User Fees

Medec files complaint over proposed fee hikes

Canadian medical device industry association Medec has filed a formal complaint in response to Health Canada's proposals to raise device user fees, some by as much as 300%¹. The group is contesting the Health Products and Food Branch's (HPFB) Proposed Cost Recovery Framework¹, which covers fees for the regulation, licensing and postmarket surveillance of medical devices and drugs.

Cost recovery revenue from drug and device companies accounts for about 15% of the HPFB's overall budget and approximately 25% of the budget of those programme areas receiving such revenues². Health Canada says it recovers a much lower percentage of its costs from fees than do health regulators in comparable countries, such as the US, the UK and Australia. Medec acknowledges that fees are a necessity. However, it says that some of the rate hikes are exorbitant - the medical device establishment fee, for example, is set to increase from Can$2,120 to Can$8,470.

The proposals were issued on 12 July. Comments were initially due by 24 August, but the notice period was later extended to 7 September, the date Medec filed its complaint.

Fee hikes

Some fees would go down. For example, the agency intends to lower the licence application evaluation fee for devices containing human/animal tissue, from Can$12,790-Can$14,490 to Can$10,960³. Most, however, would increase, including:

• the licence application for a Class III medical device (from Can$1,980 to Can$5,050 - based on components);
• implementing changes to the manufacturing of Class III devices (from Can$140-Can$310 to Can$1,270 - based on components); and
• implementing changes to the labelling of Class III devices (from Can$140-Can$2,200 to Can$5,210 - based on components)

Complaint

In its complaint, Medec said that the fee hikes are unfair to the medical device industry while Health Canada's performance remains unchanged. Other product categories (ie natural health products) are exempted from any fees, it says, giving “the impression that certain services of Health Canada are carried by other product groups, eg medical devices”⁴.

Medec wanted the government to maintain the previous system of lowest possible fees and not start applying higher fees in all situations. Most devices on the market, it says, are imports. As such, they have well-established records of prior regulatory scrutiny in other jurisdictions. Medec therefore argues that such products do not require an in-depth assessment as would first-time launches with Canada as the pilot market. It also disagrees with the HPFB's proposed cost-sharing ratios, on the grounds that they unfairly assume that the manufacturer earns most of the benefit from approvals or licences.

The industry group also objects to the fact that non-profit organisations are exempt from paying fees, and it insists that more time would be needed to implement changes. “Significant improvement” is needed before the cost recovery framework project can be sent to parliament, says Medec.

According to Canada's User Fees Act, if, after the formal complaint is issued, no agreement can be reached between HPFB and Medec, an independent advisory panel must review the dispute. The panel provides non-binding advice and recommendations to Health Canada, which ultimately decides the matter.

References

1. Medec formal complaint, 7 September 2007

2. Cost Recovery Framework: Official Notice of Fee Proposal for Human Drugs and Medical Devices, Health Canada, July 2007, www.hc-sc.gc.ca/dhp-mps/finance/costs-couts/consultation/activit/off_notice_e.html

3. Cost Recovery Framework: Consultation, Health Canada, updated 28 March 2007, www.hc-sc.gc.ca/dhp-mps/consultation/cri-irc/hpfb-dgpsa_co-reco_1_e.html

4. See Reference 1