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FACTBOX-Details of Canada's biggest drug pricing overhaul in decades

Aug 9 (Reuters) - The Canadian government finalized the biggest overhaul to its drug pricing regime since 1987 on Friday, giving new powers to the federal drug price regulator, the Patented Medicine Prices Review Board (PMPRB). The government has said its aim is to lower prices for patented drugs overall. But the impact on individual drugs, especially the effect of new cost-effectiveness and government budget analyses, will depend on how the PMPRB uses its new powers. The regulator is still drafting guidelines to describe how it will implement the regulations. It said on Friday that draft guidelines may be published in September. The following are some key features of the regulations:

NEW COMPARISON COUNTRIES Like many countries, Canada regulates drug prices in part by looking at list prices in other countries. The new rules will change the list of countries it uses, removing high-cost jurisdictions and adding countries the government says are more like Canada. Switzerland and the United States will be removed. France, Germany, Italy, Sweden, and the United Kingdom remain on the list. Australia, Belgium, Japan, Netherlands, Norway and Spain will be added. This change applies to all patented drugs, and could result in lower prices for some drugs already on the market.

COST-BENEFIT ANALYSIS Some drug prices will be evaluated on the basis of their cost-effectiveness. This approach benchmarks drugs based on how much it costs to use them to extend life. Costs are often expressed in "quality-adjusted life years." Depending on list price, manufacturers will have to provide regulators with all cost-utility analyses prepared by a publicly funded organization in Canada. Other parts of government already prepare these analyses while deciding whether to recommend that public plans pay for new drugs, but the PMPRB has not previously been allowed to take their findings into account.

BUDGET IMPACT Some drugs will be evaluated based on how they could impact government budgets. Drugmakers will have to tell the PMPRB the "estimated maximum use of the medicine in Canada." This could make it possible for regulators to distinguish between drugs that are very high cost but will only be used by a few patients, like those used to treat rare diseases, and drugs that are somewhat cheaper but widely used and thus likely to hit government drug plans hard.

DISCLOSING DISCOUNTS The new regulations would require drugmakers to disclose actual prices, including discounts, to the PMPRB, not just official list prices. "Without access to this information, the PMPRB is left to regulate prices based on inflated prices that most purchasers are not actually paying," Health Canada said in a fact sheet.

(Reporting by Allison Martell; editing by Denny Thomas and David Gregorio)