Vol. 145, No. 8 — April 13, 2011

Registration

SOR/2011-79 March 25, 2011

FINANCIAL ADMINISTRATION ACT

ARCHIVED — Fees in Respect of Drugs and Medical Devices Regulations

P.C. 2011-441 March 25, 2011

Whereas the requirements of section 4 of the User Fees Act (see footnote a) have been complied with in respect of the fees fixed in the annexed Regulations;

Therefore His Excellency the Governor General in Council, on the recommendation of the Treasury Board and the Minister of Health, pursuant to subsection 19(1) (see footnote b) and section 19.1 (see footnote c) of the Financial Administration Act (see footnote d) and, considering that it is otherwise in the public interest, subsection 23(2.1) (see footnote e) of that Act, hereby makes the annexed Fees in Respect of Drugs and Medical Devices Regulations.

FEES IN RESPECT OF DRUGS AND MEDICAL DEVICES REGULATIONS

PART 1

GENERAL

DEFINITION

Definition of “Minister”

1. In these Regulations, “Minister” means the Minister of Health.

PURPOSE

Purpose — fees

2. (1) The purpose of these Regulations is to prescribe the fees for

1. (a) the examination of a new drug submission, a supplement to a new drug submission, an abbreviated new drug submission or a supplement to an abbreviated new drug submission referred to in section C.08.002, C.08.002.1 or C.08.003 of the Food and Drug Regulations, an application in respect of an establishment licence under those Regulations or an application for a drug identification number under section C.01.014.1 of those Regulations;
   
2. (b) the examination of an application for, or the renewal of, a dealer’s licence under Part G of the Food and Drug Regulations or under the Narcotic Control Regulations;
   
3. (c) the right to sell a drug under the Food and Drug Regulations; and
   
4. (d) the examination of an application in respect of a medical device licence, the right to sell a medical device or the examination of an application in respect of an establishment licence under the Medical Devices Regulations.

Purpose — remission

(2) The purpose of these Regulations is also to remit, in whole or in part, certain of those fees.

APPLICATION

Non-application

3. These Regulations do not apply in respect of

1. (a) a drug that is proposed for veterinary use only; or
   
2. (b) a drug that is a natural health product.

ANNUAL ADJUSTMENT OF FEES

Adjustment of fees

4. Every fee set out in these Regulations is to be increased annually by 2%, rounded up to the nearest dollar, beginning on April 1, 2012.

PART 2

DRUGS

DIVISION 1

FEES FOR THE EXAMINATION OF A DRUG SUBMISSION

Interpretation

Definitions

5. (1) The following definitions apply in this Division.

“actual gross revenue”
« recettes brutes réelles »

“actual gross revenue” means the amount earned by the person referred to in section 6 during the fee verification period from the sales in Canada of the drug that is the subject of a submission, a supplement or an application referred to in that section.

“anticipated gross revenue”
« recettes brutes prévues »

“anticipated gross revenue” means the amount that the person referred to in section 6 expects to earn during the fee verification period from the sales in Canada of the drug that is the subject of a submission, a supplement or an application referred to in that section.

“fee verification period”
« période de vérification du prix à payer »

“fee verification period”, in respect of a drug that is the subject of a submission, a supplement or an application referred to in section 6, means the period beginning on the day on which the drug is first sold in Canada after a notice of compliance is issued in respect of the submission or supplement or after a drug identification number is assigned for the drug as a result of the application and ending three years after that day.

Words and expressions

(2) Unless the context otherwise requires, all other words and expressions used in this Division have the meanings assigned to them by the Food and Drug Regulations.

Fees

Fee for examination

6. Subject to sections 11 to 14, the fee for the examination of a new drug submission, a supplement to a new drug submission, an abbreviated new drug submission or a supplement to an abbreviated new drug submission referred to in section C.08.002, C.08.002.1 or C.08.003 of the Food and Drug Regulations or an application for a drug identification number under section C.01.014.1 of those Regulations is, in respect of the submission class set out in column 1 of Schedule 1 and described in column 2, the fee set out in column 3. The fee is payable by the person who files the submission or supplement or makes the application.

Timing of Payment

Timing of payment — $10,000 or less

7. (1) If the fee referred to in section 6 is $10,000 or less, it is payable at the time that the submission or supplement is filed or the application is made.

Timing of payment — more than $10,000

(2) If the fee referred to in section 6 is more than $10,000,

1. (a) 10% of the fee is payable on receipt of a notice from the Minister stating that the submission, supplement or application has been found to be incomplete following a preliminary examination;
   
2. (b) 75% of the fee is payable on receipt of a notice from the Minister stating that the submission, supplement or application has been found to be complete following a preliminary examination and has been accepted for further examination; and
   
3. (c) 25% of the fee is payable on receipt of a notice from the Minister stating that the examination of the submission, supplement or application has been completed.

Remission — not accepted for examination

8. If the total amount of the fee has been paid at the time of filing in accordance with subsection 7(1) and the person referred to in section 6 receives a notice from the Minister stating that the submission, supplement or application has not been accepted for further examination, remission is granted of the amount paid less 10%, which the Minister must repay to that person.

Deferred payment

9. (1) If the person referred to in section 6 has not completed their first full fiscal year on the day on which they file the submission or make the application and if a statement signed by the individual responsible for the person’s financial affairs specifying the commencement date of that fiscal year is provided with the submission or application, the payment of the fee in respect of the submission or application is deferred for a two-year period following the day the submission is filed or application is made, together with the payment of any fee that becomes payable in respect of a supplement filed during that period. At the end of the two-year period, the person must pay all of the applicable amounts payable.

Inaccurate statement

(2) If the Minister determines, on the basis of any information available to the Minister, that a statement provided under subsection (1) is inaccurate, the payment cannot be deferred and is payable in accordance with section 7. The Minister must notify the person accordingly.

Deferred payment — notice of compliance

10. (1) If the person referred to in section 6 submits an application for authorization under section C.07.003 of the Food and Drug Regulations at the same time that it files the submission or supplement or makes the application for a drug identification number, the payment of the fee is deferred until the issuance of a notice of compliance under section C.08.004 of those Regulations or the issuance of a document setting out the drug identification number assigned for the drug under section C.01.014.2 of those Regulations.

Later date

(2) If the person is also entitled to a deferral under section 9, the payment of the fee is deferred until the later date.

Remission

Remission — anticipated gross revenue

11. (1) Subject to subsection (4) and subsection 13(2), remission is granted of the amount by which the fee payable under section 6 exceeds 10% of the actual gross revenue of a person referred to in that section if

1. (a) the person provides with their submission, supplement or application
   
   1. (i) a statement signed by the individual responsible for the person’s financial affairs indicating the person’s anticipated gross revenue and certifying that the fee payable under section 6 is greater than an amount equal to 10% of that anticipated gross revenue,
      
   2. (ii) information establishing that the fee payable under section 6 is greater than an amount equal to 10% of the person’s anticipated gross revenue, and
      
   3. (iii) the amount of $500 for processing the remission; and

1. (b) on the basis of the information provided under paragraph (a) and any other information available to the Minister, the Minister determines that the fee payable under section 6 is likely to be greater than an amount equal to 10% of the person’s actual gross revenue.

Amounts payable

(2) The fee is then payable as follows:

1. (a) an amount equal to 10% of the person’s anticipated gross revenue is payable in accordance with subsection 7(2); and
   
2. (b) the amount, if any, by which the lesser of the fee payable under section 6 and 10% of the person’s actual gross revenue exceeds the amount paid under paragraph (a) is payable 60 days after the day on which the fee verification period ends.

Sales records

(3) Within 60 days after the end of the fee verification period, the person must provide the Minister with sales records in regard to the sales of the drug in Canada during the fee verification period, prepared in accordance with generally accepted accounting principles, and a document signed by the individual responsible for the person’s financial affairs certifying that they were so prepared.

Omission

(4) If, within 60 days after the end of the fee verification period, the person has not provided the Minister with the records referred to in subsection (3), the difference between the fee payable under section 6 and the amount already paid is immediately payable.

Remission — actual gross revenue

12. If the amount already paid is greater than 10% of the actual gross revenue of the person referred to in section 6, remission is granted of an amount equal to the difference between those amounts, which the Minister must repay to the person.

Audited sales records

13. (1) If the Minister determines, on the basis of any information available to the Minister, that the records provided in accordance with subsection 11(3) are not adequate to determine the actual gross revenue of the person referred to in section 6, the Minister may require, for the purpose of determining the fee payable or the amount of the remission, the person to provide sales records that have been audited by a qualified independent auditor.

Omission

(2) If, within 60 days after the day of the Minister’s request for the audited sales records, the person has not provided the Minister with them, the difference between the fee payable under section 6 and the amount already paid is immediately payable.

Difference payable

(3) If the audited sales records establish that the amount already paid is less than 10% of the person’s actual gross revenue, the amount by which the lesser of the fee payable under section 6 and 10% of the person’s actual gross revenue exceeds the amount paid is immediately payable.

Difference remitted

(4) If the audited sales records establish that the amount already paid is greater than 10% of the person’s actual gross revenue, remission is granted of an amount equal to the difference between those amounts, which the Minister must repay to the person.

Remission

14. Remission is granted to the person referred to in section 6 of the amount of the fee referred to in that section in respect of a drug if the manufacturer has received an authorization under section 21.04 of the Patent Act.

DIVISION 2

FEES FOR THE EXAMINATION OF AN APPLICATION FOR A DRUG ESTABLISHMENT LICENCE

Interpretation

Definitions

15. (1) The following definitions apply in this Division.

“activity”
« activité »

“activity” means an activity set out in Table I to section C.01A.008 of the Food and Drug Regulations.

“category”
« catégorie »

“category” means a category of drugs set out in Table II to section C.01A.008 of the Food and Drug Regulations.

“drug”
« drogue »

“drug” has the same meaning as in subsection C.01A.001(2) of the Food and Drug Regulations.

“establishment licence”
« licence d’établissement »

“establishment licence” means a licence issued under section C.01A.008 of the Food and Drug Regulations.

“health care facility”
« établissement de santé »

“health care facility” means a facility that provides diagnostic or therapeutic services to patients. It includes a group of such facilities that report to one common management that has responsibility for the activities carried out in those facilities.

Words and expressions

(2) Unless the context otherwise requires, all other words and expressions used in this Division have the meanings assigned to them by the Food and Drugs Act or the Food and Drug Regulations.

Application

Non-application

16. This Division does not apply to any publicly funded health care facility or any branch or agency of the Government of Canada or of the government of a province.

Fee

Fee

17. (1) The fee payable by an applicant for the examination of an application for an establishment licence or for the annual review of an establishment licence is the sum of the applicable fees referred to in sections 19 to 25 and the fee payable by an applicant for the examination of an application for the amendment of an establishment licence is the sum of the fees referred to in sections 27 and 28.

Remission

(2) Subject to subsection 26(2), if the fee is greater than an amount equal to 1% of the applicant’s actual gross revenue from activities conducted under an establishment licence during the previous calendar year, remission is granted of the difference between those amounts if the applicant provides with their application a statement signed by the individual responsible for the applicant’s financial affairs that sets out the actual gross revenue.

Timing of payment

(3) Subject to subsection (4), the fee is payable at the time the applicant submits an application for an establishment licence or for the annual review of an establishment licence under section C.01A.005 or C.01A.009 of the Food and Drug Regulations or an application for the amendment of an establishment licence under section C.01A.006 of those Regulations.

First year of activities

(4) If the applicant has not completed their first calendar year of conducting activities under the establishment licence, the payment of the fee is deferred until the end of that year.

Reinstatement

(5) Every provision of this Division that applies to an application for an establishment licence also applies to a request to have such a licence reinstated.

Interpretation

18. In sections 19 to 25, a reference to the examination of an application for an establishment licence includes an examination of an application for the annual review of an establishment licence.

Licence authorizing fabrication

19. (1) For the examination of an application for an establishment licence for each building at which one or more activities, including fabricating drugs, are to be conducted, the fee is the basic fee, set out in item 1, column 2, of Schedule 2, and any of the following fees that are applicable:

1. (a) if the licence is in respect of more than one category, for each additional category, the fee set out in item 2, column 2, of Schedule 2;
   
2. (b) if the licence is in respect of more than one dosage form class, the applicable fee set out in item 3, column 2, of Schedule 2;
   
3. (c) if the licence is in respect of sterile dosage forms, the fee set out in item 4, column 2, of Schedule 2.

Importing

(2) Despite section 21, if the importing of drugs is to be authorized by the establishment licence at a building referred to in subsection (1), the fee referred to in paragraph 21(b) is also payable.

Licence authorizing packaging/ labelling

20. (1) Subject to subsection (3), for the examination of an application for an establishment licence for each building at which one or more activities, including packaging/labelling drugs but not including fabricating drugs, are to be conducted, the fee is the basic fee, set out in item 1, column 2, of Schedule 3, and any of the following fees that are applicable:

1. (a) if the licence is in respect of more than one category, for each additional category, the fee set out in item 2, column 2, of Schedule 3;
   
2. (b) if the licence is in respect of more than one dosage form class, the applicable fee set out in item 3, column 2, of Schedule 3.

Importing

(2) Despite section 21, if the importing of drugs is to be authorized by the establishment licence at a building referred to in subsection (1), the fee referred to in paragraph 21(b) is also payable.

Medical gas

(3) If the applicant for an establishment licence proposes to conduct activities only in regard to drugs in the dosage form class of medical gas at more than one building, the fee is the sum of the following fees:

1. (a) in regard to packaging/labelling, the basic fee set out in item 1, column 2, of Schedule 3, as if only one building were authorized under the licence;
   
2. (b) in regard to all other activities, the fee that would be payable under subsection 17(1) if packaging/labelling activities were not referred to in the application.

Licence authorizing importation

21. If one or more activities, including importing drugs but not including fabricating or packaging/labelling drugs, are referred to in the application for an establishment licence, the fee for the examination of that application is

1. (a) for each building at which those activities are to be conducted, the basic fee, set out in item 1, column 2, of Schedule 4, and any of the following fees that are applicable:
   
   1. (i) if the licence is in respect of more than one category, for each additional category, the fee set out in item 2, column 2, of Schedule 4,
      
   2. (ii) if the licence is in respect of more than one dosage form class, the applicable fee set out in item 3, column 2, of Schedule 4; and

1. (b) for each fabricator outside Canada of drugs that are to be imported, except if the importer provides a certificate from a Canadian inspector indicating that the fabricator’s buildings, equipment, practices and procedures meet the applicable requirements of Divisions 2 to 4 of Part C of the Food and Drug Regulations, the sum of the following fees that are applicable:
   
   1. (i) the fee set out in item 4, column 2, of Schedule 4,
      
   2. (ii) if the licence is in respect of more than one dosage form class, for each additional dosage form class, the fee set out in item 5, column 2, of Schedule 4.

Licence authorizing distribution

22. For the examination of an application for an establishment licence for each building at which one or more activities — including distributing drugs as a distributor referred to in paragraph C.01A.003(b) of the Food and Drug Regulations but not including fabricating, packaging/ labelling or importing drugs — are to be conducted, the fee is the basic fee, set out in item 1, column 2, of Schedule 4, and any of the following fees that are applicable:

1. (a) if the licence is in respect of more than one category, for each additional category, the fee set out in item 2, column 2, of Schedule 4;
   
2. (b) if the licence is in respect of more than one dosage form class, the applicable fee set out in item 3, column 2, of Schedule 4.

Licence authorizing distribution or wholesaling

23. For the examination of an application for an establishment licence for each building at which one or more activities — including distributing drugs as a distributor referred to in paragraph C.01A.003(a) of the Food and Drug Regulations or wholesaling drugs but not including fabricating, packaging/labelling or importing drugs or distributing drugs as a distributor referred to in paragraph C.01A.003(b) of those Regulations — are to be conducted, the fee is a basic fee of $3,870.

Licence authorizing testing

24. For the examination of an application for an establishment licence for each building at which only the testing of drugs is to be conducted, the fee is a basic fee of $2,580.

Drug analysis fee

25. In addition to the fees referred to in sections 19 to 22, if the application for an establishment licence seeks to authorize the holder to fabricate, package/label or import drugs or distribute drugs as a distributor referred to in paragraph C.01A.003(b) of the Food and Drug Regulations, the fee is the highest fee set out in column 2 of Schedule 5 that corresponds to the drugs described in column 1

1. (a) in respect of which the licence is requested; and
   
2. (b) for which the holder has obtained a drug identification number, except in the case of an importer.

Audited sales records

26. (1) If the Minister determines, on the basis of any information available to the Minister, that the statement provided under subsection 17(2) is not adequate to determine the applicant’s actual gross revenue referred to in that subsection, the Minister may require, for the purpose of determining the fee payable or the amount of the remission, the applicant to provide sales records that have been audited by a qualified independent auditor.

Omission

(2) If, within 60 days after the day of the Minister’s request for the audited sales records, the applicant has not provided the Minister with them, the difference between the fee payable under subsection 17(1) and the amount already paid is immediately payable.

Difference payable

(3) If the audited sales records establish that the amount already paid is less than the amount payable under section 17, the difference between those amounts is immediately payable.

Difference remitted

(4) If the audited sales records establish that the amount already paid is greater than the amount payable under section 17, remission is granted of an amount equal to the difference between those amounts, which the Minister must repay to the applicant.

Licence Amendment

Sterile dosage forms

27. If the application to amend an establishment licence authorizing the holder to conduct one or more activities including fabricating drugs seeks to authorize the holder to fabricate drugs in sterile dosage forms for the first time at a building, the fee for the examination of the application is the basic fee set out in item 1, column 2, of Schedule 2 for each building referred to in the application.

Activity

28. (1) If an application to amend an establishment licence seeks to add an activity at a building, the fee for the examination of the application for each building at which the activity is to be added is,

1. (a) if the amendment seeks to authorize the holder to fabricate drugs, the basic fee set out in item 1, column 2, of Schedule 2;
   
2. (b) if the amendment seeks to authorize the holder to package/label drugs but not to fabricate drugs, the basic fee set out in item 1, column 2, of Schedule 3;
   
3. (c) if the amendment seeks to authorize the holder to import drugs but not to fabricate or package/label drugs, the basic fee set out in item 1, column 2, of Schedule 4;
   
4. (d) if the amendment seeks to authorize the holder to distribute drugs as a distributor referred to in paragraph C.01A.003(b) of the Food and Drug Regulations but not to fabricate, package/label or import drugs, the basic fee set out in item 1, column 2, of Schedule 4; and
   
5. (e) if the amendment seeks to authorize the holder to distribute drugs as a distributor referred to in paragraph C.01A.003(a) of the Food and Drug Regulations, or to wholesale drugs or to conduct both of those activities, but not to fabricate, package/label or import drugs or to distribute drugs as a distributor referred to in paragraph C.01A.003(b) of those Regulations, the basic fee set out in section 23.

Category

(2) Subject to subsection (3), if an application to amend an establishment licence seeks to add a category in respect of an activity that is authorized by the licence at a building, the fee for the examination of the application for each building at which the category is to be added is,

1. (a) if the amendment seeks to authorize the holder to fabricate a drug of an additional category, the basic fee set out in item 1, column 2, of Schedule 2;
   
2. (b) if the amendment seeks to authorize the holder to package/label a drug of an additional category, the basic fee set out in item 1, column 2, of Schedule 3;
   
3. (c) if the amendment seeks to authorize the holder to import a drug of an additional category, the basic fee set out in item 1, column 2, of Schedule 4;
   
4. (d) if the amendment seeks to authorize the holder to distribute a drug of an additional category as a distributor referred to in paragraph C.01A.003(b) of the Food and Drug Regulations, the basic fee set out in item 1, column 2, of Schedule 4;
   
5. (e) if the amendment seeks to authorize the holder to distribute a drug of an additional category as a distributor referred to in paragraph C.01A.003(a) of the Food and Drug Regulations or to wholesale a drug of an additional category, the basic fee set out in section 23; and
   
6. (f) if the amendment seeks to authorize the holder to test a drug of an additional category, the basic fee set out in section 24.

Included categories

(3) If an application to amend an establishment licence seeks to add a category in respect of more than one activity referred to in paragraphs (2)(a) to (f), the fee payable under subsection (2) for the examination of the application is the highest applicable fee for those activities.

DIVISION 3

FEES FOR THE EXAMINATION OF DEALER’S LICENCE APPLICATIONS

Interpretation

Definitions

29. (1) The following definitions apply in this Division.

“controlled drug”
« drogue contrôlée »

“controlled drug” has the same meaning as in subsection G.01.001(1) of the Food and Drug Regulations.

“dealer’s licence”
« licence de distributeur autorisé »

“dealer’s licence” means

1. (a) a licence issued under section G.02.003.2 of the Food and Drug Regulations; or
   
2. (b) a licence issued under section 9.2 of the Narcotic Control Regulations.

“health care facility”
« établissement de santé »

“health care facility” means a facility that provides diagnostic or therapeutic services to patients. It includes a group of such facilities that report to one common management that has responsibility for the activities carried out in those facilities.

“narcotic”
« stupéfiant »

“narcotic” has the same meaning as in section 2 of the Narcotic Control Regulations.

Words and expressions

(2) Unless the context otherwise requires, all other words and expressions used in this Division have the meanings assigned to them by the Controlled Drugs and Substances Act, Part G of the Food and Drug Regulations or the Narcotic Control Regulations.

Application

Non-application

30. This Division does not apply to

1. (a) any publicly funded health care facility;
   
2. (b) any branch or agency of the Government of Canada or of the government of a province; or
   
3. (c) any person or organization engaged only in scientific investigation.

Fees

Fee — Dealer’s licence

31. (1) The fee payable by an applicant for the examination of an application for either a dealer’s licence or the renewal of a dealer’s licence is $4,510 for each of the premises at which activities are to be conducted under the licence.

Remission

(2) Subject to section 32 and subsection 33(2), if the fee is greater than an amount equal to 1% of the applicant’s actual gross revenue from activities conducted under a dealer’s licence during the previous calendar year, remission is granted of the difference between those amounts if the applicant provides with their application a statement signed by the individual responsible for the applicant’s financial affairs that sets out the actual gross revenue.

Timing of payment

(3) Subject to subsection (4), the fee is payable at the time of submitting the application for a dealer’s licence or for the renewal of a dealer’s licence under section 9 or 9.5 of the Narcotic Control Regulations or section G.02.003 or G.02.003.4 of the Food and Drug Regulations.

First year of activities

(4) If the applicant has not completed their first calendar year of conducting activities under the licence, the payment of the fee is deferred until the end of that year.

Remission — dealer’s licence and establishment licence

32. Remission is granted of an amount equal to the difference between the total of the fees payable under subsections 17(1) and 31(1) and an amount equal to 1% of the applicant’s actual gross revenue referred to in paragraph (a) if

1. (a) the total of the fees payable under those subsections is greater than an amount equal to 1% of the applicant’s actual gross revenue from activities conducted under their dealer’s licence during the previous calendar year;
   
2. (b) the dealer’s licence and the establishment licence were issued to the same holder and are related to the same activities conducted at the same premises;
   
3. (c) remission has not been granted under subsection 17(2) nor under subsection 31(2); and
   
4. (d) the applicant has provided the statement referred to in subsection 31(2).

Audited sales records

33. (1) If the Minister determines, on the basis of any information available to the Minister, that the statement provided under subsection 31(2) is not adequate to determine the applicant’s actual gross revenue referred to in that subsection, the Minister may require, for the purpose of determining the fee payable or the amount of the remission, the applicant to provide sales records that have been audited by a qualified independent auditor.

Omission

(2) If, within 60 days after the day of the Minister’s request for the audited sales records, the applicant has not provided the Minister with them, the difference between the fee payable under subsection 31(1) and the amount already paid is immediately payable.

Difference payable

(3) If the audited sales records establish that the amount already paid is less than the amount payable under section 31, the difference between those amounts is immediately payable.

Difference remitted

(4) If the audited sales records establish that the amount already paid is greater than the amount payable under section 31, remission is granted of an amount equal to the difference between those amounts, which the Minister must repay to the applicant.

DIVISION 4

FEES FOR RIGHT TO SELL DRUGS

Interpretation

Words and expressions

34. The words and expressions used in this Division have the meanings assigned to them by the Food and Drugs Act or the Food and Drug Regulations.

Fee

Annual fee

35. (1) The annual fee that is payable by a manufacturer for the right to sell a drug for which a drug identification number has been assigned under section C.01.014.2 of the Food and Drug Regulations is $1,020.

Remission — actual gross revenue

(2) Subject to subsection 36(2), if the fee is greater than an amount equal to 1.5% of the actual gross revenue from the sale of the drug in Canada during the previous calendar year, remission is granted of the difference between those amounts if the manufacturer provides with the notification referred to in subsection (3) a statement signed by the individual responsible for the manufacturer’s financial affairs that sets out the actual gross revenue.

Timing of payment

(3) Subject to subsection (4), the fee is payable at the time the manufacturer furnishes the notification under section C.01.014.5 of the Food and Drug Regulations.

First year of activities

(4) If the manufacturer has not completed its first calendar year of selling the drug, the payment of the fee is deferred until the end of that year.

Audited sales records

36. (1) If the Minister determines, on the basis of any information available to the Minister, that the statement provided under subsection 35(2) is not adequate to determine the actual gross revenue from the sale of the drug in Canada during the previous calendar year, the Minister may require, for the purpose of determining the fee payable or the amount of the remission, the manufacturer to provide sales records that have been audited by a qualified independent auditor.

Omission

(2) If, within 60 days after the day of the Minister’s request for the audited sales records, the manufacturer has not provided the Minister with them, the difference between the fee payable under subsection 35(1) and the amount already paid is immediately payable.

Difference payable

(3) If the audited sales records establish that the amount already paid is less than the amount payable under section 35, the difference between those amounts is immediately payable.

Difference remitted

(4) If the audited sales records establish that the amount already paid is greater than the amount payable under section 35, remission is granted of an amount equal to the difference between those amounts, which the Minister must repay to the manufacturer.

PART 3

MEDICAL DEVICE FEES

DIVISION 1

INTERPRETATION

Definitions

37. (1) The following definitions apply in this Part.

“actual gross revenue”
« recettes brutes réelles »

“actual gross revenue” means the amount earned by a manufacturer during the fee verification period from sales in Canada of a medical device that is the subject of a licence application that is referred to in section 39, 40 or 41.

“annual gross revenue”
« recettes brutes annuelles »

“annual gross revenue” means

1. (a) in section 48, the amount earned by a manufacturer during a calendar year from sales in Canada of a medical device in respect of which the manufacturer holds a licence; and
   
2. (b) in sections 51 and 52, the amount earned by an establishment during a calendar year from sales in Canada of medical devices.

“anticipated gross revenue”
« recettes brutes prévues »

“anticipated gross revenue” means the amount that a manufacturer expects to earn during the fee verification period from sales in Canada of the medical device that is the subject of a licence application that is referred to in section 39, 40 or 41.

“fee verification period”
« période de vérification du prix à payer »

“fee verification period”, in respect of a medical device that is the subject of a licence application that is referred to in section 39, 40 or 41, means the period beginning on the day on which the medical device is first sold in Canada under the licence and ending two years after that day.

Definition of “licence”

(2) In this Division and Divisions 2 and 3, “licence” means a medical device licence issued under paragraph 36(1)(a) of the Medical Devices Regulations.

Words and expressions

(3) Unless the context otherwise requires, all other words and expressions used in this Part have the meanings assigned to them by the Food and Drugs Act or the Medical Devices Regulations.

DIVISION 2

FEES FOR THE EXAMINATION OF MEDICAL DEVICE LICENCE APPLICATIONS

Application

Applicable classes

38. (1) This Division applies to medical devices that are subject to the Medical Devices Regulations, other than devices that are subject to Part 2 or 3 of those Regulations, and that are classified into one of Classes II to IV under sections 6 and 7 of those Regulations.

Private label

(2) This Division does not apply to a medical device that is identical in every respect to a medical device for which a licence has been issued except that the device is labelled with the name and address of another manufacturer and the name and identifier of the device that that other manufacturer is proposing to sell under its own name or under a trade-mark, design, trade name or other name or mark owned or controlled by it.

Class II Medical Device Licence

Fee — Class II medical device

39. (1) The fee for the examination of an application for a licence for a Class II medical device submitted in accordance with section 32 of the Medical Devices Regulations is $350 and is payable by the manufacturer at the time that the application is submitted.

Reinstatement of a Class II medical device licence

(2) Every provision of this Division that applies to an application for a licence for a Class II medical device submitted in accordance with section 32 of the Medical Devices Regulations also applies to a request to have such a licence reinstated.

Class III or IV Medical Device Licence

Fee — Class III or IV medical device

40. (1) The fee that is payable by a manufacturer for the examination of an application for a licence for a Class III or IV medical device submitted in accordance with section 32 of the Medical Devices Regulations is

1. (a) in the case of a Class III medical device, for each category set out in column 1 of Schedule 6, the fee set out in column 2; or
   
2. (b) in the case of a Class IV medical device, for each category set out in column 1 of Schedule 7, the fee set out in column 2.

Reinstatement of Class III or IV medical device licence

(2) Every provision of this Division that applies to an application for a licence for a Class III or IV medical device submitted in accordance with section 32 of the Medical Devices Regulations also applies to a request to have such a licence reinstated.

Class III or IV Medical Device Licence Amendment

Fee — amendment to medical device licence

41. The fee that is payable by a manufacturer for the examination of an application for a licence amendment submitted in accordance with paragraph 34(a) or (b) of the Medical Devices Regulations is

1. (a) in the case of a Class III medical device, the amount obtained by adding, for each category set out in column 1 of Schedule 6, the fee set out in column 2; or
   
2. (b) in the case of a Class IV medical device, the amount obtained by adding, for each category set out in column 1 of Schedule 7, the fee set out in column 2.

Timing of Payment

Timing of payment

42. If the fee that is payable under section 40 or 41 is

1. (a) $5,000 or less, the fee is payable at the time that the application is submitted; or
   
2. (b) more than $5,000, the fee is payable as follows:
   
   1. (i) 10% on receipt of a notice from the Minister stating that the application has been found to be incomplete following a preliminary examination,
      
   2. (ii) 75% on receipt of a notice from the Minister stating that the application has been found to be complete following a preliminary examination and has been accepted for further examination, and
      
   3. (iii) 25% on receipt of a notice from the Minister stating that the examination of the application has been completed.

Deferred Payment

Deferred payment

43. (1) If a manufacturer has not completed its first full fiscal year on the day on which it submits its licence application and if a statement signed by the individual responsible for the manufacturer’s financial affairs specifying the commencement date of that fiscal year is provided with the application, the payment of the fee in respect of the application is deferred for a period of one year following the day the application was submitted, together with the payment of any fee that becomes payable in respect of an application for a licence amendment submitted during that period. At the end of the one-year period, the manufacturer must pay all of the amounts payable.

Inaccurate statement

(2) If the Minister determines, on the basis of any information available to the Minister, that a statement provided under subsection (1) is inaccurate, the payment cannot be deferred and is payable in accordance with section 42. The Minister must notify the manufacturer accordingly.

Remission

Remission — anticipated gross revenue

44. (1) Subject to subsection (4) and subsection 46(2), remission is granted of the amount by which the fee payable under section 39, 40 or 41, as applicable, exceeds 2.5% of the actual gross revenue from a medical device if that revenue is $100,000 or less and if

1. (a) the manufacturer provides with their licence application
   
   1. (i) a statement signed by the individual responsible for the manufacturer’s financial affairs indicating that the anticipated gross revenue is $100,000 or less and certifying that the fee payable under section 39, 40 or 41, as applicable, is greater than an amount equal to 2.5% of that anticipated gross revenue,
      
   2. (ii) information establishing that the fee payable under section 39, 40 or 41, as applicable, is greater than an amount equal to 2.5% of the anticipated gross revenue, and
      
   3. (iii) the amount of $50 for processing the remission, except in the case of the remission of a fee payable under section 39; and

1. (b) on the basis of the information provided under paragraph (a) and any other information available to the Minister, the Minister determines that the actual gross revenue will be $100,000 or less and that the fee payable under section 39, 40 or 41, as applicable, is likely to be greater than an amount equal to 2.5% of the actual gross revenue.

Amounts payable

(2) The fee is then payable as follows:

1. (a) an amount equal to 2.5% of the anticipated gross revenue is payable in accordance with section 39 or 42, as applicable; and
   
2. (b) the amount, if any, by which the lesser of the fee referred to in section 39, 40 or 41, as applicable, and 2.5% of the actual gross revenue exceeds the amount paid under paragraph (a) is payable 60 days after the day on which the fee verification period ends.

Sales records

(3) Within 60 days after the end of the fee verification period, the manufacturer must provide the Minister with sales records in regard to the sales of the medical device in Canada during the fee verification period, prepared in accordance with generally accepted accounting principles, and a document signed by the individual responsible for the manufacturer’s financial affairs certifying that they were so prepared.

Omission

(4) If, within 60 days after the end of the fee verification period, the manufacturer has not provided the Minister with the sales records, the difference between the fee referred to in section 39, 40 or 41, as applicable, and the amount already paid is immediately payable.

Remission — actual gross revenue

45. If the amount paid under section 44 is greater than an amount equal to 2.5% of the manufacturer’s actual gross revenue from the medical device and that revenue is $100,000 or less, remission is granted of an amount equal to the difference between those amounts, which the Minister must repay to the manufacturer.

Audited sales records

46. (1) If the Minister determines, on the basis of any information available to the Minister, that the records provided in accordance with subsection 44(3) are not adequate to determine the manufacturer’s actual gross revenue, the Minister may require, for the purpose of determining the fee payable or the amount of the remission, the manufacturer to provide sales records that have been audited by a qualified independent auditor.

Omission

(2) If, within 60 days after the day of the Minister’s request for the audited sales records, the manufacturer has not provided the Minister with them, the difference between the amount already paid and the fee referred to in section 39, 40 or 41, as applicable, is immediately payable.

Difference payable

(3) If the audited sales records establish that the amount already paid is less than the amount payable under section 44, the difference between those amounts is immediately payable.

Difference remitted

(4) If the audited sales records establish that the amount already paid is greater than the amount payable under section 44, remission is granted of an amount equal to the difference between those amounts, which the Minister must repay to the manufacturer.

Remission — General Council Decision

47. Remission is granted to the manufacturer of the amount of the fee referred to in section 39, 40 or 41, as applicable, in respect of a medical device if the manufacturer has received an authorization under section 21.04 of the Patent Act.

DIVISION 3

FEE FOR RIGHT TO SELL LICENSED CLASS II, III OR IV MEDICAL DEVICES

Fee

48. (1) The annual fee that is payable by a manufacturer for the right to sell a Class II, III or IV medical device for which the manufacturer holds a licence is

1. (a) $50 if its annual gross revenue from the sales of that medical device and any other medical devices in the same medical device family during the previous calendar year is less than $20,000 and if it provides a statement certifying that fact that is signed by the individual responsible for its financial affairs; and
   
2. (b) $330 in any other case.

Timing of payment

(2) Subject to subsection (3), the fee is payable at the time the manufacturer furnishes the statement referred to in subsection 43(1) of the Medical Devices Regulations.

First year of activities

(3) If the manufacturer has not completed its first calendar year of selling the medical device, the payment of the fee is deferred until the end of that year.

Audited sales records

49. (1) If the Minister determines, on the basis of any information available to the Minister, that the statement provided in accordance with paragraph 48(1)(a) is inaccurate, the Minister may require, for the purpose of determining the fee payable or the amount of the remission, the manufacturer to provide sales records that have been audited by a qualified independent auditor.

Omission

(2) If, within 60 days after the day of the Minister’s request for the audited sales records, the manufacturer has not provided the Minister with them, the difference between the fee specified in paragraph 48(1)(b) and the amount already paid is immediately payable.

Difference payable

(3) If the audited sales records establish that the amount paid under paragraph 48(1)(a) was incorrect, the difference between the fee specified in paragraph 48(1)(b) and the amount already paid is immediately payable.

DIVISION 4

FEES FOR THE EXAMINATION OF AN APPLICATION FOR AN ESTABLISHMENT LICENCE

Application

Applicable classes

50. This Division applies to establishments that import or sell medical devices that are subject to the Medical Devices Regulations, except establishments that import or sell only medical devices that are subject to Part 2 or 3 of those Regulations.

Fee

Fee

51. (1) The fee payable by an establishment for the examination of an application for an establishment licence or for the annual review of such a licence or in respect of the reinstatement of such a licence at the request of the holder following the correction of the situation that gave rise to its suspension is $7,200.

Remission

(2) Subject to subsection 52(2), if the fee is greater than an amount equal to 1% of the establishment’s annual gross revenue during the previous calendar year, remission is granted of the difference between those amounts if the establishment provides with its application or request a statement signed by the individual responsible for the establishment’s financial affairs that sets out the annual gross revenue.

Timing of payment

(3) Subject to subsection (4), the fee is payable at the time the application for the establishment licence or for the annual review of such a licence is submitted or at the time the licence is reinstated.

First year of activities

(4) If the establishment has not completed its first calendar year of conducting activities under the establishment licence, the payment of the fee is deferred until the end of that year.

Verification of Annual Gross Revenue

Audited sales records

52. (1) If the Minister determines, on the basis of any information available to the Minister, that the statement provided under subsection 51(2) is not adequate to determine the establishment’s annual gross revenue, the Minister may require, for the purpose of determining the fee payable or the amount of the remission, the establishment to provide sales records that have been audited by a qualified independent auditor.

Omission

(2) If, within 60 days after the day of the Minister’s request for the audited sales records, the establishment has not provided the Minister with them, the difference between the fee payable under subsection 51(1) and the amount already paid is immediately payable.

Correct fee payable on verification

(3) If the audited sales records establish that the amount already paid is less than the amount payable under section 51, the difference between those amounts is immediately payable.

Remission

(4) If the audited sales records establish that the amount already paid is greater than the amount payable under section 51, remission is granted of an amount equal to the difference between those amounts, which the Minister must repay to the establishment.

PART 4

TRANSITIONAL PROVISION, REPEALS AND COMING INTO FORCE

TRANSITIONAL PROVISION

Fee for prior application

53. The fee for the examination of an application, submission or supplement that is filed before the coming into force of these Regulations is the fee that is specified by the applicable regulation that is in effect at the time of filing.

REPEALS

54. The Drug Evaluation Fees Regulations (see footnote 1) are repealed.

55. The Fees in Respect of Medical Devices Regulations (see footnote 2) are repealed.

COMING INTO FORCE

Registration

56. These Regulations come into force on April 1, 2011, but if they are registered after that day, they come into force on the day on which they are registered.

SCHEDULE 1
(Section 6)

FEES FOR EXAMINATION SERVICES

Item	Column 1 Submission Class	Column 2 Description	Column 3 Fee ($)
1.	New active substance	Submissions in support of a drug, excluding a disinfectant, that contains a medicinal ingredient not previously approved in a drug for sale in Canada and that is not a variation of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate or polymorph.	303,480
2.	Clinical or non-clinical data and chemistry and manufacturing data	Submissions based on clinicalor non-clinical data and chemistry and manufacturing data for a drug that does not include a new active substance.	153,710
3.	Clinical or non-clinical data only	Submissions based only on clinical or non-clinical data for a drug that does not include a new active substance.	71,740
4.	Comparative studies	Submissions based on comparative studies (e.g. clinical or non-clinical data, bioavailability, pharmacokinetic and pharmacodynamic data) with or without chemistry and manufacturing data for a drug that does not include a new active substance.	43,360
5.	Chemistry and manufacturing data only	Submissions based only on chemistry and manufacturing data for a drug that does not include a new active substance.	20,500
6.	Published data only	Submissions based only on published clinical or non-clinical data for a drug that does not include a new active substance.	17,000
7.	Switch from prescription to non-prescription status	Submissions based only on data that support the modification or removal of a medicinal ingredient listed in Schedule F to the Food and Drug Regulations (i.e. identical claim for existing drug).	41,280
8.	Labelling only	Submissions of labelling material (i.e. does not include supporting clinical or non-clinical data or chemistry and manufacturing data).	2,760
9.	Administrative submission	Submissions in support of a manufacturer or product name change.	285
10.	Disinfectants	Submissions and applications that include data in support of a disinfectant.	3,820
11.	Drug identification number application — labelling standards	Applications attesting to compliance with a labelling standard or Category IV Monograph for a drug that does not include clinical or non-clinical data or chemistry and manufacturing data.	1,530

SCHEDULE 2
(Subsection 19(1), section 27 and paragraphs 28(1)(a) and (2)(a))

ESTABLISHMENT LICENCE FEES — FABRICATION OF DRUGS

Item	Column 1 Description	Column 2 Fee ($)
1.	Basic fee	15,450
2.	Each additional category	3,870
3.	Dosage form classes: (a) 2 classes (b) 3 classes (c) 4 classes (d) 5 classes (e) 6 classes (f) each additional class	7,730 15,450 19,320 23,180 27,040   1,550
4.	Sterile dosage forms	7,730

SCHEDULE 3
(Section 20 and paragraphs 28(1)(b) and (2)(b))

ESTABLISHMENT LICENCE FEES — PACKAGING / LABELLING OF DRUGS

Item	Column 1 Description	Column 2 Fee ($)
1.	Basic fee	10,330
2.	Each additional category	2,580
3.	Dosage form classes: (a) 2 classes (b) 3 or more classes

SCHEDULE 4
(Sections 21 and 22 and paragraphs 28(1)(c) and (d) and (2)(c) and (d))

ESTABLISHMENT LICENCE FEES — IMPORTATION AND DISTRIBUTION OF DRUGS

Item	Column 1 Description	Column 2 Fee ($)
1.	Basic fee	6,440
2.	Each additional category	1,610
3.	Dosage form classes: (a) 2 classes (b) 3 or more classes
4.	Each fabricator	1,550
5.	Each additional dosage form class for each fabricator	780

SCHEDULE 5
(Section 25)

ESTABLISHMENT LICENCE FEES — DRUG ANALYSIS

Item	Column 1 Description	Column 2 Fee ($)
1.	Vaccines	25,750
2.	Drugs, not included in items 1, 6 and 9 of this Schedule, that are listed in Schedule D to the Food and Drugs Act	10,300
3.	Drugs for human use that are listed in Schedule F to the Food and Drug Regulations or that are controlled drugs or narcotics	7,730
4.	Drugs for human use, not included in any other item, for which a drug identification number has been assigned	3,870
5.	Radiopharmaceuticals	0
6.	Whole blood and its components	0
7.	Hemodialysis products	0
8.	Drugs that are labelled as disinfectants, including those listed in paragraph 9(f) of this Schedule, but excluding other drugs labelled as disinfectants of medical devices	0
9.	Drugs that meet the requirements of a class monograph having one of the following titles: (a) ”Acne Therapies” (b) ”Antidandruff Products” (c) ”Antiperspirants” (d) ”Antiseptic Skin Cleansers” (e) ”Athlete’s Foot Treatments” (f) ”Contact Lens Disinfectants” (g) ”Fluoride-Containing Anti-Caries Products” (h) ”Medicated Skin Care Products” (i) ”Sunburn Protectants” (j) ”Throat Lozenges”	0 0 0 0 0 0 0 0 0 0

SCHEDULE 6
(Paragraphs 40(1)(a) and 41(a))

CLASS III MEDICAL DEVICES

Item	Column 1 Category	Column 2 Fee ($)
1.	Licence application	5,050
2.	Licence application for a near patient in vitro diagnostic device	8,600
3.	Change referred to in paragraph 34(a) of the Medical Devices Regulations that relates to manufacturing	1,270
4.	Any other change referred to in paragraph 34(a) or (b) of the Medical Devices Regulations	4,730

SCHEDULE 7
(Paragraphs 40(1)(b) and 41(b))

CLASS IV MEDICAL DEVICES

Item	Column 1 Category	Column 2 Fee ($)
1.	Licence application	11,750
2.	Licence application for devices that contain human or animal tissue	10,960
3.	Licence application for near patient in vitro diagnostic device	20,030
4.	Change referred to in paragraph 34(a) of the Medical Devices Regulations that relates to manufacturing	1,270
5.	Any other change referred to in paragraph 34(a) or (b) of the Medical Devices Regulations	5,390

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

The Food and Drugs Act and Controlled Drugs and Substances Act and their regulations set out regulatory requirements that industry must satisfy in order to market a human drug or medical device in Canada. Health Canada is the federal authority responsible for regulating these products both pre- and post-market, and in doing so, protects the health and safety of Canadians who use these products to maintain and improve their health.

In the early 90s, Health Canada was given the authority under the Financial Administration Act to charge industry user fees in order to recover some of the cost related to the regulation of human drugs in Canada. In the late 90s, this authority was extended to medical devices. At that time, the costs of providing regulatory services was approximately $80 million annually and revenues from fees were $40 million.

The cost of delivering these services has increased substantially since that time (up to $172.1 million for 2009–2010) due to increasing volume and complexity of submissions and marketed products, along with inflation and other costs of doing business. In the absence of updated user fees, it was projected that by the year 2011–2012, revenues from user fees will cover only 23% of cost, as compared to 50% when user fees were first introduced.

Insufficient funding has led to many impacts on Health Canada’s ability to meet internationally recognized service standards. Growing costs and outdated fees have led to increasing backlogs in the review of product submissions, surveillance of marketed products, and inspections. In turn, such backlogs impede timely access to therapies needed by Canadians, as well as impact industry with respect to making timely marketing and other investment decisions.

Further, the reports of the Office of the Auditor General of Canada (OAG) of 2004 and 2006 titled, respectively, Regulation of Medical Devices and Allocating Funds to Regulatory Programs have noted the need for sufficient and stable funding and have recommended that Health Canada update its cost recovery regime in order to provide appropriate levels of service delivery.

Objectives

The outdated cost recovery framework has placed an increasing and unsustainable funding pressure on Health Canada. To mitigate some of this pressure, the Department has relied on public funds, which now cover an increasing and inequitable share of the costs for service delivery, given the direct benefits industry derive from Health Canada’s regulatory services.

In 2005–2006, Health Canada determined the full cost of delivering regulatory services for its human drugs and medical devices programs, and subsequently conducted extensive consultations on proposed fees and service standards. Then, in 2010, Health Canada tabled a User Fees Proposal, entitled Health Canada’s Proposal to Parliament for User Fees and Services Standards for Human Drugs and Medical Devices Program (User Fees Proposal), which was approved in full by Parliament in May 2010.

Specifically, the User Fees Proposal provides the updated fee amounts, fee mitigation measures, and an annual adjustment of fees. The objective of these Regulations is to formalize these elements of the User Fees Proposal. In particular, revenues from the updated fees and current levels of public funding will provide sufficient funding for Health Canada to meet its service standards, which will in turn support access to drugs and medical devices to Canadians in a timely manner.

These Regulations also respond to the OAG recommendations to update fees to reflect costs. In addition to meeting the requirements of the User Fees Act (2004), these Regulations were developed in accordance with the Treasury Board Secretariat’s Policy on Service Standards for External Fees, and with Health Canada’s Policy and Guidelines on External Charging.

Description

Overview of the Regulations

Overall, these Regulations entitled Fees in Respect of Drugs and Medical Devices Regulations will update fees and consolidate various existing user fees regulations. Key elements of these Regulations include the following: establishing fees for regulatory activities and stipulating their amounts in a schedule or provision; establishing timing and allotment of fees payable; providing fee mitigation measures; and providing for an annual adjustment of fees.

Specifically, these Regulations will establish updated fees for human drugs and medical devices as presented in the User Fees Proposal and approved by Parliament, and these will be payable by industry for most pre- and some post-market activities related to the

• examination of a new drug submission, a supplement to a new drug submission, an abbreviated new drug submission or a supplement to an abbreviated new drug submission; examination of an application for a drug establishment licence or the annual review of a licence; examination of an application for a drug identification number; and the right for a holder of a drug identification number to sell a drug under the Food and Drug Regulations;
• examination of an application for a dealer’s licence for a controlled drug under Part G of the Food and Drug Regulations or a narcotic under the Narcotic Control Regulations; and
• examination of an application for a medical device licence, examination of an application for a medical device establishment licence or the annual review of that licence and the right for the holder of a medical device licence to sell a medical device under the Medical Devices Regulations.

Exemption

There is no cost recovery regime in place for natural health products (NHPs). These Regulations will not apply to NHPs thus retaining the status quo for these products.

These Regulations will not apply to drugs proposed for veterinary use. The existing Authority to Sell Drugs Fees Regulations will continue to apply, but only to veterinary drugs. Similar amendments have been made to continue the Licensed Dealers for Controlled Drugs and Narcotics Fees Regulations and Establishment Licensing Fees Regulations, as they apply to veterinary drugs.

These Regulations will exempt publicly funded health care facilities or any branch or agency of federal and provincial governments from fees for drug establishment licences and dealer’s licences. Additionally, persons or organizations solely conducting scientific investigations will also be excluded from fees associated with dealer’s licences.

As part of Health Canada’s effort to consolidate the Regulations, the Drug Evaluation Fees Regulations and Fees in Respect of Medical Devices Regulations will no longer be applicable and therefore have been repealed.

An exemption has been included in these Regulations to ensure that the full fees for examination of a medical device licence application will not apply to private label medical devices. A private label medical device is identical in every respect to a medical device for which a licence has already been issued by Health Canada except that it will be sold under the name or trademark of another manufacturer. The regulatory service in respect of private label medical devices will be reviewed in the future along with the review of all other regulatory services.

Fee mitigation measures

Health Canada recognizes that in certain situations, fees might result in an undue burden on certain groups or individual fee payers. Health Canada’s approach to fee mitigation has always focussed on facilitating the availability of products to help Canadians maintain and improve their health, and encouraging innovation and access to new products. These Regulations formalize Parliament’s approval of fee mitigation measures, providing applicants opportunities to seek a remission and a deferral of payment.

Remissions will be available to applicants with small revenue streams, such that the applicable fees exceed a specified percentage of actual gross revenues, determined during a verification period from the sales in Canada for that human drug or medical device. To be eligible for a remission, an applicant will have to provide information to support anticipated revenues. If an applicant failed to submit or complete a request to determine the fee remission, the fees will be payable immediately as per these Regulations. Furthermore, upon audit, differences between projected and actual amounts will be adjusted accordingly.

In some cases, companies in their first year of business will be able to seek a deferral of fee payment of one or two years depending on the application submitted. The applicant is required to submit information certifying that the company has not yet completed its first fiscal year. If inaccurate information is provided, then the deferral will not be applicable and fees will be payable in accordance with these Regulations.

These Regulations will also provide for the deferral and remission of fees for the evaluation of submissions and applications for human drug and medical device that are intended to be sold for international humanitarian purposes pursuant to the 2003 World Trade Organization’s General Council Decision.

These Regulations will also provide mitigation measures related to drug establishment licensing fees for the medical gas industry, with respect to fees for packaging/labelling activities in the form of trans-filling. Specifically, if a medical gas company conducts the activity of packaging/labelling of a medical gas at more than one building, the fee payable will be calculated as if the activity was conducted at a single building. Fees for all other activities related to the medical gas will be calculated for each building the activity is conducted and in accordance with the Regulations.

Annual adjustment of fees

These Regulations will require an annual adjustment of all fees by 2% as presented in the User Fees Proposal, and as approved by Parliament. For purposes of transparency, a notice of intent will be published annually in the Canada Gazette, Part I, reflecting the annual adjustment of 2%, beginning on April 1, 2012.

Consequential amendments

These Regulations require consequential amendments to the provisions in the Food and Drug Regulations and Medical Devices Regulations related to the expiration of establishment licences. Health Canada issues establishment licenses allowing establishments to conduct otherwise prohibited activities such as fabricating, packaging/labelling, importing, distributing and wholesaling drugs and importing and selling medical devices. Under the current Regulations, each drug or medical device establishment licence expires on December 31, no matter when in the year the licence was applied for or issued. Thus, in order to continue conducting the otherwise prohibited activities following expiry on December 31 each year, an establishment must have applied for and have been issued a new establishment licence.

These Regulations will eliminate the scenario described above by removing the expiry of establishment licences on December 31, while maintaining a requirement for annual review of the establishment licence. Elimination of the expiry date will allow all establishment licences to continue, once issued, unless they are cancelled by Health Canada or the licence holder fails to file an application for annual review prior to April 1. This latter requirement will allow Health Canada to conduct the annual review to verify that establishments are in compliance with the applicable establishment licence regulations.

Under these Regulations, suspended establishment licences must be reinstated prior to an application for annual review. If the suspended licence was not reinstated prior to April 1 in a given year, the licence will be cancelled and the establishment will have to apply for new drug or medical device establishment licence.

Transitional provision

All applications, submissions or supplements filed before the coming into force of these Regulations will be governed by the fees regulations under which they were filed. The updated fees will apply in all other cases.

Coming into force

These Regulations come into force on April 1, 2011, but if they are registered after that day, they come into force on the day on which they are registered.

Regulatory and non-regulatory options considered

The following options were considered:

Status quo

Health Canada considered continuing the existing cost recovery framework, representing user fees established in the 1990s and managing funding pressures through limited tax appropriations. However, this option would not have established good financial administration related to external charging or policy, with user fees not representative of costs, and increasing funding pressures. Without updated fees and given the increasing cost of service delivery, the impact not only would have affected Health Canada’s ability to effectively meet its internationally recognized service standards, but it would have further impacted the availability of needed therapies on the market. In addition, this option would not have addressed the OAG concerns regarding the need for proper funding while regulatory demands on the Department increased.

Phased fees

Consideration was given to phasing in fees by specific product-lines and services over a period of time. This option would have presented timing issues whereby an applicant could have circumvented the process and increased the work load of an already overburdened system. As well, consideration was given to delaying implementation to be in-line with billing cycles and appropriate levels of appropriations for applications. However, it was determined that all fees should be changed and implemented at the same time given they were consulted upon in 2007, so that the system could adapt and move forward.

Updated user fees

With this option, an updated comprehensive regulatory framework for user fees would be established to reflect current services and their costs. In addition, the framework includes mitigating measures to alleviate undesired impacts of fees, particularly on small business, thus it will encourage the innovation and access to products. This option is consistent with the OAG recommendations and in-line with the initial introduction of user fees for human drugs and medical devices, whereby the fee payer shares an appropriate portion of cost for service delivery. This is the preferred option.

Benefits and costs

The cost-benefit statement below represents an evaluation based on a 10-year period. Although the amounts will be increased by 2% starting in fiscal year 2012–2013 to account for inflation, and for consistency with cost-benefit analysis principles, the real values were used for the analysis. To derive costs and benefits in present value (PV) terms, amounts were discounted by 8% as recommended by the Treasury Board Secretariat in its Canadian Cost-Benefit Analysis Guide: Regulatory Proposals (2007).

The following cost-benefit analysis supports these Regulations to increase industry user fees for the introduction of human drugs and medical devices. These fees will help to cover increased cost to Government for maintaining service standards in the evaluation of the safety and efficacy of human drugs and medical devices, as well as monitoring and enforcing compliance of the relevant regulations. Overall, these Regulations will result in a net present value (NPV) of $639.9 million over 10 years.

Cost-benefit statement	Consumers	Base Year 2011–2012	Final Year 2020–2021	Total (PV)	Average Annual
A. Quantified impacts $
Benefits		$	$	$	$
Benefits to consumers, patients, health insurers and taxpayers
Potential savings as a result of speedier regulatory decisions on generics	Consumers, patients, public and private health plan insurers	$11.5M	$11.5M	$83.3M	$11.5M
Amount saved as a result of these Regulations	Canadian taxpayers	$66.4M	$66.4M	$481.2M	$66.4M
Benefits to industry — Human drugs
Reduction in waiting time with an assigned monetary value for New Active Substances (NAS) review	Industry — Innovators	$8.7M	$8.7M	$63.1M	$8.7M
Potential early entry of an approved New Active Substance (NAS)	Industry — Innovators	$38.1M	$38.1M	$276.1M	$38.1M
Reduction in waiting time with an assigned monetary value for ANDS1 — Comparative Studies and Chemistry &Manufacturing type	Industry — Generics	$25.1M	$25.1M	$181.9M	$25.1M
Potential early entry of an approved ANDS1 — Comparative Studies and Chemistry &Manufacturing type	Industry — Generics	$11.5M	$11.5M	$83.3M	$11.5M
Total	Human drugs	$83.4M	$83.4M	$604.4M	$83.4M
Benefits to industry — Medical Devices
Reduction in the waiting time with an assigned monetary value for the medical device sector	Industry	$54.4M	$54.4M	$395.0M	$54.4M
Total benefits		$215.8M	$215.8M	$1,563.8M	$215.8M
Cost		$	$	$	$
Fee increase	Consumers, patients, industry, public and private health plan insurers	$66.4M	$66.4M	$481.2M	$66.4M
Accelerated loss in revenue as a result of earlier entry of generics	Industry — Innovators	$23.0M	$23.0M	$166.7M	$23.0M
Potential increase in expenditure as a result of early entry of NAS	Consumers, patients, public and private health plan insurers	$38.1M	$38.1M	$276.1M	$38.1M
Total costs		$127.5M	$127.5M	$924.0M	$127.5M
Net present value				$639.9M
B. Quantified impacts in non-$
Positive impacts
1. The benefit of an early entry of a NAS human drug may provide better health outcomes to patients, which may in turn reduce other health care cost. This would offset part of the expenditure incurred by patients and public and private health plan insurers. It is anticipated that there may be a slight adjustment required by public health plans, as well as private insurers. However, the potential impact may be discounted by early access to important and new therapies for Canadians.
2. Industry can expect Health Canada to meet established service standards with additional resources for the cost recovered activities. The benefits to industry for NAS New Drug Submission and Comparative Studies and Chemistry & Manufacturing type of ANDSs are quantified in Section A above. The improvement related to review times for all other types of human drugs submissions ranges between 1.11% for DIN D (Disinfectant) to 118.1% for DIN A (application) submissions.
3. These Regulations do not mean an automatic fee increase. For example, a Class IV — Licence Application (medical devices that contain human/animal tissue) is reduced from the current range of $12,790 to $14,490 to the new amount of $10,960. This is a significant fee reduction of about $1,830 to $3,530.
C. Qualitative impacts
1.  According to Industry Canada, the medical devices industry in Canada has been changing its sources of imports; this change introduces an uncertainty that Health Canada must verify which represents an additional cost.
2.  If Health Canada is adequately funded, it can effectively maintain its regulatory oversight role. Regulatory approval from Health Canada is often cited by industry as part of the marketing strategy to promote a product or lend confidence when safety issues are a concern. This is particularly important to small- and medium-sized enterprises (SMEs).
3.  A more timely process of post-market activities, such as those related to supplemental new drug submissions or supplemental abbreviated new drug submissions should reduce information asymmetry for consumers, patients and health care professionals which can lead to improved health-related decisions.
4. According to research conducted by the Government of Canada’s Policy Research Initiative, the monetary value of reductions in mortality risks (the dollar amount to reduce the risk of one death) in Canada is worth $6.5M. It can be argued that the proposal could more than pay for itself if it leads to post-market efforts that could moderately reduce the risk of mortality.

¹ Abbreviated New Drug Submission — (Generic application)

Benefits

Benefits to consumers, patients and insurers

The present value (PV) benefits over a 10-year time period to consumers, patients, and public and private health plan insurers is estimated at $83.3 million. This amount represents a 50% reduction from the brand name price for potential savings due to the timelier entries of first generation generics. In addition, the updated fee will result in a benefit to consumers, patients and public and private health plan insurers as human drugs and medical devices may enter the market sooner.

Benefits to Canadian taxpayers

Canadian taxpayers are anticipated to save approximately $481.2 million in PV terms between fiscal year 2011–2012 and 2020–2021 if these Regulations are implemented. This amount represents the total PV of the funding gap between the established service standards and current performance over the studied period.

Benefits to industry — Human drugs

It is estimated that the total quantified PV benefits to the industry for innovative human drugs and generics is $604.4 million. Industry will benefit from more predictable and efficient performance as Health Canada becomes better resourced to meet service standards. Specifically for NAS, the assigned PV benefits for the reduction in waiting times are $63.1 million over a 10-year period.

For generics (ANDS) and their Comparative Studies and Chemistry and Manufacturing type of submission, the PV benefits will be $181.9 million between fiscal year 2011–2012 and 2020–2021.

Benefit to industry — Medical devices

The PV benefits for the medical devices industry are estimated to be $395.0 million over 10 years. This amount is calculated based on the turn-over of the products within a year and the potential loss of sales calculated at an average daily rate, then multiplied by the average number of days that exceeded service standards for the various classes of devices.

It is estimated that the infusion of fees into the review process for pre-market assessments of human drugs and medical devices will result in meeting the service standards for review assessments.

These estimates are based on the assumption that there is a value attached to time for industry associated with the delay in regulatory review, regardless of the decision outcome (approval or not) made by Health Canada. This is particularly important to start-ups and small businesses, which may not have the cash inflow to sustain a prolonged regulatory process.

Cost

Cost to consumers, patients and insurers

Based on the proposed fee increase, there is a PV cost to consumers, patients, and public and private health plan insurers in the amount of $481.2 million over a 10-year period. This calculation is based on the funding gap between established service standards and actual or current performance, assuming that industry is passing all its costs to the end users.

In addition, patients and public and private health plan insurers may incur a PV cost totalling $276.1 million as a result of early access to NAS human drugs on the market. However, the cost could be offset by the benefits of the anticipated improved health outcomes as a result of more timely access to these drugs, decreased usage of less effective therapies, or reduced utilization of other parts of the health care system. This cost represents an average which was derived from the difference in data collected from the Patented Medicine Prices Review Board and Industry Canada.

Cost to industry — Human drugs and medical devices

The human drugs and medical devices industries are expected to pay a total of $345.0 million and $136.2 million (PV) respectively for the processing of applications for marketing authorizations, issuance of establishment licences and annual authority to sell during the 10-year period. The amount will be reduced by any costs that are being passed on to patients and their public or private health plan insurers.

The total PV cost of these Regulations on innovative human drugs is $166.7 million. This is based on those generics which are not impacted by the Patented Medicines (Notice of Compliance) Regulations or data protection under the Food and Drug Regulations and which replace brand name product sales sooner as a result of more efficient regulatory process.

A summary of the cost-benefit analysis is posted on Health Canada’s Web site at the following link: http://www.hc-sc.gc.ca/dhp-mps/finance/regul-regle_cba-aca-eng.php. The complete cost-benefit analysis will be made available on request.

Rationale

Overall, these Regulations will update existing user fees and addresses current insufficient cost recovery of regulatory services. Revenues from updated fees will restore the public and private cost sharing ratio and allow Health Canada to meet its internationally recognized service standards, in turn supporting timely access to human drugs and medical devices, thus benefiting consumers and industry.

It should also be noted that all comparable international regulators charge fees for comparable services, and attempt to meet comparable service standards. Most countries have updated their user-fee levels since initial introduction and many recover a larger percentage of the cost of services than what is proposed by Health Canada. Specifically comparing the cost-sharing levels, in 2005–2006 Canada had a low regulatory cost-sharing level at approximately 28% for its human drug and medical device programs while the cost-sharing levels of the United Kingdom and Australia were at 100%, the European Union at 70% and the United States at 50%. As a result of these Regulations, Health Canada intends to recover approximately 50% of the costs of its human drug and medical devices programs in the first year of implementation.

Consultation

Health Canada undertook extensive stakeholder consultations on its proposed fees and service standards, established Independent Advisory Panels, and developed a User Fees Proposal which was approved by Parliament. The User Fees Proposal provides the basis of these Regulations. Consultations were conducted in several stages using various means of communication and were consistent with the requirements under the User Fees Act.

In spring 2007, Health Canada held consultations on the proposed Cost Recovery Framework. A consultation document was posted on Health Canada’s Web site. The document explained how user fees and service standards were developed, and identified costs, revenues and international comparisons. More than 5 000 stakeholders, including present and potential fee payers, were advised of consultations and invited to provide written answers to the online questions. A Business Impact Test (BIT) survey was included as part of the consultation document.

The BIT survey was used to identify unintended and unexpected impacts on businesses. It was reported by a majority of the respondents that the updated fees will have some negative impact on their business, particularly in regard to the proposed introduction of fees for product lines not previously subject to cost recovery. However, many respondents agreed that updated cost recovery fees were needed and that revenues should directly fund regulatory services and reduce review times.

Participants in the consultation included health product companies; industry associations (including pharmaceuticals, radiopharmaceuticals, biologics and genetic therapies, medical devices and natural health products); consumers and public interest groups; patient groups; academia; and health professional associations.

Nearly 200 responses to the BIT were analyzed, as were a similar number of written responses to a series of questions related to the proposal.

Concurrently, key stakeholders were invited to participate in face-to-face discussions. Eighteen of these meetings were held, allowing stakeholders to discuss specific issues of concern, flesh out solutions, and prepare written responses to the consultation document. The bilateral and small group meetings were followed by a multi-stakeholder meeting (an expanded Branch Advisory Committee on Management) that brought more than 20 diverse groups together to share their comments on the proposed framework. Following the consultation activities, a Stakeholder Consultation Report was posted on Health Canada’s Web site, where it is still available.

Official notice of fee proposal

As required under subsection 4(1) of the User Fees Act, an official notice of the fee proposal (Cost Recovery Framework: Official Notice of Fee Proposal for Human Drugs and Medical Devices) was published in July 2007. Eleven drug and eight medical device stakeholders registered official complaints that resulted in the establishment of Independent Advisory Panels (one on human drugs, the other on medical devices) as required by the User Fees Act.

Overall, the Panels found that the proposed user fees were based on a thorough costing methodology and were internationally comparable. The Panels remarked that stable funding must be secured by Health Canada in order to meet its internationally recognized service standards. Recommendations made by the Panels were taken into consideration and several led to changes in the User Fees Proposal.

Since July 2007, status updates on Health Canada’s cost recovery initiative have been provided to industry, consumer and patient associations. In addition, discussions on Health Canada’s position regarding the recommendations made by the Panels have taken place with key industry associations and patient groups.

Complaints were received from individual companies as well as industry associations, but no complaints were received from non-fee payers such as patients, consumers and health care professionals. Overall, the majority of stakeholders impacted by the proposal supported updating user fees provided that the fees were spent directly on service delivery so that performance targets can be met.

Further, after the publication of the Official Notice and the receipt of its subsequent feedback, previously proposed fees for annual Establishment Licences for clinical trial sites, fees for submissions related to notifiable changes and the fee differential for biologic drugs were removed from the proposal.

Parliamentary tabling of User Fees Proposal

As required under subsection 4(2) of the User Fees Act, Health Canada tabled in Parliament Health Canada’s Proposal to Parliament for User Fees and Service Standards for Human Drugs and Medical Devices Programs (User Fees Proposal). The Senate Standing Committee on Social Affairs, Science and Technology reviewed the User Fees Proposal and recommended that it be approved. During the Committee’s review, key industry stakeholders were invited to appear before the Committee.

With the tabling of a User Fees Proposal in Parliament, several additional stakeholder engagement efforts were conducted in order to share information regarding the Proposal and answer questions.

Outreach efforts have continued since the User Fees Proposal was approved by Parliament.

Stakeholder positions

Most major industry associations have been supportive of the proposed fee changes provided that service standards are met, although some have raised concerns related to specific fee levels. In particular, an industry association representing the medical devices sector has raised concerns regarding the changes in fees.

Major health care professional associations have been supportive of fee changes, as have most patients and consumer groups. However, some public advocacy groups along with some academics have raised concerns about user fees for regulatory activities in general.

Comments received following pre-publication of the Regulations in the Canada Gazette, Part I

These Regulations and related amendments were pre-published in the Canada Gazette, Part I, on November 13, 2010, followed by a 75-day comment period. The following stakeholders were notified by email of the pre-publication of these Regulations and invited to submit written comments regarding the proposal: industry associations representing pharmaceuticals, biologics and genetic therapies, and medical devices manufacturers and distributors; consumers and public interest groups; patient groups; academia; and health professional associations.

Comments were received from 15 stakeholders, including 10 from industry associations representing pharmaceuticals, biologic drugs, medical devices, non-prescription drugs, generic drugs, cosmetics, direct selling companies, and a not-for-profit centre of excellence; four from pharmaceutical companies; and one from a federal government department.

Overall, stakeholders were supportive of these Regulations, provided that Health Canada meets its service standards. Stakeholders acknowledge the need for Health Canada to update fees but expressed some concerns related to potential impacts and the implementation of these updated fees. One industry association representing the medical devices sector still does not support the initiative due to concerns related to the potential impact of the updated fees on their members.

The comments received were organized according to themes and are summarized below, along with Health Canada’s responses. No substantive changes were made to the Regulations as a result of the comments received.

Impact of fees

Eleven respondents commented on the impact of the updated fees. Four of these were concerned with the updated fees, especially for low-risk products such as generics, medical devices and non-prescription drugs, and would like to have fee levels reflect the level of effort required to regulate them. One respondent stated that since the price of generic drugs is regulated by the provinces, generic companies cannot transfer the full drug submission cost to the provinces. Without considering these points, they felt that the updated fees would place an undue financial burden on industry, in particular to start-up companies, or small- and medium-sized businesses. Three others felt that the updated fees might limit product innovation or limit the variety of therapeutic products available to Canadians. Two other respondents suggested that a cost-benefit analysis has not been provided for specific products, namely non-prescription medications or Category IV drugs.

Fees are payable based on the services provided, regardless of a company’s size. However, mitigation measures (discussed in the Description section) are available to relieve undue burden that may be experienced by certain groups or individual fee payers, which will serve Canadians by encouraging innovation and access to new products.

Not all generics are price regulated by the provinces. In cases where they are, companies can negotiate with the provinces and insurers to obtain the best price for their drugs. Nevertheless, pricing is outside the scope of these Regulations.

Health Canada’s CBA estimated that the updated fees would have a minimal impact on the commercial viability of businesses. Start-up companies and small- and medium-sized enterprises may benefit more than their larger counterparts from a more predictable regulatory process as these companies may not have the cash inflow to sustain a prolonged regulatory process.

The CBA was conducted based on drug submission type rather than prescription or non-prescription status, or perceived risk of the drug. Depending on the submission type, the applicable fee will differ to reflect the amount of work involved.

Impact assessment — 10-year consideration

One respondent suggested that the 10-year consideration provided by Health Canada in its impact assessment in these Regulations does not reflect the fact that the average innovation cycle in the medical devices industry is about 18 months.

Treasury Board Secretariat requires departments to provide a 10-year consideration when assessing impact for which Health Canada has met for this regulatory proposal.

Health Canada developed its assessment on the basis that the product life cycle of medical devices ranges from 18 to 24 months. This is reflected throughout the CBA and the formula used in calculating the benefits to the medical device industry.

Balance between user fees and public funding

Five respondents remarked that it is imperative that the Government maintain public funding for the Health Products and Foods Branch (HPFB). Not only should the fees collected stay within the Branch, but they also emphasized that any increase in fees should not be offset by any reductions in Health Canada’s portion of public funding. They stated that any reduction of public funding would negate the objective of efficient regulatory reviews for the benefit of Canadians. Another respondent suggested that since programs related to post-market surveillance and enforcement are a direct benefit to consumers, these activities warrant a greater representation in A-base funding.

There will be no reduction of Health Canada’s public funding for the human drugs and medical devices regulatory programs as a result of the planned update in user fees. The Department has the authority to collect and retain all revenues that will be generated by the updated user fees. Funds collected through user fees will be reinvested into the specific regulatory activities for which a fee has been paid and will contribute to more stable funding.

The Right to Sell fees are being updated to reflect the costs related to post-market regulatory activities, and to ensure an appropriate balance of the costs between the public and the specific group that benefits from these services. Annual product licensing allows companies to generate revenues and the service provided for the fees paid is a significant benefit to industry.

Human resources

Four respondents had expressed concerns that human resources in the Therapeutic Products Directorate of HPFB are not adequate and have resulted in service standards not being met.

The Department recognizes that successful implementation of these Regulations will require that it recruit and train staff to support its commitment to service standards. In anticipation of the updated fees, Health Canada has started to recruit new staff and to develop training programs.

Specific fees

Four respondents commented on the Right to Sell fees. Two respondents felt that the effort associated with post-market surveillance and adverse reaction monitoring activities is lower for non-prescription products and should not be charged the same fee as for prescription drugs. One respondent requested that Right to Sell fees be maintained at the 1995 levels to reflect the recommendation of the Independent Advisory Panel. In this case, the respondent felt that any shortfall in funding should be covered through an increase in public funding.

Updating the Right to Sell fees is required to reflect the costs involved in post-market regulatory activities, and to ensure that the share of the costs is equitably balanced between the public and the specific group that benefits from these services. Health Canada has determined that a single flat fee is an appropriate way to apply the costs for all products within the human drug category. Annual product licensing allows companies to generate revenues and the service provided from the fees paid is a significant benefit to industry.

As noted by the Independent Advisory Panel, all comparator jurisdictions include post-market activities in their cost-recovery systems. Health Canada would not be consistent internationally if it did not update its Right to Sell fees. The proposed fee for non-prescription drugs is internationally comparable.

Drug analysis fees for non-prescription drugs

One respondent stated that all non-prescription drugs are “low risk” and should be exempt from the Drug Analysis fees in Schedule 5 of these Regulations. They noted that a specific subset of non-prescription medications with a labelling standard is already exempted from Schedule 5.

A specific subset of non-prescription medications that meet the labelling standard has a drug analysis fee of $0. However, not all non-prescription products have the same low level of risk as this particular subgroup.

Switching from prescription to non-prescription status

One respondent stated that there are instances in switches from prescription to non-prescription status where a lower dose and a different claim are permitted. It was requested that “identical claim for existing drug” be deleted from the switch fee.

The fee associated with switching from prescription to non-prescription status is intended for unique circumstances where the data provided supports the identical claim for an existing drug. In instances where the strength of the drug is lowered and a different claim is permitted, the submission fee would be treated as “clinical or non-clinical data and chemistry and manufacturing data.” In instances where a different claim is permitted for the same strength, the fee for “clinical or non-clinical data only” would apply.

Fee mitigation

One respondent acknowledged that the fee remission model will provide relief to smaller companies, although some companies may not benefit from this mechanism given that they may be just over the threshold.

Another respondent proposed that the calculation for fee remission be based on net revenue rather than gross so that manufacturers of low volume products with low net revenue would not be unduly burdened.

Fee remissions have been included in all relevant fee categories in order to reduce any undue burden where the revenues or volume of sales may be low. For consistency, gross revenue was carried over from the previous Regulations since gross revenue is more easily validated.

Transparency of costing

Six respondents submitted comments regarding openness and transparency of costing. The primary concern was that information was not made readily available to the public in order for industry to examine the costing exercise used to determine updated fee levels. Two respondents suggested that the data in Health Canada’s Departmental Performance Report (DPR) was inconsistent with the information provided in the User Fees Proposal. In addition, a separate respondent questioned the costing approach which sought to calculate the actual program cost and the projected cost of necessary improvements to existing regulatory services. They stated that if improvements to regulatory services are to be included, Health Canada should provide information regarding where increased funding would be allocated.

Health Canada undertook the task of updating existing user fees in accordance with the procedural requirements laid out in the User Fees Act. Information concerning Health Canada’s costing exercise has been publicly available on the departmental Web site since 2007. A comprehensive activity-based costing exercise was conducted by a reputable independent third party to identify the full costs of activities to determine appropriate fee levels. The results of this costing exercise were used to develop the document entitled Cost Development in Support of HPFB User Fees, which is publicly available on Health Canada’s Web site.

Health Canada’s Departmental Performance Reports (DPR) provide the actual costs (expenditures) of program delivery across the Department for a specific fiscal year and include revenues from existing user fees; whereas the updated fees have been determined by assessing full costs through an activity-based costing exercise. The full costs reflect a regulatory capacity such that service standards will be met and that regulatory activities will support Canadians’ access to safe and high quality products.

Health Canada has committed to reinvesting revenues from fees into the activities for which the fees have been charged. In accordance with strict legislative requirements, the Minister of Health will annually table a report in Parliament outlining revenues collected from user fees, how revenues were spent, and the performance against service standards.

Annual adjustment

Two respondents supported the annual adjustment of fees by 2% with a stipulation that any automatic increases should be reviewed regularly. One respondent stated that the 2% annual adjustment to fees should be removed because it is a practice that is not consistent internationally.

Health Canada remains committed to undertaking regular reviews of its programs, including assessing fees and their annual adjustment. The annual adjustment is necessary to ensure the fees do not erode over time due to inflation. This adjustment is consistent with the practices of other international jurisdictions, such as the United States, Australia and the United Kingdom that update their fees regularly to account for inflation and for the cost of doing business.

International comparisons

Two respondents stated that these Regulations include fees associated with low-risk drugs that are not being charged for similar products in other jurisdictions. Both respondents would like to see a no-fee policy for submission evaluation for low risk drugs adopted in Canada.

Three respondents saw a lack of harmonization as a disincentive for companies to market their low risk drugs in Canada, which they felt might result in delayed access or lack of availability to these products for Canadians.

An international comparison was conducted between Canada and the four jurisdictions whose regulatory frameworks are the most similar and who charge comparable fees for similar regulatory services: United States, European Union, United Kingdom and Australia. Health Canada has taken into consideration both the similarities and the differences in how these jurisdictions calculate and categorize costs as a result of different legislative and regulatory systems and has determined that its proposed fees are comparable. The CBA also indicated that these Regulations would have a minimal impact on the number of submissions for low-risk drugs and would not pose a disincentive to market low-risk drugs in Canada.

Service improvement

One respondent indicated that they would like to see service improvements, administrative efficiency, and a plan for such improvements. Another respondent recommended that Health Canada should consider additional efficiency measures, including the use of outside experts, electronic tools, enhanced quality management of the review process and increased use of foreign information, where appropriate.

The Department is in the process of identifying and implementing efficiency measures such as electronic tools and exploring approaches for the consistent and formal integration of the use of foreign information, including the use of foreign reviews, in its marketing authorization review processes.

Service standards

Five respondents commented on service standards. One respondent noted that the service standards refer to the scientific review and do not include the processing and screening activities. Two respondents pointed out that no new service standards were set. Additionally, the concept of using average time as a service standard was questioned. Another respondent suggested that Health Canada needs to develop service standards for post-market activities that are internationally comparable.

Although internal standards exist for processing and screening activities, following consultation with stakeholders, the scientific review was identified as the most relevant service being supplied, and the most suitable for measuring performance. Individual submissions will be grouped by submission type to calculate the average review time that will be used to measure Health Canada’s performance against the service standards.

Health Canada will continue to perform reviews of existing performance standards and is in the process of developing additional internationally recognized standards, including those for post-market activities. The Department will engage stakeholders during the process.

Service standards for NAS and ANDS

Two respondents requested that Health Canada clarify whether it is proposing to exclude submission classes New Active Substances (NAS) and Comparative Studies with Chemistry & Manufacturing (Abbreviated New Drug Submissions — ANDS) from meeting the service standards.

In the Benefits and costs section, the established service standards are shown for these two types of drug submissions. To avoid double-counting the benefits, the footnote excluded them from the positive impacts being assessed under Section B of Cost-Benefit Statement — Quantified Impacts in non-monetary terms. These submissions will be included in the service standards.

Reporting on performance

One respondent requested that Health Canada provide a report to interested stakeholders similar to the report it provides to Parliament on revenues, costs and performance measurement.

Health Canada is committed to undertaking regular reviews of its programs, including assessing fees and program performance. Health Canada will continue to review the service standards it currently uses, and to report performance against these standards on an annual basis in the DPR, along with an annual report to Parliament on User Fees. Reports to Parliament are publicly available, and interested stakeholders are encouraged to obtain this report on the Web site of the Treasury Board Secretariat.

Review of fees and services (every three years)

Two respondents commented on the review of fees and cost of service that is planned every three years. One respondent fully supports the review. The second respondent was unclear whether the three year review would also include an assessment of performance standards and the extent to which these standards are internationally aligned.

As stated in the Performance and Evaluation section, Health Canada will review the fees and cost of service based on a three year cycle. The Department remains committed to undertake regular reviews of its programs to assess its fees and program performance, which will include a comparison of our standards to those of similar international regulatory authorities.

Penalties

Five respondents agree that with the implementation of the increased fees, performance should meet or exceed the service standards. However in terms of penalties, the respondents felt that the individual companies impacted should be compensated.

These Regulations are subject to the User Fees Act, which describes how to apply user fee reduction in situations where the established service standard is not met by greater than 10%.

Expiry date

Four stakeholders who commented on the establishment licence expiry date are in favour of repealing the provision. It is suggested that Health Canada continue to send out reminders notifying industry that the annual licensing review process is forthcoming. It is also desired that Health Canada develop service level commitments associated with the annual review of Establishment Licences.

With the introduction of the annual licence review process, Health Canada will maintain the existing service standards for Drug Establishment Licence and Medical Device Establishment Licence. Health Canada will continue to send out notifications to inform licence holders when the annual licence review is forthcoming.

Time to implement

Four respondents stated that the short time available to adjust their budgets to accommodate the updated fees starting in April 2011 would place an undue burden on companies. They requested delaying fee implementation until April 2012 to provide sufficient time to adjust budgets. In addition, two respondents requested that fees be phased in gradually, beginning in 2011, with one of the two respondents suggesting that the Government of Canada temporarily support the program using the necessary public funding until it achieves the target user fee funding levels.

Extensive consultations on the proposed cost recovery framework were conducted with affected stakeholders beginning in April 2007, in accordance with the requirements of the User Fees Act. At that time, Health Canada conveyed that the target for the tabling of a proposal to Parliament would be early fall 2007 and that the updated fees would be implemented in April 2008.

Health Canada’s User Fees Proposal was tabled in Parliament in April 2010, and endorsed unconditionally in May 2010. While these Regulations will come into effect in April 2011, some fees will not be payable until later in the fiscal year. This will allow for a gradual introduction of updated fees throughout the government fiscal year of 2011. For example, individuals holding establishment licences or DINs will not be required to pay for annual licence review or renewal until later in the fiscal year.

Furthermore, the suggested phased-in approach that would operate by adjusting specific fee levels would result in an unnecessary strain on regulatory programs, and unnecessary complexity for stakeholders to deal with staggered fee payments.

Natural health products

One respondent would like to see natural health products included in the proposal to ensure that regulatory activities are financially supported and that there are no differences in market-access cost for similar products.

The objective of these Regulations is to update existing fees for human drugs and medical devices. These Regulations do not apply to natural health products, for which there is no current cost recovery regime.

Non-profit organizations

One respondent requested an exemption for non-profit organizations, stating that updated fees would place an undue burden on organizations that are not generating profits.

An Independent Advisory Panel convened in accordance with the User Fees Act, recommended that Health Canada provide a fee exemption to non-profit organizations conducting humanitarian work but not to those that are actively competing in the market place. Health Canada accepted this recommendation, and non-profit companies competing and seeking market approval for a drug in Canada must pay the applicable fees. Nevertheless, non-profit organizations may apply for fee remissions as any other fee payer.

Deferral of fees for drugs sold for international humanitarian purposes

One respondent supported the deferral and remission of fees for drugs sold for international humanitarian purposes.

Health Canada remains committed to improving access to medicines in the developing world, and as part of this commitment, drugs sold for international humanitarians purposes will be addressed through the payment deferral or fee remission process.

Extraordinary use new drugs (EUND)

One respondent recommended that EUNDs be exempt from user fees because these drugs are intended to treat/mitigate the effects of chemical, biological and nuclear/radiological weapons and would only be used for emergency preparedness and response. In addition, since these therapeutic products can only be purchased by a federal, provincial or municipal government or government agency, any cost in fees paid by industry for these drugs would ultimately be transferred back to the Government of Canada.

Health Canada’s 2007 Official Notice detailed the scope of the user fee initiative. Certain activities, including those related to emergency response and public health programs, were deemed to be outside the scope of the cost recovery initiative. Similarly, in the April 2010 User Fees Proposal, Health Canada identified circumstances under which it would not be appropriate to charge user fees. If charging fees would unduly or unreasonably impede access, then fees should not be charged.

For these reasons, Health Canada agrees with the comment. While these Regulations do not explicitly include or exclude EUNDs, Health Canada is recommending an exemption from fees for all EUND-related activities, which will be added to these fee regulations as a separate regulatory amendment after these Regulations and the EUND regulations both come into force. Stakeholders will be provided with an opportunity to comment on the proposed changes to the fee regulations after the pre-publication of the amendments in the Canada Gazette, Part I.

As a result of these stakeholder comments, non-substantive changes have been made to certain provisions of the Regulations for clarity.

Implementation, enforcement and service standards

Communication / outreach strategy

As part of the implementation of these Regulations, a communication strategy will involve notices to stakeholders regarding updated fees, as well as guidance documents for stakeholders, and posting on Health Canada’s Web site. Revised fees will be published in the Canada Gazette, Part I, annually, reflecting the annual adjustment of 2%.

Human resources

A key component to the success of the cost recovery initiative supported by these Regulations is the ability to staff a number of new positions, predominately within scientific and professional categories. Health Canada is currently hiring staff to ensure successful implementation of the updated fees and the ability to meet performance targets. Further, Health Canada is planning to develop training programs for new employees, as well as strategies to address retention of experienced staff.

Information technology systems

Health Canada’s information technology (IT) system has been in place to support service standards since 1995 with only few improvements made to such systems since then. IT changes necessary to support these Regulations are currently under way, including the upgrading of tracking systems needed to clearly demonstrate revenues collected and allocated to cost-recovery activities.

Enforcement

If an applicant fails to pay a fee, then that fee payable would be a debt owing to the Crown which would be collected as per standard practice.

Service standards

With respect to service standards, Health Canada has consulted both fee paying and non-fee paying stakeholders, as required by the User Fees Act. For each fee, Health Canada has identified a service standard that reflects the level of service that can be expected. Existing service standards will be maintained with the updated fees coming into force, as presented during the consultations, and the User Fees Proposal. Service standards will not only be the expected level of service, but will become a service commitment with recourse for underperformance, as per the User Fees Act. The service standards are published in Health Canada’s Proposal to Parliament for User Fees and Service Standards for Human Drugs and Medical Devices Programs.

Performance measurement and evaluation

Health Canada has developed a Performance Measurement and Evaluation Plan (PMEP), describing the commitments to planning, monitoring, evaluating, and reporting on results of these Regulations and the overall cost recovery initiative. Specifically, the PMEP is based on a logic model that illustrates the flow from resources and activities to expected results. Performance indicators are developed to measure the short-, intermediate- and long-term outcomes illustrated in the logic model.

The logic model

The activities identified in the logic model are the regulatory services provided by Health Canada for which a user fee is charged. Through the activities, the products and services (outputs) used to implement these Regulations will be produced and delivered to the affected stakeholders, both industry and Canadians. The outputs include, for example, drugs and medical devices market authorization decisions and issuance of establishment licences.

The short-term outcomes focus on the objectives of these Regulations, as implemented through the Human Drugs and Medical Devices programs. Specifically, the short-term outcomes include timely regulatory decisions for pharmaceutical and biologic human drugs and medical device products by meeting service standards and improved compliance monitoring and surveillance.

The intermediate- and long-term outcomes focus on supporting the timely access to safe and high quality human drugs and medical devices by Canadians, better industry compliance and improved consumer health outcomes. These outcomes are part of the overall program outcomes for Human Drugs and Medical Devices programs.

The short-term outcomes contribute to the achievement of the overall program outcomes identified in the intermediate- and long-term outcomes. All outcomes will also contribute to Health Canada’s strategic objective that ultimately leads to the improved health status of Canadians.

Indicators used to measure performance

The indicators used to measure performance are derived from the logic model and are in alignment with the Strategic Outcome 2.0 of the 2011–2012 Program Activity Architecture-Performance Measurement Framework (PAA-PMF): Canadians are informed of and protected from health risks associated with food, products, substances and environments, and are informed of the benefits of healthy eating.

The Performance Measurement Strategy Table (found in Annex B of PMEP) will guide the effective collection of timely and reliable performance data that will be used for analysis and reporting of the performance on the short-, intermediate- and long-term outcomes of the logic model. Performance against service standards, including “number and percentage of regulatory decisions made within service standards by type – pre-market submissions,” will be measured.

Reporting and improvements on performance

In accordance with the Treasury Board Secretariat’s Policy on Service Standards for External Fees, Health Canada must report to Parliament annually on performance against service standards. As required under subsection 4(2) and sections 5.1 and 7 of the User Fees Act, the Department is also required to report annually to Parliament on associated costs and revenues from fees.

Reporting

The service standards are published in Health Canada’s Proposal to Parliament for User Fees and Service Standards for Human Drugs and Medical Devices Programs. Health Canada is committed to service improvements and will continue to report on performance against standards annually, as part of the annual DPR. The DPR will also discuss mechanisms to improve service delivery and regulatory performance against service standards, as appropriate. Where the Department does not meet performance standards in a particular fiscal year in respect of a user fee by a percentage greater than 10%, the user fee will be reduced by a percentage equivalent to the unachieved performance, to a maximum of 50% of the user fee, as governed by the User Fees Act. The reduced user fee applies from the day on which the annual report for the fiscal year is tabled under subsection 7(1) of the User Fees Act until the day on which the next annual report is tabled.

Improvement of performance measures

During the two years after the publication of these Regulations in the Canada Gazette, Part II, Health Canada will conduct an internal assessment and will introduce additional measures to extend the Department’s capacity for performance reporting on the service standards defined in the User Fees Proposal, as appropriate.

Review

Health Canada will review the fees and cost of services every three years and may propose new or amended fees to reflect the results of these reviews. This review will include a comparison of service standards to those of similar international regulatory authorities.

Evaluation of regulatory activities

Health Canada has developed a rolling Departmental Five-Year Evaluation Plan (2010–11 to 2014–15). The evaluation of this regulatory initiative will be rolled up to the human drug and medical device programs’ evaluations in the next five-year cycle for 2015–16 to 2019–20. Reporting on the outcomes of these Regulations will be included in these evaluations.

Work is currently being undertaken in support of the summative evaluations of both the human drug and medical device programs. These evaluations will be conducted on the programs as a whole, which will include all program activities, and will not be limited to details around cost-recoverable activities. As summative evaluations, they will assess the relevance, design and delivery as well as the intended results and efficiency of the programs. These evaluations will also include a stakeholder feedback questionnaire seeking their views on Health Canada service delivery within the scope of these two programs. The evaluation of the medical devices program is planned to start in fiscal year 2011–2012, with anticipated date of completion in 2012. The evaluation of the human drugs program is planned to start in fiscal year 2012–2013 with anticipated date of completion in 2013.

Moreover, the PMEP covers those activities and outputs associated with user fees under these Regulations. However, these Regulations contribute to and are part of a broader set of programs (i.e. human drugs and medical devices). The user fee activities, including the outputs and the outcomes to which they contribute will be reported in future program evaluations.

Comments received on the PMEP

The Regulatory Impact Analysis Statement pre-published in the Canada Gazette, Part I, indicated that the PMEP was available to stakeholders upon request. Three stakeholders requested a copy of the PMEP, and were given 30 days to provide comments. The comments received follow.

Performance reporting

One respondent stated that the proposed performance measurement indicators could be further divided in order to measure the expected outcomes for specific drug categories such as Over-the-Counter medications.

User fees are charged based on the submission type and the service standards are set accordingly. The purpose of using the current performance indicators is to ensure consistent performance measurement and reporting against the standards associated with fees being charged.

Service standards

One respondent requested clarification of the activities section of the PMEP which states targets are “between 180 – 300 calendar days, with an exception of labelling (60 days)”. They point out that review of DIN labelling is 210 days.

Service standards for review of DIN applications including labelling are 210 days whereas services standards for reviews of labelling only are 60 days.

Contact

Kendal Weber
Director General
Policy, Planning and International Affairs Directorate
Health Products and Food Branch
Health Canada
Address Locator: 2004A, Graham Spry Building
250 Lanark Avenue, 4th Floor
Ottawa, Ontario
K1A 0K9
Fax: 613-954-9981
Email: cri_irc_consultations@hc-sc.gc.ca

Footnote a
S.C. 2004, c. 6

Footnote b
S.C. 1991, c. 24, s. 6

Footnote c
S.C. 1991, c. 24, s. 6

Footnote d
R.S., c. F-11

Footnote e
S.C. 1991, c. 24, s. 7(2)

Footnote 1
SOR/95-424

Footnote 2
SOR/98-432