Federal Court of Appeals Dismisses Appeal Challenging Amended Basket of Comparison Countries in PMPRB Regulations | smart and big
On December 5, 2022, the Federal Court of Appeals (FCA) dismissed the appeal of Innovative Medicines Canada (IMC) and sixteen innovative pharmaceutical companies regarding the validity of the modified basket of comparison countries in the Regulation of Patented Medicines: Innovative Medicines Canada v Canada (Attorney General), 2022 ACF 210 (Appeal decision).
The Regulation of Patented Medicines establish the information requirements for patent holders before the Patented Medicines Price Review Board (PMPRB). The proposed amendments were first published on August 21, 2019, and broadly would have introduced:
- New price regulatory factors based on pharmacoeconomic value, market size, and GDP/GDP per capita in Canada, and related reporting obligations (pharmacoeconomic factors);
- Expanded reporting of pricing and revenue information to include confidential third party rebates (rebate reporting);
- A modified basket of foreign reference countries for reporting purposes (modified basket); Y
- Reduced reporting obligations for proprietary, over-the-counter veterinary drugs (other than non-prescription drugs on list D, such as vaccines and insulin) and generic drugs.
Court challenges to the validity of amendments (1)-(3) quickly followed.
The The Federal Court held that the amendments to the reimbursement reports (2) were invalid, but the amendments to the pharmacoeconomic factors (1) and the modified basket (3) were valid. The appeal decision is discussed below.
The The Quebec Court of Appeals held that the amendments for both pharmacoeconomic factors (1) and reimbursement reports (2) were invalid, but the modified basket (3) was valid.
Finally, the Governor in Council proceeded with amendments (3) and (4) only, and the the modifications entered into force on July 1, 2022. Draft Amended Guidelines are currently under consideration. (Update: The Guidelines will not be implemented on January 1, 2023 as planned above).
Amendment in question
For context, yes. 85(1) of the Patent Law sets out five factors the Board must consider when evaluating whether price fixing is excessive and includes:
“(c) the prices at which the drug and other drugs of the same therapeutic class have been sold in countries other than Canada.”
§101(1)(a) of the Patent Law gives the Governor-in-Council the power to issue regulations:
“(a) specifying the information and documents to be provided to the Board…”
The Regulation of Patented Medicines require patent holders to provide relevant price information for drugs sold in a basket of countries other than Canada. Before the amendment, the basket of seven countries was: France, Germany, Italy, SwedenSwitzerland, the United Kingdom and the United States. The modified basket of eleven countries is: Australia, Belgium, France, Germany, ItalyJapan, Netherlands, Norway, Spain, Sweden and the United Kingdom (countries in bold are the same in both baskets). United States and Switzerland are no longer included.
The FCA only addressed IMC’s appeal on the amended basket (3) and decided that the decision to enact the amendment changing the list of comparison countries was based on a reasonable interpretation of the power to regulate in subsection 101(1) of the Patent Law. The FCA did not accept the claim that the amendments were made for an improper purpose, namely “reducing the price of medicines in general to generate healthcare savings and pave the way for national pharmaceutical care”.
The FCA agreed with the Federal Court that the amendment simply related to a change in the collection of information, the presentation of which is “benign”. However, the purpose for which the Board uses the information submitted may be subject to subsequent challenge: “[i]If the Board then uses that comparative information to set or control prices, rather than police excessive pricing, an aggrieved party may establish on judicial review that the Board has exceeded its jurisdiction.”
Any further appeal would require the authorization of the Supreme Court of Canada.