On Tuesday, June 19, 2018, the Canadian Association for Healthcare Reimbursement (CAHR) held the Market Access 201 conference in Toronto. The theme for this conference was “Flying Blind – Navigating Patient Access through Uncertainty” which consisted of five fascinating panels focusing on important topics of interest for pharmaceutical stakeholders in Canada. Over the coming weeks, MORSE will be releasing summaries for each panel to share key insights from this conference. This issue will focus on the PMPRB panel discussion
Jeffrey Hoch – A lot has changed in the Canadian environment recently. As the MC of the CAHR 201 conference, my goal is to make sure the group understands the theme and the vision of the conference. One key theme of today is uncertainty. In a decision framework, we can understand uncertainty through sensitivity analyses. In these analyses, it is important to have the structure correct but if you’re in an environment with constant change the structure will be off. So, what do you do when you’re in a system with a lot of uncertainty?
The best thing you can do is create meetings like this one, where all the actors are present. In this way, we can hear their point of view and understand how others perceive uncertainty. This will make you more effective in what you want to achieve. There is uncertainty in the lives of academics, patients, payers and within industry as well. Today is about hearing from different people about the topics you need to hear about.
Panel 1: Patented Medicine Prices Review Board
Panel Description: This panel will explore questions about how the PMPRB consultations will unfold, how the remaining details will be developed, what transition measures will look like and what impact the final guidelines will have on current prices and new drug prices.
Moderator: Joan McCormick
Panelists: Matt Kellison, Lauren Fischer and Richard Cheung
Joan McCormick – Welcome to the panel in which will talk about the PMPRB and its evolution as the opening topic for today’s presentation.
Overall history of the PMPRB and its evolution
In July 2015, the Conservative government had a report done that stated there was a need for the government to reinforce the mandate and give more power to the PMPRB to carry out price regulation. This is not a new concept in 2017, it was brewing even further back. This report from 2015 even made note of the benchmarks and basket of countries considered by the PMPRB.
More recently the Liberals won the election and Trudeau provided a mandate letter to his health minister which addressed patented medicines and patient access. Shortly after the election, they released their strategy document which included modernization of the PMPRB framework. The question is how to organize the PMPRB to make it better used, to better complement the other agencies in a complex regulatory landscape?
They then issued a consultation document to modernize the Guidelines, which are not the law, rather they are the day to day rules which operate within the law. It was not specific to sections it looked more at questions such as what does excessive means to you? Overall, they were looking to garner interest in a consultation and they succeeded with 66 responses.
During this consultation, the Minister of Health spoke publicly about drug prices and was firmly committed to bringing prices down. The PMPRB was also included in the federal budget which is a degree of interest that hasn’t been seen in the last quarter century. They then issued a pre-consultation document to understand the potential changes to the regulations and the impact of these changes.
Matt Kellison – I wanted to touch on some of the context for change, why the government is interested in change and what their next steps are. The PMPRB is about 30 years old and comes from a time in the 80’s when the government overhauled intellectual property law and was built with the mandate to balance patent protection with consumer protection. They wanted R&D in Canada to track closer to international countries. So what happened?
The policy objectives sought by Bill C-22 have not been met. R&D has declined since 1996. It is closer to 4.4% in Canada whereas other countries are closer to 7%. Canadian prices are very high compared to OECD countries. The U.S. is an outlier and otherwise Canadian prices are highest (except for Switzerland). Maybe there is not as strong of a link between R&D and drug prices as previously thought, there are other factors at play.
Drug prices are rising, and we have seen 7% annual growth in Canadian drug prices, with 5% in the rest of healthcare and 2% inflation. In 2016 average treatment cost is over $18,000 with an increase in high-cost drugs. Of the top 10 selling drugs in Canada, there is an increased presence of biologics which often represent a small portion of the population (8 out of 10 in 2016).
It is in this context that a lot of the focus on drug prices has started. In the current framework there is no consideration of likelihood of pricing power or market dynamics. Currently, everything is based on list prices, domestic and international, but we know the true prices are likely lower. This also includes the U.S. which is a major outlier and drives the external price referencing test. The framework is applied to each medication in the same way regardless of it being a new drug or the seventh me too drug.
Proposed Changes by the PMPRB:
There are three changes being proposed to the PMPRB framework.
- Changing the basket of countries; going from seven to twelve countries, removing the U.S. and Switzerland with a goal to add more countries that are similar to Canada.
- Consider the value of the drug;
- Set price ceilings that take into account the actual prices.
The second change involves the pharmacoeconomic factors with three new factors which speak to assessing long-term sustainability. Value for money is another way of saying cost-effectiveness analysis and considers opportunity cost and strained payer budgets. This factor requires PMPRB to compare the likely benefit of quality of life against a willingness to pay threshold. The second is the size of the market and what expected annual revenues are. Depending on disease prevalence and market this can raise affordability considerations. Even with cost-effective drugs, there remains a need to consider sustainability concerns and rationing. Third is Canadian GDP and GDP per capita to reference the portion of health care expenditure that goes to drugs and ask, “is that acceptable within the growth of GDP”? All of these are taken to set a maximum price. PMPRB is trying to set a ceiling which anything above that price is unreasonable for the drug. In the guideline development, they are trying to determine if all of these factors are required for every drug. E.g. If there is sufficient competition for reimbursement, is a detailed PE not required? Could have high streamlined priority for high-cost drugs (don’t necessarily need same application).
Right now, we only see ex-factory prices and discounts given directly to customers (the PMPRB does not see PLAs or third-party discounts). We don’t know what all the payers are paying, and don’t see it nationally or internationally. When the PMPRB was initially created, actual and list prices did match; it is therefore, difficult for the PMPRB to determine meaningful ceilings based on what the market actually pays today. Domestically we would like to see third party discounts to understand the true prices of drugs.
In terms of next steps, the PMPRB scoping document looks at how these proposed changes may be operationalized and PMPRB will create a multi-stakeholder steering committee. Currently unclear on whether the January 1, 2019 date will hold. The committee will meet next week and will discuss how to operationalize these changes. The mandate of the committee will be to synthesize stakeholder views on key technical and operational modalities of new draft guidelines that would give effect to the proposed amendments. The terms of reference and diverse membership will be updated on the website shortly. Steering committee meetings will run into the fall and at that time will release a second draft of the guidelines for consultation.
Separate from the committee there will be a technical working group which will primarily be composed of clinical and economic experts to provide an academic review of the proposal. If the timeline doesn’t change, will have guidelines out in fall, then conduct outreach sessions with patentees in the interest of transparency and predictability for patentees in 2019.
Lauren Fischer – Back in 2016 Federal/Provincial/Territorial (F/P/T) governments did align on three objectives for prescription drugs – the 3 A’s: affordability, accessibility and appropriate use. Industry is aligned with these objectives and believes that no Canadian should go without a medicine because they cannot afford it. There is a role to play in partnering with government to achieve this objective. Industry is at the table in a meaningful way through the pCPA and negotiates $1.3 billion in rebates annually. Although there is good alignment in objectives, industry diverges when it comes to how best to achieve them. Provincial drug plans have in place a series of tools to assess value and affordability, namely HTA agencies and of course the pCPA negotiates on affordability. Drug program design and patient-level accessibility is in the hands of provincial drug plans and each province steers its own ship. The federal government has one agency at play and that is the PMPRB. These proposed changes to the basket, economics-based regulation and requirement to report discounts raises a number of questions and concerns from industry.
IMC Perspective – Considerations
IMC developed a comprehensive submission to the PMPRB which is available online. Government payers do not pay list prices, they pay a negotiated price. By bringing down a list price, the benefit would go to private plans. For public payers, have they considered that these changes might affect their ability to secure best value for the vulnerable populations they have chosen to cover – seniors, social assistance and those with high drug costs?
Secondly wanted to point to the use of PE in government reviews. Tying price evaluation to PE is like tying a price to sand. They are built on multiple assumptions, and changing one assumption leads to a change in result. HTA assessors in Canada use PE models as one component of a complete evaluation of a medicine. Ironically, PE evaluations are least useful in setting price ceilings for the types of medicines that drug plans are looking to PMPRB for relief – those with high cost and no comparators. Typically, these medicines exceed thresholds and yet HTA still recommends reimbursement for them in certain situations.
Patentees are unable to predict the non-excessive price as the proposed approach shifts price anchors away from verifiable data, such as Canadian or international prices, to more subjective types of potential anchors. This represents a challenge for patentees, which must be able to predict allowable ceilings at launch and over time. The proposed PMPRB reform represents a shift away from excessive price regulation. The intent of having patentees report discounts to inform regulation of new entrants to a class poses an obvious risk to confidentiality of product listing agreements.
IMC’s Proposed Solutions
In terms of IMC solutions to achieve common objectives, it is our view that there are solutions that more readily achieve the objectives with less consequences for payers, patients and industry. For example, a new basket of countries that balances government investment and affordability objectives. Industry is open to a price freeze and a new framework for drugs with no comparators and potential high-cost burden. Commitment to work with F/P/T governments on access for uninsured and underinsured; appropriate prescribing and adherence; as well as a modernized R&D investment definition.
From a pharma perspective, the changes in Canada have attracted interest from the global head offices. The view of pharma is that pricing regulation should ascribe appropriate value to new medicines and there is concern that the investment climate in Canada may be affected. Canada is competing for investment on a global stage. There is evidence internationally that changes to regulation can change the order that new medicines come to a country. To close: there remains lots of work to be done, but industry is encouraged by the latest moves of the government to slow the process down to bring in more facts to their decision making and strengthen policy to ensure benefit to all stakeholders.
Richard Cheung I am going to cover three topics; I will briefly cover the changes, how it aligns with PMPRB mandate and touch on reporting fatigue. They have generated a lot of discussion and whether the proposed changes are aligned with the mandate. If you review the Canada Gazette 1 and the boards scoping paper it is consistent in noting that amendments are to protect consumers and there are concepts of affordability and value. But are they looking at excessive prices or as a price control regulator?
Constitutionality of Drug Price Regulation by the PMPRB
The Constitution Act led to the creation of Canada and has the division of power between federal and provincial governments. The PMPRB is rooted in the Patent Act and the issue of whether the regulation of prices is a federal or provincial jurisdiction is conscientious.
For example, in 1992 the Manitoba Society of Seniors came forward with a case v. Canada Attorney General. There was a concern that the federal government exceeded their jurisdiction and the courts rejected it being in the domain of patents. The price review regime was one component of patent exclusivity and it was valid.
In 2015, a similar case went to the court of appeal and held that there is no basis for the argument that the connection with the patent ceases to be sufficient. The court found that the reasoning from 1992 was still relevant to the case.
In 2017, this question was raised yet again by Alexion to review that the price was excessive and needed to be paid back. It was deemed that the Sandoz decision held however, Alexion applied to the Supreme Court so we may hear more on this.
Late last year the Ontario government tabled a bill which requires reporting of transfers of value, the Ontario Health Sector Payment Transparency Act. Reporting is triggered when there is a transfer of value to HCPs, hospitals, pharmacies, and group purchasing organizations.
The current reporting requirements are Forms 1-3, and the proposed additional reporting includes cost-utility analysis and maximum use forecasts and the Ontario transfer of value reporting. This could create significant burden.
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