CPI - Adjustment Factors (Actual) - 2012

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

Table 1 reproduces preliminary price-adjustment factors for 2012 published in the April 2011 NEWSletter. These factors were based on forecasted annual CPI-inflation rates of 2.4% and 2.1% for 2011 and 2012, respectively.

These figures imply: (1) a maximum allowable cumulative price increase between 2009 and 2012 of 6.4% for patented drug products with Canadian sales in 2009 (that is, products whose “benchmark year” is 2009); (2) a maximum allowable cumulative price increase between 2010 and 2012 of 4.6% for products whose first Canadian sales occurred in 2010; and (3) a maximum allowable cumulative price increase between 2011 and 2012 of 2.1% for products whose first Canadian sales occurred in 2011.

In addition, the forecast inflation rate of 2.1% for 2012 implies a year-over-year price increase cap (applicable to all drug products, regardless of benchmark year) of 3.2% (= 1.5 x 2.1%) for 2012.

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

The actual rate of CPI inflation for 2011 of 2.9% was published in the January 2012 NEWSletter. The actual rate of CPI inflation for 2012 is now available and was 1.5%. These rates (along with the actual 2010 CPI-inflation rate of 1.8%) yield the following final price-adjustment factors.

The final year-over-year price increase cap for 2012 is 2.3% (= 1.5 x 1.5%).