CPI - Adjustment Factors (Actual) - 2008

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

Table 1 reproduces preliminary price-adjustment factors for 2008 published in the April 2007 NEWSletter. These factors were based on annual forecast CPI-inflation rates of 1.6% and 2.0% for 2007 and 2008, respectively, as well as the actual 2006 CPI-inflation rate of 2.0%.

Table 1

These figures imply: (1) a maximum allowable cumulative price increase between 2005 and 2008 of 5.7% for patented drug products with Canadian sales in 2005 (that is, products whose “benchmark year” is 2005); (2) a maximum allowable cumulative price increase between 2006 and 2008 of 3.6% for products whose first Canadian sales occurred in 2006; and a maximum allowable cumulative price increase between 2007 and 2008 of 2.0% for products whose first Canadian sales occurred in 2007.

In addition, the forecast inflation rate of 2.0% for 2008 implies a year-over-year price increase cap of 3.0% (= 1.5 x 2.0%) for 2008.

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

The actual rate of CPI inflation for 2007 of 2.1% was published in the January 2008 NEWSletter. The actual CPI inflation for 2008 is now available and is 2.4%. These rates (along with the actual 2006 CPI-inflation rate of 2.0%) yield the following final price-adjustment factors.

Table 2

The final year-over-year price increase cap for 2008 is 3.6% (= 1.5 x 2.4%).

In June 2007, Statistics Canada updated the base year of its Consumer Price Index (CPI) from 1992 to 2002. This change merely involved a rescaling of the series. Historical rates of growth in the CPI have not been affected.

The PMPRB will henceforth use the new base year in its calculations. The PMPRB anticipates no impact on patentees. In particular, the change in base year will require no revision of previously published CPI-based price-adjustment factors, or affect the calculation of maximum non-excessive prices.

Patentees who want more information on the CPI base year or any other aspect of the CPI should consult the Statistics Canada publication Your Guide to the Consumer Price Index (Catalogue No. 62-557-XPB), which is available online at www.statcan.gc.ca.;