Voluntary Compliance Undertaking of Merck Canada Inc. to the Patented Medicine Prices Review Board

1.0 Product Summary

1.1 Elocom (mometasone furoate) is a patented medicine sold in Canada by Merck Canada Inc. (Merck Canada), formerly known as Merck Frosst Canada Ltd. (Merck Frosst). It is indicated for the relief of inflammatory and pruritic manifestations of corticosteroid-responsive dermatoses such as psoriasis and atopic dermatitis and is available in a cream, lotion and ointment.

1.2 Health Canada issued Notices of Compliance (NOC) for Elocom on October 22, 1990. Sales of all three formulations commenced in January 1991.

1.3 Canadian patent 2191324 pertaining to Elocom was issued August 28, 2001 and will expire May 30, 2015.

1.4 Merck Canada has been the patentee for purposes of the Patent Act and the Patented Medicine Prices Review Board (PMPRB) since November 2009, when it merged with Schering-Plough Canada Inc.

2.0 Background to Reporting of Pricing Information to the PMPRB

2.1 Elocom was subject to the jurisdiction of the PMPRB as of January 1991. Schering-Plough Canada Inc. (previously Schering Canada Inc.) was the former patentee and reported pricing information with respect to Elocom in accordance with the PMPRB Guidelines (Guidelines) until December 31, 2008. All prices were within the Guidelines during that period.

2.2 On December 12, 2012 Merck Canada advised that it just became aware of the existence of patent 2191324 and subsequently filed Amended Form 1, Medicine Identification Sheets and Form 2 price and sales data from January 1, 2009 to December 31, 2012.

3.0 Application of the Excessive Price Guidelines

3.1 Board Staff and Merck Canada agree that the maximum non-excessive prices (MNEs)/national non-excessive average prices (N-NEAPs) from 2009 onward, calculated in accordance with the Guidelines are as follows:

3.2 The prices of Elocom during the period January 1, 2009 to December 31, 2012 exceeded the MNEs/N-NEAPs calculated pursuant to the Guidelines. Cumulative excess revenues from the time Merck Canada assumed responsibility for Elocom to December 31, 2012 are calculated to be $3,034,032.74.

4.0 Position of the Patentee

4.1 This Voluntary Compliance Undertaking (VCU) constitutes no admission by Merck Canada that the prices of Elocom in Canada are now or were excessive for purposes of the Patent Act.

5.0 Terms of the Voluntary Compliance Undertaking

5.1 In order to comply with the Guidelines, Merck Canada agrees to undertake the following:

5.1.1 To reduce the prices of Elocom to the 2013 N-NEAPs set out in paragraph 3.1 above.

5.1.2 To offset the cumulative excess revenues received by Merck Canada as of December 31, 2012 by making a payment to Her Majesty in right of Canada in the amount of $3,034,032.74 within 30 days of the acceptance of this VCU.

5.1.3 To offset any additional excess revenues received in 2013, as calculated by Board Staff, within 30 days of the filing of the July to December 2013 price and sales data.

5.1.4 Within 15 days of acceptance of this VCU, to provide notification to customers that the price reduction of Elocom was for purposes of ensuring adherence to the Guidelines, include a reference to the PMPRB web site for the complete text of this VCU, and provide copies of such notifications to Board Staff.

5.1.5 To file evidence with Board Staff within 30 days of the acceptance of this VCU that the prices of Elocom have been reduced in a manner consistent with the terms of this VCU.

5.1.6 To ensure that the prices of Elocom remain within the Guidelines in all future periods in which Elocom is under the PMPRB's jurisdiction.

Merck Canada Inc.
Original signed by:
Name: Tom Cannell
Position: President
Date: July 10, 2013