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Bulletin

DIP Working Group Recommends that PMPRB Permanently Adopt the DIP Methodology

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Life Sciences Bulletin

On May 16, 2012, a Report setting out the follow-up recommendations of the DIP Working Group (DIP-WG) on the pilot implementation of the DIP Methodology was released by the PMPRB. In its report, the DIP-WG recommended that the Board adopt the DIP Methodology on a permanent basis.

The DIP Methodology was introduced to address situations where the price of a patented medicine increases in excess of that allowable under the CPI-Adjustment Methodology due to a reduction or termination of benefits to customers (i.e., any 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). Under the DIP Methodology, when a Market-Specific Average Transaction Price of a drug product increases by more than that allowable under the CPI-Adjustment Methodology and the patentee provides the required evidence, the price of the drug product may increase up to the highest Non-Excessive Average Price of another class of customer without being presumed to be excessive, as long as this price does not exceed the Highest International Price Comparison test.

The DIP-WG was established to identify potential challenges, and develop workable solutions, in implementing the DIP Methodology. The challenges identified mainly involved the seemingly onerous evidence requirements to invoke the DIP Methodology. In order to simplify the evidence reporting task, the DIP-WG proposed that the DIP Methodology be divided into two streams: (i) a Simplified DIP Methodology with lower evidence requirements, for situations where the National Average Transaction Price (N-ATP) of a patented drug product does not exceed its Introductory Benchmark Price (IBP); and (ii) a Regular DIP Methodology with greater evidence requirements, to be considered in situations when the N-ATP of a patented drug product is greater than its IBP. The Board chose to implement the DIP-WG's recommendations on a one-year pilot basis.

Based on its assessment of the pilot implementation, the DIP-WG concluded that the DIP Methodology is an effective solution to address and resolve investigations arising from the reduction or termination of benefits. Moreover, the DIP-WG reported that the pilot application was generally a positive experience for both patentees and Board Staff due to the less burdensome process to request and invoke the DIP Methodology, standardized means to report required evidence, and manageable and operationally available evidence requirements.

The Board will screen a webinar for Patentees on the Follow-up Recommendations on Implementation of the DIP Methodology on June 7, 2012.

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