Exported Drugs Must Meet Canadian Standards

Summary#

This is a proposed rule from Health Canada, published June 12, 2021, called the Regulations Amending the Food and Drug Regulations (Exports and Transhipments of Drugs). It would make companies that make, package, test, distribute or wholesale drugs in Canada for export follow the same licence and quality rules as for drugs sold in Canada, and it would clarify that drugs passing through Canada must be kept in bond.

What it does#

• Requires holders who fabricate, package/label, test, distribute or wholesale a drug made in Canada solely for export to hold a drug establishment licence under the Food and Drug Regulations.
• Requires those licence holders to follow applicable good manufacturing practices (GMP), with some limited exceptions for Canada‑specific rules and certain raw ingredient rules.
• Says that specifications for raw materials, packaging and finished products must meet the rules of the country where the drug will be used.
• Adds a rule that an exporter who issues an export certificate must keep that certificate for five years.
• Clarifies that drugs transhipped through Canada must be in bond (i.e., remain under customs control and security while in Canada).
• Updates and modernizes the export certificate form in the Regulations.
• Requires payment of licence fees under the Fees Order (example licence fee for a non‑sterile fabrication licence cited as $28,364; fees for other activities range from $3,200 to $41,730).
• Sets transition timing: the amendments would come into force six months after final publication in Canada Gazette, Part II, and existing exporters get an extra three months (or longer if they apply for a licence before the end of that three‑month window).

Additional cost estimates in the proposal:

• Estimated annual cost to industry: $299,553.
• Present value cost over 10 years: $2,124,575.
• Estimated annualized administrative cost: $3,403 (about $340.30 per business).

Who's affected#

• Companies that manufacture, package, test, distribute or wholesale drugs in Canada solely for export. Health Canada says it is aware of 16 such companies; 13 already hold a licence and 3 do not.
• Exporters who sign export certificates.
• Carriers, customs brokers and others involved in moving goods through Canada, because transhipped drugs now must be in bond (this clarifies existing Customs Act practices).
• Consumers are unlikely to see price or supply changes, according to Health Canada.
• It is unclear exactly how many additional small businesses beyond the identified companies might be affected, because companies currently exempt under section 37 of the Food and Drugs Act do not have to notify the government.

Why it matters#

• It closes a gap that let drugs made in Canada for export avoid many Canadian licensing and GMP rules. That could mean identical products sold abroad faced lower regulatory oversight than those sold at home.
• The change aims to meet international trade and regulatory commitments (notably under CETA and the WTO Agreement on Trade Facilitation) and to maintain Canada’s standing in the Pharmaceutical Inspection Co‑operation Scheme. That helps Canada win or keep mutual recognition with regulators like the EU.
• For exporters it may mean new paperwork, licence fees and some one‑time compliance costs. Health Canada says most exporters already follow equivalent quality standards, so many businesses may see little change.
• For the public, the change is intended to raise confidence that drugs leaving Canada meet consistent quality standards and to reduce the risk that transhipped drugs are diverted into the domestic market.