CPI-Adjustment Factors for 2011
Notice of Correction
Note that there has been an amendment to the CPI-Adjustment Factors for 2011 published in the April 2010 PMPRB NEWSletter (Vol. 14, No. 2). Please find the corrected text below.
The Patent Act specifies the factors to be used by the PMPRB in determining whether the price of a patented drug product sold in Canada is excessive. One of these factors is the Consumer Price Index (CPI). The Board´s Compendium of Policies, Guidelines and Procedures requires the cumulative increase in a product´s price over any three-year period be no more than the increase in the CPI over the same period. The Compendium also sets a cap on year-over-year price increases, equal to one and one-half times the CPI-inflation rate for the year in question.
To allow patentees to set prices in advance, the Board´s CPI-Adjustment Methodology provides for the calculation of the CPI-adjustment factors based on forecast changes in the CPI. The Board informs patentees of these CPI-adjustment factors each year through its NEWSletter.
The following table provides CPI-adjustment factors for 2011. These factors were based on forecasts of annual CPI-inflation rates (Budget 2010: Leading the Way on Jobs and Growth, March 4, 2010: Table 2.1) of 1.7% and 2.2% for 2010 and 2011, respectively, as well as the actual 2009 CPI-inflation rate of 0.3%.
Forecast 2011 Price-Adjustment Factors for Patented Drug Products
These figures imply: (1) a maximum allowable cumulative price increase between 2008 and 2011 of 4.3% for patented drug products with Canadian sales in 2008 (that is, products whose “benchmark year” is 2008); (2) a maximum allowable cumulative price increase between 2009 and 2011 of 3.9% for products whose first Canadian sales occurred in 2009; and (3) a maximum allowable cumulative price increase between 2010 and 2011 of 2.2% for products whose first Canadian sales occurred in 2010.
In addition, the forecast inflation rate of 2.2% for 2011 implies a year-over-year price increase cap (applicable to all drug products, regardless of benchmark year) of 3.3% (= 1.5 x 2.2%) for 2011.