant's distribution of free Dovobet. Leo Pharma had begun a program to distribute Dovobet without charge shortly after being notified that the PMPRB would launch an investigation into the pricing of Dovobet. The PMPRB decided not to consider this free distribution when calculating the average transaction price because it felt that the distribution program was commenced to artificially reduce the transaction price. The Federal Court held that in this latter respect the PMPRB's decision was unreasonable. There is no compassionate use requirement in either the Patent Act or the Regulations. As a result, the intention of a distributor in making a free distribution is irrelevant, seemingly even if it was undertaken with the intent to drive down the average transaction price. For the full reasons for judgment in Leo Pharma v Attorney General of Canada, 2007 FC 306, see: http://decisions.fct-cf.gc.ca/en/2007/2007fc306/2007fc306.html Summary by: Michael Migus