Michelle BoudreauExecutive Director

Pharma Pricing and Market Access OutlookLondon, United KingdomMarch 19-22, 2013

Canada’s Patented Medicine Prices Review Board

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Outline________________________________________________

Overview of the PMPRB How the PMPRB really works. Canada Compared to the World Common Challenges Looking Forward

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Overview of the PMPRB________________________________________________ Established in 1987 as consumer protection pillar via

amendments to Patent Act The PMPRB is an independent quasi-judicial body with a dual

mandate: Regulatory: To ensure that prices charged by patentees for patented

medicines sold in Canada are not excessive Reporting: To report on pharmaceutical trends of all medicines and on R&D

spending by pharmaceutical patentees Jurisdiction

Regulate prices patentees charge (i.e. factory-gate price) for patented drug products sold in Canada, to wholesalers, hospitals or pharmacies, for human and veterinary use

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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 MIPC3) 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, PMPRB monitors average prices, CPI increase permitted but at no time can price be higher than highest international price (HIP)

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How does it really work – PMPRB ceiling price compared with public price________________________________________________

* Brand price sets the MAPP – brand price $0.65

Drug Pivotal Test PMPRB ceiling price

Patentee introductory price (average)

Publicly available price

Brand-X TCC 2.45 0.68 0.69

Brand-Y TCC 1.52 1.50 1.50

Generic-A TCC* 0.65 0.42 0.33

Regulatory Statistics

Approximately 1,200 patented drug products under PMPRB jurisdiction 2011: 109 New Drug Products introduced :

79% within Guidelines; 9% outside of Guidelines but do not trigger an investigation 12% under investigation 69% were of slight or no improvement; 25% of moderate improvement;

5% of substantial improvement and 1% breakthrough Between 2000 and 2010, average of 84 new patented drug products/year High level of compliance: average rate is approximately 95% Since 1993:

90 VCUs 26 public hearings $137 million collected through VCUs and Board Orders

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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 3 years, Germany has most often been the highest referenced price for PMPRB price tests (“HIPC”), followed by US Recent cost containment measures by reference countries, like Germany, may

therefore lead to lower prices in Canada

PMPRB Price Tests - International Referencing________________________________________________

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Canada Compared to the World________________________________________________ Canadian prices comparatively higher than a number of OECD

countries

S.Korea Ita

ly UK

Australia

France

Spain

Austria

Belgium

Swed

en

Switze

rland

Denmark CAN

German

y

Mexico

Japan USA

0.00

0.50

1.00

1.50

2.00

2.50Avg Bilateral Foreign-to-Canadian Price Ratios: Top 300 selling oral solids in Canada

IMS Health Data, 2010

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Canada Compared to the World (cont’d)________________________________________________ Growth in drug sales outpacing comparator countries

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Canada Compared to 21 EU Members - 2010

IMS Health Data, 2010

Czech RepublicEstonia

SlovakiaSlovenia

ItalyPortugal

PolandHungaryFinlandGreece

United KingdomNetherlands

FranceSpain

AustriaBelgium

LuxembourgSwedenIreland

DenmarkCanada

Germany

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05

AVERAGE BILATERAL FOREIGN-TO-CANADIAN PRICE RATIOS

0.93

1.000.98

0.890.87

0.70-0.60

0.80-0.70

0.84

Average Price Ratio for 21 EU Members 0.79

1.06

Based on top 300 selling oral solids in Canada

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Common Challenges________________________________________________ Transparency in pricing around the globe makes comparisons

increasingly challenging as a price regulator

Next wave of new drugs (e.g., biologics) are costly

Recognizing innovation and ensuring a non-excessive price = a delicate balance

Very dynamic market with many factors at play

Affordable access and sustainability is a concern shared by consumers, regulators and payers

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Looking Forward________________________________________________

Canadian-EU Comprehensive Trade Agreement (CETA) If proposal implemented, longer period of PMPRB regulation over

patented drugs; but could also cause a re-evaluation of the balance between intellectual/industrial policies and health care/drug costs

Critical jurisprudential decisions within approx. 1 year Priorities of last fiscal year: reducing regulatory burden and

increasing compliance September 2013, Board will set priorities for fiscal year 13-14 Ongoing engagement and outreach with stakeholders Continued engagement with international organizations

Thank you.Merci.

michelle.boudreau@pmprb-cepmb.gc.ca

PMPRB Website: www.pmprb-cepmb.gc.ca

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