FEDERAL REG

SOR/2016-139: Regulations Amending the Food and Drug Regulations (Shortages of Drugs and Discontinuation of Sale of Drugs)

REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE

Registered
June 14, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Executive summary Issues: Drug shortages and discontinuations are an immediate, pressing challenge to patient safety in Canada. Under the present voluntary reporting system, Canadians and health care providers are not being adequately informed of drug shortages and discontinuations, and thus are not able to make... (Click for more)


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Published on June 14, 2016

Bill Summary

SOR/2016-139: Regulations Amending the Food and Drug Regulations (Shortages of Drugs and Discontinuation of Sale of Drugs)

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Executive summary Issues: Drug shortages and discontinuations are an immediate, pressing challenge to patient safety in Canada. Under the present voluntary reporting system, Canadians and health care providers are not being adequately informed of drug shortages and discontinuations, and thus are not able to make well-informed, timely mitigation decisions. The Food and Drug Regulations (the Regulations) currently have no provisions specific to drug shortages. They do contain a provision that requires companies with a market-approved drug, which has been assigned a drug identification number (DIN), to notify Health Canada within 30 days of discontinuation of the sale of that drug. However, this provision does not specify the information to be provided as part of a notification. Description: In order to address these issues, the Government of Canada is requiring mandatory drug shortage and discontinuation reporting on a publicly available, third-party website. This information will help to ensure that patients, practitioners, and other health care stakeholders have access to reliable information about medication supply in a timely fashion, as well as a more accurate picture of the availability of certain drugs in Canada. The amendments to the Regulations mandate reporting of drug shortages and discontinuations by authorization holders to a third-party website for certain categories of drugs that have the potential, in a shortage or discontinuation situation, to adversely affect the health of Canadians. Drugs included in this amendment are as follows: drugs included in Schedules I to V of the Controlled Drugs and Substances Act; drugs listed on the Prescription Drug List; biologic drugs listed on Schedule D to the Food and Drugs Act (FDA); radiopharmaceutical drugs listed on Schedule C to the FDA; and drugs that are permitted to be sold without a prescription, but administered only under the supervision of a practitioner. The amendments specify all mandatory information to be reported to the website, the timelines for providing it, a requirement that the information must be kept up to date, and a requirement that the resolution of a drug shortage also be reported. The existing provision that requires DIN holders to notify Health Canada within 30 days of the discontinuation of the sale of a drug has been amended to specify the information that must be reported to Health Canada as part of this notification. Finally, a new provision has been added that requires authorization holders to notify Health Canada if a drug has not been sold on the Canadian market for a period of 12 consecutive months. This requirement will only apply to the drugs within the scope of the shortage and discontinuation reporting amendments. (see footnote 2) It will not affect the licence status of the drug, but will provide an accurate picture of drugs that are actively being sold on the Canadian market. Cost-benefit statement: The amendments provide an estimated benefit to Canadians of $55.6 million net present value over 10 years. The quantified benefits relate to the saving of one life per annum, estimated at $7.4 million per year. Mandatory public reporting of drug shortages and discontinuations will help to reduce dosage and prescribing errors associated with the use of substituted medications in shortage and discontinuation situations and therefore reduce fatal events due to adverse drug incidents. Costs to industry include the compliance costs associated with implementing or updating internal reporting systems and the administrative costs related to the resources required to report a shortage or discontinuation; total costs to industry are anticipated to be approximately $833,840 annually. There will also be costs to Government of approximately $2.6 million that will include compliance and enforcement, shortage mitigation, and funding for the development and maintenance of a third-party reporting system. Total costs are estimated to be $28.5 million net present value over 10 years; the net benefit of the amendments is anticipated to be $27.1 million over 10 years. “One-for-One” Rule and small business lens: The “One-for-One” Rule applies to the amendments, and the anticipated administrative burden is estimated to be $347,534 (2012 dollars) annually. The small business lens does not apply to the amendments, as none of the businesses affected by these amendments fall within the definition of “small business.” Domestic and international coordination and cooperation: Both the United States and the European Union have mandatory reporting of drug shortages and discontinuations. Background Drug shortages are an immediate, pressing challenge to patient safety in Canada. A shortage occurs when a drug manufacturer or importer cannot meet the demand for a drug in Canada. Shortage situations can also be created when a drug manufacturer or importer decides to discontinue the supply of a drug for business reasons. Reports of shortages have increased globally and domestically over the past decade. Some shortages can pose risks to the health and safety of Canadians as a result of compromised or delayed medical procedures, medication errors, and substitutions with alternative treatments that are not as safe or that are less effective. Several Canadian health care associations surveyed 1 070 of their members in October 2012 on the subject of their experiences with drug shortages. According to physicians and pharmacists surveyed, 94% reported that they had difficulty sourcing a medication within a week of the survey date, 64% of physicians reported that drug shortages had consequences for their patients, while 41% of pharmacists reported that their patients’ health had been compromised. Physicians and pharmacists both reported that drug shortages compromised care in up to 20% of patients, with consequences such as delayed access to medication, use of less effective medication, or increased risk of adverse events. Twenty percent of physicians also reported that a patient in their care had clinically deteriorated as a result of a drug shortage. A survey of Canadian anesthesiologists in the same year reported that drug shortages may have contributed to the death of as many as four Canadians in 2012. Recent drug shortages include the 2014 shortage of the frequently prescribed antibiotic penicillin, used in the treatment of common infections. Often kept in hospital emergency rooms, the penicillin shortage caused delays in treatment, as physicians had to take time to research the side effects that may be caused by unfamiliar medications as well as any possible interactions with medications the patient is currently receiving. Discontinuations of drugs without proper notice can also pose a risk to the health and safety of Canadians. For example, the 2012 market removal of a medically necessary epilepsy drug posed health and safety concerns for Canadians who were well stabilized on this medication. Cases were reported of children who, despite trying several other medications, were still experiencing epileptic episodes up to 100 times a day, before finally becoming stable on this drug. After over 10 years of symptom stability, these children lost access to this drug without warning, and had to find suitable alternatives to prevent life-threatening seizures. In order for patients and health care practitioners to properly mitigate drug shortage risks, the communication of timely, comprehensive, and reliable shortage information is essential. This information not only informs the coordination of mitigation measures by government regulators and the supply/distribution chain, but also enables health care practitioners and their patients to make timely, informed decisions about the medications they use. Issues Drug shortages adversely affect the health and safety of Canadians, and under the current voluntary reporting system, Canadians are not being adequately informed of drug shortages and discontinuations. In 2011, the Minister of Health called on industry to voluntarily provide public notification of drug shortages. In response, industry associations created a web-based voluntary notification system (www.drugshortages.ca) in 2012 and continue to operate it. While the voluntary online drug shortage reporting system has been receiving shortage and discontinuation notifications since its inception, and some companies have publicly agreed to post shortage and discontinuation information to the website, not all companies have made this commitment. This has created an information imbalance between those who post and those who do not. Still, other drug companies, while posting, are not doing so in a timely fashion. The lack of timely, complete and accurate information poses potential health and safety risks for patients. It also creates additional labour for health care professionals who rely on it to properly manage their patients’ health. This conclusion was supported in consultations undertaken in 2014, where a considerable majority of participants indicated that the current voluntary approach was not providing shortage reports that are timely, comprehensive, or reliable, and that mandatory reporting on a non-industry website was required. Stakeholders also indicated that incomplete drug shortage information creates the impression that if a product is not reported, it is available. The Minister of Health had publicly stated that, should voluntary reporting prove ineffective, alternative measures would be put in place. The first step to fulfilling this commitment was taken with the Minister’s February 2015 announcement that regulations requiring public reporting of drug shortages and discontinuations would be advanced. The consequence of not advancing these proposed amendments would be the continuation of an ineffective reporting system that puts Canadian patient safety at risk. In addition, drug manufacturers and importers are not currently required to notify Health Canada (the Department) when a drug is not being sold onto the Canadian market, but a DIN is still active (in other words, when a drug has an authorization to be marketed in Canada, but is not being sold). This information is necessary for patients and health care professionals to know in advance in order to select an appropriate course of treatment. Notification to the Department of any change in market availability of a drug would ensure that all information available to the public on the Department’s website is kept updated in a timely and accurate fashion. Objectives Amendments to the Food and Drug Regulations (the Regulations) have been made in order to introduce a mandatory reporting scheme for drug manufacturers to publicly report shortages and discontinuations of drugs. Because drug shortages have a strong adverse effect on the health and safety of Canadians, an improvement to the present voluntary system is required. The amendments address the information gaps in the current voluntary drug shortage reporting system created by drug supply disruptions and ensure the accuracy, timeliness and reliability of publicly available drug shortage and discontinuation information for Canadian patients and health care practitioners. Description Consistent with the objectives, the amendments create an obligation for drug manufacturers to publicly report drug shortages and drug discontinuations to a stand-alone, third-party administered website/reporting system that will allow the user to have access to comprehensive, timely and reliable information. Drug discontinuations will also be reported directly to the Department, and the status of the drug will be indicated as discontinued on the Department’s website. These provisions, introduced to Part C, Division 1, of the Regulations, do the following: Notification of discontinuation to Health Canada Section C.01.014.6(1)(a): This section is amended to remove the words “or import” from the provision. This provision describes the circumstances under which the Director shall cancel the assignment of a DIN. Given that section C.01.014.7 requires only the notification of the discontinued sale, and all importation for sale is for the purpose of sale, the words “or import” are unnecessary in this provision. Section C.01.014.7: This section replaces the current section C.01.014.7 in the Regulations that sets out an obligation for the DIN holder to inform the Minister of the discontinuation of a drug within 30 days. The requirement to notify the Minister of a discontinuation is amended to include the information to be submitted as part of the notification. DIN holders will be required to submit the DIN, the day on which the sale of the drug was discontinued, and the latest expiration date and corresponding lot number(s) of the drug sold on the Canadian market. This section allows the Department to ensure that drug information provided on the Department’s website is accurate and up to date, while maintaining regulatory oversight of a drug available on the Canadian market until its expiry dates. Definition of terms Subsection C.01.001(1): The definitions of the terms “authorization holder” and “discontinue” are added to this subsection. “Authorization holder” is defined as the person to whom a document was issued under subsection C.01.014.2(1) that sets out the drug identification number assigned for the drug, and in the case of a drug that is listed in Schedule C to the Act, the manufacturer to whom a notice of compliance in respect of the drug has been issued under section C.08.004 or C.08.004.01. “Discontinue” is defined in respect of the sale of a drug by the authorization holder, as to permanently cease the sale of a drug. Section C.01.014.8: This section defines the terms “drug” and “shortage”. “Drug” is defined as any drug for human use, in respect of which a DIN has been assigned under subsection C.01.014.2(1), included in Schedules I to V of the Controlled Drugs and Substances Act, drugs listed on the Prescription Drug List, biologic drugs listed on Schedule D to the Act, drugs that are permitted to be sold without a prescription, but are administered only under the supervision of a practitioner, as well as radiopharmaceutical drugs listed on Schedule C to the Act. The reporting requirement is thus focused on drugs for which a drug shortage or discontinuation would have the highest impact on patient health and safety. “Shortage” is defined as a situation in which an authorization holder for a drug is unable to meet demand for the drug. Mandatory reporting of drug shortages and drug discontinuations Sections C.01.014.9 and C.01.014.10: These sections set obligations for authorization holders to post information on drug shortages, or situations that are likely to result in drug shortages, and drug discontinuations on a website operated by a third party under contract to the Department. Mandatory information includes the name and contact information of the authorization holder; the brand name and proper name of the drug, as well as its DIN (if assigned); the medicinal ingredients contained in the drug; the therapeutic classification of the drug; the strength, dosage form and package size; the drug’s route of administration; in the case of a drug shortage, the actual or anticipated start date of the shortage, the anticipated end date of the shortage, if the date can be anticipated, and the actual or anticipated cause of the drug shortage; and in the case of drug discontinuation, the date on which the sale of the drug would be discontinued, and the reason for discontinuation. This information is required to be posted six months prior to the anticipated drug shortage or discontinuation, or, if known less than six months in advance, within five days of the authorization holder becoming aware of the anticipated or actual drug shortage and within five days of the authorization holder making the decision to discontinue the drug. These sections ensure that complete information about drug shortages and discontinuations is posted on the contracted website in a timely manner to allow patients, health care practitioners, and other health care stakeholders to be properly informed in order to mitigate potential health risks or find suitable alternatives quickly. These sections also require authorization holders to keep information up to date once it has been posted to the contracted website and to provide an update to signal the end of a shortage. Link to website Section C.01.014.11: This section requires the Department to maintain a link to the contracted website referred to in section C.01.014.9. Notification of zero sales to Health Canada Section C.01.014.12: This section sets out an obligation for an authorization holder to notify the Minister when a drug that has received market authorization has not been sold on the Canadian market for a period of 12 consecutive months, and to notify the Minister once the sale of the drug has recommenced. This new obligation will not affect the licensed status of a drug, but it will allow the Department to clearly and easily distinguish between products that have been granted a licence to be sold in Canada, but are not actively being sold, and those that are presently available for sale on the Canadian market. Including this distinction on the Department’s website will allow patients, health care practitioners, and other health care stakeholders to have a clear and current picture of which drugs are available on the Canadian market. Coming into force These amendments will come into force nine months after the day on which the Regulations are registered. Regulatory and non-regulatory options considered Voluntary reporting Prior to 2012, no national reporting system for drug shortages or discontinuations existed in Canada. With the establishment of www.drugshortages.ca in 2012, industry created a repository where manufacturers could voluntarily post information about anticipated or actual shortages they were experiencing and products that were being discontinued. Despite some improvements in industry notification, there have been persistent challenges with the voluntary approach. Stakeholders, including patient advocacy organizations, have indicated that many companies are not posting to www.drugshortages.ca, and when they do, the information provided is not timely, comprehensive, or reliable. Recent cases highlight the challenges of companies that, despite being aware of potential shortages, did not post on www.drugshortages.ca. The Department has issued public letters to companies noting the lack of timely notification and reiterating the Department’s expectation that they voluntarily provide timely notification of all drug shortages. The option of improving the current system was considered. However, during recent consultations, Canadians and drug supply system stakeholders, including provinces/territories (P/Ts), indicated that drug manufacturers and importers are failing to provide adequate drug shortage information under the current voluntary notification approach. This option would provide limited improvement to the current system, and does not address transparency and reliability issues that are a major stakeholder concern. Stakeholders indicated that mandatory reporting is necessary to reduce potential risks to the health and safety of Canadians and that failure to provide timely, comprehensive and reliable information may result in unnecessary risks to patient safety. In order to mandate such a reporting system, regulatory amendments obligating authorization holders to report shortages and discontinuances are required. Mandatory reporting to Health Canada website The option to have manufacturers and importers publicly report drug shortages and discontinuations on the Department’s website was considered. Under this approach, the Department would be responsible for the administration of the reporting system, monitoring postings, compliance and enforcement, as well as shortage management efforts. However, Heath Canada administration of the website does not reflect the fact that responding to drug shortages, including those resulting from discontinuations, is a multi-stakeholder responsibility requiring coordination between P/Ts, industry, health care professionals, the Department, and other key stakeholders. It is important to note that P/Ts, industry, and health care organizations have the most effective tools available to mitigate and prevent shortages and manage discontinuations. Moreover, third-party administration, as opposed to Health Canada administration, enables the hosting of multi-stakeholder tools and resources on a shared public platform, independent of any specific stakeholder group. Mandatory reporting to www.drugshortages.ca The option of having mandatory reporting on the existing industry website was also considered. This option would mandate manufacturers and importers to publicly report drug shortages and discontinuations on the already established www.drugshortages.ca. The Department would monitor postings, and all drug supply chain stakeholders would be able to access the website in order to implement shortage management efforts. The costs of this option are slightly lower than the selected approach, given that the drug industry owns and funds the reporting system. However, there is lower departmental oversight with this option, as website management and maintenance would be solely controlled by industry. Concern with this option was expressed by health care stakeholders, including provincial governments, as they saw this option as being too close to a system that has been shown to be insufficient for stakeholders. Consultations indicated that health care stakeholders have significant concerns with industry ownership and administration of the reporting system. Alignment with the United States approach The United States Food and Drug Administration (U.S. FDA) reporting system differs from the proposed amendments in two aspects: the types of drugs to be reported and the timing of postings to the shortage website. The U.S. system requires notification only of medically necessary drugs. The Department’s proposed amendments encompass a broader list of drugs that include drugs which may adversely affect the health and safety of Canadian patients if unavailable, even if they haven’t been designated as “medically necessary.” Under the U.S. system, while manufacturers report anticipated shortages to the FDA six months in advance of the commencement of the shortage, the information is only posted to the website once a shortage occurs. As the P/Ts, industry and health care organizations have the most effective tools to mitigate and prevent shortages and manage discontinuations, this option was rejected in favour of the selected approach. Selected regulatory approach The amendments will help to make shortage and discontinuation information publicly available as soon as it is known, so that mitigation and management measures can commence without delay. They will also implement mandatory drug shortage reporting to a website, a reporting method with which stakeholders are familiar. The website would be under contract to the Department to ensure that a high level of service to the public is maintained. This approach is informed by two years of experience with the voluntary system, consultation feedback, the position of P/Ts and health care stakeholders, and aligns with international regulatory counterparts insofar as it requires mandatory shortage and discontinuation reporting. Benefits and costs The cost-benefit analysis focuses on the administrative requirements of industry and the costs to the Canadian government to ensure compliance with the new mandatory reporting initiative. The design of the amendments is intended to ensure drug manufacturers and importers report shortages and discontinuations in a consistent and standardized manner. Similar initiatives have been undertaken in the U.S. and the European Union; the amendments will bring Canada into alignment with international jurisdictions in mandating such reporting and in keeping the administrative burden as low as possible. As key elements of the amendments are already in place under the current voluntary drug shortages reporting system at www.drugshortages.ca, industry is already familiar with the majority of the proposed reporting requirements. Costs to industry and the Department are anticipated to be approximately $28.5 million net present value over 10 years. Total benefits associated with saving one life per year due to the implementation of a mandatory drug shortages and discontinuations notification system is estimated to be $55.6 million net present value over 10 years. The total net present value (NPV) benefit of the amendments will be approximately $27.1 million over 10 years, from 2016 to 2025. The complete cost-benefit analysis is available upon request. Cost-benefit statement This table presents the cost-benefit statement. Quantified impacts (CAN$, 2015 price level / constant dollars) Quantified impacts (CAN$, 2015 price level / constant dollars) Quantified impacts (CAN$, 2015 price level / constant dollars) Quantified impacts (CAN$, 2015 price level / constant dollars) Quantified impacts (CAN$, 2015 price level / constant dollars) Base Year (Year 1) Final Year (Year 10) Total (NPV) Annualized Average Benefits Benefits Benefits Benefits Benefits Health care system — One life saved (7% discount rate) $7,400,000 $7,400,000 $55,613,000 $7,400,000 Costs Costs Costs Costs Costs Industry Compliance costs Administrative burden $2,180,000 $483,840 $350,000 $483,840 $4,460,331 $3, 636,170 $533,000 $483,840 Costs to Government $3,100,000 $2,600,000 $20,413,436 $2,690,000 Total costs $5,763,840 $3,433,840 $28,509,937 $3,706,840 Net benefits (NPV) Net benefits (NPV) Net benefits (NPV) $27,103,063 $3,693,160 Qualitative impacts Reduction in time required of health professionals to manage a shortage. Hospitals would have time to make alternative arrangements (with the six-month mandatory notification); therefore, the potential incremental cost of a drug alternative could be significantly reduced or negligible. Reduction in patient confusion and adverse events with drug alternatives. Increased opportunities to locate drug alternatives and implement mitigation plans. Minimized disruptions in patient care. Savings to the health system due to fewer acute care incidents. Additional pressures on manufacturers to report and respond to drug shortages. Potential for wholesalers and distributors to hoard drug inventories once a shortage is posted. Improvement in drug shortage information available to Canadian patients and health professionals. Qualitative impacts Reduction in time required of health professionals to manage a shortage. Hospitals would have time to make alternative arrangements (with the six-month mandatory notification); therefore, the potential incremental cost of a drug alternative could be significantly reduced or negligible. Reduction in patient confusion and adverse events with drug alternatives. Increased opportunities to locate drug alternatives and implement mitigation plans. Minimized disruptions in patient care. Savings to the health system due to fewer acute care incidents. Additional pressures on manufacturers to report and respond to drug shortages. Potential for wholesalers and distributors to hoard drug inventories once a shortage is posted. Improvement in drug shortage information available to Canadian patients and health professionals. Qualitative impacts Reduction in time required of health professionals to manage a shortage. Hospitals would have time to make alternative arrangements (with the six-month mandatory notification); therefore, the potential incremental cost of a drug alternative could be significantly reduced or negligible. Reduction in patient confusion and adverse events with drug alternatives. Increased opportunities to locate drug alternatives and implement mitigation plans. Minimized disruptions in patient care. Savings to the health system due to fewer acute care incidents. Additional pressures on manufacturers to report and respond to drug shortages. Potential for wholesalers and distributors to hoard drug inventories once a shortage is posted. Improvement in drug shortage information available to Canadian patients and health professionals. Qualitative impacts Reduction in time required of health professionals to manage a shortage. Hospitals would have time to make alternative arrangements (with the six-month mandatory notification); therefore, the potential incremental cost of a drug alternative could be significantly reduced or negligible. Reduction in patient confusion and adverse events with drug alternatives. Increased opportunities to locate drug alternatives and implement mitigation plans. Minimized disruptions in patient care. Savings to the health system due to fewer acute care incidents. Additional pressures on manufacturers to report and respond to drug shortages. Potential for wholesalers and distributors to hoard drug inventories once a shortage is posted. Improvement in drug shortage information available to Canadian patients and health professionals. Qualitative impacts Reduction in time required of health professionals to manage a shortage. Hospitals would have time to make alternative arrangements (with the six-month mandatory notification); therefore, the potential incremental cost of a drug alternative could be significantly reduced or negligible. Reduction in patient confusion and adverse events with drug alternatives. Increased opportunities to locate drug alternatives and implement mitigation plans. Minimized disruptions in patient care. Savings to the health system due to fewer acute care incidents. Additional pressures on manufacturers to report and respond to drug shortages. Potential for wholesalers and distributors to hoard drug inventories once a shortage is posted. Improvement in drug shortage information available to Canadian patients and health professionals. Costs A voluntary drug shortage reporting framework already exists and is funded entirely by the Canadian drug industry. However, the cost estimate assumes that this is a new burden on industry, since the amendments will now make reporting mandatory. It should be noted that field headings and information required to be reported under the amendments are similar to items currently being reported in the voluntary system. Industry Industry costs include two components. The first component is related to industry reporting to the third-party website and the Department (in the instance of discontinuations); it was determined that the administrative cost associated with this activity would be approximately $112 per hour for 2 hours, or $224 total per shortage. The second component is the compliance cost related to the cost of companies having to update their reporting systems to the new requirements. While this second component has already been undertaken by manufacturers that report voluntarily, there will be a number of new manufacturers that will now have to report. It is worth noting that many manufacturers already have these reporting systems in place due to similar reporting obligations in other international jurisdictions. Total compliance costs, based upon estimates from the U.S. FDA and input from stakeholders, are estimated to be $350,000 annually. An initial “ramping-up” of systems was estimated to be approximately $1.83 million based on stakeholder feedback and will apply to manufacturers without any existing shortage reporting systems in any jurisdiction. Annual costs will primarily be related to the updating of reporting systems to comply with the new regulatory provisions, as well as any certification (i.e. ISO 9001) that may be needed to meet safety standards. The total net present value of compliance costs over 10 years is estimated to be $4,460,311. The administrative burden was calculated to be the cost of reporting a shortage or discontinuation to the third-party website and the Department, based on the U.S. FDA estimate of $224 per shortage for all administrative requirements of reporting. During the stakeholder consultation process, it was estimated that there could be approximately 2 160 shortages and discontinuations reported annually in Canada, for a total annual cost of $483,840. Government Costs to Government include funds allocated to cover the cost of the contracted website and staffing requirements at the Department related to the new reporting requirement, including compliance and enforcement capacity and facilitation of multi-stakeholder mitigation efforts associated with reporting. The base year and second year are anticipated to cost $3.1 million and $3.0 million, respectively, due to the anticipated extra start-up costs for setting up the web-based reporting platform. From the third year onwards, it is anticipated that costs to Government are anticipated to be approximately $2.6 million per year. The total cost to the Department is anticipated to be $20.4 million in net present value over 10 years. Benefits Using adjusted input from the U.S. FDA, it was determined that a mandatory reporting system for drug shortages could prevent one death per year. This is a conservative average estimate, as the number and severity of drug shortages can change from year to year. The value of a life is estimated at $7.4 million, based on the inflation-adjusted value of $6.1 million used by the Treasury Board in 2004. It is anticipated that deaths due to drug shortages could be avoided if patients and health care providers are given advance notice of disruptions to the supply of essential medications. Advance notification will minimize the disruption of patient care and increase the ability of patients and health care providers to identify and familiarize themselves with possible alternative drug options, thereby reducing the incidence of medication errors and near-fatal events. Qualitative benefits include the following: Time savings for health care professionals A survey of health care professionals found that pharmacy technicians and pharmacists spent up to eight and nine hours per week, respectively, managing drug shortages. The additional resources required to manage and plan for alternative drugs is particularly concerning given that the average hourly wage in 2012 was $40 for pharmacists and $27 for pharmacy technicians. Further, the time spent managing drug shortages detracts from other important and high-value patient care activities. The implementation of regulatory amendments that stipulate when drug shortages and discontinuations are to be reported will allow health care professionals to better prepare for changes in drug supply and implement mitigation strategies sooner. Additional costs of $11,232 to $18,720 per pharmacy technician and pharmacist could be avoided annually with the implementation of the proposed amendments. Fewer adverse drug reactions and medical dosing errors Adverse drug reactions have been calculated to have a direct cost of over $3 billion annually, and this represents only an estimated 80% of the true cost to the economy. Conservative estimates link 3%–8% of all hospital admissions to adverse drug reactions. (see footnote 3) Dosage errors from using new and unfamiliar medications frequently occur as a consequence of drug shortages, as physicians and pharmacists prescribe drugs that they are less likely to prescribe or dispense. Even when appropriate substitutions exist, dosage conversion factors may be unknown. The amendments will lead to a reduction in the number of adverse drug events, since health care professionals will be better prepared for drug shortages and discontinuations. Improved knowledge of pharmaceutical alternatives could mean that standardized protocols and appropriate dosage adjustments could be made without health care professionals being challenged by tight time constraints. If this knowledge about differences in efficacy, allergic reactions, and side effects between drugs is taken into account at the time of prescription, there will also be reduced patient confusion as a result of changes in medication. Improved continuity of care and better patient outcomes In the U.S., 82% of surveyed hospitals have delayed patient treatment as a result of drug shortages, which ultimately decreases the quality of patient care and increases the risk of costlier procedures. An estimated 20% of physicians have reported that the health of a patient in their care had deteriorated due to drug shortages. Better awareness of which drugs are unavailable will reduce the likelihood that those drugs will be prescribed or used unless sufficient supply is available. Drug alternatives could be procured in a timely manner, which would reduce the likelihood of patients seeing their health deteriorate. Consistent reporting requirements for pharmaceutical manufacturers Although a website with a voluntary reporting system was in place prior to the amendments being proposed, health care associations and patient advocacy groups have indicated that it is insufficient. Complaints have been made that many manufacturers are not posting to the website, and when they do, the post is late or lacking important information. The amendments would require that all manufacturers standardize their reporting information when drug shortages or discontinuations occur. The amendments therefore allow for reporting consistency within the pharmaceutical industry by implementing standardized and predictable rules, in turn allowing industry to better forecast all applicable drug shortage and discontinuation costs. It is estimated that one life will be saved per year following the coming-into-force of the proposed amendments, at a value of $7.4 million per year. The net present benefit is anticipated to be $55.6 million over 10 years. Qualitative benefits are not included in this estimate but are anticipated to improve the quality and timeliness of patient care, reduce what additional resources are required to mitigate shortages for health care professionals, and allow for standardization and consistency of reporting rules for the whole pharmaceutical industry. “One-for-One” Rule The amendments create new provisions within existing sections of the Regulations. These new rules create a new incremental administrative burden on the pharmaceutical industry in Canada which already bears the cost of the voluntary reporting system. Consultations with the Canadian pharmaceutical industry indicated records of an estimated 2 160 potential shortages and discontinuations reported annually (i.e. including the resolution of a shortage and discontinuation), based on current patterns within the voluntary reporting system and adjusted for companies that currently do not report. The total estimated burden of reporting to the third-party website was calculated to be approximately $347,534 (2012 dollars) per year. This calculation includes the estimated $224 ($112 per hour for an estimated 2 hours) it costs to report a drug shortage per drug indication, as well as costs associated with the updating of reporting processes within each company’s regulatory compliance structure. As a way to partially reduce the administrative burden on industry, a form with pre-populated fields and drop-down menus is being considered. The cost estimates associated with the “One-for-One” Rule are reported in constant 2012 dollars. This table presents the cost estimates associated with the One-for-One Rule are reported in constant 2012 dollars. The current initiative is an "IN" ("One-for-One" Rule) Total annualized average administrative costs (constant 2012 $) $347,534 Annualized average administrative costs (constant 2012 $) $4,291 Small business lens The small business lens applies to any regulatory proposals that impact small business and that have a nationwide cost impact of over $1 million annually. The Treasury Board Secretariat defines a small business as any business, including its affiliates, that has fewer than 100 employees or between $30,000 and $5 million in annual gross revenues. In this case, only DIN and market authorization holders will be affected by the proposed amendments. Due to their revenue generation and capital-intense characteristics, few of these businesses, if any, meet the small business definition. Many Canadian small and medium enterprises (SMEs) within the pharmaceutical industry are typically in the development phase of research and often lack the capital necessary to bring their research to market (i.e. costs for the regulatory expertise to bring a product through the extensive clinical trial process, obtain drug approvals and establish manufacturing infrastructure); therefore, they often partner with, or sell their intellectual property to multinational enterprises (MNEs). These MNEs are the market authorization holders responsible for the manufacturing and distribution of the drug; it is therefore the MNEs that will be responsible for the reporting of drug shortages and discontinuations. Data compiled by Industry Canada did not detect any Canadian SME marketing their products; therefore, the small business lens does not apply. Consultation Policy consultations In May 2014, the Department launched a three-month, extensive consultation on the voluntary notification system and whether a voluntary or mandatory notification system would be more appropriate and effective for Canadian patients and those who care for them. The majority of comments received showed that, with the exception of manufacturers, stakeholders felt that the current voluntary approach is not providing drug shortage notifications that are timely, comprehensive, or reliable. Comments also showed that among stakeholders, there is a general lack of trust in the industry-run system, and that mandatory reporting of shortages and discontinuations, supported by adequate compliance and enforcement measures, is needed. Stakeholders also called for increased mitigation and management efforts to address national shortages, including increased transparency regarding the status of multi-stakeholder mitigation efforts (e.g. assessing and validating shortage risks and severity, timely communication and coordination of information, identifying causes of shortages and alternate sources of supply, shortage monitoring and reassessment). Regulatory proposal consultations In March 2015, prior to prepublication, the Department met with key stakeholders to discuss the details of these proposed amendments. Consultation participants included human innovative and generic drug manufacturers; retail pharmacy associations and their regulatory authorities; federal, provincial and territorial payers; and health care providers and their associations. Industry stakeholders expressed support for the implementation of a system similar to the U.S. FDA reporting system, but were concerned that the proposed list of drugs to be reported on would lead to over-reporting on the part of manufacturers. Conversely, health care stakeholders felt that the proposed list addressed all the products that would be of the highest concern to patients and health care practitioners. A description of the different categories of drugs that fall under the regulatory amendments will be provided in guidance documents. Both industry and health care stakeholders expressed concern with some of the proposed fields for reporting, such as impact of shortage and regional impact. As these aspects are typically beyond the control of authorization holders, and would be challenging to determine, they were subsequently removed from the amendments. In general, both industry and health care stakeholders expressed support for the proposed amendments and requested continued updates and consultations during the process of the website development, to which the Department agreed. Prepublication in the Canada Gazette, Part I The proposed Regulations Amending the Food and Drug Regulations (Shortages of Drugs and Discontinuation of Sale of Drugs) were prepublished in the Canada Gazette, Part I on June 20, 2015. The proposed Regulations were open for comment for a 75-day period. Over the course of the consultation period, the Department received over 130 comments on the proposed Regulations from 13 stakeholder groups. Respondents included national regulatory authorities, healthcare and health professional associations, and drug industry representatives and associations. Overall, respondents were supportive of the proposed amendments to the Regulations to include a mandatory reporting requirement for the shortage and discontinuation of sale of drugs. Respondents provided the following feedback on the proposed amendments to the regulations: Both healthcare and industry stakeholders expressed that while mandatory reporting is an important first step necessary for obtaining and providing patients and healthcare professionals with accurate, timely and reliable information on drug shortages and discontinuations, the Department should take more of a leadership role, such as implementing a strategy and leading coordinated efforts to address the root causes of drug shortages. While the desire was to see a system more closely reflective of the U.S. FDA, these amendments were not meant to mimic the U.S. FDA model. Respondents recommended that the Department should take an approach more similar to that of the U.S. FDA. For example, Concern was raised by industry about potential over-reporting of drug shortages and discontinuations as a result of the scope of drugs the proposed Regulations apply to. They felt that the scope was too broad and should be narrowed. Respondents suggested the scope be limited to those drugs that are medically necessary, as it is the case for the U.S. FDA. As the intent of this amendment is to capture all drugs that have the potential, in a shortage or discontinuation situation, to adversely affect the health of Canadians, and the health system, the scope of drugs to be reported has been left unchanged. The current scope will capture not only those drugs that may be medically necessary, but also those that would create a negative impact on the health system if they are discontinued or in shortage. Recommendations were also made by industry with regards to the timeframe for which an authorization holder is required to report a drug shortage or discontinuation. Respondents felt that the proposed timeframe of two days was too short and difficult to comply with. They recommended that the timeframe be aligned with the five-day timeframe required by the U.S. The Department agreed and this change was made to the Regulations. Clarification was requested, by both healthcare and industry stakeholders, on the interpretation of the term “shortage.” Industry stakeholders expressed concern that the proposed definition of drug shortage was overly broad, vague and could lead to over-reporting, as it does not take into consideration the amount of drugs potentially in the supply chain (i.e. wholesaler, pharmacy retailers). It was recommended that the definition be more closely aligned with that of the U.S. FDA. Respondents also proposed a number of factors that should be taken into consideration for when an authorization holder should be required to report a drug shortage (such as reporting only if a shortage is anticipated to last more than 30 days or the manufacturer is completely out of stock). However, due to the difference in types of drugs being reported, these proposed factors cannot be universally applied. While no change was made to the definition of “shortage,” this term and the reporting requirements associated with it are further clarified in the guidance document. Clarification was also requested, by both healthcare and industry stakeholders, on the interpretation of the term “discontinuation.” It was recommended that the Department include a definition of “discontinuation.” A definition for “discontinue” has been added to the Regulations, and the term and the reporting requirements associated with it are further clarified in the guidance document. Respondents requested clarification on a number of fields of information required to be reported as part of a drug shortage or discontinuation notification to the third party website. These fields included reporting of an anticipated shortage, shortage or discontinuation based on package size, the reason for a shortage or discontinuation, and the anticipated date when that authorization holder will be able to meet demand. Descriptions of all fields and clarification on the information required for them are provided within the guidance document. Questions were also raised regarding the purpose of the requirement to report to the Department if a drug has not been sold for 12 consecutive months. The purpose of this provision is outlined in the “Description” section above. Adjustments were made to the compliance cost estimates to reflect that a “ramping-up” of infrastructure and internal frameworks that will need to occur in advance of reporting shortages. The Department was provided with an estimate of approximately $30,000 per company in addition to the initial compliance cost estimates; this increased the total compliance cost estimates by $1.83 million in year one. Comments acknowledged that similar reporting structures were already in place in other jurisdictions; however, it was decided to assume that 75% of companies would be required to adjust or augment their reporting systems in order to comply with the Canadian regulations Healthcare and industry stakeholders also requested more information regarding the proposed third-party website and the information required to be reported to the website. Respondents commented that the third-party website should be user friendly, potentially with pre-populated drop down menus, and that guidance material be provided regarding reporting to the website. Clarification on how information reported to the website would be used was requested by industry. It was recommended that the information be analyzed and made available to Canadians. All comments received that were related to the third-party website have been reflected in the business requirements for the website. Changes to the Regulations following prepublication As a result of the consultation following prepublication, the Department made the following amendments to the prepublished Regulations. C.01.001(1) — “Discontinue” Respondents to the Canada Gazette, Part I, consultation recommended that the term “discontinue” be defined in the proposed Regulations. In addition to industry stakeholders’ feedback, Health Canada decided to define “discontinue” for the following reasons: To clarify any potential confusion with the Department’s meaning of “discontinue” compared to that of other jurisdictions. For example, the U.S. FDA defines “discontinuance” to mean a disruption in the supply of a product, whether the interruption is intended to be temporary or permanent. In contrast, the Department intends a discontinuance to mean a permanent cessation of sale, whereby the authorization holder has no intention of selling the drug in Canada in the future. There have also been recent examples of confusion by industry stakeholders in interpreting “discontinued sale” in C.01.014.7 of the FDR, which requires DIN holders to notify the Minister of a discontinuation. Stakeholders were unclear whether they were required to notify the Minister within 30 days of the last sale/distribution of the product into the market, or within 30 days of the product’s expiration date. The definition clarifies that the requirement to report a discontinuation is when a DIN or authorization holder permanently ceases sale, rather than when the product is no longer available at the retail level. C.01.014.6(1)(a) — Removal of the words “or import” The addition of the definition “discontinue” highlighted a redundancy that is found in this provision. As all importation for sale is for the purpose of sale, and only a discontinued sale is required to be reported to the Department, the words “or import” are unnecessary in this provision. The discontinuation of import alone would not lead to the cancellation of a DIN. C.01.014.9 (1)(k) — The anticipated date when the authorization holder will be able to meet demand for the drug Industry stakeholders indicated that there are often times where it may be difficult to predict when a manufacturer will be able to meet demand for a drug. Respondents requested the ability to declare “unknown” to the question of the anticipated date of resolution. The Department recognized respondents’ concerns that there truly may be circumstances in which authorization holders may not know, or be able to anticipate, the date in which they will be able to meet demand. Rather than creating a situation in which authorization holders are required to report a date that is unknown and thus providing Canadians with false expectations of when an authorization holder will be able to meet demand, it would be preferable to inform Canadians that the expected date of resolution is truly unknown. The provision was therefore amended to allow the authorization holder to indicate that the anticipated resolution date of a shortage is unknown. In addition, given that authorization holders are required to update their notification within two days of making or becoming aware of new or updated information, once an authorization holder identifies an anticipated resolution date, they will be required to report it to the third-party website. C.01.014.9 (2)(b); C.01.014.9 (2)(c); and C.01.014.10 (2)(b) — Notification timelines Industry stakeholders expressed concern with the short two-day timeframe in which they would be required to report a drug shortage or discontinuation where the authorization holder (a) anticipates a shortage will begin in six months or less; (b) did not anticipate the shortage; and (c) decides to discontinue sale of a drug in six months or less. Respondents felt that the two-day timeframe was impractical and unrealistic, especially as it relates to unanticipated shortages. Recommendations were made to align the timeframe with that of the U.S. FDA (where authorization holders have five business days to report). The timeframe to report a drug shortage or discontinuation has been increased from two days as stated in the original proposal, to five days in the final amendments, as the increased timeframe will provide stakeholders with sufficient time to gather and report information accurately rather than having to provide incorrect information because they were trying to submit the information before the deadline. The amended timeframe would also help alleviate potential confusion by aligning with the timeframe of the U.S. FDA. Coming into force In order to ensure that the implementation of the third-party website is in line with the coming into force of these Regulations, the coming-into-force date has been increased from 6 months to 9 months following the date on which these Regulations are registered. Regulatory cooperation In 2012, the Department and the province of Alberta launched the Multi-Stakeholder Steering Committee on Drug Shortages (MSSC). The MSSC brings together stakeholders from industry, government, and health care associations to advance work on the prevention, notification, and mitigation of shortages. With respect to vaccines, the Vaccine Supply Working Group (VSWG) oversees supply coordination across Canada for publicly funded vaccines. The VSWG is supported administratively by the Public Health Agency of Canada and includes all provincial and territorial jurisdictions. The amendments will ensure that the MSSC, the VSWG, P/Ts, patients, health care practitioners, and all other drug supply stakeholders have advance notice of and access to publicly available information that can be used in the mitigation of shortages and management of discontinuations. The amendments will bring Canada into alignment with the U.S. FDA and the European Medicines Agency (EMA) in establishing a mandatory requirement to report drug shortages and discontinuations. As there is no international repository for drug shortage and discontinuation reporting, each jurisdiction has its own reporting system. The U.S. FDA and the EMA administer their own systems, while the Canadian system will be administered by a third party contracted by the Department. This difference is due to the dedicated drug shortage offices in the U.S. and in Europe. In these jurisdictions, manufacturers notify the respective agencies when situations arise that may lead to a drug shortage. The agencies’ dedicated offices work with the manufacturer to mitigate the severity of, and perhaps prevent, the shortage before it affects supply on the market. While the U.S. FDA and the EMA require reporting on medically necessary products and medicinal products, respectively, the Canadian amendments will outline the specific types of products that will be subject to the Regulations. Rationale While the establishment of www.drugshortages.ca put in place a system for the voluntary reporting of drug shortages and discontinuations in Canada, comments received during consultations indicate that this system is not meeting the needs of patients, health care practitioners, and other drug supply stakeholders. Even though progress has been made, many concerns still exist regarding the quality and timeliness of information posted to the website. The false perception that all Canadian drug shortages and discontinuations are consistently reported to www.drugshortages.ca creates confusion for those looking for accurate shortage and discontinuation information. The information reported to the third-party website will be publicly available, so as to be accessible for patients, health care practitioners, and other stakeholders making decisions that may affect the health and safety of Canadians. Third-party administration of the new drug shortage reporting system reflects an understanding that addressing drug shortages and discontinuations is a multi-stakeholder responsibility, independent of any one party. Regulation is necessary to ensure that the proper level of authority is in place to mandate the reporting of this critical information. The provisions concerning information reported to the Department will bring clarity to existing regulatory requirements for the notification of drug discontinuations to Health Canada. The information reported will be used to provide a more accurate picture of drugs presently on the Canadian market and, when necessary, enable the Department and other key stakeholders to undertake additional mitigation measures. The information reported will help ensure that the drug information that the Department makes public on its Drug Product Database is accurate and up to date, so that Canadian patients, health care providers, and industry can have an accurate picture of which drugs, which fall within the reporting scope, are available on the Canadian market. This information will also help patients, health care practitioners, and stakeholders throughout the supply chain to identify potential alternative drugs available when shortages occur. Implementation, enforcement and service standards Implementation In order to implement the reporting system for drug shortages and discontinuations, the following activities were undertaken: identifying and obtaining an independent, third-party organization to develop and administer the website; identifying resources within the Department for compliance and enforcement; and identifying resources to enable the Department to partake in the facilitation of mitigation measures with industry, health care stakeholder, and other levels of government, as well as assess and prioritize appropriate mitigation efforts within the Department, when required. Prior to publication of the regulatory amendments in the Canada Gazette, Part II, the Department consulted and prepared a guidance document that describes to authorization holders the details and procedures for posting drug shortage and discontinuation information to the contracted website. This document is readily available to regulated parties and describes their obligations to report drug shortages and discontinuations. It also includes additional information to help regulated parties understand how to comply with the requirements. Enforcement Drug manufacturers and importers are responsible for ensuring that they comply with the applicable requirements of the Food and Drugs Act and its Regulations. The shortage and discontinuation reporting requirements are similar in nature to the reporting presently required for adverse drug reactions in the Regulations. Compliance will be assessed and enforced in accordance with the Department’s Compliance and Enforcement Policy (POL-0001), which outlines a graduated, risk-based approach. A number of regulatory measures are available to the Department, through the Inspectorate, to achieve compliance. These measures are generally exercised under the powers of the Food and Drugs Act and its associated regulations and other relevant legislation, including the Criminal Code. If a regulated party does not respond voluntarily to requests from the Inspectorate to comply with regulations, a range of measures can be considered, including public warnings or advisories, letters to trade and regulated parties, inspections, administrative seizures, injunctions, investigation and potentially a referral for prosecution. In the event of a successful prosecution, a drug manufacturer or importer found to have contravened a provision of the Food and Drugs Act or its Regulations is guilty of an offence and is liable to the applicable fines and/or penalties set out in the Act. Performance measurement and evaluation The Department has developed a Performance Measurement and Evaluation Plan (PMEP) to measure the performance and to conduct an evaluation of these amendments to the Regulations. This plan specifies the methods selected for the ongoing monitoring of these amendments, performance targets, indicators and data sources. These will be comprehensively tracked as part of the performance measurement strategy outlined in the PMEP. This PMEP is available upon request. Contact Bruno Rodrigue Policy, Planning and International Affairs Directorate Health Products and Food Branch Health Canada Address Locator: 3105A Holland Cross, Tower B, 5th Floor 1600 Scott Street Ottawa, Ontario K1A 0K9 Email: [email protected] Footnote a S.C. 2012, c. 19, s. 414 Footnote b R.S., c. F-27 Footnote 1 C.R.C., c. 870 Footnote 2 The scope of this provision was described in the Regulatory Impact Analysis Statement, published in the Canada Gazette, Part I, as being broader than reflected in this amendment. Footnote 3 Baker R & Norton PG (2006). Adverse events and patient safety in Canadian health care. BCMJ: 48(7).

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