The negotiation process

Overview

The negotiation process undertaken by pCPA occurs in four phases:

• Initiation
• Consideration
• Negotiation
• Completion

Please note that for more detailed information and a full overview of the pCPA negotiation process we highly recommend reviewing the pCPA Brand Process Guidelines and pCPA Brand Process Frequently Asked Questions (FAQs).

Phase 1: Initiation

Depending on whether a drug is a new drug, an existing drug or a line extension, will factor into how pCPA approaches the initiation phase.

1. New drugs

Once a recommendation is published by Canada's Drug Agency (formerly CADTH) and/or INESSS for a new drug the pCPA then issues an acknowledgment letter to the manufacturer advising them that the drug is now under consideration for negotiation by the pCPA.

2. Existing drugs

For existing drugs which are currently already publicly funded in one or more jurisdictions, the pCPA process may be initiated by the pCPA upon review of the currently funded drug products.

Negotiations for existing drugs may be initiated as a result of:

• Changes in the clinical landscape created by new drugs entering the same therapeutic space as an existing drug;
• A line extension of an existing drug;
• A therapeutic review involving the existing drug;
• A review of the product listing agreement (PLA) within any of the jurisdictions;
• A review of the formulary;
• The needs of a jurisdiction; and
• Any unforeseen circumstance that the pCPA believes warrants initiation of negotiation.

3. Line extensions

A line extension is when a manufacturer introduces a new product that is a new version or an enhancement of one of their existing drugs.

Manufacturers should contact the pCPA for inquiries about line extensions. Line extensions are subject to jurisdictional submission review, processes, and approvals and the collective pCPA process may also apply.

Phase 2: Consideration

In this phase, the pCPA considers whether it will enter into a negotiation for a drug. At this time, the pCPA may seek to gather additional information or clarification as required.

Some of the factors that may influence this consideration phase include: 

• The health technology assessment (HTA) recommendation, which provides clinical and pharmacoeconomic review 
• If there are any therapeutic gaps in care 
• Budget Impact Analysis (BIA) 
• Affordability
• The therapeutic landscape 
• Current coverage of alternative drugs 
• If there are upcoming therapeutic options 
• Jurisdiction-specific needs 

Once the Consideration Phase is completed, the pCPA will issue a letter to the manufacturer identifying whether pCPA will engage in negotiations, place a hold on the consideration phase, or close the file and not negotiate.

Phase 3: Negotiation

The lead jurisdictions(s) reach out to the manufacturer to outline next steps and initiate negotiations. They may request that the manufacturer submit an offer outlining the manufacturers terms. 

The negotiation format is determined by a combination of contributing factors including the drug, the manufacturer, and lead jurisdictions(s). Negotiations typically take place in person or via teleconference, and the frequency of meetings can vary depending on product requirements. 

PCPA aims to finalize negotiations within 90 business days from the Engagement Letter (see Process Timelines below), however many factors can impact negotiation timelines. For more information please refer to pCPA Brand Process Guidelines and pCPA Brand Process Frequently Asked Questions (FAQs).

Phase 4: Completion

The pCPA process is considered complete once the negotiation has resulted in mutually agreed upon terms and a fully executed agreement as detailed in a letter of intent (LOI), or, if mutually agreed upon terms are not reached, the pCPA issues a close letter to the manufacturer, indicating that the negotiation is closed.

Process Timelines

The pCPA is committed to continuous improvement of process predictability and standardization. The target timelines below are aspirational and aim to improve the current pCPA process timelines over the course of the coming years for New Drugs.

The transition from the current state, in which the proposed target completion times are not being met, is outlined below through target expectations for Year 1 (commencing within fiscal year 2018/19) and Year 2 (fiscal year 2019/20).

Phase	Associated deliverable	Target completion time	Frequency of meeting target completion time
1 - Initiation	Acknowledgment Letter	≤ 10 Business Days from HTA recommendation†	100%
2 - Consideration	Engagement/Close/Hold Letter	≤40 Business Days from HTA recommendation†	Year 1: 80% Year 2: 90%
3 - Negotiation	Proposals/Counterproposals	≤ 90 Business Days from Engagement Letter	Year 1: 80% Year 2: 90%
4 - Completion	LOI/Close letter

While the deliverables for Phase 1 and Phase 2 can be managed through pCPA internal processes, it is noted that Phase 3 and Phase 4 deliverables are dependent on all negotiating parties and therefore should be considered as joint targets. Variations and perspectives on causes for deviation from targets will be tracked to assist the parties in further improving process efficiency.

^†First HTA recommendation, either Canada's Drug Agency or INESSS

Post pCPA 

Upon full execution of an LOI, it is the responsibility of the individual jurisdictions and the manufacturer to transfer the terms into a product listing agreement (PLA).