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Patented Medicine Prices Review Board Let’s Talk Numbers Ottawa, December 6, 2012 Content Price Review of Existing Medicines • • CPI-Adjustment Methodology Highest International Price Comparison Exchange Rates Verification of International Prices • Calculating ex-factory prices Criteria for an Investigation Application Forms for the DIP Methodology 2 CPI-Adjustment Methodology Guidelines - Schedule 9 1.1 … the National Average Transaction Price and … of an existing patented drug product will be presumed to be excessive if they increase by more than that allowed under the Board’s CPIAdjustment Methodology, as long as this price does not exceed the HIPC test. 3 CPI-Adjustment Methodology Constraint #1 1.2 - Adjusting the benchmark prices of the drug product for the cumulative change in the CPI from the benchmark year to the year under review (CPI-Adjusted Price); and 4 CPI-Adjustment Methodology Constraint #2 1.2 - Applying a cap on the maximum price increase in any one year, equal to 1.5 times the forecast change in the annual CPI. In periods of high inflation (over 10%), the limit will be five percentage point more than the forecast change in the CPI. 5 Terminology Benchmark Year & Price • Introductory vs Current • Benchmark Year is 3 years prior to the date of sale, unless date of first sale is less than 3 years • Introductory Benchmark Price: Lower of the N-ATP and MAPP • Current Benchmark Price: Lower of the N-ATP and N-NEAP 6 CPI-Adjustment Methodology CPI factor derived using Stats Can factors Cap factor is 1.5x the annual forecast CPI Factors Published in the PMPRB NEWSletter • • 7 Actual: January NEWSletter Forecast: April NEWSletter Calculating the N-NEAP Example: 3 years Year N-ATP N-NEAP Highest International Price 2009 (Benchmark) $10.0000 $10.0000 $12.0000 2010 $10.1000 $10.1800 $12.0000 2011 $10.2000 $10.4700 $12.0000 2012 $10.4000 ? $12.0000 2012 Forecast CPI Factor = 1.064 2012 Forecast Cap Factor = 1.032 CPI = 1.064 x $10.0000 = $10.6400 Cap = 1.032 x $10.2000 = $10.5264 The forecast N-NEAP for 2012 = $10.5264 8 Take the lower Calculating the N-NEAP Example: When Date of First Sale is less than 3 years prior Year N-ATP MAPP / N-NEAP Highest International Price 2010 (Benchmark) $10.0000 $10.0000 $12.0000 2011 $10.0500 $10.2900 $12.0000 2012 $10.2000 ? $12.0000 2012 Forecast CPI Factor (2 year) = 1.046 2012 Forecast Cap Factor = 1.032 CPI = 1.046 x $10.0000 = $10.4600 Cap = 1.032 x $10.0500 = $10.3716 The forecast N-NEAP for 2012 = $10.3716 9 Take the lower Calculating the N-NEAP Example: No yearly price increase Year N-ATP MAPP / N-NEAP Highest International Price 2009 (Benchmark) $10.0000 $10.0000 $12.0000 2010 $10.0000 $10.1800 $12.0000 2011 $10.0000 $10.4400 $12.0000 2012 $10.5000 ? $12.0000 2012 Forecast CPI Factor = 1.064 2012 Forecast Cap Factor = 1.032 CPI = 1.064 x $10.0000 = $10.6400 Cap = 1.032 x $10.0000 = $10.3200 The forecast N-NEAP for 2012 = $10.3200 10 Take the lower Calculating the N-NEAP Example: How CPI & Cap differ in the second year of sales Date of first Sale - March 23, 2011 Benchmark Price: $10.0000 Year N-ATP MAPP / N-NEAP Highest International Price 2011 (Full Year) $9.0000 $10.0000 $12.0000 2012 $10.0000 ? $12.0000 2012 Forecast CPI Factor (1 year) = 1.021 2012 Forecast Cap Factor = 1.032 CPI = 1.021 x $10.0000 = $10.2100 Cap = 1.032 x $9.0000 = $9.2880 The forecast N-NEAP for 2012 = $9.2880 11 Take the lower Highest International Price Comparison Guidelines - Schedule 6 1.2 … the Average Transaction Price of a patented drug product at the national level…will be presumed to be excessive if it exceeds the highest price of the same strength and dosage for of the same patented drug product for each country listed in the Regulations (France, Germany, Italy, Sweden, Switzerland, the United Kingdom, and the United States). 12 Highest International Price Comparison Guidelines - Schedule 6 2.1 To calculate the HIPC test for a new patented drug product, the exchange rates used are the simple average of the thirty-six monthly average noon-spot exchange rates for each country (taken to eight decimal places) as published by the Bank of Canada for the thirty six months ending four months before the date of the first sale of the drug product. 13 Highest International Price Comparison Seven countries listed in the Regulations Reported Form 2 Block 5 Exchange rates (36-month average) Verification of International Prices 14 Exchange Rates 36-Month Average April 2009 March 2012 April 2010 • April 2011 Found on the website Are you a Patentee? Frequently Requested Items (http://www.pmprb-cepmb.gc.ca/english/View.asp?x=1606&mp=1298) 15 International Price Verification ABC 100 mg/tab (DIN 01234567) International Price Verification January-June 2011 Company Submission Prices Country Canada Germany US Median 16 (Local Currency) (30) (30) (30) (30) (30) (30) (28) (28) (28) (30) (30) (30) (30) (90) (90) (90) (90) 76.5000 (CDN$)(H) 84.1500 (CDN$)(H) 76.5000 (CDN$)(P) 84.1500 (CDN$)(P) 76.5000 (CDN$)(W) 84.1500 (CDN$)(W) 40.0400 (€)(H) 42.1000 (€)(P) 40.0400 (€)(W) 203.0000 (US$)(H) 203.0000 (US$)(P) 203.0000 (US$)(W) 167.2400 (US$)(FSS) 608.9600 (US$)(H) 608.9600 (US$)(P) 608.9600 (US$)(W) 501.7100 (US$)(FSS) (Canadian Currency) Publicly Available International Prices (30) 76.5000 (CDN$) (30) 84.1500 (CDN$) International Ex-Factory Prices Backed Out From Public Sources (Canadian (Local Currency) Currency) $2.6775 $2.6775 (28) 61.2400 (€) $2.1463 $6.9589 $4.5526 (30) (30) (90) (90) 188.8400 (US$)(WAC) 165.3400 (US$)(FSS) 566.4700 (US$)(WAC) 496.0400 (US$)(FSS) (28) 42.1000 (€)(P) (28) 39.7200 (€)(W) $2.1561 N/A $6.3429 $4.2495 Verification of International Prices Country Source France Vidal X X Germany Röte Liste X X Italy L’Informatore Farmaceutico X X Sweden TLV Website X X Switzerland BAG online United Kingdom Monthly Index of Medical Specialties (MIMS) United States Thompson PDR- Red Book - Direct Price (DP) - Wholesale Acquisition Cost (WAC) Federal Supply Schedule Hospital Pharmacy Wholesaler Other X X X X X X(a) X X 4-FSS (a) Report only one Wholesale price unless the DP and WAC prices are different. 17 Example: Verification for Germany Company Submission Pack Size Price € Customer Class (28) 40.04 (H) (28) 42.10 (P) (28) 40.04 (W) Average Price / Unit in € Average Price/ Unit in CDN $ [(40.04/28) +( 42.10/28) + (40.04/28)] / 3 = 1.4545 € 1.4545 x 1.47565833 = CDN $ 2.1463 Exchange rate for Germany: 1.47565833 Company would be requested to provide evidence that € 40.04 is the publicly available exfactory price of ABC for hospitals in Germany. 18 Calculating the Ex-Factory Price (Germany) • Formulary Price (FP) stated in euros in Röte Liste • FP includes 19% Value Added Tax (VAT) • No price comparable to ex-factory hospital price reported by patentee 19 Calculating the Ex-Factory Price (Germany) • Step 1: Remove VAT: FP net (FPN) = FP / 1.19 • Step 2: Calculate ex-factory pharmacy price (PP) PP = (FPN-8.10) / 1.03 • Step 3: Derive ex-factory wholesale price (WP) 20 Calculating the Ex-Factory Price (Germany) • Ex-factory wholesale price (WP) is derived as follows: If : 21 0 < PP ≤ 3.45 WP = PP / 1.15 3.46 < PP ≤ 4.19 WP = PP - 0.45 4.20 < PP ≤ 5.60 WP = PP / 1.12 5.61 < PP ≤ 7.26 WP = PP - 0.60 7.27 < PP ≤ 9.81 WP = PP / 1.09 9.82 < PP ≤ 12.37 WP = PP - 0.81 12.38 < PP ≤ 24.61 WP = PP / 1.07 24.62 < PP ≤ 28.43 WP = PP - 1.61 28.44 < PP ≤ 1,272.00 WP = PP / 1.06 PP > 1,272.00 WP = PP – 72 Example: Verification Germany (Drug ABC, March-June 2011) Publicly Available Price(1) Pack Size Price Ex-Factory Price Pack Price Cust. Size € Class (28) (28) 42.10 (28) 39.72 61.2400 (€) (€)(P) Average Price/ Average Price/ Unit in € Unit in CDN $ [42.10/28 + 39.72/28 ]/2 (€)(W) = 1.4611 € 1.4611 x 1.47565833 = CDN $ 2.1561 (1) Price Source for Germany: Röte Liste Jan. 1, 2011 Exchange rate for Germany: 1.47565833 Explanation of second column Prescription drug Step 1 remove VAT FPN = 61.24/1.19 = 51.46 Step 2 PP = (FPN-8.10) / 1.03 = (51.46 – 8.10) / 1.03 = 42.10 Step 3 WP = 42.10 / 1.06 = 39.72 22 International Price Verification ABC 100 mg/tab (DIN 01234567) International Price Verification January-June 2011 Company Submission Prices Country Canada Germany US Median 23 (Local Currency) (30) (30) (30) (30) (30) (30) (28) (28) (28) (30) (30) (30) (30) (90) (90) (90) (90) 76.5000 (CDN$)(H) 84.1500 (CDN$)(H) 76.5000 (CDN$)(P) 84.1500 (CDN$)(P) 76.5000 (CDN$)(W) 84.1500 (CDN$)(W) 40.0400 (€)(H) 42.1000 (€)(P) 40.0400 (€)(W) 203.0000 (US$)(H) 203.0000 (US$)(P) 203.0000 (US$)(W) 167.2400 (US$)(FSS) 608.9600 (US$)(H) 608.9600 (US$)(P) 608.9600 (US$)(W) 501.7100 (US$)(FSS) (Canadian Currency) Publicly Available International Prices (30) 76.5000 (CDN$) (30) 84.1500 (CDN$) International Ex-Factory Prices Backed Out From Public Sources (Canadian (Local Currency) Currency) $2.6775 $2.6775 (28) 61.2400 (€) $2.1463 $6.9589 $4.5526 (30) (30) (90) (90) 188.8400 (US$)(WAC) 165.3400 (US$)(FSS) 566.4700 (US$)(WAC) 496.0400 (US$)(FSS) (28) 42.1000 (€)(P) (28) 39.7200 (€)(W) $2.1561 N/A $6.3429 $4.2495 Criteria for Investigation 24 N-ATP exceeds the MAPP by 5% at intro Excessive Revenues greater than $50,000 PMPRB receives a complaint OTC and Veterinary Patentees still have to submit the Form 1 and Notification of Intent to Sell If there is a complaint, the PMPRB will request that the patentee file the complete Form 2s since date of first sale. 25 DIP Methodology Simplified and Regular DIP Introductory Benchmark Price (IBP) Two parts to the form (A & B) • • Part A (simplified & regular) reasons for the DIP Part B (regular only) Block 5 list price increases Must demonstrate loss of benefits 26 Reference Material PMPRB Website - special section reserved for Patentees, look for the pill bottle along the side. (www.pmprb-cepmb.gc.ca) Exchange Rates http://www.pmprb-cepmb.gc.ca/english/View.asp?x=1606&mp=1298 Verification of International Prices http://www.pmprb-cepmb.gc.ca/english/view.asp?x=1511&id=278 (Outreach Session) or http://www.pmprb-cepmb.gc.ca/english/View.asp?x=1600&mp=274 (Formulas) DIP Methodology (Webinar, Forms and Reports) http://www.pmprb-cepmb.gc.ca/english/View.asp?x=1490&mp=277 27