Frequently Asked Questions
1. What is the Patented Medicine Prices Review Board (PMPRB)?
Created in 1987 under the Patent Act as an independent quasi-judicial tribunal, the PMPRB limits the prices set by manufacturers for all patented medicines, new and existing, sold in Canada, under prescription or over the counter, to ensure they are not excessive.
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2. What is the role and mandate of the Patented Medicine Prices Review Board?
As an independent quasi-judicial body, the PMPRB carries out its mandate independently of other organizations such as Health Canada, which approves drugs for safety and efficacy, and public drug plans, which approve the listing of drugs on their respective formularies for reimbursement purposes.
The PMPRB has a dual role:
Regulatory: To protect consumers and contribute to Canadian health care by ensuring that prices charged by manufacturers for patented medicines are not excessive. Reporting: To contribute to informed decisions and policy making by reporting on pharmaceutical trends and on the R&D spending by pharmaceutical patentees.
Regulatory: To protect consumers and contribute to Canadian health care by ensuring that prices charged by manufacturers for patented medicines are not excessive.
Reporting: To contribute to informed decisions and policy making by reporting on pharmaceutical trends and on the R&D spending by pharmaceutical patentees.
3. What is a patented medicine?
A patented medicine is a drug to which a Canadian patent pertains. A patent provides exclusive rights to the patent holder to use the invention for the duration of the patent.
4. What is a patent?
A patent is an instrument issued by the Commissioner of Patents in the form of letters patent for an invention that provides its holder with a monopoly limited in time. It gives the patentee the exclusive right to make, sell, or otherwise exploit the invention for the duration of the patent.
5. What is the duration of a patent?
20 years from the date of filing.
6. What is a non-patented medicine?
A non-patented medicine is a drug that is not protected by a patent, including generic drugs and some brand name drugs.
7. What is a generic drug?
A drug which is the same as a brand name drug and is allowed to be produced and marketed after the brand name drug's patent has expired.
8. What is the difference between prescription drugs, over the counter drugs and non-prescription drugs?
Prescription drugs are usually prescribed by a physician, dispensed by a pharmacist and received either in hospital or in the community. A prescription drug may or may not be patented.
Over the counter drugs or non-prescription drugs are legally available without a prescription but may be prescribed. Usually paid for directly by the consumer but, when prescribed, OTC medicines are sometimes covered by public and private drug plans. Although an over the counter drug may or may not be patented, only a small number of OTC drugs are patented.
9. What type of medicine does the PMPRB regulate?
The PMPRB regulates the manufacturers' prices of patented medicines sold in Canada to ensure that they are not excessive. The regulation of the medicine for safety and efficacy is the responsibility of the Department of Health under the Food and Drugs Act and Regulations.
The PMPRB reviews the "factory-gate" price, i.e. the price at which the manufacturer sells the patented medicine to wholesalers, hospitals and pharmacies. The PMPRB does not have jurisdiction over prices charged by wholesalers or retailers nor over pharmacists' professional fees.
The PMPRB regulates the price of each patented drug product, including each strength of each dosage form of a patented medicine. This is normally the level at which Health Canada assigns a Drug Identification Number (DIN).
The PMPRB's jurisdiction includes patented medicines marketed or distributed under voluntary licenses.
10. Does the PMPRB regulate prices of generic drugs?
The PMPRB has no authority to regulate the prices of non-patented drugs, including generic drugs.
11. Who ensures the safety of drugs in Canada?
Health Canada assesses new medicines to ensure that they conform with the Food and Drugs Act and Regulations. Formal authorization to market or distribute a medicine is granted through a Notice of Compliance issued by Health Canada.
12. What controls exist to ensure that the prices Canadians pay for drugs are reasonable?
In Canada, the prices of patented medicines only are subject to direct price controls through the PMPRB.
To determine if the price of a patented drug sold in Canada is excessive, the PMPRB applies factors set out in the Patent Act and in its price guidelines.
In summary:
Public drug plans also play a role in drug pricing through the listing of drugs on their respective formularies for purposes of reimbursement.
13. What factors affect the cost of prescription medicines?
Many factors influence the total cost of drugs:
14. How do drug prices in Canada compare to prices in other countries?
Although total expenditures on drugs have been going up, the prices of patented medicines in Canada over the past ten years have decreased in comparison to other industrialized countries.
15. What process does the brand name pharmaceutical industry (patentees) follow to ensure they comply with the PMPRB guidelines?
Under the Patented Medicines Regulations, patentees are required to report information on the introductory prices and sales of new patented medicines within 60 days of the date of first sale and to continue to file detailed information prices and sales of each patented drug for the first and last six-month period of each year for as long as the drug remains patented.
16. How does the PMPRB review the pricing information for all patented medicines sold in Canada?
The PMPRB reviews pricing information on an on-going basis to ensure that the prices comply with the Patent Act and does so for the duration of the patent.
Following the scientific review, the PMPRB reviews the price of the drug to determine if it is within the Guidelines, based on the factors established in the Patent Act.
When Board Staff finds that the price of a patented drug appears to exceed the Guidelines, and where the criteria for commencing an investigation is met, Board Staff will conduct an investigation to determine the facts.
An investigation can result in its closure; in a Voluntary Compliance Undertaking (VCU) by the patentee to reduce the price and to pay excessive revenues; or in a public hearing and remedial action.
17. What happens after the PMPRB conducts an investigation?
An investigation may result in one of the following situation:
18. Does the PMPRB have any kind of power or authority to reduce prices?
If, after a public hearing, the Board finds that a price is excessive, it may order the patentee to reduce the price and take measures to offset up to double excess revenues it may have received. The offset of excess revenues may be achieved through additional price reduction or a payment to the Government of Canada.
19. What happens to the money paid to the Government of Canada?
Under the Patent Act, the Minister of Health can make arrangements with provincial counterparts to distribute the money. The PMPRB has no authority with respect to the distribution of funds collected under a VCU or Board Order.
20. Does the PMPRB delay or block the sale of a drug in Canada?
No. If the PMPRB finds that the price of a patented medicine is excessive, it can order a price reduction.
The PMPRB does not have the authority to prevent the sale of a patented medicine based on its price nor to remove it from the market.
21. Does the PMPRB regulate research and development?
The PMPRB has no authority to regulate R&D. The PMPRB's mandate is to report on R&D. With the adoption of the 1987 amendments to the Patent Act, Canada's Research Based Pharmaceutical Companies (Rx&D) made a public commitment that the brand name pharmaceutical industry would increase its annual R&D expenditures as a percentage of sales to 10% by 1996. In 2002, the R&D-to-sales ratio was 9.9%.
22. The PMPRB also has a reporting role. What does that entail?
The PMPRB reports annually to Parliament on its activities, on price trends of patented medicines and all medicines and on R&D expenditures as reported by pharmaceutical patent-holding companies.
Furthermore, in 2001, federal/provincial/territorial ministers of Health announced the establishment of the National Prescription Drug Utilization Information System (NPDUIS). The PMPRB, in collaboration with the Canadian Institute for Health Information (CIHI), has been mandated to provide analysis of price, utilization and cost trends so that Canada's health system has more comprehensive, accurate information on how prescription drugs are being used and on sources of cost increases.
