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Draft for consultation: Guide to safety stocks

This page is for consultation purposes only and may change. Learn about the consultation and how to provide your feedback. The consultation closes on March 8, 2025.

Disclaimer: This document does not constitute legislation. In the event of any inconsistency or conflict between the legislation and this document, the legislation takes precedence. This document is an administrative document that is intended to facilitate compliance by the regulated party with the legislation and the applicable administrative policies.

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Overview

Introduction

Health Canada is responsible for helping people in Canada maintain and improve their health. This is done, in part, through our commitment and actions to help address and mitigate the harm to public health caused by drug shortages. Our goal is to help ensure that people in Canada have access to the drugs they need when they need them.

Market authorization holders (MAHs) are required to hold safety stock in Canada for select drugs for which a shortage could present a serious and imminent risk of injury to human health. This requirement is laid out in sections C.01.014.82, C.01.014.83, C.01.014.84 and C.01.014.85 of the Food and Drug Regulations (FDR) (Safety Stock Provisions). The select drugs are included in the List of Drugs for the Purposes of Section C.01.014.84 (Safety Stock List).

Learn more about drug shortages and the roles of various stakeholders in addressing them.

Purpose

This guidance document will help MAHs understand how to comply with the Safety Stock Provisions by outlining:

Scope

Safety stock requirements apply to drugs, identified by their drug identification number (DIN), that are on the Safety Stock List.

Health Canada developed this list for drugs for which a shortage could present a serious and imminent risk of injury to human health.

Health Canada interprets a serious and imminent risk of injury to human health due to a shortage as the likelihood that interruption, lack or delay of treatment due to a shortage could imminently cause serious harm to human health.

Elements that determine the seriousness of the harm caused by interruption, lack or delay in treatment due to a shortage include, but are not limited to, an injury that:

The imminent condition is met when the harm is caused immediately by the interruption, lack or delay of treatment due to a shortage, regardless of when the harm is detected. Elements that are used to determine imminent risk include, but are not limited to, the following:

Sex- and gender-based analysis plus (SGBA Plus): Advancing equity, diversity and inclusion

Health Canada has a formal, corporate commitment to applying a sex- and gender-based analysis plus (SGBA Plus) approach to develop, implement and evaluate our activities. This includes our research, surveillance, legislation, policies, regulations, programs and services. This is in keeping with the federal government's commitment to gender-based analysis plus (GBA Plus).

The SGBA Plus process is an intersectional approach to assess how a range of factors interact and intersect with each other and broader systems of power. Examples of factors are sex, gender, age, race, ethnicity, socioeconomic status, disability, sexual orientation, cultural background, migration status and geographic location.

Conducting this analysis helps us to understand how intersecting identity factors, histories, power relations, distribution of resources and individuals' lived realities contribute to differences in accessing health-related resources and health outcomes. By applying SGBA Plus, we can engage in responsive and inclusive health research and develop policies, services, programs and other initiatives to promote greater health equity.

When engaging in this regulatory framework, we encourage you to conduct an SGBA Plus analysis and also take necessary steps to mitigate any possible negative impacts on particular groups.

Learn more about SGBA Plus analysis and assessment:

Note about guidance documents in general

Guidance documents provide assistance to industry on how to comply with governing statutes and regulations. They also provide guidance to Health Canada staff on how mandates and objectives should be met fairly, consistently and effectively.

Guidance documents are administrative, not legal, instruments. This means that Health Canada may consider alternative approaches to meeting the regulatory requirements that stakeholders may propose. However, to be acceptable, alternate approaches to the principles and practices described in this document must be supported by adequate justification. Stakeholders should discuss their proposals with Health Canada in advance so that the regulator can determine whether the applicable statutory or regulatory requirements can be met.

In accordance with its regulatory authorities and its mandate under the Food and Drugs Act, Health Canada may request other information or material, or define conditions not specifically described in this document, to help us adequately assess the safety, efficacy or quality of a therapeutic product. We are committed to ensuring that such requests are justifiable and that decisions are clearly documented.

This document should be read in conjunction with the relevant sections of the regulations and other applicable guidance documents.

Responsibilities of regulated parties and Health Canada

Responsibilities of MAHs

MAHs are responsible for:

Responsibilities of Health Canada

Health Canada is responsible for:

We conduct compliance and enforcement activities related to these regulatory requirements as per our Compliance and enforcement policy for health products (POL-0001).

Understanding the regulations

What is safety stock

Safety stock is extra inventory kept on hand to protect against drug shortages and the harm they pose to public health. This inventory helps prevent shortages when demand exceeds forecasted demands and inventory, or when there are delays or disruptions in receiving stock.

Maintaining safety stock helps MAHs continue to fulfill customer orders so that people in Canada are not harmed by a shortage. This way, safety stocks also protect people in Canada by helping to prevent and mitigate drug shortages that could present a serious and imminent risk of injury to human health.

Safety stocks must be stored in Canada.

We recommend that MAHs rotate safety stock to ensure that inventory does not expire.

Determining which drugs require safety stock

The Safety Stock List identifies drugs by their drug identification number (DIN). It is the MAH's responsibility to determine if they market a drug (DIN product) included on the list.

MAHs are required to maintain safety stock for all of the drugs that they market that are included on the Safety Stock List, unless the exemption in subsection C.01.014.84(2) applies because of a shortage of the specified drug.

Health Canada develops and maintains the Safety Stock List in consultation with the public and stakeholders. A drug can be included on the list if all three pre-conditions are met. That is, there are reasonable grounds to believe that:

The Safety Stock List is divided into 2 parts:

Changes are made to the Safety Stock List following stakeholder consultation. This is in line with Health Canada's Incorporation by reference policy. MAHs are strongly encouraged to participate in the consultation process. Health Canada incorporates information from stakeholder consultation when determining whether a drug should be held in safety stock.

When Health Canada makes amendments to the list, MAHs will be given sufficient time to come into compliance with their new stockholding obligations.

MAHs may wish to submit information to Health Canada that could inform the decision to add a drug to Part 1 or Part 2 of the list. This includes:

We look at a number of factors when determining whether a different quantity of safety stock must be held, such as:

Written requests can be submitted by email to Drug.shortages-Penurie.de.medicament@hc-sc.gc.ca.

Amount of safety stock to be held

For drugs on Part 1 of the Safety Stock List

Three months of safety stock is required for each drug included on Part 1 of the Safety Stock List. MAHs must calculate this amount based on the total quantity of the drug sold in Canada during the previous calendar year using the following formula:

  • Quantity to be contained in safety stock = (A/12) × 3
  • A = the total quantity of the drug that the MAH sold in Canada in the previous calendar year

Example: The company sold 12,000 units last year. Therefore, the value of A in the formula would be 12,000 units.

  • Quantity to be contained in safety stock = (12,000 units/12) × 3
  • = 3000 units must be held in safety stock

A visual example of Part 1 is provided in Table 1.

Table 1: Visual example of Part 1 of the Safety Stock List
Part 1: Drugs for which a 3-month safety stock is required
Drug identification number Brand name of drug, medicinal ingredients(s) Manufacturer name Dosage form, strength, route(s) of administration
01234567 Drug C Drug company C Tablet, 150 mg, Oral

For drugs on Part 2 of the Safety Stock List

The amount of safety stock required is based on the specific situation for each drug listed on Part 2 of the Safety Stock List using the following formula:

  • Quantity to be contained in safety stock = (A/B) × C
  • A = the total quantity of the drug that the MAH sold in Canada during the reference period set out in column 1 of Part 2 of the Safety Stock List
  • B = the reference period for the drug (column 1 of Part 2 of the Safety Stock List)
  • C = the total number of months of safety stock that is required (column 2 of Part 2 of the Safety Stock List)

Example: The company sold 12,000 units during the reference period of April 2024 to July 2024. Therefore, the value of A in the formula would be 12,000 units.

Health Canada determines the values of B and C when a drug is added to Part 2 Safety Stock List. For this example, Health Canada determines that:

  • B = 4 months (number of months of the reference period in column 1)
  • C = 2 months (column 2)
  • Quantity to be contained in safety stock = (A/B) × C
  • = (12,000 units/4 months) × 2 months
  • = 6,000 units must be held in safety stock

A visual example of Part 2 is provided in Table 2.

Table 2: Visual example of Part 2 of the Safety Stock List
Part 2: Drugs for which different variables to calculate the quantity of safety stock required

Column 1

New reference period (number of months)

Column 2

Total number of months of stock to be held

 Drug identification Number Brand name of drug, medicinal ingredients(s) Manufacturer name Dosage form, strength, route(s) of administration
April to July, 2024 2 07654321 Drug A Drug company A Tablet, 80 mg, Oral

Note: Health Canada determines the values in columns 1 and 2 of Part 2 of the Safety Stock List when a drug is added to this part of the list. The values may be amended as part of the stakeholder consultation process. MAHs may submit information to Health Canada that supports the determination of the appropriate reference period and stock amount if information about the drug and demand for the drug changes after the consultation has occurred.

Using safety stock

MAHs are expected to be able to meet demand without using safety stock. When rotating safety stock, new supply must be available before older supply is sold. Safety stock is considered a buffer supply and may only be used when there's an actual or anticipated shortage.

Once an actual or anticipated shortage is reported, an MAH may use the safety stock to prevent or mitigate the shortage. We recommend that companies include comments in their report about the use and availability of safety stock for all applicable shortages.

All actual shortages and anticipated shortages must be reported on Drug Shortages Canada. There has to be an actual or anticipated shortage of the drug before using safety stock.

For more information on shortage reporting, consult:

Once an MAH can meet demand without using safety stock, the shortage report should be marked "resolved". The safety stock must be replenished in full as quickly as possible.

Providing information on safety stock to Health Canada

Record keeping requirements

MAHs for drugs that are on Part 1 or Part 2 of the Safety Stock List are required to maintain an annual record. This record must contain the following information for each month of the previous year:

MAHs must retain all records for at least 3 years after the day on which they were created.

As per paragraph C.01.014.81(1)(d) of the FDR, MAHs must also establish and maintain shortage prevention and mitigation plans (SPMPs) that include a detailed description of how they are complying with safety stock requirements, if applicable.

For more information on what should be included in shortage prevention and mitigation plans, consult:

Definitions

Drug establishment licence (DEL):

A licence issued to a person in Canada pursuant to Division 1A of the FDR to conduct licensable activities in a building that has been inspected and assessed as being in compliance with the requirements of Divisions 2 to 4 of the FDR, as applicable.

Drug identification number (DIN):

A computer-generated 8-digit number assigned by Health Canada to a drug upon market authorization under subsection C.01.014.2(1) of the FDR.

This number uniquely identifies each drug under the regulations that is sold in a dosage form in Canada. It is located on the package label of prescription and non-prescription drugs that have been evaluated and authorized for sale in Canada.

A DIN uniquely identifies the following characteristics:

  • product name
  • manufacturer name
  • active ingredient or ingredients
  • strength of active ingredient or ingredients
  • dosage form
  • route or routes of administration
  • species (for veterinary drugs only)
Incorporation by reference:

A term used to describe a mechanism, which allows a document or list that is not in the text of the regulations, in whole or in part, to be made a part of the regulations. Health Canada uses incorporation by reference to:

  • achieve policy and regulatory objectives
  • leverage existing documents and
  • maintain agile regulatory frameworks that can more quickly adapt to changes in science or technology or in response to an emerging health or safety risk

Incorporation by reference can also be used to align with provincial and territorial regulations and to achieve international cooperation on matters of trade, without compromising health and safety.

Manufacturer or distributor:

A person, including an association or partnership, who under their own name, or under a trade, design or word mark, trade name or other name, word or mark controlled by them, sells a food or drug. (FDR, A.01.010)

Market authorization holder (MAH):

Refer to manufacturer or distributor definition.

Person:

An individual or an organization as defined in section 2 of the Criminal Code.

Shortage:

In respect of a drug, a situation where the manufacturer to whom a document was issued under subsection C.01.014.2(1) that sets out the DIN assigned for the drug is unable to meet the demand for the drug in Canada. (FDR, C.01.014.8 (2))

Shortage prevention and mitigation plans (SPMPs):

Plans that aim to prevent the occurrence or mitigate the impact of drug shortages by identifying, assessing and taking measures to prevent or mitigate the shortage risks associated with a drug.

Resources

Legislation and regulations

Web pages and associated documents

Contact us

Contact the Health Product Shortages Directorate by email at hpsdpdcorr-corrdgppsdp@hc-sc.gc.ca.

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