CPI-Adjustment Factors Based on Inflation Forecasts

The 2005 CPI-Adjustment Factors included in Table1 were published in the April 2004 NEWSletter. The 2005 CPI-adjustment factors are based on forecasts of annual CPI-inflation rates for 2004 and 2005. The Base CPI is the average of the monthly CPI figures, as published by Statistics Canada, for the benchmark year.

Table 1 – 2005 CPI-Adjustment Factors for All Patented Drug Products (CPI 1992=100)

The 2005 Forecast CPI was 126.26 (1992=100) and was based on the actual CPI figures for 2003 (122.32), as published by Statistics Canada, and the latest available inflation projections (1.4% for 2004, and 1.8% for 2005) from the federal Department of Finance.

Cap for 2005 = 2.7% (1.5 x 1.8)

CPI-Adjustment Factors Based on Actuals

As of January 2006, Statistics Canada reports annual average CPI values of 124.56 and 127.34 for 2004 and 2005, respectively. Table 2 gives revised CPI-adjustment factors incorporating these actuals.

Table 2 – 2005 CPI-Adjustment Factors for All Patented Drug Products (CPI 1992=100)

The actual 2005-over-2004 CPI-inflation rate was 2.2% compared to the 2005 forecast rate of 1.8%. This gives a 2005-over-2004 price increase cap of 3.3% (= 1.5% x 2.2%) rather than the 2.7% cap calculated on the basis of the 2005 forecast inflation rate.