Compendium of Policies, Guidelines, and Procedures for Price Review Process

1. Compendium of Policies, Guidelines and Procedures, June 2009Implementation: January 1, 2010 Regulatory Affairs and Outreach Branch Toronto, Ontario Montreal, Quebec June 17, 2009 June 18, 2009

2. Overview Introduction Guidelines and Procedures Scientific Review Process Price Tests Any Market Review “DIP Methodology” Re-setting NEAP Filing Requirements

3. Compendium of Policies, Guidelines and Procedures Part A – Legal Framework New section on legal framework Part B – Policies New section which sets out Board policies Part C – Guidelines and Procedures Aligned with price review process Schedules

4. Modified Terminology for MNE Price More transparent Regulations require reporting of average prices New terms: Maximum Average Potential Price (MAPP) Introductory price ceiling for all markets: national, pharmacies, hospitals, wholesalers, and provinces/territories Non-Excessive Average Price (NEAP) Based on actual pricing in each market

5. Maximum Average Potential Price(MAPP) Will publish MAPP for new patented drug products in Summary Reports Will not publish CPI-inflated MAPP

6. Domestic Price Comparisons New methodology for public prices for comparators identified for price tests Clarity and predictability of public prices to be used in price tests (TCC and RR tests) New methodology applies both when comparator sold by same or different patentee

7. Domestic Price Comparisons (cont’d) Six price sources will be consulted: Association québécoise des pharmaciens propriétaires (AQPP); IMS Health; McKesson Canada; Ontario Drug Benefit (ODB) Programs; PPS Pharma; and, Régie de l'assurance maladie du Québec (RAMQ) For each comparator identified, lowest public price selected Price test conducted using the price identified for each comparator

8. New patented drug product XYZ – assume it is a slight or no improvement and three comparable drug products were identified as comparators for TCC test

9. TCC test for new patented drug product XYZ

10. Publicly Available International Prices Patented Medicines Regulations direct patentees to provide publicly available ex-factory prices when completing Form 2, Block 5 Commercially sensitive confidential prices are not to be reported

11. Use of Patented and Non-Patented Drug Products as Comparators in the Price Tests Historical policy and practice All pivotal comparators assessed against price tests in Guidelines Exclude any comparator, patented or non-patented, being sold at an excessive price

12. Policy on Offsetting Excess Revenues Actual price reduction below previous year’s NEAP Once excess revenues offset by price reduction, ATP may return to market-specific NEAP VCU required to resolve excess revenues below investigation criteria after 3 consecutive years

13. Example of offset below investigation criteria

14. Guidelines and Procedures

15. Submission Process for New Drug Products Filing of Scientific Data No explicit regulatory requirement with the exception of Form 1 and product monograph (or information similar to that contained in product monograph).

16. Submission Process for New Drug Products Source of Scientific Information Patentee Submission Research by Drug Information Center (DIC) Research by Board Scientific Staff Research by Human Drug Advisory (HDAP) Panel members Other experts (as required) Scientific review does not consider pricing information

17. Submission Process for New Drug Products Scientific Review DIC Patentee Submission Board ScientificStaff HDAPMembers Experts HDAP (majority vote) Recommendation on Level of Therapeutic Improvement,Comparators and Dosage Regimens

18. Products Not Referred to the HDAP In general, new patented drug products are referred to HDAP However, the following new patented drug products will not be referred to HDAP unless the patentee files a submission claiming therapeutic improvement: The new patented drug product represents a new DIN of an existing dosage form of an existing drug product, or a new DIN of another dosage form of the existing drug product that is comparable to the existing dosage form as per Schedule 2 and has the same indication or use as the existing DIN; or The new patented drug product is a combination drug product, the individual components of which are sold in Canada and have the same indication or use; or The new patented generic drug product is considered by Health Canada to be bioequivalent to the reference brand drug product sold in Canada; or The new patented generic drug product is a licensed version of an existing brand drug product sold in Canada.

19. Determining the Primary Indication/Use Guidelines did not change; Primary indication/use for drug products with multiple indications/use will be based on the approved indication or use for which the drug product offers the greatest therapeutic advantage in relation to alternative therapies; Where there is no apparent single approved indication or use for which the new patented drug product offers the greatest therapeutic advantage, the approved indication or use representing, potentially, the greatest proportion of sales will be the basis for recommending its level of therapeutic improvement; and selection of drug products to be used for comparison purposes;

20. Level of Therapeutic Improvement Breakthrough: A breakthrough drug product is the first one to be sold in Canada that treats effectively a particular illness or addresses effectively a particular indication. Substantial Improvement: A drug product offering substantial improvement is one that, relative to other drug products sold in Canada, provides substantial improvement in therapeutic effects. Moderate Improvement: A drug product offering moderate improvement is one that, relative to other drug products sold in Canada, provides moderate improvement in therapeutic effects. Slight or No Improvement: A drug product offering slight or no improvement is one that, relative to other drug products sold in Canada, provides slight or no improvement in therapeutic effects.

21. Factors Considered in Recommending the Level of Therapeutic Improvement Primary Factors Increased efficacy Reduction in incidence or grade of important adverse reactions The primary factors will be given the greatest weight. Primary factors will be considered in order to assess if the new patented drug product is a breakthrough, or represents substantial, moderate or slight/no improvement relative to other drug products available in Canada

22. Factors Considered in Recommending the Level of Therapeutic Improvement Secondary Factors Route of administration Patient convenience Compliance improvements leading to improved therapeutic efficacy Caregiver convenience Time required to achieve the optimal therapeutic effect Duration of the usual treatment course Success rate Percentage of affected population treated effectively Disability avoidance/savings Secondary factors will then be considered. These secondary factors could result in the level of therapeutic improvement being assessed at up to the level of moderate therapeutic improvement. Note: factors such as the mechanism of action; a new chemical entity and a different pharmacokinetic profile will generally not be taken into consideration, unless the impact of these factors results in either increased efficacy and/or a reduction in the incidence or grade of important adverse reactions.

23. Methodology for the Evaluation of the Level of Therapeutic Improvement An evidence-based approach will be used Hierarchy of evidence from the Oxford Centre for Evidence-Based Medicine (see Schedule 1 in the Compendium)

24. Selection of Comparators HDAP uses the World Health Organization (WHO) Collaborating Centre for Drug Statistics Methodology’s Anatomical Therapeutic Chemical (ATC) Classification System Products will typically be those identified at the 4th sub-class level HDAP may also choose from the next higher sub-class or another sub-class

25. Selection of Comparators Level of Therapeutic Improvement Comparators Breakthrough None Substantial Improvement Drug products over which is it substantial improvement Will be reviewed by HDAP Moderate Improvement Drug products over which is it moderate improvement Slight/No Improvement Comparable drug products -if no comparable drug products: “superior” drug products

26. Selection of Comparators Level of Therapeutic Improvement Comparator -Same active ingredient -Same indication/use -Same or comparable dosage form -Same or different dosage regimen -Same active ingredient -Same indication/use -Same or comparable dosage form Will not be reviewed by HDAP unless company makes submission claiming therapeutic improvement Combination Drug Products Each of the component parts Generic Bioequivalent Generic Licensee Brand name drug product

27. Comparable Dosage Regimens Guidelines did not change Will normally not be higher than the maximum of the usual recommended dosage in the Product Monograph The most appropriate strength of the drug product will be chosen for a particular dosage regimen Course of treatment will be applicable to acute indications A per-day regimen (based on maintenance dose) will be applicable to chronic situations

28. OTC and Veterinary Drug Products Upon receipt of a complaint, the PMPRB will undertake the scientific review of the patented OTC or veterinary drug product in the same manner as is undertaken for all other patented drug products

29. Submission Process for New Drug Products Communication of Results Following HDAP meeting (approximately 1 – 2 weeks after meeting) Board Staff proceed to price review Patentees have opportunity to re-submit

30. Introductory Price Tests Price premium aligned with degree of therapeutic improvement: Breakthrough – Median of International Price Comparison (MIPC) Substantial Improvement – Higher of top of Therapeutic Class Comparison (TCC) test and the MIPC Moderate Improvement – Higher of mid-point between top of TCC test and the MIPC, and top of TCC test Slight/No Improvement – Top of TCC test

31. Introductory Price Tests Intro Price Tests Level of Therapeutic Improvement Comparators Breakthrough None MIPC Higher of: Top TCC test and MIPC Substantial Improvement Drug products over which it is substantial improvement - Higher of: Mid point and Top TCC test Top TCC test / MIPC - If cannot derive dosage regimen or price of comparator(s) is excessive MIPC Drug products over which it is moderate improvement Moderate Improvement Comparable drug products -if no comparable drug products: “superior” drug products Top TCC test - Lower of: Bottom TCC test and MIPC - If cannot derive dosage regimen or price of comparator(s) is excessive MIPC Slight/No Improvement 31

32. Introductory Price Test Level of Therapeutic Improvement Intro Price Test Comparator • -Same active ingredient • -Same indication/use • Same or comparable dosage • form • -Same or different dosage • regimen -Same active ingredient -Same indication/use -Same or comparable dosage form -RR test if same dosage regimen -TCC test if different dosage regimen Combination Drug Products Each of the component parts TCC test (sum of each of the component parts) Generic Bioequivalent Generic Licensee Brand name drug product RR test

33. Reasonable Relationship (RR) Test Clarify language Change to test 2: will also conduct if slope zero addresses situation where only negative y-intercepts Test 3: Maintain pricing for new lower strength at price of existing higher strength

34. Highest International Price Comparison (HIPC) Test For all patentees, HIPC test conducted: At national level For pharmacy and hospital customer classes For each province and territory HIPC test not applied to wholesaler class of customer

35. International Therapeutic Class Comparison (ITCC) Test Not pivotal price test – for information only Focus on median price Two methods: Straight Class Approach Ratio Approach Only generics of companies selling in Canada included

36. Investigation Criteria • N-ATP or any MS-ATP of a new patented drug product exceeds MAPP during introductory period by more than 5% • N-ATP of an existing patented drug product exceeds N-NEAP by more than 5% • Excess revenues (calculated at national level) for a new or existing patented drug product are $50,000 or more

37. Any Market Price Review Intent of statute - ensure prices not excessive in “any market” or “relevant market” At introduction: Both national and “market-specific” ATPs will be investigated if trigger criteria After introduction: Monitor National ATP Review specific markets only if national ATP triggers investigation criteria Submarkets: Pharmacies, hospitals, wholesalers Provinces/Territories Excess revenue calculated at national level

38. Any Market Review – Introductory Period

39. Any Market Review – Existing (based on second example on previous slide)

40. “DIP Methodology” If price increase due solely to end or reduction of a benefit, patentee not held to allowable CPI increases Type of Benefit: Must conform to ss. 4(4) or 4(5) of the Regulations – “price reduction given as a promotion or in the form of rebates, discounts, refunds, free goods, free services, gifts or any other benefits of a like nature” 40

41. “DIP Methodology”Evidence of Benefit Form of evidence (e.g., agreement/contract, data requirements) not specified to allow flexibility given newness of DIP methodology However, Need to demonstrate that recipient was aware that it was receiving a benefit not offered to all customers Need to identify type and value of benefits and when/how it was offered Provide evidence of termination/reduction of benefits Need to identify whether recipient is still receiving other benefits

42. “DIP Methodology” Price If evidence of benefit, ATP of market could increase to highest NEAP of another market Rationale: Remove disincentives to offering benefits

43. “DIP Methodology”

44. Re-setting the NEAP Interim MIPC if too few comparator countries; may be reviewed when sold in 5 countries or after 3 years Recognition of possible “cost of making and marketing” e.g., once NOC obtained after drug product first sold as Investigational New Drug, through Clinical Trial Application, or under the Special Access Programme (SAP)

45. Filing Requirements

46. Form 1 - Medicine Identification Sheet (electronic format including Product Monograph)

47. FORM 2 - Information on the Identity and Prices of the Medicine (electronic format)

48. Where to find Forms on PMPRB Web site

49. Reporting Process Form 2 Block 4 and Block 5 templates specific to each company are sent by PMPRB to patentee approximately 45 days before reporting deadline Failure to File (FTF): Letter advising patentee of FTF 7 days to file missing information Board Order Data submitted by patentee goes through PMPRB electronic verification system Error report generated Compliance Status reports sent approximately 45 days after reporting deadline

50. Upcoming regulatory filing: a gentle reminder Form 2 reporting January-June 2009 data due on or before July 30, 2009 Don’t forget cover sheet i.e. Block 1, 2, 3 and electronic signature Block 4 and 5 Strength/unit, dosage form: Follow the template DIN, strength/unit, dosage form must be the same on both Blocks Pack size: pay attention to the unit in strength/unit to determine the pack size Block 5 Generic name: beware of spelling mistakes Ex-factory price for Canada must be reported too Ex-factory price for other countries must be in national currency of the country Never comment directly on Forms: include a separate document (word or e-mail)