1. Emerging Trends in Pharmaceutical Marketing Pricing Strategy Workshop

2. Some History… The ODB froze the 1993/94 formulary prices Québec and Saskatchewan have policies where they need to have the best available price Resulted in almost no drug price inflation until 2003

3. But… Price difference between U.S. is increasing Cross-border shopping has become a sizeable problem Manufacturers are looking for solutions

4. Prices Canada vs. International Source: Annual Report, CEPMB, 1999-2004 Prices at par Canadian prices are lower Canadian prices are higher

5. Prices Canada vs. International Prices at par Canadian prices are lower Canadian prices are higher Source: Annual Report, PMPRB, 1999-2004

6. Prices Canada vs. International Prices at par Canadian prices are lower Canadian prices are higher Source: Annual Report, PMPRB, 1999-2004 Stronger currencies

7. Prices Canada vs. International Prices at par Canadian prices are lower Canadian prices are higher Source: Annual Report, PMPRB, 1999-2004 Weaker USD

8. The difference between Canada and the U.S. is increasing? Prices Canada vs. U.S. Source: Annual Report, PMPRB, 1999-2004

9. When compared to the U.S., U.K. and Switzerland, Canadian prices (patented drugs) are lower Affected by exchange rates – lower Canadian dollar since 2002 (36-month average) is reversing trends The difference with the U.S. is increasing Increasing Internet sales Pressures to reduce the difference Prices Canada vs. International

10. ? New Products Launched: Prices “at par” internationally Existing Products: Price increases Restricted by the PMPRB – bending the rules Restricted by the provinces Prices Canada vs. International

11. Formulary Increases By provinces

12. Formulary Increases and Timing By provinces, BOTOX (UNIT DOSE VIAL) April 2004

13. Formulary Increases and Timing By provinces

15. Are formularies the last answer? Private Drug Plans are ±40% of the National drug market Only few have managed formularies Most are price takers, even with adjudication system

16. Price Increases – Private Data 2003-2004 Sample of 1200 DINs (72% of all Ontario private drug plan claims – July 2005) Approximately 200 price increases on brand products form Jan. 2002 to July 2005 Approximately 25 price increases on generic products form Jan. 2002 to July 2005 30 manufacturers Most increases 3%-6% (brand products) 2% to 300% (generic products)

17. Brogan Price Index Private Drug Plans January 2002 = 1

18. Brogan Price Index Versus Inflation June 2003 = 1

19. Price Increases – Conclusions Depends on who is paying Timing is everything – especially when the PMPRB is concerned What is the reaction of all stakeholders?