Patented Medicine Prices Review Board Regulatory Affairs and Outreach Branch

Regular DIP Methodology – a refresher

Ottawa, May 16, 2013

Patented Medicine Prices Review BoardRegulatory Affairs and Outreach Branch

Preparing for a successful Regular DIP Application Benefits Block 5 Canadian price list

Invoking the Regular DIP Methodology Administrative forms Application-Related Issues and Solutions

Understanding what happens after successfully invoking the Regular DIP CPI Methodology Dealing with future increases

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Overview

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Preparing for a successful DIP application

Benefits at Introduction

Q: How to apply the DIP Methodology when benefits exist at introduction?

A: Report customers with and without benefits as separate lines in the Form 2 Block 4 at introduction and as long as benefits are given. The ATP excluding the benefits will be used to calculate the IBP*.

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Example : customers with and without benefits within the same class

2010: Drug product X introduced to Canadian market on September 1 DIN 1234567; strength/unit 1 MG/TAB; dosage form S1; pack size 10; 1000 packages sold only to hospitals, in Ontario

Price to some hospitals: $20.00/tabletPrice to other hospitals: $15.00/tablet (contract). MAPP is $20.00$/tablet N-ATP is $17.50/tablet H-ATP is $17.50/tablet

2012: Contract ends. Same quantities sold as in 2010 but price is now $20.00 to all hospitals. N-ATP is now $20/tablet

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Form 2 Block 4 September-December 2010

N-ATP = $17.50 ; H1-ATP (class without benefits) = $20.00; H2-ATP (class with benefits) = $15.00

Form 2 Block 4 January-June and July-December 2012

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4 SALES OF THE MEDICINE BY THE PATENTEE IN FINAL DOSAGE FORM IN CANADA 1

Drug Identif ication Number (DIN) or Assigned Number Strength/Unit Dosage Form Package Size

Number of Packages Sold INDICATE EITHER (6) Province

Class of Customer

(2) (3) (3,4) (3,5) (5) Net Revenue AVG Price/Package (4) (4)1234567 1 MG/TAB S1 10.00 500.00 100000.0000 6 1

1234567 1 MG/TAB S1 10.00 500.00 100000.0000 6 1

N-ATP = $20.00; H1-ATP = $20.00; H2-ATP = $20.00

When invoking the Regular DIP Methodology, the H1-ATP in 2010 (class without benefits) will be used to calculate the IBP* in 2012

4 SALES OF THE MEDICINE BY THE PATENTEE IN FINAL DOSAGE FORM IN CANADA 1

Drug Identif ication Number (DIN) or Assigned Number Strength/Unit Dosage Form Package Size

Number of Packages Sold INDICATE EITHER (6) Province

Class of Customer

(2) (3) (3,4) (3,5) (5) Net Revenue AVG Price/Package (4) (4)1234567 1 MG/TAB S1 10.00 500.00 100000.0000 6 11234567 1 MG/TAB S1 10.00 500.00 75000.0000 6 1

Are you selling above your list price?

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Block 5 Canadian list price

2009 2010 2011 2012Form 2 Block 5 Canada $20.00 $20.00 $20.00 $20.00ATP $20.00 $19.00 $19.00 $21.00

Patentees are reminded to ensure that the reported Block 5 and Block 4 data are accurate. An ATP cannot be higher than the list price.

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2007 2008 2009 2010 2011 2012

Form 2 Bl5 Canada $20.0000 $20.6000 $20.6000 $20.6000 $20.6000 $20.9000

% Bl5 increase 3.0% 1.4%

% annual CPI 2.4% 0.3% 1.8% 2.9% 1.5%

IBP/IBP* $20.0000 $20.4800 $20.4800 $20.4800 $20.4800 $20.7664

N-ATP $20.0000 $19.0000 $18.0000 $17.0000 $17.0000 $21.0000

MAPP/N-NEAP $20.0000 $20.4800 $19.0950 $18.4860 $17.7480 $17.3910

Block 5 prices as originally filedNo more benefits in 2012 – investigationRegular DIP Methodology not successful; ATP>IBP*

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2007 2008 2009 2010 2011 2012

Prices reported in Part B (and substantiated)

$20.0000 $20.6000 $20.6000 $20.6000 $20.9000 $21.2000

% Bl5 increase 3.0% 1.5% 1.4%

% annual CPI 2.4% 0.3% 1.8% 2.9% 1.5%

IBP/IBP* $20.0000 $20.4800 $20.4800 $20.4800 $20.7872 $21.0782

N-ATP $20.0000 $19.0000 $18.0000 $17.0000 $17.0000 $21.0000

N-NEAP $20.0000 $20.4800 $19.0950 $18.4860 $17.7480 $17.3910

Prices reported in Part B (copies of list prices provided)No more benefits in 2012 – investigationRegular DIP Methodology successful; ATP<IBP*

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Invoking the Regular DIP Methodology

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APPLICATION FORM TO INVOKE THE DIP METHODOLOGY

Which methodology are you invoking: Simplified DIP (Please complete Part A only)

Regular DIP (Please complete Part A and Part B)

PART A

Background Information: Please describe the circumstances that support the application of the DIP methodology to this DIN

Product Information

Brand Name: Generic Name:

DIN: Strength/Unit: Period of Review:

Application forms

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Description of the benefit: Please indicate when the benefit commenced and was terminated, the type and value of the benefit, customer classes that received it, whether there are on-going benefits, etc.

Certified by I hereby certify that the information presented is true and correct.

Signature of duly authorized person for the reporting patentee: Name: Title: Organization: Date: Tel Number: ( ) Fax Number: ( ) E-mail:

Please send the completed Form to the PMPRB Senior Regulatory Officer assigned to your company

Application forms

Part A: as described previously Part B

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PART B Price Increase Chart

Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

List Price (price/unit)

% List Price Increase

Maximum Selling Price/Unit

Effective Date of List Price increase

Year 1

Application forms

Patented drug product has been sold to various customers since April 1, 2007. Its price became under investigation in 2012. Patentee believes that Regular DIP Methodology can be applied.

Only one List Price $20.00/tab in 2007, 2008 and 2009 $21.00/tab in 2010, 2011 and 2012

Price increase was effective as of April 1st 2010 Maximum selling price was list price

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Regular DIP application

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2007 2008 2009 2010 2011 2012

List Price (price/unit) 20.00 20.00 20.00 20.00 21.00 21.00 21.00

% List Price Increase 5.00%

Maximum Selling Price/Unit 20.00 20.00 20.00 20.00 21.00 21.00 21.00

Effective Date of List Price increase 1-Apr-10

PART A Drug product information, background and description of benefit to be provided as required in the Form

Copies of the List Price to be provided for each year reported in the Price Increase Chart

Patented drug product has been sold to various customers since April 1, 2007. Its price became under investigation in 2012. Patentee believes that Regular DIP Methodology can be applied.

Two List Prices: Wholesaler $20.00/tab in 2007, 2008 and 2009 $21.00/tab in 2010, 2011 and

2012 Quebec $15.00/tab in 2007, 2008 and 2009

$15.60/tab in 2010, 2011 and 2012

Price increases were effective as of April 1st 2010 Maximum selling price was list price:

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2007 2008 2009 2010 2011 2012





Quebec 2007 2008 2009 2010 2011 2012





PART A Drug product information, background and description of benefit to be provided as required in the Form

Copies of the List Price to be provided for each year reported in the Price Increase Chart

Regular DIP Methodology: Calculation of IBP*

To calculate the IBP*, Board Staff applies the lower of the1) CPI Methodology and 2) The Block 5 increases *Subject to the Highest International Price

However there are two “Quick tips”.

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Quick Tip 1: Block 5 Canada price increase vs. annual (one year) CPI

Use lower of : annual (one year) CPI and % increase of Form 2 Block 5 Canada price

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2007 2008

Form 2 Bl5 Canada $20.0000 $20.6000

% Bl5 increase 3.0%

% annual CPI 2.4%

IBP/IBP* $20.0000 $20.4800


Quick Tip 2: No increase in Form 2 Block 5 Canada price for at least 3 years

Use lower of: Cap % increase in Form 2 Block 5

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2007 2008 2009 2010 2011 2012

Form 2 Bl5 Canada $20.0000 $20.0000 $20.0000 $20.0000 $20.0000 $20.5000

% Bl5 increase 2.5%

Cap 3.6% 0.5% 2.7% 4.4% 2.3%

IBP/IBP* $20.0000 $20.0000 $20.0000 $20.0000 $20.0000 $20.4600

Regular DIP Methodology: Calculation of IBP*When Form 2 Block 5 Canada price increases every year, CPI-Adjustment Methodology considered.

2010 CPI 20.0000 X 1.045 = 20.9000 CAP 20.5414 X 1.027 = 21.0960 % Bl5 increase 20.5414 X 1.018 = 20.9111

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2007 2008 2009 2010 2011 2012

Form 2 Bl5 Canada $20.0000 $20.5000 $20.5615 $20.8700 $21.2875 $21.6068

% Bl5 increase 2.5% 0.3% 1.8% 2.0% 1.5%

% annual CPI 2.4% 0.3% 1.8% 2.9% 1.5%

% Cap 3.6% 0.5% 2.7% 4.4% 2.3%

% CPI Adj. Factor 2.4% 2.7% 4.5% 5.1% 6.3%

IBP/IBP* $20.0000 $20.4800 $20.5414 $20.9000 $21.3180 $21.6378

N-ATP $20.0000 $19.5000 $19.0000 $18.5000 $18.0000 $21.5000

N-NEAP $20.0000 $20.4800 $19.5975 $19.5130 $19.3140 $18.4140


Block 5 Canada price decrease

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2007 2008

Form 2 Bl5 Canada $20.0000 $19.5000

% Bl5 increase

% annual CPI 2.4%

IBP/IBP* $20.0000 $19.5000

DIN previously sold Q: In cases involving the acquisition of a patented drug product prior to January 1, 2010, what is the appropriate Introductory Benchmark Price (IBP) where a patentee acquires a DIN(s) that had been previously sold by another patentee?

A: The IBP for the product sold by the second patentee would be equal to the IBP for the product sold by the first patentee provided the second patentee receives this information from the first patentee.

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Understanding what happens after successfully invoking the

Regular DIP

A: Change the year in which the Regular DIP is applied to year 1 for the purposes of the CPI-Adjustment Methodology.

YR 1 - DIP successfully applied and N-NEAP = N-ATP Excess revenue = 0

YR 2 - N-NEAP = YR 1 N-NEAP/N-ATP + CPI methodology

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What happens after successfully invoking the Regular DIP Methodology?

Regular DIP Methodology

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2007 2008 2009 2010 – Yr. 1 2011 – Yr. 2

List Price Canada $20.0000 $20.5000 $20.5000 $20.5000 $20.5000

% list price increase 2.5%

% annual CPI 2.4% 0.3% 1.8% 1.5%

Cap 3.6% 0.5% 2.7%

IBP/IBP* $20.0000 $20.4800 $20.4800 $20.4800 $20.4800

N-ATP $20.0000 $19.0000 $18.0000 $20.0500

N-NEAP $20.0000 $19.4560 $18.4860 $20.0500 $20.3508

Regular DIP applied in 2010 (Year 1)

Regular DIP Methodology: Scenario 1

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2007 2008 2009 2010 – Yr. 1 2011 – Yr. 2



% annual CPI 2.4% 0.3% 1.8% 1.5%

Cap 3.6% 0.5% 2.7%

IBP/IBP* $20.0000 $20.4800 $20.4800 $20.4800 $20.4800

N-ATP $20.0000 $19.0000 $18.0000 $20.0500 $20.2500

N-NEAP $20.0000 $19.4560 $18.4860 $20.0500 $20.3508

Scenario 1 – Year 2 N-ATP < Year 2 N-NEAP


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2007 2008 2009 2010 – Yr. 1 2011 – Yr. 2



% annual CPI 2.4% 0.3% 1.8% 1.5%

Cap 3.6% 0.5% 2.7%

IBP/IBP* $20.0000 $20.4800 $20.4800 $20.4800 $20.4800

N-ATP $20.0000 $19.0000 $18.0000 $20.0500 $20.4500

N-NEAP $20.0000 $19.4560 $18.4860 $20.0500 $20.3508

Scenario 2 – Year 2 N-ATP > Year 2 N-NEAP,But < IBP*

Regular DIP Methodology: Scenario 2Post Regular DIP application in Year 2

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2007 2008 2009 2010 – Yr. 1 2011 – Yr. 1



% annual CPI 2.4% 0.3% 1.8% 1.5%

Cap 3.6% 0.5% 2.7%

IBP/IBP* $20.0000 $20.4800 $20.4800 $20.4800 $20.4800

N-ATP $20.0000 $19.0000 $18.0000 $20.0500 $20.4500

N-NEAP $20.0000 $19.4560 $18.4860 $20.0500 $20.4500

Scenario 2 – Year 2 N-ATP > Year 2 N-NEAP,But < IBP*


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2007 2008 2009 2010 – Yr. 1 2011 – Yr. 2



% annual CPI 2.4% 0.3% 1.8% 1.5%

Cap 3.6% 0.5% 2.7%

IBP/IBP* $20.0000 $20.4800 $20.4800 $20.4800 $20.4800

N-ATP $20.0000 $19.0000 $18.0000 $20.0500 $20.7500

N-NEAP $20.0000 $19.4560 $18.4860 $20.0500 $20.3508

Scenario 3 – Year 2 N-ATP > N-NEAP,and > IBP* - no list price increase in Year 2


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2007 2008 2009 2010 – Yr. 1 2011 – Yr. 2


% list price increase 2.5% 1.5%% annual CPI 2.4% 0.3% 1.8% 1.5%

Cap 3.6% 0.5% 2.7% 2.25%

IBP/IBP* $20.0000 $20.4800 $20.4800 $20.4800

N-ATP $20.0000 $19.0000 $18.0000 $20.0500 $20.7500

N-NEAP $20.0000 $19.4560 $18.4860 $20.0500 $20.3508

Scenario 4 – Year 2 N-ATP > N-NEAP and > IBP*,However - list price increase in Year 2


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2007 2008 2009 2010 – Yr. 1 2011 – Yr. 1


% list price increase 2.5% 1.5%% annual CPI 2.4% 0.3% 1.8% 1.5%

Cap 3.6% 0.5% 2.7% 2.25%

IBP/IBP* $20.0000 $20.4800 $20.4800 $20.4800 $20.7872

N-ATP $20.0000 $19.0000 $18.0000 $20.0500 $20.7500

N-NEAP $20.0000 $19.4560 $18.4860 $20.0500 $20.7500

Scenario 4 – Year 2 N-ATP > N-NEAP and > IBP*,However - list price increase in Year 2

Considerations and General Reminders

DIP has to be applied for – the forms must be filled out Pay attention and consider changes to CPI Product must be sold at list price – Block 4 sale Pay attention to your Block 5 data and your MAPP at

introduction HIPC is always a factor Your SRO (Senior Regulatory Officer assigned to your

company) is always available for discussion on specific issues

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QUESTIONS ?

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Documents

Patented Medicine Prices Review Board Regulatory Affairs and Outreach Branch