Bill C-17, An Act to Amend the Food and Drugs Act (Bill), received royal assent on November 6, 2014. The Bill applies to medical devices and prescription and over-the-counter drugs (collectively, therapeutic products), but does not apply to natural health products.

The Bill grants the Minister of Health (Minister) substantial new powers, including the power to order recalls, collect post-market safety information, and implement label changes. The Bill also imposes increased penalties for noncompliance and, perhaps most controversially, permits the disclosure of confidential business information relating to therapeutic products without consent or notice under certain circumstances. The Bill is in line with Health Canada’s general trend over the last few years towards increased safety regulations, including the Canada Consumer Product Safety Act, which came into force in 2011 and the Safe Food for Canadians Act, which was passed in 2012 but is not yet in force.

The salient features of the Bill are set out below.

NEW OBLIGATIONS FOR MANUFACTURERS/SELLERS

Bill C-17 contains numerous provisions that impose additional post-market obligations on manufacturers and/or sellers of therapeutic products. For instance, the Bill allows the Minister to:  

  • Order the seller of a therapeutic product to recall the product if the Minister believes the product presents a serious or imminent risk of injury to health
  • Order a manufacturer to modify a therapeutic product’s label or to modify or replace its packaging if the Minister believes that doing so is necessary to prevent injury to health
  • Order a manufacturer to conduct certain assessments, tests, or studies in respect of a therapeutic product, and to provide the results to the Minister.

Many Canadians were unaware that prior to this Bill, the Minister did not have the power to recall a therapeutic product although the Minister had the ability to issue unilateral communications regarding the safety of a therapeutic product, suspend a company’s product approval and/or issue other orders regarding the sale of an impugned product.

The Bill also enables the Governor in Council to make regulations that would trigger additional obligations, such as regulations requiring manufacturers to disclose clinical trial data to the public in a prescribed time and manner, and to provide safety-related information (e.g. regarding labelling changes that have taken place outside Canada) to the Minister.

CONCERNS REGARDING CONFIDENTIAL BUSINESS INFORMATION

The Bill sets out several circumstances under which the Minister may disclose confidential business information (CBI), which may include trade secrets. Specifically, the Bill allows the Minister to disclose or release CBI without notice or consent:

  • To anyone, including the public, if the Minister believes the product may present a serious risk of injury to human health
  • To a government (including foreign government), a government adviser, or a person who carries out functions relating to the protection or promotion of human health or safety of the public, if the purpose of the disclosure is related to the protection or promotion of human health or the safety of the public.

Further, the Bill permits the Governor in Council to make regulations designating certain business information as non-confidential (or specifying circumstances in which CBI ceases to be confidential) and allowing such information to be disclosed without notice or consent.

This new disclosure regime, which is more permissive than regimes in the United States and the European Union, has raised concerns about Canada’s compliance with international trade obligations relating to the protection of trade secrets and other confidential data. In response, Minister Rona Ambrose has publicly confirmed her commitment that any disclosure of CBI will only occur in a manner that is consistent with Canada’s treaty obligations.    

NEW OBLIGATIONS FOR HEALTH-CARE INSTITUTIONS

In addition, the Bill allows the Minister to make regulations requiring health-care institutions to report adverse drug reactions or medical device incidents. The switch from voluntary to mandatory reporting would require significant new compliance measures by affected institutions.

TOUGHER PENALTIES

Increased penalties for contravention accompany the new obligations under the Bill. For instance, a person who contravenes a provision of the Food and Drugs Act or its regulations relating to a therapeutic product is now liable for a monetary penalty of up to C$5 million per day and/or imprisonment for up to two years. The Bill also sets out additional officer, director and agent liability where such individuals direct, authorize, assent to, acquiesce or participate in an offence committed by a corporation, and such individuals are liable to the same strict penalties set out above.

These tougher penalty provisions are counterbalanced by a new due diligence defence to prosecutions for offences under the legislation. Note, however, that the due diligence defence cannot be evoked where a person has knowingly made false or misleading statements to Health Canada or has knowingly or recklessly caused a serious risk of injury to human health in contravening a provision relating to a therapeutic product. In such cases, the maximum penalties set out above do not apply and harsher punishments may be imposed on a discretionary basis by the court.

MOVING FORWARD

Most of the Bill came into force upon royal assent, including the tougher penalties and the Minister’s new powers to order recalls, require labelling changes and disclose CBI and new information about a product. However, there are a few provisions that will come into force at a later date and after relevant regulations have been developed, including the power to publicly disclose negative regulatory decisions. Companies should monitor the regulatory landscape closely, as portions of the Bill will be further defined through regulation in the coming months and years.

Given the new obligations imposed under the Bill and the significant consequences of a violation, pharmaceutical and medical devices companies should review their compliance programs carefully to ensure that any applicable post-market requirements can be met. A good compliance program both reduces the likelihood of non-compliance with the Bill and may also be used as evidence of due diligence in the event a violation occurs.