Tiered pricing framework

The TPF applies to any generic product where the currently or previously available brand reference product was eligible for reimbursement by any drug plan.

Line extensions of existing generic products may be processed through the line extension policy (see Question 32) if a relevant brand reference product has not been marketed in Canada.

The price confirmation process determines the price and tier of market entrants and exits and their competitors.

• Manufacturers submit the TPF pricing confirmation form found on the generics page of our website for all market entrants (including select molecules) and market exits via email to the pCPA.
• The pCPA verifies that the TPF applies to the product and determines the appropriate price tier. The pCPA advises the submitting manufacturer and all drug plans when the assessment is complete.
• The pCPA notifies affected manufacturers when an assessment results in a tier change.

These products might include oral solid cancer products and those for HIV and tuberculosis, for example. If a product is listed on the public drug plan formulary in any jurisdiction, it’s subject to the TPF and must be submitted for price confirmation through the centralized process.

Biosimilar drugs are outside the scope of the TPF.

or the purposes of confirming the appropriate tier within the TPF, “competitor” means any product that has a Notice of Compliance (with an associated drug identification number (DIN)) and:

• Holds a marketed status on Health Canada’s drug product database

OR

• Holds an approved status on Health Canada’s drug product database

AND

• Has supply available in the 12 months leading up to a submission in any drug plan. This availability is demonstrated by product distribution, such as through distributors and wholesalers.

Note: A market exit assessment will not be applied in assigning the appropriate tier. However, if a product associated with a submitted market exit form (with a cancelled post market, dormant, or discontinued Health Canada status) has failed the pCPA’s market exit assessment due to sales exceeding benchmark values, the product will be counted as a competitor.

The pCPA will assign the appropriate tier within the TPF for products with a natural product number (NPN) on a case-by-case basis.

As of October 1, 2023, all jurisdictions will use Ontario’s brand reference price for all new categories established on or after October 1, 2023, with the following exceptions.

• When an assessment results in a tier change, existing categories established through the TPF prior to April 1, 2018 will use the established Ontario brand reference price (established when the first generic drug triggered the TPF generic category).
• When an assessment does not result in a tier change, existing categories established through the TPF prior to April 1, 2018 will continue to use the previously established brand reference price. British Columbia will use the brand reference price for British Columbia. For all other jurisdictions, the previously established Ontario brand reference price will continue to apply.

Note: The British Columbia brand reference price is established with the price for the low-cost alternative drug comparator, as defined in the drug price regulation British Columbia Regulation 344/2012.

New Brunswick can't accept a calculated price that is higher than the listed unit price in any other drug plan in Canada.

The following sequence of jurisdictions will be used to establish the brand reference price:

1. Alberta
2. Saskatchewan
3. British Columbia
4. Manitoba
5. Nova Scotia
6. New Brunswick
7. Prince Edward Island
8. Newfoundland and Labrador
9. Yukon
10. Québec

Once the brand reference price is assessed through the TPF, the same price will be used for all future assessments.

The historical product policy applies to generic products whose brand reference product meets specific criteria, and those in a drug category which has not previously undergone pCPA assessment. Recognizing the potential issues with using historical brand reference prices, these assessments are subject to a maximum price reduction relative to existing generic drug pricing. To be eligible for this maximum price decrease, the brand reference product must meet the following criteria:

• Be classified as cancelled post-market (CPM) according to the Health Canada drug product database.
• Have a CPM status effective on or before April 1, 2014.

See Question 10 for more information.

If the criteria for the historical product policy isn’t met, the historical price of the reference brand will be used to establish the brand reference price for the category as per the following sequence of jurisdictions:

1. Ontario
2. Alberta
3. Saskatchewan
4. British Columbia
5. Manitoba
6. Nova Scotia
7. New Brunswick
8. Prince Edward Island
9. Newfoundland and Labrador
10. Yukon
11. Québec

For the historical products policy, a maximum price reduction will be applied for the assessment relative to currently marketed generic products in the price category. The maximum price decrease applied will be relative to the number of categories in the market and the tier in which the product enters the market. A maximum price reduction for a product assessed at Tier 2 is 10%. For a product assessed as Tier 3, the maximum price reduction is 30%. A product transitioning from tier 2 to tier 3 is 30%. For more information, please refer to the historical products policy document.

Current prices may vary by drug plan. The price used for assessment will be determined based on the existing sequence of jurisdictions:

1. Ontario
2. Alberta
3. Saskatchewan
4. British Columbia
5. Manitoba
6. Nova Scotia
7. New Brunswick
8. Prince Edward Island
9. Newfoundland and Labrador
10. Yukon
11. Québec

If more than one generic drug exists in the jurisdiction, the lower price is used for the assessment.

If the standard TPF assessment results in a lower price than the maximum price reduction, a revised assessment will be applied, in which the maximum price decrease is applied.

Proportionate price decreases are assessed relative to existing generic pricing in the selected drug plan. If the assessment price for a market entry is higher than existing generic drug pricing in a specific drug plan, that jurisdiction is not expected to implement a price increase.

The pCPA will conduct a historical analysis of the generic and brand drug prices to identify the appropriate brand reference price. Please note that Ontario will continue to use the brand reference prices as determined under Ontario Regulation 201/96.

The TPF does not affect the authority of any participating drug plans to make decisions with respect to coverage.

A TPF pricing confirmation form for market entrants (including pan-Canadian select molecules) or market exits must be filled out and returned to the pCPA for all market entry and exit submissions. The TPF forms can be found on the generic drugs page of our website.

The submission of a market entry or exit assessment means a manufacturer must do the following:

• Confirm it is currently able to supply the product being submitted for an assessment at the distribution level in a quantity sufficient to meet the anticipated demand for the product in the drug plan in which it is listed.
• Acknowledge that the pCPA and drug plans may undertake further action to confirm supply.
• Accept terms and conditions on the TPF pricing confirmation form.

The pCPA will notify drug plans, the submitting manufacturer, and competitors (if there is a change in tier) of the assessed tier and price.

For market entrants, all competitors currently listed at higher prices must adjust their prices to match the assessed price established through the TPF. This adjustment would happen during the next formulary update for jurisdictions.

For market exits, all competitors currently listed will be given the opportunity to adjust their prices to match the assessed price point established through the TPF. This adjustment would happen during the next formulary updates for drug plans.

If the manufacturer’s submitted unit price exceeds the pCPA’s calculated unit price, the manufacturer can review the calculated unit price and respond to the pCPA.

If the manufacturer declines the assessment, they are deemed non- compliant by the pCPA. Non-compliant products are subject to the process outlined in Question 16.

Non-compliant refers to any situation for any generic product where the manufacturer doesn’t agree with the pCPA’s calculated unit price and won’t provide their product to drug plans at the calculated unit price. If a manufacturer doesn’t comply with the established tier, non-compliant products may not be listed, or they may be delisted.

Drug plans will provide all manufacturers with generic products in a new or existing category an opportunity to adjust prices according to the pCPA’s assessment. If the price isn’t adjusted to match the pCPA’s calculated unit price, it will be considered a non-compliant assessment. In this case, the drug plans may be required, according to their policies, regulations or legislation, to fund only the lowest-cost alternative price.

When a submitting manufacturer is compliant with the pCPA calculated unit price, competitors are expected to adjust their prices to pCPA’s calculated unit price. The manufacturer will be notified of the pCPA assessment by the pCPA or by any drug plan. Tier or price changes for competitors will occur for a drug plan only when that plan undergoes a regular scheduled formulary update. Jurisdictions commit to adhering to formulary submission deadlines and listing deadlines.

If the number of competitors increases, resulting in a change in the applicable pricing tier, all manufacturers in the class will have the opportunity to review, and then accept or decline, the pCPA’s calculated unit price at the new pricing tier. If a manufacturer declines the assessment, they’re deemed non-compliant. Non-compliant products may not be listed, or they may be delisted, if a manufacturer does not comply with the established tier or price.

Example:

Currently, 2 competitors are marketed in Canada. Both are listed at 50% of brand-name drug price. A third competitor submits a TPF pricing confirmation form to the pCPA. The pCPA assesses the submitting manufacturer’s form and determines that the category now has 3 competitors. This means the new compliant price is 25% of brand-name drug price. The pCPA will communicate the new compliant price and tier to all 3 competitors.

If the third competitor chooses not to submit to a drug plan for listing at the compliant price, the 2 original competitors must still reduce their price to 25% of brand-name drug price with the next updated release of respective formulary updates. Drug plans commit to adherence to formulary submission deadlines and listing deadlines.

The final accepted price represents the manufacturer’s per unit product price under the TPF should the product be listed in a drug plan, regardless of whether the brand-name product is currently listed. For greater certainty, the final reimbursement price may include upcharges and mark-ups as allowed by each public plan’s policies and regulations.

Yes. Manufacturers are required to make submissions for listing in individual jurisdictions based on the result of the price confirmation process. Drug plans may have additional submission requirements as part of a complete submissions package. Drug plans retain sole discretion over the final coverage decision of products listed their formulary.

Once a TPF pricing confirmation form has been received and assessed by the pCPA, all competitors are expected to adjust their price to match the pCPA’s calculated unit price in all jurisdictions, including where the product was listed prior to pCPA assessment. If the price is not adjusted to match the pCPA’s calculated unit price, it will be considered non-compliant. Generic products deemed non-compliant through the TPF may be delisted from public drug plan formularies.

DINs/NPNs will continue to be submitted to the pCPA.

• For categories that have not been established through the TPF, the pCPA will confirm that the DIN/NPN was listed in at least one jurisdiction prior to April 1, 2014.
• The pCPA will advise the manufacturer that the DIN/NPN is not an assessable product under the TPF.
• The pCPA will provide the manufacturer and jurisdictions a suggested submitted price based on an analysis of the lowest listed DIN/NPN price listed in any jurisdiction across Canada.
• Manufacturers must then follow the appropriate submission requirements when seeking listing on a public drug plan formulary. Any existing jurisdictional policies, legislation, or regulations will apply. (See Question 19.) 

This process applies to situations where a generic product was already listed in one or more jurisdictions prior to April 1, 2014 and it is now seeking listing on another public drug plan formulary.

Price increases are considered under the TPF only as part of the market exit assessment process, when one or more competitors have left the market and a market exit assessment may result in a tier change (tier 3 to 2 or 1, or tier 2 to 1).

Generic products that have applied through the market exit assessment process and have successfully been granted a tier change as a result of one or more competitor(s) leaving the market, aren’t eligible to apply for further price increases. Price increase requests for generic products not affected by the TPF may be considered by drug plans as per current established jurisdictional processes.

The pCPA is made aware of changes in competitors through the market exit assessment process. See Question 25 for more details.

A market exit assessment is triggered when the number of competitors in a category changes because of a product exiting the market on or after April 1, 2018. There is no retroactivity. Market change triggers taking place prior to April 1, 2018 aren’t eligible.

A manufacturer or a drug plan may apply for a market exit assessment when a DIN/NPN has exited the market as evidenced by a status change on or after April 1, 2018, on one more of the following sources: 

• Health Canada’s Drug Product Database (cancelled post-market status or dormant status)
• Drug Shortages Canada (discontinued status, no reversal of decision status, no remaining supply)

The pan-Canadian select molecules are exempt from market exit assessments. However, pan-Canadian select molecules will be reviewed by the pCPA on a case-by-case basis for inclusion.

Once a status change occurs in one of the resources outlined in Question 26 (on or after April 1, 2018), the pCPA seeks confirmation through a market exit confirmation form from the exiting manufacturer. A drug plan can also request the pCPA initiate a market exit assessment. The exiting manufacturer has 5 business days to respond. The manufacturer will need to establish that there’s no intention to re-enter the Canadian market within 1 year of the date they completed the form.

At the time of market exit confirmation, if it's determined there’s intention to re-introduce the generic products in the Canadian market within 1 year of the date the manufacturer completed the market exit confirmation form, the pCPA won’t proceed with recommending delisting to drug plans. The pCPA will require the manufacturer to provide the anticipated date of market re-entry or exit and may check back at a later date to confirm this position. 

Once the pCPA receives a completed market exit confirmation form, it conducts a sales test on the exiting DIN/NPN. If the DIN/NPN doesn’t pass the sales test, the first eligible date for re- application will be 3 months from the date the sales test failed. 

Flexibility to pass applications that fail the sales test in a small number of drug plans, or that have market share history close to a relevant sales threshold, could be allowed after the circumstances are reviewed.

A sales test is used to confirm the market exit of a drug. The sales test looks at the following factors:

Maximum historical market share

Relevant sales threshold 

The maximum historical market share is assessed in each evaluated time period for the drug product exiting the market (by drug plan and month) as a percentage of total drug category volume.

Market share is evaluated in each time period from April 1, 2015 to present-day, based on quantity of units dispensed. Maximum historical market share is used to determine the relevant sales threshold for the exiting drug product.
 

A drug will be evaluated by drug plan and time period, over the previous 6 months, to determine if it exceeds the relevant sales threshold. If it does exceed the sales threshold, it won’t pass the sales test.

The pCPA may monitor public sales data and wholesale records to verify market entry and issue a TPF market entry assessment if sales increase or supply is available.

Once the exiting DIN/NPN passes the sales test, the remaining competitor DINs/NPNs in the category are eligible for TPF assessment. 

The pCPA will process the submitted market exit TPF pricing confirmation form and recommend delisting of exiting DIN/NPN to all drug plans and provide the new assessed tier/price.

For products that have gone through a market exit assessment and have been delisted from the public formularies in all jurisdictions, the manufacturer must notify the pCPA when they know that the DIN/NPN will be returning to the Canadian market. The manufacturer will re-submit to the TPF to be assessed prior to listing on formularies.

A line extension is a new strength of a generic product formulation sold by the manufacturer that contains the same active ingredient or ingredients in the same dosage form. The policy is intended to proportionally price new submissions of line extension products to currently marketed strengths. 

Three scenarios have been identified that may arise when a line extension is marketed. The pCPA will determine which scenario the line extension belongs to and will use the following algorithms for pricing:

• Equal pricing: Assessment of line extension strength price is equal to marketed strengths.
• Simple proportionality: Price of line extension strength price is proportional to marketed strengths/units.
• Complex proportionality: Price of line extension strength price is proportional to:
  • Average of two neighbouring strengths per milligram, if line extension strength is bracketed by marketed strengths (“in-between” strengths).
  • Price per milligram of closest strength, if line extension strength is not bracketed by market strength (“book end” strength).

If the reference strength has been previously assessed through the TPF, the TPF assessed price is used. If the anchor strength has not been previously assessed through the TPF, use the list price in the jurisdictions according to the following sequence of jurisdictions: 

1. Ontario
2. Alberta
3. Saskatchewan
4. British Columbia 
5. Manitoba 
6. Nova Scotia 
7. New Brunswick
8. Prince Edward Island
9. Newfoundland and Labrador
10. Yukon
11. Québec