July 30, 2019
By Noel Courage
Companies launching patented medicines in Canada should be prepared for price review. The Patented Medicine Prices Review Board ("PMPRB") is the government agency empowered to patrol and limit the price of patented medicines. It sees its role as protecting consumers by ensuring that patent drug prices are not excessive. This role has created an occasional price tug of war with pharmaceutical companies in the past as the two sides try to decide upon an appropriate price. Companies need to recoup the huge costs of research and development and turn a profit for shareholders before patents expire and generic drugs enter the market. Companies that don’t make money will not generate many new drugs in future.
Price Review Only
The PMPRB mandate is price review, focused on patented medicines. For reimbursement of a medicine, drug manufacturers typically look to each of the separate provincial formularies and private insurers.
No Jurisdiction Until a Patent is Granted
Companies that wish to open discussions with the PMPRB prior to patent grant may do so. The patent must be granted to trigger PMPRB jurisdiction to require price review. In the Hoechst v Canada1 case, it was also determined that the PMPRB did not have jurisdiction over pending patent applications. It was stated that a patent application gives rise only to the potential for the grant of a patent. Once a patent is granted and the Board takes jurisdiction, the Board may then attempt to revisit pricing issues for the period prior to patent issuance, depending when the product was first sold and when the patent application was laid open.
Broad Price Review Jurisdiction
Merest Slender Thread
The PMPRB has applied its jurisdiction broadly. For example, it held that it could review price of a medicine based on a patent that was not even being used to manufacture the medicine, as long as the patent somehow pertained to the medicine. The Federal Court of Appeal upheld this view and stated that there need only be a rational connection between a patent and the medicine for the board to have jurisdiction - this connection can be one of the “merest slender thread”2.
Any Patent Can Trigger Jurisdiction
It does not matter if the patent is for a commercial embodiment of the medicine or not. The case of Hoechst v. Canada, noted above, considered the smoking-cessation product, Nicoderm, which slowly delivers nicotine from a patch into the skin. The Court followed the earlier ICN case and stated that it is irrelevant whether Hoechst was actually making use of a particular patent for a delayed-release patch. It only mattered that the patent has a nexus to Nicoderm (ie. that it could be used for Nicoderm). Hoechst still had the power to use the patent for the alternative patch design to prevent a competitor from using that alternate patch and entering the Canadian market with a competing product to Nicoderm.
Generics Drug Prices May Be Reviewed
The PMPRB can review generic drug prices if the generic company has express or implied rights under a patent. In an early case on this issue, Sandoz attracted PMPRB price review by selling medicines covered by patents owned by Novartis (its parent company) and other affiliates, creating an implied license3. In another case, Ratiopharm had a contract with GSK under which Ratiopharm sold ratio-HFA, which triggered the jurisdiction of the Board4.
Upcoming Revisions to Regulations
The federal government published proposed amendments to the Patented Medicines Regulations in December 2017. This led to a fair amount of commentary on behalf of innovative pharma, since the proposed amendments were expected to modify the review criteria in a manner that would have the typical effect of reducing prices. Revised regulations are expected to be published this year.
How to Deal with the PMPRB
Pharmaceutical companies typically negotiate patented medicine price with the PMPRB in advance of product launch by providing comparative pricing data and other information to justify proposed pricing. The PMPRB can trigger an administrative price review hearing if no agreement is reached. A PMPRB decision can be appealed to a court.
*The author acknowledges, with thanks, research work of Nyrie Israelian, in relation to generic price review and the upcoming revisions to regulations.
1 2005 FC 1552.
2 ICN Pharmaceuticals, Inc. v. Canada (PMPRB), 1997 1 FC 32 (FCA).
3 Sandoz Canada Inc v Canada (Attorney General), 2014 FC 501.
4 Ratiopharm Inc v Canada (Attorney General), 2014 FC 502.
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