Canada's Food and Drugs Act ("the Act") was first enacted in 1920 and has been amended many times over the years. On November 6, 2014, Bill C-17 (also referred to as the Protecting Canadians from Unsafe Drugs Act or Vanessa's Law) received Royal Assent and was enacted into law. This brings about the most significant set of amendments to the Act in decades. These amendments focus primarily on safety of "therapeutic products" (a new definition which includes drugs and medical devices, but not natural health products) once they are approved and on the market. Although much of the detail of the implementation of these changes has been left to as-yet unpublished Regulations, there is no question that the amendments reflect a significant increase in Ministerial oversight and powers.
Key amendments include the following:
1. New Ministerial Powers – the amendments grant the authority for the Minister of Health ("the Minister") to issue a large number of orders, including:
a. Orders for the provision of information
b. Orders requiring labelling and packaging modifications
c. Orders that products be sent to a particular place
d. Orders for recalls, product assessments and other corrective action
e. Orders requiring information to be compiled and tests, studies or monitoring to be conducted
The basis for the issuance of the above orders differs depending on which order the Minister wishes to make. For example, the Minister may issue an order for the provision of information on the basis of a belief that a product presents a serious risk of injury to human health. In the case of recall orders, the risk of injury to health may be serious or imminent.
The amendments also provide for the Minister to apply to the court for injunctions.
2. Incident Reporting By Institutions – the amendments provide for mandatory incident reporting by as-yet undefined "institutions." Although it is expected that this will expand mandatory incident reporting to hospitals and possibly other health care facilities, the scope and procedure for such reports is to be further expanded upon in Regulations.
3. Confidential Business Information ("CBI") – as has been seen in other recently enacted product safety legislation, the amendments provide for scenarios in which the Minister may disclose otherwise confidential business information without consent. However, in this case, the threshold for such disclosure is arguably significantly lower: allowing that CBI can be disclosed without notice or consent if the purpose of the disclosure is related to the protection or promotion of human health or the safety of the public if the disclosure is to one of a list of entities and people. Unlike other product safety legislation, there is also no post-disclosure notification requirement.
4. Increased Penalties – the amendments bring into force much more significant penalties (for companies as well as their directors, officers and certain other representatives) for offences. Previously, the harshest penalties for non-food related offences were fines of $5,000 and three years in prison. Pursuant to the amendments, contravention of the Act or its Regulations in respect of a therapeutic product can result in fines of up to $5 million and imprisonment for two years. For providing false information or for knowingly or recklessly causing a serious risk of injury to human health in the contravention of the Act or Regulations, the penalties include an unlimited fine and imprisonment for up to five years.
The impact of these penalties is exacerbated by the fact that each day on which an offence is carried out constitutes a separate offence.
5. New Regulation-Making Powers – the amendments permit the making of Regulations relating to a number of post-marketing activities including the issuance of therapeutic product authorizations, permitting conditions to be placed on authorizations, relating to clinical trial and investigational test information, regarding foreign activity and requiring modifications to labels.
Implications
The impact of the new Ministerial powers will not be truly appreciated until Regulations are released and we have an opportunity to see how Health Canada will be applying its new powers. However, there are some issues to consider even at this early stage.
Industry should take these legislative changes as an opportunity to review compliance programs and standard operating policies to ensure that they reflect the new regulatory environment under the amended Act. In light of the prospect of greater scrutiny and enhanced Ministerial powers, companies' training on, and implementation of, these programs and policies should also be revisited. The Act provides a due diligence defence against prosecution, so the importance of being able to provide evidence of a corporate culture of compliance is further underscored.
In light of the increased possibility of disclosure of otherwise confidential business information, communications protocols should be considered. These amendments underscore the importance of ensuring that information provided to Health Canada is accurately and carefully worded to reduce the risk of documents being taken out of context and ensuring that communications strategies are coordinated across jurisdictions.
The potential impact of this amended legislation on product liability exposure is unknown and will very much depend on the manner in which it is implemented. If the amendments bring about more mandatory product recalls, prosecutions and increased disclosure of otherwise confidential information, it is certainly possible that product liability claims may increase accordingly. In Canada, such claims are often the subject of proposed class actions.
We will continue to follow the implementation of Vanessa's Law and provide updates as Regulations are released. If you have any questions, please feel free to contact the author of this e-LERT.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
