In recent years Health Canada has been expanding its legislative and regulatory powers in respect of consumer safety on a number of fronts. In particular, the federal government recently passed the Canada Consumer Product Safety Act, which introduced a host of regulatory requirements relating to packaging, labelling and product information in respect of various consumer products manufactured and sold in Canada. Similarly, the government launched its recent Safe Food for Canadians Action Plan (and companion legislation), with a view to strengthening and expanding Health Canada’s safety and inspection powers in relation to Canadian food products.

In keeping with this expansion of Health Canada’s regulatory powers, and in response to growing consumer concerns about medical device and pharmaceutical safety in Canada, the government recently introduced amendments to the Food and Drugs Act (the “FDA”). In essence, these amendments grant Health Canada the regulatory authority to collect data prior to or after a drug or a medical device enters the market, and to take swift action to protect the health of the public when a risk is identified. Bill C-17, the Protecting Canadians from Unsafe Drugs Act (Vanessa’s Law) (the “Act”), received Royal Assent on November 6, 2014.. The Act was named in honour of the late daughter of Member of Parliament Terence Young, who died of complications relating to a prescription drug that was subsequently pulled from the market.

The Act introduces amendments to the FDA in a number of key areas. In particular, the Act (inter alia):

  • grants the Ministry of Health (the “MOH”) the power to require manufacturers to provide information, or to require that tests or studies be conducted and the results disclosed to the Ministry;
  • grants the MOH the power to require changes to labelling and packaging to more clearly reflect health risks or differentiate between competitors;
  • grants the MOH the power to recall drugs and devices adjudged to be unsafe;
  • grants the MOH the power to bring an application seeking injunctive relief in cases where a person has done, is about to do or is likely to do anything that constitutes an offence under the FDA;
  • grants the MOH the power to disclose confidential business information about a drug or a medical device to a government, a person from whom the Minister seeks advice, or a person who carries out functions relating to the protection of public health in cases where the disclosure would prevent or minimize the risk of injury to the health of the public. Furthermore, this information may be disclosed without notifying the person to whom the information relates or obtaining their consent;
  • enacts more stringent penalties for offences under the FDA, up to a maximum of $5,000,000 per day or two years in prison. Stronger fines may also be imposed if the offences are committed intentionally. Moreover,  the Act poses increased liability for Directors and Officers. Directors and Officers who direct, authorize, or otherwise participate in the commission of an offence under the Act can be held liable on conviction, even if the director or officer is not personally prosecuted for the offence; and
  • requires the compulsory reporting of adverse drug reactions and medical device incidents by hospitals and other healthcare institutions. The information and the format in which it must be reported in will be the subject of regulations that will be developed in consultation with the provinces.

The Act is notably silent on what recourse a manufacturer has in the event that MOH implements measures designed to protect public health that are proven, in the fullness of time, to have been unfounded. Regardless of whether or not a drug or device is ultimately found to pose adverse health risks, the mere fact of heightened regulatory scrutiny and the possibility of intervention under the new FDA amendments (in the form of possible recall, remedial or injunctive orders) poses potential risks to share value, market share and brand equity, as well as the attendant litigation risks.

Although the mechanics of how the amendments to the FDA will be implemented have largely been left to regulation (which are being developed as part of a broader Regulatory Roadmap for Health Products and Food), manufacturers and distributors of prescription drugs and medical devices, as well as healthcare institutions, are advised to begin considering the potential impact of the amendments on their day-to-day operations, and should consider developing procedures and risk management protocols to ensure compliance with the Act.