2014 CPI-Based Price-Adjustment Factors

Preliminary Price-Adjustment Factors (Based on Forecast Inflation Rates)

The following table reproduces preliminary price-adjustment factors for 2014 published in the April 2013 NEWSletter. These factors were based on forecasted annual Consumer Price Index (CPI) inflation rates of 1.3% and 2.0% for 2013 and 2014, respectively.

These figures imply: (1) a maximum allowable cumulative price increase between 2011 and 2014 of 4.9% for patented drug products with Canadian sales in 2011 (i.e., products whose “benchmark year” is 2011); (2) a maximum allowable cumulative price increase between 2012 and 2014 of 3.3% for products whose first Canadian sales occurred in 2012; and (3) a maximum allowable cumulative price increase between 2013 and 2014 of 2.0% for products whose first Canadian sales occurred in 2013.

In addition, the forecast inflation rate of 2.0% for 2014 implies a year-over-year price increase cap applicable to all drug products, regardless of benchmark year, of 3.0% (=1.5 x 2.0%).

Final Price-Adjustment Factors (Based on Actual Inflation Rates)

The 2013 actual rate of CPI inflation of 0.9% was published in the January 2014 NEWSletter. The 2014 actual rate of CPI, which is now available, was 2.0%. These rates, along with the actual 2012 CPI-inflation rate of 1.5%, yield the following final price-adjustment factors:

The year-over-year price increase cap for 2014 is 3.0% (=1.5 x 2.0%).