Pesticide Cost Recovery (FAQs)
1. What is cost recovery?
Cost recovery is the practice of establishing and collecting user fees for services, including regulatory activities. User fees are commonly charged across all levels of government for services similar to pesticide regulatory applications.
2. Why did user fees need to be updated?
The fees for reviewing pesticide applications had not changed in 20 years, even though the complexity and volume of work, as well as the cost of doing business has increased. Taking effect April 1, 2017, the updated fee structure better reflects the current costs of regulating pesticides.
3. How will updated fees benefit Canadians?
The primary benefit to Canadians is the realignment of a portion of the costs of the product registration process from federal taxpayers to the private sector. This ensures a more appropriate cost-sharing balance between Government and companies that benefit from the regulatory activity.
4. What are the changes to the fees and charges?
Most fees increased to cover a higher share, approximately 30%, of the government’s current costs for reviewing pesticide applications. Some fees have decreased due to efficiencies in the process and changes in the way work is done. Also, new fees apply for microbial and semiochemical pesticides.
The annual charge applied to each registered pesticide has increased to reflect inflation since 1997. The maximum annual charge has increased from $2,690 to $3,600 and the minimum annual charge has increased from $75 to $100. Under the Service Fees Act, this charge is subject to an annual increase based on the previous year’s All-Items Consumer Price Index (CPI) as of April 1, 2019.
5. What process did Health Canada follow for updating its fees and charges?
Health Canada tracked its time and costs associated with pesticide applications over an 18-month period. Fees were then set at approximately 30% of costs, with some adjustments to align with international regulators.
Consultations with pesticide registrants and other interested stakeholders have been ongoing since 2010, culminating in the publication of two consultation documents in 2014. Throughout the consultations, stakeholders expressed a clear desire that increased revenues from fees be re-invested in the pesticide regulatory program to fund priority activities and to provide stability to the program.
All of this work resulted in Health Canada’s Pesticide Cost Recovery Official Notice of Fee Proposal, which outlined updated fees and charges, and provision for an annual adjustment of fees. After the Proposal was approved by Parliament in May 2016, the proposed Regulations were pre-published in the Canada Gazette, Part I on June 11, 2016 for consultation.
The final regulations were published in Canada Gazette, Part II on February 22, 2017, coming into effect on April 1, 2017.
6. Were any changes made after the Canada Gazette, Part I consultation?
Health Canada’s responses to all of the comments received during the publication are provided in the Regulatory Impact Analysis Statement of the Pest Control Products Fees and Charges Regulations.
The following minor changes were made to the regulations after the CGI consultation:
- Research authorizations and products manufactured for export require full payment at the time of application (instead of incremental payment option of 10%, 25% and 65%).
- The coming into force date of the regulations was changed to April 1, 2017 (rather that at time of publication).
7. Are service standards being changed?
As indicated throughout the consultations, some service standards have been updated to align with the new Regulations. Revisions to the Management of Submissions Policy include:
- A standard of 365 days for submissions, including Item 10 of Schedule 1 — Identification of compensable data;
- A standard of six months for precedent-based submissions relating to formulation amendments;
- Standards for applications received under the notification policy; and
- Administrative performance standards for pre-submission consultations. It should be noted that these administrative performance standards do not fall under the Service Fees Act as no fees are charged for pre-submission consultations.
8. Will fee reductions still be in place?
The fee structure has always included measures to encourage and maintain the registration of products with low sales. Health Canada will continue to provide reductions in application fees and the minimum annual charge for qualifying products.
9. What are the conditions associated with fee reductions?
Applications for registration
An applicant may apply for a fee reduction at the time of application for registration. A 3-year anticipated sales projection is required. Certified sales records must be submitted after the 3-year verification period, which begins on the date of first sale in Canada. Health Canada then verifies if the fee originally paid was appropriate, or if a balance/refund is owed. Audited records of sales may be requested if the certified records are not adequate to determine eligibility of the fee reduction.
To support a minimum annual charge, registrants must provide certified sales records when submitting payment. If necessary, Health Canada may request audited sales records to confirm eligibility for reduced charges.
In situations where the recalculated fees or charges are not paid, Health Canada may deny service, cancel or amend registrations.
10. How will the additional revenues be used?
The anticipated $4.3M in additional annual revenues will be retained by Health Canada. Such additional revenues will help Health Canada to maintain or improve service delivery standards for reviewing pesticide applications, and improve the timeliness, engagement and transparency of post-market review activities.
11. How will fees be updated in the future?
The new cost recovery regime has a mechanism to maintain the industry’s share of the cost of registering pesticide each year. Fees will be adjusted annually by 2% to account for inflation and other cost increases. Under the Service Fees Act, the annual charge is subject to an annual increase based on the previous year's All-Items Consumer Price Index. Health Canada also plans to review the cost recovery regulations every 3-5 years.
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