### PPTX - Patented Medicine Prices Review Board

```Patented Medicine Prices Review Board
Let’s Talk Numbers
Ottawa, December 6, 2012
Content
Price Review of Existing Medicines
•
•
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
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
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
4
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 factor derived using Stats Can factors
Cap factor is 1.5x the annual forecast CPI
Factors Published in the PMPRB
•
•
7
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
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
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)
Currency)
Publicly Available
International Prices
(30) 76.5000 (CDN\$)
(30) 84.1500 (CDN\$)
International Ex-Factory Prices
Backed Out From Public Sources
(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
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)
Currency)
Publicly Available
International Prices
(30) 76.5000 (CDN\$)
(30) 84.1500 (CDN\$)
International Ex-Factory Prices
Backed Out From Public Sources
(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

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
```