Fees for the Review of Human and Veterinary Drug Establishment Licence Applications

Foreword

Guidance documents are meant to provide assistance to industry and health care professionals on how to comply with governing statutes and regulations. They also provide assistance to Health Canada staff on how mandates and objectives should be implemented in a manner that is fair, consistent, and effective.

This guidance document is an administrative instrument not having force of law; it provides clarification on the applicability of the Fees in Respect of Drugs and Medical Devices Order and how to comply with the associated requirements.

It is important to note that Health Canada reserves the right to request information or material, or define conditions not specifically described in this document, in order to allow the Department to administer fees associated with providing regulatory oversight of activities related to drugs and medical devices. Health Canada is committed to ensuring that such requests are justifiable and that decisions are clearly documented.

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

Please note that this guidance document is in effect as of April 1, 2020.

Table of Contents

Related guides and help

Related acts and regulations

1. Introduction

As required by the Food and Drugs Act and its regulations, any person in Canada must obtain a drug establishment licence (DEL) if they are engaged in any of the following six regulated activities with respect to drugs - fabricate, import, distribute, wholesale, package/label, and test. Health Canada has charged fees since 1995 to recover some of the costs associated with the regulatory oversight of these activities.

This document provides guidance on how the fees for the review of an application for a DEL will be administered, as stipulated in the Fees in Respect of Drugs and Medical Devices Order.

1.1 Objective

This guidance document is intended to assist applicants in fulfilling regulatory requirements related to DEL fees as per the Food and Drugs Act, its regulations, and order. In the case of any discrepancies between this document and the Food and Drugs Act (FDA), its regulations, and order, the latter three take precedence over this document.

1.2 Policy statements

Those submitting DEL applications for human or veterinary drugs will be charged a fee for the examination of the licence application, including all compliance and enforcement and supporting activities needed to ensure that the applicant/DEL holder conforms to all regulatory requirements. Fees are proportionate to the type and complexity of the regulated activity in which the applicant is engaged. The applicable fees are laid out in Schedules 3 and 4 of the Fees in Respect of Drugs and Medical Devices Order. Fees can be waived for those who qualify for a fee exemption. Refer to Section 3.4 Fee mitigation and exemptions for further details on fee exemptions.

As of April 1, 2020, new fees will be in effect. These fees are being phased-in over 4 years for human/human and veterinary DEL fees as laid out in Schedule 3 and 7 years for veterinary only DEL fees as laid out in Schedule 4. They will also increase annually to keep up with inflation. Refer to Section 3.6 Applicable fees for further details.

Should fees not be paid, Health Canada has the authority to withhold services, approvals or rights and privileges. This may include the cancellation of an establishment licence.

Further, as of April 1, 2020, Health Canada:

2. The DEL fee

This section provides guidance about the structure and components of the DEL fee.

2.1 Fees for DEL applications

The same DEL fees apply to the examination of the following three types of applications:

The manner in which the DEL fee is calculated is the same for human/human and veterinary use, and veterinary use only drugs. However, there are two separate fee schedules; one for establishments dealing with drugs for human/human and veterinary use, with fees phasing in over 4 years, and a separate fee schedule for drugs for veterinary use only, with fees phasing-in over 7 years.

2.2 How the DEL fee is calculated

There are two components to the DEL fee:

2.2.1 The domestic component of the DEL fee

The fees associated with each regulated activity are listed in the Fees in Respect of Drugs and Medical Devices Order, in Schedule 3 for drugs for human/human and veterinary use and in Schedule 4 for drugs for veterinary use only. The DEL fee is charged according to the regulated activity listed on the application for each domestic building.

The fee per regulated activity reflects the level of regulatory effort needed to oversee that activity. Regulated activities, ordered from the greatest to the least level of regulatory oversight required (also known as 'most upstream'), are:

The domestic component of the DEL fee is determined based on the most upstream activity, regardless of the number of activities conducted at the domestic building. This applies to each domestic building that is listed on the licence or application. For example, an application for both the activity of importation and wholesale at one domestic building will be charged the importation fee.

2.2.2 The building outside Canada (or foreign building) component of the DEL fee

The second DEL fee component is determined based on the number of unique foreign buildings listed on the licence or application.

For a new or reinstated DEL application, the foreign building fee is determined based on the number of unique foreign buildings listed on the application, regardless of whether that building handles finished dosage form (FDF) products or active pharmaceutical ingredients (APIs).

For annual licence review applications, the foreign building fee is determined based on each unique foreign building listed on the licence at any point during the Government of Canada fiscal year Footnote 2, regardless of whether that building handles FDF products or APIs.

2.3. DEL fee proration

The application for a new or reinstated DEL, or an application to amend a DEL to request the addition of a new domestic building to the licence, could be subject to fee proration, depending on when during the Government of Canada fiscal year the application is received (see Table 1). Applications for the annual review of an existing DEL are not eligible for fee proration.

The percentage of the fee payable for applications received in each quarter of the Government of Canada fiscal year is shown in Schedule 5 of the Fees in Respect of Drugs and Medical Devices Order and in Table 1, below. For example, if the application to amend a licence to add a new domestic building is received on November 15, that application would be charged 50% of the full fee.

Table 1: Fee Proration for Eligible DEL Applications
Application Receipt Date Percent of Full Fee Payable
April 1 to June 30 100%
July 1 to September 30 75%
October 1 to December 31 50%
January 1 to March 31 25%

2.4 Summary of how the DEL fee is calculated

The applicable components of the DEL fee are summarized by application type in Table 2.

Table 2: DEL Fee Components by Application Type
Application Type Domestic
Fee Component
Building Outside Canada (Foreign Building)
Fee Component
When is the fee charged? Is fee proration applicable?
Fee Basis Fee Calculation Fee Basis Fee Calculation
New or Reinstated Drug Establishment Licence (DEL) Fee to review an application to obtain an establishment licence for one or more domestic buildings. One fee per building, where the fee charged corresponds to the activity requiring the highest level of regulatory oversight listed on the application (most upstream activity). The same fee applies to FDF and/or API buildings. Fee to review the application to list one or more unique foreign buildings on the establishment licence associated with each domestic building. Flat fee per unique foreign building, regardless of activity. The same flat fee applies to FDF and API buildings. Fee is charged at the time of application, payable upon invoice issuance. Yes
DEL Amendment to add a domestic building Fee to review an application to add a domestic building to an existing establishment licence. The fee charged corresponds to the activity requiring the highest level of regulatory oversight listed on the application (most upstream activity). The same fee applies to FDF and/or API buildings. Fee to review the application to list one or unique more foreign buildings on the establishment licence associated with the new domestic building, if applicable. Flat fee per unique foreign building, regardless of activity. The same flat fee applies to FDF and API buildings.

Domestic fee component is charged at the time of the amendment application, payable upon invoice issuance.

Foreign building fee is charged at the time of annual licence review, payable upon invoice issuance.

Yes
Annual Licence Review (ALR) Fee to review an ALR application for all domestic buildings listed on the establishment licence. One fee per building, where the fee charged corresponds to the activity requiring the highest level of regulatory oversight listed on the application (most upstream activity). The same fee applies to FDF and/or API buildings. Fee to review an ALR application for all unique foreign buildings that were listed on the establishment licence at any point during the Government of Canada fiscal year. Flat fee per unique foreign building, regardless of activity. The same flat fee applies to FDF and API buildings. Fee is charged at the time of annual licence review application, payable upon invoice issuance. No

3. Guidance

This section provides detailed information on the timing of fee payment, mitigation, exemptions, and credit for missed performance standards.

3.1 Timing of fee payment

Following DEL screening and upon determination that the application is accepted for further review, Health Canada will issue a notice to the applicant and an invoice for the applicable fee. For information about the DEL application and licensing process, please refer to the Management of Applications and Performance for Drug Establishment Licences (GUI-0127) and the Drug Establishment Licence Application: Forms and Instructions (FRM-0033).

Fees may be paid by credit card (Visa, MasterCard, or American Express), cheque, money order, international bank draft, or bank wire. All payments must include a reference to the DEL licence number or company's Health Canada account number in order to avoid delays or errors. Further instructions for the payment of fees are outlined in How to Pay Your Establishment License Fees.

3.2 Late payments

Payment is due upon issuance of the invoice. Interest on overdue accounts begins to accrue 30 days from the date of invoice issuance.

In the event that the applicable fee is not paid in full within 30 days of the invoice date, the application will be placed on cost recovery hold, at which point all work associated with the application will stop. This hold will remain in place until the required payment is made. If payment is not received within 30 days following the cost recovery hold, the application may be rejected. In the case of annual licence review, the licence may be subject to cancellation.

Health Canada is committed to working with applicants whose accounts are in arrears, and encourages them to contact us as soon as possible to establish a monthly payment arrangement.

Applicants who have questions regarding their account may contact Accounts Receivable at 1-800-815-0506 or by email at hc.ar-cr.sc@canada.ca.

3.3 Overpayments

Any overpayment of fees will automatically be credited to the associated account. To request a refund of a credit balance, a written request must be submitted by email to the Cost Recovery Invoicing Unit at hc.criu-ufrc.sc@canada.ca.

Applicants may also request that their credit balance be applied to their account to pay (or partially pay) future fees in advance. Applicants wishing to do so must submit a request and attach a copy of their most recent statement, indicating the account or client number, as well as the available credit amount.

Applicants wishing to dispute the fee indicated on their invoice may submit a request for reconsideration by email at hc.criu-ufrc.sc@canada.ca. To ensure the processing of an application is not impeded by a cost recovery hold, it is important that applicants pay their fee on time, even as Health Canada investigates a fee disagreement. Once the review of the fee is complete, any outstanding credits will be issued.

3.4 Fee mitigation and exemptions

Fees can be requested to be waived or reduced for applications filed:

To be considered for mitigation, applicants must apply at the time of filing by indicating the type of mitigation requested on the application form. In the case of small businesses, applicants will be required to register as a small business and ensure that their registration information is kept up to date (see below for more information).

3.4.1 Small business

Applicants who meet the criteria of a small business will be invoiced at the reduced fee described below. However, should Health Canada subsequently determine that the applicant does not qualify as a small business the full fee is payable. In the event that the reduced amount had already been invoiced and paid, the difference between the full fee and the original invoice is payable.

A small business is definedFootnote 3 as:

Applicants that meet the above definition are eligible for a 25% reduction of the fee payable.

Applicants must indicate that they are requesting small business mitigation on the Drug Establishment Licence Application: Forms and Instructions (FRM-0033). Applicants must visit Funding and Fees and formally register as a small business by providing the information below. Applicants who have not registered as a small business will be charged the full fee.

Affiliated companies are those that:

In the event that a company has not yet completed a full fiscal year, it is permissible to use estimates/projections with respect to annual gross revenue and number of employees. In this situation Health Canada will follow-up once the applicant's fiscal year end date has passed to verify the company's small business status.

Note that at any point in time, Health Canada may request additional information from the applicant to verify the company's small business status. This may include (but is not limited to):

3.4.2 Publicly funded health care institutions or government organizations

All applications filed by publicly funded health care institutions, or any branch or agency of the Government of Canada or of a province or territory, are exempt from fees.

A publicly funded institution is defined as an institution that is funded by the Government of Canada or a provincial government, and is:

In order to be considered for the publicly funded health care institution or Government organization fee exemption, the applicant must indicate it on their Drug Establishment Licence Application: Forms and Instructions (FRM-0033).

3.5 Missed performance standards

Performance for all applications filed on or after April 1, 2020 will be tracked individuallyFootnote 4. The Performance Standards for Fees in Respect of Drugs and Medical Devices Order defines the service standard applicable to each fee associated with drugs and medical devices. For drug establishment licences, the performance standard reflects the time to complete the review of the application. This is defined as the period from the date of receipt of the complete application to the date of approval or rejection of the application, not including any clock pauses or cost recovery holds.

Please see the Management of Applications and Performance for Drug Establishment Licences guide(GUI-0127) for more information regarding the performance standard for DEL applications and the associated pause the clock policy.

In the event that a regulatory decision is not provided within the established DEL performance standard of 250 calendar days, applicants will be credited 25% of the fee originally paid. Health Canada will notify the applicant accordingly following the processing of the application. Note that Health Canada joint and parallel reviews with other regulatory agencies will be exempt from the application of the performance standard remissions.

3.6 Applicable fees

Applicable DEL fees are laid out in Schedules 3 and 4 of the Fees in Respect of Drugs and Medical Devices Order. Beginning on April 1, 2021, fees will increase annually by an amount equivalent to the Consumer Price Index (CPI) from the previous year. An annual adjustment is necessary to ensure that fees continue to keep pace with the impact of inflation on regulatory oversight costs. Each fall, Health Canada will publish a Notice of Intent in the Canada Gazette, setting out the fees to be implemented the following April 1, and update Funding and Fees accordingly.

3.7 General contact information

Application Inquiries

Drug Establishment Licensing Unit
Health Canada
200 Eglantine Driveway, Tunney's Pasture
Ottawa, Ontario
K1A 0K9

General DEL questions:
hc.del.questions-leppp.sc@canada.ca

Annual Licence Review application questions:
hc.del.alr-eal.lepp.sc@canada.ca

Fee Inquiries

Applicants with fee inquiries and/or those who wish to dispute a fee that is subject to this guidance document should contact:

Cost Recovery Invoicing Unit
Health Canada
200 Eglantine Driveway, Tunney's Pasture
Ottawa, Ontario K1A 0K9
By email: hc.criu-ufrc.sc@canada.ca

Invoice Payment Inquiries

Accounts Receivable
Address Locator: 1918B
18th Floor, Room 1804B, Jeanne-Mance Building
161 Goldenrod Driveway, Tunney's Pasture
Ottawa, ON K1A 0K9
By email: hc.ar-cr.sc@canada.ca
By phone: 613-957-1052 or 1-800-815-0506
By fax: 613-957-3495

Appendix A - Current fee deferrals and remissions

Effective April 1, 2020, Health Canada no longer offers deferrals for applicants that have not completed their first calendar year of conducting activities under a DEL, or remissions associated to actual gross revenue. The following information is specific to applicants who have applied for, or been granted a fee deferral or remission, prior to April 1, 2020, as per Regulations Amending and Repealing Certain Regulations Made under the Financial Administration Act.

1.1 Deferred payments

1.1.1 Drug establishment licence

For an applicant who has not completed its first full calendar year of conducting activities under any DEL, the payment of the applicable DEL fee is deferred until the end of that first full calendar year. "Calendar year" means a period of 12 consecutive months commencing on January 1. Following the end of the deferral period, the applicant must pay all of the applicable fees.

If it is determined, on the basis of any information available to Health Canada, that an applicant does not qualify for payment deferral, all applicable fees are immediately payable with interest.

1.1.2 Drug establishment licence that is in respect of veterinary drugs only

For an applicant who has not completed its first full calendar year of conducting activities under any DEL, the payment of the applicable DEL fee is deferred until 90 days after the end of that first full calendar year. "Calendar year" means a period of 12 consecutive months commencing on January 1. Following the end of the deferral period, the applicant must pay all of the applicable fees.

If it is determined, on the basis of any information available to Health Canada, that an applicant does not qualify for payment deferral, all applicable fees are immediately payable with interest.

1.2 Fee remission

1.2.1 Drug establishment licence

If an applicant's total payable fee is greater than 1% of the actual gross revenue generated by activities conducted under a DEL during the previous calendar year, fee remission will be reviewed and considered. The amount remitted will equal the difference between the total applicable fees and the amount of 1% of the applicant's actual gross revenue.

If an applicant wishes to apply for fee remission, it must make this request by submitting a Drug Establishment Licence Calculation Chart, and a Certified Statement of Revenue, signed by the individual responsible for the applicant's financial affairs, that sets out the actual gross revenue along with the application. The statement can be a signed copy of the applicant's general ledger or signed copy of sales logs from the general ledger.

1.2.2 Drug establishment licence that is in respect of veterinary drugs only

If an applicant's total payable fee is greater than 1.5% of the actual gross revenue generated by activities conducted under a DEL for veterinary drugs only during the previous calendar year, fee remission will be reviewed and considered. The amount remitted will equal the difference between the total applicable fees and the amount of 1.5% of the applicant's actual gross revenue.

If an applicant wishes to apply for fee remission, it must make this request by submitting a Drug Establishment Licence Calculation Chart, and a Certified Statement of Revenue, signed by the individual responsible for the applicant's financial affairs, that sets out the actual gross revenue along with the application. The statement can be a signed copy of the applicant's general ledger or signed copy of sales logs from the general ledger. The Certified Statement of Revenue must be provided within 90 days after the day on which the first calendar year ends.

1.2.3 Confirmation of the actual gross revenue

If it is determined, based on any information available to Health Canada, that the information provided by the applicant in support of a request for fee remission was not adequate to determine their actual gross revenues, Health Canada may require the applicant to provide sales records that have been audited by a qualified independent auditor (i.e., a chartered accountant). The audited records are to be used for the purpose of determining the fee payable or the amount of the remission.

If the applicant does not submit audited sales records within 60 days after Health Canada makes an official request for such records, remission will be automatically denied. The full DEL fee will be payable with interest.

Footnotes

Footnote 1

Refers to the period determined by a business for calculating its annual ("yearly") financial statements for tax purposes or other annual reporting responsibilities.

Return to footnote 1 referrer

Footnote 2

The Government of Canada fiscal year refers to a period of 12 consecutive months beginning on April 1 in one year and ending on March 31 in the following year.

Return to footnote 2 referrer

Footnote 3

Treasury Board of Canada Secretariat, 2016. Hardwiring Sensitivity to Small Business Impacts of Regulation: Guide for the Small Business Lens https://www.canada.ca/en/treasury-board-secretariat/services/federal-regulatory-management/guidelines-tools/guide-small-business-lens.html

Return to footnote 3 referrer

Footnote 4

Note that performance for all applications filed prior to April 1, 2020, will continue to be monitored rigorously and processed.

Return to footnote 4 referrer

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