The Final Countdown? The Upcoming Changes to the Patented Medicines Regulations

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Jasmine Yu is an IPilogue Writer and a 1L JD Candidate at the University of Toronto.

 

After numerous delays over two years, amendments to the Patented Medicines Regulations, which governs Canada’s Patented Medicine Prices Review Board (PMPRB), is finally set to come into force this year, on July 1, 2022 — at least for now.

Who is the Patented Medicine Prices Review Board?

The PMPRB is a Canadian quasi-judicial body that regulates the prices of patented pharmaceuticals to avoid excessive pharmaceutical prices. The board’s objective is to balance encouraging pharmaceutical research and development (R&D) investment with the public health interest of reducing pharmaceutical prices for consumers.

The PMPRB derives its legal authority partly from the Regulations, which specifies the information and documents patentees must provide to the Board, price requirements for drugs sold in Canada, and more.

Why Amend?

The PMPRB saw it fit to introduce changes to its legal framework because it was achieving neither of its objectives under the current scheme — Canadian patented drug prices were the third highest globally, while pharmaceutical R&D investment has declined.

The Amendments

The PMPRB first published the amendments on August 21, 2019. The first substantive revision to the Regulations since the Board’s establishment in 1987, it will bring major changes to the PMPRB’s current legal framework.

There are three main elements to the amendments:

First, the amendments added three new price regulatory factors to consider whether a patented drug’s price is excessive.

Second, the amendments updated the list of comparator countries, whose drug prices serve as a “benchmark” to establish the range of prices that the pharmaceutical companies find acceptable for their patented medicines. According to the PMPRB, the updated countries have similar consumer protection policies, economic wealth, and marketed medications as Canada. The United States, for example, was removed for having vastly different consumer protection priorities — its drug prices are 247% higher than Canada’s.

Third, there were changes in patentees’ pricing and sales reporting requirements. For instance, the reporting requirement was reduced for medicines at a low risk of excessive pricing, such as veterinary drugs and generics. 

The amendments, once in effect, will apply to all drugs issued a drug identification number (DIN) on or after the amendments’ publication — August 21, 2019. Those that received a DIN before this date must still comply with certain other provisions.

A double-edged sword?

The PMPRB views that these amendments will have a progressive impact and decrease total spending on patented medicines by 5.8% over the next 10 years. These changes are perhaps much needed, as Canada is the only developed country in the world with universal healthcare that does not cover prescription drugs. Meanwhile, Canadians pay the highest price for generic drugs in the world and the second-highest prices per capita for prescription drugs — after the US. One-in-ten Canadians cannot afford their prescription drugs. 

However, there are also opposing voices. Lobby groups, such as Innovative Medicines Canada (IMC), argue that these amendments will have significant negative impacts R&D investment in Canada and on the number of new drugs available to Canadians and on R&D investment in Canada.

IMC and several Canadian pharmaceutical companies brought a judicial review application to challenge numerous provisions. The Federal Court of Canada, in Innovative Medicines Canada v Canada, 2020 FC 725, struck down subsection 3(4) of the amendments as it was ultra vires the Patent Act. In a separate case, the Quebec Superior Court declared section 4(4) invalid and unconstitutional.[1]

A group of physicians also voiced their opposition in an open letter. Their arguments mirror that of IMC: the proposed regulations will make Canada an unattractive market for companies launching new drugs, resulting in medications that could alleviate suffering being denied access to Canadians.

Conclusion

Much like how the original intentions of the PMPRB did not actualize into tangible results, and hindsight revealed flaws in its original policy, the actual consequences of these new amendments may not surface immediately. Canadian Pharmacare policy certainly seems to require an iterative process, as numerous stakeholders and market factors are at play. We perhaps need to examine the faults in Canada’s current patchwork system of private and public insurance plans for potential solutions — to strike a balance between affordable medicine and a vibrant R&D environment.


[1] Merck et al, c Le Procureur Général du Canada, Québec Superior Court File No. 500-17-109270-192.

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