Bill C-17, the Protecting Canadians from Unsafe Drugs Act (Vanessa’s Law) was passed by the federal legislature and received Royal Assent on November 6, 2014.  It represents the most substantial amendment to the Food and Drugs Act (Canada) (FDA) in over 50 years and has significant implications for the health industry, including drug and medical device manufacturers and health care institutions. 

Vanessa’s Law is named after the daughter of Member of Parliament Terence Young, who died after taking a prescription drug that was later found to be unsafe and removed from the market.

Vanessa’s Law modernizes the FDA to introduce a “life-cycle” approach to the oversight of therapeutic products, including post-market safety and assessment powers, stronger enforcement mechanisms and harsher penalties.  It will require “prescribed” health care institutions, likely hospitals, to report serious adverse drug reactions and medical device incidents to Health Canada.  It is also aimed at increasing openness and transparency by making certain information publicly available. 

Definitions and Scope

Vanessa’s Law introduces three new definitions: “therapeutic product”, “therapeutic product authorization” and “confidential business information”.  

  • Therapeutic product is broadly defined to encompass all drugs, devices or any combination of the two.  This includes non-prescription, over-the-counter medicines, vaccines and gene therapies.  Natural health products are specifically excluded. 
  • Therapeutic product authorization is an authorization that permits the import, sale, advertisement, manufacture, preparation, preservation, packaging, labelling, storing or testing of a therapeutic product.  The holder of a therapeutic product authorization is required to comply with any terms or conditions associated with that authorization.
  • Confidential business information means information that is not publicly available, for which reasonable measures have been taken to ensure it is not available to the public, and that has actual or potential economic value to the business or its competitors because it is not publicly available.  Its disclosure would result in a material financial loss to the company or a material financial gain to its competitors.

Increased Ministerial Powers

Vanessa’s Law regulates a broad range of activities for therapeutic products including:

  • Public disclosure of prescribed information relating to clinical trials and investigational tests by authorization holders.  In addition, all orders or regulatory decisions issued by the Minister of Health (“Minister”) must be made publicly available.
  • Increased powers of the Minister in relation to the disclosure of confidential business information, packaging/labelling, assessments and testing, and product recalls where associated with risk of harm to human health.  For example:
    • Disclosure of Confidential Business Information - where the Minister believes a therapeutic product may present a “serious risk of injury to human health”, the Minister may gather and disclose confidential business information with no notice or consent from the affected party. 
    • Packaging/Labelling – where necessary to prevent injury to health, the Minister may order the authorization holder to modify or replace a product label or packaging.
    • Recall – the Minister may order a therapeutic product to be recalled where it is deemed to present a serious or imminent risk of injury to health.  Alternatively, if corrective action can effectively address the risk, the order may provide for corrective action.  This may or may not allow the sale of the therapeutic product, subject to conditions.
    • Product information – subject to regulations, the Minister may order that the authorization holder compile information, conduct assessments, further product testing or studies or monitor experience and supply the information to the Minister.  This will allow information on “real world” safety and effectiveness to be collected by Health Canada post-approval.

Mandatory Reporting by Health Care Institutions

Prescribed health care institutions will be required to report serious adverse drug reactions or medical device incidents that involve therapeutic products to Health Canada.  It is widely acknowledged that under the current voluntary scheme, adverse reactions are under-reported.  The time and difficulty associated with submitting reports and lack of feedback from Health Canada when a report has been submitted can be disincentives to reporting. 

New regulations will set out definitions and the specifics of these reporting obligations. In recognition of the additional administrative burden that mandatory reporting will place on health care institutions, the Minister must take into account existing information management systems, such as electronic health record systems, when making recommendations.  Health care institutions are also subject to penalties for non-compliance with Vanessa’s Law.

Regulation Making Authority

Vanessa’s Law provides broad authority for the Governor-in-Council to make regulations with respect to therapeutic products and the issuance of therapeutic product authorizations. This includes regulations relating to post-market assessments, tests and studies, monitoring of experience and information compilation.  The regulations may also incorporate documents by reference, for example, policy and guidance documents, technical standards and the like.

Offences and Penalties

Consistent with the approach being taken in other areas, there are new offences and penalties for non-compliance with Vanessa’s Law that focus on economic disincentives. On conviction by indictment, potential fines have been increased from $5,000 per day to up to $5 million per day, imprisonment for a term not exceeding two years, or both.  The Act gives the court discretion to order even larger fines where a violation of the provisions involves intentional conduct, such as making false or misleading statements to Health Canada or wilful or reckless harm to human health.  

Officers and directors may be personally liable for the act of the corporation.  Corporate officers, directors, or agents who “direct, authorize, assent to, participate in or otherwise acquiesce in the commission of an offence” are individually liable and subject to penalties, whether or not they are prosecuted for the offence.  Importantly, Vanessa’s Law provides for a due diligence defence, unless the contravention is intentional. 

In Force Dates

Some of the provisions of Vanessa’s Law are in force, for example, the power to recall unsafe therapeutic products, to direct label changes or modifications and to impose greater fines and penalties.  Other changes will not come into force until supporting regulations have been developed and there will be opportunities for further consultation.  From an operational perspective, Health Canada will also need to ensure that the supporting frameworks are in place. 

Compliance

Vanessa’s Law reflects a fundamental shift in Canada’s approach to patient safety for therapeutic products.  Particularly in light of the enhanced penalty provisions, the potential risk for drug and medical device companies and their corporate directors and officers is considerable.  Senior management will need to play an active and visible role in fostering a culture of compliance and in overseeing the organization’s corporate compliance program. 

In addition to understanding the therapeutic product provisions under Vanessa’s Law, it is critical that organizations develop and/or update their compliance programs in order to be able to rely on a statutory due diligence defence.  As a starting point, organizations should conduct an internal audit of their current compliance programs in relation to the requirements for therapeutic products.  This will enable the identification of gaps and the development of a compliance strategy to place the organization in as defensible a position as possible.

Lauren Parrish, Student-at-Law