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Consumer Price Index - CPI
What is CPI?
'Consumer Price Index' (CPI) or 'cost-of-living index' is an inflationary indicator
calculated by measuring the average price level of a fixed "basket" of products and
services (including housing, food, and transportation) purchased by a typical
Canadian consumer during a given month. The monthly published CPI represents
the rate of inflation.
2006 Actual Vs. Forecast CPI-Adjustment Factors
Under the PMPRB rules, drug prices can only increase with inflation. The methodology applied by the Board is to multiply the benchmark price by the published CPI-adjustment factors. In April of every year, the PMPRB publishes the forecast CPI factor as well as the CPI adjustment factors for the following year. In April 2005, the forecast CPI factor and CPI adjustment factors for 2006 were published. Statistics Canada released the December 2006 CPI and the full year 2006 actual CPI estimate is now available. The actual numbers suggest that the 2006 forecasted CPI adjustment factors were underforecasted.
The table below provides the forecast as well as actual 2006 CPI-adjustment factors. Depending on the year of launch, different CPI-adjustment factors are used:
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Benchmark year
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2006 Forecast*
CPI-Adjustment Factors
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2006 Actual**
CPI-Adjustment Factors
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2003 or earlier
2004
2005
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1.058
1.039
1.020
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1.062
1.043
1.020
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* Source: PMPRB NEWSletter Volume 9, Issue No. 2 April 2005
** Source: Statistics Canada www.statscan.ca.
All price increases from 2005 to 2006 were restricted to no more than 3.0% [1.5 x 2006 inflation]
Note: In 2006, the actual CPI factor (129.90) was higher than the forecasted number (129.47). This is significant for drugs that are priced higher than the MNE. Patented products, which were accumulating excess revenues, will witness a decrease in those amounts. The actual CPI-adjustment factors being higher than forecasted lead to a Maximum Non-Excessive price (MNE) for the year higher than previously established. The gap between the Average Transaction Price (ATP) and the MNE decreased leading to less excess per unit accumulated for those patented medicines.
2007 Forecast CPI - Adjustment Factors
The following are the CPI figures forecasted for 2007:
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Benchmark year
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2007 Forecast CPI-Adjustment Factors
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2004
2005
2006
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1.066
1.042
1.019
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Source: April 2006 PMPRB Newsletter.
All price increases from 2006 to 2007 are restricted to no more than 2.9% [1.5 x 1.9% (2007 budget forecast inflation)]
Note: If actual inflationary increases exceed these forecasts, patentees are entitled to the actual increases
CPI Information & Statistics
http://www.bank-banque-canada.ca/en/backgrounders/bg-i4.htm
Source: Bank of Canada
Inflation Calculator
http://www.bank-banque-canada.ca/en/inflation_calc.htm
Source: Bank of Canada
Latest CPI Release
http://www.statcan.ca/english/Subjects/Cpi/cpi-en.htm
Source: Statistics Canada
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