CPI - Adjustement Factors (Actual) - 2010

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

Table 1 reproduces preliminary price-adjustment factors for 2010 published in the April 2009 NEWSletter. These factors were based on forecasted annual CPI-inflation rates of 0.7% and 1.9% for 2009 and 2010, respectively.

Table 1

These figures imply: (1) a maximum allowable cumulative price increase between 2007 and 2010 of 5.0% for patented drug products with Canadian sales in 2007 (that is, products whose “benchmark year” is 2007); (2) a maximum allowable cumulative price increase between 2008 and 2010 of 2.6% for products whose first Canadian sales occurred in 2008; and (3) a maximum allowable cumulative price increase between 2009 and 2010 of 1.9% for products whose first Canadian sales occurred in 2009.

In addition, the forecast inflation rate of 1.9% for 2010 implies a year-over-year price increase cap of 2.9% (= 1.5 x 1.9%) for 2010.

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

The actual rate of CPI inflation for 2009 of 0.3% was published in the January 2010 NEWSletter. The actual rate of CPI inflation for 2010 is now available and was 1.8%. These rates (along with the actual 2008 CPI-inflation rate of 2.4%) yield the following final price-adjustment factors.

Table 2

The final year-over-year price increase cap for 2010 is 2.7% (= 1.5 x 1.8%).