2011 June Status Report of the Auditor General of Canada

Chapter 6—Regulating Medical Devices—Health Canada

Main Points

Introduction

Medical devices in Canada
Stakeholders and partners in medical devices
Health Canada’s Medical Devices Program
What we found in our 2004 and 2006 audits
Focus of the audit

Observations and Recommendations

Funding for the Medical Devices Program

Funding for the program has increased over time
Health Canada is not meeting its obligations for the timely review of medical devices applications
Health Canada does not know if it is meeting its obligations for its post-market activities
Steps have been taken to address remaining funding shortfalls

Approving medical devices for sale in Canada

Health Canada’s decisions on medical device applications are not timely
Untimely decisions can have important consequences
Health Canada could benefit from increased international cooperation for its pre-market activities

Managing risks from devices available in Canada

Health Canada has significantly expanded its post-market activities
Health Canada identifies risks for key post-market activities but does not know if they are adequately mitigated
Health Canada is working cooperatively with international jurisdictions on post-market activities but needs to determine if further actions are necessary

Conclusion

About the Audit

Appendix—List of recommendations

Exhibits:

6.1—Risk levels associated with classes of medical devices

6.2—Total funding for pre-market and post-market activities in the 2008–09 and 2009–10 fiscal years ($ millions)

6.3—Progress in addressing our recommendation on establishing program baselines

6.4—Progress in addressing our 2004 and 2006 recommendations on funding

6.5—Health Canada consulted with the Canadian medical devices industry to set service standards

6.6—Health Canada has consistently fallen short of its service standards for reviewing applications

6.7—Progress in addressing our recommendations for pre-market activities

6.8—Progress in addressing our recommendations on post-market activities

Case Study:

6.1—Automated Blood Collection System

Main Points

What we examined

The term “medical devices” encompasses a wide range of medical, surgical, and dental products and instruments used to diagnose, treat, and prevent diseases and other physical ailments. They range from basic items, such as bandages, to complex devices such as pacemakers and diagnostic ultrasound systems.

As required under the Food and Drugs Act, Health Canada regulates the safety and effectiveness of all medical devices marketed in Canada. It does this through a combination of scientific review, monitoring, compliance, and enforcement activities, both before and after the devices reach the Canadian marketplace. The Department works toward ensuring that the public has timely access to safe and effective medical devices, and that those who need to know about related safety concerns are informed of them in a timely manner.

In March 2004 we reported concerns about the continued viability of the Medical Devices Program, given the increasing complexity and number of devices available in Canada and the resources allocated to the Program. We concluded that the Program was not sustainable with the resources it had. We made similar observations in our November 2006 Report.

In this audit, we examined Health Canada’s progress in meeting commitments it made in response to selected recommendations from our previous reports. In particular, we examined the timeliness of the Department’s review of applications to allow or deny medical devices to be sold in Canada. We also examined how it manages the risks related to medical devices already available on the Canadian market and how it meets its obligations for medical devices. In addition, we looked at international regulatory cooperation.

Audit work for this chapter was substantially completed on 29 October 2010.

Why it’s important

Medical devices play an important role in all stages of the delivery of quality health care, from the most basic procedures, such as monitoring blood pressure and body temperature, to complex surgeries. All are meant to improve the health and well-being of patients by helping to prevent, diagnose, and treat disease, to reduce pain and suffering, and to extend and save lives. Medical devices are increasing in number and complexity, due in part to medical and technological advances.

Close to 1.4 million different medical devices are currently on the Canadian market. Canadians rely on Health Canada for assurance that available medical devices are safe and effective. Users of medical devices also rely on Health Canada to promptly inform them of safety concerns related to medical devices that are in use.

What we found

  • Overall, Health Canada has made unsatisfactory progress toward meeting commitments it made in response to recommendations in our 2004 and 2006 reports. Although it has accomplished much in some areas, the Department is not meeting its obligations under the Medical Devices Program, mostly at the pre-market stage. For example, more than 45 percent of the time it does not meet its service standards for timely review of medical device submissions, thus delaying Canadians’ access to the health benefits of these devices. According to Health Canada, this problem is due to a funding shortfall caused in part by rapid growth in medical device technology and increasingly complex submissions.
  • Health Canada does not know if it has allocated too much or not enough resources to post-market activities such as inspections and surveillance. The Department has not established what levels of activity are needed to protect the health and safety of Canadians. In addition, while the Department has identified risks associated with medical devices already available on the Canadian market, it has yet to determine whether the risks that the inspections and the review of incident reports are designed to address have been adequately mitigated.
  • Health Canada recently developed strategies to increase cooperation at the pre-market stage with regulatory bodies in other countries. While we acknowledge the significant challenges involved, progress to date is unsatisfactory. The work has not taken advantage of foreign resources, information, and knowledge and has not yet improved regulatory performance.
  • Health Canada has taken significant actions to meet some commitments made in response to other recommendations from previous reports. A major accomplishment was making the Medical Devices Program more sustainable than in previous years. The Department increased its funding to the Program and expects to eliminate the remaining funding shortfall by implementing new user fees starting in the 2011–12 fiscal year. Another significant accomplishment has been establishing a national inspection program to assess compliance with the Food and Drugs Act and Regulations. The Department also increased its capacity to identify safety risks associated with medical devices on the market.

The Department has responded. The Department agrees with all of the recommendations. Its detailed responses follow the recommendations throughout the chapter.

Introduction

Medical devices in Canada

6.1 Canadians rely on a range of medical devices to prevent, diagnose, and treat diseases, disabilities, and other physical conditions. Devices such as dialysis equipment, pacemakers, and surgical lasers have improved or saved the lives of many Canadians and are indispensable to today’s health care practitioners.

6.2 In Canada, the safety and effectiveness of medical devices are regulated under the Food and Drugs Act administered by Health Canada. The Act defines a medical device as “any article, instrument, apparatus or contrivance, including any component, part or accessory thereof, manufactured, sold or represented for use” in the medical treatment of human beings.

6.3 Medical devices are categorized in four classes (I, II, III, and IV) on the basis of the risks associated with their use and the controls necessary to provide reasonable assurance that they are safe and effective. Exhibit 6.1 lists the various classes of medical devices and the risk levels associated with their use.

Exhibit 6.1—Risk levels associated with classes of medical devices

Device Class Risk Level Examples
Class I Lowest Reusable surgical scalpel, bandages, culture media
Class II Low Contact lenses, epidural catheters, pregnancy test kits, surgical gloves
Class III Moderate Orthopaedic implants, glucose monitors, dental implants, haemodialysis systems, diagnostic ultrasound systems
Class IV High HIV test kits, pacemakers, angioplasty catheters
Source: Health Canada
Stakeholders and partners in medical devices

6.4 In addition to the federal government, in its role as regulator, there are a number of other important stakeholders and partners in medical devices.

6.5 The public. The primary stakeholder is the public. Members of the public buy and use medical devices to receive some health benefit. However, with this benefit comes some level of potential risk, since the quality and safety of devices can never be absolutely guaranteed. The Canadian public has limited control over the risks and benefits to which it is exposed. Ultimately, Canadians must trust others, such as health care professionals and manufacturers of therapeutic products, to provide safe and effective services and products.

6.6 Health care facilities and health care professionals. Health care facilities, which are under the responsibility of provinces and territories, buy and use medical devices. Health care professionals provide advice on how to use or install medical devices. They also play a significant role in helping to ensure the continued safety of medical devices for the public. They are often the first to become aware of a problem with a device; this makes them a critical source of information on adverse incidents. They can help prevent future problems from occurring by passing this information on to manufacturers and/or the federal government in a timely manner.

6.7 Medical devices industry. The legal responsibilities of the medical devices industry are outlined in the Medical Devices Regulations, which place significant responsibility on manufacturers, importers, and distributors to do all they can to protect the health and safety of the public.

6.8 Foreign regulatory authorities. Health and safety concerns are shared by governments worldwide. Health Canada works with foreign regulators to develop international standards, harmonize regulations, and share information on adverse incidents involving medical devices. Participation in such activities can help the Department increase its capacity to make timely regulatory decisions about medical devices before they are sold in Canada, and to quickly identify risks associated with devices already on the Canadian market.

Health Canada’s Medical Devices Program

6.9 Health Canada’s Medical Devices Program is responsible for regulating the safety and effectiveness of medical devices both before and after they reach the Canadian marketplace. The program uses a regulatory framework based on risk management principles and scientific methods and seeks to emphasize public safety, while optimizing quality and effectiveness. The Department’s responsibilities apply to all medical devices marketed in Canada, regardless of whether they are manufactured here or overseas.

6.10 The program uses a combination of scientific review, monitoring, and compliance and enforcement activities to pursue its goal of ensuring that medical devices available in Canada are safe and effective.

6.11 The Medical Devices Program is delivered jointly by the Health Products and Food Branch (composed of the Therapeutic Products Directorate, the Health Products and Food Branch Inspectorate, and the Marketed Health Products Directorate) and the Regions and Programs Branch. In the 2009–10 fiscal year, direct costs of the program amounted to $20.9 million. Its staff consisted of 185 full-time equivalent employees.

6.12 Pre-market activities. The Medical Devices Program regulates medical devices and their manufacturers, importers, and distributors, through two distinct licensing regimes: licensing of establishments and licensing of medical devices.

6.13 Health Canada requires manufacturers of Class I devices that do not sell through an establishment already holding a licence, as well as importers and distributors of any medical devices for human use, to obtain an establishment licence to sell their products in Canada. This requirement applies to organizations located in Canada and abroad. Establishment licences attest that the organizations holding them comply with regulatory requirements, and that those organizations have documented procedures to manage complaints, recalls, shipping, storage, and delivery of medical devices marketed in Canada. Health Canada issued 2,048 establishment licences in the 2008–09 fiscal year and 2,147 in the 2009–10 fiscal year. Establishment licences have to be renewed once a year. Because most of the establishment licences issued by Health Canada were renewals as opposed to new ones, both we and the Department considered this activity to be a post-market activity.

6.14 The Medical Devices Regulations require that manufacturers who are seeking a licence for a Class II, III, or IV device first demonstrate to Health Canada that they meet quality standards in the design and manufacturing of their medical devices. These standards are based on internationally accepted standards for quality systems.

6.15 Before issuing a device licence, Health Canada evaluates information provided by manufacturers in support of their claim that the device meets the safety and effectiveness requirements of the Medical Devices Regulations. The nature of the information required from manufacturers and evaluated by Health Canada depends on the risk rating of the device. If a high-risk device is modified, Health Canada must also authorize the change. As a result, Health Canada reviews license applications for both new and modified devices. The average number of Class II, III, and IV medical device applications reviewed annually by Health Canada over a five-year period (fiscal years 2005–06 to 2009–10) was 4,007.

6.16 Post-market activities. The pre-market review process cannot identify or predict all possible malfunctions of the more than 1.4 million different medical devices currently on the Canadian market. Consequently, both industry and Health Canada must continually monitor and assess the safety of medical devices on the market, to protect the health and safety of Canadians. To do so, Health Canada receives reports of suspected problems from manufacturers, health care professionals, and consumers. The Department assesses the severity of the reported problems and takes action to mitigate the health and safety risks when necessary.

6.17 The Department also monitors recalls of medical devices by domestic and foreign manufacturers and conducts inspections of establishments that manufacture, import, or distribute medical devices. It monitors various sources of scientific and medical information to identify problems and potential risks related to medical devices on the market. Health Canada evaluates information that stems from these activities and takes action if it identifies a serious health risk. Such actions can include

  • requiring that a manufacturer modify product labels and instructions on how to use devices,
  • issuing warnings to the public and the health care community about potential device-related health and safety concerns, and
  • advising industry to remove a product from the market.
What we found in our 2004 and 2006 audits

6.18 In March 2004, we concluded that the program was not sustainable in its (then) current state. We recommended that Health Canada review applications for medical devices, on a timely basis, and find ways to increase international regulatory cooperation. At the post-market stage, we recommended that Health Canada engage in active inspection of industry operations to verify compliance with regulations. We also recommended that it improve its post-market surveillance system to provide timely, accurate, and complete information about incidents involving medical devices.

6.19 In November 2006, as part of a broader examination of the allocation of resources to regulatory programs managed by Health Canada, we expressed concerns about the Department’s ability to meet its obligations for medical devices. We found that the Department had not determined the level of activity required to meet its responsibilities. The Department committed to review the funding allocated to the Medical Devices Program and to renew its cost-recovery regime. It also committed to establish the level of activity required to meet its responsibilities for medical devices—along with corresponding performance targets and resource requirements.

Focus of the audit

6.20 The focus of our audit was to determine whether Health Canada has made satisfactory progress in implementing selected recommendations we have made on its management of the Medical Devices Program.

6.21 Because our 2004 audit concluded that the pre-market evaluation process was consistently followed, we focussed our audit on the timeliness of this process. We also examined the management of risks from medical devices already on the Canadian market. We focused our audit on four post-market activities:

  • inspections,
  • the review of incident reports,
  • signal assessment and surveillance, and
  • risk communication.

6.22 We also looked at actions taken by the Department to fund the program and to determine the level of activity required to meet its obligations for medical devices. Finally, we examined actions taken by the Department to increase international cooperation. We did not examine the monitoring of investigational testing (clinical trials), unlicensed devices, and the reuse of single-use devices. Also, we did not audit the process for allocating resources reported on in our 2006 report.

6.23 More details on the audit objectives, scope, approach, and criteria are in About the Audit at the end of this chapter.

Observations and Recommendations

Funding for the Medical Devices Program

Funding for the program has increased over time

6.24 The sustainability of a program depends on both the amount and sources of its funding. Health Canada funds its ongoing program activities, such as regulatory compliance and enforcement, through public monies authorized by Parliament. Because the activities of Health Canada’s Medical Devices Program also benefit the private sector, the government introduced user fees in 1996. Revenue from industry is used to pay for the costs of running the program and to provide services at specified levels.

6.25 Our 2004 audit noted that insufficient resources were allocated to deliver the Program. For the 2002–03 fiscal year, program funding for the direct costs of pre-market activities was $1.7 million plus $1 million for post-market activities, for a total of $2.7 million. The Department’s funding was supplemented by user fees charged to industry to recover some costs. In the same fiscal year, Health Canada recovered $4.6 million. This brought its total program funding for direct costs to $7.3 million.

6.26 Our 2006 audit showed that program funding for direct costs had increased to $8.8 million in the 2003–04 fiscal year, to $11.4 million in the 2004–05 fiscal year, and to $13.7 million in the 2005–06 fiscal year. We recommended that Health Canada review the funding allocated to regulatory programs to ensure programs received sufficient funding to meet the Department’s obligations and to adequately protect the health and safety of Canadians. The Department agreed with our recommendation and committed to complete a review of funding allocated to regulatory programs by March 2008.

6.27 We examined the funding allocated to the Medical Devices Program for the 2008–09 and 2009–10 fiscal years. Because the Department does not track the funding by program, but by activity, we did not audit the financial information provided by Health Canada. We reviewed the information for consistency with information that we reported on in our 2004 and 2006 chapters. We also interviewed key officials and we ensured the reasonableness of the financial information provided by Health Canada.

6.28 We found that Health Canada allocated $10.1 million toward the direct costs of the program in the 2009–10 fiscal year (Exhibit 6.2), as compared to $2.7 million in the 2002–03 fiscal year (financial information presented in our 2004 report). Despite this increase, the program continues to face challenges in meeting its responsibilities, as discussed in the next section.

Exhibit 6.2—Total funding for pre-market and post-market activities in the 2008–09 and 2009–10 fiscal years ($ millions)

  2008–09 2009–10
Pre-market Post-market Total Pre-market Post-market Total
Health Canada funding
Direct costs 4.9 5.4 10.3 5.0 5.1 10.1
Indirect costs 3.7 4.8 8.5 4.1 5.6 9.7
Total 8.6 10.2 18.8 9.1 10.7 19.8
Industry funding
User fees 4.4 6.5 10.9 4.1 6.7 10.8
Total funding of the Medical Devices Program 13.0 16.7 29.7 13.2 17.4 30.6
Indirect costs—Costs of the program that are not directly related to the service activity, for example, the cost of office space.

Source: Health Canada (unaudited)

Health Canada is not meeting its obligations for the timely review of medical devices applications

6.29 According to the Cabinet Directive on Streamlining Regulations, “departments and agencies are responsible for putting in place the processes to implement regulatory programs and to manage human and financial resources effectively, including . . . planning for the necessary human and financial resources . . .” The 2007–2012 Medical Devices Strategic Plan describes one of its strategic objectives as having stable and adequate funding in place to meet all program requirements.

6.30 In our 2006 audit, we reported that program managers were concerned that some activities were insufficient to meet their obligations. We noted that Health Canada had no program baseline—that is, it had not determined the required level of activities that the Medical Devices Program must carry out to meet its regulatory responsibility of protecting the health and safety of Canadians, and had not identified performance targets for these activities and the resources needed to do this work. We recommended that it do so and the Department agreed to begin a review of the funding allocated to the program and to set a baseline by 31 March 2008.

6.31 We examined reviews undertaken by Health Canada to address our recommendation, as well as its operational plans and performance reports. We also interviewed key officials.

6.32 We found that Health Canada has established program baselines for its core pre-market activities, such as the review of applications for establishment licences and for medical devices licences. In particular, Health Canada has established the required level of activity to issue licences, and, in consultation with industry, has set service standards. However, Health Canada is not meeting these service standards for reviewing medical device applications (paragraphs 6.48 to 6.55). According to Health Canada, this is due to an estimated $4.2 million funding shortfall for the 2009–10 fiscal year. Because service standards for the review of medical device applications are not consistently met, we conclude that Health Canada is not meeting its obligations for this key activity. Our assessment of progress made on pre-market activities is found in Exhibit 6.7.

Health Canada does not know if it is meeting its obligations for its post-market activities

6.33 We reported in our 2006 audit that program managers were concerned that some activities were insufficient to meet the Medical Devices Program’s regulatory responsibilities. We examined the following post-market activities to determine if program baselines had been established:

  • Inspections of establishments—on-site visits to assess how well an establishment conforms to sections of the Act and Regulations that mostly deal with either the safety or efficacy of medical devices or the administration of procedures designed to detect potential risks and respond when risks are identified.
  • Review of incident reports—reviewing documentation of device-related incidents received from manufacturers, health care professionals, and the public, to assess the underlying cause and seriousness of the incident.
  • Signal assessments and surveillance—continuous review of a variety of information sources, such as clinical and scientific literature and incident reports from foreign authorities, to assess and confirm possible connections (signals) between reported incidents and medical devices already on the market.
  • Risk communications—to inform the public, industry, and health care professionals about risks associated with the use of medical devices on the market, using different communication tools, such as public advisories and warnings, letters to health care professionals, notices to hospitals, and foreign product alerts.

    Health Canada and the industry share the responsibility to communicate safety information about medical devices.

6.34 We examined operational plans and performance reports for the 2008–09 and 2009–10 fiscal years for the post-market activities included in the scope of the audit. We also interviewed key officials.

6.35 We found no complete baseline for any of the four examined post-market activities. In particular, Health Canada has not set the required level of effort for most of its post-market activities. For example, the Department has not determined how often establishments should be inspected to mitigate the identified risks. Therefore, it does not know whether it is doing too many or not enough inspections in a given year.

6.36 Furthermore, except for signal assessment and surveillance, performance targets have not been set for the other three post-market activities we examined. No performance targets exist for inspections of establishments, the review of incidence reports, or risk communications. Although it is more complex to set targets for risk communications because of the participation of industry and departmental staff involved in the process, it is quite reasonable and feasible to set performance targets for these three post-market activities.

6.37 Health Canada identified an estimated funding shortfall of $26.3 million for post-market activities in the 2009–10 fiscal year. But without a complete program baseline, the Department does not know if too much or not enough resources are allocated to these activities.

6.38 We conclude that the Department does not know if it is carrying out the required level of post-market activity and that it has not established a desired level of performance. In other words, the Department does not know if it is meeting its obligations for post-market activities. We therefore assess progress on our past recommendation related to establishing program baselines as unsatisfactory (Exhibit 6.3).

Exhibit 6.3—Progress in addressing our recommendation on establishing program baselines

Recommendation Progress
Health Canada should establish program baselines (for the Medical Devices Program) by defining the required level of activities that the programs must carry out in order to meet their regulatory responsibilities of protecting the health and safety of Canadians. It should also identify the targeted performance for these activities, and the resources needed to do this work.

(See recommendation 8.27 of the 2006 November Report of the Auditor General of Canada, Chapter 8, Allocating Funds to Regulatory Programs—Health Canada)

Unsatisfactory
Satisfactory—Progress is satisfactory, given the significance and complexity of the issue, and the time that has elapsed since the recommendation was made.

Unsatisfactory—Progress is unsatisfactory, given the significance and complexity of the issue, and the time that has elapsed since the recommendation was made.

6.39 Recommendation. Health Canada should complete program baselines for post-market activities by defining the level of activities necessary to meet its obligation of protecting the health and safety of Canadians. It should also identify performance targets for these activities and the resources it needs to do this work.

The Department’s response. Agreed. Health Canada is committed to completing the establishment of program baselines. In May 2010, the Department began evaluating the international landscape of medical device inspections as a first step toward determining an appropriate risk-based inspection cycle. As a result, the Department expects to establish and implement a more risk-based inspection cycle in the 2012–13 fiscal year.

In an effort to develop performance measures and baselines, Health Canada began reviewing the process of compliance verification activities in October 2010. The Department expects to establish appropriate baselines by the 2012–13 fiscal year.

The Department has already begun developing performance standards and targets for its post-market surveillance review-related activities and risk communications activities in 2009 and expects full implementation by the 2011–12 fiscal year. A plan to enhance the effectiveness of risk communications is being developed for implementation during the 2011–12 fiscal year.

Steps have been taken to address remaining funding shortfalls

6.40 In 2006, we recommended that Health Canada develop a reporting mechanism that would require program managers to inform the departmental Executive Committee systematically about significant funding shortfalls and their effects. The Department agreed with our recommendation and stated that directorates were now reporting program results and their regulatory responsibilities to the Branch Executive Committee.

6.41 We examined operational plans and performance reports for the 2008–09 and 2009–10 fiscal years and interviewed key officials. Program managers estimated a $4.2-million funding shortfall for pre-market activities and a $26.3-million funding shortfall for post-market activities for the 2009–2010 fiscal year. These shortfalls were discussed at the departmental level.

6.42 To address the long-standing funding shortfall for the Medical Devices Program, Health Canada began a project in 2004 to update its user fees. User fees had been established in 1996 and the cost to perform the regulatory services had increased since then. In May 2010, Parliament approved a proposal by Health Canada to increase user fees related to the evaluation, approval, and monitoring of medical devices. The new user fees will be governed by the User Fees Act, which provides for financial penalties to the regulator (Health Canada) if it does not meet service standards. (A key penalty for late processing of applications is that users may be granted fee reductions of up to 50 percent.) Health Canada has yet to amend the regulations before the new fees can come into force. New user fees are expected to be implemented in the 2011–12 fiscal year.

6.43 To update user fees, Health Canada had to establish the full costs of the program. We examined documents produced by the Department that supported the Proposal to Parliament to increase user fees. We did not audit Health Canada’s analyses of these costs.

6.44 According to Health Canada, it would cost $61.1 million to deliver the program in such a way that all obligations would be met. This amount includes the full costs of the program, namely $30.6 million for the 2009–10 fiscal year (Exhibit 6.2), as well as the estimated funding shortfalls of $4.2 million and $26.3 million that Health Canada has identified (paragraphs 6.32 and 6.37).

6.45 If the user fee proposal is implemented as proposed, Health Canada estimates that revenues will increase by about 160 percent, going from $10.8 million in the 2009–10 fiscal year to $27.9 million in the 2011–12 fiscal year. On that basis, industry would be covering about 46 percent of the total program cost of $61.1 million. Health Canada’s contribution would increase from $19.8 million in the 2009–10 fiscal year to $31.6 million in 2011–12. Health Canada has stated that the additional $12 million required in the 2011–12 fiscal year to deliver the program will be achieved through a combination of cost reductions, program efficiencies, and possible internal reallocations of funds.

6.46 In 2006, we recommended that Health Canada, in consultation with clients, set user fees for medical devices program services that are based on clear and measurable service standards. As part of the user fee proposal, Health Canada developed new standards, in consultation with industry, that are measurable. Health Canada indicated that it intends to publish guidance that will clarify the interpretation of these new service standards.

6.47 We therefore assess the progress made on our past recommendations related to funding as being satisfactory (Exhibit 6.4).

Exhibit 6.4—Progress in addressing our 2004 and 2006 recommendations on funding

Recommendation Progress
Health Canada should resolve the problems in its cost recovery program. It should determine the actual costs of the program and set fees based on those costs.

(Recommendation 2.111 of the 2004 March Report of the Auditor General of Canada, Chapter 2, Health Canada—Regulation of Medical Devices)

Satisfactory
Health Canada should review the core funding allocated to [the Medical Devices Program] to ensure that it receives sufficient funding to meet regulatory responsibilities and to adequately protect the health and safety of Canadians.

(See recommendation 8.43 of the 2006 November Report of the Auditor General of Canada, Chapter 8, Allocating Funds to Regulatory Programs—Health Canada)

Satisfactory
Health Canada should, in consultation with clients, set user fees for Medical Devices program services that are based on clear and measurable service standards.

(See recommendation 8.46 of the 2006 November Report of the Auditor General of Canada, Chapter 8)

Satisfactory
Health Canada should develop a reporting mechanism that would require program managers to inform the departmental Executive Committee systematically about
  • the level of financial resources allocated to the Medical Devices Program,
  • results achieved with the funds, and
  • extent to which the program has met its regulatory responsibilities, including significant gaps and their consequences.

(See recommendation 8.84 of the 2006 November Report of the Auditor General of Canada, Chapter 8)

Satisfactory
Satisfactory—Progress is satisfactory, given the significance and complexity of the issue, and the time that has elapsed since the recommendation was made.

Unsatisfactory—Progress is unsatisfactory, given the significance and complexity of the issue, and the time that has elapsed since the recommendation was made.

Approving medical devices for sale in Canada

Health Canada’s decisions on medical device applications are not timely

6.48 Health Canada conducts pre-market activities before it authorizes a company to market a medical device. These activities include reviewing submissions of scientific evidence by manufacturers to determine the device’s safety and efficacy.

6.49 In 2004, we found that the pre-market evaluation process was consistently followed but there were delays in the authorizing of licences. We recommended that Health Canada ensure that Canadians have timely access to all available safe and effective devices. The Department agreed with our recommendation and stated that it would undertake a review to determine the reason(s) it was not meeting performance targets. It committed to begin taking corrective action in spring 2005.

6.50 The User Fees Act states that, before a regulating authority fixes, increases, or expands the application of a user fee or increases its duration, it must establish standards against which the performance of the regulating authority can be measured.

6.51 Both establishment licences and medical device licences are subject to user fees. As part of establishing its user fees, Health Canada had consulted with the Canadian medical device industry and established service standards (Exhibit 6.5).

Exhibit 6.5—Health Canada consulted with the Canadian medical devices industry to set service standards

Service activity Service standard for completing activity Performance target for the service standard
Authorizing device licences
Class II: review time to first decision* 15 calendar days  
Class III: review time to first decision 75 calendar days 90%
Class IV: review time to first decision 90 calendar days  
*A first decision can either be a decision to request additional information from the applicant or a final decision to either approve or deny the application for a medical device licence.

6.52 To determine the timeliness of Health Canada’s decisions to approve or deny a medical device licence, we examined whether the Department was meeting its established service standards for its review of Class II, III, and IV medical device licence applications. We also examined management reports related to program performance for the period under audit, analyzed the database on licences issued, and interviewed key officials.

6.53 We found that the Department is not consistently meeting its service standards related to applications for medical device licences. For example, first decisions were made within the 90-day service standard for only 55 percent of Class IV medical device applications in the 2009–10 fiscal year. As well, our analysis of the number of days to review a Class IV medical device application in the 2009–10 fiscal year showed that 45 percent of these applications required longer than the 90-day service standard, by an average of 63 days.

6.54 Meeting service standards for medical devices has been a long-standing issue for Health Canada. In our 2004 audit, we reported that, in 2002, an estimated 42 percent of Class III medical devices were processed within the service standard of 75 days, and that an estimated 31 percent of Class IV medical devices were processed within the service standard of 90 days. The performance reflected in Exhibit 6.6 for the 2008–09 and 2009–10 fiscal years shows that meeting service standards continues to be a problem.

Exhibit 6.6—Health Canada has consistently fallen short of its service standards for reviewing applications

Health Canada's review of applications measured against its service standards

[text version]

* Data from 2002 was collected during our 2004 audit. At that time, we did not collect data on applications for Class II medical devices. The percentages for Class III and IV applications were estimated from a random sample of applications.

6.55 Health Canada indicated that factors contributing to the delays in reviews include the rapid growth of medical device technology with more products using, for example, nanotechnology. This means that more hours are needed to complete a review. According to Health Canada officials, other factors contributing to delays in reviews include reviewers having to complete tasks other than review work. These factors include responding to regulatory questions, information technology that is outdated, lack of funding and staff, and an increased number of requests for additional information because applications are incomplete. The case study on Health Canada’s decision on an application for an automated blood collection system shows that service was not timely.

Case Study 6.1—Automated Blood Collection System

The automated red cell collection system is a device that allows blood collectors to collect two units of red cells from a single donor instead of one unit. Health Canada received an application from an American company for this Class III device on 14 September 2007. Although the service standards indicate that a first review for a Class III device application must be processed within 75 days, the first review took more than 7 months (221 days), which is almost 5 months (146 days) more than the service standard. At the end of this first review, Health Canada requested additional information to the manufacturer. It took more than three weeks for the manufacturer to respond to the request. It then took Health Canada more than two months to conduct its second review and to reach its final decision to approve the device. Almost 11 months (333 days) had elapsed since the date the application was submitted.

Untimely decisions can have important consequences

6.56 Both the Canadian public and health care professionals benefit from having timely access to safe and effective medical devices. While it is important that Health Canada take the necessary time to properly evaluate a device for safety and therapeutic effectiveness, delays in authorizing licences means Canadians’ access to the health benefit of these devices is delayed.

6.57 To understand the consequences of untimely decisions for industry, we surveyed 77 US manufacturers who, between April 2008 and March 2010, had been issued a licence for a new Class III or IV medical device by Health Canada. We sent the survey only to US manufacturers because they represent almost half of all licences issued by Health Canada for Class III and IV medical devices. Of the 77 companies surveyed, we received 52 responses (a response rate of 68 percent).

6.58 Of the 52 responses we received, 28 were from companies whose applications had not been approved within the service standard. Of these, 17 told us that the consequences for them of Health Canada’s delayed approval included delayed launches of their devices to the public and loss of sales. Although not specifically mentioned in the responses, delayed approvals also mean that Canadians’ access to the health benefit of these devices is delayed.

6.59 Untimely decisions to approve or deny a medical device licence may also have financial consequences for Health Canada. The User Fees Act states that, before a regulating authority fixes, increases, or expands the application of a user fee or increases its duration, it must establish standards against which the performance of the regulating authority can be measured. When new user fees come into effect, the regulator (in this case, Health Canada) may suffer financial penalties—fee reductions of up to 50 percent for users—if it fails to meet service standards.

6.60 Recommendation. Health Canada should ensure that it meets service standards for the review of medical device applications so that Canadians and health care professionals have timely access to safe and effective devices.

The Department’s response. Agreed. Health Canada has received Parliamentary approval to increase user fees for medical devices. Once implemented, these fees will contribute to more stable funding for key regulatory services such as product reviews, post-market surveillance, and inspections. Increased revenues will be reinvested into specific activities for which the fees were collected. These revenues will allow Health Canada to meet its well-established and internationally recognized performance standards. The Department anticipates meeting the service standards associated with the Cost Recovery Proposal by April 2012.

Health Canada could benefit from increased international cooperation for its pre-market activities

6.61 According to the Cabinet Directive on Streamlining Regulations, departments and agencies are to take advantage of opportunities for cooperation, either bilaterally or multilaterally. Our 2004 Report included a recommendation, accepted by Health Canada, that the Department consider engaging in activities that would allow it to benefit from international regulatory cooperation for its pre-market activities. For this audit, we examined departmental documentation related to international activities. We also interviewed key officials at Health Canada.

6.62 Health Canada’s 2007 Blueprint for Renewal II commits the Department to enhanced international cooperation by focusing resources on working within existing agreements to improve regulatory performance. This includes activities that would support Health Canada’s decision making, for example, the sharing of real-time information on risk assessments and product reviews.

6.63 Health Canada recognizes the benefits of making direct use of foreign reviews, such as

  • drawing on expertise, held by another jurisdiction, in a subject area;
  • better efficiency in the application review process; and
  • better resource management, including the reallocation of resources to priority or complex applications.

6.64 To assess the potential benefits of international cooperation, we asked the companies we surveyed to tell us whether the device for which they sought Health Canada’s approval had been previously approved by Europe, the United States, Australia, or Japan; and, if so, when that approval had been granted. We did not compare Health Canada’s review time to that of other jurisdictions. Of the 52 responses we received from US companies, 42 stated that the medical device for which they sought Health Canada’s approval had already been approved in one or more of the listed jurisdictions. Devices had been on the market in other jurisdictions for an average of two years before companies applied to Health Canada for approval.

6.65 Therefore, our survey results show that opportunities exist for Health Canada to make use of assessment work done in other jurisdictions in its own assessment of the safety and efficacy of medical devices with a view to increase the efficiency of its processes.

6.66 We found that, so far, Health Canada’s international strategies have mainly focused on the harmonization of medical devices regulations, an area the Department has been involved in for almost 20 years. The Department is a founding member of the Global Harmonization Task Force (GHTF), created in 1992 to respond to the growing need for international harmonization of the regulations. The GHTF is a voluntary group of regulatory officials and industry representatives from the European Union, the United States, Canada, Australia, and Japan and from non-governmental organizations.

6.67 Health Canada has had some success in cooperating with one jurisdiction. Since 2004, Health Canada has been working with the Australian government’s Therapeutic Goods Administration on the reciprocal recognition of quality system audits for medical device manufacturers. As of October 2010, both regulators are able to accept each other’s audit results. Because this initiative is so new, Health Canada has not yet received Australia’s recent audit results, so efficiencies have not yet been realized.

6.68 Although Health Canada has been able to cooperate with other jurisdictions in other areas of importance, we found that strategies aimed at making direct use of foreign reviews to enhance the efficiency of Health Canada’s medical device review process were only recently developed—six years after our 2004 recommendation related to this was accepted by the Department. In June 2010, the Department approved a Master Plan for the Use of Foreign Regulatory Information in the Regulatory Review of Health Products. This plan’s objectives are to enhance the efficiency of the Department’s review process and to improve Canadians’ timely access to devices that are safe and of high quality.

6.69 As of October 2010, the Department had developed guidance on the extent to which foreign reviews can be used. It also developed an approach to enhance participation on foreign regulatory scientific committees. Health Canada officials told us that a pilot project on the use of foreign reviews should be implemented in the 2011–12 fiscal year.

6.70 Health Canada has recognized that there are challenges in realizing the potential of international cooperation, and we concur. Such challenges include

  • the availability and scientific quality of foreign review reports,
  • foreign regulatory authorities’ legal frameworks enabling the sharing of complete reviews,
  • the lack of legal authority in Canada to compel industry to provide foreign reviews when submitting an application, and
  • maintaining the integrity of Health Canada’s scientific capacity while making more systematic use of foreign reviews.

Although these are significant challenges, Health Canada recognizes that there are advantages to increasing the level of international regulatory cooperation.

6.71 Because initiatives that could improve the efficiency of Health Canada’s review process are recent and have not yet had a positive impact on regulatory performance, we conclude that Health Canada has made insufficient progress in its efforts to work cooperatively with international jurisdictions to leverage resources, information, and knowledge related to pre-market assessments of medical devices (Exhibit 6.7). Health Canada is not making direct use of foreign reviews that could lead to program efficiencies.

Exhibit 6.7—Progress in addressing our recommendations for pre-market activities

Recommendation Progress
Health Canada should ensure that Canadians have timely access to all available safe and effective devices. More specifically, it should ensure that all devices are approved within the performance targets and should consider engaging in activities that would allow it to benefit from international regulatory co-operation.

(Recommendation 2.75 of the 2004 March Report of the Auditor General of Canada, Chapter 2, Health Canada—Regulation of Medical Devices)

Unsatisfactory
Satisfactory—Progress is satisfactory, given the significance and complexity of the issue, and the time that has elapsed since the recommendation was made.

Unsatisfactory—Progress is unsatisfactory, given the significance and complexity of the issue, and the time that has elapsed since the recommendation was made.

6.72 Recommendation. Health Canada should implement the Master Plan for the Use of Foreign Regulatory Information, which it developed in 2010, for international cooperation at the pre-market stage, with a view to improving regulatory performance by making use of resources, information, and knowledge from other jurisdictions.

The Department’s response. Agreed. Health Canada has begun implementing a three-year plan to make more efficient, consistent, and systematic use of international regulatory information for pre-market assessments and expects to have the plan fully operational by March 2013. The Department will continue collaborating with international counterparts to allow timely and complete access to information from other jurisdictions.

Managing risks from devices available in Canada

Health Canada has significantly expanded its post-market activities

6.73 Post-market activities are conducted once a device has come onto the Canadian market. They focus on product safety and effectiveness, and regulatory compliance. We examined the following post-market activities:

  • inspections of establishments,
  • the review of incident reports,
  • signal assessment and surveillance, and
  • risk communication.

6.74 We noted in our 2004 audit that health and safety risks at the post-market stage needed to be better managed. Health Canada agreed to review its (then) current level of post-market activities and to develop an action plan to address our findings by spring 2005.

6.75 To determine whether the Department adequately managed the risks related to medical devices available on the Canadian market, we examined the steps taken by the Department to allocate resources to devices presenting the greatest risk. We reviewed management reports related to program performance for the period under audit and we interviewed program officials. As mentioned in paragraph 6.27, we did not audit the financial information provided by Health Canada.

6.76 We found that the Department has significantly increased the level of funding for the direct costs of its post-market activities since 2004. In our 2004 report, we observed that Health Canada allocated close to $3 million to its post-market activities, including revenues from user fees. In the 2009–10 fiscal year, the Department allocated $11.8 million to its post-market activities, including user fees, which represents a 293 percent increase.

6.77 In 2004, the Department established a national inspection program to assess the industry’s compliance with the Food and Drugs Act and the Medical Devices Regulations. Health Canada stated that the number of establishments it inspected annually has steadily increased since the introduction of the program to reach 226 inspections in the 2009–10 fiscal year, or 14 percent of the licensed establishments located in Canada.

6.78 We noted that the number of reports on device-related incidents received from manufacturers, health care professionals, or the public has increased since our last audit. In 2004, we reported that Health Canada received 1,000 incident reports in the 2001–02 fiscal year. The Department has stated that the number rose to 4,867 in the 2009–10 fiscal year, an increase of 387 percent. In 2009, the Department established, on a pilot basis, a network involving 10 health care facilities across Canada to further improve the number and quality of incident reports collected. As part of this pilot, Health Canada obtains information on incidents from each of the participating facilities. During the first year of the pilot, these sites prepared 161 incident reports.

6.79 The Department has also increased its capacity to carry out surveillance activities and signal assessments (paragraph 6.33). In 2004, we reported that Health Canada had no proactive system for identifying patterns in incident reports or complaints that could signal a serious safety concern. Health Canada has since developed its capacity to proactively identify safety risks and take steps to address them. In the 2009–10 fiscal year, Health Canada told us that it detected 49 signals requiring additional analysis and did an in-depth assessment of 17.

Health Canada identifies risks for key post-market activities but does not know if they are adequately mitigated

6.80 The Health Products and Food Branch mandate includes “minimizing health risk factors to Canadians while maximizing the safety provided by the regulatory system for health products and food.” We examined whether Health Canada allocates its resources to medical devices that present the greatest risk to the health and safety of Canadians.

6.81 One of the key strategic actions identified in the Health Products and Food Branch Strategic Plan 2007–2012 is to strengthen post-market activities, which includes surveillance and monitoring of medical devices’ safety and therapeutic effectiveness. In addition, two objectives of Health Canada’s Blueprint for Renewal II are to ensure that regulatory scrutiny is consistent with the risks posed by a product and to develop a stronger post-market surveillance system.

6.82 Inspection of establishments. We reviewed Health Canada’s inspection strategy, which has been in force since 2003, and the annual inspection plans for the 2008–09 and 2009–10 fiscal years, as well as guidelines for carrying out inspections and management reports on performance. We also interviewed program officials.

6.83 According to Health Canada, there were 1,624 companies in Canada subject to inspection in the 2009–10 fiscal year. Because the Medical Devices Regulations place significant responsibility for protecting the health and safety of Canadians on the industry itself, it is particularly important that Health Canada assess its activities. Since it is not feasible for Health Canada to inspect every establishment each year, the Department has adopted a risk-based approach for this activity.

6.84 Annual inspection plans identify the establishments that pose the greatest risk of non-compliance with the Food and Drugs Act and Medical Devices Regulations. For 2009–10, these are

  • Class I manufacturers;
  • Class III and IV importers;
  • manufacturers of house brands (for example, store brand toothbrushes); and
  • establishments that have had an establishment licence for more than five years without an inspection.

Because manufacturers of Class II, III, and IV devices are subject to quality systems audit, they have been excluded from the risk-based inspection plans. However, Health Canada can still inspect these manufacturers when warranted.

6.85 Once the highest-risk establishments have been identified through the risk-based inspection plan, it is up to Health Canada’s regional offices to select the establishments and carry out the actual inspections. Health Canada prepares quarterly reports that present results achieved through inspections. However, the Department does not compile information from regional offices on the number of establishments inspected by risk criteria outlined in the inspection plan. This means that Health Canada does not know if the risks identified in the yearly inspection plan are being adequately mitigated and whether resources are being allocated to devices that present the greatest risk.

6.86 We found that the 2009–10 risk-based inspection plan did not consider the 523 licensed establishments identified by Health Canada as being located outside of Canada when it determined which establishments posed the greatest risk. Establishments located outside of Canada represent 24 percent of the 2,147 licence holders. This means that Health Canada has no information on the risks posed by these establishments. Indeed, inspection activities have always excluded companies located outside of Canada. The strategy, developed in 2003, advises inspectors to contact companies located outside of Canada to ask for and review information and records and to assess compliance with the regulations. To date, this has not been done. Health Canada has recently stated that it will develop a pilot project in the 2010–11 fiscal year to inspect foreign establishments.

6.87 Recommendation. Health Canada should assess the risks posed by foreign establishments and consider the results of this assessment when it develops the annual risk-based inspection plan and carries out the inspections to ensure that the risks are adequately addressed.

The Department’s response. Agreed. Health Canada identified this area as a priority in its 2010–2011 inspection operational plan and has already begun preliminary work in this area. The Department expects to conduct a risk assessment of foreign establishment licence holders by the end of 2011–12. Any further activities may require regulatory amendments and will depend on both the results of the above risk assessments and an analysis of existing legislation.

6.88 Incident reports. Health Canada developed criteria to assess incidents, which include the

  • likelihood of similar incidents;
  • population at risk;
  • benefits from the device;
  • magnitude of public and professional concern;
  • user qualifications (professional, trained user versus unqualified, untrained user);
  • potential effectiveness of regulatory action; and
  • user awareness of the problem.

6.89 However, we found that Health Canada does not assess whether incident reports on specific devices have been reviewed according to the risks identified for that device or that incident reports are reviewed in a timely manner. Without this information, it is difficult for Health Canada to know if the risks identified are being adequately mitigated and whether resources are being allocated to devices that present the greatest risk.

6.90 Recommendation. Health Canada should regularly assess whether resources have been allocated to the identified risks for inspections and the review of incident reports and whether these risks have been adequately mitigated.

The Department’s response. Agreed. Health Canada will continue to assess whether resources have been allocated to identify risks by determining an appropriate risk-based inspection cycle and establishing appropriate baselines as described in the Department’s response to Recommendation 6.39. In addition, the Department will evaluate incident reporting through the Sentinel system and establish performance standards consistent with other product lines by the 2011–12 fiscal year. Data from medical device incident reports, other post-market activities, and associated performance measures will be used to identify high-risk areas requiring risk mitigation activities. The Department will also endeavour to determine, to the extent possible, whether the identified risks have been mitigated.

6.91 Signal assessment and surveillance. We found that Health Canada has a process in place to assess risks for the signals it detects, based on established criteria. These criteria include death, life threatening event, hospitalization (required or prolonged), disability, or incapacity caused by or related to the use of a medical device. Resources are then allocated to the higher risk signals.

6.92 Risk communication. In 2004, we reported that the Department had never developed a communications plan or communications strategy to inform the public, industry, and health care professionals about risks associated with the use of certain medical devices on the market. We found that, since our 2004 audit, Health Canada has developed a guide for risk communication activities involving medical devices. The guide describes the various risk communication tools that the Department and industry can employ. It also outlines what type of communication tool to use depending on the urgency of the situation and the targeted audience. Health Canada stated that when a risk communication is needed, it is considered a high priority and takes precedence over other tasks. This allows the Department to allocate its resources to areas of greatest risk within the Medical Devices Program.

6.93 However, we also found that Health Canada has not assessed whether its risk communications for medical devices effectively reach their target audiences and do so in a timely manner. Without such assessments, it is difficult for Health Canada to determine if its risk communication activities for medical devices are timely or if they are reaching target audiences.

6.94 Recommendation. Health Canada should assess whether its communications to inform the public, industry, and health care professionals about risks associated with medical devices on the market are effectively reaching their target audiences and doing so in a timely manner.

The Department’s response. Agreed. Health Canada will undertake a systematic evaluation of the effectiveness of its risk communications for all product lines, including medical devices. The plan will identify current gaps and challenges with risk communication evaluation and will highlight short-term, medium-term, and long-term activities aimed at systematic evaluation of Health Canada’s risk communication tools. This plan will be initiated in the 2011–12 fiscal year with an anticipated completion date of the 2013–14 fiscal year.

Health Canada is working cooperatively with international jurisdictions on post-market activities but needs to determine if further actions are necessary

6.95 Health Canada has stated that it intends to pursue opportunities to work cooperatively with international jurisdictions. We examined documents related to international cooperation to support Health Canada’s post-market activities for medical devices. We also interviewed program officials at Health Canada.

6.96 We found that Health Canada is working with international jurisdictions and has updated a guidance document on incident reporting. This update is based on the work that the Department is doing with the Global Harmonization Task Force. In addition, the Department indicated that it makes use of foreign incident data to inform signal assessments and surveillance activities. It has also developed a post-market surveillance strategy called Planning for Our Future: Federal Regulatory Post-Market Surveillance Strategy 2007–2012. This strategy states that the Department would like to increase its capacity for systematically reviewing foreign incident reports. However, the strategy does not describe concrete actions that it needs to take to do so, with accompanying timelines and resources. Furthermore, the Department has not determined whether further actions are necessary for other key post-market activities such as inspections, signal assessments, and risk communications.

6.97 We conclude that Health Canada is working cooperatively with international jurisdictions on post-market activities by leveraging resources, information, and knowledge on incident reports, but it needs to determine if further actions are necessary.

6.98 Recommendation. Health Canada should determine whether it needs to take additional steps to increase international cooperation for its post-market activities. If so, the Department should identify concrete actions to be taken, along with timelines and needed resources.

The Department’s response. Agreed. Over the next three years, Health Canada will identify gaps in international cooperation for post-market activities and the steps needed to increase international collaboration for post-market activities such as inspections, signal assessments, and communications. A three-year implementation work plan (2010–2013) will be developed.

6.99 In summary. Overall, we found that Health Canada has made satisfactory progress in implementing our past recommendation on post-market activities. The Department has established a national inspection program and has increased its capacity to analyze post-market surveillance information and incident reports (Exhibit 6.8). Health Canada allocates its resources to medical devices that pose the greatest risk for signal assessment and surveillance. However, the Department has yet to determine whether the risks associated with medical devices available on the Canadian market (that establishment inspections and the review of incident reports are designed to address) have been adequately mitigated, and whether its risk communications reach the target audiences and do so in a timely manner. Therefore, Health Canada is not adequately managing the risks related to medical devices available on the Canadian market for these three post-market activities.

Exhibit 6.8—Progress in addressing our recommendations on post-market activities

Recommendation Progress
Health Canada should ensure that it manages the risks and benefits related to medical devices after they are available for sale. More specifically, it should
  • engage in active inspection of industry operations at the post-market phase to verify compliance with the Regulations;
  • improve the collection, analysis, and interpretation of post-market surveillance information by increasing the number and quality of adverse events reports collected and by improving its analytical and interpretive capability; and
  • improve its approach to communication of safety concerns so that those who need to know are informed in a timely manner.

(See recommendation 2.100 of the 2004 March Report of the Auditor General of Canada, Chapter 2, Health Canada—Regulation of Medical Devices)

Satisfactory
Satisfactory—Progress is satisfactory, given the significance and complexity of the issue, and the time that has elapsed since the recommendation was made.

Unsatisfactory—Progress is unsatisfactory, given the significance and complexity of the issue, and the time that has elapsed since the recommendation was made.

Conclusion

6.100 Overall, we concluded that Health Canada has not made satisfactory progress in acting on commitments it made in response to recommendations from our 2004 and 2006 reports. While overall program funding has increased and program capacity has been enhanced, primarily at the post-market stage, the Department is not fully meeting its obligations in relation to medical devices.

6.101 Decisions on applications for medical device licences are not delivered in a consistently timely way. As a result, the service standards agreed to between the Department and industry are often not met. This delays access to these devices by Canadians and health care professionals.

6.102 Health Canada has significantly expanded its post-market activities by, for example, establishing a national inspection program, and has identified risks associated with medical devices already available on the Canadian market. It has yet to determine whether the risks that the establishment inspections and the review of incident reports are designed to address have been adequately mitigated, and whether its risk communications reach the target audiences and do so in a timely manner. Therefore, Health Canada is not adequately managing the risks related to medical devices available on the Canadian market for these three post-market activities.

6.103 Greater cooperation with foreign regulatory bodies has the potential to improve the Medical Devices Program’s regulatory performance. The Department’s work to date on the international front has not taken advantage of foreign resources, information, and knowledge at the pre-market stage.

About the Audit

All of the audit work in this chapter was conducted in accordance with the standards for assurance engagements set by The Canadian Institute of Chartered Accountants. While the Office adopts these standards as the minimum requirement for our audits, we also draw upon the standards and practices of other disciplines.

Objectives

The overall audit objective was to determine whether Health Canada has made satisfactory progress in implementing selected recommendations from previous reports from the Auditor General of Canada about adequately managing the Medical Devices Program.

The audit sub-objectives were to determine whether the Department

  • makes timely decisions about allowing medical devices to be sold in Canada,
  • adequately manages the risks related to medical devices available on the Canadian market, and
  • meets its obligations for medical devices.

Scope and approach

Our audit focused on the three directorates involved in the delivery of the Medical Devices Program and examined whether selected previous recommendations associated with activities undertaken at the pre-market and post-market stages and relating to program management have been implemented.

At the pre-market stage, we examined the timeliness of reviews of medical device applications, and the steps taken to increase program efficiency through international regulatory cooperation with key regulatory agencies in such countries as the United States and Australia. As well, we randomly sampled 100 market authorizations from 602 Class III and IV applications from US manufacturers. We did this to cover the period between April 2008 and March 2010, using the provision that the sample include no more than one submission per applicant. Seventy-seven of the sampled authorizations had valid applicant contact information and the corresponding applicants were surveyed.

At the post-market stage, we examined the steps taken by the Department to allocate resources to devices presenting the greatest risk and to increase program efficiency through international regulatory cooperation.

Finally, we reviewed departmental efforts to

  • determine required levels of activity, performance, and funding necessary to meet its obligations;
  • monitor program performance against such requirements; and
  • report on and address performance and funding gaps, as appropriate.

We examined the funding allocated to the Medical Devices Program for the 2008–09 and 2009–10 fiscal years. Because the Department tracks the funding by activity, and not by program, we did not audit the financial information provided by Health Canada. We reviewed the information for consistency with information presented in our 2004 and 2006 reports. We also interviewed key officials and we ensured the reasonableness of the financial information provided by Health Canada.

We collected evidence through interviews with key Health Canada officials involved with the program at headquarters and in several regional offices. We met with representatives from the medical devices industry and the health care field. We reviewed documentation, including regulations, operational plans, performance reports, and program reviews. We also surveyed companies to which Health Canada had issued a licence for a new medical device in the 2008–09 and 2009–10 fiscal years.

We did not examine the monitoring of investigational testing (clinical trials), unlicensed devices, and the reuse of single-use devices. As well, we did not audit the process of resource allocation reported in our 2006 report.

Criteria

To determine whether the Department makes timely decisions about allowing medical devices to be sold in Canada, we used the following criteria:
Criteria Sources

Health Canada reviews licence applications for medical devices in a timely manner.

  • User Fees Act, section 4(2)(c)
  • Policy on Management of Applications for Medical Device Licences and Investigational Testing Authorizations, Health Canada, 2001

Health Canada works cooperatively with international jurisdictions by leveraging resources, information, and knowledge related to pre-market assessments of medical devices assessments.

  • Cabinet Directive on Streamlining Regulations, section 4.4, Treasury Board, 2007
  • Health Products and Food Branch 2007–12 Strategic Plan: Protecting and Promoting the Health and Safety of Canadians, Health Canada, 2007
  • Blueprint for Renewal II: Modernizing Canada’s Regulatory System for Health Products and Food, Health Canada, 2007
To determine whether the Department adequately manages the risks related to medical devices available on the Canadian market, we used the following criteria:
Criteria Sources

Health Canada allocates its resources to medical devices that present the greatest risk to the health and safety of Canadians.

  • Cabinet Directive on Streamlining Regulations, section 4.5, Treasury Board, 2007
  • Regulation of Medical Devices, Auditor General of Canada, 2004—Departmental response to recommendation 2.100
  • Medical Devices Program Strategic Plan 2007–12: Building for the Future, Health Canada, 2007
  • Health Products and Food Branch 2007–12 Strategic Plan: Protecting and Promoting the Health and Safety of Canadians, Health Canada, 2007
  • Blueprint for Renewal II: Modernizing Canada’s Regulatory System for Health Products and Food, Health Canada, 2007

Health Canada works cooperatively with international jurisdictions by leveraging resources, information, and knowledge on device-related incidents, inspections, signal assessments and surveillance, and risk communications.

  • Cabinet Directive on Streamlining Regulations, section 4.4, Treasury Board, 2007
  • Health Products and Food Branch 2007–12 Strategic Plan: Protecting and Promoting the Health and Safety of Canadians, Health Canada, 2007
  • Blueprint for Renewal II: Modernizing Canada’s Regulatory System for Health Products and Food, Health Canada, 2007
To determine whether the Department meets its obligations for medical devices, we used the following criteria:
Criteria Sources

Health Canada determines the required levels of activity, performance, and funding needed to meet its obligations.

Health Canada meets the required levels of activity, performance, and funding needed to fulfill regulatory and program responsibilities.

  • Cabinet Directive on Streamlining Regulations, section 4.6, Treasury Board, 2007

Health Canada identifies and addresses performance and funding gaps/shortfalls, as needed.

Management reviewed and accepted the suitability of the criteria used in the audit.

Period covered by the audit

The audit covered the period of 1 April 2008 to 31 March 2010. Audit work for this chapter was substantially completed on 29 October 2010.

Audit team

Assistant Auditor General: Neil Maxwell
Principal: Louise Dubé

Sébastien Bureau
Daphné Lamontagne
Juliet Woodfield

For information, please contact Communications at 613-995-3708 or 1-888-761-5953 (toll-free).

Appendix—List of recommendations

The following is a list of recommendations found in Chapter 6. The number in front of the recommendation indicates the paragraph where it appears in the chapter. The numbers in parentheses indicate the paragraphs where the topic is discussed.

Recommendation Response
Funding for the Medical Devices Program

6.39 Health Canada should complete program baselines for post-market activities by defining the level of activities necessary to meet its obligation of protecting the health and safety of Canadians. It should also identify performance targets for these activities and the resources it needs to do this work. (6.33–6.38)

Agreed. Health Canada is committed to completing the establishment of program baselines. In May 2010, the Department began evaluating the international landscape of medical device inspections as a first step toward determining an appropriate risk-based inspection cycle. As a result, the Department expects to establish and implement a more risk-based inspection cycle in the 2012–13 fiscal year.

In an effort to develop performance measures and baselines, Health Canada began reviewing the process of compliance verification activities in October 2010. The Department expects to establish appropriate baselines by the 2012–13 fiscal year.

The Department has already begun developing performance standards and targets for its post-market surveillance review-related activities and risk communications activities in 2009 and expects full implementation by the 2011–12 fiscal year. A plan to enhance the effectiveness of risk communications is being developed for implementation during the 2011–12 fiscal year.

Approving medical devices for sale in Canada

6.60 Health Canada should ensure that it meets service standards for the review of medical device applications so that Canadians and health care professionals have timely access to safe and effective devices. (6.48–6.59)

Agreed. Health Canada has received Parliamentary approval to increase user fees for medical devices. Once implemented, these fees will contribute to more stable funding for key regulatory services such as product reviews, post-market surveillance, and inspections. Increased revenues will be reinvested into specific activities for which the fees were collected. These revenues will allow Health Canada to meet its well-established and internationally recognized performance standards. The Department anticipates meeting the service standards associated with the Cost Recovery Proposal by April 2012.

6.72 Health Canada should implement the Master Plan for the Use of Foreign Regulatory Information, which it developed in 2010, for international cooperation at the pre-market stage, with a view to improving regulatory performance by making use of resources, information, and knowledge from other jurisdictions. (6.61–6.71)

Agreed. Health Canada has begun implementing a three-year plan to make more efficient, consistent, and systematic use of international regulatory information for pre-market assessments and expects to have the plan fully operational by March 2013. The Department will continue collaborating with international counterparts to allow timely and complete access to information from other jurisdictions.

Managing risks from devices available in Canada

6.87 Health Canada should assess the risks posed by foreign establishments and consider the results of this assessment when it develops the annual risk-based inspection plan and carries out the inspections to ensure that the risks are adequately addressed. (6.82–6.86)

Agreed. Health Canada identified this area as a priority in its 2010–2011 inspection operational plan and has already begun preliminary work in this area. The Department expects to conduct a risk assessment of foreign establishment licence holders by the end of 2011–12. Any further activities may require regulatory amendments and will depend on both the results of the above risk assessments and an analysis of existing legislation.

6.90 Health Canada should regularly assess whether resources have been allocated to the identified risks for inspections and the review of incident reports and whether these risks have been adequately mitigated. (6.88–6.89)

Agreed. Health Canada will continue to assess whether resources have been allocated to identify risks by determining an appropriate risk-based inspection cycle and establishing appropriate baselines as described in the Department’s response to Recommendation 6.39. In addition, the Department will evaluate incident reporting through the Sentinel system and establish performance standards consistent with other product lines by the 2011–12 fiscal year. Data from medical device incident reports, other post-market activities, and associated performance measures will be used to identify high-risk areas requiring risk mitigation activities. The Department will also endeavour to determine, to the extent possible, whether the identified risks have been mitigated.

6.94 Health Canada should assess whether its communications to inform the public, industry, and health care professionals about risks associated with medical devices on the market are effectively reaching their target audiences and doing so in a timely manner. (6.92–6.93)

Agreed. Health Canada will undertake a systematic evaluation of the effectiveness of its risk communications for all product lines, including medical devices. The plan will identify current gaps and challenges with risk communication evaluation and will highlight short-term, medium-term, and long-term activities aimed at systematic evaluation of Health Canada’s risk communication tools. This plan will be initiated in the 2011–12 fiscal year with an anticipated completion date of the 2013–14 fiscal year.

6.98 Health Canada should determine whether it needs to take additional steps to increase international cooperation for its post-market activities. If so, the Department should identify concrete actions to be taken, along with timelines and needed resources. (6.95–6.97)

Agreed. Over the next three years, Health Canada will identify gaps in international cooperation for post-market activities and the steps needed to increase international collaboration for post-market activities such as inspections, signal assessments, and communications. A three-year implementation work plan (2010–2013) will be developed.

 


Definitions:

Direct costs—Costs of the Medical Devices Program that are directly related to the service activity, for example, the cost of an evaluator to review an application. (Return)

Full costs—The total cost of all resources used or consumed in delivering a program, including direct costs (such as salaries and employee benefit plans) and indirect costs (such as office space, information technology services, and human resource services). (Return)

Quality system audit—Audit of quality control and quality assurance systems put in place by a manufacturer to prevent and control problems in the design and manufacturing process. (Return)

 

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