Gerry Jeffcott, of 360 Public Affairs, gave a presentation for the CCSN on the drug approval process in Canada on March 27, 2014. He outlines the divide between public and private networks, cost management, as well as the review and approval process for pharmaceuticals in Canada.

1. The Mad, Fairy-tale World of Drug
Approval in Canada!
CCSN Webinar Presentation
March 27, 2014
Gerry Jeffcott
Senior Associate, 3Sixty Public Affairs

2. Presentation Overview
• The Canadian medication review and approval process
• Health Canada
• The PMPRB
• National HTA processes
• Public plans
• Private plans
• Uncrating the annual Canadian pharmaceuticals bill
• Hospitals
• Public payers
• Private payers
• Pharmaceuticals cost management
• Public plans
• Private plans

3. Canadian Pharmaceutical Review
and Approvals Process
Step 1 –
Marketing Authorization
Health Canada review
Safety, efficacy and manufacturing quality
Notice of Compliance (NoC) / Notice of Compliance with conditions (NoC/c)
Product monograph outlines indications covered and clinical claims which can be made
Step 2 –
Pricing Review
Patented Medicines Prices Review Board (PMPRB) review
Maximum Average Potential Price (MAPP) established
Step 3 –
Reimbursement
Review
Common Drug Review
(CDR)
Expert review of
comparative clinical and
cost-effectiveness for
most new medicines
Formulary listing
recommendation
issued
(list, do not list or list with
conditions)
Pan-Canadian Oncology
Drug Review (pCODR)
Expert review of
comparative clinical and
cost-effectiveness for
oncology medications
Formulary listing
recommendation
issued
(list, do not list or list with
conditions)
Local /Regional Review
(For generics and older
medications)
Expert review of
comparative clinical and
cost-effectiveness
Formulary listing
recommendation
issued
(list, do not list or list
with conditions)
Step 4 –
Jurisdictional
Formulary
Decision-making
Public Drug Benefit Plan review of expert committee recommendations
For consideration of jurisdictional budgetary capacity, plan characteristics, determination
of clinical criteria (if any), price and utilization negotiations and reimbursement status
Formulary listing decision issued / Inclusion on formulary
or and
/ or

4. Federal Reviews
• Responsible for protecting
Cdns’ health and well-being
• Regulatory authority charged
with ensuring medicines are
safe, effective and
manufactured appropriately
• NoCs outline indications and
allowable clinical clams
• Cost / prices are not
considered
• Ensures that prices for
patented medicines sold in
Canada are not “excessive”
• Determines the maximum
(factory-gate) prices that can
be charged in Canada for
patented medications
• Also regulates the level of
price increase manufacturers
may take on an annual basis
Health Canada review
Safety, efficacy and manufacturing quality
Notice of Compliance (NoC) / Notice of Compliance
with conditions (NoC/c)
Product monograph outlines indications covered and
clinical claims which can be made
Patented Medicines Prices Review Board
(PMPRB) review
Maximum Average Potential Price
(MAPP) established

5. National HTA Reviews
• Independent agencies created and governed by their
sponsoring jurisdictions
• Responsible for conducting comparative clinical and cost-
effectiveness reviews
• Produce non-binding, scientifically-based, expert
recommendations addressing whether a medication
should be reimbursed and under what circumstances
• Generally “No means no and yes means maybe”
Common Drug Review (CDR)
Expert review of comparative clinical and cost-
effectiveness for most new medicines
Formulary listing recommendation issued
(list, do not list or list with conditions)
Pan-Canadian Oncology Drug Review (pCODR)
Expert review of comparative clinical and cost-
effectiveness for oncology medications
Formulary listing recommendation issued
(list, do not list or list with conditions)
or

6. Formulary Decision-making (Public
Plans)
• Public drug plans vary widely, but all determine coverage on their
drug benefit plan formularies
• All rely on advice from local expert review committees; Some
conduct additional HTA reviews after CDR/pCODR
• All consider:
• Budgetary capacity
• Plan characteristics
• Determination of clinical criteria (if any)
• Price and utilization negotiations
Public Drug Benefit Plan review of expert committee
recommendations
For consideration of jurisdictional budgetary capacity, plan
characteristics, determination of clinical criteria (if any), price
and utilization negotiations and reimbursement status
Formulary listing decision issued / Inclusion on formulary
Local /Regional Review
(For generics and older medications)
Expert review of comparative clinical and cost-
effectiveness
Formulary listing recommendation issued
(list, do not list or list with conditions)

7. Formulary Decision-making (Public Plans)
Local
• Req’d in BC, AB, ON
• Optional in SK
• MB requires UMAs
• Atlantic provinces do not have
sufficient infrastructure to support
them
• Not available in QC, but under
review
pan-Cdn Purchasing Alliance
• A nat’l negotiations mechanism
• Involves all provinces and
territories (except Quebec).
• One jurisdiction negotiates on
behalf of all
• Separate agreements are
completed with each interested
jurisdiction
Product Listing / Utilization Management Agreements
• Confidential negotiated agreements between innovative manufacturers and
drug benefit programs to facilitate improved access
• Terms intended to address limitations identified by HTA reviews
• Typically involve manufacturers offering financial considerations (i.e., rebates)

8. Formulary Decision-making
(Private Plans)
• Many plans are still “open”, but a growing percentage are
“managed”
• Individual plan sponsors decide what to cover, but based on advice
from insurers, PBMs, benefits consultants, brokers and others
• Insurers typically offer plan templates which can be customized to
meet a given sponsor’s needs
• Formal medication review committees generally do not exist within
the private drug plan sector
• Reviews are conducted by in-house committees, contracted health
professionals or contracted external expert groups. They are used
to assess new products and recommend formulary positioning

9. Who Pays for Pharmaceuticals in
Canada
Total 2013 Rx Meds Expenditure - $29.3 B*
100% of total
Public Sector share - $12.2 B
41.6% of total
Provincial Drug Benefit Plans - $10.5 B
35.8% of total; 86.1% of public share
Federal Drug Benefit Plans - $0.6 B
2.0% of total; 4.9% of public share
Other Publicly Funded
Meds Expenditure - $1.1 B
3.8% of total; 9.0% of public share
Private Sector share - $17.1 B
58.4% of total
Private Insurers - $10.1 B
34.5% of total; 59.1% of private share
Out-of-Pocket Contributions
(from consumers) - $7.0 B
23.9% of total; 40.9% of public share
* Not including medicines dispensed in hospitals
Source: Prescribed Drug Spending in Canada 2012 Report, CIHI

10. Rx Medicines Administered in Hospitals
• According to Industry Canada’s Pharmaceutical Industry
Profile, hospital sales represented 11% or $2.45 B of
the $22.3 B spent on pharmaceuticals in 2011
• Medications administered in Canadian hospitals to
eligible residents are fully funded by the public health
care system (Medicare)
• Note – these sales are separate from and in addition to
the totals from the previous slide
• Pharmaceuticals purchased by hospitals are counted as part of
the national hospitals bill by CIHI

11. Public Payers
• Provinces and territories collectively pay for almost 40% of Rx meds
nationally through their drug benefit programs
• Variations exist, but all 10 provinces and 3 territories provide
subsidized Rx meds for welfare recipients - most also cover seniors
• There are also programs to address special needs, (i.e., organ
recipients, cystic fibrosis patients, etc.), but these vary widely by
jurisdiction
• All require varying co-payments and/or deductibles, all manage
restrictive formularies and have mandatory generic substitution
policies in place.
• Some offer ‘universal’ (BC, SK, MB, QC & soon AB, ) programs and
others offer catastrophic coverage (ON, NS, PE, NF & soon NB)
• There is significant variation in coverage rules and reimbursement
of specific medications between the provinces
Provincial Drug Benefit Plans - $10.5 B
35.8% of total; 86.1% of public share

12. Public Payers
• The fed. gov’t runs several programs which pay for about 2% of the
total expenditure on Rx meds in Canada
• They provide subsidized coverage for Rx meds directly to:
• First Nations and Inuit persons
• The military
• RCMP members
• Veterans (military and RCMP)
• Inmates in federal prisons
• Refugees
• The fed. gov’t. also funds and co-manages the Public Service
Health Care Plan (PSHCP) with its unions (the cost of which is not
included in the 2% figure)
Federal Drug Benefit Plans - $0.6 B
2.0% of total; 4.9% of public share

13. Public Payers
• This category refers to spending by other gov’t departments /
agencies on Rx meds
• Primarily it includes workers compensation programs’ sending and
the drug insurance fund premiums collected by Quebec
Other Publicly Funded Meds Expenditure - $1.1 B
3.8% of total; 9.0% of public share

14. Private Payers
• Private plans pay for >35% of Rx meds costs in Canada. Provided by:
• Life and Health Insurers (SunLife, Manulife, Great-West Life, etc.)
• Not-for-Profit providers (Blue Cross, Green Shield Canada)
• Among them, 10 companies dominate the national market, collectively
representing 95% of the business
• In Ontario, (53% of the nat’l market), 3 players control the lion’s share
• Reg’l markets are dominated by 1-2 players (usually Blue Cross affiliates)
• Each has multiple plan models which are customized to meet sponsor
needs
• The majority of plans cover most Rxs (based on some standard restrictions)
• But, a growing number of plans are “managed” through customized
formularies and/or restrictive measures
Private Insurers - $10.1 B
34.5% of total; 59.1% of private share

15. Private Payers
• More than 21% of the total nat’l Rx meds bill is paid by individuals,
including those who not eligible for public or private plan coverage
and/or whose meds are not covered by public or private payers.
They include:
• Self-employed and their families
• The unemployed and their families
• Non-insured or under-insured workers and their families
• Much of the out-of-pocket expense comes from co-payments and
deductibles
• Note - Only about 10% of seniors maintain private insurance
coverage beyond retirement which means that any meds not
covered by the provincial formulary are out-of-pocket expenses for
those patients
Out-of-Pocket Contributions (from consumers) - $7.0 B
23.9% of total; 40.9% of public share

16. Cost-management (Public Plans)
• Limits on OTCs, hospital
meds, “lifestyle” &
experimental treatments
• Formulary reviews
• Cost-sharing
• Price / reimbursement limits
• Mandatory generic substitution
• Special authorization
• Cost-effectiveness reviews
• Clinical criteria
• PLAs
• Increased focus on utilization
management (particularly for
very high-cost meds)
• Increased reliance on PLAs
(particularly via the pCPA
process)
• Increased inter-jurisdictional
collaboration
• Increased attention on “value”
differentiations
Traditional Approaches What the Future Holds

17. Cost-management (Private Plans)
• Limits on OTCs, hospital
meds, “lifestyle” &
experimental treatments
• Cost-sharing
• Annual or lifetime maximums
• Mandatory generic
substitution
• Managed formularies
• Tiered formularies
• Plans which mirror public plans
• Special authorization
requirements
• Therapeutic substitution
• Case management
• Pooling schemes
CLHIA Report on Rx Drug Policy
Calls for:
− Health Canada to take a tougher
approach to medication approvals
− Strengthened consumer protection
mandate for the PMPRB
− Common, national minimum
formulary
− National, comprehensive, high-cost
medication strategy
− New approach to addressing orphan
medicines

18. Discussion
Step 1 –
Marketing Authorization
Health Canada review
Safety, efficacy and manufacturing quality
Notice of Compliance (NoC) / Notice of Compliance with conditions (NoC/c)
Product monograph outlines indications covered and clinical claims which can be made
Step 2 –
Pricing Review
Patented Medicines Prices Review Board (PMPRB) review
Maximum Average Potential Price (MAPP) established
Step 3 –
Reimbursement
Review
Common Drug Review
(CDR)
Expert review of
comparative clinical and
cost-effectiveness for
most new medicines
Formulary listing
recommendation
issued
(list, do not list or list with
conditions)
Pan-Canadian Oncology
Drug Review (pCODR)
Expert review of
comparative clinical and
cost-effectiveness for
oncology medications
Formulary listing
recommendation
issued
(list, do not list or list with
conditions)
Local /Regional Review
(For generics and older
medications)
Expert review of
comparative clinical and
cost-effectiveness
Formulary listing
recommendation
issued
(list, do not list or list
with conditions)
Step 4 –
Jurisdictional
Formulary
Decision-making
Public Drug Benefit Plan review of expert committee recommendations
For consideration of jurisdictional budgetary capacity, plan characteristics, determination
of clinical criteria (if any), price and utilization negotiations and reimbursement status
Formulary listing decision issued / Inclusion on formulary
or and
/ or

19. Thank you!
Gerry Jeffcott
gjeffcott@3sixtypublicaffairs.com
Ph – (613) 851-1602