Backgrounder: Regulation of patented drug prices in Canada 

May 2017

The Honourable Jane Philpott, Minister of Health, has committed to working with her provincial and territorial counterparts to improve the affordability, accessibility and appropriate use of prescription drugs in Canada. To this end, the federal government will better protect Canadians against excessive patented drug prices by modernizing the regulatory framework that guides the work of the Patented Medicine Prices Review Board (PMPRB).

The Patent Act and the Patented Medicines Regulations provide the legal authority for the PMPRB to regulate the prices of patented medicines sold in Canada to ensure that they are not excessive.

The Act and Regulations set out the factors and information to be considered by the PMPRB when determining whether the price of a patented drug is excessive. The existing framework focuses on the public list prices of a patented drug across Canada and in other countries, allowing the PMPRB to make comparisons when setting price ceilings.

The current framework does not provide the PMPRB with the tools and information it needs to regulate prices in today’s environment, which is marked by an increasing number of high cost specialty drugs and by list prices that bear little resemblance to the market prices paid after confidential discounts are applied. As it stands, Canada’s prices are pegged to a list of countries with some of the highest prices in the world. There is no provision for consideration of whether the price of a drug reflects its value to patients, the size of the market for the drug or the relative wealth of a country. Further, the confidential price reductions drug patent holders offer to payers after the first point of sale are not factored in.

The Minister of Health has announced the Government of Canada’s intention to modernize the framework that guides the PMPRB, by proposing amendments to the Regulations. Potential amendments include revising the list of comparator countries for which patentees must provide drug price information, introducing new economics-based factors so that willingness and ability to pay can be taken into consideration in assessing whether the price of a patented drug is excessive, and updating the information required from patentees.

As a first step, Health Canada has launched an initial consultation to seek the views of stakeholders and interested Canadians. Feedback will allow for refinement of the regulatory proposal prior to pre-publication in Canada Gazette, Part I. All interested parties will have a further opportunity to provide input at that time.