Final user-fee regulations aimed at recouping the cost of implementing and maintaining Canada's revised medical device regulatory framework are tentatively scheduled for publication in June in the Canada Gazette Part II pending final approval by the Canadian Health Ministry and Treasury Board.

Under the proposed fee structure, companies pursuing premarket approval of medical devices in Canada will be subject to fees as much as 60% higher than those currently charged, depending on the number of data components required and the risk classification for each product. Whereas current fees (reported in U.S. dollars and based on current exchange rates) fall in the $86-7,592 range, proposed fees under the revised schedule increase to $138-10,353.

The revised fee system is based on three basic categories of activity carried out by Health Canada's Therapeutic Products Programme (TPP), including premarket evaluation of data, device licensing/annual renewal, and establishment licensing/annual renewal.

The amount that a company would be required to pay for initial product review would vary contingent on the amount of data submitted to TPP. Manufacturers of Class III and IV products would incur a higher charge than sponsors of Class II devices because the premarket approval regs require for higher-risk categories a greater number of data components, each of which is assigned an individual review fee. Class I products would be exempt from premarket review.

The proposed fee schedule, for example, lists twelve separate data submission components for Class IV devices ranging in price from $97-5,294, while only as many as four submission components could be required for Class III products, with fee levels falling in the $97-1,017 range.

Certain other fees would be constant for sponsors of Class II, III and IV products, including a $138 charge for initial licensing for new devices and a $1,746 initial establishment license fee for device classes I-IV. Across-the-board annual device license renewal fees would be approximately $69 for classes II, III, and IV while devices in all four risk-based categories would be subject to an annual establishment licensing renewal fee of $1,463. All manufacturers would be required to complete establishment registration by Jan. 1, 1999.

The July 8 proposed effective date for the new fee schedule coincides with the phased implementation of Canada's Medical Device Regulations, a final rule for which is scheduled for publication on May 28 in the Canada Gazette Part II following May 4 approval by Canada's Special Committee of Cabinet (SCC). A majority of the regs are scheduled to be in effect July 1. A draft proposal for the framework - which will replace existing regs established in 1975 - was published on Feb. 15, 1997 ("The Gray Sheet" March 10, p. 10).

Canada developed the risk-based classification system in response to the 1992 government-sponsored "Hearn Report," which called for more stringent regulation of medical devices ("The Gray Sheet" April 11, 1994, p. 6). In addition to premarket rules and cost recovery regs, the revised regulatory framework includes requirements for quality systems, device investigations, adverse reporting and recalls.

In response to industry feedback on the proposed regs, TPP is expected to exempt Class I devices from device registration requirements. TPP has indicated that it will modify the establishment registration requirement in order to obtain basic information on Class I medical devices, and require manufacturers, importers and distributors to identify the general device categories of Class I devices they sell.

Input obtained from stakeholders in the medical device industry also contributed to TPP's decision to include fee-reduction provisions in the final fee regs.

Under the first provision, an applicant is eligible for a fee reduction if, at the time of the initial application for a product license, the fee to be paid is expected to exceed 5% of the anticipated gross revenue from the first two years of sales. The $138 fee for Class II devices, for example, would be reduced to $69 if the applicant meets the requisite criteria. A specific formula would be applied to Class III and IV products.

A second provision states that the annual license renewal fee will be reduced to about $35 from $69 "if the medical device had gross revenue of less than [U.S. $13,804] in the previous fiscal year." To address the concerns of the small business community, a third provision states that if a company's total product fees are greater than 1.5 percent of the total annual gross revenue of the company in the previous fiscal year, the total fee will be reduced to 1.5 percent.

In addition, fees for several Class III and IV submission components will be waived by TPP if the device is involved in clinical trial evaluation.

TPP's efforts to prepare industry for the transition to the regulatory structure include publication over the past several months of a series of guidance documents aimed at helping companies interpret the new regs.

An April 6 draft guidance document, entitled "Preparation of a Premarket Review Document for Class III and IV Devices Licence Application" provides firms with an explanation of the type of scientific and medical requirements for Class III and IV in vitro and non-in vitro diagnostic devices license applications, including an instruction that a summary must be included of all preclinical and clinical studies used to support device safety and effectiveness claims.

In comments made on the proposed regs, industry stakeholders voiced concern that finalization of the regs would result in the majority of IVDD products being grouped into Class III or IV. In response, TPP released on April 24 a "Guidance for the Risk-Based Classification System of in vitro Diagnostic Devices." The guidance clarifies that the intent of the regs is to allow most IVDDs to be designated either as Class I or II.

Manufacturers of Class II products can look to TPP's "Guidance for the Medical Device Licensing Process" for help in interpreting the regs. For assistance in determining in what risk category to place a particular device, TPP published on May 4 a draft "Guidance for the Risk-based Classification System," which is designed to "guide the user through the application of the risk classification rules" for non-IVDD devices.

In a published response to comments received from industry on the proposed regs, TPP explained that Class IV IVDDs represent a high individual risk and a high community risk, such as those intended to "ensure microbiological safety of donated blood, tissue and organs and for those used in detecting infectious agents such as HIV and hepatitis viruses." Class III products are those that "either represent a high individual risk or moderate community risks," such as devices used for blood and tissue typing, for near-patient testing and for genetic testing.

Several additional draft guidance documents published by TPP over the past six months include: "How to Apply for Authorization to Obtain Custom-Made or Special Access Devices"; "Guidance for Mandatory and Voluntary Problem Reporting"; "Preparation of an Application for Investigational Testing"; "Guidance for Medical Device Complaint Handling and Recalls"; "Guidance for the Interpretation of Significant Change"; and "Guidance on How to Determine the Device License Type."

In developing the new regulatory framework, TPP identified as one of its primary goals harmonization with other governments' regulatory systems.

TPP examined the U.S., EU, Japanese and Australian regulatory systems, and placed emphasis on "developing requirements which are harmonious with those of our international trading partners and eliminating, to the greatest extent possible, requirements unique to Canada." TPP also performed a study to compare the conformity of classification results between the Canadian and EU systems.

Despite TPP's concerted effort to standardize Canada's device classification rules and quality systems regs with the international regulatory environment, certain industry stakeholders are skeptical that the rules truly are in line with those of other industrialized countries.

Controversy erupted, for instance, when TPP announced that it had decided to require manufacturer compliance with ISO standards 13485 and 13488. The regs stipulate that, effective July 1, 2001, manufacturers of Class II devices must be in compliance with ISO 13488 and producers of Class III and IV devices must satisfy ISO 13485 provisions.

Certain manufacturers assert that certification to ISO 9001/9002, EN 46001/46002 and U.S. current good manufacturing practices should be acceptable alternatives to the proposed requirement for reasons related to cost and convenience.

In defending its decision, TPP maintains that ISO 13488/13485 "constitute the only true international consensus standards for quality systems as applied to medical devices," adding that "these standards essentially represent the current evolutionary state of the medical device specific version of the original generic quality systems standards ISO 9001/9002." Accordingly, they contain "the latter standards in total but include substantial supplementary medical device requirements, largely reflecting EN46001/46002."

Canada's Final User-Fee Schedule To Include Three Fee-Reduction Provisions

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