Guidance Document: Risk Classification Guide for Licensed Dealers of Class A Precursors’ Inspection Observations (CS-GD-019)

Effective Date: 2019/12/09

Foreword

Guidance documents are meant to provide assistance to industry and health care professionals on how to comply with governing laws and Regulations. Guidance documents also provide assistance to staff within Health Canada to ensure laws and regulations are administered in a manner that is fair, consistent, and effective.

Guidance documents are administrative instruments not having force of law and, as such, allow for flexibility in approach. Alternate approaches to the principles and practices described in this document may be acceptable provided they are supported by adequate justification. Alternate approaches should be discussed in advance with the relevant programme area to avoid the possible finding that applicable statutory or regulatory requirements have not been met.

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 adequately assess the safety and security of controlled substances and precursors. Health Canada is committed to ensuring that such requests are justifiable and that decisions are clearly documented.

Table of Contents

  1. Purpose
  2. Scope
  3. Overview
  4. Appendices

1. Purpose

This guidance document is intended to help licensed dealers understand:

This document helps to ensure consistency among Health Canada inspectors during inspections of licensed dealers of Class A precursors so that the regulations are administered in a fair, consistent and effective way across Canada.

2. Scope

These guidelines apply to inspections that are conducted under section 31 of the Controlled Drugs and Substances Act (CDSA) to assess compliance with the Precursor Control Regulations (PCR).

This guide covers licensed dealers of Class A precursors, which are subject to inspections.

The following table shows the three types of icons used in this document, and the way they are intended to be used.

Important: Key or cautionary information to know.

Information: Supplementary information like citations and legal references.

Tip: Suggestions that can help people comply with the regulations.

3. Overview

Under the authority of section 31 of the CDSA, Health Canada inspects licensed dealers that conduct regulated activities, such as produce, package, import, export, sell or provide Class A precursors to assess their compliance with the PCR. This activity verifies that appropriate safety measures are in place to minimize the risk of diversion of Class A precursors to illicit markets.

During an inspection, an inspector notes deviations from the regulatory requirements found in the PCR. These deviations appear as observations in the inspection report provided to the establishment.

3.1 Assignment of the Risk to an Observation

Inspectors make observations when they note areas where the licensed dealer is not adequately meeting its regulatory requirements. Observations are classified as minor, major or critical according to the risk:

Critical Observation

An observation that identifies a significant and immediate and/or imminent risk to public health and safety, including risk of diversion, and prevents the detection of diversion, or involves fraud, misrepresentation, or falsification of information. The risk of diversion is immediate/imminent and high.

Major Observation

An observation of activities/procedures that may increase the risk to public health and safety, including risk of diversion, impairs the detection of diversion, or impairs the LD from taking actions to address the potential risk for diversion. The risk of diversion is moderate.

Minor Observation

An observation of activities/procedures that could increase the risk of diversion. The LD is generally able to prevent, detect and take actions to address potential risks for diversion. The risk of diversion is low.

Important: Some observations may be upgraded to a greater risk rating depending on the scope, frequency, and severity of the deviation.

Findings are communicated to the licensed dealer during the course of the inspection. It may be possible for the licensed dealer to correct the deviations during the inspection itself; if not, they must take corrective actions after the inspection to address the observations. When a critical observation is noted during an inspection, the inspector will bring this to the immediate attention of the licensed dealer and the Office of Controlled Substances (OCS). The inspector will inform the licensed dealer that the seriousness of the observation may result in the inspection being assigned a Non-Compliant (NC) rating.

Important: Recurring observations that are carried over from a previous inspection may be classified higher than initial observations of a similar nature.

All observations recorded in the Inspection Report indicate a contravention of the CDSA and its associated regulations and thus require corrective action, regardless of the overall inspection rating attributed to the inspection. Observations requiring immediate or expedited corrective actions will be identified for the licensed dealer.

Information: Refer to Appendix B for a list of sample observations Health Canada considers critical, major, and minor. Please note that this list is not exhaustive, and other observations may be added where appropriate.

3.2 Assignment of the Inspection Rating

After the inspection, the number and severity of the observations noted by the inspector informs the assignment of an overall inspection rating.

The overall rating indicates whether the licensed dealer is compliant or non-compliant with the requirements of the CDSA and PCR.

The possible inspection ratings are:

Compliant (C)

At the time of the inspection, the regulated party has demonstrated that the activities it conducts are in compliance with the CDSA and its associated regulations. A ‘C’ rating does not mean that there were no observations or corrective actions required.

Non-Compliant (NC)

At the time of the inspection, the regulated party has not demonstrated that the activities it conducts are in compliance with the CDSA and its associated regulations. The observations taken together indicate a situation that would present a significant risk of diversion or a potential risk to public health or safety.

Generally, a C rating will be assigned in situations where:

Generally, an NC rating will be assigned in situations where:

An NC rating may result in compliance and enforcement actions. If further enforcement actions are considered (such as licence suspension), the licensed dealer will be given the opportunity to be heard. The process to be followed will be outlined in the letter communicating the decision.

A follow-up inspection may be required to verify the implementation of corrective actions.

For more information on compliance and enforcement, please refer to the Compliance and enforcement policy framework and Compliance and Enforcement Policy for Controlled Substances and Precursors (CS-POL-001).

3.3 Additional Guidance

For more information on the overview of Health Canada inspections, please refer to A Guide to Health Canada Inspections which outlines the rights and responsibilities of regulated parties in relation to Health Canada inspections.

4. Appendices

4.1 Appendix A - Glossary

Acronyms

A/RPIC

Alternate Responsible Person in Charge

CDSA

Controlled Drugs and Substances Act

OCS

Office of Controlled Substances

PCR

Precursor Control Regulations

RCMP

Royal Canadian Mounted Police

RPIC

Responsible Person in Charge

SPIC

Senior Person in Charge

Terms

Important: If there is any conflict between a definition in this guide and a definition in the Controlled Drugs and Substances Act and the Precursor Control Regulations, the definition in the Act/Regulations prevails.

Class A Precursor

(a) any substance set out in Part 1 of Schedule VI to the Act; and

(b) any preparation or mixture referred to in Part 3 of Schedule VI to the CDSA that contains a substance referred to in paragraph (a)

Controlled Substance

a substance included in Schedule I, II, III, IV or V of the CDSA

Diversion

the transfer of substances listed in the schedules of the CDSA from the licit to illicit market

Inspection

Monitoring and assessment against the applicable requirements of the Act and its associated regulations. Inspections are routinely conducted based on risk to assess compliance.

Inspector

Any person designated as an inspector under section 30 of the CDSA

Licensed Dealer

the holder of a licence

Observation

A deviation or deficiency (i.e., non-compliance) to the requirements of the regulations noted by an inspector during the inspection that is documented in writing in the inspection report.

Regulated Party

any organization that is regulated under the CDSA and can be inspected as per the regulations therein

4.2 Appendix B -Sample observations

Important: The following are sample observations inspectors may note during an inspection. This list of sample observations is not intended to be all-inclusive, and inspectors may use other observations where appropriate.

4.2.1 Destruction

PCR 47(2), 47(3), 47(4)

Critical Observation

Major Observation

Minor Observation

4.2.2 Security and Loss/Theft

PCR 83, 85(3), 90(1), 20(1)(b.1), 20(1)(c), 90(2), 90(3)

Critical Observation

Major Observation

Minor Observation

4.2.3 Dealer’s Licence

PCR 14(1)(a), 6.1, 7(a-b), 88

Critical Observation

Major Observation

Minor Observation

4.2.4 End-Use Declaration (EUD)

PCR 8, 85(2), 85(5)

Critical Observation

Major Observation

Minor Observation

4.2.5 Transportation

PCR 9(1.1), 9(2)

Critical Observation

Major Observation

Minor Observation

4.2.6 Personnel

PCR 13(2), 13(3), 13(4), 13(5), 20(1)(a-b), 21

Critical Observation

Major Observation

Minor Observation

4.2.7 Importation and Exportation

PCR 6(3), 7(c-d), 28, 28.1, 35, 35.1, 43

Critical Observation

Major Observation

Minor Observation

4.2.8 Record Keeping

PCR 85(1), 85(5), 85(6), 85(7)

Critical Observation

Major Observation

Minor Observation

4.2.9 Suspicious Transactions

PCR 86(1), 86(3)

Critical Observation

Major Observation

Minor Observation

4.2.10 Annual Report

PCR 87

Critical Observation

Major Observation

Minor Observation

4.3 Appendix C - References

Laws and Regulations

Controlled Drugs and Substances Act

Precursor Control Regulations

Related Documents

Compliance and enforcement policy framework

Compliance and Enforcement Policy for Controlled Substances and Precursors (CS-POL-001)

Guidance Document for the Requirements and Responsibilities of Licensed Dealers of Class A Precursors

Inspection Strategy for Licensed Dealers of Controlled Substances and Class A Precursors (CS-POL-002)

Websites

A Guide to Health Canada Inspections

Precursor Chemicals

Regulating Controlled Substances and Precursors

Reporting Loss or Theft of Controlled Substances and Precursors

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