IP lawyers guide clients through drug pricing framework transition

Helping clients report the status of their patents and navigate commercial agreements are major tasks for IP lawyers anticipating changes proposed by the Patented Medicine Prices Review Board. 

Last August, Health Canada announced amendments to the Patented Medicines Regulations make patented medicines more affordable, which PMPRB said would take effect July 1, 2020. Draft guidelines released by the PMPRB were meant to outlinehow to determine “whether a price is potentially excessive,” the organization said at the time.

For clients, the changes have created some business uncertainty over the past year, says Daphne Lainson, a partner at Smart & Biggar LLP in Ottawa.

“There are a number of things that are still outstanding, including the guidelines,” she says. “But in the end, the idea — the overall effect actually — will be to generally lower the price of a patented medicine in Canada, which could be significant in terms of market access.” 

While some changes, like the pricing formula, have gained widespread understanding in the industry, lawyers are still helping their clients anticipate other aspects of the pricing change as a potential deadline looms.

“There's, I think, optimism within industry that there'll be some clarification in the final guidelines that will help better understand and take account for certain products like orphan drugs,” she says. 

“We're in this area now where we are in a bit of a vacuum as to how best to advise clients. It's not entirely clear how the new law is going to be applied because we don't have final guidelines.” 

Lawyers have also been eyeing two key cases that could impact this area of law, says Lainson. A Quebec case explores whether the rules encroach on provincial authority over drug price control, while a federal court challenge examines whether the new rules are beyond the scope of the PMPRB consumer protection mandate.

“There are various commercial agreements that will come into effect,” she says, when asked about the July timeline and the lawsuits. “If the regulations fall away, and a company does make a decision about the price of their product, it — practically speaking — may be very difficult for them to make an adjustment.” 

Amid the ongoing uncertainty, lawyers are also observing recent health and economic precautions surrounding COVID-19. The Canadian Intellectual Property Office has warned of “significant delays,” and courts at several levels across the country have suspended hearings. An in-person forum on the ins and outs of the patent drug pricing changes didn’t take place, either, amid restrictions on large gatherings, Lainson says. 

Now, IP lawyers must look ahead to how the current public health approach may impact implementation of the drug pricing transition. Other issues at play will be the length of a grace period (six months or 18 months), grandfathered drugs and understanding the pricing nexus.

“So, then the bigger question becomes, well, ‘When are these regulations going to come into effect — and how should people be planning for that?’” she says. “It's really helping them understand . . . . what the implications will be and when they will need to be adjusting their pricing.”