New Lagged CPI-Adjustment Methodology Initiative – 2015 Implementation

As part of the Board's commitment to ensure that the Guidelines respond to relevant developments in an appropriate timeframe, a change to the Consumer Price Index (CPI)-Adjustment Methodology was proposed. This change was initiated to reduce the regulatory burden on patentees and to make effective use of Board Staff resources without adversely affecting the PMPRB mandate to protect consumers.

The proposal recommended replacing the forecast CPI with the actual CPI when calculating the CPI-Adjustment Factor for the forecast period. A consultation process was launched and interested parties were invited to submit their comments on the new initiative.

Based on the feedback received from the consultation, the Board has approved implementation of the new Lagged CPI-Adjustment Methodology Initiative.

The new CPI initiative will be implemented for 2015. The Actual 2013 CPI, representing the 12-month period ending in December 2013, will be used to determine the CPI-Based Price-Adjustment Factors for 2015. The CPI-Based Price-Adjustment Factors provided below will establish the maximum allowed price increase. CPI-Based Price-Adjustment Factors will be announced in the January issue of the NEWSletter.

Calculating the CPI-Adjustment Factors for 2015 Using the Actual 2013 CPI

Forecast Year: 2015

Benchmark Year 2012 2013 2014
Base CPI* 2010
(116.47)
2011
(119.86)
2012
(121.68)
2015 CPI
Adjustment Factor
Actual 2013 CPI /
2010 Base CPI
Actual 2013 CPI /
2011 Base CPI
Actual 2013 CPI /
2012 Base CPI

* Base CPI = Benchmark Year – 2
Actual 2013 CPI = 122.82
Cap = 1.5 x Actual Inflation for 2013

Since the date of implementation is 2015, there is no need for any transitional measures to be put in place. Price increases for 2013 and 2014 will be assessed using the current CPI-Adjustment Methodology. Note that the Final 2013 CPI-Based Price-Adjustment Factors based on actual inflation rates are included in this issue of the NEWSletter. Similarly, the January 2015 NEWSletter will provide the relevant actual 2014 CPI-Based Price-Adjustment Factors. As has been the practice, the 2014 CPI-Based Price-Adjustment Factors based on forecast changes in the CPI have already been announced in the April 2013 NEWSletter.

For a summary of the changes to the Guidelines arising from this policy decision (Part C, subsection C.12; and Schedule 9, subsections 1.2, 2.5, 2.6, 2.7, 2.9 and 2.10), please see the side-by-side comparison of current and new text now available on the website. The change will be reflected in the annual June update of the Compendium of Policies, Guidelines and Procedure once it comes into effect.

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