2014 Review of the Fees in Respect of Drugs and Medical Devices Regulations

October 31, 2014

All inquiries should be directed to CRI_IRC_consultations@hc-sc.gc.ca

Table of Contents

List of Tables

List of Performance Standard Tables

List of Figures

Appendices

1. Executive Summary

Health Canada (HC) is the federal authority responsible for regulating the safety, efficacy, and quality of human drugs and medical devices, as mandated by the Food and Drugs Act.

In April 2011, the Fees in Respect of Drugs and Medical Devices Regulations came into force, marking the first update to user fees for activities conducted under the Human Drugs and Medical Devices Programs since the 1990s. When the revised fees were implemented, HC committed to reviewing its fees and costs for services after three years, as well as comparing its service standards to those of similar international regulatory authorities. This document fulfills that commitment.

Fees were adjusted to better reflect the costs of delivering regulatory programs. The original revenue projections in the User Fee Proposal predicted a 50% recovery of costs. However, projected revenues of $88M in 2013-14 represent only 43% of drug and medical device regulatory activity costs. This is an increase over the 28% recovered in the last year (2010-11) before fees were revised and has resulted in industry paying a more appropriate share of the costs and reducing the reliance on taxpayer dollars.

The increase in revenues has allowed HC to invest in its IM/IT infrastructure, and improve its business processes, such as:

  • leveraging the United States' Food and Drug Administration's (FDA) eSubmission Gateway to allow industry to submit their applications electronically;
  • continuing cooperation with other regulatory authorities to improve review processes for applications and inspections;
  • implementation of an electronic reporting system for adverse event reporting; and
  • significant improvements in data gathering capacity to support costing efforts and alignment with financial management systems.

HC has also strengthened its scientific capacity and human resource complement with the increased revenues, which has facilitated improvements in performance. The addition of 235 resources, including 90 inspectors across the regions and doubling the chemistry review capacity for generic pharmaceutical drug submissions, has helped eliminate backlogs, including drug establishment inspections and drug submission evaluation. These investments are reflected in an increase in reported costs from $172M in 2010-11 to a projected $206M for 2013-14.

In the original User Fee Proposal, cost-sharing ratios were established based on the calculated public / private benefits of the related activities, applied to unit costs to set fee amounts which were then used to forecast revenue based on anticipated workload. After considering anticipated mitigation measures, the original proposal projected to recover approximately 50% of all applicable costs from user fees and the balance from appropriations. The expected balance was not realized as revenues currently represent approximately 40% of all associated costs, mainly due to lower revenues having been received than originally projected.

Under the new fee regulations, the threshold for qualifying for mitigation measures changed, and fee remission amounts totalled approximately $22M (or 20% of revenue) in 2013-14. Fee deferrals were a new measure intended to reduce the financial burden for start-up companies, however they are challenging from an administrative and financial management perspective, requiring ongoing verification and adjustments across fiscal years. This completely new mitigation measure resulted in almost $5M in revenue being deferred in 2013-14, a substantially higher amount than originally projected. Fee mitigation has proven to have had a significant impact on budget management and anticipated revenues. Revenue forecasts are now more accurate, allowing for programs to ensure the appropriate allocation of resources. For example, the 2011-12 DPR forecasted $83.3M revenue for 2012-13, and HC collected $81.8, demonstrating 98% accuracy. Efforts are ongoing to fine tune forecasting approaches.

The vast majority of regulated parties pay their user fees and pay in a timely manner; however there are instances in which companies fail to pay. Additionally, HC only has authority to revoke a market authorization/establishment licence/site licence when there is a health and safety risk, while other regulating authorities have the authority to legally withhold services if fees are not paid.

The timing of collection of some fees has resulted in fluctuations in the reporting of revenue for establishment licenses. As revenues cannot be carried over between fiscal years, there are challenges associated with revenues arriving at the end of the fiscal year. The timing of payment schedule is not consistent across all fee lines and some fees are collected in a different fiscal year than the year in which the work was completed. For example, in the case of Establishment Licences payments are due March 31 of every year. In 2012, this resulted in approximately $5M of revenue being received after March 31, but linked to licenses from the previous fiscal year (e.g. 2011-12). This situation repeated itself with a greater impact in 2012-13 with $9M collected in the subsequent fiscal year.

With the exception of three generic submission fee lines in 2012-13, HC had met all performance standards for both drug and medical device fees since fees were revised. As per the User Fees Act (UFA), the consequence for a missed standard is a reduced user fee. As a result, reduced user fees are expected to result in a $1.9M reduction of revenue in 2013-14, and $2.7M in 2014-15. Through increased targeted resources and improved business processes, HC was able, in November of 2013, to eliminate the generic drug review backlog that led to missed performance standards.

Workloads are slowly increasing in many areas (both cost recovered and non-cost recovered), and use the same resources. There are increasing instances where submissions are becoming more complex, include multiple indications, dosage forms and strengths in a single application, contain more clinical trial data, and require a greater level of effort to review. In addition, novel technologies and products are emerging that blur the existing boundaries between medical devices, drugs and biologics and represent a number of challenges for pre-market review. Overall performance, while currently within standards, is expected to become challenging.

Within the broader regulatory environment, there are new and expanding activities being delivered and deliberated, where new fees may be appropriate for consideration such as Active Pharmaceutical Ingredients inspections. Further, some existing fee structures like Drug Establishment Licensing (DEL) are very complicated and may benefit from revision. As part of this review HC also reviewed the service standards of other international jurisdictions (United States, European Union, United Kingdom, and Australia). These same jurisdictions were also reviewed in 2007. A comparison of Canadian service standards to international counterparts is possible only at a high level as legislation, cost recovery approaches, and regulatory organization structures differ across jurisdictions. In general, HC has performance targets that remain internationally comparable, as they were in 2007.

The Department will continue its analysis of drug and medical device activities and fees, and efforts will continue to improve service delivery, identify efficiencies and refine processes, with the goal of developing a modernized cost recovery framework.

2. Introduction and Overview

In April 2011, the Fees in Respect of Drugs and Medical Devices Regulations (Regulations) came into force, marking the first update to fees for activities conducted under the Human DrugsFootnote 1 and Medical Devices Programs (Programs) since the 1990s. In developing the new Regulations, HC committed to review its fees and costs for services every three years, as well as to compare its service standards to those of similar international regulatory authoritiesFootnote 2Footnote 3.

This document fulfills HC's commitment and also highlights the successes and challenges that HC has experienced during this implementation period. The following sections of this review provide an analysis of costs, revenues, and operational performance by product line for three fiscal years (2011-12 through 2013-14).

2.1 Background

HC is the federal authority responsible for regulating the safety, efficacy, and quality of human drugs and medical devices, as mandated by the Food and Drugs Act. Pursuant to this legislation, generally drugs and medical devices must be evaluated to assess their benefits and risks before HC authorizes their sale on the Canadian market. HC also monitors, assesses (evaluates), and issues establishment licenses and risk manages marketed health products. In undertaking these regulatory activities, HC is committed to protecting and promoting the health and safety of Canadians.

In the 1990s, HC began charging fees for certain activities; fees were established for regulatory activities related to human drugs in 1995 and for medical devices in 1998. Canada is not alone in this approach. In fact, all comparable international regulators charge fees for such services, as private industry gains significant financial benefit if their products are approved for sale. Over time, however, the fees that regulators charge must be adjusted to account for changes in service delivery and operational costs. Furthermore, when fees represent an appropriate proportion of program costs, regulators are better able to maintain a consistent level of service to industry, while also ensuring that citizens have access to advanced medications and treatments.

Cost recovery is one pillar in HC's funding profile, next to appropriations, that helps support the sustainability of the human drugs and medical devices programs. Upon original implementation, user fee revenues represented approximately 50% of HC's regulatory costs. However, by 2007-08 user fee revenues accounted for only 28% of HC's human drugs and medical devices costs. While revenues had remained relatively stable, costs had continued to increase, primarily due to significant increases in operating expenses including resources to address emerging crises, program evolutions in areas like pharmacovigilance and compliance and enforcement, rising submission volumes and increasing submission complexity. This shift limited HC's ability to hire additional staff which in turn resulted in backlogs for many submission types and delayed public access to new and innovative therapies. The insufficient funding also restricted HC from making much needed investments in its IT infrastructure and business processes.

In 2004, HC initiated a project to update its user fees in line with the requirements set out in the newly enacted UFA.

UFA:

The UFA provides a legislative framework for the establishment and reporting of user fees within the federal government. Departments who are charging user fees that are subject to the UFA are required to report annually on revenues, costs associated with activities, and performance against defined standards.

In setting user fees, federal departments must carry out consultations with stakeholders, including clients and other regulating authorities with a similar clientele before tabling a proposal in each House of Parliament.

In accordance with departmental and Treasury Board Secretariat guidance documents on costing, HC developed a costing model to be used to update its fees. The model was developed by a third party, and incorporated information from HC's financial and time reporting systems in use at the time. The model included all direct and indirect costs, such as salary, operating, accommodation and corporate costs. Unit costs were determined using either an hourly rate or program-related costs, depending on the data available. These unit costs were then used to establish fee amounts for a user fee proposal. Due to the interval between collecting the financial data and writing the proposal, costs were adjusted by a factor to reflect the projected increase.Footnote 4

As per the UFA, HC consulted with stakeholders, including industry, health professionals, and patient and consumer groups in 2007. Additionally, HC established independent advisory panels to address complaints. More than two additional years passed before the proposal was tabled in Parliament in 2010, and implemented via regulation on April 1, 2011.

2.2 Fee Line Activity Overview

User fees are collected for six main activities/fee lines, including: (1) Drug Evaluation, (2) Medical Device Evaluation, (3) Drug Right to Sell, (4) Medical Device Right to Sell, (5) DEL, and (6) Medical Device Establishment Licensing. A description of each of these activities/fee lines is provided in Table A below:

Table A - Fee Line Activity Descriptions:
Activity/Fee Line Description
(1) Drug Evaluation (DEVAL) and (2) Medical Device Evaluation (MDEVAL) DEVAL and MDEVAL is the evaluation of manufacturer submissions for human drugs (biologic and pharmaceutical) and medical devices. These activities help in assessing the safety, efficacy, and quality of a product for a specific use prior to its marketing in Canada.
(3) Drug Right to Sell (DRTS) and (4) Medical Device Right to Sell (MDRTS) DRTS and MDRTS include activities related to authorizing a manufacturer to begin or continue to sell an approved or licensed health product in Canada. User fees associated with these activities help support post-market surveillance, adverse drug reaction monitoring, and compliance and enforcement actions.
(5) Drug Establishment Licensing (DEL) and (6) Medical Device Establishment Licensing (MDEL) DEL and MDEL include activities related to license processing (initial processing, annual reviews, and amendments) and inspection. User fees in these two areas help support processing of establishment licensing applications, inspections and compliance assessments for industry facilities that engage in the fabrication, importation, distribution, packaging, labeling, and testing of drugs and medical devices.

Under the different fee lines there are various classes of submissions or types of applications. Under the Evaluation (EVAL) fee lines, each submission class or type of application has its own fee and performance standard. For example, the DEVAL pharmaceutical evaluation fee line covers 39 different fee types and classes; the DEVAL biologics evaluation fee line covers 12 different fee types and classes; and the MDEVAL medical device evaluation fee line covers 10 different fee classes. The DEL fee line covers five activities with a component-based fee structure.

As per the reporting requirements of the UFA, HC reports actual costs and revenues for each fee line in the annual Departmental Performance Report (DPR), along with performance against specific service standards (refer to Appendices A and B).

3. Financial Overview

As anticipated, both costs and revenues have increased since the fees were revised, but the amount of the increase varies across different fee line activities. For example there are areas that have experienced challenges from a cost perspective (i.e., non-payment, and costing limitations), whereas other areas have confronted more challenges from a revenue standpoint (i.e., forecasting and fee mitigation).

Table B illustrates the costs and revenues published in the HC DPR for the year before the fees were revised (2010-11) and the subsequent years under the revised fees. Costs include all activities deemed relative to that particular fee line, including indirect and corporate costs. Revenues reflect monies received in that fiscal year.

Table B - Costs Table B footnote T and Revenues in $000 (as published in Departmental Performance Reports)
Fee Line 2010-11 Actual 2011-12 Actual 2012-13 Actual 2013-14Table B footnote * Projected

Table B footnotes

Table B footnote 1

Calculated based on expenditures

Return to table B footnote T referrer

Table B footnote 2

2013-14 shows forecast revenue projections as published in 2012-13 DPR

Return to table B footnote * referrer

DEVAL Cost $79,367 $79,625 $86,684 $88,418
Revenue $22,657 $29,487 $38,955 $38,095
% Cost Recovered 29% 37% 45% 43%
MDEVAL Cost $11,684 $17,932 $16,131 $16,454
Revenue $4,025 $6,166 $6,313 $6,840
% Cost Recovered 34% 34% 39% 42%
DRTS Cost $47,205 $56,698 $52,522 $53,572
Revenue $7,615 $9,248 $10,287 $10,312
% Cost Recovered 16% 16% 20% 19%
MDRTS Cost $7,378 $11,265 $11,069 $11,291
Revenue $2,662 $6,817 $8,308 $8,547
% Cost Recovered 36% 61% 75% 76%
DEL Cost $20,297 $27,880 $24,219 $24,703
Revenue $7,875 $13,851 $11,363 $15,107
% Cost Recovered 39% 50% 47% 61%
MDEL Cost $6,089 $10,151 $11,460 $11,689
Revenue $4,115 $8,242 $6,622 $9,404
% Cost Recovered 68% 81% 58% 80%
Total Cost $172,020 $203,551 $202,085 $206,127
Total Revenue $48,949 $73,811 $81,848 $88,305
% of Total Cost 28% 36% 41% 43%

In 2010-11, prior to the implementation of the revised fees in April 2011, HC collected $49M in revenue for cost recovered activities related to drugs and medical devices. The first year with the new fees saw revenues increase to $74M in (2011-12), and continue to increase to a projected $88M in (2013-14). As anticipated, total program costs for regulatory activities has increased. Based on projected costs and revenues, the original fee proposalFootnote 5 anticipated HC could recover approximately 50% of costs from industry user fees and the remainder from appropriations. While the implementation of the revised fees has led to a significant increase in revenues collected, HC has not achieved that expected balance. Revenues represent just over 40% of all costs, and vary significantly across fee lines, ranging from 20% to 75% for 2012-13.

In the original User Fee Proposal, cost-sharing ratios were established based on the calculated public / private benefits of the related activities. These original ratios were used to set the appropriate fee amounts for each individual fee by applying them to the unit costs for each fee line. For EVAL fees, a ratio of 25% public benefit and 75% private benefit was used, for Right to Sell (RTS) fees a 50-50 split was used; and for establishment licensing (EL) the fee-setting ratio was 85% private for medical devices and 100% private for drugs. The percentage cost recovered as indicated in Table B reflects the comparison of total revenue received in a fiscal year against the expenditures for the related activities.

While the User Fee Proposal had originally projected total costs of $228M and revenues of $112M, these amounts were adjusted during the regulatory development phase based on clarification of activities and workload projections.

The 2% adjustment provision in the fee regulations has been published annually in the Canada Gazette Part I and implemented effective April 1st of every year since 2011. While this has contributed to slightly increased revenues since implementation, HC has had to manage financial pressures from government wide operating reductions, resulting in ongoing funding challenges and adjustments. Additionally, incidents regarding influenza pandemics, drug shortages and other public health concerns have emphasized the public's expectation for an immediate response to complaints and/or safety issues. This expectation and the resulting commitment of resources can have a significant impact on funding pressures.

3.1 Costs

As was anticipated, the costs reported for all fee lines increased in the first year of implementation in 2011-12 (see Table B). This increase primarily reflects the addition of 235 resources, implementation of IT projects and expansion of program delivery that was expected with the increase in revenue.

3.1.1 Enhanced Costing Efforts

Since revising fees, HC has reviewed the original costing efforts to enhance how costing data is collected and allocated to program activities. Previously, data had been collected and collated using a cumbersome manual process as system data were unavailable in a convenient or consistent manner.

In response, HC has significantly increased its data gathering capacity and is using a more integrated approach to determine costs for individual program activities. HC launched a branch-wide tracking system (the Cross Application Timesheet - Project System; CATS-PS) to collect level of effort data. This system allows both direct program costs (e.g. reviewer's salaries) and indirect program costs (e.g. management, policy and planning, audit and evaluation) to be assigned to activities based on their use of resources. Additionally, in 2011, a detailed activity structure was developed and implemented to provide consistent definitions of key activities to allow for costs to be compared across programs and product lines. The information contained in both the activity structure and time tracking systems are aligned with the data in SAP, (the Departmental Financial System), which allows for a more accurate mapping. Moving forward, the information from these structures and systems will be used to validate and revise fees; to support costing efforts for other activities such as Treasury Board submissions; as well as to support reporting requirements.

3.1.2 Impact of Non-Payment

While the vast majority of regulated parties pay their user fees and pay on time, sometimes companies fail to pay. This leads to HC having cost recoverable expenditures for which revenues are not being collected.

HC only has authority to revoke a market authorization/establishment licence/site licence when there is a health and safety risk. Other regulating authorities (e.g., the United States Food and Drug Administration (FDA), Australia Therapeutic Goods Agency (TGA), and the European Medicines Agency (EMA) are legally able to withhold services if fees are not paid.

3.2 Revenue

The original revenue forecast for 2011-12 under the revised fees was $112M. However, only $74M was collected that year, almost 34% less than the expected amount. Forecasts made in 2007 were based on trends from previous years, as well as a projected 15% growth in overall submissions and applications. However, the recessionary events of 2008-09 significantly impacted the health product industry. The growth did not materialize, especially for projected ELs, and there was a downturn in the number of submissions received from industry.

Additionally, changes in the fee structure for submissions (moving from a component-based fee to a single flat fee based on submission types and timing of payments) may have resulted in higher revenue projections. For ELs, timing of fee payment has had a significant impact on the reporting of revenue, with activities and related fees often crossing fiscal years. A similar situation occurred for DEVAL, as some of the revenue received in 2011-2012 still reflected fees being charged under the old fee framework for submissions already under review. This resulted in an increase in revenue in 2011-12 but not as great as expected, with another significant increase in 2012-13 once all submissions received were under the new fee regulations.

As a result of these outliers, 2012-13 will be considered the baseline year that represents revenues received under the new Regulations, whereas 2011-12 represented the transition year in implementing the new fees.

HC has since enhanced its forecasting models used to project revenues and manage workload. Models now include:

  1. use of an industry environmental scan to detect changes in industry's business models that may impact submission volumes;
  2. use of data from members of key drug industry associations (known as drug pipeline data); and
  3. modelling that identifies correlations among the fee types/classes, and identifies likely trends in several submission classes. Forecasts are now more accurate, allowing for programs to ensure the appropriate allocation of resources. For example, the 2011-12 DPR forecasted $83.3M revenue for 2012-13, and HC collected $81.8, demonstrating 98% accuracy. Efforts are ongoing to fine tune forecasting approaches. Generally, a more stable and predictable trend of revenues are anticipated, based on full implementation of the revised fees and improved forecasting.

As revenues cannot be carried over between fiscal yearsFootnote 6, there are challenges associated with revenues arriving at the end of the fiscal year. Thus, some fees may be collected in a different fiscal year than the year in which the work was done. This is especially relevant for ELs, where payments are due March 31 of every year, the last day of the federal government's fiscal year. In 2012, this resulted in approximately $5M of revenue being received after March 31, but linked to licenses from the previous fiscal year (e.g. 2011-12). This situation repeated itself with a greater impact in 2012-13 with $9M collected in the subsequent fiscal yearFootnote 7. As an additional example, for many submission evaluation fees, 75% of the fee must be paid at the beginning of the review process and 25% when the final review is completed (this can often cross over into the next fiscal year). This poses an administration burden for both industry as well as HC. Other regulatory agencies, such as the FDA and the European Medicines Agency (EMA), collect 100% of the fee at the time of receipt of the submission or application. A summary of when the different fees are invoiced and collected is presented in Table C.

Table C - Timing of Payment Schedule
Fee Line Invoicing Collections
DEVAL Ongoing Ongoing
MDEVAL Ongoing Ongoing
DRTS October Primarily October/November
February for deferred fees Primarily February/March
MDRTS December/January Primarily January to March
DEL After receipt of application Ongoing annual renewal applications and payments are due on or before March 31.
MDEL After receipt of application Ongoing annual renewal applications and payments are due on or before March 31.

3.3 Fee Mitigation

Since the implementation of user fees in the 1990s, HC's approach to fee mitigation has focused on facilitating the availability of health products to Canadians, and encouraging innovation and access to new products. There are two forms of fee mitigation measuresFootnote 8 currently available to industry: remission and deferral. Generally, remission under the fee regulations is granted when a user fee exceeds a certain percentage of an applicant's gross revenue based on sales in Canada over a specific period of time (the fee verification period) as defined in the Regulations. A deferral under the fee regulations is granted if the applicant has not completed their first full fiscal year on the day on which they file a submission or make their application. Under the new fee regulations, the threshold for qualifying for mitigation changed for most of the fee lines. Fee deferrals were a completely new mitigation measure, making it more challenging for HC to accurately predict how many companies and products would qualify.

All fee mitigation has an impact on budget management and anticipated revenues, due to potential fluctuations in uptake that require ongoing verification and adjustment throughout the fiscal year. While the authority is provided for in the fee regulations, there is currently no established process to audit mitigation requests.

Appendix C provides a summary of all mitigation measures and requirements by fee line.

3.3.1 Fee Remission

Fee remission under the fee regulations is based on either a percentage of a company's gross revenue and/or product sales, or is a flat fee. The threshold applied to qualify for a remission differs across the fee lines ranging from 1 to 10%, and some areas require a fee for processing the remission. As illustrated below in Table D, the actual impact on revenue has increased to 20%, with approximately $22M being remitted in 2013-14.

Table D - Remissions by Fee Line Activity
Remission 2011-12 2012-13 2013-14
$ remitted % of revenue $ remitted % of revenue $ remitted % of revenue
DEVAL $110,809 <1% $411,407 1% $99,445 <1%
MDEVAL $136,853 2% $270,128 4% $210,600 3%
DRTS $3,437,969 27% $4,000,554 25% $4,246,334 25%
MDRTS $2,343,880 26% $2,941,174 25% $3,335,602 27%
DEL $1,420,750 9% $1,615,180 10% $2,173,412 15%
MDEL $4,562,381 36% $4,408,768 36% $12,004,643 53%
Total $12,012,641 14% $13,647,211 12% $22,070,036 20%

Annual licencing fees for both products and establishments have resulted in a greater percentage of remissions than product evaluation fees, where only a handful of applicants requested and qualified for remissions. For DRTS, in both 2011-12 and 2012-13, almost 60% of companies applied for at least one fee remission, with over a third of all products on the market qualifying. In 2012-13, many medical device companies sought and received significant fee mitigation; more than 1100 out of 3100 companies (35%) applied for and were granted a fee remission for their MDRTS, and over 900 out of 2100 (43%) companies did the same for their medical device establishment licence.

Even though the revenues have been waived, these activities must still be funded by appropriations and thus have an impact on the Department. However, these remitted amounts have been forecasted and incorporated into revenue projections, and are not considered revenue that should have been collected.

3.3.2 Fee Deferral

A fee deferral under the fee regulations refers to a situation where the full fee is payableFootnote 9, but the due date has been delayed. This differs from a fee remission under the fee regulations where less than the full fee is payable. Fee deferrals were intended to reduce the financial burden for start-up companies that may not have had the chance to build their business to a productive level and thus give them additional time to build sales and collect revenue. However the deferral process can have a potentially significant financial impact on industry, as they may be required to pay two fee amounts in one year (the deferred fee and the current year's fee).

The deferral provision has resulted in significant amounts of revenue not being collected in the year originally forecasted, and has resulted in revenue management challenges. For example, in 2012-13 HC had to address a $6.6M adjustment in revenues due to deferrals. Additionally, fee deferrals require an increased effort to administer, as multiple invoices and systems are required to track and manage the deferred fees.

The application of deferrals, as set out in the fee regulations, is not consistent across all fee lines. For the DRTS and MDRTS fee lines, deferrals are granted to manufacturers who have not completed the first calendar year of selling the product, while other fee lines grant deferrals for companies that have not completed a full calendar year of activity, and in some cases HC has granted deferrals to companies that have taken over existing products or sites. Table E highlights the large volume of RTS fees being deferred. Another inconsistency is the time allowed for a deferral. For example, a medical device evaluation fee is deferred for a one-year period, whereas for a drug submission the fee is deferred for a two-year period.

Table E - Fee Deferrals Footnote 10 by Fee Line Activity
Deferrals 2011-12 2012-13 2013-14
$ revenue deferred # applications $ revenue deferred # applications $ revenue deferred # applications
DEVAL $570 2 $289,869 3 $226,363 3
MDEVAL $700 2 $3,002 2 $2,302 2
DRTS 611,286 922 $1,675,844 1,077 $1,699,777 983
MDRTS $827,452 3,021 $358,714 1,553 $538,217 2,029
DEL $1,248,761 65 $2,977,814 155 $827,255 65
MDEL $738,072 153 $1,343,291 273 $1,658,708 324
Total $3,426,841 4,165 $6,648,534 3,063 $4,952,623 3,406

4. Investments and Enhancements

Revised fees allowed HC to modernize its IM/IT infrastructure to support the effective and efficient delivery of its cost recovery activities. Key investments were made to enhance HC's time-tracking and performance measurement capabilities and to support business processes in an integrated and secure electronic environment. HC also invested in its workforce by increasing scientific capacity.

4.1 IM/IT Investments

HC's recent IM/IT investments in both its operational and regulatory IM/IT infrastructure have enabled HC to reach performance targets and to provide improved service to Industry. Some accomplishments include:

  • Implemented an activity tracking system to collect data to support enhanced costing, project planning, submission workload management and performance management data.
  • Improved IT infrastructure to reliably support efficient business processes for our electronic submission management system. These improvements lay the foundation for fully electronic business processes. Additional enhancements have been made to HC's laboratory information management system.
  • Leveraged the US FDA Electronic Submission Gateway to enhance Health Products and Food Branch's ability to efficiently exchange drug submission information with industry in a secure electronic environment. This helps support the timely review of submissions and reduce administrative burden on industryFootnote 11.
  • Converted paper-based submissions and forms into an electronic format to enhance efficiency and productivity for cost-recovered reviews, and eventually reduce paper burden on industry stakeholders. For example, the medical devices pilot allows industry to submit applications electronically (along with hard copy) with the goal of eventually eliminating the paper application.
  • Initiated an IT project that will allow for more efficient processing of EL applications, including consideration of electronic billing and invoicing.
  • Implemented an electronic reporting system using a gateway for adverse event reporting. This allows the efficient submission of adverse drug reaction (ADR) information by industry to HC and offers process improvements by reducing manual data entry and providing a solution for receiving more than 500,000 foreign reports received annually.

4.2 Business Improvements

In addition to business system investments, improvements have been made in many areas of HC's business operations. Some key accomplishments include:

  • Developed a human resources strategy to accelerate staffing and strengthening scientific capacity through training; retention of key scientific groups; and hiring more scientific experts. HC nearly doubled its chemistry review capacity for generic pharmaceutical drug review since April 2011 to address the high incoming volume of generic pharmaceutical drug submissions. An additional 90 Inspector positions were also added to the Inspectorate programme across the regions.
  • Improved submission planning by streamlining processes and applying them consistently, such as assigning a manager to work with the reviewer in some cases to provide coaching and feedback. In the biologics area, a complexity index was developed and is currently being piloted to improve resource allocation for pre-market review. A repository of Good Review Practices was also created and templates for reviewers were developed.
  • Improved project management capacity so that managers are now better able to monitor individual applications and their progress in the review cycle, and take appropriate action to support performance standards are being met.
  • With the migration of over-the-counter (OTC) products from one functional area to another, the examination of some non-prescription drug and disinfectant review functions is also underway with a view to create further efficiencies in the processes.
  • In 2013, under its Quality Management System for HC's biologic and genetic therapy domain, testing laboratories achieved certification under ISO 17025:2005 for five test methods to provide increased confidence by stakeholders in the test results. These test methods are also aligned with recognised international test methods. Extension to the scope is being requested for 2014 to include an additional five methods.
  • Improved processes to enhance industry's awareness and compliance of the EL fee requirements. These measures include presentations, webinars, and providing detailed information regarding DELs and MDELs on the HC website.
  • Enhanced review processes by improved regulatory cooperation and by leveraging foreign regulatory information. HC is working strategically with other regulatory authorities towards an increased convergence of regulatory requirements, in order to support continuous improvement of the drug review process and inspections of foreign sites.
  • Continued participation in the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH); formal information-sharing agreements with the FDA, Australia's Therapeutic Goods Administration (TGA), and the European Community; and ongoing participation with the FDA in the Regulatory Cooperation Council, the overall goal of which is to better align the two countries' regulatory approaches.
  • Improved processes for annual licence review, to enable the verification of applications and the calculation of fees are now conducted concurrently. This has had a positive impact on the time required to process applications. Currently, HC is in the midst of evaluating its current establishment licensing framework with the intent to transform the processes to be more efficient and effective.

5. Medical Devices

5.1 Medical Device Application Evaluation

Medical Devices are classified according to the potential risk they present to a user; a more extensive review process is undertaken for each higher-risk class of device. HC reviews medical device applications for product safety, efficacy, and quality to determine the probable risk benefit ratio that the device presents. The manufacturer may then be granted market authorization or refused if the application is found deficient and the applicant cannot or does not address the deficiencies.

As presented in Figure 1, overall application volume for medical devices has changed considerably from 2010-11 to presentFootnote 12. Compared to volumes before the revised fees were implemented in 2011-12, new applications have decreased for all classes, but most dramatically for Class II, where applications are down 58%, having steadily decreased every year. After an initial downturn when the revised fees were introduced, Class III amendments have increased consistently every year since 2011-12.

Figure 1 - Medical Device Applications and Amendments Received

Back

Performance standards related to how long it should take to evaluate an application have been identified for each type of application, and reported against in the annual DPR. These standards reflect the average time of the first reviewFootnote 13 of all applications in an individual fee line. Since the implementation of updated fees, all medical device application evaluation standards have been met.

Table PS-1 Medical Device Evaluation
Performance Standard Performance Result
2010-11 2011-12Footnote 14 2012-13 2013-14
MDEVAL: The average number of days to complete the review for each type of application; range from 15 calendar days to 75 calendar days 5 of 9 line items met performance standards 9 of 9 line items  met performance standards 9 of 9 line items met performance standards 8 of 9 line items met performance standardsFootnote 15

In addition to meeting the service standards published in the User Fee Proposal, timelines for application review have improved for Class II, III and IV medical devices since 2011 under the new cost recovery framework. The most notable improvements have taken place in the review of Class III and IV device applications (to first decision), as depicted in Figure 2 and 3 belowFootnote 16, where significant decreases can be seen in the years following the increase in fees.

Despite meeting the performance standards which are based on an average time to review, performance assessed by the percent of decisions made within performance targets varies across the class types. For Class II application review, the percentage of those applications over target has increased, primarily due to fluctuations in resources. This has recently improved and stabilized and decisions on time percentages exceeded 90% in March of 2014. Decisions on time have also improved from as low as 50% in 2009-10 for Class III, and 44% in 2008-09 for Class IV, to approximately 80% for both classes in 2012-13.

Figure 2 - Medical Device Class III Application Performance Against Target

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Figure 3 - Medical Device Class IV Application Performance Against Target

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At the time the new fee regulations were introduced, private label medical devices were exempted from fees. Since that time, the volume of applications have increased, peaking at over 328 received in 2011-12, and still requires resources that are also working on cost-recovered applications. Similarly, there is currently no fee for a class II medical device amendment. As seen in Figure 1, there is a significant volume of these amendments, which also impacts on resources.

The volume of applications containing bundles and applications with non-significant amendments (and therefore no fee), have continued to increase, climbing to approximately 55% of amendment applications received in 2012-13. This results in fewer fees being collected as fees are only applied against the initial application for a device licence, for a significant change to Class III and IV devices, or for a change that would affect the class of the device.

Additional workload such as administrative changes (Faxbacks) remain high with an average of 6,500 received per year, Special Access Program (SAP) applications with 5,900 per year, and Investigational Testing Authorizations (ITA's) with over 160 new applications, and 60 modification applications received per year. All of these applications have no fee associated with them and draw from the same resources utilized for cost recovered applications.

Novel technologies and products are emerging that blur the existing boundaries between medical devices, drugs, and biologics. These combination products, while not representing a significant workload volume, present a number of unique challenges for pre-market review. For example, classification of a combination product as a medical device results in a misalignment of costs to revenues if the majority of the review is done in a drug evaluation area.

HC has made progress in increasing its harmonization of the regulatory framework for medical devices. HC was a longstanding active participant in the Global Harmonization Task Force (GHTF), and is now an active member of the International Medical Device Regulators Forum (IMDRF). The IMDRF is a voluntary group of global medical device regulators who have come together to build on the strong foundational work of GHTF and aim to accelerate international medical device regulatory harmonization and convergence. HC plays a leading role in the forum and currently chairs the Regulated Products Submission group which is working on harmonizing medical device licence application format and electronic filing.

5.2 Compliance and Enforcement

HC conducts compliance and enforcement activities such as facility inspections to evaluate the suitability of establishments to manufacture, import, test, wholesale or distribute medical devices. This work includes key activities such as: licensing medical device establishments; conducting inspections to ensure compliance with regulatory requirements, and conducting compliance verifications including the monitoring of recalls in order to verify that regulatory requirements are being followed.

As reported below, HC has consistently met the established standard for issuing MDELs.

Table PS-2 Medical Device Establishment Licensing
Performance Standard Performance Result
2010-11 2011-12 2012-13 2013-14
MDEL: 120 calendar days to issue or renew a licence. 99.5% within performance standard Average 77 days Average 101 days Average 90 days

In the area of compliance and enforcement, HC has implemented significant changes to its inspection program for medical devices. Using a new risk-based approach, domestic MDEL holders are inspected on an established cycle and are rated as either compliant or non-compliant according to the risk classification of the observations noted during inspections. In 2012, HC conducted a pilot project to assess the possibility of expanding the inspection program to include foreign establishments. Under the pilot, 19 paper-based assessments and three on-site assessments were completed in 2012. As a result, HC integrated foreign MDEL holders into the medical device inspection program beginning in 2013-14.

The number of MDELs issued each year is slowly increasing, with 2,037 issued in 2010, 2,307 in 2011, 2,341 in 2012 and 2,414 in 2013. As shown in Table F below, HC has almost doubled the number of on-site inspections of medical device establishments in 2013-14 compared to before the revised fees were implemented, and has completed close to or more than 100% of its target number of inspections in the last two fiscal years.

Table F: Medical Device Establishment Inspections Carried Out
Fiscal year Target number of inspections Number of on-site inspections completed Percentage of target inspections completed
2009-10 243 226 93.0%
2010-11 243 245 100.8%
2011-12 395 344 87.1%
2012-13 420 429 102.1%
2013-14 465 455 97.8%

In addition to monitoring compliance through the inspection program, HC also conducts compliance verification activities including the monitoring of recalls in order to verify that regulatory requirements are being followed. HC opened 1,558 compliance verifications/incidents in 2010-11, 1,485 in 2011-12 and 1,813 in 2012-13. See Table G below for a breakdown of various compliance verifications and activities from 2010-11 to 2012-13.

Table G: Medical Device Compliance Verifications
Hazard type Voluntary problem reports Recalls No device licence No establishment licence Total
2010-11
Type I 57 42 0 0 7,902
Type II 307 545 136 40 1,032
Type III 57 261 10 103 431
Total 421 848 146 143 9,365
2011-12
Type I 71 31 1 0 4,469
Type II 284 502 114 60 961
Type III 49 294 7 72 422
Total 404 827 122 132 5,852
2012-13
Type I 66 45 5 0 116
Type II 267 513 227 210 1,217
Type III 64 391 9 16 480
Total 397 949 241 226 1,813
2013-14
Type I 73 50 2 2 127
Type II 243 538 196 226 1,203
Type III 55 421 4 12 492
Total 371 1,009 202 240 1,822

5.3 Post Market Safety

Post market safety surveillance activities, including mandatory problem reporting, registries and other reports, allow HC to identify trends and issues potentially requiring additional attention.

The service standard associated with the annual product licensing fee, listed in the table below, relates to the maintenance of the Medical Device Active Licence Listing database, which contains up-to-date product information provided at time of renewal.

Table PS-3 Medical Device Right to Sell
Performance Standard Performance Result
2010-11 2011-12 2012-13 2013-14
MDRTS: 20 calendar days, from deadline for receipt of annual notification, to update the Medical Devices Active License Listing (MDALL) database. 100% within performance standard 99.8% within performance standard 99.9% within performance standard 99.97% within standard

HC introduced internal service standards and performance targets for signal assessments and ad-hoc reviews for medical devices, as outlined in Table H below.

Table H: Performance Standards for Medical Devices Post Market Surveillance Activities
Type of review Target Completion Time (Working Days from Assignment) Standard Completion %
Signal Assessment 130 90%
Ad Hoc Reviews 60 90%

HC also made process improvements to the data entry and assessment of Mandatory Problem Reports in order to pilot the implementation of performance targets. High priority reports are targeted for processing within 15 working days, 95% of the time. All other mandatory reports are targeted for 84 working days. The volume of reports has been steadily increasing with an overall increase of 23% from 2012 to 2013.

HC launched the Medical Devices Single Audit Program (MDSAP) pilot in January 2014 together with the Australian TGA, the Brazilain Agancia Nacional de vigilancia sanitaria (ANVISA) and the United States FDA. The MDSAP program is expected to result in a stronger, more efficient and internationally consistent program that at that same time will reduce overall regulatory burden to manufacturers thereby promoting innovation and trade.

6. Drug Products

6.1 Pharmaceutical and Biologic Submission Evaluation

HC evaluates drug submissions and applications submitted by manufacturers of pharmaceutical and biologic drugs, to help ensure that products are safe, effective and of quality for specific conditions of use.

Standards have been identified for each fee line, and reported against in the annual DPR. These standards reflect the average time of the first reviewFootnote 17 of all submissions in an individual fee line. The number of line items varies between years as submission are not necessarily received for each fee line every year, and performance is only reported on those submissions whose review is completed in that year.

Table PS-4 Drug Evaluation
Performance Standard Performance Result
2010-11 2011-12Footnote 18 2012-13 2013-14
DEVAL Pharmaceutical: The average number of days to complete the review for each submission type and user fee category; range from 30 calendar days to 300 calendar days 11 of 25 line items met performance standards 35 of 35 line items met performance standards 30 of 35 line items met performance standards 32 of 36 line items met performance standards
DEVAL Biologics: The average number of days to complete the review for each submission type and user fee category; range from 45 calendar days to 300 calendar days 10 of 13 line items met performance standards 12 of 12 line items met performance standards 12 of 12 line items met performance standards 12 of 12 line items met performance standards

Prior to the implementation of updated fees in April 2011, HC faced significant challenges in meeting performance targets related to processing drug submissions. As patent protection ended for a record number of 'blockbuster' drugs, some backlogs developed due to a significant rise in the number of generic pharmaceutical drug submissions received per year (increasing 87% from 160 in 2007-08 to 299 in 2011-12). HC had inadequate staffing levels to respond to the surge. Increased revenues from revised fees coupled with improved business processes and a small sustainable increase in staff, resulted in HC being able to eliminate the generic backlog in November 2013.

Penalties:

As per the UFA, penalties are incurred when annual performance falls short of set performance standards by more than 10%. When a target is missed, the user fee is reduced by a percentage equivalent to the unachieved performance, up to a maximum of 50% of the user fee. This reduced user fee is in effect from the date of tabling of the DPR and remains in effect until the publications of the subsequent year's DPR.

Since the updated fees, HC had met all performance standards for both drug and medical device fees until 2012-13. In 2012-13, five line items missed their targets and four were in the area of generic pharmaceutical drug reviews (refer to Table I). As a consequence of the prioritization of the generics submission backlog, there were delays and three generic submission fee lines missed their performance standards by more than 10%. As per the User Fees Act, the consequence for a missed standard is a reduced fee for the next year. As a result, reduced user feesFootnote 19 based on missed performance standards in 2012-13 for those three generic lines are expected to result in a $1.9M reduction of revenue in 2013-14, and $2.7M in 2014-15. Through increased resources and improved business processes, HC was able to eliminate the generic drug review backlog in November of 2013. However, at the end of 2013-14, and as a result of the generic submissions that had been in backlog, one generic submission fee line missed its performance standard by more than 10%. The reduced user fee is expected to result in an additional revenue reduction of $400K in 2014-15 and $600K 2015-16.

Table I - Pharmaceutical Drug Submission Missed Performance Targets
Submission Type Service Standard 2012-13 Reported Performance 2012-13 % Penalty 2013-14 Projected Reported Performance 2013-14 % Penalty
Abbreviated New Drug (Comparative Studies, Chemistry and Manufacturing) 180 days 264 days 47% 198 days 0%
Supplementary Abbreviated New Drug (Comparative Studies, Chemistry and Manufacturing) 180 days 340 days 50% 191 days 0%
Abbreviated New Drug (Chemistry and Manufacturing Only) 180 days 233 days 29% 287 days 50%
New Drugs (Clinical and Chemistry and Manufacturing) 300 days 302 days 0% 178 days 0%
Supplementary Abbreviated New Drug (Chemistry & Manufacturing) 180 days 198 days 0% 157 days 0%
NDS-D Disinfectant 300 days 266 0% 327 days 0%

The total number of all drug submissions received has increased slightly over the past three years. However, the numbers do vary along product line and submission type. During this period, the average number of days to first decision for new drug submissions has remained relatively constant, and at this time has kept pace with performance standards. However, in the area of generic pharmaceutical drugs (as mentioned above) the average number of days to first decision has actually decreased during the past two years, which contributed to the elimination of the generic pharmaceutical drug submission backlog.

For pharmaceutical drugs, the Supplemental New Drug Submissions saw significant growth in recent years, with volumes received increasing 72% from 2010-11 to 2013-14 (from 116 to 199 submissions), as presented in Table J. For generics, the Abbreviated New Drug Submissions increased 27% from 190 submissions in 2010-11 to 242 in 2013-14Footnote 20. Also in generics, Supplementary Abbreviated New Drug Submissions saw submissions more than double, with 109% increase from 2011-12 to 2013-14 (from 56 to 117 submissions).

Table J: Drug Submission Review Performance - Pharmaceutical Drugs
New Drug Submissions (NDS) 2010-11 2011-12 2012-13 2013-14
Number of submissions received 63 53 85 56
Number in workload (at year end) 55 40 62 38
Percentage in backlog 11% 0% 2% 0%
Number of approvals (subset of decisions) 47 57 45 64
Number of Decisions 88 97 75 99
Supplemental New Drug Submissions (SNDS)
Number of submissions received 116 141 163 199
Number in workload (at year end) 72 90 88 89
Percentage in backlog 1% 1% 2% 0%
Number of approvals (subset of decisions) 110 98 156 163
Number of decisions 163 138 196 207
Abbreviated New Drug Submissions (ANDS)
Number of submissions received 190 231 194 242
Number in workload (at year end) 221 273 201 175
Percentage in backlog 55% 60% 38% 0.1%
Number of approvals (subset of decisions) 109 113 241 253
Number of decisions 159 188 368 412
Supplemental Abbreviated New Drug Submissions (SANDS)
Number of submissions received 56 68 71 116
Number in workload (at year end) 46 49 42 39
Percentage in backlog 57% 39% 26% 0%
Number of approvals (subset of decisions) 39 58 71 98
Number of decisions 51 72 83 124

In the area of biologic drugs, HC has noted an increase of 57% (from 14 to 22) in biologic New Drug Submissions received from 2010-11 to 2013-14, but also a recent decrease in the number of biologic Supplemental New Drug Submissions received (Table K). These submission types require significant level of time and resources.

Table K: Drug Submission Review Performance - Biologic Drugs
New Drug Submissions (NDS) 2010-11 2011-12 2012-13 2013-14
Number of submissions received 14 14 18 22
Number in workload (at year end) 6 15 17 14
Percentage in backlog 0% 0% 0% 0%
Number of approvals (subset of decisions) 14 8 14 17
Number of decisions 23 14 27 24
Supplemental New Drug Submissions (SNDS)
Number of submissions received 101 82 94 75
Number in workload (at year end) 56 46 61 43
Percentage in backlog 0% 0% 0% 0%
Number of approvals (subset of decisions) 60 79 77 89
Number of decisions 91 96 93 100

While HC has been able to historically meet most performance standards since the implementation of revised fees, this performance is not expected to be sustainable. Based on an initial assessment of time tracking data, HC has identified areas where an increased level of effort has been recorded compared to similar types of submissions are being reported, when compared to original costing model. There are areas where submissions are becoming more complex (e.g. new and hybrid molecules, earlier pivotal trials, niche products and multiple indications), requiring more time by resources to review and address issues.

Workload has increased in non-cost recovered areas which has potential impacts on the performance of cost recovered activities, such as in the area of Notifiable Changes Footnote 21(NC). As shown in Table L, HC received 1,143 Therapeutic Products Directorate (TPD) NCs Safety 90-day applications (with an average review time of 37 hours) in 2013-14, up from 888 in 2012-2013, and 709 in 2011-12. As is the case with the overall volume of drug submissions, the volume of NCs fluctuates by category. While the reclassification of TPD NC Quality 90s to an SNDS, SANDS or Annual Notification has enabled this workload to be cost recovered, a year over year increase for others (e.g. TPD Safety 90) represents a significant workload that is reviewed by the same resources working on cost-recovered submissions. One of the reasons for the increase in the number of NCs Safety 90-day is the increase in the number of post market signal assessments. For example, in 2012-13, 36 post market signal assessments in one review area resulted in 24 NCs.

Table L: Notifiable Changes Volumes
2010-11 2011-12 2012-13 2013-14
TPD
Quality 90 60 170
Regular 866
Safety 90 24 709 888 1143
Safety 120 31 37 64 71
Total 981 916 952 1214
BGTD
Quality 90 1 294 340 328
Regular 440
Safety 90 1 104 88 101
Safety 120 19 23 15 28
Total 461 421 443 457

6.2 Compliance and Enforcement

HC conducts compliance and enforcement activities such as facility inspections to evaluate the suitability of establishments to fabricate, package/label, wholesale, import, distribute or test drug products. This work includes key activities such as: licensing drug establishments; conducting inspections to ensure compliance with regulatory requirements; and conducting compliance verifications in response to specific complaints or identified risks relevant to human drugs.

Table PS-5 Drug Establishment Licensing
Performance Standard Performance Result
2010-11 2011-12Footnote 22 2012-13 2013-14
DEL: 250 calendar days to issue or review a licence. 97.4% within performance standard Average 121 days Average 183 days Average 153 days

Variation in performance standard results for 2011-12 and 2012-13 can be attributed mainly to a decision made regarding when to start the "clock" on having received an application. In 2011-12, the application clock began when a file had been screened by an officer. This was changed in 2012-13 to when the application physically arrived at the Inspectorate, therefore increasing the amount of time the file spent moving through the process.

Drug establishment license inspection backlogs were eliminated in the two years following the updated fees. Increased fees and program efficiencies can be attributed to the success in going from approximately 195 "files" in backlog in 2006-07 to about 35 in 2011-12. Currently, there is no backlog.

An annual inspection summary report has been developed to be published on the HC website. The 2012-13 report includes a description of Inspectorate activities and outputs, the overall compliance rate of industry, the risk ratings of observations noted during inspections, and examples of the common observations cited in non-compliant establishments. Some of that information is presented in Table M.

Table M: Human Drug Establishment Inspections
Fiscal Year Number of Inspections Initiated for Human Drugs Number of Non-compliant ratings % Non-compliant
2010-11 584 25 4.3%
2011-12 653 17 2.6%
2012-13 624 23 3.7%
2013-14 575 19 3.3%

In addition to specific provisions in the fee regulations for companies dealing with medical gas, inspections for these facilities have been expanded from a fixed three-year cycle to a four-year cycle using a risk-based approach.

Over the past few years there has been an increase in the number of foreign site paper assessments, primarily due to the complexities of the global marketplace. Globalization of the supply chain for therapeutic products is creating challenges for managing risks at various points in the product supply chain, particularly in the manufacturing process. This shift has created pressure for increased harmonization of regulatory approaches which poses a number of supply chain management challenges and has resulted in an increase in Good Manufacturing Practices (GMP) issues and visibility in Canada and internationally. An initiative recently launched between Canada and the US under the Regulatory Cooperation Council (RCC) aims to address the challenges associated with GMP inspections, by increasing each country's reliance on GMP inspection reports of drug manufacturing facilities prepared by the other country, rather than unnecessarily duplicating efforts.

Given the global nature of the human drug industry, HC leverages its relationships with its trusted regulatory partners to help assure the quality of the manufacture of drug products imported from foreign sites. HC now recognizes GMP standards from members of the Pharmaceutical Inspection Convention/Cooperation Scheme (PIC/S) and the 28 countries with which Canada has signed four Mutual Recognition Agreements (MRAs) (i.e., countries within the European Community, Switzerland, Australia and the European Free Trade Association).

On November 8, 2013, HC amended the Food and Drug Regulations related to active pharmaceutical ingredients (APIs). To facilitate implementation, HC is leveraging the existing establishment licence process to establish oversight of API activities. There are an estimated 50 to 80 establishments involved domestically, and a greater number internationally, which will likely result in an increased number of inspections moving forward. HC completed its first API-related inspection in November 2013. Fees for activities pertaining to API's are not included in existing fee regulations.

A large number of drug products and APIs imported into Canada come from countries with which HC does not have an MRA. This poses a challenge in the case of APIs, where importation accounts for 85% of the Canadian market. Furthermore, although domestic drug establishments are inspected on a pre-determined cycle, according to risk-based criteria, HC does not often conduct on-site inspections of foreign facilities. However, given that Canada has established strong relations with and has built confidence in the inspection programs of many other regulators, HC is able to rely on the inspection reports available from other regulators in some cases. Annually HC receives over 400 Certificates of Compliance from its MRA partners and reviews close to 500 inspection reports for foreign sites not in MRA countries. These inspection reports are generally PIC/S member generated and usually provided by the importer.

Workloads have significantly increased in other key areas, which supports the changing landscape of the industry and exemplifies the need for HC to transform practices to be effective. One example of this is in the area of the blood inspection program. HC finalized a new regulatory framework for blood and blood components in October 2013, which had previously been regulated under the Food and Drug Regulations (FDR). Having stand-alone regulations specific to blood and its components will serve to strengthen pre-existing requirements related to donor suitability assessment, collection, testing, labelling, storage, distribution, and importation. However, with the new blood regulations, come more compliance and enforcement responsibilities. The blood regulations will apply to all establishments that handle blood, where as in the past under the FDR, they only applied to two currently licensed blood operators and a private manufacturer of drugs from blood. Currently, cost recovery does not apply to blood establishments but work is being carried out by the same resources responsible for existing cost recovery activities. The majority of blood establishment submissions are from non-profit organizations. However, a small number of submissions are received from for-profit institutions.

6.3 Post Market Safety

Post-market safety surveillance activities address safety issues once a product is on the market. Issues of concern may be triggered by various sources of information, such as adverse reactions, new studies, or other information received by the manufacturer, other regulatory agencies, or associations. In the case of Risk Management Plans (RMPs), safety information is received as part of a pre-market submission, and the plan is reviewed within the service standards for that submission.

Further to the commitment made as a result of the Independent Advisory Panel on Human Drugs during the user fee proposal development, HC introduced internal service standards and performance targets for several key activities including for ADR reports; signal assessments; risk management plan (RMP) and Periodic Safety Update Report (PSUR) review, as well as ad-hoc reviews and advertising issues assessments. These standards are outlined in Table N.

Table N: Performance Standards for Pharmaceutical and Biologic Post Market Surveillance Activities
Type of review Target Completion Time (Working Days from Assignment) Standard Completion %
ADR Exit Priority Workflow 15 95%
ADR Exit Workflow Initial Reports 42 95%
ADR Exit Workflow and Priority Workflow All Initial and Follow-up Reports 84 95%
Signal Assessment 130 90%
RMP Review 90 90%
PSUR Level I Review 30 90%
PSUR Level II Review 90 90%
Ad Hoc Reviews 60 90%

The standard associated with the annual product licensing fee, listed in the table below, relates to the maintenance of the Drug Product Database, which contains up to date product information provided at time of annual notification.

Table PS-6 Drug Right to Sell
Performance Standard Performance Result
2010-11 2011-12 2012-13 2013-14
DRTS: 120 calendar days to update the Drug Product Database (DPD) following Annual notification. Met performance standard 100% Average of 9 days per DIN product Average of 7 days per DIN product Average of 9 days per DIN product

Over time, the drug identification number (DIN) has also been used as a tool to track the market status of a drug and assist with import control. Once a drug product has been approved, a DIN is assigned and entered into a HC database. Historically, Radiopharmaceuticals have been exempted from the DIN requirement because they were only distributed in hospitals. The assignment of a DIN to radiopharmaceuticals (using the same DIN application process followed by other drug manufacturers), would provide HC with the ability to track these products once on the market and will enable the eventual charging of annual fees.

As shown in Figure 4, the volume of adverse reaction reports has been steadily increasing since well before the update of the fees, primarily reflective of the implementation of the Canada Vigilance Program in 2007. An increase in the number of products available on the Canadian market, along with efforts to make reporting easier as well as more stringent reporting requirements, including mandatory reports by industry, have also contributed to the increase in reporting.

Figure 4 - Drug Adverse Reaction Volume

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In April 2013, HC began implementing electronic reporting of adverse reactions for industry, and aims to receive more than 80% of all industry adverse reaction reports electronically in 2014. In addition HC has also begun developing and implementing strategies to systematically monitor adverse reaction reports, including targeted surveillance and data mining.

In early 2013, HC launched the Recalls and Safety Alerts Database, which includes an advanced search feature and a new format for risk communications. All risk communications are now classified into one of two main categories -- advisories and recalls -- which should eliminate any uncertainty as to whether or not a product recall is being communicated. HC has recently initiated an evaluation of its risk communications for health products, including human drugs, following through on long-standing plans to assess the effectiveness of its risk communications products.

In efforts to better align with international best practices and reduce burden on industry HC has moved toward the new common Periodic Benefit Risk Evaluation Report (PBRER). The PBRER provides greater emphasis on benefit than the PSUR, and also provides a greater focus on the cumulative knowledge regarding a medicinal product, while retaining a focus on new information.

In January 2013 guidance on the reporting of ADR was included in the Medication Management Standards for health care facilities, including hospitals. As part of the certification process Accreditation Canada evaluates the performance of these facilities against national standards of excellence.

In April 2014, Minister Ambrose announced the posting of summaries of health product safety reviews as the first in a series of measures that HC is taking to be more transparent and open with Canadians about regulatory decisions. A safety review is an assessment of a health product's benefits and harms, undertaken by HC when a safety issue is identified for a product that is on the Canadian market. Summaries of safety reviews will provide the public with plain-language descriptions of HC's findings and decisions, so that Canadians can continue to have confidence in the health products they use.

Under the Regulatory Transparency and Openness Framework, the department has committed to providing Canadians with credible and timely information that is easy to understand so that Canadians can make well-informed decisions on their health and the health of their families.

7. International Comparison

A commitment was made in the 2011 Regulatory Impact Analysis Statement that accompanied the revised fee regulations to compare service standards to those of similar international regulatory authorities in the three year review. HC has determined that the following countries that were included in the comparison in the Parliamentary User Fee Proposal are still relevant for comparison:

  • United States (FDA)
  • Australia (TGA)
  • United Kingdom (Medicines and Healthcare Regulatory Agency)
  • European Union (EMA)

This comparison will review the same service standards that were originally assessed (if still applicable). A comparison of Canadian service standards to international counterparts is possible only at a high level as legislation, cost recovery approaches, and regulatory organization structures differ across jurisdictions.

7.1 Human Drug Regulatory Environment

HC is a Steering Committee member of the International Conference on Harmonization (ICH) of Technical Requirements for the Regulation of Pharmaceuticals for Human Use, which makes recommendations on harmonizing scientific and technical aspects of pharmaceutical product registration. Additionally, Canada has formal Mutual Recognition Agreements (MRA's) with the European Community and Australia, as well as a Memorandum of Understanding with the U.S.

While the performance standards may be relatively similar, each country's regulatory requirements and processes for approvals differ in various jurisdictions. As an example, approval times for HC are sometimes reported as the total time from filing to final approval. This measurement can include time where HC has issued a decision that a submission is not approvable and are awaiting a response from the sponsor for further information to support its approval. Our service standards generally report only on a portion of the review process, and are calculated based on calendar days. Other jurisdictions, such as the FDA, do not include the wait time (i.e., the wait time for a response to a not-approvable letter is not included in overall approval metrics) in their service goals, and have 'stop-the-clock' provisions for not counting time spent by a company during the review process. The EMA has a more structured review process which includes a two-phase evaluation period with two stop-the-clock periods to provide time for sponsors to respond to questions or provide requested information; a final opinion is targeted to be provided before Day 210.

7.2 Medical Devices Regulatory Environment

In the area of Medical Devices, all four jurisdictions plus Canada are members of the International Medical Device Regulators Forum (formerly the Global Harmonization Task Force). The Forum coordinates and harmonizes medical devices regulatory activities, and member countries exchange both pre and post-approval information. All these jurisdictions utilize some form of risk-based classification system, with lower-risk devices demanding less rigor in the pre-market approval process and significantly more evaluation is applied in the evaluation of higher risk devices, but have various definitions and criteria resulting in devices sometimes being classified differently among jurisdictions.

In Canada, Class I devices are exempted from regulatory review and Class II, III and IV medical devices are required to be manufactured under the appropriate International Organization for Standardization (ISO) standard. Australia has a similar exemption for Class I devices that applies to devices not intended to be supplied in a sterile state or that do not have a measuring function. The US differs in that if the device (Class I, II and some III) is shown to be substantially equivalent to a legally marketed device that is not subject to pre-market approval, a limited review is allowed, while a full premarket approval application (PMA) is required for all new Class III devices.

While not the practice in Canada, third party reviews may be conducted in some situations in the US. The EU and UK uses third parties or Notified Bodies/Competent Authorities for pre-market approval, called a conformity assessment. Australia also allows EU conformity assessments to be used in place of an assessment by the TGA.

7.3 International Comparison of Service Standards

In general, HC has performance targets that remain internationally comparable, as they were in 2007. Published service standards from other jurisdictions are not always suitable for comparison because of variations in the regulatory and operational regimes.

One significant change since the original comparison was completed, has been the implementation of the Generic Drug User Fee Amendments (GDUFA) in 2012 in the US, which introduced fees and service standards for generic drug product applications and facilities. The US also reauthorized the Prescription Drug User Fee Act (PDUFA) in 2012 for the next five years, but most service standards remained unchanged.

For Right to Sell (120 calendar days to update Drug Product Database with Annual Notification), no other jurisdiction had comparable performance standards.

Review of a Drug Submission
Country New Active Substance Generics
Canada 300 calendar days 180 calendar days
US 90% within 10 months 60% within 15 months (FY15), 90% within 10 months by FY 2017
EU 210Footnote 23 calendar days 210 calendar days
UK 98% assessed in 150 calendar days Requiring Advisory Committee advice: 185 calendar days
Australia 255 working days 255 working days
Application for a Drug Establishment Licence or Renewal
Canada 250 calendar days
US No comparable standard
EU 210 calendar days for pre-authorization inspection
90 days to issue GMP certificate after inspection
UK 80% in 100 calendar days and 98% in 150 calendar days
Australia 180 calendar days

Most medical device service standards have not changed significantly since 2007. The United States published Medical Device User Fee Amendments 2012 (MDUFA III) which updated fees and service standards. For Right to Sell (20 days to update Medical Devices Active License Listing database with annual notification) and Establishment Licensing (120 days), no other jurisdiction had comparable performance standards.

Review of Medical Device Licence Application
Canada Class IV = 75 calendar days
Class III = 60 calendar days
Class II = 15 calendar days
US For FY14 PMA = 80% within 180 FDA days
Panel-track PMA = 70% within 320 FDA days
PMA Supplements = 90% within 90 or 180 FDA days
510(k) = 93% within 90 FDA days
EU No comparable standard
UK No comparable standard, as review completed by certified notified bodies not MHRA
Australia Submissions finalized within 90 days

8. Conclusion and Next Steps

This Review fulfills the commitment made to Parliament, industry and stakeholders during the development of the Fees in Respect of Drugs and Medical Devices Regulations that were implemented in April 2011. The objectives of those regulations were to update fees for the human drugs and medical devices programs to reflect current costs, and to provide stable and sustainable resourcing of these regulatory programs. In general, those objectives have been achieved. Throughout this document we have highlighted HC's experience of the last three years in implementing these fee regulations. During this period, HC has identified areas in which measured improvements could be further explored. Should revisions to the user fees and Regulations be pursued in the future, HC would adopt a coordinated approach to improve consistency across all fee lines. HC continually strives to have a cost recovery framework that that meets expectations, charges the appropriate fees, and is built upon the most appropriate cost recovered activities.

Improving our regulatory tools and environment to best protect the health and safety of Canadians, while considering the impact on industry, is and remains a priority for HC. The environment is constantly shifting and is influenced by the pace of technological developments in regulating new and emerging science; medicines and products; modern business practices; globalization; international alignment; and emerging best practices. In response to these and other drivers, HC is modernizing its regulatory framework. Some potential changes may have cost recovery implications that will need to be considered, such as in the area of orphan drugs, plain language labelling or other regulated products.

Next Steps

HC will continue its analysis of drug and medical device activities and fees and efforts will continue to improve service delivery, identify efficiencies and refine processes. This will serve to improve alignment and leverage similar concepts across the individual fee regulations as HC looks to further integrate core elements (e.g. policy, operations, and regulatory activities) to allow for an appropriate fee revision cycle.

To ensure HC's cost recovery regime for drugs and medical devices remains financially stable, HC will continue to analyze and track its financial data to ensure that costs reflect the realities of the operating environment. As regulatory activities and costs evolve over time, new fees could be added and existing ones withdrawn or amended as modernization takes place, while respecting existing legislation and central agency requirements.

Appendix A

Cost and Revenues (Data from 2010-11 DPR)
A. User Fees Forecast Revenue 2010-11 ($000) Actual Revenue 2010-11 ($000) Full Cost 2011-12 ($000) Fiscal Year Forecast Revenue ($000) Estimated Full Cost ($000)
Right to Sell Drugs Fees $7,700 $7,615 $47,205 2011-12
2012-13
2013-14
$8,553
$8,724
$8,899
$53,095
$56,760
$57,896
Drug Establishment Licensing Fees $6,000 $7,875 $20,297 2011-12
2012-13
2013-14
$21,901
$22,339
$22,786
$26,080
$26,601
$27,133
Drug Submission Evaluation Fees (Pharmaceuticals & Biologic Products) $23,000 $22,657 $79,367 2011-12
2012-13
2013-14
$40,870
$50,060
$51,061
$87,157
$93,319
$95,185
Medical Device Licence Application Fees $3,800 $4,025 $11,684 2011-12
2012-13
2013-14
$9,425
$9,613
$9,805
$14,864
$16,266
$16,591
Fees for Right to Sell a Licensed Medical Device $1,800 $2,662 $7,378 2011-12
2012-13
2013-14
$8,377
$8,545
$8,715
$10,927
$12,408
$12,656
Medical Device Establishment Licensing Fees $3,000 $4,115 $6,089 2011-12
2012-13
2013-14
$11,992
$12,232
$12,477
$13,505
$13,775
$14,051
Total Revenues, Costs, and Forecasts $45,300 $48,949 $172,020 2011-12 $101,118 $205,628
Cost and Revenues (Data from 2011-12 DPR)
A. User Fees Forecast Revenue 2011-12 ($000) Actual Revenue 2011-12 ($000) Full Cost 2011-12 ($000) Fiscal Year Forecast Revenue ($000) Estimated Full Cost ($000)
Right to Sell Drugs Fees $8,553 $9,248 $56,698 2012-13
2013-14
2014-15
$8,724
$8,899
$9,077
$57,832
$58,989
$60,168
Drug Establishment Licensing Fees $21,901 $13,851 $27,880 2012-13
2013-14
2014-15
$14,811
$15,107
$15,409
$28,438
$29,007
$29,587
Drug Submission Evaluation Fees (Pharmaceuticals & Biologic Products) $40,870 $29,487 $79,625 2012-13
2013-14
2014-15
$35,065
$35,766
$36,482
$81,217
$82,842
$84,499
Medical Device Licence Application Fees $9,425 $6,166 $17,932 2012-13
2013-14
2014-15
$7,027
$7,167
$7,310
$18,290
$18,656
$19,029
Fees for Right to Sell a Licensed Medical Device $8,378 $6,817 $11,265 2012-13
2013-14
2014-15
$8,445
$8,614
$8,786
$11,490
$11,720
$11,954
Medical Device Establishment Licensing Fees $11,992 $8,242 $10,151 2012-13
2013-14
2014-15
$9,220
$9,405
$9,593
$10,355
$10,561
$10,773
Total Revenues, Costs, and Forecasts $101,119 $73,811 $203,551 2012-13 $83,292 $207,622
Cost and Revenues (Data from 2012-13 DPR)
A. User Fees Forecast Revenue 2012-13 ($000) Actual Revenue 2012-13 ($000) Full Cost 2012-13 ($000) Fiscal Year Forecast Revenue ($000) Estimated Full Cost ($000)
Right to Sell Drugs Fees $8,724 $10,287 $52,522 2013-14
2014-15
2015-16
$10,312
$10,518
$10,729
$53,572
$54,644
$55,737
Drug Establishment Licensing Fees $14,811 $11,363 $24,219 2013-14
2014-15
2015-16
$15,107
$15,409
$15,717
$24,703
$25,197
$25,701
Drug Submission Evaluation Fees (Pharmaceuticals & Biologic Products) $35,065 $38,955 $86,684 2013-14
2014-15
2015-16
$38,095
$38,857
$39,634
$88,418
$90,186
$91,990
Medical Device Licence Application Fees $7,027 $6,313 $16,131 2013-14
2014-15
2015-16
$6,840
$6,976
$7,116
$16,454
$16,783
$17,119
Fees for Right to Sell a Licensed Medical Device $8,445 $8,308 $11,069 2013-14
2014-15
2015-16
$8,547
$8,718
$8,892
$11,291
$11,517
$11,747
Medical Device Establishment Licensing Fees $9,220 $6,622 $11,460 2013-14
2014-15
2015-16
$9,404
$9,593
$9,785
$11,689
$11,923
$12,161
Total Revenues, Costs, and Forecasts $83,292 $81,848 $202,085 2013-14 $88,305 $206,127

Appendix B

Performance Summary (Data taken from DPRs: 2010-11, 2011-12, 2012-13)

Performance Summary for 2010-11: all of the requests, with the exception of the seventeen items outlined in yellow, met their performance standards

Performance summary for 2011-12: all of the requests met their performance standards.

Performance summary for 2012-13: all of the requests, with the exception of the five items outlined in yellow, met their performance standards.

Note: the performance standards are listed first, followed by performance results for each of the two years.

Drug Evaluation:

The Drug Evaluation category represents HC's authorization activities that permit a manufacturer to sell their product in Canada. There are numerous different types and categories of products and changes to products that require HC authorization. For example: biological drugs or chemical (pharmaceutical) drugs; brand name drugs or generic pharmaceutical drug drugs; new drugs or old drugs; adding a new indications or changing a manufacturing site. The size and complexity of these different drug evaluations are very diverse and so different performance standards are required to represent that diversity. The complex performance reporting below represents the diverse products and drug evaluation types that are submitted by various sub-sectors of the drug industry. A glossary describing all of these areas can be found at the end of this table.

Table 1: Drug Evaluation
User Fees (Fee Lines) 2010-11 Performance Results (days) Performance Standard (days) 2011-12 Performance Results (days) 2012-13 Performance Results (days)
Drug Evaluation Fees (DEVAL) New User Fees - Submission Received* post April 1, 2011 New User Fees - Submissions Received* post April 1, 2011 New User Fees - Received* post April 1, 2011
Review 1 (average time in calendar days) Review 1 (average time in calendar days) Pharmaceuticals, fee class and type Review 1 (average time in calendar days) Pharmaceuticals, fee class and type Review 1 (average time in calendar days) Pharmaceuticals, fee class and type
Performance: Several items in this category did not meet the performance standard, and are marked in yellow. Performance: All of the items in this category met the performance standard Performance: Most of the items in this category met the performance standard. The five items that didn't are marked in yellow.

Pharmaceuticals
NDS: Priority NAS = 169
NDS: NAS = 310
NDS: Clin only = 295
NDS: Clin/C&M = 316
NDS: Priority Clin/C&M = 180
NDS: Labelling only = 50
NDS: Comp/C&M = 325
ANDS: C&M/Labelling = 307
ANDS: Comp/C&M = 385
SNDS: Clin/C&M = 347
SNDS: Clin only = 270
SNDS: Comp/C&M = 233
SNDS: C&M/Labelling = 235
SNDS: Rx to OTC New INDIC = NA
SNDS: Rx to OTC No New Indication = NA
SNDS: Labelling only = 64
SNDS-C: Clin only =277
SANDS: Clin only = 343
SANDS: Comp/C&M = 301
SANDS: C&M/Labelling = 332
SANDS: Labelling only = 53
DIN A with data = 396
DIN A form only = 213
DIN D with data = 147
DIN D form only = 111

NAS: NDS = 300 days

CLIN C&M: NDS = 300
CLIN C&M: SNDS = 300
CLIN: SNDS = 300
CLIN: DIN A = 210

COMP C&M: ANDS = 180
COMP C&M: NDS = 180
COMP C&M: SANDS = 180
COMP C&M: SNDS = 180
COMP C&M: DIN A = 210

C&M: ANDS = 180
C&M: SANDS = 180
C&M: NDS = 180
C&M: SNDS = 180
C&M: DIN A = 210

NAS: NDS = 220 days

CLIN C&M: NDS = 236
CLIN C&M: SNDS = 235
CLIN: SNDS = 226
CLIN: DIN A = 188

COMP C&M: ANDS = 172
COMP C&M: NDS = 175
COMP C&M: SANDS = 177
COMP C&M: SNDS = 159
COMP C&M: DIN A = n/a

C&M: ANDS = 121
C&M: SANDS = 132
C&M: NDS = n/a
C&M: SNDS = 115
C&M: DIN A = 201

NAS NDS = 256 days

CLIN C&M NDS = 302 (not met)
CLIN C&M SNDS = 271
CLIN SNDS = 266
CLIN DIN A = 160

COMP C&M ANDS = 264 (not met)
COMP C&M NDS = 154
COMP C&M SANDS = 340 (not met)
COMP C&M SNDS = 175
COMP C&M DINA = 210

C&M ANDS = 233
C&M SANDS = 198
C&M NDS = 110
C&M SNDS = 150
C&M DIN A = 117

PUBLISHED DATA: SNDS=300
PUBLISHED DATA: DIN A=210
Rx to OTC Switch: SNDS = 180

DISINFECTANT: NDS-D = 300
DISINFECTANT: DIN D 180 = 180
DISINFECTANT: DIN D 210 = 210

PUBLISHED DATA: SNDS=243
PUBLISHED DATA: DIN A=n/a
Rx to OTC Switch: SNDS = n/a

DISINFECTANT: NDS-D = n/a
DISINFECTANT: DIN D 180 = 7
DISINFECTANT: DIN D 210 = 181

PUBLISHED DATA SNDS = 213
PUBLISHED DATA DINA = 200
Rx to OTC Switch SNDS = 167

DISINFECTANT NDS-D = 266
DISINFECTANT DIND 180 = n/a
DISINFECTANT DIND 210 = 194

Biologics
NDS: Priority NAS = 175
NDS: NAS = 274
NDS: Clin/C&M = 302
ANDS: Comp/C&M = N/A
SNDS: Priority Clin only = 187
SNDS: Clin/C&M = 291
SNDS: Clin only = 257
SNDS: Comp/C&M = 180
SNDS: C&M/Labelling = 167
SNDS: Labelling only = 37
SNDS: NOC-C Clin only = 250
DIN B with data = 94
DIN B form only = 90

LABELLING ONLY: NDS=60
LABELLING ONLY: SNDS=60
LABELLING ONLY: ANDS=60
LABELLING ONLY: SANDS=60
LABELLING ONLY: DIN A=180
LABEL STANDARD: DIN A=45
LABEL STANDARD: DIN D=45
LABEL STANDARD: DIN F=45

ADMINISTRATIVE: ANDS = 45
ADMINISTRATIVE: NDS = 45
ADMINISTRATIVE: SNDS = 45
ADMINISTRATIVE: SANDS = 45
ADMINISTRATIVE: DIN A = 45
ADMINISTRATIVE: DIN D = 45

LABELLING ONLY: NDS=47
LABELLING ONLY: SNDS=46
LABELLING ONLY: ANDS= n/a
LABELLING ONLY: SANDS=27
LABELLING ONLY: DIN A=103
LABEL STANDARD: DIN A=32
LABEL STANDARD: DIN D=22
LABEL STANDARD: DIN F=32

ADMINISTRATIVE: ANDS = 30
ADMINISTRATIVE: NDS = 31
ADMINISTRATIVE: SNDS = 33
ADMINISTRATIVE: SANDS = 30
ADMINISTRATIVE: DIN A = 16
ADMINISTRATIVE: DIN D = 17

LABELLING ONLY NDS = 56
LABELLING ONLY SNDS = 54
LABELLING ONLY ANDS = 58
LABELLING ONLY SANDS = 32
LABELLING ONLY DINA = 127
LABELLING STANDARD DINA = 32
LABELLING STANDARD DIND = 35
LABELLING STANDARD DINF = 34

ADMINISTRATIVE ANDS = 21
ADMINISTRATIVE NDS = 22
ADMINISTRATIVE SNDS = 35
ADMINISTRATIVE SANDS = 24
ADMINISTRATIVE DINA = 21
ADMINISTRATIVE DIND = 32

Biologics, fee class and type

NAS NDS = 300 days

CLIN C&M: NDS = 300
CLIN C&M: SNDS = 300
CLIN: SNDS = 300

C&M ANDS = 180
C&M: SNDS = 180
C&M: DINB = 210

COMP C&M: SNDS = 180

LABELLING ONLY: SNDS = 60

PUBLISHED DATA: SNDS = 300
ADMINISTRATIVE: NDS = 45
ADMINISTRATIVE: DINB = 45

Biologics, fee class and type

NAS NDS = 238 days

CLIN C&M: NDS = 244
CLIN C&M: SNDS = 291
CLIN: SNDS = 233

C&M ANDS = n/a
C&M: SNDS = 146
C&M: DINB = 153

COMP C&M: SNDS = 179

LABELLING ONLY: SNDS = 33

PUBLISHED DATA: SNDS = 177
ADMINISTRATIVE: NDS = 38
ADMINISTRATIVE: DINB = 36

Biologics, fee class and type

NAS NDS = 230 days

CLIN C&M NDS = 275
CLIN C&M SNDS = 296
CLIN SNDS = 272

C&M ANDS = 180
C&M SNDS = 168
C&M DINB = 192

COMP C&M SNDS = 177

LABELLING ONLY SNDS = 55

PUBLISHED DATA SNDS = 140
ADMINISTRATIVE: NDS = 42
ADMINISTRATIVE: DINB = n/a

Medical Device Evaluation:

This category is more complex. With respect to evaluating medical devices, there are different fees and performance standards depending on the Class of medical device. Fees increase, as does the length of time to evaluate a product, depending on the complexity of the product and the level of potential risk of that product. Thus, evaluating a Class II medical device has a lower user fee and a shorter performance standard than a Class IV medical device, which is defined as having more potential risk.

Table 2: Medical Device Evaluation
User Fees (Fee Lines) 2010-11 Performance Results (days) Performance Standard (days) 2011-12 Performance Results (days) 2012-13 Performance Results (days)
Medical Device - Evaluation (MDEVAL) Average review time to first decision
Performance: Most items in this category met the performance standard, those that did not are highlighted in yellow. New User Fees - Received* post April 1, 2011 New User Fees - Received* post April 1, 2011

Performance: All of the items in this category met the performance standard
New User Fees - Received* post April 1, 2011

Performance: All of the items in this category met the performance standard

Review 1 (average time in calendar days)

Class II = 14.7
Class II amendment = 10.25
Class II Private Label = 15.95
Class II Private Label amendment = 13.28
Class III = 69.64
Class III amendment = 66.47
Class IV = 104.84
Class IV amendment = 61.29

Review 1 (average time in calendar days)

Class II New = 15 days
Class III New = 60
Class III Near Patient = 60
Class III Manufacturing Amendment = 60
Class III Significant Amendment = 60
Class IV New = 75
Class IV Human-Animal Tissue =75
Class IV Manufacturing Amendment = 75
Class IV Significant Amendment = 75

Review 1 (average time in calendar days)

Class II New = 10.49 days
Class III New = 45.02
Class III Near Patient = 40.86
Class III Manufacturing Amendment = 25.92
Class III Significant Amendment = 43.25
Class IV New = 67.33
Class IV Human-Animal Tissue= 70
Class IV Manufacturing Amendment = 32.72
Class IV Significant Amendment = 52.14

Review 1 (average time in calendar days)

Class II New = 12.99 days
Class III New = 51.46
Class III Near Patient = 50.42
Class III Manufacturing Amendment = 37.80
Class III Significant Amendment = 52.14
Class IV New = 68.09
Class IV Human-Animal Tissue= 67.00
Class IV Manufacturing Amendment = 43.10
Class IV Significant Amendment = 63.64

Right to Sell and Establishment Licensing:

These fees are charged for both medical devices and drugs. The 'Right to Sell' allows industry to officially sell a regulated product in Canada and Establishment Licensing allows industry to manufacture / distribute / import / wholesale / test regulated products in Canada. These performance standards are straightforward, with a single fee and a single performance standard for each product line and service.

Table 3: Right to Sell and Establishment Licensing
User Fees (Fee Lines) 2010-11 Performance Results (days) Performance Standard (days) 2011-12 Performance Results (days) 2012-13 Performance Results (days)
Drugs - Right to Sell (DRTS) Performance Standards: 120 calendar days to update the Drug Product Database following notification 120 calendar days to update the Drug Product Database following notification Met: Average number of days: 9.1 Met: Average number of days = 7.1
Performance Results: 100% within 120 calendar days
Medical Devices - Right to Sell MDRTS) Performance Standards: 20 calendar days from deadline for receipt of annual notification to update the Medical Devices Active License Listing (MDALL) database 20 calendar days from deadline for receipt of annual notification to update the Medical Devices Active License Listing (MDALL) database Met: 99.8% within 20 calendar days Met: 99.9% within 20 Calendar days
Performance Results: 100% within 20 calendar days
Drug - Establishment Licensing (DEL) Performance Standards: 250 calendar days to issue / renew licence 250 calendar days to issue / renew licence Met: Average number of days: 121 Met: Average Number of days: 183
Performance Results: 100% within 250 calendar days
Medical Devices - Establishment Licensing (MDEL) Performance Standards: 120 calendar days to issue / renew licence 120 calendar days to issue / renew licence Met: Average number of days to issue / renew licence: 77 Met: Average number of days to issue / renew licence: 101
Performance Results: 99.5% issued within 120 calendar days

Appendix C

Mitigation Measures by Fee Line
Fee Type Current Mitigation Measures
DEVAL

Fee Remission:

  • Fee capped at 10% of the actual gross revenue earned from the drug's sales during the period beginning with day the drug is first sold in Canada and ending three years after that day; $500 processing fee

Fee Deferral:

  • If the person has not completed their first full fiscal year on the day when they make their submission or application then the fee is deferred for a two year period
MDEVAL

Fee Remission:

  • Fee capped at 2.5% if sales less than $100K during the period beginning with day the medical device is first sold in Canada under the license and ending two years after that day; $50 processing fee for Class III and IV

Fee Deferral:

  • Fee is deferred to the end of the company's first full fiscal year of operation.
DRTS

Fee Remissions:

  • Fee capped at 1.5% of the actual gross revenue from the sale of the drug (per DIN) in Canada in the previous calendar year

Fee Deferrals:

Fee is deferred to the end of their first full calendar year of selling the drug.

MDRTS

Fee Remission:

  • Reduced fee of $50 if annual gross revenue in previous calendar year is less than $20,000

Fee Deferral:

  • Fee is deferred to the end of their first full calendar year of selling the medical device.
DEL

Fee Remission:

  • Fee capped at 1% of the company's actual gross revenue for the previous calendar year

Fee Deferral:

  • Fee is deferred to the end of the company's first full calendar year of conducting activities under the establishment licence.
MDEL

Fee Remission:

  • Fee capped at 1% of the establishment's annual gross revenue for the previous calendar year

Fee Deferral:

  • Fee deferred to the end of the company's first full calendar year of conducting activities under the establishment licence.
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