Regulations Amending the Medical Devices Regulations (Importation): SOR/2018-225

Canada Gazette, Part II, Volume 152, Number 23

Registration

SOR/2018-225 October 30, 2018

FOOD AND DRUGS ACT

P.C. 2018-1327 October 29, 2018

Her Excellency the Governor General in Council, on the recommendation of the Minister of Health, pursuant to section 30 footnote a of the Food and Drugs Act footnote b, makes the annexed Regulations Amending the Medical Devices Regulations (Importation).

Regulations Amending the Medical Devices Regulations (Importation)

Amendments

1 The Medical Devices Regulations footnote 1 are amended by adding the following after section 21:

21.1 Despite section 21, any person who imports for sale a medical device that is not labelled in accordance with these Regulations shall ensure

21.2 Any person who imports for sale a medical device that is not labelled in accordance with these Regulations shall ensure that the manufacturer of the medical device notifies the Minister in writing of the name of the person who will relabel it in Canada if it is to be relabelled on the manufacturer’s behalf.

2 Section 44 of the Regulations is amended by adding the following after subsection (2):

(3) Any person who imports a medical device shall ensure that the person from whom they import it holds an establishment licence.

(4) Subsection (3) does not apply where a person imports

3 Paragraph 45(j) of the Regulations is replaced by the following:

Coming into Force

4 These Regulations come into force on the 60th day after the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Issues

This Regulatory Impact Analysis Statement (RIAS) addresses two issues with respect to the regulation of medical devices: (1) the need to support the ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) by permitting relabelling of devices after importation; and (2) the need to clarify establishment licensing requirements for Class I device manufacturers and distributors of all device classes located outside Canada.

(1) Supporting the ratification of the CPTPP by permitting relabelling of devices after importation

Canada signed the CPTPP on March 8, 2018. The CPTPP creates a requirement for each signatory country (defined in the CPTPP as a “Party”) to permit the manufacturer or supplier of an imported medical device to correct non-compliant device labels by relabelling the device after importation, but prior to sale. footnote 2 This requirement aims at streamlining the process for importing medical devices, including radiation emitting medical devices, and to facilitate the import-export activities for medical device manufacturers and distributors.

The CPTPP’s provision on relabelling is currently not reflected in Canada’s Medical Devices Regulations (MDR) and Radiation Emitting Devices Regulations (REDR). Imported medical devices, including radiation emitting medical devices, not in compliance with the MDR and REDR labelling requirements are refused entry at the border since non-compliant products are not permitted to enter Canada. To enable Canada to conform to its international trade obligations under the CPTPP, regulatory amendments to the MDR and the REDR are required.

(2) Clarifying establishment licensing requirements for Class I device manufacturers and distributors of all device classes located outside Canada who wish to import and sell their devices in Canada

The regulatory amendments to permit relabelling in Canada following import are targeted to benefit medical device manufacturers and distributors located outside Canada. In the context of permitting relabelling of devices not in compliance with labelling requirements after importation, Health Canada needs to ensure it has clear authorities and sufficient regulatory tools to exercise oversight over regulated parties choosing to relabel their products in Canada.

Oversight is exercised through the issuance of a product or an establishment licence to monitor the compliance of the medical device industry with Canadian regulatory requirements. Class I devices (lower risk) do not require a product licence. In most cases, compliance of these devices with Canadian regulatory requirements is monitored through the importer or the distributor in Canada who holds a medical device establishment licence (MDEL). However, Canadian retailers and healthcare facilities importing medical devices are not required to hold an MDEL. When foreign manufacturers of Class I devices and distributors of all classes sell directly to a Canadian retailer or a healthcare facility, the issuance of an MDEL is the only mechanism for the regulator to know the identity of these entities located outside Canada and to assess their compliance with Canadian regulatory requirements.

Under the Food and Drugs Act (FDA), Health Canada has long issued MDELs to foreign Class I manufacturers and distributors of all device classes located outside Canada to permit them to import and sell a device in Canada. Permitting relabelling of devices after importation in Canada highlights an existing issue with respect to the clarity of current establishment licensing requirements under the MDR for foreign Class I manufacturers and all classes of distributors located outside Canada. Amending the MDR to permit relabelling of devices after importation in Canada provides an opportunity to clarify that the requirement to hold an MDEL for importing and selling a device in Canada also applies to foreign Class I manufacturers and distributors of all device classes located outside Canada, even when they sell directly to a retailer or a healthcare facility in Canada.

Background

(1) Supporting the ratification of the CPTPP by permitting the relabelling of devices after importation

The CPTPP is one of the largest free trade agreements in the world encompassing 11 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam). The CPTPP countries are Canada’s third largest trading partner. footnote 3 This agreement is expected to benefit Canada by significantly boosting Canada’s gross domestic product (GDP) as a result of preferential market access to the other CPTPP jurisdictions. footnote 4 The CPTPP is also seen as a means to enhance regulatory certainty and transparency among trade partners. footnote 5

CPTPP parties are currently undertaking domestic procedures for implementation and ratification. Canada introduced implementing legislation, Bill C-79: CPTPP implementation Act, footnote 6 on June 14, 2018, and has worked to be among the first signatory countries to enable the ratification of the agreement.

The CPTPP includes annexes to the Technical Barriers to Trade (TBT) chapter addressing specific challenges faced by exporters of pharmaceuticals, medical devices, information and communications technology, and cosmetics, among others. In particular, Chapter 8 – TBT, Annex E, section 17 states:

If a Party requires a manufacturer or supplier of a medical device to indicate information on the product’s label, the Party shall permit the manufacturer or supplier to indicate the required information by relabelling the product or by using supplementary labelling of the device in accordance with the Party’s domestic requirements after importation but prior to offering the device for sale or supply in the Party’s territory.

This provision on relabelling does not require CPTPP jurisdictions to waive any other national regulatory requirements applicable to the marketing of medical devices, including radiation emitting medical devices.

Currently, all medical devices imported for sale in Canada must meet the labelling requirements listed in sections 21–23 of the MDR under the FDA. In addition, all radiation emitting medical devices offered or imported for sale or lease in Canada must meet the labelling requirements set out in the REDR according to section 5 of the Radiation Emitting Devices Act (REDA).

(2) Clarifying medical device establishment licensing requirements for Class I device manufacturers and distributors of all device classes located outside Canada who wish to import and sell their devices in Canada

The MDR govern the sale and importation of medical devices in Canada, including those that are radiation-emitting devices. With certain limited exceptions, the MDR state that any person who sells or imports medical devices in Canada requires an MDEL. This applies to distributors and importers of all classes of medical devices (I–IV) and to Class I medical device manufacturers who sell their own products in Canada.

Since the inception of the MDR in 1998, Health Canada has required both domestic and foreign establishments to hold an MDEL for sale and importation of medical devices in Canada. footnote 7 To date, Health Canada has licensed a total of about 800 foreign establishments and continues to issue MDELs to Class I foreign manufacturers and all foreign distributors. That represents 30% of the total number of MDEL holders (total includes domestic and foreign MDEL holders).footnote 8

Objectives

The first objective is to align the current MDR and REDR with the relabelling provisions of the CPTPP to permit the relabelling of an imported device that is non-compliant with Canadian labelling requirements after importation but before sale. These regulatory amendments support the overarching objectives of the CPTPP to diminish non-tariff trade barriers and contribute to increased reciprocity among CPTPP jurisdictions. As such, there is no intention to increase the regulatory burden on foreign suppliers of medical devices who wish to benefit from such options.

The second objective is to continue to protect the health and safety of Canadians by clearly stating in the MDR that any person who imports a Class I device from a foreign manufacturer or a Class I–IV device from a foreign distributor can only do so from a foreign manufacturer or distributor who holds an MDEL. The intention is to pursue the current establishment licensing practice and to maintain Health Canada’s ability to

Description

(1) Supporting the ratification of the CPTPP by permitting relabelling of devices after importation

The regulatory amendments to the MDR and REDR will permit the importation for sale of a medical device with non-compliant labels provided that certain conditions are met:

The importer of the device must ensure that these conditions have been met. The prohibitions on selling a medical device not in compliance with labelling regulatory requirements will continue to apply. Therefore, the relabelling must occur prior to the sale of the device in Canada.

There will be no change with respect to regulatory responsibility for compliance with labelling requirements, so as not to impose new regulatory requirements on the importers or the manufacturers. Under the REDR, the manufacturer or the importer of the device will remain responsible for ensuring that labelling, including relabelling activities, has been conducted in compliance with the regulations. Under the MDR, this responsibility rests with the manufacturer of the device who usually conducts labelling activities.

(2) Clarifying medical device establishment licensing requirements for Class I device manufacturers and distributors of all device classes located outside Canada who wish to import and sell their devices in Canada

The amendments to section 44 of the MDR clarify that any person who imports a medical device must ensure that the person from whom they import holds an establishment licence. Consistent with the current regulations, this requirement would not apply to

A related amendment to paragraph 45(j) of the MDR clarifies that foreign MDEL applicants must provide information related to their establishments located outside Canada.

“One-for-One” Rule

The “One-for-One” Rule does not apply to these regulations, as no additional administrative burden will be imposed by these regulatory amendments. Relabelling in Canada after importation but before sale remains optional and regulated parties can opt to continue the current practice of labelling in compliance with Canadian requirements before importing. There is an expectation that regulated parties will choose to relabel their products in Canada on the basis that the benefits outweigh the costs associated with the completion of the prescribed notification requirements to Health Canada. Amendments to section 44 and paragraph 45(j) are limited to the clarification of an existing practice and will not increase the administrative burden imposed by current establishment licensing requirements on regulated parties.

Small business lens

The small business lens does not apply to these regulatory amendments, as there are no incremental costs imposed by these amendments.

Consultation

Stakeholders affected by these amendments for relabelling in Canada include

Between January 2012 and October 2015, the Government consulted the provinces and territories, businesses, academia, civil society, think tanks and unions prior to the conclusion of the Trans-Pacific Partnership (TPP)footnote 9 negotiations.footnote 10 Over this period, the Government engaged in a total of 2 457 interactions on the TPP with 424 stakeholders, and received 1 094 written or electronic submissions, including 314 from the public. In addition to interactions with key stakeholders, all stakeholders were able to submit their views on the TPP through a notice of consultation in the Canada Gazette, and were invited to participate in “open public updates” provided by Government of Canada officials.footnote 11

In addition, between October 2015 and January 2017, the Government met with the provinces and territories, businesses, academia, civil society, think tanks, municipalities, Indigenous groups and unions. During this period, the Government had a total of 778 interactions with 576 stakeholders, and received 41 084 written or electronic submissions, including 40 917 from the public. footnote 12 The Canadian Chamber of Commerce, partnering with Export Action Global, also offered hands-on workshops which included product labelling and regulatory proposed provisions among their topics. footnote 13 During these two consultation periods, stakeholders did not reference the relabelling provision as part of their comments. Overall, the Canadian business community is highly supportive of the CPTPP.

Due to the significant consultation associated with the pre-and post-negotiation of the CPTPP, additional consultations specific to the relabelling regulatory amendments to the MDR and REDR were not undertaken.

Given that the amendments related to establishment licensing requirements only clarify a practice in existence since 1998 and already well-known by the industry, there has been no pre-consultation undertaken on these specific regulatory amendments.

Rationale

(1) Supporting the ratification of the CPTPP by permitting relabelling of devices after importation

These regulatory amendments will support timely ratification and implementation of the CPTPP. The overarching objective of the CPTPP is to enhance market access to key Asia-Pacific markets. These regulatory amendments support the achievement of economic, business and trade benefits associated with the CPTPP.

Canada is a net importer of medical devices with a net import value assessed at $5.3 billion in 2017. footnote 14 Providing businesses with regulatory flexibility to permit relabelling in Canada will continue to support and facilitate access to quality medical devices by Canadians. Driven by an aging population, the demand for medical devices is expected to grow. footnote 15 According to Statistics Canada, by 2031, seniors aged 65 years or over are expected to increase to 23% of the population from 16.9% in 2016. footnote 16 It is estimated that orthopedic and prosthetic equipment imports are projected to expand at a growth rate of 8.3%, while demand for all other medical device categories is expected to grow by at least 3% per year. footnote 17 Diminishing non-tariff trade barriers through changes to the labelling provisions for devices may improve access to medical devices in support of the overall health of Canadians.

Although Canada is a net importer of medical and radiation-emitting medical devices, the reciprocity among CPTPP jurisdictions is expected to similarly benefit Canadian medical and radiation emitting medical device businesses exporting to other countries. This will be accomplished without compromising the integrity of the regulatory frameworks and the safety of Canadians as labelling requirements will remain unchanged. The option of coming into compliance with labelling requirements either outside of or within Canada becomes a corporate choice. The industry is afforded the opportunity to select the best business strategy to decrease its administrative and compliance costs based on its corporate model and the characteristics of its supply chain.

(2) Clarifying medical device establishment licensing requirements for manufacturing of Class I devices and distribution of all device classes located outside Canada who wish to import and sell their devices in Canada

The issuance of a product licence or an establishment licence allows Health Canada to monitor the compliance of the medical device industry with Canadian regulatory requirements. For Class I foreign manufacturers and distributors of all classes selling their devices directly to a healthcare facility or a retailer in Canada, the MDEL is the only mechanism for Health Canada to know the identity of the foreign entities located outside Canada and to assess their products’ compliance with Canadian regulatory requirements. These regulatory amendments clarify that any unlicensed person who imports a medical device shall ensure that the person from whom they import holds an MDEL. These amendments will increase regulatory certainty and maintain Health Canada’s ability to detect and take rapid response to mitigate health and safety risks due to regulatory non-compliance, including any incidents arising from non-compliant labels.

Implementation, enforcement and service standards

The regulatory amendments will come into force 60 days after the day on which they are registered by the Clerk of the Privy Council. This will align with the entry into force of the CPTPP implementation Act.

Health Canada has already implemented similar provisions permitting relabelling of drugs and cosmetics after importation but prior to sale in Canada: section A.01.044 of the Food and Drug Regulations and section 9 of the Cosmetic Regulations. In implementing relabelling provisions for medical devices, Health Canada will build on current operations by moving from manual processing to online processing of advance notices of importation. Electronic web-based submissions of notices of importation will benefit the regulated industries (i.e. drugs, cosmetics and medical devices) and Health Canada by

There is no change to labelling requirements under the MDR and the REDR. To facilitate compliance with the requirement for advance notice of importation of devices which will be relabelled in Canada, guidance will be provided regarding

Manufacturers conducting relabelling activities in Canada on behalf of a foreign manufacturer will continue to be inspected based on risk and based on complaints received resulting from labelling issues. This approach could also be accompanied by other targeted compliance monitoring activities to verify the compliance of a sample of relabelled products on the market.

There is also no change in the implementation and enforcement of the current MDEL licensing program. Foreign manufacturers or distributors not already licensed according to the existing practice applying for a licence will be charged appropriate service fees to cover costs associated with the delivery of the MDEL under the cost recovery framework for health products. The current performance standard of 120 days associated with the issuance of a decision on an application for an MDEL remains unchanged.

Contact

Kim Dayman-Rutkus
Director
Compliance Policy and Litigation Support
Policy and Regulatory Strategies Directorate
Regulatory Operations and Regions Branch
Department of Health
Jeanne Mance Building
200 Eglantine Driveway
Tunney’s Pasture
Ottawa, Ontario
K1A 0K9
Telephone: 613-954-6785
Email: PRSD-Consultations-DSPR@Canada.ca