Pharma and Life Sciences Tax News Vol. 11, No.4:

A recent ruling by the Supreme Court of Canada involving the determination of an arm's length price between a Canadian pharmaceutical company and its foreign affiliate, stands for the proposition that the purchase price by the Canadian company of pharmaceutical products for sale into the branded pharmaceutical market, cannot be benchmarked by reference to the purchase price paid for the active ingredient by third-party Canadian generic pharmaceutical companies.

The Supreme Court of Canada commented that since transfer pricing is an art and not an exact science, and that as long as a taxpayer is within a reasonable range of results, their transfer prices should not be adjusted.

For more information, please read PwC's Pricing Knowledge Network: Focusing on the impact of major intercompany pricing issues