MORSE Consulting is pleased to contribute its pCPA/public payer expertise with leading pricing and reimbursement experts and provide our respective views on how the new PMPRB regulations may impact the Canadian environment. These experts include:
- PMPRB: Joan McCormick, Principal Consultant – IQVIA
- HTA/Health Economics (HE): Sumeet Singh & Heather Cameron – Cornerstone Research Group Inc.
- Private Payers: Suzanne Lepage, Suzanne Lepage Consulting
The purpose of this summary is two-fold:
- to share our insights with the market access community; and
- to provide a synopsis that reimbursement professionals can share with internal and external stakeholders to improve understanding regarding the potential implications.
PMPRB Expert Perspective – IQVIA
The drive to lower patented Canadian drug prices has officially begun. On August 9, 2019, Health Canada announced the final Regulations which confirmed that:
- Canadian rebates and other benefits – to anyone – will have to be filed by patentees,
- Patented OTC/vet/generic drugs will only have to report to PMPRB upon request,
- Basket of countries will grow to 11 (the US and Switzerland will be removed from the original basket, and six new countries will be added),
- New factors will be added to the tools available to the Board for determining whether the price of a medicine is excessive.
Pharmacoeconomics, market size and GDP, the new factors being added, will only be applied to new drugs, according to the final version of the Regulations. Drugs with an assigned DIN in advance of the publication of the new Regulations, will be protected from these new factors. Furthermore, the Regulations stipulate that only drugs with a cost above about $26,000 per year will be required to file information relating to pharmacoeconomics – suggesting, that drugs with lower annual costs will also not be subject to this factor. With the Regulations finalized, the possibility of the government losing interest in lowering the prices of patented medicines disappears. The framework for PMPRB price review will change.
Until the Guidelines that will bring these new Regulations to life have been finalized, our ability to calculate the true impact of these changes remains driven by scenarios and assumptions. To date, the PMPRB has indicated that all drugs, both new and existing, will not only be subject to the new basket of countries, but that the ceiling will now be set by the median of that lower priced basket. Previously, the highest international price served as the ceiling for all drugs. In contrast, only a small fraction of new drugs, deemed to be a high priority, will be reviewed using the average rebated price and the new factors. The draft Guidelines are expected to be published for comment in the fall and to be finalized in advance of implementation July 1, 2020, alongside the Regulation implementation.
To learn more about the proposed changes contact firstname.lastname@example.org to enquire about upcoming IQVIA PMPRB training scheduled for Thursday October 17, 2019 in Montreal and Friday October 18, 2019 in Toronto. Note that these sessions are only open to pharmaceutical companies and related associations. If you are interested in this material but are not eligible to register, please contact IQVIA directly.
HTA/HE Expert Perspective – Cornerstone Research Group
Apart from revising the list of comparator countries, the revised PMPRB framework integrates three additional price regulatory factors in determining whether the price of a patented medicine is excessive: 1) Pharmacoeconomic (PE) value, i.e., cost per quality-adjusted life year (QALY); 2) Market size across all payers; and 3) Annual per-patient cost in relation to per-capita gross domestic product (GDP) in Canada. Together, these additional factors are intended to include value for money and affordability considerations in setting ceiling prices for pharmaceuticals. Manufacturers will be required to submit information on Factors 2 and 3 for all drugs subject to the revised PMPRB regulations (i.e., drugs receiving a DIN after publication of the regulations on August 21, 2019, other than certain veterinary and generic medicines that are exempt from mandatory reporting). As noted above, since PMPRB will only assess ‘high cost medications’ against the PE value factor, manufacturers will only be required to submit PE information for drugs with 12-month per-patient costs exceeding 50% of GDP per capita (currently ~$26K). The required PE information is comprised of ‘published’, unredacted PE analyses from the Canadian Agency for Drugs and Technologies in Health (CADTH) and/or the Institut national d’excellence en santé et services sociaux (INESSS).
From a health economic (HE) and health technology assessment (HTA) lens, manufacturers will now need to count on an extended review of HE materials for an expanded HTA review process. While there is considerable uncertainty as to how the additional price regulatory factors will be operationalized, there are several key questions:
- How will Factor 2 (i.e., market size) impact the setting of a ceiling price? The revised regulations and RIAS provide no indication of how market size information will be used, what (if any) thresholds will be applied, and whether consideration of other factors (i.e., PE value) will be triggered if those thresholds are met.
- Whose PE analysis will be considered by PMPRB in evaluating Factor 1, and will PMPRB perform their own reanalyses? If the CADTH/INESSS reference case is used as a starting point for PMPRB assessment, manufacturers will be at the mercy of the analyst and clinical expert(s) that redefined the reference case. There is considerable heterogeneity (and subjectivity) in CADTH/INESSS re-analyses, both between agencies, and between reviewers within agencies.
- What will PMPRB’s cost-per-QALY threshold be in setting prices? The scope of the PE assessment proposed by PMPRB appears to reach beyond the remit of that conducted by HTA agencies, by also factoring in the ‘health opportunity cost’ or ‘marginal cost of a QALY’ to understand how to maximize the use of healthcare spend for optimal population health. This suggests the implementation of willingness-to-pay thresholds for setting ceiling prices. As acknowledged in the report of the Technical Working Group struck to inform PMPRB’s modernization of its price review process, there is substantial uncertainty regarding the marginal cost per QALY in Canada, and this value is likely to differ across jurisdictions. Notably, CADTH and INESSS have no set cost-per-QALY threshold by which the cost effectiveness of therapies is judged. PMPRB has thus far been non-committal about what cost-per-QALY thresholds would be applied, however the RIAS “…assumes that the PMPRB would apply a $50k cost-per-QALY threshold for medicines for standard diseases (including cancer), a $150k threshold for medicines for rare diseases, and a $35k threshold for medicines with a high-prevalence population”.
- Will PMPRB consider list prices or net prices for comparators in its preferred PE analyses? Currently, PE analyses submitted to CADTH and INESSS are based on list prices for comparators, however, net prices would presumably be more relevant for PMPRB. It is uncertain how manufacturers would be able to acquire net prices for analysis given the confidential nature of product listing agreements (PLAs).
- How will PMPRB consider new drugs used as part of combination treatment, such as many cancer therapies? For example, will the GDP test (Factor 3) be applied to the drug under review, or to the overall cost of the combination regimen? Since the manufacturer likely has little or no control over the prices of other components of a combination regimen, the use of regimen costs in PMPRB’s pricing tests could be especially detrimental to the price of products that must be used in combination with other medications.
The revised regulations and RIAS emphasize that the additional reporting burden to manufacturers is expected to be minimal since much of the required information is already provided to various bodies (e.g., PE analyses are submitted to CADTH and INESSS). However, we believe that the burden on manufacturers to meet the requirements for Factor 2 (market size) could be substantial, since market size estimation for a therapy will need to extend beyond a single indication and jurisdiction (reflecting the current requirements of CADTH/INESSS and public payers) to national estimates that include public, private, and out of pocket use for each DIN.
It is hoped that the draft guidelines will provide additional insight into how the new price regulatory factors will be operationalized to leverage the work already being done by HTA agencies.
pCPA & Public Payers Expert Perspective – MORSE Consulting
It is important to emphasize that in the absence of the new PMPRB Guidelines, it is difficult to have a clear sense of the true impact of these regulatory changes. Nevertheless, we have attempted to provide some reasonable speculation on how the PMPRB changes may impact: (i) products currently on the market; and (ii) products that will be introduced after the new regulations are published (August 21, 2019).
For products currently on the market, as noted earlier in Joan McCormick’s update, patentees need to report Canadian rebates and other benefits to anyone. In addition, the basket of countries will grow to 11 (the US and Switzerland having been removed from the original basket, and six new countries have been added). If the PMPRB is setting the price ceiling at the median of a lower priced basket and this in turn lowers the current list price of marketed products, this may not only have significant financial implications for manufacturers, but it may also result in administrative challenges for public payers and distribution channels. A lower list price may compel manufacturers to attempt to re-negotiate existing product listing agreements (PLAs) – particularly if there is a significant market change due to the decreased revenue from the private and cash paying market. From a payer perspective, since PLAs contain references to list prices, these agreements will at minimum need to be amended to include the revised lower list price. The lower prices will also need to be updated on formularies, as well as communicated and operationalized through the product distribution channels.
For new products entering the market after August 21, 2019, there is a potential for the application of these new factors. Even for those new products that do not trigger the factors, the pCPA will continue to have a role in supporting listing decisions (as per their mandate which extends beyond price negotiations). Whether their expectations regarding the magnitude of confidential rebates will change remains to be seen. For those products that trigger the new factors, there is a clear lack of predictability on how the factors will be implemented and if/how pCPA will adjust its negotiating expectations in light of these factors. One thing is for certain, the amount of time it will likely take to receive reimbursement for these higher-priced drugs is likely to increase until all stakeholders are able to acclimatize to this new pricing framework.
Private Payer Expert Perspective – Suzanne Lepage Consulting
The Canadian Life Health Insurance Association (CLHIA) and major Canadian insurers  welcomed the proposed PMPRB changes, as they have long advocated for reduced drug prices to manage growing drug plan costs. 
There seems to be little concern by the private payer industry about the potential for fewer new drugs to be launched in Canada, or taking a longer time to launch. 
Many private payers have implemented HTA programs to evaluate new drugs. If the new guidelines are only applied to new medicines, then there is a potential for inequities in pricing and value assessment of new versus existing medications in their review process. In addition, existing review timelines could extend if private payers choose to delay decision making so that they can review and consider the outcomes of the PMPRB reviews.
As noted by MORSE Consulting with regards to public plans, existing product listing agreements with private payers will need to be reviewed in light of the impact of PMPRB changes.
Private payer messaging should continue to focus on the potential impact of reduced access to medications that can keep their plan members/employees healthy and productive, and prevent health related absenteeism or costly long term disability claims.
The changes announced by the PMPRB are expected to be the most impactful regulatory amendments to the Canadian pricing regime in decades. The upcoming Guidelines, expected to be released in September, will be critical to understand the true impact of these changes. However, even with their release, significant uncertainty from a pricing, HTA, and payer perspective will remain for the foreseeable future.
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