Canada Gazette, Part I, Volume 146, Number 39: Regulations Amending the Food and Drug Regulations (1475 ― Good Manufacturing Practices)

September 29, 2012

Statutory authority

Food and Drugs Act

Sponsoring department

Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

Active ingredients (AI) are substances or a mixture of substances that, when used as a raw material in the fabrication of a drug in dosage form, provide the intended effect. The AI contained in most pharmaceuticals are chemical in origin and are often referred to as active pharmaceutical ingredients (API). Examples would include the acetaminophen contained in a pain relief tablet, or the sildenafil citrate contained in an erectile dysfunction drug. AI of biological origin are often referred to as bulk process intermediates (BPI). One example would be the insulin contained in an insulin pen cartridge for use by diabetics.

The quality of the AI in a drug has a direct effect on the safety and efficacy of that drug. Poorly manufactured and contaminated AI have been associated with negative health outcomes, including death, in a number of incidents over the past decades. A recent example is the 2008 international crisis regarding contaminated heparin, a blood-thinning drug. An investigation by the U.S. Food and Drug Administration (FDA) revealed that bulk heparin sodium (an AI) purchased from an Asian supplier by the U.S. drug manufacturer was contaminated with oversulfated chondroitin sulphate (OSCS). As of April 29, 2008, the FDA associated 81 deaths and 785 serious injuries in the United States with tainted doses of heparin. (see footnote 1) Worldwide, there has been growing concern over the quality of AI as the manufacturing of AI and dosage-form drugs has been increasingly outsourced to developing countries.

In Canada, the quality of drugs in dosage form and higher-risk AI (namely, BPI) is ensured through, among other things, the imposition of good manufacturing practices (GMP). GMP ensure that products are consistently produced and controlled according to quality standards. However, there are no GMP requirements for API, the AI used in most pharmaceuticals. Current regulatory requirements pertaining to such AI mostly involve testing before use in a dosage-form drug, which cannot eliminate all risks. (see footnote 2) Testing is also incapable of retroactively improving the quality of a product — an AI which has failed testing must either be destroyed without recovery of the cost of manufacture, or sold into a market which will accept substandard AI (e.g. a country with poor or no regulatory control over drugs, or a counterfeit drug ring).

In 2000, in recognition of the risks posed by poorly manufactured AI in a globalized pharmaceutical market, the international community of pharmaceutical regulators and manufacturers developed and adopted a guideline concerning GMP for AI, known as International Conference on Harmonisation (ICH) guideline Q7. In the years since ICH guideline Q7 was finalized, most of the industrialized world, including the United States, the European Union, Japan, Singapore and Australia, has implemented the guideline in law.

This proposed regulatory amendment would make GMP for all AI a regulatory requirement in Canada as well, helping to ensure the quality of AI that would be used in drugs available to Canadians, whether imported or domestically manufactured.

By bringing Canada into line with its international regulatory counterparts, this amendment would also allow Canada to establish regulatory equivalence in respect of AI with other industrialized countries, particularly those with which it has a Mutual Recognition Agreement (MRA). (see footnote 3) In evaluating the safety of AI manufactured outside of Canada, Health Canada would be able to take advantage of GMP inspections by trusted international partners. Conversely, Canadian manufacturers would be able to leverage their compliance with Canadian requirements and inspection results from Health Canada to participate in the international drug market. Finally, Health Canada would be able to reciprocate in international regulatory work-sharing, joining ongoing programs (see footnote 4) with other regulators to inspect AI manufacturing sites located in developing countries, and otherwise doing its part to ensure the safety of the global AI supply.

Objectives

The main objective of the proposed regulatory amendment is to protect the health and safety of Canadians by implementing into regulation internationally accepted GMP for AI requirements. A secondary objective is to ensure that the associated regulatory burden is mitigated by compensating efficiencies or minimized to the extent possible.

Description

The enabling legislation is the Food and Drugs Act. This regulatory proposal would amend the Food and Drug Regulations as follows.

Good Manufacturing Practices requirements

The proposed regulatory amendment would generally impose on the fabrication, packaging/labelling, testing, storing and transport of all AI the GMP requirements which currently apply to dosage-form drugs and the subset of AI known as BPI. This would be accomplished through the amendment of the definition of “drug” for the purposes of Division 2 of Part C of the Food and Drug Regulations. The proposed regulatory amendment would also amend or add provisions tailored to AI in accordance with ICH guideline Q7 where necessary (e.g. adding AI-specific record retention periods).

Under the proposed regulatory amendment, no person who has fabricated, packaged/labelled, tested or stored a drug would be permitted to sell the drug unless they have performed their activity in accordance with GMP requirements. Dosage-form fabricators would be required to use only GMP-compliant AI in their drugs. A Drug Identification Number (DIN)-holding distributor or importer of a dosage-form drug would be prohibited from selling the drug unless it — including any AI used in it — were GMP-compliant.

This amendment would carry out the main objective of improving the quality of AI used in drugs in Canada by implementing into regulation internationally accepted GMP for AI requirements.

Establishment licensing requirements

The proposed regulatory amendment would extend EL requirements to all AI fabricators, packagers/labellers, testers and importers. As with current EL holders, an EL would not be issued until the applicant had been assessed by Health Canada and found to be in compliance with the proposed GMP requirements.

Distributors and wholesalers of the subset of AI known as API, which only store and transport already-packaged and -labelled API, would be subject to the applicable GMP requirements but would not be required to apply for an EL, as the risks do not warrant the imposition of an EL requirement and accompanying inspection program. (see footnote 5)

The proposed regulatory amendment would not change current EL requirements in respect of dosage-form and BPI fabricators, packagers/labellers, testers, importers, distributors or wholesalers.

This amendment would thus provide Health Canada with oversight and enforcement authorities regarding the riskiest activities in the AI supply chain, while ensuring the regulatory burden is not extended unnecessarily.

Traceability requirement

Every fabricator, packager/labeller, distributor, wholesaler and importer of an AI, whether an API or a BPI, would be required to include, on the container label or on other documentation accompanying the drug, directly following the information provided by any previous party (a) the regulated party’s name, contact details, and EL number, if applicable; (b) whether it has fabricated, packaged/labelled, distributed, wholesaled or imported the drug; (c) the date of that activity; (d) the expiration or re-test date of the drug; and (e) the lot number of the drug.

This record-keeping amendment fostering the traceability of AI would help to protect the health and safety of Canadians in several ways. It would allow for more rapid and targeted investigation and recall of problematic AI. It would also make the introduction of illegitimate, substandard AI into the supply chain more difficult as verification of an AI’s provenance would be simplified.

The anticipated burden of this new requirement would be minimized to the extent possible by requiring only basic, easily available information from each regulated party, and by being non-prescriptive in terms of the format of the documentation. The burden would also be offset by the greater efficiency it would lend to both Health Canada when carrying out regulatory actions, and other regulated parties in complying with their obligations (such as the dosage-form manufacturer’s obligation to verify the GMP compliance of the AI they use). Such transparency in the Canadian AI supply chain would also help to foster international confidence in the Canadian drug industry generally.

Transition period

The proposed regulatory amendment would come into force six months after the day on which it is registered. This delay in the coming into force of the regulatory amendment would allow all regulated parties to adjust to the new requirements. Furthermore, on the day the regulatory amendment comes into force, any person who fabricates, packages/labels, tests or imports an API would be allowed to continue to do so without an EL provided they submit an EL application within three months after the coming into force of the regulatory amendment. This transition provision would ensure that regulated parties do not find themselves in a state of non-compliance solely due to any Health Canada administrative delays.

Miscellaneous

Veterinary drugs: AI included solely in drug products for veterinary use are not within the scope of the proposed Regulations.

Natural health products: As with veterinary drugs, AI included solely in natural health products are not within the scope of the proposed Regulations.

Regulatory and non-regulatory options considered

The following regulatory and non-regulatory options were considered.

Option 1: Status quo

Currently, API (a subset of AI) are not subject to any direct regulatory requirements other than the requirement for dosage-form fabricators to test a sample of each lot or batch of raw material against its specifications. The only assessment by Health Canada of API quality takes place during the pre-market drug submission review. The pre-market assessment provides an evaluation of the quality of the proposed API at the time of the application to market the dosage-form drug, but the evaluation is focused on the API’s chemical properties and method of manufacture, and does not cover critical GMP areas such as quality management, facilities, and materials management (among others). This approach does not provide for oversight once manufacturing is underway.

A benefit of this option is that no additional financial costs for Health Canada or for regulated parties would be incurred. However, it constitutes an ongoing risk to the health and safety of Canadians. Also, under this option, Canada continues to be unable to participate in international regulatory cooperation to ensure the safety of the global AI supply, and Canadian industry continues to face barriers to entry into the global drug market.

Option 2: More active and ongoing promotion of the voluntary implementation of GMP for AI

Health Canada guidance documents currently recommend voluntary implementation of ICH guideline Q7. Option 2 differs from Option 1 (status quo) in that it would involve more active and ongoing promotion by Health Canada of GMP for AI on a voluntary basis.

Knowledge of the benefits of GMP for AI is currently well-disseminated throughout industry. Most Canadian companies which voluntarily comply with ICH guideline Q7 do so for the purposes of fulfilling the requirements of foreign regulatory authorities and business partners. These companies have some difficulty being inspected or audited for compliance, sometimes needing to arrange and pay for “foreign” inspections from their target markets, which puts them at a disadvantage compared to companies based in jurisdictions which have implemented requirements for, and inspect against, GMP for AI. Companies which sell only in Canada and which have voluntarily adopted ICH guideline Q7 as a best practice, to the benefit of Canadians, may be at a competitive disadvantage compared to other non-exporting companies which have chosen not to incur the additional cost of the following guideline Q7.

It is doubtful that further promotion by Health Canada at this point would motivate more of the Canadian AI industry to voluntarily adopt GMP. Under Option 2, Canadian companies which do not undertake foreign inspections would continue to be unable to participate in the international pharmaceutical market, and Canada would continue to be unable to participate in international regulatory cooperation to ensure the safety of the global AI supply.

Option 3: Regulatory amendment

Under this recommended option, following GMP for AI would become mandatory for Canadian industry and enforceable by Health Canada. Such a regulatory approach would be consistent with Canada’s current regulatory framework, which imposes GMP requirements for dosage-form drugs and BPI (AI of biological origin). The approach would also be consistent with the approach taken by many of Canada’s international regulatory counterparts, including the European Union, the United States, Japan, Singapore and Australia.

Canada is a party to several Mutual Recognition Agreements (MRAs) relating to the parties’ respective GMP compliance programs for drug products. (see footnote 6) The MRAs allow each regulator party to the agreement to accept the others’ GMP inspection results as equivalent to its own. It is expected that equivalence with Canada’s MRA partners in respect of AI would be established prior to the coming into force of the regulatory amendment after an equivalency exercise following existing MRA procedures — e.g. a documentary review by the other MRA regulators — if the proposed regulatory amendment were implemented.

Also, some regulators (see footnote 7) which have already implemented GMP for AI have entered into a regulatory work-sharing pilot program, sharing inspection reports and carrying out joint inspections of foreign AI manufacturers. It is expected that Canada would be able to participate in such a program if this regulatory proposal were implemented.

At some point in the future, Health Canada may consider the merits of developing a regulatory amendment to recover from industry some of the cost of conducting inspections by imposing EL fees similar to those currently in place for dosage-form drugs and BPI.

Benefits and costs

Cost-benefit statement

As AI of biological origin (BPI) are already regulated in Canada due to their higher-risk nature, the focus of the cost-benefit analysis is primarily on API. As indicated in the cost-benefit analysis, the proposed regulatory amendment would provide a net benefit to Canadians, with a net present value (NPV) of about $35.6 million over 10 years. The complete cost-benefit analysis is available upon request.

A. Quantified impacts ($)

		Base Year	Final Year (see footnote 8)	Total (PV) (see footnote 9)	Annual Average
Benefits	Industry — “Foreign” inspection fees savings for Canadian manufacturers selling abroad. (see footnote 10)	$0.7M	$1.6M (see footnote 11)	$9.2M	$1.4M
	Industry — Cost savings due to removal of poor quality drug products at API stage instead of dosage-form stage. (see footnote 12)	$2.4M (see footnote 13)	$5.6M	$34.6M	$4.9M
	Total benefits	$3.1M	$7.2M	$43.8M	$6.3M
Costs	Industry — Training and administration costs for API fabricators, packagers/labellers, testers, importers, distributors and wholesalers.	$1.0M (see footnote 14)	<$0.1M	$1.0M	<$0.1M
	Health Canada — Administration of new requirements.	$0.1M	$1.7M	$7.2M	$1.1M
	Total costs	$1.1M	$1.8M	$8.2M
Net Present Value (NPV)				$35.6M
B. Positive qualitative impacts
Potential reduction in the number of recall incidents due to API quality issues. Reduced impact of recalls should they occur by helping to narrow down the scope of the recall, through problem identification and record-keeping requirements that allows the isolation of problem lots. Consumers and patients, as well as Canada’s international regulatory counterparts, are assured explicitly that API in dosage-form drugs sold in Canada are meeting the international safeguard standard (GMP). As the number of jurisdictions requiring API to meet the international standard continues to expand, the implementation of the proposal would protect Canada against the increased risk of becoming a destination to divert non-GMP-compliant products to, which in turn could translate into health costs to Canadians, and sales and economic costs to business. The proposal would allow Health Canada to establish regulatory equivalence with its international counterparts, enabling Health Canada to reciprocate in international regulatory work-sharing to ensure the safety of the global AI supply. Establishing regulatory equivalence would also result in the reduction of duplicative oversight by various regulators internationally, and the reduction of Canadian manufacturers’ worldwide compliance costs, consistent with the Government of Canada’s Red Tape Reduction Initiative.

Benefits

Canadian consumers and patients

Although no Canadian data is currently available, the proposed GMP requirements should reduce the future risk of pharmaceuticals for human use with substandard AI being on the Canadian market, given the experience of the World Health Organization (WHO), (see footnote 15) the European Union (see footnote 16) and countries that have implemented similar regulations. This in turn could reduce the health hazards for consumers and patients. Also, the increased ability of the system to trace problematic API would allow removal of such products from circulation more rapidly, which in turn could reduce the risk of their consumption by consumers and patients.

Furthermore, as the number of jurisdictions requiring API to meet the international Q7 standard continues to expand, without the proposed amendment, Canada will increasingly run the risk of becoming a destination to divert non-compliant products to, which in turn could translate into health costs to Canadians and sales and economic costs to business.

At a minimum, the proposed Regulations would provide additional assurance that patients are “getting what they pay for,” i.e. drug products with the expected quality, safety and efficacy. Given that Canadians spent about $31.1 billion on drugs outside hospital settings in 2010,(see footnote 17) the prevention of the entry of a miniscule percentage of drugs with substandard AI into the market could translate into a significant amount in dollar terms.

Industry

If the proposed GMP for AI requirements were in place, they could reduce wastage, save costs and minimize negative impacts by allowing for timelier discovery and better pinpointing of the specific troubling areas, rather than later, during the dosage-form manufacturing process or after the drugs have been on the market, when additional investment has been made. This additional investment could range from a minimum of 50%–60% for a generic oral solid (see footnote 18) to a possible higher percentage for those products still under patent protection, where the API represent a lesser percentage in total cost.

Because Canada does not regulate API directly at present, there are no specific Canadian data available. Nevertheless, there is evidence to support API-related problems being responsible for an estimated 2%–8% of dosage-form recalls in this country. There were between 135 and 241 recalls per year in Canada during the last four years with an annual average of 193 recalls. In the past, industry has suggested informally that it costs the sector about $1 million per recall in Canada. If the proposed GMP requirements could prevent the need for 2%–8% of recalls, the savings could range between $3.8 million and $15.4 million annually. At the very least, the savings could be worth between $1.9 million and $7.7 million if the recalls were triggered at the API stage rather than at the dosage-form stage.

The traceability requirement in the proposal would ensure drug manufacturers in Canada could identify API problems specifically and possibly earlier in the supply chain — a process that should already be considered best business practice. The benefits of traceability are best illustrated by a recent case in which the AI of two biologics for the treatments of a couple of rare maladies were found by the U.S. FDA to be contaminated. (see footnote 19)

According to the American manufacturing company, the supply constraint due to the manufacturing problems adversely impacted its bottom line by about $451 million. (see footnote 20) However, the situation could have been much worse if the entire production had had to be shut down and the inventory had been deemed contaminated — one AI alone could have reduced the company’s revenue by an additional $793 million. (see footnote 21), (see footnote 22) As it was, the ability to trace allowed the company to identify the problem lots and salvage the rest. Because the drugs are for rare diseases and the production from the only facility of the U.S. firm is small to begin with, there could have been significant health consequences to patients if the supply of AI from the whole plant had had to be disposed of.

The proposal to align domestic GMP requirements with international standards could facilitate participation by Canadian manufacturers in the international market, and level the playing field between domestic-only and international manufacturers in the Canadian market. Currently, some companies pay for inspections in order to sell into jurisdictions where ICH guideline Q7 has already been implemented. The European Directorate for the Quality of Medicines and HealthCare (EDQM) charges EUR 9,000 or CAN$13,050 in such cases. In the United States, there are 310 Canadian companies identified by the U.S. FDA (see footnote 23) as subject to its inspections. The proposal would allow such companies to rely on inspection by Health Canada instead. Also, the proposal would reduce the domestic and international compliance obligations of Canadian manufacturers by harmonizing rules, which is consistent with the Government’s Red Tape Reduction Initiative.

Health Canada

Implementation of the proposed regulatory framework would allow Health Canada to establish regulatory equivalence with its international counterparts. It would allow Health Canada to take advantage of GMP inspections by trusted international partners in ensuring higher quality drugs for Canadians, reducing duplicative oversight. It would also allow Health Canada to reciprocate in international regulatory work-sharing to ensure the safety of the global AI supply. From this perspective, Canada would help protect its credibility as a regulator in the global environment by playing an active role in enforcing the standards of this important commodity, where WHO and EDQM GMP inspections have revealed high failure rates.

The traceability requirement would allow Health Canada to carry out more rapid and targeted investigation of problematic AI. It would also make the introduction of illegitimate, substandard AI into the supply chain more difficult as verification of an AI’s provenance would be simplified.

Costs

Canadian consumers and patients

It is not expected that Canadian consumers and patients would bear any significant cost as a result of this proposal.

Industry

Because Canada would be among the last industrialized countries to formalize GMP for AI in accordance with the international guideline, and because the Canadian pharmaceutical industry exports a significant proportion of its products to jurisdictions which have already implemented such requirements, industry is expected to incur minimal incremental costs to comply. It is expected that there would be miscellaneous administrative and clerical time spent by the affected parties for filing EL applications. This should account for less than $100,000 annually, assuming it is less than five hours of work per EL application. A one-time training cost, including employee time, may also be required for a minority of companies that are not currently following directive Q7, particularly those under the category of API packagers/labellers, distributors or wholesalers. Using ISO and on-line FDA GMP training as proxies, it is estimated the cost would be in the $930,000 range, with certain assumptions. (see footnote 24)

Health Canada

Health Canada estimates that there would be approximately 400 prospective licensable parties in Canada and its administrative cost would start at about $95,000 during the transition year. The cost would increase continuously for the next three years until it reaches $1.5M when the program is fully implemented. Anticipated increases after that reflect the cost of inflation or other similar items.

Rationale

The selected option is Option 3 (regulatory amendment). It best fulfills the primary objective of protecting the health and safety of Canadians by implementing GMP for AI requirements equivalent to those of Canada’s international partners. Due to the high level of voluntary compliance which already exists and measures taken to minimize the regulatory burden where possible, the costs of regulatory implementation would be low relative to the expected benefits, thus fulfilling the secondary objective.

Consultation

Health Canada conducted various stakeholder consultations by way of mail surveys, mixed stakeholder sessions and bilateral association meetings in 2002, 2003, 2004, 2009 and 2011. The stakeholders consulted included dosage-form drug manufacturers and distributors; API manufacturers, distributors, and importers; health professional associations (including pharmacy associations); veterinary associations; and other government departments. Stakeholders also submitted unsolicited correspondence inquiring after the status of this regulatory proposal over the years.

Overall, stakeholders were supportive of the regulatory proposal. Stakeholders involved with drugs for human use indicated that they were generally prepared for the proposed new Regulations. Stakeholders involved with the veterinary drug industry gave strongly opposing views on the desirability of the regulatory proposal (i.e. some strongly for, some strongly against). Stakeholders involved with drugs traditionally accorded some flexibility in the interpretation of GMP requirements, such as Category IV monograph products, clinical trial drugs and radiopharmaceuticals, wanted some assurance that flexibility would also be accorded to AI for such drugs.

Health Canada has given consideration to all the comments. In particular, in response to feedback received from veterinary stakeholders in 2009, Health Canada decided to include only AI for human drugs within the scope of this regulatory proposal. The concerns of stakeholders involved with drugs traditionally accorded some flexibility will be addressed in guidance documents, as is currently the case with these drugs.

Implementation, enforcement and service standards

Upon publication of the regulatory amendment in the Canada Gazette, Part Ⅱ, there would be a six-month period before the regulatory amendment would come into force, giving all regulated parties an opportunity to adjust to the new requirements. Guidance documents created by Health Canada would be available to aid regulated parties in coming into compliance.

In addition, API fabricators, packagers/labellers, testers and importers already active as of the day of the coming into force would be permitted to continue conducting their activities without an EL, provided that they have applied for an EL within three months after that day. This transition provision would ensure that regulated parties do not find themselves in a state of non-compliance solely due to any Health Canada administrative delays. No service standards would be applicable to the EL application process as no user fee would be charged, but Health Canada expects the AI process timeline would be comparable to the process timeline for drugs.

Enforcement of the new regulatory requirements would commence once the regulatory amendment came into force. Enforcement mechanisms would be based on the current system for dosage-form drugs (i.e. EL requirements, GMP inspections, compliance verifications, and required follow-up actions). Ongoing implementation would include setting a schedule for regular inspections of EL holders.

Contact

Barn-Yen Li
Policy Analyst
Policy and Strategic Planning Division
Health Products and Food Branch Inspectorate
Department of Health
250 Lanark Avenue
Address Locator 2006C
Ottawa, Ontario
K1A 0K9
Fax: 613-957-9392
Email: insp_pol@hc-sc.gc.ca

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to section 30 (see footnote a) of the Food and Drugs Act (see footnote b), proposes to make the annexed Regulations Amending the Food and Drug Regulations (1475 — Good Manufacturing Practices).

Interested persons may make representations concerning the proposed Regulations within 75 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part Ⅰ, and the date of publication of this notice and be addressed to Barn-Yen Li, Policy Analyst, Health Products and Food Branch Inspectorate, Department of Health, Address Locator: 2006C, Graham Spry Building, 6th Floor, 250 Lanark Avenue, Ottawa, Ontario K1A 0K9 (fax: 613-957-9392; email: insp_pol@hc-sc.gc.ca).

Ottawa, September 20, 2012

JURICA ČAPKUN
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE FOOD AND DRUG REGULATIONS (1475 — GOOD MANUFACTURING PRACTICES)

AMENDMENTS

1. The definition “expiration date” in subsection C.01.001(1) of the Food and Drug Regulations (see footnote 25) is replaced by the following:

“expiration date” means

• (a) in the case of a drug in dosage form, the earlier of the following dates, expressed at minimum as a year and month:
  • (i) the date up to and including which the drug maintains its labelled potency, purity and physical characteristics, and
  • (ii) the date after which the manufacturer recommends that the drug not be used; and
• (b) in the case of an active ingredient, whichever of the following dates is applicable, expressed at minimum as a year and month:
  • (i) the retest date, or
  • (ii) the date after which the manufacturer recommends that the active ingredient not be used. (date limite d’utilisation)

2. (1) The definition “wholesale” in subsection C.01A.001(1) of the Regulations is repealed.

(2) Subsection C.01A.001(1) of the Regulations is amended by adding the following in alphabetical order:

“active ingredient” means a drug that, when used as a raw material in the fabrication of a drug in dosage form, provides its intended effect. (ingrédient actif)

“active pharmaceutical ingredient” means an active ingredient that is used in the fabrication of a pharmaceutical. (ingrédient actif pharmaceutique)

“bulk process intermediate” means an active ingredient that is used in the fabrication of either a drug of biological origin that is listed in Schedule C to the Act or a drug that is listed in Schedule D to the Act. (produit intermédiaire en vrac)

“wholesaler” means a person who is not a distributor described in section C.01A.003 and who sells any of the following drugs other than at retail sale:

• (a) a drug in dosage form that is listed in Schedule C or D to the Act or in Schedule F to these Regulations or a controlled drug as defined in subsection G.01.001(1);
• (b) an active ingredient; or
• (c) a narcotic as defined in the Narcotic Control Regulations. (grossiste)

(3) Subsection C.01A.001(2) of the Regulations is replaced by the following:

(2) In this Division and in Division 2, “drug” does not include a dilute drug premix, a medicated feed as defined in subsection 2(1) of the Feeds Regulations, 1983, an active ingredient that is for veterinary use or a drug that is used only for the purposes of an experimental study in accordance with a certificate issued under section C.08.015.

3. Section C.01A.003 of the Regulations is replaced by the following:

C.01A.003. This Division and Divisions 2 to 4 apply to the following distributors:

• (a) a distributor of an active ingredient or of a drug in dosage form that is listed in Schedule C to the Act; and
• (b) a distributor of a drug for which the distributor holds the drug identification number.

4. Subsection C.01A.004(1) of the Regulations is replaced by the following:

C.01A.004. (1) Subject to subsection (2), no person shall, except in accordance with an establishment licence,

• (a) fabricate, package/label or import a drug;
• (b) perform the tests, including examinations, required under Division 2;
• (c) distribute a drug as set out in section C.01A.003 that is not an active pharmaceutical ingredient; or
• (d) wholesale a drug that is not an active pharmaceutical ingredient.

5. (1) Paragraphs C.01A.005(f) and (g) of the Regulations are replaced by the following:

• (f) whether the applicant proposes to carry out a licensed activity in respect of an active ingredient;
• (g) the address of each building in Canada in which the applicant proposes to fabricate, package/label, test as required under Division 2 or store drugs, specifying for each building the activities and the categories of drugs and, for each category, the dosage form classes, if any, and whether any drug will be in a sterile form;

(2) Subparagraph C.01A.005(m)(i) of the Regulations is replaced by the following:

• (i) the name and address of each fabricator, packager/labeller and tester of the drug and the address of each building in which the drug is fabricated, packaged/labelled or tested, specifying for each building the activities and the categories of drugs and, for each category, the dosage form classes, if any, and whether any drug will be in a sterile form,

(3) Paragraph C.01A.005(n) of the Regulations is replaced by the following:

• (n) in the case of any other importer, the name and address of each fabricator, packager/labeller and tester of the drugs proposed to be imported and the address of each building in which the drugs will be fabricated, packaged/labelled and tested, specifying for each building the activities and the categories of drugs and, for each category, the dosage form classes, if any, and whether any drug will be in a sterile form; and

6. (1) Item 4 of Table I to section C.01A.008 of the Regulations is replaced by the following:

Item	Activities
4.	Distribute as set out in paragraph C.01A.003(a) a drug that is not an active pharmaceutical ingredient

(2) Item 7 of Table I to section C.01A.008 of the Regulations is replaced by the following:

Item	Activities
7.	Wholesale a drug that is not an active pharmaceutical ingredient

(3) Table II to section C.01A.008 of the Regulations is amended by adding the following after item 1:

Item	Categories of drugs
1.1	Active ingredients

7. The Regulations are amended by adding the following after section C.02.003:

C.02.003.1 No person shall sell a drug that they have fabricated, packaged/labelled, tested or stored unless they have fabricated, packaged/labelled, tested or stored it in accordance with the requirements of this Division.

C.02.003.2 (1) No person shall import an active ingredient into Canada for the purpose of sale unless they have in Canada a person who is responsible for its sale.

(2) No person who imports an active ingredient into Canada shall sell any lot or batch of it unless the name of the person who imports it and the address of the principal place of business in Canada of the person responsible for its sale appear on its label.

Use in Fabrication

C.02.003.3 No person shall use an active ingredient in the fabrication of a drug unless it is fabricated, packaged/labelled, tested and stored in accordance with the requirements of this Division.

8. Subsections C.02.012(2) to (4) of the Regulations are replaced by the following:

(2) Every fabricator and packager/labeller and, subject to subsections (3) and (4), every distributor referred to in paragraph C.01A.003(b) and importer of a drug shall maintain a system to ensure that any lot or batch of the drug fabricated and packaged/labelled on premises other than their own is fabricated and packaged/labelled in accordance with the requirements of this Division.

(3) Subsection (2) does not apply to a distributor if the drug is fabricated, packaged/labelled and tested in Canada by a person who holds an establishment licence that authorizes those activities in respect of that drug.

(4) Subsection (2) does not apply to a distributor or importer if the drug is fabricated or packaged/labelled in an MRA country at a recognized building and both of the following requirements are met:

• (a) the address of the building is set out in their establishment licence; and
• (b) they retain a copy of the batch certificate for each lot or batch of the drug that they receive.

9. Sections C.02.013 and C.02.014 of the Regulations are replaced by the following:

C.02.013. (1) Every fabricator, packager/labeller, wholesaler, distributor referred to in section C.01A.003 and importer of a drug shall have on their premises in Canada a quality control department that is supervised by personnel described in section C.02.006.

(2) Except in the case of a wholesaler or a distributor referred to in paragraph C.01A.003(a), the quality control department shall be a distinct organizational unit that functions and reports to management independently of any other functional unit, including the manufacturing, processing, packaging or sales unit.

C.02.014. (1) Except in the case of a wholesaler or a distributor referred to in paragraph C.01A.003(a), no lot or batch of a drug shall be made available for further use in fabrication or for sale unless the person in charge of the quality control department approves the sale or the further use.

(2) A drug that is returned to its fabricator, packager/labeller, wholesaler, distributor referred to in section C.01A.003 or importer shall not be made available for further use in fabrication or for further sale unless the person in charge of the quality control department approves the further sale or further use.

(3) No lot or batch of a raw material or packaging/labelling material shall be used in the fabrication or packaging/labelling of a drug unless the person in charge of the quality control department approves the use.

(4) No lot or batch of a drug shall be reprocessed unless the person in charge of the quality control department approves the reprocessing.

10. Subsections C.02.018(1) and (2) of the Regulations are replaced by the following:

C.02.018. (1) Each lot or batch of a drug shall, before it is made available for further use in fabrication or for sale, be tested against the specifications for that drug.

(2) No lot or batch of a drug shall be made available for further use in fabrication or for sale unless it complies with the specifications for that drug.

11. Sections C.02.019 to C.02.023 of the Regulations are replaced by the following:

C.02.019. (1) A packager/labeller of a drug, a distributor referred to in paragraph C.01A.003(b) and an importer of a drug other than an active ingredient shall perform the finished product testing on a sample of the drug that is taken either

• (a) after receipt of each lot or batch of the drug on their premises in Canada; or
• (b) before receipt of each lot or batch of the drug on their premises in Canada if the following conditions are met:
  • (i) the packager/labeller, distributor or importer
    • (A) has evidence satisfactory to the Director to demonstrate that drugs sold to them by the vendor of that lot or batch are consistently manufactured in accordance with and consistently comply with the specifications for those drugs, and
    • (B) undertakes periodic complete confirmatory testing, with a frequency satisfactory to the Director, and
  • (ii) the drug has not been transported or stored under conditions that may affect its compliance with the specifications for that drug.

(2) If the packager/labeller, distributor or importer receives a lot or batch of a drug on their premises in Canada the useful life of which is more than 30 days, the lot or batch shall be tested for identity and the packager/labeller shall confirm the identity after the lot or batch is packaged/labelled.

(3) Subsections (1) and (2) do not apply to a distributor if the drug is fabricated, packaged/labelled and tested in Canada by a person who holds an establishment licence that authorizes that activity.

(4) Subsections (1) and (2) do not apply to a distributor or importer if the drug is fabricated, packaged/labelled and tested in an MRA country at a recognized building and both of the following requirements are met:

• (a) the address of the building is set out in their establishment licence; and
• (b) they retain a copy of the batch certificate for each lot or batch of the drug that they receive.

Records

C.02.020. (1) Every fabricator, packager/labeller, distributor referred to in paragraph C.01A.003(b) and importer shall maintain all of the following records on their premises in Canada for each drug that they fabricate, package/label, distribute or import:

• (a) subject to subsection (1.1), master production documents for the drug;
• (b) evidence that each lot or batch of the drug has been fabricated, packaged/labelled, tested and stored in accordance with the procedures described in the master production documents;
• (c) evidence that the conditions under which the drug was fabricated, packaged/labelled, tested and stored are in compliance with the requirements of this Division;
• (d) evidence that establishes the period during which the drug in the container in which it is sold or made available for further use in fabrication will meet the specifications for that drug; and
• (e) evidence that the finished product testing referred to in section C.02.018 was carried out, including the results.

(1.1) An importer need not maintain master production documents on their premises in Canada if the documents are maintained in a way that the importer can retrieve them in a timely manner when an inspector requests them.

(2) Every distributor referred to in paragraph C.01A.003(b) and importer shall make available to the Director, on request, the results of testing performed on raw materials and packaging/ labelling materials for each lot or batch of a drug that it distributes or imports.

(3) Every fabricator shall maintain on their premises written specifications for all raw materials and adequate evidence of the testing of those raw materials referred to in section C.02.009 and of the test results.

(4) Every person who packages a drug shall maintain on their premises written specifications for all packaging materials and adequate evidence of the examination or testing of those materials referred to in section C.02.016 and of any test results.

(5) Every fabricator, packager/labeller and tester shall maintain on their premises in Canada detailed plans and specifications of each building in Canada where they fabricate, package/label or test drugs and a description of the design and construction of those buildings.

(6) Every fabricator, packager/labeller and tester shall maintain on their premises in Canada personnel records in respect of each person who is employed to supervise the fabrication, packaging/labelling and testing of drugs, including the person’s title, responsibilities, qualifications, experience and training.

C.02.021. (1) All records and evidence of the fabrication, packaging/labelling, finished product testing referred to in section C.02.018 and storage of a drug in dosage form that are required to be maintained under this Division shall be retained for one year after the expiration date of the drug unless the person’s establishment licence specifies some other period.

(2) Subject to subsection (4), all records and evidence of the fabrication, packaging/labelling, finished product testing referred to in section C.02.018 and storage of an active ingredient that are required to be maintained under this Division shall be retained in respect of each lot or batch of the active ingredient for the following period unless the person holds an establishment licence that specifies some other period:

• (a) in the case of an active ingredient that has a retest date, three years after the lot or batch has been completely distributed; or
• (b) in any other case, one year after the expiration date of the lot or batch.

(3) Subject to subsection (4), all records and evidence of the raw material testing referred to in section C.02.009 and of the testing of packaging/labelling materials that are required to be maintained under this Division shall be retained for five years after the raw materials and packaging/labelling materials were last used in the fabrication or packaging/labelling of a drug unless the person’s establishment licence specifies some other period.

(4) If a fabricator is required to maintain records and evidence in respect of the same active ingredient under subsections (2) and (3), they shall maintain them for the longest period that is applicable.

C.02.022. (1) Every wholesaler, distributor referred to in section C.01A.003 and importer of a drug in dosage form shall retain records of sale of each lot or batch of the drug, which enable them to recall the lot or batch from the market, for one year after the expiration date of that lot or batch unless their establishment licence specifies some other period.

(2) Every distributor of an active ingredient referred to in paragraph C.01A.003(a) and every wholesaler and importer of an active ingredient shall retain records of sale of each lot or batch of the active ingredient, which enable them to recall the lot or batch from the market, for the following period unless the person holds an establishment licence that specifies some other period:

• (a) in the case of an active ingredient that has a retest date, three years after the lot or batch has been completely distributed; or
• (b) in any other case, one year after the expiration date of the lot or batch.

C.02.023. (1) On receipt of a complaint or any information respecting the quality of a drug or its deficiencies or hazards, every fabricator, packager/labeller, wholesaler, distributor referred to in section C.01A.003 and importer of the drug shall make a record of the complaint or information that contains the following:

• (a) the results of any investigation carried out under subsection C.02.015(2) and, if applicable, the corrective action taken; or
• (b) the name and business address of the person in charge of the quality control department to whom the complaint or information was forwarded under subsection C.02.015(2.1) and the date on which it was forwarded.

(2) Records referred to in subsection (1) shall be retained for the following period unless the person holds an establishment licence that specifies some other period:

• (a) in the case of a drug in dosage form, one year after the expiration date of the lot or batch of the drug; and
• (b) in the case of an active ingredient,
  • (i) if the active ingredient has a retest date, three years after the lot or batch has been completely distributed, or
  • (ii) in any other case, one year after the expiration date of the lot or batch of the active ingredient.

12. The Regulations are amended by adding the following after section C.02.024:

C.02.024.1 Every distributor of an active ingredient referred to in paragraph C.01A.003(a) and every fabricator, packager/ labeller, wholesaler and importer of an active ingredient shall add all of the following information to the documentation that accompanies the active ingredient, immediately after any like information that has been added by another person:

• (a) their establishment licence number, or if there is none, their name, address, telephone number, fax number and email address;
• (b) an indication whether they have fabricated, packaged/labelled, wholesaled, distributed or imported the active ingredient and the date on which that activity was carried out;
• (c) the expiration date; and
• (d) the lot number.

13. Section C.02.025 of the Regulations is replaced by the following:

C.02.025. (1) Every distributor referred to in paragraph C.01A.003(b) and importer of a drug in dosage form shall retain in Canada a sample of each lot or batch of the packaged/ labelled drug for one year after the expiration date of the drug unless their establishment licence specifies some other period.

(2) Subject to subsection (4), the fabricator of a drug in dosage form shall retain a sample of each lot or batch of raw materials used in the fabrication for two years after the materials were last used in the fabrication unless their establishment licence specifies some other period.

(3) Subject to subsection (4), the fabricator of an active ingredient shall retain a sample of each lot or batch of it for the following period unless their establishment licence specifies some other period:

• (a) in the case of an active ingredient that has a retest date, three years after the lot or batch has been completely distributed; or
• (b) in any other case, one year after the expiration date of the lot or batch.

(4) If a fabricator is required to maintain samples in respect of the same active ingredient under subsections (2) and (3), they shall maintain them for the longest period that is applicable.

14. Sections C.02.027 and C.02.028 of the Regulations are replaced by the following:

C.02.027. (1) Every distributor referred to in paragraph C.01A.003(b) and importer of a drug in dosage form shall establish the period during which each drug in the package in which it is sold will comply with the specifications for that drug.

(2) Every fabricator and importer of an active ingredient shall establish the period during which each drug in the package in which it is sold will comply with the specifications for that drug.

C.02.028. (1) Every distributor referred to in paragraph C.01A.003(b) and importer of a drug in dosage form shall monitor, by means of a continuing program, the stability of the drug in the package in which it is sold.

(2) Every fabricator and importer of an active ingredient shall monitor, by means of a continuing program, the stability of the drug in the package in which it is sold.

15. The definition “drug” in section C.03.001 of the Regulations is replaced by the following:

“drug” means a drug that is listed in Schedule C to the Act that is in dosage form or a drug that is an active ingredient of biological origin that can be used in the preparation of a drug listed in that Schedule; (drogue)

16. The definition “drug” in section C.04.001 of the Regulations is replaced by the following:

“drug” means a drug that is listed in Schedule D to the Act that is in dosage form or a drug that is an active ingredient that can be used in the preparation of a drug listed in that Schedule; (drogue)

TRANSITIONAL PROVISIONS

17. (1) Every person who, on the day on which these Regulations come into force, fabricates, packages/labels, tests or imports an active pharmaceutical ingredient may continue to do so without an establishment licence if they submit an application for a licence under section C.01A.005 of the Food and Drug Regulations within three months after that day.

(2) Subsection (1) applies until the determination of the licence application under section C.01A.008 or C.01A.010 of the Food and Drug Regulations.

COMING INTO FORCE

18. These Regulations come into force six months after the day on which they are registered.

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