Interim Order Respecting Drug Shortages (Safeguarding the Drug Supply)

Backgrounder

November 2020

Drug shortages are a growing global problem, especially for smaller markets like Canada. Since 2017, 10-15% of drugs have been in shortage at any given time and almost half (44%) of all marketed drugs in Canada have been in shortage at least once. These dynamics have been worsened by the COVID-19 pandemic, by disrupting the availability of drugs while increasing the demand for select medicines used in the treatment and management of COVID-19 infections.

On October 1, 2020, the United States (U.S.) published the final rule on the Importation of Prescription Drugs. The rule comes into effect on November 30, 2020, and creates a pathway to allow licensed U.S. pharmacists or wholesalers to import in bulk certain prescription drugs intended for the Canadian market. There has been significant state-level support for the bulk importation of drugs from Canada, and any industry uptake would worsen the existing problem of drug shortages in Canada.

On November 27, 2020, the Minister of Health signed the Interim Order Respecting Drug Shortages (Safeguarding the Drug Supply) (interim order). The interim order introduces new measures to help safeguard the Canadian drug supply by helping to make sure that participation in bulk importation frameworks, such as the one recently established by the U.S., does not cause or exacerbate a drug shortage in Canada.

Under the interim order, certain drugs intended for the Canadian market are prohibited from being distributed for consumption outside of Canada, if that sale could cause or exacerbate a drug shortage.

The interim order applies to all drugs subject to mandatory shortage reporting requirements in Canada, as any shortage of these drugs would harm the health and safety of Canadians. This includes all drugs that are eligible for U.S. bulk importation and additional categories, such as biologics and controlled substances. It also includes drugs authorized under the Interim Order Respecting the Importation, Sale and Advertising of Drugs for Use in Relation to COVID-19.

This prohibition applies to all sales made by a drug establishment licence (DEL) holder (e.g., a fabricator, wholesaler, or distributor), but does not apply to sales made by a person who is not required to hold a DEL (such as a consumer-level pharmacy).

The distribution of drugs for consumption outside of Canada continues to be permitted in cases where the seller determines that the sale will not cause or exacerbate a drug shortage.

Additionally, sales of products manufactured in Canada for export continue to be permitted if they meet the conditions set out in subsection 37(1) of the Food and Drugs Act and are not included in the scope of the prohibition.

DEL holders must maintain a record of how they determined that the sale would not cause or exacerbate a shortage in Canada. A drug is in shortage when a manufacturer is unable to meet the demand for the drug in Canada. Information is available for manufacturers and DEL holders will receive guidance to help determine if a sale could cause a shortage.

This interim order also creates an obligation for DEL holders and manufacturers (i.e., market authorization holders) to provide information, about a shortage or potential shortage, upon request. The information must be submitted electronically within the time specified by the Minister, and each request will explain why the information is needed. This authority will be used only if the requested information is not provided voluntarily. 

Health Canada will enforce this Interim Order through compliance promotion, monitoring, and verification activities. DEL holders who violate the terms of the Interim Order may be subject to enforcement actions, which could include corrective measures, issuance of public communications, or the suspension or cancellation of the DEL.

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