Evidence of meeting #86 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was health.
A video is available from Parliament.
5:50 p.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
The duty to consult is already prescribed in the legislation, and that will be maintained. Do I have that right?
5:50 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
Absolutely.
5:50 p.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
With respect to the new act, the Service Fees Act, which is the subject of the bill we'll be discussing at a later date, I'm trying to understand why these fees at the Department of Health, would not fall under the Service Fees Act?
5:50 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
Absolutely.
That's what we're basically proposing.
We're asking for an exemption from what was the User Fees Act and what is to be renamed as the Service Fees Act. We essentially meet all the requirements and the criteria that are in it.
In addition, pursuant to budget 2017 and some of the transformations that are going on in the pharmaceutical, medical access, and affordability world, we are already building new regulatory processes by which we can transform how we do our work.
It is a minimum 15-month process, and probably more like 18 months, to lift and shift our current set of fees under the Food and Drugs Act. Given the ambiguity of the timing of the implementation of the TBS changes and the coming into force therein, we thought that it would be better to get out ahead of that. In addition, we're talking about a comprehensive approach under the Food and Drugs Act that aligns to the policy, to the instrument the minister has. The minister will set fees through ministerial order.
However, ministerial order is not a blank cheque. It is essentially a regulatory process lite, with all of the elements of the regulatory process. It just minimizes a few of them, so that we will able to do this more than once every 22 years.
5:50 p.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
If I understand correctly, you will continue to benefit from an exemption under the Service Fees Act, but your standards will remain the same or they may be higher. Is that correct?
5:50 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
Absolutely.
Health Canada has a strong record here. We are a globally competitive regulator. Our performance is comparable to any of the major regulators in the world, like the FDA, the EMA, the Australians, and the New Zealanders as well. We charge industry a fraction of the regulatory cost to do those same reviews at a competitive pace, while protecting the safety and efficacy of the drugs.
We feel that this is very comprehensive. It's robust. We have a great deal of experience here. We're a long way from the implementation of the User Fees Act in 2002 or 2003. We think we're in a different situation now.
5:50 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you, Mr. Dusseault.
Before I go to Mr. Deltell, on these user fees, there are other agencies beyond food and drugs.... Under Health Canada, there's the Canadian Food Inspection Agency. Part of that now is the big pest management review agency.
No, that's not under you guys.
Does this relate to any of those fees?
5:50 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
It does not, actually. Those are other organizations within the health portfolio that, as is the case with CFIA, already have this exemption.
What Health Canada is asking for here is not unusual. There are several examples in the BIA as well, and there are other departments that currently have these authorities and these exemptions.
5:50 p.m.
Liberal
The Chair Liberal Wayne Easter
This is not in any way tying fees to the consumer price index, like we're seeing in some other areas?
5:50 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
The fees currently have an inflationary factor in them. In fact, under the new Service Fees Act, that will be a mandatory requirement for all departments. That is one of the few positive aspects of the user fee regime that we have, given that it is now six or seven years out of date. The escalator has prevented the attrition of resources, which would impact on the safety and performance of the regulator.
We're in a world now where it's been six or seven years, and we need to get out of the gate, refresh those fees, and ensure that industry pays it fair share and taxpayers are also paying their fair share. That's why we'd like to move along on this.
5:50 p.m.
Liberal
The Chair Liberal Wayne Easter
When you do increase these fees, in your consultation with industry—I guess my view is that Ottawa often works in silos—was any consideration given to the impact these fees could have on the economic viability, the business and commercial operations, of the areas these fees apply to?
5:55 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
Absolutely. That is a requirement of our approach, and it's a requirement of the Statutory Instruments Act, as well as a cabinet directive on the setting of regulations. The regulatory impact analysis studies are a mandatory piece of this. That will continue.
As I said, we have a list of about 12 things that our current regime has under the FAA, and all 12 of them will basically exist under the FDA as well. So the requirements to study the impact on industry is mandatory, and we will continue to do that.
The pharmaceutical industry in Canada is actually quite robust, and I think that Industry Canada or ISED could comment further on that kind of stuff if you had questions about that. It's not our expertise to understand the market as a whole and all of its dynamics, but we do assess the impact.
Globally, what we're talking about here is that all the major regulators in the world charge somewhere between 80% to 100% of the costs to the industry to regulate those products. Health Canada is in a world right now where we're subsidizing the cost, and fees amount to about 40% to 45% of our cost. So we charge much less than the global reality, and the fees are a fraction of what.... For instance, the FDA in the United States would charge $2 million for a major new active substance drug review, whereas we're charging about $250,000 to $300,000.
5:55 p.m.
Liberal
The Chair Liberal Wayne Easter
Finally, is there any kind of an appeal process set up so that when the fees are announced they can make their point?
5:55 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
Absolutely. First, they're subject to consultation and negotiation and then an understanding of the sectors of the industry. Second, there is a dispute resolution framework that we'll put in place as part of this. That has never been a major issue with this industry that we face. It's usually subject to the consultation piece.
5:55 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Thank you, Mr. Chair.
Ladies and gentlemen, welcome to your House of Commons.
Can you give us a simple example of where there is a problem today in your department that would be fixed by this bill?
5:55 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
I can give you several. As I said, the fees have not been updated in six or seven years. Those fees were based on costing from 2008. What we're talking about is moving resources from other parts of our branch, for instance in Health Canada, to subsidize the cost of doing these regulatory reviews.
You can only rob Peter to pay Paul for so long, and that's the state we're in. We continue to meet our performance standards, but every year there is a situation in which we have challenges with that and have to reallocate resources to do that. We report publicly on this data every year as well.
Do you have another example you want to talk about?
5:55 p.m.
David Lee Executive Advisor to the Assistant Deputy Minister, Assistant Deputy Minister’s Office, Health Products and Food Branch, Department of Health
Certainly. In the past we have had incidents when we were changing our regulations. For example, a few years ago, we put in new regulations to govern active pharmaceutical ingredients, specifying that this is how you make them to make sure they're safe. Under the current regulations, changing and introducing new fees, took two to three years in our experience. It wasn't rapid enough to bring in new costing for that framework, so we had inspectors going out and resources deployed by the department, and yet we couldn't catch up with the regime.
This new mechanism would allow us, by ministerial order, with consultation with all of the resolution mechanisms, to move a lot more quickly and to harmonize the many new regulations coming in that we are looking at departmentally.
5:55 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
What kinds of fees need to be fixed under the Aeronautics Act , navigation, railway safety, and shipping? You talk about medication. What is the link with transport?
5:55 p.m.
Executive Advisor to the Assistant Deputy Minister, Assistant Deputy Minister’s Office, Health Products and Food Branch, Department of Health
There's no link here with transport. Transport needs its own regime under its own instrument. Here, under the Food and Drugs Act, we have tailored the mechanisms to really serve our regulatory environment, which is very complex. If you look at the Food and Drugs Act, there are a lot of regulations and oversight for medical devices and drugs. We've written a set of rules that will apply especially to this environment.
6 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
I can elaborate.
Basically, all the departments that charge user fees do so individually under their regulations generally. What the Transport Canada folks who were just presenting were talking about were non-regulatory areas where the administrator would enter into an agreement to charge fees on a voluntary basis. They're quite complex and subject to each department's stakeholders, industries, and consultations.
All that is governed by the principles of the service fees that Treasury Board is bringing forward, but some departments have been in this business quite a long time and have very robust frameworks already.
6 p.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Thank you.
We're talking about pharmaceutical companies. Let's say that these companies aren't the biggest complainers in our society.
You say they have to pay their fair share of the costs of reviewing their products, which is done by Health Canada. What would happen in a hypothetical situation where they would be asked to pay a much larger share of the costs associated with approving their medications?
The drug approval process costs taxpayers and the public purse millions of dollars. What would happen if pharmaceutical companies were asked to foot the entire bill?
6 p.m.
Director General, Resource Management and Operations Directorate, Health Products and Food Branch, Department of Health
What would that do?