Health Canada proposed regulations target shortage risks

On December 28, 2024, Health Canada published a regulatory proposal¹ to amend the Food and Drug Regulations (FDR)² and the Medical Device Regulations (MDR)³ to include new provisions aimed at addressing and mitigating the risks of drug and device shortages in Canada.

What you need to know

• If enacted, the new regulations would address drug shortages by:
  • requiring drug manufacturers to maintain safety stock in Canada for specified drugs and to develop and maintain plans to address shortages for drugs where a shortage could present a serious risk of injury to human health;
  • requiring drug importers and wholesalers to report significant demand surges to Health Canada for specified drugs; and
  • introducing additional tools, including exceptional importation and expiration date extensions.
• Manufacturers and importers of medical devices would be required to report actual and potential shortages on a third-party website at least six months ahead of the anticipated shortage date.
• Both drug and medical device manufacturers would be subject to an enhanced regulatory framework for reporting shortages and discontinuations.
• The regulations would be rolled out in three phases, giving regulated parties time to adapt. The expanded scope, expiration date extension, and exceptional import and sale provisions would come into force six months after publication of final regulations. Provisions on shortage prevention and mitigation plans and demand surge reporting would come into force 12 months after publication. Requirements for safety stocks would come into force 18 months after publication.
• Stakeholders can submit comments on the proposed regulations and draft guidelines until March 8, 2025.

Additional requirements for drug manufacturers to address shortage

Safety stock

Under the proposed regulations, drug manufacturers would be required to maintain a safety stock in Canada for specified drugs for which a shortage could present a serious and imminent risk of injury to human health. A safety stock list (the List) will be incorporated by reference into the FDR, and the List may be amended by Health Canada occasionally⁴. Health Canada may add a drug to this List if it has determined, following stakeholder consultation, that (i) a shortage of that drug could present a serious and imminent risk of injury to human health; (ii) it is technically feasible to hold safety stock of the drug; and (iii) a failure to ensure that safety stock is held in Canada could lead to a shortage that presents a serious and imminent risk of injury to human health⁵.

Amount of safety stock to be held

The safety stock list is divided into two parts, differing in the amount of safety stock that must be held. This amount is calculated using the following formula:

(A/B)*C, where:

• A is the total quantity of the drug sold in the reference period;
• B is the reference period, in terms of months; and
• C is the number of months safety stock needs to be held.

Drugs on Part 1 of the safety stock list require three months of safety stock. This amount is based on the average quantity sold in a month in the previous calendar year (i.e., B is equal to 12, and C is equal to 3). For example, if a company had sold 12,000 units during the previous calendar year, 3,000 units would be required to be held in safety stock. For drugs on Part 2 of the safety stock list, Health Canada will determine the reference period and the number of months of safety stock needed to be held. These numbers will determine the quantity that must be held in safety stock⁶.

From an operational perspective, if an actual or anticipated shortage is reported, drug manufacturers may use the safety stock to prevent or mitigate the shortage. Once demand can be met without using safety stock, Health Canada would expect that the safety stock be replenished in full as quickly as possible. Manufacturers would rotate safety stock to ensure that inventory does not expire. When rotating safety stock, Health Canada would require that the new supply to replenish the safety stock be available before depleting any older supply of the safety stock.

Record keeping

Drug manufacturers must maintain records relating to the safety stock, specifying (i) how the quantity of safety stock was calculated, (ii) the location(s) and amount of stock available, and (iii) if the stock is held by the manufacturer directly or by a third party, and the contact information of the stockholder. Records must be updated monthly to reflect the details for each month of the previous year and be retained for at least three years after the day they were created.

Shortage prevention and mitigation plans

Drug manufacturers will also be required to prepare a Shortage Prevention and Mitigation Plan (SPMP) for drugs where a shortage could present a serious risk of injury to human health⁷. Health Canada will develop and maintain a Critical and Vulnerable Drug List (which is distinct from the List of Drugs requiring safety stock) for which an SPMP is required⁸. The current draft list includes anti-infectives, critical care medications, certain anti-neoplastic agents, hormones, and vaccines.

A SPMP must include a detailed description of the following key elements:

• The measures that the manufacturer will take to identify and assess shortage risks associated with the drug.
• The measures that the manufacturer will take to prevent or mitigate shortage risks, and steps to mitigate the impact of a shortage if it were to occur.
• A general description of how the effectiveness of the measures taken will be evaluated.
• A communication plan to Health Canada if there is a significant increase in the likelihood that a shortage could occur⁹.

Manufacturers must update the SPMP every three years or after a significant change in the likelihood that a shortage could occur. The SPMP must be provided to Health Canada upon request within 24 hours or as specified.

Reporting demand surges

The proposed regulations would require drug establishment license holders (i.e., importers, wholesalers or distributors of drugs) to report any significant demand surge for drugs on the Critical and Vulnerable Drug List, within five days after the last day of the month when the demand surge occurred. A significant demand surge would occur when monthly volume of sales in Canada for a drug in scope had increased by at least 250% within a month, compared to the volume of sales in the same month in the previous calendar year¹⁰.

Additional tools to address drug shortages

In addition to the above measures, the proposed regulations provide Health Canada with other tools to be used to address drug shortages:

• Expanding the scope of drugs subject to shortage regulations by incorporating by reference a List of Drugs for the Purposes of Section C.01.014.8 of the Food and Drug Regulations (Expanded Scope List). This list is different from the Safety Stock List and the Critical and Vulnerable Drug List and would be maintained by Health Canada, and generally amended only after consultation with stakeholders.
• Requiring manufacturers to report discontinuations at least 12 months in advance.
• Allowing exceptional importation and sale of foreign-authorized drugs in response to drug shortages¹¹. A list of drugs for exceptional importation and sale would be incorporated by reference into the FDR, which includes a list of foreign-authorized drugs and the date these drugs would be eligible for exceptional importation into Canada¹².
• The new regulations would also allow for expiration date extensions of specified drug product lots. A list of drugs with extended expiration dates would be incorporated by reference in FDR and maintained by Health Canada¹³.

Reporting medical device shortages

The proposed regulations would also amend the MDR to require manufacturers of specified class I-IV medical devices and importers of specified Class I devices to establish procedures to (i) monitor demand for the medical devices in Canada; (ii) identify when shortages of the medical devices were to occur; and (iii) provide shortage-related information to Health Canada if requested¹⁴.

The proposed regulations would also enhance existing shortage reporting requirements to include the following:

• Require manufacturers and importers to report an actual or potential shortage of a specified medical device, even if they have a device that could be substituted for the medical device in shortage or for which a shortage is anticipated.
• Require manufacturers and importers to report discontinuations at least 12 months in advance.
• Require online postings with details of a that medical device shortage¹⁵.

A specified medical device is a medical device on the List of Medical Devices – Shortages and Discontinuation of Sale. Health Canada may add a category of medical devices to this list if it has reasonable grounds to believe that a shortage or discontinuation of sale in Canada of any device in that category could present a risk of injury to human health. The current list includes critical care and select surgical devices.

Timing

The proposed regulations would come into force in three phases, giving regulated parties time to adapt to new regulatory requirements:

• The regulations relating to the establishment of the Expanded Scope List, expiration date extension, and exceptional import and sale would come into effect six months after final regulations are published in Canada Gazette, Part II.
• The regulations related to the requirement for importers and wholesalers to report demand surges, the SPMP, and reporting requirements would come into effect one year after publication.  
• The requirements for safety stocks would come into effect 18 months after publication.

What’s next

Currently the proposed regulations and guidance documents are open for consultation. Stakeholders and the public can submit comments to Canada Gazette, Part I or Health Canada until March 8, 2025¹⁶.