SOR/2016-123: Regulations Amending the Narcotic Control Regulations (Opium Poppy)


June 3, 2016

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues Taking into consideration the current global oversupply of naturally derived opiates, allowing commercial poppy cultivation would be counter to Canada’s international commitments and could contribute to the persistent global risk of diversion of opiates into illicit markets. Background Cultivation of opiu... (Click for more)


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1st Reading 2nd Reading 3rd Reading

Published on June 3, 2016

Bill Summary

SOR/2016-123: Regulations Amending the Narcotic Control Regulations (Opium Poppy)

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues Taking into consideration the current global oversupply of naturally derived opiates, allowing commercial poppy cultivation would be counter to Canada’s international commitments and could contribute to the persistent global risk of diversion of opiates into illicit markets. Background Cultivation of opium poppy Opium poppy (Papaver somniferum) is grown to supply the narcotic ingredients for many legal pharmaceutical painkillers (e.g. morphine and oxycodone), as well as illicit substances. The legitimate opiate industry extracts narcotic substances from plant material, and uses a multistep purification process to obtain pharmaceutical grade ingredients. There is a risk of diversion of opioid material from legal channels to the illicit market at each stage, from cultivation to processing. Currently, opium poppy is cultivated for legitimate pharmaceutical purposes in 14 countries around the world, and opiate raw materials are sold and transported in a highly integrated international supply chain. Australia, Spain, France, Turkey and India grow opium poppy that supplies 90% of worldwide demand for naturally derived opiate medications. In the United Kingdom, a pharmaceutical company cultivates opium poppy for its own use in the manufacture of domestic medicines. Opium poppy is currently not cultivated for commercial purposes in Canada or the United States (U.S.). International drug conventions Canada is a party to the United Nations (UN) Single Convention on Narcotic Drugs, 1961, as amended by the 1972 Protocol (the 1961 Convention). As a party to the 1961 Convention, Canada is obliged to impose controls that limit the possession of, use of, trade in, distribution of, import, export, manufacture and production of narcotics exclusively to medical and scientific purposes, and to cooperate with other states in the execution of the provisions of the 1961 Convention. In May 1979, the United Nations’ Economic and Social Council (ECOSOC) adopted Resolution 471, which called on importing countries such as Canada to support traditional suppliers (specifically Turkey and India) of narcotic raw material (NRM) and to limit imports from non-traditional supplying countries (e.g. Australia and Spain). The resolution, which was reaffirmed by ECOSOC in 1981, was adopted to limit overproduction of NRM, to restore a balance between supply and demand, and to prevent diversion to illicit channels, particularly in countries that face logistical difficulties in monitoring and controlling diversion to an illicit market. The ECOSOC has adopted similar resolutions in the intervening years, including E/RES/2007/9, co-sponsored by Canada in 2007. This resolution urged countries to adjust global production to a level that reflects actual demand for licit purposes, and also urged governments of countries where opium poppy is not being cultivated commercially to refrain from engaging in such activities in order to avoid the proliferation of supply sites. International drug control oversight The International Narcotics Control Board (INCB) is the international body responsible for monitoring compliance with the UN international drug control conventions. Importing countries must provide estimates of their projected national requirements for controlled substances, such as opiates, and have these estimates confirmed by the INCB each year. Similarly, opioid producing countries must submit estimates of their projected hectares grown and production levels and have these estimates confirmed by the INCB. In the absence of confirmed estimates of production levels, importing countries should not trade with a producing country. Annual reports issued by the INCB indicate that the global supply of opium has exceeded demand since 2009. In its most recent annual report, the INCB noted that, at the end of 2015, the global existing stock of opiate raw material rich in morphine was expected to reach approximately 616 tons, which is sufficient to supply 17 months of expected global demand with no new production, while the oversupply of opiate raw material rich in thebaine was expected to reach 423 tons, which is enough to supply 20 months of expected global demand. In other words, there would be no shortage of opiate raw material for medicines until mid-2017, even if all global production ceased in January 2016. Import controls in the United States U.S. regulations (21 CFR 1312) prohibit the importation of any substance listed on Schedules I or II of the U.S. Controlled Substances Act (e.g. active pharmaceutical ingredients or finished dosage forms) except under listed conditions, which include cases of national emergencies or if the material is an NRM. In addition, the regulation establishes a list of countries from which U.S. manufacturers may import NRM and prohibits the importation of NRM from countries not on the list. The regulation further restricts imports so that 80% of the total amount of NRM imported into the U.S. must originate from two traditional suppliers (India and Turkey), and the remaining 20% from five non-traditional producers (Australia, France, Hungary, Poland and Spain). Under this regulation, also known as the 80/20 Rule, (see footnote 2) the Drug Enforcement Agency (DEA) cannot issue an import permit for opiate raw materials from a country that is not listed, and permits must be issued so that the mandated 80/20 ratio is maintained. This applies to all opiates, except for low dose codeine products that are listed on Schedule V of the U.S. Controlled Substances Act. Controlled substances in Canada In Canada, opium poppy and its preparations, derivatives, alkaloids and salts are controlled under the Controlled Drugs and Substances Act (CDSA). Any activity involving opium poppy and the opiates derived from these plants must follow the requirements set out in the CDSA and the Narcotic Control Regulations (NCR). These laws allow Canada to meet its obligations under international drug control treaties. Currently, there is no commercial cultivation of opium poppy taking place in Canada. Opioid-based pharmaceuticals sold in Canada are either imported as finished dosage forms or manufactured domestically from active pharmaceutical ingredients imported into Canada. Finished products manufactured in Canada can either be sold domestically or exported to other markets, but these activities (i.e. importation, manufacture and sale) must be conducted according to the requirements of the NCR. There has been cultivation of opium poppy in Canada for scientific research purposes, with authorizations issued under section 67 of the NCR. While Canada has established production regimes for other controlled plants, such as industrial hemp (the Industrial Hemp Regulations), there is no such framework for commercial opium poppy cultivation in Canada. Objective The objective of these regulatory amendments is to prohibit the commercial cultivation of opium poppy under the NCR. Description The Regulations amend the NCR to explicitly prohibit anyone from cultivating, propagating or harvesting opium poppy for any purpose other than scientific research. “One-for-One” Rule The amendments modify existing Regulations but do not include any provisions that change administrative costs to business, so the “One-for-One” Rule does not apply. Small business lens The amendments do not impose any cost on businesses, including small businesses. Therefore, the small business lens does not apply. Consultation No formal consultations were held prior to the publication of the amendments in the Canada Gazette, Part II, since a commercial poppy industry does not exist in Canada, and no cost is imposed on any stakeholders. Rationale In examining the impacts of prohibiting commercial cultivation of opium poppy in Canada, Health Canada primarily considered the risks to public health and safety associated with the cultivation of opium poppy and Canada’s obligations and commitments under international conventions and resolutions. Consideration was also given to the supply and demand for naturally derived active pharmaceutical ingredients for opioid medications and opportunity loss for Canadian companies. Canadians are the second largest consumers of prescription opioids in the world, behind the U.S., and reports of problematic opioid use and opioid-related deaths are increasing. The large scale cultivation of fields of opium poppy presents a public health and safety risk. In addition to the obvious risks of diversion of opium poppy to illicit markets, morphine and/or thebaine-rich opium poppy can kill those who attempt to take it recreationally. In Australia, thefts from thebaine-rich opium poppy in order to make doda tea to get high have led to severe adverse reactions and seven deaths. In addition, morphine-rich poppies used to make doda tea also carry the risk of overdose. While the effect that commercial opium poppy cultivation in Canada would have on the problem of global oversupply would be impossible to quantify, any activity that reduces the amount of licit opiate raw material purchased from vulnerable countries creates stock in those countries that could be diverted to illicit channels. Illegal drugs cross international borders, and it is likely that some portion of these diverted opiates could end up in Canadian communities, where there are well documented challenges with opioid abuse. Furthermore, the amendments are aligned with Canada’s obligations under international conventions/resolutions on drug control, including international resolutions that call on new countries to refrain from entering into commercial poppy cultivation. There have been no documented drug shortages anywhere in the world attributed to a lack of opiate active pharmaceutical ingredients. Opium poppy is grown in 14 countries in all regions of the world. It is unlikely that natural or man-made disasters would simultaneously impact production in all of these countries. The global supply has been increasing faster than demand since 2009, and the latest INCB estimates indicate that stored stocks are sufficient to support global medical needs for at least 17 months, if all international production were to have stopped in January 2016. There is currently no known pharmaceutical manufacturer in Canada that has the facilities or systems in place to convert raw opiate materials (poppy straw or concentrate of poppy straw) into the active pharmaceutical ingredients used to produce finished medicines. In addition, there is no company in the pharmaceutical sector that imports raw opioid materials such as concentrate of poppy straw to process into active pharmaceutical ingredients. Instead, active pharmaceutical ingredients derived from opium poppy are imported and used to manufacture finished dosage form of opioid drugs. The amendments do not restrict imports, and therefore have no impact on current activity in the Canadian pharmaceutical sector. However, given that the amendments prohibit commercial cultivation of opium poppy in Canada, there may be an associated lost opportunity for companies that would contemplate cultivating opium poppy commercially now or in the future. Over the period 2011–2015, Canada imported an average of 20 560 kg of opiate active pharmaceutical ingredients annually. The potential for a Canadian company to supply a share of this quantity of active pharmaceutical ingredients in the future will no longer exist, and any expected future revenue or profit will be forgone. The magnitude of the theoretical forgone revenue or profit is currently difficult to accurately quantify, given that the industry does not currently exist in Canada. However, the foregone revenue or profit is assumed to be negligible given the ongoing, persistent global oversupply of opiate active pharmaceutical ingredients on the tightly controlled international market and the vertically integrated nature of the pharmaceutical industry, in which many companies own the subsidiaries that perform various steps in the production of finished products. Implementation, enforcement and service standards Because the amendments do not introduce new requirements, no changes to the Department’s compliance and enforcement directives need to be made. Contact Legislative and Regulatory Affairs Division Controlled Substances Directorate Healthy Environments and Consumer Safety Branch Health Canada 150 Tunney’s Pasture Driveway Ottawa, Ontario K1A 0K9 Email: OCS_regulatorypolicy-BSC_ [email protected] Footnote a S.C. 2015, c. 22, s. 4(1) Footnote b S.C. 1996, c. 19 Footnote 1 C.R.C., c. 1041 Footnote 2 http://www.deadiversion.usdoj.gov/21cfr/cfr/1312/1312_13.htm

This Bill does not amend any statutes.

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