Explanatory note: Interim order No. 2 extends measures for drugs, medical devices and foods for a special dietary purpose

Alert for Explanatory note: Interim order No. 2 extends measures for drugs, medical devices and foods for a special dietary purpose

Health Canada published new amendments to the Food and Drug Regulations in Canada Gazette, Part II on September 1, 2021. These will create a permanent pathway for the exceptional importation and sale of foreign-authorized drugs and medical devices into Canada in response to a shortage. These regulations entered into force on March 2, 2022. For more information, visit Regulations amending certain regulations concerning drugs and medical devices (shortages): Notice

(This note is not part of the Order.)

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Proposal

The Interim Order No. 2 Respecting Drugs, Medical Devices and Foods for a Special Dietary Purpose in Relation to COVID-19 (IO No. 2) was made by the Minister of Health on March 1, 2021. IO No. 2 repeals and replaces the Interim Order Respecting Drugs, Medical Devices and Foods for a Special Dietary Purpose in relation to COVID-19 (IO No. 1) made by the Minister on March 30, 2020, and approved by the Governor in Council (GIC) on April 8, 2020. It extends and modifies certain measures for drugs, medical devices and foods for special dietary purposes introduced in IO No. 1. These measures continue to be necessary to help prevent and alleviate the effects of shortages that are caused or exacerbated, directly or indirectly, by COVID-19.

The Minister may make interim orders under subsection 30.1(1) of the Food and Drugs Act, if the Minister believes that immediate action is required to deal with a significant risk, direct or indirect, to health, safety or the environment. Such an order ceases to have effect 14 days after it is made unless it is approved by the Governor in Council.

Objectives

The objective of IO No. 2 is to help prevent or alleviate the effects of health product shortages caused or exacerbated, directly or indirectly, by COVID-19.

Background

COVID-19 is a new disease never before seen in humans. It is an infectious respiratory disease caused by a strain of the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). COVID-19 infection has been known to cause respiratory symptoms, fever, cough, shortness of breath and breathing difficulties. In more severe cases, it may cause pneumonia, severe acute respiratory syndrome, kidney failure and death.

The disease was first detected in Wuhan, China, in December 2019. The World Health Organization (WHO) declared a global pandemic related to COVID-19 on March 11, 2020. Originally seen to be a local outbreak, COVID-19 has now affected most countries across the globe. There are now more than 109 million cases and over 2 million people have lost their lives. As of February 17, 2021, the number of confirmed cases in Canada has exceeded 800,000. However, the situation continues to evolve and change.

From the outset, the COVID-19 pandemic created global supply chain challenges. Shortages of health products are a growing global problem with particular implications for smaller markets like Canada. Approximately 83% of drug manufacturing activity is conducted outside of Canada and roughly 68% of drugs in final dosage form are imported. As well, imports account for nearly 75% of Canada’s medical device market. Many of these imports are from single suppliers, making Canada particularly vulnerable to unforeseen events that disrupt manufacturing and distribution.

The COVID-19 pandemic has made this situation worse. It has disrupted supply chains and caused an increase in demand for certain health products used to prevent, treat and manage COVID-19. Product categories regulated under the Food and Drugs Act that have experienced an increase of shortages or demand, or where the risk of a shortage has become more pronounced, include:

Since March 2020, Health Canada has responded to 45 Tier 3 (highest impact) drug shortages, compared to only 10 Tier 3 shortages in 2019. Of the over 400 medical device shortage reports received as of February 17, 2021, 281 shortages were confirmed and posted. Before making IO No. 1, Health Canada was made aware of only 27 medical device shortages from 2015 to February 2020. At that time, there were no mandatory requirements to report medical device shortages in Canada. While the supply and demand levels for some health products are stabilizing, the need for vigilance continues. The federal government remains focused on the health and safety of Canadians during the COVID-19 pandemic.

Health Canada plays an active role in mitigating the impact of shortages on Canadians. The department works closely with provinces and territories, manufacturers and others in the supply chain to ensure that Canadians have access to the prescription drugs and medical devices they need. Regulatory requirements for manufacturers to report drug shortages came into force in March 2017. These require manufacturers to report certain drug shortage and discontinuation information on a third-party website. There are no other existing requirements in legislation or permanent regulation directly related to medical devices or other health product shortages.

To date, the federal government has put in place a number of temporary measures to support efforts to alleviate shortages that occur and to help prevent new shortages. For example, in March 2020, Health Canada implemented an interim policy to address the unprecedented demand for disinfectants and hand sanitizers in Canada at the start of the pandemic. This interim policy supplements the Canadian supply by facilitating importation of foreign products that do not fully meet regulatory requirements under the Food and Drugs Act but do not compromise the safety of Canadians. These measures have enabled Health Canada to facilitate the availability of supplies of these products for Canadians. As of February 17, 2021, the sale and import of 670 products (surface disinfectants and hand sanitizers) have been permitted under the policy.

As a part of Health Canada’s efforts to prevent and alleviate shortages of key products, IO No. 1 was made by the Minister on March 30, 2020. Its approval by the GIC on April 8, 2020, extended its operation by up to a year. IO No. 1 permitted the exceptional importation of specified health products that may not fully meet Canadian regulatory requirements, but are manufactured to comparable standards, to help alleviate a shortage. As of February 17, 2021, 56 drugs, 265 medical devices and 2 foods for a special dietary purpose were permitted for exceptional importation and sale under this interim order. IO No. 1 also mandated the reporting of shortages of select medical devices that are critical during the pandemic, similar to a requirement already in place for drugs. These and other measures undertaken by the department in partnership with manufacturers and importers have led to the resolution of 25 Tier 3 drug shortages and 118 medical device shortages.

The Minister also made two more interim orders focused on drug shortages over the past year.

The Interim Order Respecting the Prevention and Alleviation of Shortages of Drugs in Relation to COVID-19 was made by the Minister on October 16, 2020, and approved by the GIC on October 23, 2020. This interim order provides additional tools to address drug shortages. These include the ability to require specific information about a shortage related to COVID-19 and to impose terms and conditions on the market authorization for a drug related to a shortage.

The Interim Order Respecting Drug Shortages (Safeguarding the Drug Supply) was made by the Minister on November 17, 2020, and approved by the GIC on December 4, 2020. This introduces new measures to help prevent foreign bulk importation of drugs intended for the Canadian market from causing or worsening a drug shortage in Canada. An example is the program recently established in the United States.

Without further action, IO No. 1 would have expired on March 30, 2021. Once IO No. 1 expired, products previously permitted to be imported and sold to address a shortage would no longer be permitted. As well, Health Canada would be unable to permit new products to be imported and sold through exceptional importation. This would worsen the impact of these shortages on Canadians.

Moreover, reporting of medical device shortages would no longer be required, which would have reduced Health Canada’s ability to monitor shortages of critical medical devices. Urgent action is required to maintain these authorities, enabling Health Canada to continue helping to prevent and alleviate the effects of health product shortages caused or exacerbated, directly or indirectly, by COVID-19.

Implications

Exceptional Importation

Under IO No. 2, the exceptional importation and sale of drugs, medical devices, and foods for a special dietary purpose will continue to be permitted to address shortages of these products that are caused or made worse, directly or indirectly, by COVID-19. Products governed by IO No. 2 may be imported into Canada, provided they were manufactured with similar high quality and manufacturing standards to those required for Canadian-approved products.

Under IO No.1, the Minister maintained up-to-date lists of the drugs, medical devices, and foods for a special dietary purpose eligible for exceptional importation on Health Canada's website. These lists are again being incorporated by reference under IO No. 2 and will continue to be maintained. Industry guidance outlines how companies can submit proposals for adding a non-compliant drug, medical device, or food for a special dietary purpose to these lists to address a shortage. Health Canada may also add a product to a list without receiving a specific proposal from a company if requested by a public health official, such as the Chief Public Health Officer of the Public Health Agency of Canada, if necessary to address a potential shortage. Health Canada reviews proposals based on a number of factors, including but not limited to product type and availability of supply.

IO No. 2 also formalizes a regulatory framework to permit the exceptional importation and sale of surface disinfectants (also called biocides) to address increased demand. It modifies the definition of a “biocide” that was defined in IO No. 1 so that the term refers only to disinfectants, and not hand sanitizers, which are regulated differently. The exceptional importation framework for biocides in IO No. 2 will replace Health Canada’s earlier interim policy approach for imported disinfectants. An up-to-date list of biocides eligible for exceptional importation will be maintained. Many of the biocides that were eligible for import and sale under Health Canada’s previous policy approach will continue to be permitted under the IO No. 2.

IO No. 2 modifies regulatory flexibilities previously made available to regulated parties that manufacture, import, and/or sell hand sanitizers, as the domestic production capacity for these products has now stabilised. Under IO No. 1, companies were permitted to conduct activities related to drug-based hand sanitizers without a drug establishment license (DEL). IO No. 2 reintroduces the requirement for companies to have a DEL to conduct regulated activities related to drug-based hand sanitizers. Companies wishing to continue conducting licensable activities related to drug-based hand sanitizers will have six months to apply for a DEL. After applying, companies can continue those activities until a determination is made with respect to their applications.

In addition, IO No. 2 no longer permits companies to provide Health Canada with label text in place of a label mock-up as part of an application for a drug identification number (DIN) or a new drug submission on behalf of a drug-based hand sanitizer. However, any application for a product seeking market authorization that is pending a decision at the time IO No. 2 comes into force will be considered under the terms of IO No. 1.

IO No. 2 also modifies Health Canada’s approach to official languages for products that arrive in Canada through exceptional importation. Under IO No. 1, guidance for industry indicated the department’s expectation for importers to ensure that information on the safe use of the product be available in French and English. IO No. 2 makes that regulatory requirement explicit. Importers wishing to keep their products in the Canadian market will have six months to come into compliance.

Any importer who is permitted for exceptional importation and sale under IO No. 2 must notify the Minister electronically, in a format that is specified by, or acceptable to, the Minister, at least five business days before importation. These products will still be subject to some of the requirements set out in the Food and Drugs Act and its Regulations, including reporting adverse drug reactions, recall requirements and mandatory problem reporting (medical devices).

Medical Device Shortage Reporting

IO No. 2 also continues the requirement for manufacturers and importers of medical devices considered critical during the COVID-19 pandemic to notify the Minister of shortages of those medical devices introduced in IO No. 1. The notification must happen within five business days of becoming aware of an actual or anticipated shortage. Information is to be submitted electronically in a format specified by, or acceptable to, the Minister.

IO No. 2 clarifies that the shortage reporting requirement for substitute devices, components, accessories or parts should be based only on the manufacturer’s own capacity, supply and orders. It does not include a situation where the device is on backorder for less than thirty days. These changes bring shortage reporting requirements into better alignment with those of the U.S. Food and Drug Administration, thus avoiding confusion for manufacturers. They also clarify the circumstances under which manufacturers should report a shortage and will improve Health Canada’s oversight of medical device shortages.

Under IO No. 1, the Minister maintained an up-to-date lists of medical device shortages and a list of specified medical devices for which shortages must be reported. Products appearing on the list of specified medical devices are selected based on signals from public reports, industry, provinces and territories, or other stakeholders. These lists are being re-incorporated under IO No. 2 and will continue to be maintained.

IO No. 1 introduced an authority for the Minister to request additional information about a shortage of a medical device, or its components, accessories, parts or consumable materials that had been reported to Health Canada. However, the ongoing pandemic has underscored the need for more robust information respecting medical device shortages.

The authority in IO No. 1 was effective in obtaining supplemental information from manufacturers and importers who have reported a shortage to Health Canada. However, while assessing the impact of that actual or anticipated shortage may have on Canadians, it was often necessary to gather information from additional companies. For example, Health Canada has had to request information from other manufacturers and importers to determine the supply of potential substitute medical devices. Similarly, Health Canada has also requested supply and demand information from companies to validate signals received from other sources to determine if a risk of shortage existed.

To date, industry has provided this information when requested and Health Canada has worked with companies to address shortages. However, an expanded authority to compel information on medical device shortages will facilitate timely access to needed information when companies would not voluntarily provide the information. This will enable Health Canada to assess and respond more quickly to an actual or anticipated shortage, which could limit or prevent harm to Canadians.

As such, IO No. 2 introduces an expanded authority for the Minister to request information on existing and potential medical device shortages that have not been reported or that are not subject to an obligation to report. The Minister can request this information from a manufacturer, importer or distributor of a medical device if the Minister has reasonable grounds to believe that:

The Minister can only use this power to request information that is in the control of a manufacturer, importer or distributor. This power cannot be used to require them to create new information in response to the Minister’s request. The decision to compel information through IO No. 2 must be reasonable, factual, and flow logically from the signals available to the Minister. These signals may include complaints, media reports, shortage reports or knowledge of broader supply chain issues. Industry, provinces and territories, or other stakeholders may also identify potential indications of shortages.

A manufacturer, importer or distributor required to provide information must do so electronically in a format that is specified by, or acceptable to, the Minister. The required information is to be submitted within the time frame specified by the Minister. However, the Minister cannot require the information to be submitted with less than 24 hours’ notice, unless the Minister has reasonable grounds to believe there is a serious and imminent health risk. Details on the process for providing information, and the types of information that may be requested, have been provided to industry through the guidance document on medical device shortages.

Enforcement and Compliance

Enforcement of IO No. 2 takes place through inspection, compliance promotion, monitoring and verification. Health Canada will continue to conduct compliance promotion sessions with regulated parties to increase their understanding of their new obligations and to minimize non-compliance.

Health Canada has a number of enforcement powers available to address non-compliance with the Food and Drugs Act or an issue of public health and safety. Actions that could be taken against regulated parties violating the terms of the IO include:

Health Canada will choose the most appropriate tool to help ensure compliance and to mitigate any risks to health. Our decision is informed by the specifics of each case and aligns with the compliance and enforcement policy framework and the compliance and enforcement policy for health products (POL-0001).

Consultations

Health Canada received comments on IO No. 1 through ongoing discussions with stakeholders, industry conferences and two focused stakeholder engagement sessions on June 4, 2020, and September 3, 2020. These comments were generally supportive. Stakeholders understood the need to continue the frameworks and authorities put in place through IO No. 1. The department sought to accommodate stakeholder feedback on IO No. 2 where possible.

Some stakeholders wanted more clarity on how the interim policy previously used to import disinfectants and hand sanitizers would change. IO No. 2 clarifies our approach to these products by placing the agile regulatory measures previously offered through the interim policy in a more formal framework based on a list incorporated by reference. Some stakeholders also raised concerns that the shift from the interim policy to the new framework in IO No. 2 will now only encompass disinfectants that are imported and are not available to Canadian manufacturers. However, Health Canada continues to offer other agile measures to Canadian manufacturers such as expediting review times for product applications that only contain direct or indirect SARS-CoV-2 claims.

Other concerns raised by biocide stakeholders included:

IO No. 2 addresses some of these concerns. It clarifies that importers must make information that permits the safe use of a product available in both French and English and in a manner that is accessible to consumers.

Medical device stakeholders wanted greater clarity about Canadian shortage reporting requirements. IO No. 2 clarifies the reporting requirements by specifying that shortages should be based only on the manufacturer’s own capacity, supply and orders, and do not include situations in which the manufacturer produces another device that can be substituted for the device in shortage. In addition, IO No. 2 excludes the reporting of backorders that are less than 30 days. These changes also bring Canadian requirements into closer alignment with the U.S.

The expanded authority to request information related to medical device shortages has been designed to address stakeholder concerns by specifying that the Minister can only request information that is in the control of the manufacturer, importer or distributor so that this power cannot be used to require them to create new information. As well, a provision was added that specifies the Minister can only compel information if there are reasonable grounds to believe that the manufacturer, importer or distributor would not provide the information without a legal obligation. Additionally, a minimum timeline of 24 hours for information requests, unless there is a serious and imminent risk of injury to human health, has been included in the IO No. 2.

In January and February 2021, Health Canada consulted on IO No. 2 with a range of stakeholders, including:

Sessions focused on how IO No. 2 differs from IO No. 1 and how the authorities will be used in the future.

Health Canada also accepted written comments from stakeholders between January 22, 2021, and February 11, 2021. Stakeholders were largely supportive of IO No. 2 and the proposed changes from IO No. 1. A small number of stakeholders consider the new requirement for information to be made available in French and English to be burdensome. However, most stakeholders did not indicate it would impact their choice to make use of the exceptional importation frameworks.

In general, stakeholders indicated that the tools in IO No. 2 were effective in helping to address shortages. They did not raise significant concerns.

Health Canada has been in contact with representatives of provincial and territorial governments and other stakeholders, such as health care providers and patient advocacy groups. They are supportive of IO No. 2 and its measures to address shortages of drugs, biocides, medical devices and foods for a special dietary purpose in light of the current COVID-19 global pandemic.

Contact

Catherine Hudon
Director, Compliance Policy and Regulatory Affairs
Policy and Regulatory Strategies Directorate
Regulatory Operations and Enforcement Branch
Health Canada
Address Locator: 1907A
200 Eglantine Driveway
Jeanne Mance Building
7th Floor, Room 705A
Tunney's Pasture
Ottawa ON  K1A 0K9
Tel: 343-540-8524

Email: hc.prsd-questionsdspr.sc@canada.ca
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