CPI - Adjustment Factors (actual) - 2011

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

Table 1 reproduces preliminary price-adjustment factors for 2011 published in the April 2010 NEWSletter. These factors were based on forecasted annual CPI-inflation rates of 1.7% and 2.2% for 2010 and 2011, respectively.

These figures imply: (1) a maximum allowable cumulative price increase between 2008 and 2011 of 4.3% for patented drug products with Canadian sales in 2008 (that is, products whose “benchmark year” is 2008); (2) a maximum allowable cumulative price increase between 2009 and 2011 of 3.9% for products whose first Canadian sales occurred in 2009; and (3) a maximum allowable cumulative price increase between 2010 and 2011 of 2.2% for products whose first Canadian sales occurred in 2010.

In addition, the forecast inflation rate of 2.2% for 2011 implies a year-over-year price increase cap (applicable to all drug products, regardless of benchmark year) of 3.3% (= 1.5 x 2.2%) for 2011.

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

The actual rate of CPI inflation for 2010 of 1.8% was published in the January 2011 NEWSletter. The actual rate of CPI inflation for 2011 is now available and was 2.9%. These rates (along with the actual 2009 CPI-inflation rate of 0.3%) yield the following final price-adjustment factors.

The final year-over-year price increase cap for 2011 is 4.4 % (= 1.5 x 2.9%).