2013 CPI-Based Price-Adjustment Factors

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

Table 1 reproduces preliminary price-adjustment factors for 2013 published in the April 2012 NEWSletter. These factors were based on forecasted annual CPI-inflation rates of 2.1% and 2.0% for 2012 and 2013, respectively.

These figures imply (1) a maximum allowable cumulative price increase between 2010 and 2013 of 7.2% for patented drug products with Canadian sales in 2010 (that is, products whose “benchmark year” is 2010); (2) a maximum allowable cumulative price increase between 2011 and 2013 of 4.1% for products whose first Canadian sales occurred in 2011; and (3) a maximum allowable cumulative price increase between 2012 and 2013 of 2.0% for products whose first Canadian sales occurred in 2012.

In addition, the forecast inflation rate of 2.0% for 2013 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%) for 2013.

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

The actual rate of CPI inflation for 2012 of 1.5% was published in the January 2013 NEWSletter. The actual rate of CPI inflation for 2013 is now available and was 0.9%. These rates (along with the actual 2011 CPI-inflation rate of 2.9%) yield the following final price-adjustment factors.

The final year-over-year price increase cap for 2013 is 1.4% (= 1.5 x 0.9%).