Let’s Talk Numbers Ottawa, December 6, 2012 Patented Medicine Prices Review Board

Let’s Talk Numbers

Ottawa, December 6, 2012

Patented Medicine Prices Review Board

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Price Review of Existing Medicines• CPI-Adjustment Methodology• Highest International Price Comparison

Content

Exchange Rates

Verification of International Prices• Calculating ex-factory prices

Criteria for an Investigation

Application Forms for the DIP Methodology

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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 CPI-Adjustment Methodology, as long as this price does not exceed the HIPC test.

Guidelines - Schedule 9

CPI-Adjustment Methodology

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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

Constraint #1



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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.

Constraint #2

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• Introductory Benchmark Price: Lower of the N-ATP and MAPP

• Current Benchmark Price: Lower of the N-ATP and

N-NEAP

Benchmark Year & Price

Terminology

• Benchmark Year is 3 years prior to the date of sale, unless date of first sale is less than 3 years

• Introductory vs Current

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CPI factor derived using Stats Can factors

Factors Published in the PMPRB NEWSletter

• Actual: January NEWSletter• Forecast: April NEWSletter


Cap factor is 1.5x the annual forecast CPI

Calculating the N-NEAPExample: 3 years

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2012 Forecast CPI Factor = 1.064

CPI = 1.064 x $10.0000 = $10.6400Cap = 1.032 x $10.2000 = $10.5264

Take the lower

The forecast N-NEAP for 2012 = $10.5264

2012 Forecast Cap Factor = 1.032

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

Calculating the N-NEAPExample: When Date of First Sale is less than 3 years

prior

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2012 Forecast CPI Factor (2 year) = 1.046

CPI = 1.046 x $10.0000 = $10.4600Cap = 1.032 x $10.0500 = $10.3716

Take the lower



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

Calculating the N-NEAPExample: No yearly price increase

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2012 Forecast CPI Factor = 1.064

CPI = 1.064 x $10.0000 = $10.6400Cap = 1.032 x $10.0000 = $10.3200

Take the lower





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

Calculating the N-NEAPExample: How CPI & Cap differ in the second year of

sales

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2012 Forecast CPI Factor (1 year) = 1.021

CPI = 1.021 x $10.0000 = $10.2100Cap = 1.032 x $9.0000 = $9.2880

Take the lower





2011 (Full Year) $9.0000 $10.0000 $12.0000

2012 $10.0000 ? $12.0000

Date of first Sale - March 23, 2011

Benchmark Price: $10.0000

Highest International Price Comparison

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).

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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.

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Seven countries listed in the Regulations

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Reported Form 2 Block 5

Verification of International Prices

Exchange rates (36-month average)

Exchange Rates36-Month Average

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• Found on the website

(http://www.pmprb-cepmb.gc.ca/english/View.asp?x=1606&mp=1298)

Frequently Requested ItemsAre you a Patentee?

March 2012April 2009

April 2010 April 2011

http://www.pmprb-cepmb.gc.ca/english/View.asp?x=1606&mp=1298

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ABC 100 mg/tab (DIN 01234567)International Price Verification

January-June 2011

Country

Company Submission Prices International Ex-Factory Prices Backed Out From Public Sources

(Local Currency) (Canadian Currency)

Publicly Available International Prices (Local Currency) (Canadian

Currency) (30) 76.5000 (CDN$)(H) (30) 76.5000 (CDN$) (30) 84.1500 (CDN$)(H) (30) 84.1500 (CDN$)

Canada(30) 76.5000 (CDN$)(P)

$2.6775

$2.6775(30) 84.1500 (CDN$)(P) (30) 76.5000 (CDN$)(W) (30) 84.1500 (CDN$)(W) (28) 40.0400 (€)(H) (28) 61.2400 (€) (28) 42.1000 (€)(P) Germany (28) 42.1000 (€)(P) $2.1463 (28) 39.7200 (€)(W) $2.1561 (28) 40.0400 (€)(W) (30) 203.0000 (US$)(H) (30) 188.8400 (US$)(WAC) (30) 203.0000 (US$)(P) (30) 165.3400 (US$)(FSS) (30) 203.0000 (US$)(W) (90) 566.4700 (US$)(WAC)

US(30) 167.2400 (US$)(FSS)

$6.9589(90) 496.0400 (US$)(FSS)

N/A

$6.3429(90) 608.9600 (US$)(H)

(90) 608.9600 (US$)(P) (90) 608.9600 (US$)(W) (90) 501.7100 (US$)(FSS) Median $4.5526 $4.2495

International Price Verification

Verification of International Prices

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Country Source Hospital Pharmacy Wholesaler OtherFrance Vidal X X

Germany Röte Liste X X

Italy L’Informatore Farmaceutico X X

Sweden TLV Website X X

Switzerland BAG online X

United Kingdom

Monthly Index of Medical Specialties (MIMS)

X X

United States

Thompson PDR- Red Book

- Direct Price (DP)

- Wholesale Acquisition Cost (WAC)

Federal Supply Schedule

X X

X(a)

X

X 4-FSS

(a) Report only one Wholesale price unless the DP and WAC prices are different.

Example: Verification for Germany

Pack Price Customer Size € Class

Average Price / Unit in € Average Price/ Unit in CDN $

(28) 40.04 (H) [(40.04/28) +( 42.10/28) + (40.04/28)] / 3= 1.4545 €

1.4545 x 1.47565833 = CDN $ 2.1463(28) 42.10 (P)

(28) 40.04 (W)

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Company would be requested to provide evidence that € 40.04 is the publicly available ex-factory price of ABC for hospitals in Germany.

Company Submission

Exchange rate for Germany: 1.47565833

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• Formulary Price (FP) stated in euros in Röte Liste

Calculating the Ex-Factory Price (Germany)

• FP includes 19% Value Added Tax (VAT)

• No price comparable to ex-factory hospital price reported by patentee

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• 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)


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• Ex-factory wholesale price (WP) is derived as follows:

If : 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 PricePack Price Cust. Size € Class

Average Price/ Unit in €

Average Price/ Unit in CDN $

(28) 61.2400 (€) (28) 42.10 (€)(P) [42.10/28 + 39.72/28 ]/2= 1.4611 €

1.4611 x 1.47565833 = CDN $ 2.1561

(28) 39.72 (€)(W)

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Exchange rate for Germany: 1.47565833

(1) Price Source for Germany: Röte Liste Jan. 1, 2011

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

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ABC 100 mg/tab (DIN 01234567)International Price Verification

January-June 2011

Country

Company Submission Prices International Ex-Factory Prices Backed Out From Public Sources

(Local Currency) (Canadian Currency)

Publicly Available International Prices (Local Currency) (Canadian

Currency) (30) 76.5000 (CDN$)(H) (30) 76.5000 (CDN$) (30) 84.1500 (CDN$)(H) (30) 84.1500 (CDN$)

Canada(30) 76.5000 (CDN$)(P)

$2.6775

$2.6775(30) 84.1500 (CDN$)(P) (30) 76.5000 (CDN$)(W) (30) 84.1500 (CDN$)(W) (28) 40.0400 (€)(H) (28) 61.2400 (€) (28) 42.1000 (€)(P) Germany (28) 42.1000 (€)(P) $2.1463 (28) 39.7200 (€)(W) $2.1561 (28) 40.0400 (€)(W) (30) 203.0000 (US$)(H) (30) 188.8400 (US$)(WAC) (30) 203.0000 (US$)(P) (30) 165.3400 (US$)(FSS) (30) 203.0000 (US$)(W) (90) 566.4700 (US$)(WAC)

US(30) 167.2400 (US$)(FSS)

$6.9589(90) 496.0400 (US$)(FSS)

N/A

$6.3429(90) 608.9600 (US$)(H)

(90) 608.9600 (US$)(P) (90) 608.9600 (US$)(W) (90) 501.7100 (US$)(FSS) Median $4.5526 $4.2495

International Price Verification

Criteria for Investigation

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N-ATP exceeds the MAPP by 5% at intro

Excessive Revenues greater than $50,000

PMPRB receives a complaint

OTC and Veterinary

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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.

DIP Methodology

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Introductory Benchmark Price (IBP)

Must demonstrate loss of benefits

Block 5 list price increases

Simplified and Regular DIP

Two parts to the form (A & B)

• Part B (regular only)

• Part A (simplified & regular) reasons for the DIP

Reference MaterialPMPRB Website - special section reserved for Patentees, look for the pill bottle along the side. (www.pmprb-cepmb.gc.ca)

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DIP Methodology (Webinar, Forms and Reports)http://www.pmprb-cepmb.gc.ca/english/View.asp?x=1490&mp=277

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)

Exchange Rateshttp://www.pmprb-cepmb.gc.ca/english/View.asp?x=1606&mp=1298

http://www.pmprb-cepmb.gc.ca/


http://www.pmprb-cepmb.gc.ca/english/view.asp?x=1511&id=278








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Let’s Talk Numbers Ottawa, December 6, 2012 Patented Medicine Prices Review Board