Question Period Note: Patented Medicine Prices Review Board

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• The Patented Medicine Prices Review Board (PMPRB) is an independent quasi-judicial body that protects the interests of Canadian consumers by ensuring that the prices of patented medicines sold in Canada are not excessive.
KEY MESSAGES
• Canada has among the highest patented medicine prices in the world, and these high prices can impact the ability of patients to access new medicines.
• Health Canada supports and respects the PMPRB’s role as a strong, independent quasi-judicial body that protects the interests of Canadian consumers by ensuring that the prices of patented medicines sold in Canada are not excessive.
IF PRESSED ON THE HEALTH CANADA SUBMISSION OR QUESTIONS ABOUT ANY POTENTIAL INTERFERENCE IN THE BOARD’S DECISION…

• PMPRB is an independent quasi-judicial body and is responsible for the development and implementation of its Guidelines. As stated in section 96(5) of the Patent Act, the PMPRB must consult with various parties, including the Minister of Health, before the issuance of any guidelines. It is in that context that Minister Duclos wrote to the chair of the PMPRB to share his views with respect to the proposed Guidelines.
• As part of the PMPRB’s consultation process, Health Canada sent a submission to the Board on December 5, 2022, asking it to consider pausing the consultation process, to allow time to work collaboratively with health system partners and stakeholders, including provinces and territories, to understand fully the short and long-term impacts of the proposed new Guidelines.
IF PRESSED ON LEADERSHIP CHANGES AT PMPRB…
• On February 1, 2023, following an open, transparent and merit-based selection process, Thomas J. Digby was appointed as the Chairperson of the PMPRB for a term of five years.
• The Government of Canada is committed to appointing highly qualified candidates to best serve the interests of Canadians.
• Health Canada would like to thank Mélanie Bourassa Forcier and Matthew Herder for their work as members of the Board during their terms.
• Members of the PMPRB are Governor-in-Council appointments.
IF PRESSED ON PMPRB BOARD MEMBERS…
• All members of the PMPRB board are Governor-in-Council appointments.
• On March 10, 2023, Notice of Opportunities for a new board member and vice-chairperson of the Board were issued by the Privy Council Office.
• Appointments will follow in due course.
IF PRESSED ON IMPACT OF THE RESIGNATION OF PMPRB OFFICIAL…
• Officials working as staff within the PMPRB are public servants, and the PMPRB is responsible for its own staffing. Questions about human resources and staffing at the PMPRB should be directed to PMPRB.
IF PRESSED ON PMPRB’S CURRENT CAPACITY TO PROTECT CANADIANS FROM EXCESSIVE PRICES OF PATENT MEDICINES…
• The PMPRB was established under the Patent Act and reports into Parliament through the Minister of Health. It does and will continue to play an important role in exercising its authority as an independent body to oversee the prices of patented medicines in Canada and ensure that Canadians are not paying excessive prices.
• The PMPRB and its legal framework are an important part of the pharmaceutical landscape, and the Government of Canada is committed to the mandate of the PMPRB and its role in protecting consumers against excessive prices of patented medicines.
IF PRESSED ON GUIDELINES …
• Health Canada supports and respects the PMPRB’s role as a strong, independent quasi-judicial body that protects the interests of Canadian consumers by ensuring that the prices of patented medicines sold in Canada are not excessive.
• Specific questions regarding next steps with respect to the Guidelines should be directed to PMPRB.
IF PRESSED ON THE PMPRB …
• As an arm’s-length organization of the government, the PMPRB reviews the prices patentees charge for patented drug products in the Canadian market. The PMPRB can work with patentees to achieve voluntary price reductions, or the board can hold public hearings to determine whether a price is excessive, and (if so) order price reductions or the offset of excess revenues.
• Health Canada supports and respects the PMPRB’s role as a strong, independent quasi-judicial body that protects the interests of Canadian consumers by ensuring that the prices of patented medicines sold in Canada are not excessive.
IF PRESSED ON CONCERNS WITH IMPACTS ON REVENUE TO INDUSTRY AND DRUG ACCESS …
• The Government of Canada understands the importance of the pharmaceutical sector and in supporting research and development in Canada. A balance between supporting innovation and improving the affordability and accessibility of patented drugs for Canadians is essential.
• Even with lower prices, revenues from patented drug sales are expected to continue growing over the next ten years in Canada.
IF PRESSED ON IMPACT OF PHARMACEUTICAL INVESTMENTS IN CANADA …
• Our Government recognizes the importance of the life sciences sector to the Canadian economy, innovation, and quality of life. We remain committed to strengthening the innovation ecosystem in Canada.
• Budget 2021 announced significant investments to grow Canada’s life sciences and bio-manufacturing sector, providing a total of $2.2 billion over seven years towards growing a vibrant domestic life sciences sector.

The Patented Medicine Prices Review Board (PMPRB), an arm’s-length organization of the government, reviews the prices patentees charge for patented medicines available in the Canadian market to ensure that they are not being sold at a price that the PMPRB finds to be “excessive”. The PMPRB can work with patentees to achieve voluntary price reductions or hold public hearings to determine whether a price is excessive, and (if so) order price reductions or the offset of excess revenues.

The Minister of Health has the authority under the Patent Act to refer matters to the PMPRB, which in turn is required to inquire into the matter and report its findings back to the Minister. Additionally, the Minister is responsible for making recommendations to Cabinet on changes to the Patented Medicines Regulations (PMR), which form part of the PMPRB’s legislative framework.

On August 21, 2019, the Government of Canada published the final amendments to the PMR in the Canada Gazette, Part II. At that time, the amendments were scheduled to take effect on July 1, 2020.

The amendments included three main elements:
• Providing the PMPRB with additional price regulatory factors that consider the price of patented medicines relative to their value and impact on the Canadian health care system (these amendments would ultimately not come into force);
• Requiring patentees to report Canadian price information that is net of all adjustments (e.g. rebates, discounts, including third party rebates) (these amendments would ultimately not come into force); and,
• Revising the “basket” of comparator countries, to include markets with comparable consumer protection priorities, economic wealth, and medicine markets as Canada.

On November 21, 2019, the PMPRB launched consultations with stakeholders on the draft Guidelines to operationalize the amendments. The PMPRB revised draft Guidelines on June 19, 2020 and published its updated Guidelines on October 23, 2020.

The original coming into force date of the regulatory amendments was delayed four times by six months due to considerations associated with the COVID-19 pandemic. On March 29, 2020, stakeholders were informed of an initial delay of six months to January 1, 2021. In December 2020, stakeholders were notified of another six-month delay to July 1, 2021. In June 2021, the coming into force was delayed further to January 1, 2022. Then, in December 2021, stakeholders were informed of another six-month delay to July 1, 2022. These delays provided additional time for stakeholders to prepare for the new reporting obligations and to familiarize themselves with the final Guidelines, allowing them to continue to focus their efforts on combatting the pandemic.

Since 2019, the pharmaceutical landscape has shifted dramatically. A new context has developed, brought on by the COVID-19 pandemic and coupled with the progression of various initiatives seeking to improve accessibility and affordability for needed medicines. Health Canada took the opportunity in March 2022 to consult with stakeholders on a way forward. Further to these consultations, the Government announced on April 14, 2022, that it was moving forward with the coming into force on July 1, 2022, of the new basket of comparator countries and reduced reporting requirements for medicines with lowest risk of excessive pricing of the Patented Medicine Regulations. The Government did not proceed with the amendments related to the new price regulatory factors, nor with the requirements to file information net of all price adjustments (e.g. rebates, discounts, including third party rebates).

On June 30, 2022, in anticipation of the coming into force of the amendments to the PMR on July 1, 2022, the PMPRB published Interim Guidelines for establishing non-excessive prices for drugs launched during the period of time between the coming into force of the PMR and the publication of the Final Guidelines. The consultation process for the interim Guidelines proposed that once the Draft Guidelines were published, there would be a targeted consultation with key stakeholders.

Subsequently, on October 6, 2022, Draft Guidelines were published with a 60-day Notice and Comment Period ending December 5, 2022. The PMPRB expressed the intention to issue Final Guidelines by the end of the year and coming into effect on January 1, 2023. The PMPRB proposed that the enforcement period would begin in January 2024 to provide rights holders two reporting periods to adjust to the new Guidelines. In addition to the new Schedule of 11 comparator countries, the Draft Guidelines contained a number of substantive changes as part of the Board’s modernization efforts. As part of its consultation process, the PMPRB opened an online consultation portal and hosted an online public consultation on the draft Guidelines on November 3, 2022, and November 8, 2022, in English and French, respectively. Further, representatives of the pharmaceutical industry were invited to closed webinars on November 3 and 8, 2022, in English and French.

On November 28, 2022, the Minister of Health wrote to the Acting Chairperson of the PMPRB asking that the Board consider pausing the consultation process to allow time to fully understand the short and long-term impacts of the proposed guidelines. This letter was written in context of section 96(5) of the Patent Act, which states that the PMPRB must consult with various parties, including the Minister of Health, before the issuance of any guidelines.

In December 2022, Mélanie Bourassa Forcier, Vice-Chairperson and Acting Chairperson of PMPRB, confirmed her resignation and in February 2023, Matthew Herder confirmed his resignation from the Board and published his resignation letter online. Douglas Clark, Executive Director (a public servant who reports into the Chairperson) announced that he would remain as a special advisor for a specified period, but resigned from his Executive Director position in February 2023.

In February 2023, the Government of Canada announced the appointment of Thomas J. Digby as the chairperson of the PMPRB following an open, transparent and merit-based selection process, for a term of five years. Appointment processes for a member and vice-chairperson position on the board were launched on March 10, 2023, and appointments are expected to follow in due course.

On March 9, 2023, the Standing Committee on Health (HESA) adopted a motion to conduct a study on the PMPRB and invited the following witnesses, in addition to any further witnesses the committee may consider relevant: the Honourable Jean-Yves Duclos, Minister of Health; Matthew Herder, former member of the PMPRB; Mélanie Bourassa Forcier, former acting chair, PMPRB; and Douglas Clark, former executive director, PMPRB. The committee will report its findings and recommendations to the House and request that the government table a comprehensive response to the report.

On April 27, 2023, HESA commenced its study on the PMPRB. Minister Jean-Yves Duclos made a statement and, along with Deputy Stephen Lucas, Eric Belair and T. Nessim Abu-Zahra, answered questions. Melanie Bourassa Forcier, former acting chairperson of the Board also made a statement and answered questions. The study continued on May 2, 2023, with Matthew Herder, former Board member, and Douglas Clark, outgoing executive director, PMPRB, each making opening statements and answering questions. On May 4, HESA passed a motion that witnesses produce correspondence they consider relevant to support their testimony to the committee.

Litigation concerning the amendments to the Patented Medicines Regulations

The PMR amendments were challenged in the Federal Court and Superior Court of Quebec. In the Federal Court challenge, Innovative Medicines Canada and sixteen Canadian subsidiaries of brand-name companies filed an application for a judicial review of the amendments. On June 29, 2020, the Court upheld most of the regulatory amendments, but struck down the collection of confidential rebate information. Similarly, on December 18, 2020, the Quebec Superior Court ruled to uphold the constitutionality of the existing PMPRB regime and the regulatory amendments, except the collection of price information that is net of third-party rebates. Following this, the Court of Appeal of Québec on February 18, 2022, upheld the constitutionality of the existing regime and the validity of the updated basket of comparator countries, but found that the three new price regulatory factors, in addition to the collection of confidential rebate information to be invalid. Neither party sought leave to appeal the decision to the Supreme Court of Canada.

On December 5, 2022, with respect to updating the comparator basket of countries, the Federal Court of Appeal unanimously dismissed an appeal by Innovative Medicines Canada (IMC) and upheld the Federal Government’s amendment to the PMR. The decision upholds a key element of the Government’s agenda to implement regulations that will result in lower drug prices for Canadians. IMC did not seek leave to appeal this decision to the Supreme Court of Canada.

• On July 1, 2022, Health Canada’s amendments to the Patented Medicines Regulations (PMR) came into force. These amendments include a new basket of comparator countries and reduced reporting requirements for those medicines at lowest risk of excessive pricing (e.g., over-the-counter drugs and generic medicines). The price reporting requirements for the new basket of countries have been in force since July 1, 2022. The PMPRB has therefore received from regulated parties the new pricing information respecting the new basket of comparator countries for all of 2022.
• To operationalize the amendments and modernize other aspects of its existing Guidelines, the PMPRB proposed new final Guidelines, which were published on October 6, 2022, for a 60-day consultation period, ending December 5, 2022.
• In December 2022, the PMPRB announced that it would not implement the proposed new Guidelines on January 1, 2023, as they had previously indicated. PMPRB communicated that the Interim Guidelines would remain in place until further notice.
• On December 5, 2022, Mélanie Bourassa Forcier resigned as Acting Chairperson of the PMPRB, and on February 20, 2023, Matthew Herder resigned from the Board.
• On February 1, 2023, the Government of Canada announced the appointment of Thomas J. Digby as the chairperson of the PMPRB following an open, merit-based process.
• On March 9 2023, the Standing Committee on Health (HESA) adopted a motion to conduct a study on the Patented Medicine Prices Review Board and invite the following witnesses, in addition to any further witnesses the committee may consider relevant: the Honourable Jean-Yves Duclos, Minister of Health; Matthew Herder, former member of the PMPRB; Mélanie Bourassa Forcier, former acting chair, PMPRB; and Douglas Clark, former executive director, PMPRB. The committee will report its findings and recommendations to the House and request that the government table a comprehensive response to the report.
• On April 27, 2023, HESA commenced its study on the PMPRB. Minister Jean-Yves Duclos made a statement and, along with Deputy Stephen Lucas, Eric Belair and T. Nessim Abu-Zahra, answered questions. Melanie Bourassa Forcier, former acting chairperson of the Board also made a statement and answered questions. The study continued on May 2, 2023, with Matthew Herder, former Board member, and Douglas Clark, outgoing executive director, PMPRB, each making opening statements and answering questions.
• On May 4, HESA passed a motion that witnesses produce correspondence they considered relevant to support their testimony to the committee.