VIREAD : NOTICE

IN THE MATTER OF the Patent Act R.S.C. 1985, c. P-4, as amended
AND IN THE MATTER OF Gilead Sciences, Inc.
AND IN THE MATTER OF Viread (tenofovir disoproxil fumarate)

NOTICE

TAKE NOTICE that the Patented Medicine Prices Review Board ("Board" or "PMPRB") proposes to issue an Advance Ruling Certificate ("ARC") pursuant to subsection 98(4) of the Patent Act (the "Act") in respect of the price of the medicine Viread.

AND TAKE NOTICE that the Board will consider written submissions as to whether it should issue the ARC, which submissions are to be filed in accordance with the directions below.

A. Purpose of this Notice

1. The purpose of this Notice is to provide Ministers of Health in the provinces and territories of Canada and other interested persons with an opportunity to make submissions on the appropriateness of issuing an Advance Ruling Certificate in the form set out in Attachment 1 with respect to the price proposed by Gilead Sciences, Inc. ("Gilead") for the patented medicine Viread.

B. Background

2. Viread 300 mg tablet is a patented medicine which Gilead proposes to sell in Canada. Viread is indicated for the treatment of HIV-1 infection in combination with other antiretroviral agents in patients 18 years of age and older who have experienced virologic failure on other regimens. The usual recommended dose is one tablet per day.

3. Canadian Patent No. 1,295,614 pertaining to Viread was issued to the Institute of Organic Chemistry, Czech Republic on February 11, 1992. Gilead is the patentee in Canada for purposes of the PMPRB.

4. Health Canada issued a Notice of Compliance with Conditions to Gilead for Viread 300 mg tablet (DIN 02247128) on March 18, 2003. Gilead began selling Viread in Canada on March 15, 2004.

5. Gilead has provided Viread free of charge to over 1,900 patients who are enrolled in the company's Expanded Access Program (EAP) since October 2001. Since commercialization, Gilead continues to supply Viread at no cost for patients that are enrolled in the EAP and that are eligible for provincial drug plan coverage until the respective drug benefit plans have had an opportunity to list Viread as a benefit on their formularies. In its submission of information pursuant to the Patented Medicines Regulations, 1994 ("Regulations"), Gilead will report the quantities of Viread supplied under the EAP, but these will not be taken into account in calculating the average price or the net revenue from sales of the medicine.

6. The average selling (transaction) price for Viread in 2004 will not exceed $15.1250 per tablet, after rebates, discounts, and other reductions are taken into account in accordance with the Regulations and the PMPRB's Excessive Price Guidelines ("Guidelines"). Gilead has established a list price of $16.2500 per tablet.

7. The Guidelines provide that new drug products will be categorized for price review purposes according to, among other things, the degree of therapeutic improvement over existing drugs. A category 2 drug product is one that is a breakthrough or provides a substantial improvement over comparable existing drug products. A category 3 drug product is one that provides moderate, little or no therapeutic advantage over comparable existing drug products.

8. Gilead has not requested a category 2 classification under the Guidelines for Viread, but reserves the right to do so in the future.

9. The PMPRB's Human Drug Advisory Panel having considered all available scientific evidence, recommended that Viread - a nucleotide reverse transcriptase inhibitor - be classified as a category 3 new medicine and that it be compared to all nucleoside reverse transcriptase inhibitors within the same 4th level of the Anatomical, Therapeutic, Chemical (ATC) System.

10. One of the tests under the PMPRB's Guidelines for determining whether the introductory price of a category 3 new drug product is excessive is whether it exceeds the prices of the comparable drug products in the same therapeutic class in a Therapeutic Class Comparison (TCC) test. In conducting the TCC, the highest cost per day of therapy in the class was Ziagen at $12.50. The details of the TCC are provided in Attachment 2.

11. A second test under the Guidelines for purposes of reviewing the introductory price of a category 3 new drug product is whether the Canadian price exceeds the prices in the countries listed in the Regulations. Viread is sold in all seven comparator countries. Prices in these countries range from $12.6759 (Italy) to $21.3184 (France). The median international price is $18.3751. Attachment 3 provides details of the international prices.

12. Gilead has submitted that, even if Viread is a category 3 new medicine, it is not appropriate to compare it to the nucleoside class in a TCC test for purposes of the Guidelines. Such a comparison would result in a maximum non-excessive (MNE) price that:

1. would be 30% below the median international price of Viread and the lowest of the comparator countries;
2. would be one of the lowest worldwide (2nd lowest in over 20 markets);
3. would not recognize the relative value of Viread, since Viread – a nucleotide reverse transcriptase inhibitor - is priced at a premium to the nucleoside class in all of the comparator countries.

13. Pursuant to section 85 of the Act, and for purposes of determining whether the price of a patented medicine is excessive under section 83, the Board shall take into consideration the following factors, to the extent that information on the factors is available to the Board:
the prices at which the medicine has been sold in the relevant market;

1. the prices at which other medicines in the same therapeutic class have been sold in the relevant market;
2. the prices at which the medicine and other medicines in the same therapeutic class have been sold in countries other than Canada;
3. changes in the Consumer Price Index; and
4. such other factors as may be specified in any regulations made for the purposes of this subsection.

14. In light of the above factors as set out in section 85 of the Act, and for purposes of this ARC, Board Staff has recommended that it is appropriate to rely on the approach used in the Humalog (insulin lispro) case in determining whether the proposed price is within the Guidelines. In the Humalog case, the MNE price was based on the median of the ratios of the price of Humalog to the price of regular insulin in Canada and in the other countries listed in the Regulations.

15. The proposed Canadian average selling price for Viread of $15.1250 per tablet is not only 18% below the median international price, but is the second lowest of the comparator countries.

16. Viread is priced at a premium to the nucleosides in the same 4th level ATC class in the seven comparator countries. The proposed price of Viread relative to the prices of the nucleosides in Canada is in line with the ratios of the prices of these drugs in the other countries listed in the Regulations, as shown in Attachment 4 (PDF).

C. Grounds for Issuance of the ARC

17. Board Staff has recommended that it is appropriate for the Board to conclude that it would not have sufficient grounds to make an order under section 83 with respect to Viread taking into consideration the factors set out in section 85 of the Act:

a. The proposed Canadian price in 2004 is well below the median of the international prices; it will be the second lowest of the seven comparator countries;

b. It reflects the relationship of the price of Viread to other medicines in the same therapeutic class in countries other than Canada;

c. It is consistent with the policies of the Board that patentees should seek advisory assistance with respect to the proposed price of a patented medicine;

d. Price changes in future years will be subject to the Guidelines.

D. Conclusion

18. The Board will consider the submissions of Board Staff, Gilead and other interested parties with a demonstrated interest in this matter in determining whether to issue the Advance Ruling Certificate.

E. Process for Submissions

19. All persons who wish to make representations in this matter shall file a written submission with the Board on or before May 7, 2004.

20. All submissions by the provincial and territorial Ministers of Health will be considered by the Board.

21. All submissions by other persons shall include a clear statement of the person's interest in this matter, and shall state the reasons why the Board should consider the submission.

22. All submissions shall be filed with the Secretary of the Board at Box L40, 333 Laurier Avenue West, Suite 1400, Ottawa, Ontario K1P 1C1. Further information on the role and process of the Board may also be obtained from the Secretary of the Board.

23. Board Staff and Gilead will be given the opportunity to make written submissions in response to any written submissions received within fifteen (15) days thereafter, no later than May 25, 2004.

Ottawa, April 8, 2004

Table of Contents

1. Viread : Attachment 1
2. Viread : Attachment 2
3. Viread : Attachment 3
4. Viread : Attachment 4

Viread : Attachment 1

Advance Ruling Certificate

Pursuant to subsection 98(4) of the Patent Act

Re:Gilead Sciences, Inc. and Viread 300 mg tablet (DIN 02247128)

I hereby certify, pursuant to subsection 98(4) of the Patent Act, that the Board is satisfied on the basis of the information submitted by Gilead Sciences, Inc. ("Gilead") and as summarized in the Notice and Comment dated April 8, 2004 that there would not be sufficient grounds to make an order under section 83 of the Patent Act in respect of Gilead concerning the above-noted matter.

In accordance with the statutory provision, this certificate is not binding on the Board. It is based on the material facts disclosed, and may be revoked or altered, in whole or in part, at any time. Should the circumstances warrant, the Board would not be precluded from taking action under the Act with respect to this drug product, irrespective of the issuance of this certificate.

Robert G. Elgie
Chairperson

Viread : Attachment 2

Viread Therapeutic Class Comparison

Notes:

1 Proposed average selling (transaction) price, Gilead Sciences, Inc.
2 Ontario Drug Benefit Formulary, September 2003
3 Liste de médicaments du Québec, June 2003

Viread : Attachment 3

Viread International Price Comparison1 (Cdn $)

Notes:

1 Sources for Prices
Canada: Proposed average selling (transaction) price, Gilead Sciences, Inc.
France: Sempex, May 2003
Germany: Rote Liste, July 2003
Italy: L'Informatore Farmaceutico, January 2003
Sweden: Prislista, June 2003
Switzerland: Medwin website, January to June 2003; Swiss price cannot be net backed out, however, ex-factory price is provided on formulary website
UK: Mims, February 2003
US: Redbook, February 2003; Federal Supply Schedule (FSS), January 2003

Derived from publicly available formulary prices using regulated wholesale mark-ups set out in the PMPRB Study S-0215, Verification of Foreign Patented Drug Prices 2000 available on the PMPRB website www.pmprb-cepmb.gc.ca under Other Publications; Study Series.

Exchange rates based on 36 months ending September 2003 as per Schedule 3 of the PMPRB's Compendium of Guidelines, Policies and Procedures.

2 For the U.S., there is no national drug formulary, nor regulated mark-ups. The Red Book publishes an Average Wholesale Price (AWP); the Federal Supply Schedule (FSS) includes a drug formulary for purposes of several federal drug plans and represents the prices paid by the U.S. Government. For purposes of this comparison, the U.S. price has been estimated by averaging the AWP and the FSS prices.

Viread : Attachment 4

PDF

Viread 300 mg (DIN 02247128)
Pricing Ratios in Canada and Other Countries1
Using Net Backed Out2 International Formulary Prices for Viread and Comparators
(Cost per day in Canadian Currency*)

Notes:

1 Sources for Prices:
France: Sempex, May 2003
Germany: Rote Liste, July 2003
Italy: L'Informatore Farmaceutico, January 2003 (Viread), March 2003 (comparators)
Sweden: Prislista, June 2003
Switzerland: Medwin website, Jan-June 2003; Swiss price cannot be net backed out, however, ex-factory price is provided on formulary website
U.K.: MIMS, February 2003 (Viread), May 2003 (comparators)
U.S.: Redbook, February 2003 (Viread), June 2003 (comparators); Average Wholesale Price (AWP) used only when Direct Price (DP) not available Federal Supply Schedule (FSS), January 2003 (Viread), June 2003 (comparators)

2 The methodology for deriving net backed out price can be found in the study “Verification of Foreign Patented Drug Prices 2000“ available on the PMPRB website www.pmprb-cepmb.gc.ca under Other Publications; Study Series.

3 For the US, there is no national drug formulary, nor regulated mark-ups. The Red Book publishes a Direct Price (DP) and/or an Average Wholesale Price (AWP); the Federal Supply Schedule (FSS) includes a drug formulary for purposes of several federal drug plans and represents the prices paid by the U.S. Government. For purposes of this comparison, the U.S. price has been estimated by averaging the DP (or AWP, where DP not listed) and the FSS prices.

4 Viread: Proposed Canadian price, Gilead Sciences, Inc. International formulary prices were used to derive international net backed out prices.

5 Ontario Drug Benefit formulary, September 2003

6 Liste de médicaments du Québec, June 2003

7 Numbers calculated by multiplying each Canadian comparator price by its median ratio

* Exchange rates based on 36-months ending September 2003 as per PMPRB Compendium Schedule 3.