FEDERAL REG

SOR/2016-294: Regulations Amending the Precursor Control Regulations (Fentanyl Precursors)

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

Registered
November 18, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations or the Order.) Issues Canada is experiencing an increasing number of opioid overdoses and deaths across the country. Fentanyl is being implicated in a growing number of these deaths. According to the Canadian Community Epidemiology Network on Drug Use, between 2009 and 2014 there were at least 655 deaths in Canada... (Click for more)


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Senate

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Published on November 18, 2016

Bill Summary

SOR/2016-294: Regulations Amending the Precursor Control Regulations (Fentanyl Precursors)

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations or the Order.) Issues Canada is experiencing an increasing number of opioid overdoses and deaths across the country. Fentanyl is being implicated in a growing number of these deaths. According to the Canadian Community Epidemiology Network on Drug Use, between 2009 and 2014 there were at least 655 deaths in Canada where the opioid fentanyl was determined to be the cause or a contributing cause. (see footnote 2) In April 2016, British Columbia declared a public health emergency because of over 200 overdose deaths in the first three months of the year, one third of which were associated with fentanyl. Furthermore, for the period from January through July 2016, there were 264 illicit drug overdose deaths with fentanyl detected in British Columbia. (see footnote 3) In addition, deaths involving fentanyl in a number of other provinces have also increased markedly. For example, in Alberta there were 274 fentanyl-related overdose deaths in 2015 compared to 120 in 2014, (see footnote 4) and in Ontario, there were 154 fentanyl-implicated deaths in 2014 and 120 in 2013. (see footnote 5) Law enforcement agencies have noted the presence of illicit fentanyl production in Canada. Yet, many of the chemicals required to produce fentanyl are not controlled in Canada. This means that the ingredients used to make fentanyl can be legally imported into Canada in any amount. This results in Canadian border services officers and law enforcement officials not being able to stop these shipments; they can only take action after the illicit fentanyl is produced. Background Fentanyl and its misuse in Canada Fentanyl, a potent synthetic opioid analgesic, is a controlled substance listed in Schedule I of the Controlled Drugs and Substances Act (CDSA) and regulated under the Narcotic Control Regulations. Therapeutic products containing fentanyl are approved in Canada as analgesics for the treatment of severe pain. As an opioid, fentanyl’s euphoric effects and addictive properties make it prone to misuse. Licit fentanyl for pharmaceuticals is produced in other countries and imported into Canada in its finished form. Due to fentanyl’s potency, it is very toxic and dangerous when misused. Use of fentanyl in the illicit drug market poses significant risks to public health as it is often mixed in an unknown quantity with other drugs, such as oxycodone and heroin, and users are not always aware that they are taking fentanyl. As a result, drug overdoses and deaths in Canada involving fentanyl have increased markedly. According to the Royal Canadian Mounted Police (RCMP), fentanyl is finding its way to Canada’s illicit drug market in three ways: diversion of pharmaceutical fentanyl products, mainly skin patches; smuggling from abroad; and, more recently, from production in clandestine laboratories in Canada using precursor chemicals. For example, between 2011 and 2015, six clandestine labs were identified in Canada where illicit fentanyl production occurred or was intended to occur. The illicit fentanyl is used to prepare products for distribution and sale by being pressed into pills and marketed as fentanyl or another substance (e.g. oxycodone), or mixed into other illicit drugs such as heroin. Senate public bill S-225 In June 2016, a Senate public bill, S-225, An Act to Amend the Controlled Drugs and Substances Act (substances used in the production of fentanyl), was passed by the Senate with amendments. The bill proposes to address the growing fentanyl crisis by adding the following six precursor chemicals used to produce fentanyl to Schedule VI to the CDSA: Propionyl chloride; 1-Phenethyl-4-piperidone and its salts; 4-Piperidone and its salts; Norfentanyl (N-phenyl-N-piperidin-4-ylpropanamide) and its salts; 1-Phenethylpiperidin-4-ylidenephenylamine and its salts; and N-Phenyl-4-piperidinamine and its salts. Bill S-225 is currently awaiting introduction in the House of Commons. Legitimate use and international controls Of the six chemicals proposed in Bill S-225, four have no known legitimate industrial or commercial uses in Canada. Propionyl chloride is used by pharmaceutical companies and the research community as a solvent in the synthesis of chemicals and 4-piperidone is used for research and development purposes. Of the six chemicals proposed, only one (1-phenethyl-4-piperidone) is controlled in other countries, specifically the United States and Australia. Legislative framework for controlled substances and precursors The CDSA provides for the control of substances that can alter mental processes and that may produce harm to health and the society when diverted or misused, as well as precursors that can be used in the production of controlled substances. Except as authorized by regulations or exempted in accordance with the CDSA, activities (i.e. possession, production, trafficking, importation and exportation) with controlled substances and precursors are prohibited. The CDSA also specifies the offences and penalties associated with the conduct of illegal activities with controlled substances and precursors. Furthermore, the Act authorizes the Governor in Council to make regulations and to amend the schedules to the CDSA by order. Substances listed in Schedules I to V to the CDSA are defined as controlled substances, while substances listed in Schedule VI to the CDSA are defined as precursors. Developed under the CDSA in 2002, the Precursor Control Regulations (PCR) set out a framework within which activities with precursors are regulated. Under the PCR, a licence is required for any person to produce, package, sell, provide, import, export, and possess for the purpose of exporting Class A precursors, and a registration is required for any person to produce for the purpose of sale, import and export Class B precursors. The PCR also specify requirements for record-keeping, security and reporting that licensed or registered dealers must comply with. The schedule to the PCR includes specified thresholds in absolute quantities or package size for each Class A precursor. More specifically, the PCR allow retailers who meet the criteria specified in section 5 to sell or provide Class A precursors without a licence. For example, retailers must sell more than just chemicals or chemicals and equipment used in the chemical industry. In addition, they can only sell Class A precursors in amounts not exceeding those set out in the schedule. In addition, particular record-keeping requirements must be met if a licensed dealer, a pharmacist, a practitioner or a person in charge of a hospital sells or provides a Class A precursor above the maximum quantity set out in the schedule. Furthermore, additional documentation must be attached to any shipment of Class A precursors that exceeds the maximum quantity set out in the schedule. Objective The objective of this scheduling amendment is to help protect the health and safety of Canadians and to address the growing opioid crisis by adding regulatory controls on six chemicals used in the illicit production of fentanyl while still permitting access to the chemicals for legitimate purposes. Description The Order amends Schedule VI to the CDSA by adding the following six chemicals that can be used in the production of fentanyl to the list of Class A precursors: Propionyl chloride; 1-Phenethyl-4-piperidone and its salts; 4-Piperidone and its salts; Norfentanyl (N-phenyl-N-piperidin-4-ylpropanamide) and its salts; 1-Phenethylpiperidin-4-ylidenephenylamine and its salts; and N-Phenyl-4-piperidinamine and its salts. The regulatory amendment adds these chemicals to Column 1 of the schedule to the PCR and sets out in column 2 a maximum quantity of “0” for these chemicals. This means that an end-use declaration must be obtained by the licensed dealer for all transactions of any of these precursor chemicals to a person who is not a licensed dealer and that shipments of any of these precursor chemicals must be accompanied by additional documentation as required by the PCR. With these amendments, any person who is not authorized to import, export or possess for the purpose of exporting these precursor chemicals will be subject to the offences and penalties set out in section 6 of the CDSA. Any person who produces, sells, provides, imports, exports, and possesses for the purpose of export these precursor chemicals will have to be in compliance with the PCR. “One-for-One” Rule These amendments will result in administrative burden costs to eight Canadian businesses should they wish to continue selling, importing and/or exporting any of these precursor chemicals. Six of these companies are already licensed under the PCR and would need to apply for an amendment to their existing licence (one hour to complete); two of these companies are unlicensed and would need to apply for a licence (approximately three hours to complete). All eight businesses may also incur additional administrative costs associated with submitting permit applications (30 minutes per application) if they decide to import or export these chemicals. For the purposes of this analysis, it is assumed that businesses may require up to as many as 10 permits per year. The administrative costs for all of these activities are calculated using an average cost of $41.60 per hour, based on the assumption that an employee in the natural and applied sciences field would be completing these forms. In accordance with the Red Tape Reduction Regulations, the administrative burden to businesses, assuming they will have activities with these chemicals, was calculated over 10 years and discounted using a rate of 7%. The present value (2012) of the total annualized incremental administrative costs to these businesses is estimated to be $3,675 or approximately $460 per business. Since these amendments will result in administrative burden, the “One-for-One” Rule applies and it is considered an “IN” under the Rule. The estimated cost will be offset by an equivalent reduction in the administrative credits available within the health portfolio. Small business lens Eight Canadian companies have been identified as selling, importing and/or exporting one or more of these precursor chemicals, none of which is a small business. Therefore, the small business lens does not apply to these amendments. Consultation On September 3, 2016, Health Canada published a notice to interested parties in the Canada Gazette, Part I, to notify stakeholders and the general public about this regulatory amendment. The consultation closed on October 2, 2016. Three comments were received in response to the notice, all of which were from pharmaceutical companies with operations in Canada. The first had questions regarding end-user requirements under the PCR. The second had questions about the legitimate and illegitimate uses of the proposed chemicals and whether they were controlled in other countries. The third comment included a statement that these amendments would impact them and other pharmaceutical companies should they need to access these chemicals for manufacturing and/or for research and development purposes. No comments of opposition were received. A World Trade Organization Technical Barriers to Trade notification was also posted in September 2016. The consultation closed on October 8, 2016. No comments were received as a result of this notification. Rationale Fentanyl is very toxic and dangerous when misused. Exposure to fentanyl both from voluntary misuse of fentanyl products or from involuntary misuse of products laced with the substance has led to increasing numbers of drug overdoses and deaths being reported nationwide with an unprecedented number of cases in British Columbia in 2016. Placing controls on the production, sale, provision, import, export and possession for the purpose of exporting of fentanyl precursor chemicals will help to curb the illicit manufacture of fentanyl in Canada. This action is intended to result in a reduction in the availability of illicit fentanyl products. Scheduling these six precursor chemicals to the schedule to the PCR means that they are controlled like other Class A precursors under the CDSA and provides law enforcement agencies with the authority to take action against activities with these chemicals that are not in accordance with the CDSA. These amendments achieve the objectives of Senate Public Bill S-225 in an expeditious fashion. They also complement Health Canada’s Action Plan on Opioid Misuse, announced by the Minister of Health in June 2016, by enhancing law enforcement’s ability to address the supply side of illicit opioids. Costs These regulatory amendments will result in cost to businesses. Companies supplying, importing or exporting any of these six precursor chemicals will incur costs to comply with this amendment. Eight businesses were identified as dealing with at least one of the six scheduled precursor chemicals. Six of these businesses are already licensed dealers under the PCR and will incur costs to have their licences amended should they want to continue to conduct business with the scheduled precursor chemicals. The two unlicensed companies would have to apply to become licensed dealers and renew their licences and incur associated costs to continue to conduct activities with any of these precursor chemicals. There will also be additional on-going administrative costs to all businesses to prepare and submit import and/or export permit applications if they intend to import and/or export any of these chemicals, as well as costs associated with record-keeping activities. The present value of the total cost to businesses over a 10-year period, using a 7% discount rate, is estimated to be $58,760, or an annualized cost of $8,365. Researchers in Canada will incur a negligible administrative cost, as they will need to complete an end-use declaration in order to purchase any of these chemicals from a licensed dealer. Should a researcher wish to import any of these precursor chemicals for research purposes, they can request that Health Canada import the precursor chemicals on their behalf. Again, the researcher would incur a negligible administrative cost, as they would need to complete a form. Being negligible, these costs are not accounted for in the estimates. No cost is expected for the Government. Given that Health Canada already has a licensing system in place for precursor chemicals, the provision of licences, authorizations, and permits would be conducted as part of normal activity and no additional resources would be required. Costs associated with compliance and enforcement activities would also be absorbed by existing programs. Benefits These regulatory amendments are expected to result in benefits to Canadians. The misuse of fentanyl has led to an increasing number of drug overdoses and deaths. Controlling activities with the precursor chemicals used to produce fentanyl will help mitigate the risk of their availability and subsequent use in the illicit production of fentanyl, thereby protecting the health and safety of Canadians. Implementation, enforcement and service standards Due to the urgent nature of the growing opioid crisis in Canada, these regulatory amendments come into force on the day of publication in the Canada Gazette, Part II. As part of the implementation of these amendments, Health Canada will notify stakeholders of the changes and provide additional information on the Department’s website. Health Canada is responsible for authorizing activities (through licences, permits, and exemptions) with substances scheduled under the CDSA and its regulations and for monitoring compliance with regulatory requirements. Law enforcement agencies and the Canada Border Services Agency are responsible for taking enforcement action in response to contraventions of the CDSA. Under the CDSA, a range of penalties applies to the offences associated with the precursor chemicals covered by these regulatory amendments. The maximum penalty for indictable offences with respect to substances in Schedule VI to the CDSA is imprisonment for a term not exceeding 10 years. There are no additional service standards other than those that already exist for issuing licences and permits under the CDSA. Contact Anna Wheeler Healthy Environments and Consumer Safety Branch Health Canada Main Statistics Canada Building 150 Tunney’s Pasture Driveway Ottawa, Ontario K1A 0T6 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 SOR/2002-359 Footnote 2 Canadian Community Epidemiology Network on Drug Use (CCENDU) Bulletin: Deaths Involving Fentanyl in Canada, 2009-2014. August 2015. (http://www.ccsa.ca/Resource%20Library/CCSA-CCENDU-Fentanyl-Deaths-Canada-Bulletin-2015-en.pdf) Footnote 3 British Columbia Coroners Service. Fentanyl-Detected Illicit Drug Overdose Deaths January 1, 2012 to July 31, 2016. August 13, 2016. (http://www2.gov.bc.ca/assets/gov/public-safety-and-emergency-services/death-investigation/statistical/fentanyl-detected-overdose.pdf) Footnote 4 Alberta Health. Fentanyl and the take-home naloxone program. (http://www.health.alberta.ca/health-info/AMH-Naloxone-Take-home.html) Footnote 5 Office of the Chief Coroner of Ontario. Report for the Years 2012 – 2015. (http://www.mcscs.jus.gov.on.ca/english/Deathinvestigations/OfficeChiefCoroner/Publicationsreports/OCCAnualReport2014.html)

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