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PMPRB finds ultra-rare drug PROCYSBI is excessively priced

Update: On November 8, 2022, the PMPRB ordered that Horizon pay approximately $22 million (CAD) in excess revenues to the Receiver General of Canada ( News Release).


On September 1, 2022, a Panel of the Patented Medicine Prices Review Board (PMPRB) issued a decision that the price of Horizon Pharma’s PROCYSBI (cysteamine delayed release capsules) was and is excessive under sections 83 and 85 of the Patent Act. The Panel ordered Horizon to reduce the price of PROCYSBI from $0.4140/mg to no higher than the Maximum Average Potential Price (MAPP) prescribed by the Moderate Improvement Test under the Guidelines ($0.2202/mg) and pay the excess revenues to Canada. 

Background

PROCYSBI is used to treat an ultra-rare genetic disorder, nephropathic cystinosis. The formulation allows for dosing every 12 hours. Sales commenced on September 7, 2017, at an introductory price below the maximum price permitted under the Median International Price Comparison (MIPC) Test. 

From 1994 to September 2017, CYSTAGON, an immediate release formulation of cysteamine, was available only under the Special Access Program (SAP) but required dosing every six hours. Upon the launch of PROCYSBI, access to CYSTAGON was limited to circumstances in which a medical practitioner established that the patient was medically unable to use PROCYSBI.

Board Staff received a complaint about the price of PROCYSBI from the pan-Canadian Pharmaceutical Alliance (pCPA), which triggered an investigation. As Board Staff and Horizon could not resolve the issues, Board Staff filed a Statement of Allegations, resulting in the hearing before the Panel.

The Panel’s decision

Board’s Mandate: Considering case-law, including the recent Alexion FCA decision, the Panel held “the Board’s mandate is to ensure that patentees do not abuse their statutory monopoly rights by charging excessive prices and, in this respect, the Board does have a consumer protection mandate… [T]he patent abuse relevant to the Board’s mandate is the act of charging a price that is excessive within the meaning of section 85, not patent abuse under other sections of the Act (such as section 65) or some alleged general abuse of monopoly power [para. 107]… The Act itself balances patentee rights/innovation and consumer protection, not the Board” [para. 115].

Not the same medicine: The Panel disagreed with Board Staff’s submission that PROCYSBI and CYSTAGON were the same medicine, finding “[t]he term “medicine” refers to the commercial formulation (PROCYSBI), and not simply the active ingredient (cysteamine bitartrate)” [para. 137].  The pricing of CYSTAGON under section 85(1)(a) – “(a) the prices at which the medicine has been sold in the relevant market” – therefore did not apply.

Same therapeutic class: The two drugs were in the same therapeutic class as they are clinically equivalent (treat the same disease, effect is assessed in the same way, and both have the same active medicinal ingredient). Despite only being available through SAP, CYSTAGON had been “sold” in the “relevant market” for the purposes of section 85(1)(b) – “(b) the prices at which other medicines in the same therapeutic class have been sold in the relevant market”.

No departure from Guidelines: While Board Staff had submitted that a new level of therapeutic improvement and new pricing models should be applied (which would reduce the price to 71% to 98% of its current price), the Panel held that a departure from the Guidelines is not reasonable or necessary to appropriately implement section 85 of the Patent Act. One reason provided for not departing from the Guidelines was that “Board staff reverse-engineered the three new pricing models to generate results that would reduce the price of Procysbi by a greater order of magnitude than the reduction prescribed by Guidelines”, [para. 191] which the Panel held was not a principled approach and inconsistent with the Board’s mandate.

Moderate Improvement Test is appropriate: The Panel held that PROCYSBI is a moderate improvement over CYSTAGON. In so holding, it agreed with the Human Drug Advisory Panel’s conclusion and considered the evidence presented at the hearing, including finding insufficient evidence to satisfy the breakthrough status asserted by Horizon. The application of the Moderate Improvement Test prescribed by the Guidelines (subject to using the international as opposed to the Canadian prices of CYSTAGON) appropriately operationalizes the section 85(1) factors and fulfils the Board’s mandate.

Section 85(2) factors irrelevant as Panel could make a decision under section 85(1): It is only if the Panel is unable to determine whether the price of the medicine is excessive after having considered the section 85(1) factors that the Panel may consider the costs of making and marketing the medicine or any other factors that the Board deems relevant under section 85(2), as constrained by section 85(3).

Rejection of Horizon’s submissions on further factors: The Panel rejected Horizon’s submissions that the Canadian price for PROCYSBI cannot be excessive because it is one of the lowest prices of PROCYSBI in the world and it does not enable Horizon to cover its costs of capital. These factors are not relevant under section 85(1).

Should you have any questions, please do not hesitate to contact a member of the Life Sciences Regulatory & Compliance Group.

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