Health Canada Moving to Flat-Fee Structure April 1st

Citing rising costs of performing medical device and pharmaceutical regulatory activities in Canada, Health Canada has announced user fee increases—some of them substantial—for medical device license application reviews, medical device establishment license reviews and right-to-sell licenses.

Health Canada argues that user fees currently in place have not been adjusted since 1995, and no longer align with the costs involved in regulating the Canadian market effectively.

The current fee structure for drug and medical device submission evaluations is linked to the submission type and is component-based, where individual fees are identified based on the type of information provided to support the submission, and added up to determine the total fee payable for any given submission.

The proposed revised fee structure establishes a flat fee for different categories. This reflects the average activity cost and level of effort associated with those groups of submissions; the type of submission is no longer relevant in fee calculations. The proposed flat fee structure applied to drugs and medical devices will simplify the determination of the fee to be charged, more effectively align that fee to respective costs and provide an increased level of cost certainty for fee payers.

Existing fee structures in Canada depend upon submission types and components, with individual fees determined using the information provided by firms to support their submissions. Going forward, Health Canada will impose flat fees for types of licenses being sought in order, according to the regulator, to reflect average costs of dealing with submissions.

All fee increases are set to go into effect April 1st.

Most significantly, the regulator will charge $7,200 for medical device establishment licenses.

Medical device license application review fees have also been released:

Medical Device Licence Application Review Fees as of April 1, 2011
Fee Category Description Fee
Class II - Licence Application   $350
Class III - Licence Application   $5,050
Class III - Licence Application (Near Patient In Vitro Diagnostic Devices)   $8,600
Class IV - Licence Application   $11,750
Class IV - Licence Application (Devices that contain human / animal tissue)   $10,960
Class IV - Licence Application (Near Patient In Vitro Diagnostic Devices)   $20,030
Class III - Changes in Manufacturing Changes in manufacturing processes, facility, equipment or quality control procedures $1,270
Class IV - Changes in Manufacturing $1,270
Class III - Significant Changes (not related to Manufacturing)   $4,730
Class IV - Significant Change (not related to Manufacturing   $5,390

Right-to-sell license fees for Class II, III and IV medical devices will also rise to $330 on April 1st.

Canadian regulators expect these fee adjustments, along with similar increases imposed upon pharmaceutical firms, to generate $66.4 million in additional revenues; over the next 10 years, Health Canada expects the fee increase to result in a $639.9 million boost.

Full fees for examinations of medical device license applications will not pertain to private-label medical devices sold under the names of separate manufacturers. Fee mitigation or deferral may also be available for manufacturers with small revenue sources, those in their first year of business, or firms developing devices to be sold for international humanitarian efforts.

Health Canada’s fee restructuring may seem prohibitive and sudden, especially given the rapid implementation date, but won't likely deter manufacturers over the long run from one of the world’s more lucrative medical device markets.

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