PMPRB: A fork in the road
Wayne Critchley served as Executive Director of the PMPRB from 1990 to 2005 and has closely followed it since in his roles in the public and private sectors. In this article, he shares his personal observations on how the PMPRB can navigate a path forward.
One of my former bosses, Chairperson Bob Elgie, liked to quote Yogi Berra when we were wrestling with tough issues at the Patented Medicine Prices Review Board (PMPRB). One of his favourites: “When you come to a fork in the road, take it.“
That advice is relevant for the PMPRB today, because it is at a fork in the road in its attempt to be more relevant in today’s pharmaceuticals market. As new federal regulations governing the PMPRB are slated to come into effect on January 1, 2021, there is still a lack of consensus on the need for changes, what form they should take, how they will be implemented, and on their likely impact. Will the new regulations make drugs more affordable for Canadians, or will they create so many barriers and uncertainties that pharmaceutical companies are reluctant to bring cutting edge therapies to Canada? There is already some evidence that the planned changes are having a negative impact on decisions to launch new drugs in Canada and to conduct clinical trials here.
As the PMPRB scrambles to finalize guidelines to implement the new regulations, it also faces significant legal challenges to the validity of the regulations and even to the constitutionality of the PMPRB regime itself.
The federal government’s PMPRB changes can be likened to a three-legged stool:
- A new, and lower-priced basket of countries for comparison purposes;
- New economic pricing factors based on the value assessment and budget considerations currently used by public drug plans; and
- A “net price” calculation that incorporates downstream payments made paid by patentees to public and private drug plans.
In June, there were two significant developments. First, the PMPRB issued draft guidelines that would rely on highly complex calculations to set an allowable “rebated price” for major new drugs. The second development was a decision of the Federal Court of Canada that knocked out the third, and important, leg of the PMPRB reform stool – the Court struck down the provision regarding third party payments.
The effect of this decision goes beyond the issue of reporting payments. The PMPRB has relied on this provision to support its approach to implementing the “economic pricing factors,” the second leg of the stool. In light of Court’s decision, the current proposal to review a net “rebated price” is no longer viable.
This leaves the PMPRB at a fork in the road. One path involves trying to glue its broken stool back together to address the new reality (although it is not obvious how it might do this, and certainly not by the end of the year.) This route will lead to further delays, more controversy, and prolonged uncertainty. The Federal Court decision may well be appealed and a major constitutional challenge to the PMPRB regime will be heard in Quebec Superior Court in September. The ultimate outcome of these cases could take several years, during which some patients may have to wait for new medicines.
The alternate path is to proceed as planned with the first leg, and implement a new “basket” of countries on January 1, but to defer creating guidelines on the economic pricing factors pending further policy development and consultation. This approach offers several benefits to all parties. It ensures the immediate implementation of new provisions that will lower drug prices in Canada, fulfilling a key federal government policy objective. It allows the PMPRB to monitor the impact of this change to help inform future policy development. The PMPRB will not be giving up the economic pricing factors: On the contrary, those factors will remain to be used in the context of Board hearings where all sides can present relevant evidence and make submissions to the hearing panel.
There are many competing interests and perspectives at play and the PMPRB cannot be expected to satisfy all of them. The pharmaceutical industry, for example, is strongly opposed to the new basket of countries. But the second road gives Ottawa a clear “win” by rapidly reducing allowable prices for new patented drugs, and thereby generating substantial savings for public and private drug plans. It also provides time for further consideration on the more contentious elements, including further dialogue to help address the concerns of many patient groups who fear that the changes will deprive Canadians of timely access to important new medicines.
From my experience, I suspect that most stakeholders will be pleased with that outcome.
Wayne Critchley is a Senior Associate in the Health and Life Sciences practice at Global Public Affairs.