Guideline Modernization: Case Studies
Summary of Cases
| |
Treatment cost
(annual or full regimen) |
Potential treatment population
(annual) |
Potential annual revenues |
Profile |
Potential disease area |
| Case 1 |
$1K |
500,000 |
$500M |
Treats a chronic condition
One approved indication
Has comparators
Very large treatment population |
Diabetes, Mental health disorders |
| Case 2 |
$7K |
100,000 |
$700M |
Treats a chronic condition
One approved indication
Substantial therapeutic benefit, no approved comparators
Large treatment population each year |
AMD |
| Case 3 |
$20K |
103,000 |
$2B |
Substantial therapeutic benefit to a less common chronic condition with a small treatment population
Moderate therapeutic benefit to a more common chronic condition with a large treatment population |
DMARDs |
| Case 4 |
$50K |
3,000 |
$150M |
One approved indication for 2nd line treatment of cancer
Several therapeutic alternatives exist
Small treatment population |
Oncology |
| Case 5 |
$50K |
200,000
(31,000) |
$1.5B |
Provides cure for a serious condition
Large treatment population
If no rationing, all could be treated in 7 years |
Hep C |
| Case 6 |
$300K |
1,000 |
$300M |
Rare disease drug with one indication
Limited clinical significance
Small treatment population, high severity of illness, unmet need |
EDRD |
Acronyms
- HIPC – Highest international price comparison
- MIPC –Median international price comparison
- LIPC – Lowest international price comparison
- TCC – Therapeutic class comparison
- MLP – Maximum list price
- MAPP – Maximum average potential price
- MRP – Maximum rebated price
- NEAP – Non-excessive average price
- HTA – Health Technology Assessment
- QALY – Quality-adjusted life year gained
- ICER – Incremental cost-effectiveness ratio
- PV – pharmacoeconomic value
- $/QALY – cost per quality adjusted life years gained
- RWE – Real world evidence
Case 1 – Large population, therapeutic comparators
- Treats a chronic condition
- Has therapeutic comparators
- One approved indication by Health Canada (HC)
- Very large potential treatment population
- Possible indications: diabetes, mental health disorders, etc.
- Annual treatment cost (list price): $1,000*
- Population with the condition: 500,000
- Potential annual revenues based on the total treatment population: $500M
- Category 1 due to market size
* Assumed a once-a-year dose for ease of calculations.
Case 1 – Application of the Proposed Guidelines
| Factor |
Intro Period |
End of Year 1 |
End of Year 2 |
End of Year 3* |
End of Year 4 |
End of Year 5 |
End of Year 6 |
| MLP (set by MIPC) |
$800 |
$785 |
$780 |
$750 |
$750 |
$750 |
$750 |
| PV Threshold Price** |
N/A |
$640 |
N/A |
N/A |
N/A |
N/A |
N/A |
| Revenue at PV Price |
N/A |
$33M |
$50M |
$68M |
$75M |
$81M |
$91M |
| Market Size Adjustment *** |
N/A |
N/A |
10% |
30% |
N/A |
N/A |
N/A |
| MRP |
N/A |
$640 |
$627 |
$581 |
$581 |
$581 |
$581 |
| Total revenue at MRP |
N/A |
$33M |
$49M |
$61M |
$68M |
$74M |
$82M |
*MLP/MRP frozen.
**CADTH estimated ICER is $100K. PV threshold used is $60,000/QALY.
***A progressive discount applies to the total annual drug cost (revenue) at the cost-effective price, where each successive $10M above $40M is discounted by an additional 10%, up to a maximum of 50%. This $40M market size threshold has been used for demonstration purposes only.
Case 1 – Current vs New Proposed Guidelines
| Original ex-factory Price |
$1,000 |
|
Current Guidelines |
Proposed Guidelines |
| Price Ceiling |
$1900 (assume top of TCC > MIPC) |
Ex-factory price ceiling (MLP): $750
Rebated price ceiling (MRP): (frozen at year 3): $581
|
| Tests used to set the Ceiling |
Midpoint of top of TCC and MIPC (moderate improvement) |
MLP: MIPC
MRP: 30% adjustment to PV price |
| Ceiling percent reduction from original price |
none |
MLP: 25%
MRP: 42% |
| Compliance assessment made against |
ATP (rebated price including free goods, but not PLAs) |
MLP: ex-factory price
MRP: ATP where rebates include PLAs |
Case 2 – Large population, no therapeutic alternatives
- Treats a chronic condition
- One clinically significant approved indication
- No therapeutic alternatives
- Large treatment population
- Potential disease areas: age-related macular degeneration (AMD).
- Annual treatment cost (list price): $7K
- Population with the condition: 100K in any given year
- Potential annual revenues based on the total treatment population: $700M
- Category 1 based on projected market size, no therapeutic alternatives
Case 2 – Application of the Proposed Guidelines
| Factor |
Intro Period |
End of Year 1 |
End of Year 2 |
End of Year 3* |
End of Year 4 |
End of Year 5 |
| MLP (set by MIPC) |
$6.7K |
$6.3K |
$6.0K |
$6.0K |
$6.0K |
$6.0K |
| PV Threshold Price** |
N/A |
$3,490 |
N/A |
N/A |
N/A |
N/A |
| Revenue at PV Price |
N/A |
$67M |
$97M |
$125M |
$80M |
$97M |
| Market Size Adjustment |
N/A |
30% |
50% |
N/A |
N/A |
N/A |
| MRP |
N/A |
$3,050 |
$2,525 |
$2,525 |
$2,525 |
$2,525 |
| Total Revenue at MRP |
N/A |
$62M |
$79M |
$92M |
$70M |
$79M |
*MLP/MRP frozen at year 3.
**CADTH estimated ICER is $100K. PV threshold used is $60K/QALY.
Case 2 – Current vs New Proposed Guidelines
| Original ex-factory Price |
$7,000 |
|
Current Guidelines |
Proposed Guidelines |
| Price Ceiling |
$6000 |
Ex-factory price ceiling (MLP): $6000
Rebated price ceiling (MRP): $2525
|
|
Tests used to set the Ceiling
|
MIPC |
MLP: MIPC
MRP: cost effectiveness adjusted for market size |
| Ceiling percent reduction from original price |
14% |
MLP: 14%
MRP: 64% |
| Compliance assessment made against |
ATP (rebated price, rebates include free goods, but not PLAs) |
MLP: ex-factory price
MRP: ATP where rebates include PLAs |
Case 3 – Two indications with different therapeutic benefits and prevalence rates
- Treats 2 chronic conditions
- Condition 1 (first indication): estimated 3,000 people in Canada, first in class, brings significant therapeutic improvement over standard of care
- Condition 2 (subsequent indication): Estimated 100,000 people in Canada, Therapeutic alternatives available, brings slight or no therapeutic improvement
- No therapeutic alternatives for condition 1, therapeutic alternatives for condition 2
- Annual treatment cost: $20K
- Potential annual revenues based on the total treatment population: $2B
- Category 1 based on projected market size.
Case 3 – Application of the Proposed Guidelines (first indication)
| Factor |
Intro Period |
End of Year 1 |
End of Year 2* |
End of Year 3** |
End of Year 4 |
End of Year 5 |
End of Year 6 |
| MLP (set by MIPC) |
$19K |
$18K |
$17K |
$17K |
$17K |
$17K |
$17K |
| PV Threshold Price *** |
N/A |
$9,975 |
N/A |
N/A |
N/A |
N/A |
N/A |
| Revenue at PV Price |
N/A |
$99M |
$143M |
$195M |
$249M |
$304M |
$362M |
| Market Size Adjustment |
N/A |
40% |
50% |
50% |
N/A |
N/A |
N/A |
| MRP |
N/A |
$7,580 |
$6,329 |
$5,835 |
$5,835 |
$5,835 |
$5,835 |
| Revenue at MRP |
N/A |
$80M |
$102M |
$128M |
$163M |
$199M |
$237M |
*MLP frozen based on 7 countries.
**MRP frozen after 3 years.
*** ICER threshold used is $60K/QALY.
Case 3 – Application of the Proposed Guidelines (second indication)
Several therapeutic resulting in median TCC $6,000; LIPC = $14K
| Factor |
Intro Period |
End of Year 1 |
End of Year 2* |
End of Year 3** |
End of Year 4 |
End of Year 5 |
End of Year 6 |
| MIPC |
$19K |
$18K |
$17K |
$17K |
$17K |
$17K |
$17K |
| PV Threshold Price *** |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
| MLP=higher of LIPC and median TCC |
$14K |
$13 |
$12.5 |
$12.5 |
$12.5 |
$12.5 |
$12.5 |
| Revenue at MLP |
$72M |
$137M |
$201M |
$237M |
$348M |
$426M |
$507M |
| Market Size Adjustment |
N/A |
20% |
30% |
40% |
N/A |
N/A |
N/A |
| MRP |
$6,000 |
$5,627 |
$4,680 |
$3,712 |
$3,712 |
$3,712 |
$3,712 |
| Revenue at MRP |
$31M |
$59M |
$75M |
$81M |
$103M |
$126M |
$151M |
Case 3 –Current vs New Proposed Guidelines
| Original ex-factory Price |
$20,000 |
|
Current Guidelines |
Proposed Guidelines |
Price Ceiling
Indication 1 |
$19,000 |
Ex-factory price ceiling (MLP): $17,000
Rebated price ceiling (MRP):
$7,580
|
Price Ceiling
Indication 2 |
$19,000 |
Ex-factory price ceiling (MLP): $14,000
Rebated Price ceiling (MRP): $5,627
|
| Tests used to set the Ceiling |
MIPC |
MLP: MIPC for condition 1
LIPC for condition 2
MRP: lower of MLP or med TCC adjusted for market size for condition 2 |
| Ceiling percent reduction from original price |
None |
MLP: 10%; 26%
MRP: 60%; 70% |
| Compliance assessment made against |
ATP (rebated price, rebates include free goods, but not PLAs) |
MLP: ex-factory price
MRP: ATP where rebates include PLAs |
Case 4 – 2nd line oncology medicine
- One clinically significant approved indication
- Several therapeutic alternatives exist
- Low 5-year survival rates
- Small treatment population: 3,000
- Annual treatment cost: $50,000
- Potential annual revenues based on the total treatment population: $150M
- Category 1 based on projected market size, annual treatment cost above GDP/capita
Case 4 – Application of the Proposed Guidelines
| Factor |
Intro Period |
End of Year 1 |
End of Year 2 |
End of Year 3* |
End of Year 4 |
End of Year 5 |
End of Year 6 |
| MLP (set by MIPC) |
$47.5K |
$45K |
$42.5K |
$40K |
$40K |
$40K |
$40K |
| PV Threshold Price** |
N/A |
$25K |
N/A |
N/A |
N/A |
N/A |
N/A |
| Revenue at PV Price |
N/A |
$10M |
$15M |
$19M |
$25M |
$30M |
$36M |
| Market Size Adjustment*** |
N/A |
MIPC |
MIPC |
MIPC |
MIPC |
MIPC |
MIPC |
| MRP |
N/A |
$45K |
$42.5K |
$40K |
$40K |
$40K |
$40K |
| Revenue at MRP |
N/A |
$14M |
$20M |
$26M |
$33M |
$40M |
$47M |
*MLP/MRP frozen.
**CADTH estimated ICER is $250K. PV threshold used is $60K/QALY.
***Positive market size adjustment owing to small market size – lower of MIPC, 2xPV Threshold price
Case 4 – Current vs New Proposed Guidelines
| Original ex-factory Price |
$50,000
|
|
Current Guidelines |
Proposed Guidelines |
| Price Ceiling |
$45K (assume top of TCC < MIPC) |
Ex-factory price ceiling (MLP): $40K
Rebated price ceiling (MRP): (frozen at year 3): $40K
|
| Tests used to set the Ceiling |
Midpoint of top of TCC and MIPC (moderate improvement) |
MLP: MIPC
MRP: Lower of MIPC, 2xPV threshold price |
| Ceiling percent reduction from original price |
10% |
MLP: 20%
MRP: 20% |
| Compliance assessment made against |
ATP (rebated price including free goods, but not PLAs) |
MLP: ex-factory price
MRP: ATP where rebates include PLAs |
Case 5 – Curable condition, large treatment population
- Provides cure for a common and serious condition
- Large treatment population: estimated 200,000 Canadians are living with the condition
- All could be treated in seven years assuming no rationing
- As of 2018, the health care system cost associated with the condition is estimated at $10 billion annually.
- Annual treatment cost of $50K (based on the manufacturer’s suggested list price)
- Potential annual revenues based on the total treatment population: $1.5B
- Category 1 based on projected market size, annual treatment cost above GDP/capita
Case 5 – Application of the Proposed Guidelines
| Factor |
Intro Period |
End of Year 1 |
End of Year 2* |
End of Year 3** |
End of Year 4 |
End of Year 5 |
End of Year 6 |
| MLP (set by MIPC) |
$48K |
$45K |
$43K |
$43K |
$43K |
$43K |
$43K |
| PV Threshold Price*** |
N/A |
$50K |
N/A |
N/A |
N/A |
N/A |
N/A |
| Revenue at PV Price |
N/A |
$1.5B |
$1.5B |
$1.5B |
$1.5B |
$1.5B |
$1.5B |
| Market Size Adjustment**** |
N/A |
50% |
50% |
50% |
50% |
50% |
50% |
| MRP |
N/A |
$25K |
$24K |
$23K |
$23K |
$23K |
$23K |
| Total revenue at MRP |
N/A |
$770M |
$740M |
$708M |
$708M |
$708M |
$708M |
*MLP frozen based on 7 countries.
**MRP frozen.
***CADTH estimated ICER is $50K, below PMPRB PV threshold
****Maximum market size adjustment of 50%. Assuming competitor entry in Year 6.
Case 5 – Current vs New Proposed Guidelines
| Original ex-factory Price |
$50,000 |
|
Current Guidelines |
Proposed Guidelines |
| Price Ceiling |
$48K (assume top of TCC < MIPC) |
Ex-factory price ceiling (MLP): $43K
Rebated price ceiling (MRP): (frozen at year 3): $25K
|
| Tests used to set the Ceiling |
Higher of top of TCC and MIPC (substantial improvement) |
MLP: MIPC
MRP: 50% adjustment to PV price |
| Ceiling percent reduction from original price |
4% |
MLP: 14%
MRP: 50% |
| Compliance assessment made against |
ATP (rebated price including free goods, but not PLAs) |
MLP: ex-factory price
MRP: ATP where rebates include PLAs |
Case 6 – Rare disease drug
- Rare disease drug with one indication
- Limited clinical significance (moderate improvement over placebo) but offers hope for the first time for a severe condition with high burden of illness and high unmet need.
- Small treatment population: 1,000 Canadians diagnosed with the condition, 2% increase per year.
- One in every 4,000 children born are affected by the condition.
- Annual treatment cost: $300,000
- Potential annual revenues based on the total treatment population: $300M
- Category 1 based on projected market size, annual treatment cost above GDP/capita
Case 6 – Application of the Proposed Guidelines
| Factor |
Intro Period |
End of Year 1 |
End of Year 2 |
End of Year 3* |
End of Year 4 |
End of Year 5 |
End of Year 6 |
| MLP (set by MIPC) |
$240K |
$240K |
$240K |
$240K |
$240K |
$240K |
$240K |
| PV Threshold Price** |
N/A |
$60K |
N/A |
N/A |
N/A |
N/A |
N/A |
| Revenue at PV Price |
N/A |
$3.0M |
$6.1M |
$9.4M |
$12.7M |
$19.9M |
$23.6M |
| Market Size Adjustment*** |
N/A |
2xPV |
2xPV |
2xPV |
2xPV |
2xPV |
2xPV |
| MRP |
N/A |
$120K |
$120K |
$120K |
$120K |
$120K |
$120K |
| Total revenue at MRP |
N/A |
$6.0M |
$12.2M |
$18.7M |
$25.4M |
$39.8M |
$47.2M |
*MLP/MRP frozen.
**CADTH estimated ICER is $300K-700K, depending on population and severity. Assume 80% price reduction required to meet PMPRB PV threshold of $60K/QALY.
***Positive market size adjustment owing to small market size – lower of MIPC, 2xPV Threshold price.
Case 6 – Current vs New Proposed Guidelines
| Original ex-factory Price |
$300,000 |
|
Current Guidelines |
Proposed Guidelines |
| Price Ceiling |
$240K |
Ex-factory price ceiling (MLP): $240K
Rebated price ceiling (MRP): (frozen at year 3): $120
|
| Tests used to set the Ceiling |
Midpoint of top of TCC and MIPC (moderate improvement, no comparators) |
MLP: MIPC
MRP: 2xPV price |
| Ceiling percent reduction from original price |
20% |
MLP: 20%
MRP: 60% |
| Compliance assessment made against |
ATP (rebated price including free goods, but not PLAs) |
MLP: ex-factory price
MRP: ATP where rebates include PLAs |