Canada Gazette

The purpose of the proposed amendments to the Patented Medicines Regulations, 1994 (hereinafter referred to as the "amendments") is to increase efficiency and timeliness in the price review process for patented medicines by the Patented Medicine Prices Review Board (PMPRB). This is in keeping with the PMPRB's mandate to ensure that prices of patented medicines sold in Canada are not excessive, thereby protecting consumers and contributing to Canadian health care. Patentees will also benefit from more timely advice on potential excessive pricing matters.

The proposed amendments would come into force on the day after the date on which they are registered, with the exception of the amendments respecting identification of specific types of benefits (subsection 4(2) of the amendments), and the submission of information to the Board using the appropriate electronic document with the electronic signature of an authorized individual (section 5 of the amendments), which would come into force on July 1, 2008.

The PMPRB is an independent quasi-judicial body established by Parliament in 1987 under the Patent Act (Act). The Minister of Health is responsible for the pharmaceutical provisions of the Act as set out in sections 79 to 103.

Although part of the Health Portfolio, the PMPRB carries out its mandate at arms-length from the Minister of Health. It also operates independently of other bodies such as Health Canada, which approves drugs for safety and efficacy, and public drug plans, which have responsibility for approving the listing of drugs on their respective formularies for reimbursement purposes.

The PMPRB has a dual role, regulatory and reporting. Under its regulatory role, the PMPRB ensures that prices charged by patentees for patented medicines sold in Canada are not excessive, thereby protecting consumers and contributing to Canadian health care. Its reporting mandate consists in reporting on pharmaceutical trends of all medicines, and on R&D; spending by pharmaceutical patentees, thereby contributing to informed decisions and policy-making.

The PMPRB consists of five part-time Board members appointed by Order-in-Council.

The PMPRB is responsible for regulating the prices that patentees charge—the factory-gate price—for prescription and non-prescription patented drugs sold in Canada to wholesalers, hospitals, pharmacies or others, for human and veterinary use, to ensure that they are not excessive. The PMPRB regulates the price of each patented drug product, including each strength of each dosage form of each patented medicine sold in Canada. This is normally the level at which Health Canada assigns a Drug Identification Number (DIN).

Pharmaceutical products are regulated at the federal level in Canada in two ways. Firstly, Health Canada assesses new medicines to ensure that they conform to the Food and Drugs Act. Formal authorization to market or distribute a medicine is granted through a notice of compliance (NOC) issued by Health Canada, indicating approval of safety, efficacy and quality. Health Canada is also responsible for approving the entry into Canada of a non-approved medicine on the specific request of a physician for a patient, through the Special Access Program.

Secondly, under the Patent Act (Act), the PMPRB ensures that the prices of patented medicines sold in Canada are not excessive. The Patented Medicines Regulations, 1994 (Regulations) set out patentees' filing requirements with respect to the PMPRB. The Regulations specify the information that patentees must file with the PMPRB in accordance with their obligations under the Act, and the timeframes for doing so.

The Regulations need to be modernized in some areas given that some information needed to conduct price reviews is currently only provided on request or not at all. These amendments are also in keeping with the PMPRB Timelines Initiative and the objective of Health Canada's Therapeutic Access Strategy of improved access for Canadians to affordable pharmaceuticals.

Under the Regulations, patentees are required to report on the identity of a new patented medicine and information on the first 30 days' introductory prices and sales in Canada within 30 days after the end of this period, along with publicly available prices of the medicine for the countries listed in the Regulations where the medicine is sold. They are also required to continue to file detailed information on prices and sales of each patented drug for the first and last six-month periods of each year, within 30 days of the end of each period, for as long as the drug remains under the PMPRB's jurisdiction.

While not used in price regulation, patentees are also required to annually file information on total sales and research and development expenditures. This requirement of the Act pertains to PMPRB's second mandate, which is to report on pharmaceutical trends.

There are three key forms that the PMPRB has developed as guidance for patentees:

The proposed amendments were originally pre-published in the Canada Gazette, Part I, on December 31, 2005. Since their pre-publication, there has been extensive consultation with stakeholders, as indicated in the Consultation section of this Regulatory Impact Analysis Statement, and the proposed amendments have been modified accordingly. These changes were influenced by submissions received from stakeholders and additional analytical work undertaken by PMPRB staff taking into account the following core principles:

The proposed requirement that patent application numbers be filed has been removed from the proposal that was originally published in the Canada Gazette, Part I. Paragraphs 80(1)(a) and 80(2)(a) of the Act already require patentees to file information on patents that have been granted. Updated information (e.g. Form 1) must be filed should there be any changes to the original information—which would include a need to re-file when a new patent that pertains to the medicine is granted. This current requirement will be strictly monitored by the PMPRB.

The proposed requirement that patentees submit a draft product monograph has been removed. Patentees objected to the provision of a draft product monograph, citing confidentiality concerns and the possibility that a draft document could change, necessitating further work by both patentees and the PMPRB. However, given the necessity of this type of information to begin the scientific review component of the price review, patentees will still be required to submit, if an NOC has not been issued in respect of the medicine, information similar to that contained in a product monograph. The proposed requirement that a product monograph be provided in cases where a NOC has been issued has not changed.

3. Reduction in filing timelines for information respecting the identity of the medicine

Patentees indicated that reducing the filing timeframe from 30 days to 1 day, as originally proposed for this information, would be unrealistic and result in insufficient time to meet the filing deadline. The PMPRB believes that the information is known to the patentee, and should not pose an unrealistic burden on patentees. Nevertheless, it is now proposed that the timeline for provision of this information be changed to the earlier of seven days after the date of issuance of the first NOC in respect of the medicine, or seven days after the date on which the medicine is first offered for sale in Canada.

4. Reduction in filing timelines for price and sales information for the first sales of the medicine

At present, the first filing of price and sales information by patentees is for the first 30 days' sales and does not occur until 30 days after the end of this 30-day sale period. In the proposal originally published in the Canada Gazette, Part I, the PMPRB proposed changing two aspects of this regulation. In regard to the period for which the information is required, it was proposed to reduce this to only the first day's sales. In regard to when the information is required, it was proposed to be reduced to the day after the date of first sale of a new patented medicine in Canada. Stakeholders who opposed changes to the time for filing indicated that this would present undue stress, resulting in inaccurate data or a potential failure to file. The PMPRB will still request data for the first day of sales only, but it is now proposed that the deadline for filing remain at the current 30 days after the day on which the medicine is first sold in Canada. This is believed to be reasonable given that Form 1 information will no longer be required in a reduced timeframe following the date of first sale, but will be available to the PMPRB 29 days earlier, given the reporting period itself will be reduced from 30 days to the first day's sales.

5. Reduction in filing timelines for price and sales information for semi-annual reporting periods

Currently, patentees have 30 days following the end of each semi-annual filing period to submit semi-annual price and sales data. In the original pre-publication in the Canada Gazette, Part I, it was proposed to shorten the timeframe to 15 days following the end of each filing period. Some stakeholders stated this would be unrealistic and would cause inaccuracies and undue stress on patentees and potentially a failure to file. Recognizing this, and given that Statistics Canada only issues the actual CPI figure for the previous year (which is also used in the price review process) about mid-January, the PMPRB determined that price reviews would not be overly delayed by the 30-day filing deadline. Therefore, it is now proposed that this requirement revert back to within 30 days following the end of each six-month period, representing no change to the current requirement.

In the amendments originally published in the Canada Gazette, Part I, it was proposed that patentees identify and report the amounts and types of benefits deducted in the calculation of average price per package and net revenue from sales. This process would be facilitated by adding a column to the format for filing (i.e. Form 2), into which patentees would enter appropriate codes.

Given that the Regulations specifically allow only for certain types of deductions in calculating net price or net sales, the PMPRB needs to be assured that only allowable deductions are being claimed. In addition, this overall requirement is expected to improve the consistency in reporting of free goods and other benefits, and to reinforce for patentees the importance of ensuring correct data filings, especially regarding the quantity of products associated with discounts, rebates, free goods, etc.

Patentees claimed that the burden of this requirement would be onerous. Patentees argued that they already report net prices or sales taking into account such benefits, but without identifying the specific nature of the benefit. The PMPRB, however, believes that this information would be beneficial to the price review process; for example, it will help the PMPRB to determine that reporting is consistent and complete.

In the amendments originally published in the Canada Gazette, Part I, there was a reference to codes for types of transactions related to "any amounts" used in the calculation of the average transaction price being reported. It was not intended that the actual amounts for each transaction be reported; rather, average net prices or net revenue by class of customer in each province/ territory is the information required. Therefore, the proposed amendment has been changed so that patentees would be required to report the types of benefits deducted in the average price calculation, but not the amounts of each benefit. To further lessen the burden of implementation on patentees, the regulatory amendment respecting identification of specific types of benefits has been changed so that it would come into force on July 1, 2008, and not immediately following publication in the Canada Gazette, Part II.

In the original pre-publication in the Canada Gazette, Part I, some patentees opposed providing notification to the PMPRB of proposed price increases stating that it was outside of the PMPRB's mandate and could result in competitiveness impacts at the beginning of negotiations with payers. While the PMPRB maintains that price increases are within its jurisdiction, further analysis revealed that the nature of the information to be submitted would be unwieldy and would cause administrative burden on both patentees and Board staff. For these reasons, this proposed amendment has been removed.

In the amendments originally published in the Canada Gazette, Part I, it was proposed that patentees could file information electronically, if they so wished. Correspondingly, electronic signatures would be accepted.

Given that all patentees are currently voluntarily filing information electronically, this proposed amendment has been changed such that electronic filing of information would now be mandatory. The file type and format that must be used will be made available on the PMPRB Web site. The proposed amendment to accept electronic signatures remains.

To further lessen the burden of implementation on patentees, the proposed amendment respecting the submission of information to the Board using the appropriate electronic document with the electronic signature of an authorized individual has been revised so that it would come into force only on July 1, 2008.

In the proposed amendments originally published in the Canada Gazette, Part I, there were two other proposals that remain unchanged. These are as follows:

i. Veterinary drugs, and over-the-counter drugs for human use, would be regulated on a complaints-based approach. Patentees will be required to provide price and sales information to the Board within 30 days after the date on which the Board sends a request in response to a complaint respecting the price of a medicine.

In previous consultations, stakeholders either fully supported these proposed amendments or expressed no concerns beyond those already addressed.

The current reporting requirements and timeframes lead to inefficiencies in the price review process and, hence, potentially longer timeframes during which drugs may be sold at excessive prices. This can directly affect consumers' ability to afford the medicines they require and cause delays or refusals by, or costs to, public drug plans relative to the listing of new drugs for the purpose of reimbursement. For these reasons, the status quo is not an acceptable option.

Economic or market-based instruments seek to change the behaviour of market participants through the use of economic incentives. They are more typically used in environmental hazard abatement plans, where reductions in hazards could be traded for, or compensated with, some reward. They have less application for administrative changes, such as those proposed here. Consequently, they will not be explored further.

A stakeholder comment following the original pre-publication in the Canada Gazette, Part I, was that naming other third party data providers could result in data inaccuracies. In fact, the data being sought in these amendments is of a proprietary nature and, hence, can only be provided by patentees. Furthermore, it is patentees who are subject to the Patent Act and Patented Medicines Regulations, 1994, not third party data providers. To eliminate any potential confusion, third party data sources are no longer named in this proposal.

In considering the available alternatives to regulation (which can include those discussed here, as well as performance standards, voluntary programs, non-compliance penalties and performance-based incentives), and different forms of regulation, no other alternative is expected to result in the same level of efficiency and effectiveness as the amendments. As a result, the proposed amendments are considered to be the most practical and appropriate way of meeting the information needs of the PMPRB to increase efficiency in the price review process, while not creating an additional undue regulatory burden on patentees.

The introductory scientific review process will be able to begin 23 days earlier for each individual drug product than in the status quo situation, resulting from the earlier filing of information on the identity of the medicine. The requirement for mandatory provision of a product monograph or similar information will eliminate further delays after the filing of required information about the medicine, stemming from the need to request this additional information from patentees. The price review process will also be accelerated by up to 29 days, in view of the need to only file price and sales information for the first day, rather than the first 30 days of sale. As a result, consumers, payers/insurers, provinces and territories, and patentees are all expected to benefit.

Costs to industry are expected to be low, as the amendments mainly represent administrative changes to when required information is to be submitted, and some additional information requirements (e.g. types of benefits included in the calculation of the average net price), all of which is currently possessed by the patentee. It is not expected to result in any major changes to business practices, increased capital expenditures or additional staff requirements.

Increased costs to Government would be minimal, and would include a redesign of the proposed electronic form for filing price and sales information (Form 2) to incorporate the additional column for reporting explanatory codes for the types of benefits that are included in the calculation of average net price and sales, and some new verification programming to ensure that the electronic information is filed in the proper format. Any costs associated with the review of additional information would be offset by other staff time savings and efficiencies resulting from reduced need for one-off follow-ups with patentees to seek additional needed information.

Net benefits are expected to be positive, and may increase over time as the efficiency of the price review process improves. Positive, increasing benefits would very likely exceed the expected costs, even in the initial years after the proposed amendments come into force.

No significant distributional issues are expected to result from the amendments. Benefits and costs are not expected to accrue to any single demographic or regional group in Canada more significantly than any other.

Notification of proposed amendments was published in the January 2005 issue of the PMPRB NEWSletter, and as a Notice and Comment, both of which are available on the PMPRB Web site (see footnote 1). A total of 21 stakeholder submissions were received by the PMPRB, and all were posted on the PMPRB Web site. In addition, PMPRB staff met twice with representatives of Canada's Research-based Pharmaceutical Companies (Rx&D;).

In general, while provinces, territories and insurers supported the proposed amendments with respect to earlier or clarified pricing information, patentees were in opposition to them. Concern was raised over the legality of the wording of one of the originally proposed amendments (related to price increase notification), the potential for greater imposition of regulatory burden and possible competitiveness impacts. Consequently, and as a result of refocusing the data needs of the PMPRB, some of the proposed amendments were revised.

The proposed Regulatory Amendments and Regulatory Impact Analysis Statement were published in the December 31, 2005 edition of the Canada Gazette, Part I, for a 30-day consultation period. Thirteen submissions were received from stakeholders, which were carefully examined by the PMPRB. The PMPRB also again met with members of Canada's Rx&D; on March 6, 2006, to discuss their comments on the proposed amendments and to hear any additional concerns of patentees in this regard. In follow-up, Rx&D; provided written feedback on the amendments.

In February and March of 2007, Board staff met with representatives from Rx&D;, BIOTECanada and the Canadian Generic Pharmaceutical Association (CGPA) to discuss the proposed amendments and implementation matters. The industry representatives raised specific concerns relating to a few proposed amendments which could increase the regulatory burden of patentees—reporting of specific amounts of benefits. Given the interpretation of this amendment, and that PMPRB had not actually intended the need for such information, a revised regulatory package was developed.

While no stakeholders were opposed to the overall goal of improved price review efficiency, some expressed concerns with respect to proposed amendments and the associated filing burden for patentees. These concerns, and the PMPRB's responses, are summarised in the section above outlining changes to the regulatory amendments.

Section 96 of the Patent Act vests the Board with the powers, rights and privileges of a superior court of record. Section 99 further states that any order of the Board may be made an order of the Federal Court or any superior court of a province and is enforceable in the same manner as an order of the court. Hence, the Board has the authority to enforce its orders and duly exercise its jurisdiction.

Sylvie Dupont
Secretary of the Board
Standard Life Centre
333 Laurier Avenue W
P.O. Box L40, 14th Floor
Ottawa, Ontario
K1P 1C1
Fax: 613-952-7626
Email: sdupont@pmprb-cepmb.gc.ca

Notice is hereby given that the Governor in Council, pursuant to section 101 (see footnote a) of the Patent Act, proposes to make the annexed Regulations Amending the Patented Medicines Regulations, 1994.

Interested persons may make representations concerning the proposed Regulations within 15 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Sylvie Dupont, Patented Medicine Prices Review Board, Box L40, Standard Life Centre, 333 Laurier Avenue West, Suite 1400, Ottawa, Ontario K1P 1C1 (tel: 613-954-8299; fax: 613-952-7626; e-mail: sdupont@pmprb-cepmb.gc.ca).

1. The long title of the Patented Medicines Regulations, 1994 (see footnote 2) is replaced by the following:

3. (1) The portion of subsection 3(1) of the Regulations before paragraph (a) is replaced by the following:

3. (1) For the purposes of paragraphs 80(1)(a) and (2)(a) of the Act, information identifying the medicine shall be accompanied by the product monograph for the medicine or, if a notice of compliance has not been issued in respect of the medicine, by information similar to that contained in a product monograph, and shall indicate

(3) The information referred to in subsection (1) shall be provided no later than the earlier of

(a) seven days after the day on which the first notice of compliance is issued in respect of the medicine, and

(b) seven days after the day on which the medicine is first offered for sale in Canada.

4. (1) Paragraphs 4(1)(c) to (g) of the Regulations are replaced by the following:

(d) the day or period, referred to in subsection (2) or (3), to which the information pertains;

(e) the drug identification number assigned under the Food and Drug Regulations in respect of the medicine or, if no drug identification number has been assigned, any other identification number assigned in respect of each dosage form and strength of the medicine of the patentee or former patentee; and

(i) the quantity of the medicine sold in final dosage form and either the average price per package or the net revenue from sales in respect of each dosage form, strength and package size in which the medicine was sold by the patentee or former patentee to each class of customer in each province and territory,

(ii) the publicly available ex-factory price for each dosage form, strength and package size in which the medicine was sold by the patentee or former patentee to each class of customer in each province and territory, and

(iii) if the medicine is being sold in one or more of the countries set out in the schedule, the publicly available ex-factory price for each dosage form, strength and package size in which the medicine was sold to each class of customer in each of those countries.

(2) Subsections 4(2) to (10) of the Regulations are replaced by the following:

(2) If the medicine is for human use and contains a controlled substance as defined in the Controlled Drugs and Substances Act or a substance listed or described in Schedule C or D to the Food and Drugs Act or Schedule F to the Food and Drug Regulations, the information referred to in subsection (1) shall be provided

(a) for the day on which the medicine is first sold in Canada, within 30 days after that day; and

(b) for each six-month period beginning on January 1 and July 1 in a year, within 30 days after the end of the period.

(3) If the medicine is for human use and does not contain a controlled substance as defined in the Controlled Drugs and Substances Act or does not contain a substance listed or described in Schedule C or D to the Food and Drugs Act or in Schedule F to the Food and Drug Regulations or is a medicine for veterinary use, the information referred to in subsection (1), for each six-month period beginning on January 1 and July 1 of each year, shall be provided to the Board within 30 days after the date on which the Board sends a request in response to a complaint respecting the price of the medicine, and during the two years following the request, within 30 days after each six-month period.

(a) in calculating the average price per package of medicine, the actual price after any reduction given as a promotion or in the form of rebates, discounts, refunds, free goods, free services, gifts or any other benefit of a like nature and after the deduction of the federal sales tax shall be used;

(b) in calculating the net revenue from sales of each dosage form, strength and package size in which the medicine was sold in final dosage form, the actual revenue after any reduction in the form of rebates, discounts, refunds, free goods, free services, gifts or any other benefit of a like nature and after the deduction of federal sales taxes shall be used; and

(5) Subject to subsection (6), this section does not apply to medicine sold by a patentee or former patentee to a person with whom they do not deal at arm's length or to another patentee or former patentee.

(6) If the patentee or former patentee sells the medicine to a person with whom they do not deal at arm's length and who is not required to provide information under paragraphs 80(1)(a) or (2)(a) of the Act, the patentee or former patentee shall provide the information required under paragraph (1)(f) in respect of any resale of the medicine by the person.

(7) For the purposes of subparagraph (1)(f)(iii), the price at which a medicine was sold in a country other than Canada shall be expressed in the currency of that country.

(8) For the purposes of this section, the Income Tax Act, as that Act read on December 1, 1987, applies, with any modifications that the circumstances require, in determining whether a patentee or former patentee is dealing at arm's length with another person.

(9) For the purposes of this section, "publicly available ex-factory price" includes any price of a patented medicine that is agreed on by the patentee or former patentee and the appropriate regulatory authority of the country in which the medicine is sold by the patentee.

7. (1) Every person required by these Regulations to provide information to the Board shall do so by using the appropriate electronic document made available on the Board's website and by sending the completed electronic document, in its original format and file type, to the email address specified by the Board on its website.

(2) The electronic document shall bear the electronic signature of an authorized individual, certifying that the information set out in the document is true and complete.

6. Schedule I to the Regulations is replaced by the schedule set out in the schedule to these Regulations.

7. (1) Subject to subsections (2) and (3), these Regulations come into force on the day on which they are registered.

(2) Paragraph 4(4)(c) of the Patented Medicines Regulations, as enacted by subsection 4(2) of these Regulations, comes into force on July 1, 2008.

See January 2005 NEWSletter and Notice and Comments respectively at www. pmprb-cepmb.gc.ca, under Publications, NEWSletter, and Consultations, Notice and Comments. You can also click on www.pmprb-cepmb.gc.ca/english/View. asp?x=287∓=68 and www.pmprb-cepmb.gc.ca/english/view.asp?x=400∓ =68.