Order Repealing the Establishment Licence Fees Remission Order (Indication of an Activity in respect of a COVID-19 Drug): SOR/2021-274
Canada Gazette, Part II, Volume 156, Number 1
Registration
SOR/2021-274 December 22, 2021
FOOD AND DRUGS ACT
The Minister of Health, pursuant to section 30.63 footnote a of the Food and Drugs Act footnote b, makes the annexed Order Repealing the Establishment Licence Fees Remission Order (Indication of an Activity in respect of a COVID-19 Drug).
Ottawa, December 15, 2021
Jean-Yves Duclos
Minister of Health
Order Repealing the Establishment Licence Fees Remission Order (Indication of an Activity in respect of a COVID-19 Drug)
Repeal
1 The Establishment Licence Fees Remission Order (Indication of an Activity in respect of a COVID-19 Drug) footnote 1 is repealed.
Coming into Force
2 This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Issues
The Establishment Licence Fees Remission Order (Indication of an Activity in respect of a COVID-19 Drug) [remission order], in tandem with the Interim Order Respecting the Importation, Sale and Advertising of Drugs for Use in Relation to COVID-19 (interim order), formed part of Health Canada’s temporary response to the COVID-19 pandemic.
The interim order expired on September 17, 2021, one year after the day it was made. The remission order does not cease to have effect, unless it is expressly repealed by the Minister of Health. Stakeholders were informed of the temporary nature of the measure when the remission order was made, and that it would cease to have effect once the interim order expired. In the interest of consistency and transparency of the law, and to provide clarity to stakeholders on which set of fees are in force, the remission order is repealed.
Background
On September 16, 2020, the interim order was made by the Minister of Health to expedite the authorization for the importation, sale, and advertising of drugs used in relation to COVID-19. Drug submissions approved under this order were not subject to cost recovery fees.
The Minister of Health also made the remission order on the same day to further support the industry in providing Canadians with timely access to drugs used in relation to COVID-19. This allowed for remission of fees associated with drug establishment licences issued or amended under the interim order. This remission of fees was limited to activities conducted solely in relation to COVID-19 drugs. Fees for the 2021 annual licence review of those same drug establishment licences were also remitted for buildings or activities that were solely related to COVID-19 drugs.
Between September 2020 and September 2021, no new drug establishment licences were issued under the interim order. Seven drug establishment licence holders sought amendments to their existing licences to conduct activities related to COVID-19 drugs. Six of these companies were granted a partial remission of fees for the annual review of their drug establishment licences, for the part of the licence that was amended under the interim order.
On March 17, 2021, the Regulations Amending the Food and Drug Regulations (Interim Order Respecting the Importation, Sale and Advertising of Drugs for Use in Relation to COVID-19) [regulations] transitioned some of the flexibilities offered in the interim order to permanent regulations. These regulations came into force partly on the day of their registration on March 18, 2021, and on the day of the expiry of the interim order on September 17, 2021. Under these regulations, drug establishment licence holders who wanted to maintain their licence, or part of their licence issued under the interim order had to notify Health Canada of their intent to continue conducting their COVID-19 drug activities prior to the expiry of the interim order.
By September 2021, the seven drug establishment licence holders indicated whether they were going to continue or discontinue their COVID-19 drug activities. One licence holder confirmed it did not intend to continue its COVID-19 drug activities. As such, all amendments to their licence issued under the interim order were removed from their drug establishment licence upon the expiry of the interim order. Two licence holders confirmed their intentions to continue some of their COVID-19 drug activities, thus maintaining the corresponding amendments to their licence after the expiry of the interim order. The remaining four licence holders confirmed their intentions to continue all COVID-19 drug-related activities. All amendments to their licence issued under the interim order were therefore maintained.
This means that the six licence holders remain eligible for fee remission relating to all future annual licence reviews unless the remission order is repealed.
Objective
The objective of the Order Repealing the Establishment Licence Fees Remission Order (Indication of an Activity in respect of a COVID-19 Drug) [ministerial order] is to provide clarity to stakeholders about the end of fee remission under the existing remission order. Upon the coming into force of the ministerial order, drug establishment licence fees fixed under the Fees in Respect of Drugs and Medical Devices Order apply to any drug establishment licence application, amendment and annual licence review related to an activity conducted in relation to a COVID-19 drug.
Description
Health Canada charges fees for regulatory activities, including pre-market regulatory review, ongoing surveillance of products once they are on the market, and the review of establishment licences. Any person who fabricates, packages, labels, imports, tests, distributes, or wholesales a drug in Canada must hold an establishment licence issued under the Food and Drug Regulations. Fees for the examination of applications, the amendments and the annual review of establishment licences are established under the Fees in Respect of Drugs and Medical Devices Order.
As part of its response to the COVID-19 pandemic, Health Canada allowed fees fixed in the Fees in Respect of Drugs and Medical Devices Order to be remitted for the applications, the amendments, and the annual review of those licences processed under the interim order.
To benefit from a fee remission, drug establishment licence holders had to conduct a regulated activity solely in relation to COVID-19 drugs that met the conditions of the interim order. In alignment with the nature of the interim order, this exceptional measure was intended to be temporary.
The interim order expired on September 17, 2021. However, the remission order does not have an expiry date. Future fee remission for annual licence review remains possible by way of the remission order since the Regulations provide drug establishment licence holders with the option to maintain their applications and amendments authorized under the interim order. Repealing the remission order ensures that fees set out in the Fees in Respect of Drugs and Medical Devices Order in relation to drug establishment licence review apply moving forward.
Regulatory development
Consultation
Health Canada has conveyed to stakeholders its intent to cease remitting fees associated with establishment licence applications for activities conducted in relation to COVID-19 drugs once the interim order expired. This included a (ARCHIVED) Notice to Stakeholders published on November 30, 2020, and a stakeholder consultation session held on December 11, 2020. This consultation session was attended by representatives from the pharmaceutical industry, professional associations, and provincial health authorities. A What Was Heard Report summarizing comments received in relation to the consultation was published on January 26, 2021. All engagement outlined the temporary nature of the fee remission and informed stakeholders that they would be subject “in full” to drug establishment licence fees after the interim order expired. Stakeholders did not raise any concerns with this approach.
Guidance for drug establishment licence holders, published on March 31, 2021, and a drug establishment licence bulletin, issued on August 6, 2021, reiterated Health Canada’s approach towards drug establishment licence fees once the interim order had expired.
Repealing the remission order is consistent with the approach previously shared with stakeholders.
Modern treaty obligations and Indigenous engagement and consultation
The ministerial order is not expected to impact treaties with the Indigenous peoples of Canada. Health Canada conducted an initial assessment that examined the geographical scope and subject matter of the initiative in relation to modern treaties in effect and did not identify any potential modern treaty impacts.
Instrument choice
The option of maintaining the remission order was considered. This option was rejected because Health Canada had intended the remission of fees under the remission order to be a temporary measure during the early stages of the pandemic to support industry in providing Canadians with timely access to drugs used in relation to COVID-19. Maintaining the remission order could have permitted drug establishment licence holders to continue to benefit from fee remissions at a time when access to COVID-19 drugs had stabilized. This could have created the appearance of an uneven playing field for industry where drug establishment licence holders involved in importation, sale, and advertising of drugs in relation to COVID-19 paid fewer fees than other licence holders.
Regulatory analysis
Benefits and costs
This section provides a description of the anticipated impacts on the drug industry, the Government of Canada, and Canadians regarding the repeal of the remission order. It is estimated that the overall impact is low.
Costs and benefits associated with the ministerial order are determined by incremental differences between the baseline, where the remission order is not repealed and continue to be in effect, and on the situation where the remission order is repealed and the Fees in Respect of Drugs and Medical Devices Order applies.
Industry
Under the remission order, fee remissions were only granted in relation to applications submitted under the interim order. No company received a “full” remission for the annual review of their licence in 2021 since no new drug establishment licences were issued under the interim order.
Between September 2020 and September 2021, seven companies amended their drug establishment licences under the interim order to conduct activities in relation to COVID-19 drugs. This qualified them for a partial remission of their 2021 annual licence review fees. Six received a partial fee remission for the annual review of their existing drug establishment licences, as those licences were amended under the interim order before the 2021 annual licence review period. The amount granted in partial fee remission was low for each of these companies. Based on the 2021 annual licence review, eligible drug establishment licence holders received on average a fee remission of $7,000 of the full fee.
Annual licence review requests for documentation are sent to drug establishment licence holders in early January of each calendar year. However, drug establishment licence holders are not required to return such documentation to Health Canada until March 31. As such, Health Canada cannot confirm 2022 annual licence review fees until April 2022. Data collected by Health Canada from the 2021 annual licence review process shows that Health Canada granted approximately $42,000 in fee remission relating to the annual licence review under the remission order. It is assumed that this amount represents the upper limit estimate of what would have been granted in subsequent years had the remission order not been repealed.
Therefore, the cost to industry resulting from repealing the remission order is estimated to be low, at a maximum of $42,000 per year.
Government of Canada
The Department receives approximately 3 500 applications every year, including new drug establishment licence applications, amendments to existing establishment licences, and renewals. Of these, 800 are annual licence review applications.
The expected benefits to Health Canada include the previously mentioned upper limit estimate of $42,000 as Health Canada will now receive the full annual licence fee that was previously foregone under the remission order. The benefits to the Government of Canada are estimated to be low, which reflects the low impact anticipated for industry.
In addition, applications for drug establishment licences issued or amended under the interim order were not anticipated as part of departmental revenue forecasts given the limited scope of the remission order and its temporary nature.
Canadians
It is not anticipated that companies will cease producing COVID-19 drugs solely based on the remission order being repealed given the low amount remitted in 2021. Almost every company (i.e. 6 out of the 7) that was conducting COVID-19 drug activities under the interim order decided to continue their activities beyond the expiry of the interim order. The ministerial order is not expected to reduce the Canadian supply of COVID-19 drugs in light of the above considering that only a small number of companies benefited from fee remission under the remission order. Therefore, it is not expected to have an impact on Canadians.
Benefits
Fees to be recovered will be reinvested into the specific activity for which the fees were paid, which in turn reduces the cost to Canadians. Such additional revenues contribute to more stable funding for providing key regulatory services to Canadians and the industry.
Small business lens
The one company that qualified as a small business notified Health Canada of its intention not to maintain its drug establishment licence amendments issued under the interim order. Assuming that this company will not apply in future years, repealing the remission order will not impact small businesses.
One-for-one rule
An existing regulatory title, Establishment Licence Fees Remission Order (Indication of an Activity in respect of a COVID-19 Drug), is being repealed. However, there is an incremental change of zero in administrative costs on business.
Regulatory cooperation and alignment
There is no comprehensive information about fee remission strategies adopted by other countries as a response to the pandemic. However, Canada’s cost recovery approach is consistent with approaches taken by other countries in terms of fees charged to industry for regulatory services. For example, the Australian Therapeutic Goods Administration requires Australian sites that manufacture medicines to hold a manufacturing licence. The United Kingdom also requires manufacturers to hold a manufacturer licence issued by the Medicines and Healthcare Products Regulatory Agency. Similarly to Health Canada’s approach, fees are payable in both countries for the issuance of a licence, as well as for its annual review. The United States Food and Drug Administration charges user fees for new drug submissions and the registration of drug establishments.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus (GBA+)
It is anticipated that ministerial order will not have a direct impact on Canadians. Health Canada has considered the indirect impact the ministerial order could have on population groups that are at higher risk of developing serious symptoms or of dying of COVID-19, since it could be perceived as reducing incentive to industry to manufacture COVID-19 drugs. At-risk population groups include seniors, people at risk due to underlying medical conditions, people who have compromised immune systems, or anyone facing socio-economic challenges such as difficulty accessing medical care or health advice, unstable employment or inflexible working conditions, social or geographical isolation, or inadequate housing conditions.
However, only six companies benefited from partial remission of their annual drug establishment licence fees related to a COVID-19 drug, and these companies also manufacture other non-COVID-19 drugs in Canada. The amount associated with the partial fee remission in 2021 was negligible, averaging $7,000 per company. This represents between only 2% and 10% of the full amount that would normally be charged for the annual review of the companies’ licences.
Stakeholders did not raise any concerns in regard to the Department’s intent to cease fee remission once the interim order had expired. Indeed, almost every company (i.e. 6 out of the 7) that was conducting COVID-19 drug activities under the interim order have continued their activities beyond the interim order expiry, knowing that fee remission would come to an end. As such, the ministerial order is not expected to have an impact on the Canadian supply of COVID-19 drugs.
Should the above-mentioned scenario occur, the impact on the Canadian supply of COVID-19 drugs is expected to be offset by additional measures taken by the government throughout the pandemic. Those measures include amendments to the Food and Drug Regulations to expedite licensing of COVID-19 drugs, as well as allowing the exceptional importation of foreign drugs that may not fully meet certain Canadian regulatory requirements, but are manufactured according to comparable standards.
Rationale
Future fee remission for annual licence review remains possible by way of the remission order since the Regulations provide drug establishment licence holders with the option to maintain their applications and amendments authorized under the interim order. Repealing the remission order ensures that fees set out in the Fees in Respect of Drugs and Medical Devices Order in relation to drug establishment licence review apply.
Implementation, compliance and enforcement, and service standards
Implementation
The remission order is repealed on the day on which the ministerial order is registered.
With the coming into force of this order, all drug establishment licence holders conducting activities related to COVID-19 drugs are subject to fees fixed under the Fees in Respect of Drugs and Medical Devices Order.
Compliance and enforcement
Failure to pay the applicable fees could result in Health Canada taking compliance and enforcement action in line with Health Canada’s existing guidance, including the Fees for the Review of Human and Veterinary Drug Establishment Licence Applications and the Management of Applications and Performance for Drug Establishment Licences (GUI-0127). The Department chooses the actions and tools that are most appropriate for the situation, based on an assessment of available evidence and risks pertaining to the situation. The type of action depends on the nature of the contravention and may include withholding services, rejecting a drug establishment licence application or cancelling the licence.
Service standards
The Performance standards for the Fees in Respect of Drugs and Medical Devices Order and the Management of Applications and Performance for Drug Establishment Licences (GUI-0127) remain unchanged. Drug establishment licence applications are still to be processed within a 250 calendar days of review time. Drug establishment licence holders are still required to submit a complete annual licence application before April 1 of every year to allow completion of the review by August.
Contact
Catherine Hudon
Director
Compliance Policy and Regulatory Affairs
Policy and Regulatory Strategies Directorate
Regulatory Operations and Enforcement Branch
Health Canada
200 Eglantine Driveway, Tunney’s Pasture
Jeanne Mance Building
Address locator: 1907A
7th Floor, Room 705A
Ottawa, Ontario
K1A 0K9
Telephone: 343‑540‑8524
Email: hc.prsd-questionsdspr.sc@canada.ca