Pricing and Reimbursement Policies 27 Pricing Policies Patented

Pricing and Reimbursement Policies 27

Pricing Policies Patented Medicines • Patented Medicine Prices Review Board (PMPRB) monitors and sets the price of patented medicines • Judges whether a price is “excessive” for new patented drugs and existing patented drugs • PMPRB regulations mandated and guided by s 79 -103 the Patent Act • PMPRB uses 2 step process to set and review prices for new patented drug products: 1. 2. Scientific review Price review 28

Scientific Review • The purpose of the scientific review process is to establish: “level of therapeutic improvement of a patented drug product” • Level of therapeutic improvement assessed by Human Drug Advisory Panel • Four categories of therapeutic improvement: 1. 2. 3. 4. Breakthrough Substantial Improvement Moderate Improvement Slight or No Improvement 29

Price Review Process • Level of therapeutic improvement used to determine if a price is “excessive” 1. Breakthrough: excessive price determined by international reference pricing (IRP); France, Germany, Italy, Sweden, Switzerland, the United Kingdom, and the United States 2. Substantial Improvement: price is excessive if higher of IRP price OR highest non-excessive price compared with drugs in therapeutic class (TCC test) 3. Moderate Improvement: IRP and/or TCC 4. Slight or No Improvement: TCC or IRP 30

PMPRB Investigations and Hearings • PMPRB can initiate investigations into excessive pricing • If excessive pricing is determined, investigated party can agree to a lower price and offset any revenue based on excessive pricing (Voluntary Compliance Undertaking) • If investigated party does not agree to lower price voluntarily PMPRB can hold hearings and ultimately order price to be lowered and double revenue amounts to be offset • Hearing decisions are subject to federal judicial review 31

Reimbursement Policies • Prescription drugs covered through private and provincial/territorial public plans • Covers 98% of population • Federal government only provides coverage for a small number of individuals, circa. 1 million • Plans vary in scope, coverage and reimbursement policies from province/territory to province/territory 32

Generic Substitution and Pricing Substitution • Interchangeability and substitution rules set at provincial level • Substitution rules differ from province to province • Biggest provinces – including Ontario, BC and Quebec – allow, but do not mandate generic substitution • Saskatchewan, Manitoba, PEI, Newfoundland Labrador mandate substitution Pricing • High generic prices have resulted in provincial price caps: i. Ontario: prices capped at 25 -35% of brand list price ii. Quebec: capped at highest provincial price e. g. Ontario iii. Alberta: prices capped at 45 -56% of brand list price iv. British Columbia: prices capped at 35 -42% of brand list price 33

Federal HTA • Canadian Agency for Drugs and Technologies in Health (CADTH) conducts “clinical, cost-effectiveness, and patient evidence” assessments for public sector health care decision makers • Common Drug Review (CDR): – review of Drug Submissions from public bodies – provides formulary listing recommendations to all Canadian publicly funded federal, provincial, and territorial drug plans except Quebec. • Only 50% of drugs that undergo CDR recommended for reimbursement • Final decision rests with provinces/territories – CDR makes recommendation does not mandate formulary listings 34

Provincial/Territorial HTA • Provinces and territories have own HTA bodies • Quebec: Agence d’Évaluation des Technologies et des Modes d’Intervention en Santé • Ontario: Medical Advisory Secretariat (MAS) • Alberta: Institute of Health Economics • Provincial/territorial recommendations are also non-binding 35