Guidance Document: Risk Classification Guide for Licensed Dealers of Controlled Substances’ Inspection Observations (CS-GD-017)

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 ensure consistency among Health Canada inspectors during licensed dealer inspections of controlled substances so that the regulations are administered in a fair, consistent and effective manner 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 Narcotic Control Regulations (NCR), Parts G and J of the Food and Drug Regulations(FDR-G or FDR-J), the Benzodiazepines and Other Targeted Substance Regulations (BOTSR).

This guide covers the following controlled substances which are subject to licensed dealer 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 activities with controlled substances, such as produce, package, import, export, sell or send, transport or deliver to assess their compliance with the CDSA and its associated regulations. Inspections verify that appropriate security measures are in place at the licensed dealer to minimize the risk of diversion of controlled substances to illegal markets.

During an inspection, an inspector notes deviations from the regulatory requirements found in CDSA and its associated regulations. 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 observations 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 establishment is compliant or non-compliant with the requirements of the CDSA and its associated regulations.

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 action is considered (such as licence suspension), the licensed dealer may 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.

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/QPIC

Alternate Qualified Person in Charge

BOTSR

Benzodiazepines and Other Targeted Substances Regulations

CDSA

Controlled Drugs and Substances Act

FDR

Food and Drug Regulations

NCR

Narcotic Control Regulations

OCS

Office of Controlled Substances

QPIC

Qualified 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 Narcotic Control Regulations and/or Food and Drug Regulations and/or Benzodiazepines and Other Targeted Substances Regulations, the definition in the Act/Regulations prevails.

Controlled Drug

a controlled substance included in the Schedule related to section G of the Food and Drug Regulations, or a product or compound that contains the substance

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

Licensed Dealer

the holder of a licence

Narcotic

any substance set out in the schedule of the Narcotic Control Regulations or anything that contains the substance

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

Restricted Drug

a controlled substance included in the Schedule related to section J of the Food and Drug Regulations, or a product or compound that contains the substance

Targeted substance

a controlled substance included in Schedule 1 of the Benzodiazepines and Other Targeted Substances Regulations, or a product or compound that contains the substance

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 cite other observations where appropriate.

4.2.1 Advertising and Labelling

NCR: NCR 70(a), NCR 70(c), NCR 24

FDR: FDR G.06.004(a), FDR G.06.004(b), FDR G.02.050, FDR J.01.063(1), FDR J.01.058

BOTSR: BOTSR 78(a), BOTSR 78(b), BOTSR 31

Critical observations

Major observations

Minor observations

4.2.2 Destruction

NCR: NCR 27.5, NCR 27.6, NCR 28.4

FDR: G.02.067, G.02.068, G.02.075, J.01.071, J.01.072, J.01.078

BOTSR: BOTSR 36, BOTSR 37, BOTSR 44

Critical observations

Major observations

Minor observations

4.2.3 Security

NCR: NCR 13(1)(a), NCR 26.1, NCR 27, NCR 27.1, NCR 27.2, NCR 27.3, NCR 27.4, NCR 28.3, NCR 26

FDR: G.02.018(1)(a), G.02.060, G.02.061, G.02.062, G.02.063, G.02.064, G.02.065 G.02.066, G.02.074, J.01.026(1)(a), J.01.065, J.01.066, J.01.062, J.01.064, J.01.065, J.01.066, J.01.067, J.01.068, J.01.069, J.01.070, J.01.077

BOTSR: BOTSR 20(1), BOTSR 34.1, BOTSR 35, BOTSR 35.1, BOTSR 35.2, BOTSR 35.3, BOTSR 35.4, BOTSR 43, BOTSR 71, BOTSR 34

Critical observations

Major observations

Minor observations

4.2.4 Dealer's Licence

NCR: NCR 3(1)(a)(i), NCR 8(1)

FDR: G.01.005(1)(a)(i), G.02.001(1), J.01.004(1)(a), J.01.009(1)

BOTSR: BOTSR 3(1), BOTSR 12(1), BOTSR 74

Critical observations

Major observations

Minor observations

4.2.5 Personnel

NCR: NCR 8(2), NCR 9.1, NCR 9.2, NCR 13(1), NCR 14.1, NCR 14.2(1)

FDR: G.02.001 (2), G.02.003, G.02.004, G.02.018(1), G.02.022, G.02.023(1), J.01.009(2), J.01.011, J.01.012, J.01.026(1), J.01.030, J.01.031(1)

BOTSR: BOTSR 12(2), BOTSR 14, BOTSR 15, BOTSR 20(1), BOTSR 21.1, BOTSR 21.2(1)

Critical observations

Major observations

Minor observations

4.2.6 Documents

NCR: NCR 28, NCR 28.1, NCR 29, NCR 29.1, NCR 29.2

FDR: G.02.071, G.02.072, G.02.077, G.02.078, G.02.079, J.01.075, J.01.076, J.01.084, J.01.085, J.01.086

BOTSR: BOTSR 40, BOTSR 41, BOTSR 75, BOTSR 76, BOTSR 77

Critical observations

Major observations

Minor observations

4.2.7 Annual Reports

NCR: NCR 28.5

FDR: G.02.076, J.01.079

BOTSR: BOTSR 45

Critical observations

Major observations

Minor observations

4.2.8 Sales

NCR: NCR 25, NCR 25.1, NCR 25.2, NCR 25.3, NCR 25.4, NCR 25.5

FDR: G.02.051, G.02.052, G.02.053, G.02.054, G.02.055, G.02.056, J.01.059(1), J.01.060

BOTSR: BOTSR 32

Critical observations

Major observations

Minor observations

4.2.9 Orders

NCR: NCR 25.6, NCR 25.7, NCR 28.2

FDR: G.02.057, G.02.058, G.02.059, G.02.073

BOTSR: BOTSR 33, BOTSR 33.1, BOTSR 42, BOTSR 70

Critical observations

Major observations

Minor observations

4.2.10 Importation and Exportation

NCR: NCR 8, NCR 18(1), NCR 18.3, NCR 18.6, NCR 21(1), NCR 21.3, NCR 21.6, NCR 26(2)

FDR: G.02.001, G.02.030(1), G.02.033, G.02.036, G.02.040(1), G.02.043, G.02.046, G.02.060(2), J.01.009, J.01.038(1), J.01.041, J.01.044, J.01.048(1), J.01.051, J.01.054, J.01.062(2)

BOTSR: BOTSR 12(3), BOTSR 12(4), BOTSR 25(1), BOTSR 25.3, BOTSR 25.6, BOTSR 28(1), BOTSR 28.3, BOTSR 28.6, BOTSR 34(2)

Critical observations

Major observations

Minor observations

4.2.11 Test Kits

NCR: NCR 4

FDR: G.01.006, J.01.005

BOTSR: BOTSR 4

Critical observations

Major observations

Minor observations

4.2.12 Activities

NCR: NCR 8(1), NCR 8(5), NCR 14.2(1), NCR 14.3(1)

FDR: G.02.001(1), G.02.023(1), G.02.024(1), J.01.009(1), J.01.031(1), J.01.032(1)

BOTSR: BOTSR 12(1), BOTSR 21.2(1), BOTSR 21.3(1)

Critical observations

Major observations

Minor observations

4.3 Appendix C - References

Acts and Regulations

Controlled Drugs and Substances Act (CDSA)

Narcotic Control Regulations (NCR)

Food and Drug Regulations (FDR-G or FDR-J)

Benzodiazepines and Other Targeted Substance Regulations (BOTSR)

Related Documents

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

Destruction of narcotics, controlled and restricted drugs and targeted substances by licensed dealers - Guidance document (CS-GD-020)

Directive on Physical Security Requirements for Controlled Substances and Drugs Containing Cannabis

Inspection Guide for Licensed Dealers of Controlled Substances (CS-GD-016)

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

Policy Statement on the Electronic Ordering of Controlled Substances

Recording and Reporting of Suspicious Transactions for Controlled Substances and Precursors (CS-GD-025)

Reporting Loss or Theft of Controlled Substances and Precursors (CS-GD-005)

Websites

A Guide to Health Canada Inspections

Compliance and enforcement policy framework

Controlled substances - Licences

Regulating Controlled Substances and Precursors

Reporting Loss or Theft of Controlled Substances and Precursors

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