Frequently Asked Questions, Stakeholders
How does the Patented Medicine Prices Review Board (PMPRB) consult Canadians?
In various ways - through its Notice and Comment process, its NEWSletter and E-Bulletins, to name a few. The PMPRB welcomes feedback on any issue at any time. For more information on the means and ways the PMPRB consults, you are invited to review the PMPRB's Consultation Policy.
Stakeholder feedback is important to the PMPRB. Do not hesitate to reach us.
How can I stay up to date on PMPRB news?
Subscribe to our RSS feeds or follow us on Twitter @PMPRB_CEPMB for updates and announcements.
What is the PMPRB?
Created in 1987 under the Patent Act as an independent quasi-judicial tribunal, the PMPRB limits the prices set by patentees for all patented medicines, new and existing, sold in Canada, under prescription or over the counter, to ensure they are not excessive.
What is the role and mandate of the PMPRB?
As an independent quasi-judicial body, the PMPRB carries out its mandate independently of other organizations such as Health Canada, which approves drugs for safety and efficacy, and public drug plans, which approve the listing of drugs on their respective formularies for reimbursement purposes.
The PMPRB has a dual role:
Regulatory: To ensure that prices charged by patentees for patented medicines sold in Canada are not excessive.
Reporting: To report on pharmaceutical trends of all medicines and on the R&D spending by pharmaceutical patentees.
What controls exist to ensure that the prices Canadians pay for drugs are reasonable?
In Canada, the prices of patented medicines only are subject to direct price controls through the PMPRB.
To determine if the price of a patented drug sold in Canada is excessive, the PMPRB applies factors set out in the Patent Act and in its price guidelines.
In summary:
- Most new patented drug prices are limited so that the cost of therapy is in the range of the cost of therapy for existing drugs sold in Canada used to treat the same disease;
- Prices of moderate and substantial improvement drugs and breakthrough drugs are also restricted by a variety of tests;
- Existing patented drug prices cannot increase by more than the Consumer Price Index (CPI);
- In addition, the Canadian prices of patented medicines can never be the highest in the world.
Public drug plans also play a role in drug pricing through the listing of drugs on their respective formularies for purposes of reimbursement.
What factors affect the cost of prescription medicines?
Many factors influence the total cost of drugs:
- prices of patented drugs
- prices of non-patented drugs
- prices of generic drugs
- retail and wholesale mark-ups
- pharmacists' professional fees
- changes in the composition of total population, e.g. proportion of older persons
- changes in prescribing habits of physicians
- changes in the utilization of drugs, i.e. number of drugs used per patient
- trends towards using newer drug therapy instead of other treatments.
How do drug prices in Canada compare to prices in other countries?
The prices of patented medicines in Canada remain at the median of international prices as defined by our comparator countries: France, Germany, Italy, Sweden, Switzerland, the United Kingdom, and the USA
How does the PMPRB review the pricing information for all patented medicines sold in Canada?
The PMPRB reviews pricing information on an on-going basis to ensure that the prices comply with the Patent Act and does so for the duration of the patent.
Following the scientific review, the PMPRB reviews the price of the drug to determine if it is within the Guidelines, based on the factors established in the Patent Act.
In summary:
- Most new patented drug prices are limited so that the cost of therapy is in the range of the cost of therapy for existing drugs sold in Canada used to treat the same disease;
- Prices of moderate and substantial improvement drugs and breakthrough drugs are also restricted by a variety of tests;
- Existing patented drug prices cannot increase by more than the Consumer Price Index (CPI);
- In addition, the Canadian prices of patented medicines can never be the highest in the world.
When Board Staff finds that the price of a patented drug appears to exceed the Guidelines, and where the criteria for commencing an investigation is met, Board Staff will conduct an investigation to determine the facts.
An investigation may result in one of the following situations:
- the closure of the file, where it is concluded that the price was within the Guidelines;
- a Voluntary Compliance Undertaking (VCU) by the manufacturer to reduce the price and take other measures to comply with the Guidelines; or
- a public hearing to determine if the price is excessive and, if so, the issuance of a remedial order by the Board.
Does the PMPRB have any kind of power or authority to reduce prices?
If, after a public hearing, the Board finds that a price is excessive, it may order the patentee to reduce the price and take measures to offset up to double excess revenues it may have received. The offset of excess revenues may be achieved through additional price reduction or a payment to the Government of Canada.
What happens to the money paid to the Government of Canada?
Under the Patent Act, the Minister of Health can make arrangements with provincial counterparts to distribute the money. The PMPRB has no authority with respect to the distribution of funds collected under a VCU or Board Order.
Can the PMPRB delay or block the sale of a drug in Canada?
No. If the PMPRB finds that the price of a patented medicine is excessive, it can order a price reduction.
The PMPRB does not have the authority to prevent the sale of a patented medicine based on its price nor to remove it from the market.
Does the PMPRB regulate research and development?
The PMPRB has no authority to regulate R&D. The PMPRB's mandate is to report on R&D expenditures as reported by patentees. With the adoption of the 1987 amendments to the Patent Act, Canada's Research Based Pharmaceutical Companies (Rx&D) made a public commitment that the brand name pharmaceutical industry would increase its annual R&D expenditures as a percentage of sales to 10% by 1996.
The PMPRB also has a reporting role. What does that entail?
The PMPRB reports annually to Parliament on its activities, on price trends of patented medicines and all medicines and on R&D expenditures as reported by pharmaceutical patent-holding companies.
Furthermore, in 2001, federal/provincial/territorial ministers of Health announced the establishment of the National Prescription Drug Utilization Information System (NPDUIS). The PMPRB, in collaboration with the Canadian Institute for Health Information (CIHI), provides analyses of price, utilization and cost trends in order that Canada's health system has more comprehensive, accurate information on how prescription drugs are being used and on sources of cost increases.