2016 Master File Cost Recovery Consultation

A Consultation Document in Advance of a Notice to Interested Parties

Objective

As indicated in the February 15, 2016 Notice included with the Draft Guidance Document: Master Files (MFs) - Procedures and Administrative Requirements consultation, fees charged for the provision of non-regulatory Master Files (previously referred to as Drug Master File, DMF) services and the corresponding service standards are being reassessed.

This consultation document is intended to provide an opportunity to review the proposed new Master Files (MF) service fees and to consider possible impacts for MF Holders, Drug and Clinical Trial Sponsors, and members of the public. This document outlines the requirements for establishing non-regulatory charges and a rationale for the proposed fee levels and annual increases.

Introduction

A MF is a reference that provides information about specific processes or components used in the manufacturing, processing, or packaging of a drug. The MF is a useful vehicle for providing information to Health Canada, where that information is of a proprietary nature (that is [i.e.], confidential business information) and where the MF Holder does not wish to make the information available to sponsors (drug product manufacturers or clinical trial applicants) of a drug submission (including DIN applications) or clinical trial application (CTA). This information could be included in the drug submission or CTA itself if the MF Holder chose to share this information with its clients (i.e., drug and clinical trial sponsors) instead of filing a standalone MF. As a result, there is no regulatory requirement to file a MF. It is a voluntary process resulting in a service that Health Canada provides to industry to facilitate review of drug products.

As the MF process is voluntary and represents solely a private benefit, the non-regulatory charges are fully cost recovered under the Ministerial Authority to Enter into Contract and have been developed in accordance with Health Canada's

and relevant Treasury Board of Canada Secretariat (TBS) policies (for example [e.g.],

). These policies allow for the Department to recover all costs associated with the MF process, including 'overhead' activities such as management oversight, quality audits, policy/guidance development, forecasting, and internal finance.

Rationale to Justify Fees

The MF process was internally audited in 2015, which resulted in several recommendations to improve and streamline the registration and review of these files by Health Canada. These changes have been incorporated into the Draft Guidance Document: Master Files (MFs) - Procedures and Administrative Requirements which was posted in February 2016 for industry consultation. Given that the level of effort for administrative processing is anticipated to change as a result of implementation of the proposed process changes, it is appropriate to re-evaluate the fee levels for MF processes.

Fees for all MF activities were developed a number of years ago. Refinements in Health Canada's costing methodology, in addition to recent improvements in technology and administrative processes, have resulted in a more robust determination of level of effort required and resulting fee level proposal.

Key Process Change

Previous MF processes included a requirement for MF Holders to file bi-annual updates, irrespective of substantive changes being made to their MF, and unlimited amendments could be filed at any time (but were not cost-recovered). The Draft Guidance Document: Master Files (MFs) - Procedures and Administrative Requirements provides clarification on the timelines and procedures surrounding changes to the MF. All changes with respect to chemistry and manufacturing (quality) issues to MFs are now called Updates and these are only required when a Supplement to an (Extraordinary Use or Abbreviated) New Drug Submission [EUND or (A)NDS], Notifiable Change (for biologics), Post-Authorization Division 1 Change (PDC), CTA-Amendment or CTA-Notification need to be filed with Health Canada.

Costing Methodology

Direct costs and hours associated with the fee lines were pulled from the Project Systems Time-tracking System for a three year period 2013-14 to 2015-16. Overhead for each of the three years was prorated to the three fee lines based on the overall cost associated with the fee line. The full costs associated with each MF fee line were averaged over the three year period to determine the cost and divided by the average number of submissions to determine a full cost per submission by fee line.

Fee Structure and Revenue Expectations

Based on the costing methodology described, the proposed fees are presented below.

To ensure a transparent and consistent approach with all stakeholders, the administration of MF fees will continue to be aligned with the administration of regulatory fees and will include an automatic 2% increase, effective April 1 of each year. Based on the proposed fees and the 2% annual increases, the revenue expectations are presented below.

From 2017-18 forward, revenues are expected to increase annually due to the anticipated increased workload as a consequence of the new updates that will be filed. A Notice to Interested Parties is anticipated to be published by February 2017 in Canada Gazette, Part I and will specify an implementation date.

Impact of the Proposed Fees on Payers and Non Payers

While fees for registering a new MF are proposed to increase, the registration of a new MF occurs only once (unlike drug submissions, which are filed on a regular basis), after which the new MF resides with Health Canada for the rest of its lifespan (and is accessed by one or more drug sponsors on a continual basis). Therefore, this one time cost to register a new MF with Health Canada is deemed to be appropriate and does not impart an undue burden on stakeholders, who benefit from this voluntary service.

MF Holders will only be required to update their file when necessary rather than on a bi-annual basis; as a result Health Canada operations will be more fairly supported by the cost-recovery of fees from those MF Holders making use of these services.

Revenues collected from revised MF fees will be used to sustain operational activities and facilitate continuous improvement. For example, compared to when the original MF fees were set, the Department has improved its operational efficiency by optimising its human resource allocation and management oversight, digitising the submission process, and is making necessary improvements to its critical infrastructure (Information Management/Information Technology systems). These efforts will benefit MF Holders by enabling the Department to sustainably perform MF activities within the proposed Service Standards.

There is no impact anticipated on the general public (Non payers) as the MF processes are voluntary and do not impact Health Canada's drug review practices or market access.

Services to be Delivered and Service Standards

The registration of MFs and related documents involves the processing, screening, tracking, cost recovery, and information management of all files submitted within a 30 day service standard. Significant time is also spent on servicing requests from internal and external stakeholders who require information on these MFs.

Service standards were reviewed for File Registration and Letters of Access and are not proposed to change at this time. Service standards for the new Update process were reviewed based on the previous activity and are proposed to be 30 days.

Providing Your Input

Questions or comments related to the consultation of MF Cost Recovery should be directed to:

Health Canada
Health Products and Food Branch, Therapeutic Products Directorate
Bureau of Policy, Science and International Programs
Address Locator 3102C3
Holland Cross, Tower B
1600 Scott St.
Ottawa, Ontario
K1A 0K9

Telephone: 613-948-4623
Email: policy_bureau_enquiries@hc-sc.gc.ca

Input received by January 9, 2017 will be considered.

Next Steps

Following the consultation period, any stakeholder comments received will be reviewed and considered. A Notice to Interested Parties will then be published (targeted for February 2017) in Canada Gazette, Part I setting out the revised fees and specifying an implementation date.

Question and Answers

Q1: Why are changes being proposed to the fees for MF activities?

A1: As a result an internal audit of MF processes, process improvements have been identified and proposed process changes are presented in the Draft Guidance Document: Master Files (MFs) - Procedures and Administrative Requirements which is intended to replace the outdated 2008 Draft Guidance Document - Drug Master Files (DMFs). The proposed fees are reflective of the current and projected administrative effort to fulfill these new MF processes.

Q2: Why do the fees need to be changed now?

A2: Process changes will be implemented once the Draft Guidance Document: Master Files (MFs) - Procedures and Administrative Requirements is finalized. Given the changes to MF processes (and level of effort for implementation), maintaining current fees based on existing processes is not appropriate.

Q3: How were proposed fee levels determined?

A3: For each MF activity, analyses of the average time spent for Health Canada personnel to perform the required administrative processes were determined and direct effort costs were determined by multiplying the time spent by average salary costs. Final costs (and proposed fees) were determined by loading these direct costs with a portion of indirect costs, as specified by the current Health Canada costing model.

Q4: Why are there increases in fees for some MF activities which are not impacted by process changes?

A4: Fees for all MF activities were developed a number of years ago. Refinements in Health Canada's costing methodology, in addition to recent improvements in technology and administrative processes, have resulted in a more robust determination of level of effort required and resulting fee level proposal.

Q5: Are the proposed fees fair?

A5: Previous MF processes included a requirement for MF Holders to file bi-annual updates irrespective of substantive changes being made to their MF, while unlimited amendments could be filed at any time (but were not cost-recovered). The proposed timelines and procedures surrounding changes to the MF (i.e., updates are only required when a Supplement to an (Extraordinary Use or Abbreviated) New Drug Submission [EUND or (A)NDS], Notifiable Change (for biologics), Post-Authorization Division 1 Change (PDC), CTA-Amendment or CTA-Notification need to be filed with Health Canada - as opposed to a schedule-based requirement) results in a fairer cost distribution to stakeholders.

Q6: Under what authority are the proposed fees being requested?

A6: As the MF process is voluntary and represents solely a private benefit, the non-regulatory charges are fully cost-recovered under the Ministerial Authority to Enter into Contract and have been developed in accordance with Health Canada's External Charging Policy and Guidelines and relevant Treasury Board of Canada Secretariat (TBS) policies (e.g., Policy on Service Standards for External Fees).

Q7: As MF fees are being revised, will service standards for MF activities be revised?

A7: Service standards were reviewed for File Registration and Letters of Access and are not proposed to change at this time. Service standards for the new Update process were reviewed based on the previous activity and are proposed to be 30 days.

Q8: What benefits are anticipated as a result of proposed MF fee changes?

A8: MF Holders will only be required to update their file when necessary rather than on a bi-annual basis; as a result Health Canada operations will be more fairly supported by the cost-recovery of fees from those MF Holders making use of these services.

Q9: When will the new fees come into effect?

Q9: Following consultations, a Notice to Interested Parties is anticipated to be published by February 2017 in Canada Gazette, Part I and will specify an implementation date.