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Health Canada plan could harm veterinary drug market, CAHI warns

The organization says the department needs to get in step with other countries

A Health Canada plan to impose service fees on human and veterinary medicines will keep many treatments for farm and companion animals out of the country, says Jean Szkotnicki, president of the Canadian Animal Health Institute.

The Canadian animal health market is 2.5 per cent of the global market and shouldn’t be treated like the human medicine sector, which is 35 times larger, and is helped by subsidized drug prices, she said.

“Yet the proposed service fees increases are similar for both the animal and human health businesses, which CAHI and its members do not think is fair. These higher fees will hurt the availability of veterinary drugs in the Canadian market due to the loss of niche products and increased costs for veterinary medicines.”

Higher service fees for veterinary drugs will negatively impact the competitiveness of Canadian animal agriculture and the ability to practise sound veterinary medicine, she said.

The Health Canada fees are to cover the cost of reviewing veterinary drug submissions and for oversight of product quality such as fabricating, licensing and warehousing. The fees would be increased by 50 per cent over a seven-year period.

About 80 to 90 per cent of current veterinary drugs do not meet the sales threshold set by the proposed new service fees for veterinary drug registration and maintenance in the marketplace, she said.

CAHI has been talking to Health Canada since the service fee was first proposed last fall. While the department has said it will substantially reduce its proposed fees, they will still “result in smaller market products not being brought to the Canadian market and many existing small market medications would not be economically viable and will no longer be sold,” she said.

The service fee is intended to increase competitiveness, innovation and exports, but it will take the veterinary medication industry in the exact opposite direction, she said.

“Business would see deteriorated profit margins on new and existing drugs. Increased fees will encourage companies to invest outside of Canada and Canada’s innovative companies, many of which are small, will be unable to afford to have their products approved and sold in Canada.”

It would affect both food and companion animal owners, including equine. Also affected would be entrepreneurs in new and small production animal niches ranging from sheep and goats to buffalo.

While Health Canada has recognized the extreme negative impact the original service proposal would have had on small veterinary medication manufacturers, the remedy in the latest proposal would still have a very negative impact on small manufacturers, she said.

Health Canada also intends to charge a substantial fee for minor use medicines when most other jurisdictions are providing incentives to manufacturers to ensure that licensed products are available to minor species, she said. Canada will be unique in treating these applications as a source of cost recovery fees.

Whether companies serve as an importer of foreign medicines or manufacture in Canada, some will be hit with massive increases in licence fees.

The department proposes to calculate future services fees on the Consumer Price Index, which isn’t related to Health Canada’s true program costs, she said.

The department should recast the proposed fee increases in light of the government’s objectives of increasing competitiveness, reducing unnecessary regulatory burdens, fostering innovation and meeting Canada’s objective of increasing agri-food exports, she said.

“It must factor into the analysis the impact and risk of lost products on animal medication users and adjust the definition of small businesses by removing the affiliate provision and reflecting small individual businesses in Canada. As well it should reduce the fees for drug establishment licences and participate in joint reviews with other countries.”

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