1. Pharmacare 2020 Conference
Vancouver, Feb 26-27, 2013
Michelle Boudreau
Executive Director, PMPRB

2. Outline
________________________________________________
 Policy objectives in practice
 How does it really work: an imperfect alignment?
 Concluding remarks
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3. Policy Objectives in Practice - key quotes and court
pronouncements
______________________________________________
“…changes (to Bill C-22) will also ensure consumer protection by
creating a drug prices review board to monitor drug prices. . .”
 The Honourable Harvie Andre made this comment upon
introducing Bill C-22 for second reading on November 20,
1986.
 The protection of consumer interests was one of the “Five
Pillars” of public policy addressed by amendments to the
Patent Act creating the PMPRB.
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4. Policy objectives in practice- key quotes and court
pronouncements
______________________________________________
“…The Board’s interpretation of its mandate under the relevant
provisions was consistent with its consumer protection purpose
and should not be disturbed.”
 Supreme Court of Canada’s decision in the Celgene/Thalomid
matter, January 2011
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5. Policy objectives in challenging and changing reality…
________________________________________________
 Policy objective of the day – 25 years ago – was Canada’s drug prices
would never be the highest and would be, on average, in the “middle”
 Very dynamic market with many factors at play
 A national regulatory framework that sets a ceiling (“non-excessive price”)
for all consumers, all patented drugs and all payers and cash-paying
consumers
 Transparency in pricing around the globe makes comparisons increasingly
challenging as a price regulator
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6. How does it really work - price tests
________________________________________________
 Blend of therapeutic improvement & international referencing
 Recognize incremental pharmaceutical innovation
 At introduction, price premium aligned with therapeutic improvement:
 Four levels of therapeutic improvement:
1) Breakthrough – Median of International Price Comparison (MIPC)
2) Substantial Improvement – Higher of top of Therapeutic Class Comparison
(TCC) and the MIPC
3) Moderate Improvement – Higher of mid-point between top of TCC test and the
MIP, and top of TCC (primary & secondary factors apply here)
4) Slight/No Improvement – Top of TCC
 After introduction, monitor Average Transaction Price (ATP)
subject to CPI based price increases and cannot be greater
than highest international price (HIP)
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7. How does it really work - price tests
________________________________________________
 Price tests are applied in accordance with therapeutic
improvement
 Based on specific circumstances, price ceilings at intro
may be set differently
 For example, in 2011, within the “slight or no improvement
category” (70% of new drugs)
 the highest international price comparison (HIPC) test sets the
Maximum Average Potential Price (MAPP) 30% of the time because
the TCC was higher than HIPC, or a TCC could not be conducted
 the TCC sets the MAPP 40% of the time
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8. How does it really work - MAPP compared with public
price
________________________________________________
Drug Cat Intro- Intro - Pivotal MAPP Intro Publicly
MIP HIPC Test Bench available
Price price
(ATP)
Brand-X SNI 1.15 2.95 TCC 2.45 0.68 0.69
Brand-Y SNI 1.40 1.85 TCC 1.52 1.50 1.50
Generic-A SNI 0.85 1.50 TCC* 0.65 0.42 0.33
* Brand price sets the MAPP – brand price $0.65
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9. Average Ratio of 2011 Price to Introductory Price, by
Year of Introduction
________________________________________________
1.10
1.06 1.06 1.06
1.05 1.04
1.03
1.02
1.01 1.01
1.00
1.00 0.99
0.98 0.99
Ratio
0.97
0.95 0.94
0.93
0.93
0.90
0.85
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: PMPRB
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10. Concluding remarks
________________________________________________
 Recognizing innovation and ensuring a non-excessive price = a delicate
balance
 Very dynamic market with many factors at play
 Consumer protection vis-à-vis drug pricing remains an important policy
objective
 Transparency in pricing around the globe makes comparisons increasingly
challenging as a price regulator
 Affordable access and sustainability is a concern shared by
consumers, regulators and payers
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11. Thank you.
Merci.
michelle.boudreau@pmprb-cepmb.gc.ca
www.pmprb-cepmb.gc.ca
Twitter: @PMPRB_CEPMB
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12. Annex – additional information
and statistics
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13. Market trends - Canada Compared to the World
________________________________________________
 In 2005 and 2011, Canadian drug sales accounted for 2.4% and
2.6%, respectively, of the global market
 Small, but significant market
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14. Market trends - Canada Compared to the World
________________________________________________
 Growth in drug sales outpacing comparator countries
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15. Market trends - Canada Compared to the World
________________________________________________
 Canadian prices comparatively higher than a number of OECD
countries
2.50
Avg Bilateral Foreign-to-Canadian Price Ratios: Top 300 selling oral solids in Canada
2.00
1.50
1.00
0.50
0.00
IMS Health Data, 2010
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16. Market trends - Canadian Public Drug Plan* Spending on Rx
Drugs, Rates of Growth and Annual Totals, 2005/06 to 2010/11
* NPDUIS, all public drug plans, including NIHB, are included with the exception of Newfoundland; Yukon; NWT’s and Quebec. Its important to
keep in mind that there may be some provincial plans, like disease specific plans, that are not included even if the province is included. The totals
include drug cost, retail/wholesale mark-ups as well as dispensing fees.
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17. PMPRB Price Tests - How Does it Really Work?
________________________________________________
 Of the 109 New Drug Products introduced in 2011:
 12% under investigation
 69% were of slight or no improvement
 25% of moderate improvement
 5% of substantial improvement 1% breakthrough
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18. PMPRB Price Tests - International Referencing
________________________________________________
 Reference pricing at introduction and for existing drugs based on 7
comparator countries - France, Germany, Italy, Sweden, Switzerland, UK, and US
 Policy changes in these countries could impact prices in Canada
 Over last three years, Germany has most often been the highest
referenced price for PMPRB price tests, followed by US
 Recent cost containment measures by reference countries may lead to lower prices
in Canada (e.g., Germany)
Frequency in setting Highest International Price Comparison test at introduction
16
14
12
10
8
6
4
2
0
France Germany Italy Sweden Switzerland UK USA
2008 0 2 0 1 0 2 3
2009 0 7 0 1 1 0 3
2010 0 6 0 0 0 0 4
2011 0 5 1 1 0 0 15
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19. Regulatory Statistics
High level of compliance - On average, 93-95% overall compliance
2011 2010
New Drug Products 109 68
Introduced
Number of 69 87
Investigations
Between 2000 and 2009, average of 86 new patented drug
products/year
 Of the 109 new drug products introduced in 2011:
 79% within Guidelines
 13% under investigation
 8% outside of Guidelines but do not trigger an investigation
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