Guidance Document: Risk Classification Guide for Licensed Dealers of Controlled Substances’ Inspection Observations (CS-GD-017)
Effective Date: 2019/12/09
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
- 4.1 Appendix A - Glossary
- 4.2 Appendix B -Sample observations
- 4.3 Appendix C - References
This guidance document is intended to help licensed dealers understand:
- the classification of observations noted during an inspection according to risk;
- the assignment of an overall compliance rating to an inspection;
- how to comply with the regulations noted below; and
- situations that Health Canada considers unacceptable and that may result in a non-compliant rating (NC) and/or compliance and enforcement actions (Appendix B)
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.
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:
- Targeted Substances
- Controlled drugs
- Restricted drugs
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.
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.
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:
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.
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.
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.
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:
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.
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:
- few major observations focused on isolated issues are noted; or
- only minor observations are noted.
Generally, an NC rating will be assigned in situations where:
- a critical observation is noted during an inspection;
- numerous major observations are noted during an inspection, indicating that the company does not have adequate systems in place to minimize the risk of diversion; or
- major or minor observations noted during previous inspections have been repeated, indicating that the company did not:
- implement the corrective actions submitted following the previous inspection; and/or
- put in place adequate preventative actions in a timely manner to avoid recurrence of such deviations.
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.
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.
Alternate Qualified Person in Charge
Benzodiazepines and Other Targeted Substances Regulations
Controlled Drugs and Substances Act
Food and Drug Regulations
Narcotic Control Regulations
Office of Controlled Substances
Qualified Person in Charge
Senior Person in Charge
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.
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
a substance included in Schedule I, II, III, IV or V of the CDSA
the transfer of substances listed in the schedules of the CDSA from the licit to illicit market
the holder of a licence
any substance set out in the schedule of the Narcotic Control Regulations or anything that contains the substance
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.
any organization that is regulated under the CDSA and can be inspected as per the regulations therein
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
a controlled substance included in Schedule 1 of the Benzodiazepines and Other Targeted Substances Regulations, or a product or compound that contains the substance
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.
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
- The licensed dealer was found to be advertising controlled substances on its website and social media.
- The licensed dealer was found to be advertising a targeted substance under a name that does not match the name on its licence.
- The licensed dealer was found to have a picture of its Health Canada dealer's licence and the Health Canada logo on its website.
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
- No records of destruction were kept by the licensed dealer.
- There were no witnesses during a destruction
- The licensed dealer did not obtain Health Canada's approval before the destruction of controlled substances.
- The licensed dealer destroyed controlled substances in the presence of unqualified witnesses.
- Records of destruction were missing the name and quantity of controlled substances destroyed, date and method of destruction, the name and title of the witnesses who attended the destruction.
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
- The licensed dealer had an unexplained loss of controlled substances.
- Access to controlled substances was not restricted to persons whose presence is required by their work responsibilities.
- The tamper evidence seal was not adequate or suitable for detecting diversion.
- The licensed dealer was found to store documented controlled substances in an unsecure containment or location.
- The licensed dealer exceeded the maximum illicit value limit of their vault level.
- Not all sensors and/or alarms for vaults or cages were tested as part of the licensed dealer's regular vault/cage testing to confirm that the security system was operational.
- Changes to the security measures at the licensed dealer's site were made without prior approval from the OCS.
- The licensed dealer did not adequately investigate the loss of controlled substances.
- The internal procedure for the detection of losses and thefts was inadequate.
- The licensed dealer maintained incomplete and/or inaccurate records of transportation, such as chain of signatures.
- A suspicious transaction for controlled substances was not identified or verified by the licensed dealer.
- The vault or cage contained articles and/or products other than controlled substances.
- The licensed dealer reported a loss or theft to Health Canada after the 72 hours period.
- Loss or theft reports that were submitted were incomplete.
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
- The licensed dealer was found to possess a controlled substance that was not listed on its licence.
- The licensed dealer did not follow the terms and conditions set out in its licence.
- The licensed dealer did not inform Health Canada of their name change.
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)
- The licensed dealer was performing regulated activities outside the working hours of any Qualified Person in Charge or Alternate Qualified Person in Charge.
- The Qualified Person in Charge was not sufficiently supervising the activities of the licensed dealer when regulated activities were occurring with controlled substances.
- The licensed dealer failed to obtain Health Canada's approval prior to hiring a new Person-in-Charge.
- The licensed dealer did not notify Health Canada within 10 days of changes to the Senior Person in charge.
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
- There was a complete lack of record retention of controlled substances received at the licensed dealer
- The monthly physical inventory did not include all controlled substances at the premises.
- The monthly physical inventory records contained inaccurate information.
- The monthly activities report did not contain complete or accurate information in regards to the physical inventory.
- The process for performing the monthly inventory was deficient.
- Records were not maintained for 2 years.
- Documents pertaining to imports or exports were missing.
- Supporting documents (e.g. logs, purchase orders, chain of signatures and manufacturing records) were missing or were not available.
- Inventory records were stored offsite, therefore were unavailable at the licensed site.
- The date indicated on the records was not always the date that the products were received by the licensed dealer.
- Monthly activities reports were not sent to Health Canada within the prescribed timelines.
- Copies of monthly activities reports submitted to Health Canada were not available during inspection.
NCR: NCR 28.5
FDR: G.02.076, J.01.079
BOTSR: BOTSR 45
- The licensed dealer did not prepare an annual report.
- The annual report did not contain complete or accurate information in regards to the physical inventory.
- The annual report was not sent to Health Canada within the prescribed timelines.
- Copies of annual reports submitted to Health Canada were not available during inspection.
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
- The licensed dealer sold or provided a controlled substance to an unauthorized person.
- The licensed dealer provided substances to a pharmacist or practitioner named in a notice of restriction.
- The licensed dealer did not have a system for checking orders against notices of restriction.
- The system for checking orders against the notices of restriction was deficient.
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
- The licensed dealer sent a quantity of controlled substances exceeding the quantity on an order.
- The licensed dealer did not obtain a receipt that included the signature of the pharmacist within five working days for several orders that were filled.
- The quantity of the verbal order, the name of the substance, or the name of the person who placed the order was missing or inaccurate.
- The licensed dealer was regularly accepting verbal orders in cases where it was not applicable.
- The licensed dealer provided substances for verbal orders placed by non-authorized individuals from a hospital or a pharmacy.
- The licensed dealer sent an order in multiple deliveries when not allowed.
- The licensed dealer filled orders without a signature and date from the customer.
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)
- The licensed dealer exported a controlled substance without the issuance of an export permit.
- The licensed dealer imported a controlled substance without the issuance of an import permit.
- The quantity imported or exported exceeded the quantity on the permit.
- The licensed dealer did not tamper seal a shipment that was intended for export.
- The licensed dealer did not provide a declaration for an export to the OCS.
- The licensed dealer did not provide a declaration for an import to the OCS.
- The export or import occurred outside the period of validity of the permit.
- The licensed dealer exported a controlled substance to a place other than the one specified on the export permit.
- The licensed dealer did not provide a declaration for an export within 15 days of exportation.
NCR: NCR 4
FDR: G.01.006, J.01.005
BOTSR: BOTSR 4
- The test kit was sold for purposes other than medical, laboratory, industrial, educational, or research use.
- A test kit with a cancelled registration number was sold.
- Registration number or name of manufacturer was missing from the test kits sold.
- The address of the manufacturer was missing from the labelling of a test kit that contained targeted substance.
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)
- An unlicensed company conducted activities with controlled substances.
Food and Drug Regulations (FDR-G or FDR-J)
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