PMPRB Holds That Excessive Prices From One Year Cannot Be Offset By Non-Excessive Prices From Another Year (QUADRACEL, PENTACEL)

Summary

In a decision dated December 21, 2009 (later amended on March 1, 2010), the PMPRB held that sanofi's QUADRACEL and PENTACEL vaccine products were priced excessively. On March 16, 2010, the Board ordered sanofi to make a payment in the amount of $2,512,877.74 representing its excess revenues. The Board's decision was reviewed by the Federal Court (2011 FC 859) and in the Court's view, the reasons for the Board's Decision were found to be lacking in clarity and completeness. The matter was remitted by the Court to the Board for reconsideration.

Board's Reconsideration of Remedy

The issue of whether sanofi's sale prices were excessive was not contested at the hearing. Rather, the issue before the Board was whether it should impose a remedy to address the excessive revenues in some years, or accept sanofi's position that the excessive revenues should be offset by non-excessive sale prices in other years.

The Federal Court held that the Board did not consider this issue "clearly and fully" in its initial decision and ordered that it be reconsidered.

On reconsideration, the Board rejected sanofi's argument for two reasons.

First, sanofi sold its vaccines to the Government of Canada in one period at reduced prices as a result of the Government's competitive procurement process. This discount was a benefit to the Government. In contrast, sanofi's sale price was considered to be excessive in another period in which there was no competitive process. According to the Board, those excess revenues should be paid to the Government. Since the Government was entitled to both of these "benefits", sanofi could not use its reduced sale prices in one year to offset its excessive sale prices in other years.

Second, the PMPRB Guidelines state that the maximum non-excessive price ("MNE") is determined on an annual basis and that prices from one year cannot be offset against prices from another year. While these Guidelines are not binding, the Board decided that they should be applied in the present case.

Conclusion

The Board held that its initial Order dated March 16, 2010, in which sanofi was ordered to pay $2,512,877.74 to the Government, was the appropriate remedy by which the excessive revenues earned by sanofi should be offset.

Link to decision:

PMPRB-07-D6-QUADRACEL and PENTACEL...