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HESA Committee Report

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Mrs. Joy Smith
Chair, Standing Committee on Health
Sixth Floor, 131 Queen Street
House of Commons
Ottawa, ON
K1A 0A6

Dear Mrs. Smith:

Pursuant to Standing Order 109 of the House of Commons, I am pleased to respond on behalf of the Government of Canada to the Ninth Report of the Standing Committee on Health (HESA) entitled Drug Supply in Canada:  A Multi-Stakeholder Responsibility, tabled in the House of Commons on June 8, 2012.

I would like to thank the Committee for its work in studying Canada’s drug supply system in light of recent disruptions in the supply of critical medicines.  The Government of Canada is committed to playing a strong and collaborative role towards a stable and resilient drug supply system, and is supportive of the important and timely work of the Committee, its Report and recommendations.  Importantly, the Report and the recommendations recognize the distinct and collaborative roles and responsibilities of the various players involved in preventing and limiting the impact of drug supply disruptions on Canadians: manufacturers, provinces and territories, industry organizations, the federal government and others. 

The Government of Canada’s response to the Committee’s Report is presented in three sections.  The first section highlights the roles and responsibilities of the key parties and the importance of a collaborative approach to the Canadian drug supply.  The second section responds to recommendations aimed at multi-jurisdictional partners (1, 2, 4, 5 and 7), describes the leadership role of the Government of Canada in collaborating with the various stakeholders along the spectrum of the drug supply chain.  The third section responds to the recommendations targeted directly at the federal government (3 and 6), and highlights ongoing efforts to increase transparency and to clarify government policy during essential medicine shortages.

For ease of reference, the Committee’s recommendations are found in the Appendix to the letter.

A Multi-Stakeholder Responsibility

The Government of Canada recognizes the importance of a strong, stable and resilient drug supply system as a vital component of an effective health care system.  But this is a complex issue.  As the Committee has described in its Report, there are multiple players in the drug supply chain, all working to deliver products for patients.  The only way Canadians will benefit from the stable drug supply system they expect and deserve, is if all players, at all levels of government, as well as industry, do their parts, and take concrete steps towards long term solutions.

For our part, as pointed out in the Report, the Government of Canada’s primary role in the Canadian drug system is as the regulator of drugs and health products.  Before a drug can be sold in Canada, the manufacturer must establish a product’s safety, efficacy and quality as required by the Food and Drugs Actand Regulations.  The Canadian Agency for Drugs and Technologies in Health (CADTH), an independent, not-for-profit body funded by the federal, provincial and territorial governments (save Quebec), conducts reviews of the clinical and cost-effectiveness evidence for drugs, and provides formulary listing recommendations to all of Canada’s publicly-funded drug plans, except Quebec (which has its own process).

As the federal regulator, Health Canada has a number of tools available to assist companies and manufacturers to minimize the impact of a supply disruption, such as working with manufacturers so that alternate suppliers, changes in manufacturing processes, or changes in manufacturing locations can be reviewed on a priority basis.  It can also enable emergency access to alternatives when manufacturers and/or healthcare facilities cannot meet urgent medical supply needs.  To supplement the extraordinary needs of provinces and territories in times of critical emergency – such as a mass casualty event or a pandemic – the federal government also maintains a limited supply of select drugs in the Public Health Agency of Canada’s National Emergency Stockpile System (NESS).

In addition, the Government of Canada, through various programs, provides drug coverage for about one million Canadians who are members of eligible groups, including First Nations and Inuit, members of the military, Veterans, members of the Royal Canadian Mounted Police, eligible refugees, and inmates in federal penitentiaries.  The federal government also represents Canadian interests in international fora such as the World Health Organization (WHO) and the Organisation for Economic Co-operation and Development (OECD), as well as in partnership with international regulatory counterparts, to assess and prevent the global cause of drug supply disruptions.

The Provinces and Territories (P/Ts) have the primary responsibility for managing and delivering health care within their respective jurisdictions – including managing their respective drug plans.  For the supply of medically necessary drugs, the P/Ts negotiate contracts with bulk drug purchasing groups.  These groups, in turn, negotiate supply contracts with drug makers.  On behalf of P/Ts, the bulk drug purchasing groups determine who the supplier is based on a number of factors, including the price, conditions, and how many suppliers they need, and establish penalties or contingencies for non-delivery.

Industry is responsible for manufacturing and supplying safe, effective, high-quality drugs to the Canadian market. As such, they are responsible for understanding the health care needs for their products, for understanding the potential impacts of supply interruptions on their customers, as well as for managing inventories in a responsible way to meet those needs.  As made clear by witnesses before the Committee, industry also has a critical role in reporting potential or emerging shortages to help ensure that health professionals have the time and information they need to appropriately manage supply interruptions.  Industry should have supply management strategies in place so that individual companies consider the potential for shortages, and plan appropriately to prevent such shortages.

When supplies are interrupted, health professionals, pharmacies, hospitals and clinics can implement strategies to ensure the most efficient use of existing supplies, to identify alternative therapies if appropriate, and to minimize the impacts on patients.  They keep patients advised of the supply situation in each health care facility and community, and adjust treatment schedules and procedures if required.  If a shortage is significant and long in duration, alternative supplies may be sought from drug makers within Canada or in other countries. 

Patients who are directly impacted by drug shortages have important insights to share in understanding and mitigating drug shortages, and must be a part of any discussions.  The Government of Canada recognizes and applauds the critical role they play in holding all parties to account.  At all times, the health and safety of patients are of top priority.

Multi-Stakeholder Action (Recommendations 1, 2, 4, 5 and 7)

The Committee Report and recommendations highlight the importance of all players working collaboratively in order to help safeguard nation-wide drug supply.  While recognising its primary role as regulating drugs and health products, the federal government is committed to continue playing a strong collaborative role with the multiple jurisdictions and stakeholders in their efforts to anticipate, mitigate and manage shortages.

Targeting critical medicines and therapeutic alternatives, reporting obligations, generic drug pricing and contractual policies, recommendations 1, 2, 4 and 5 speak directly to continuing the federal government’s collaborative work with P/Ts that is already underway.  The Government of Canada is committed to working with stakeholders and will use existing and developing forums to explore these recommendations with P/T colleagues, and others such as CADTH, where needed.

In response to Recommendation 1, the Government of Canada agrees that regular communication and sharing of information amongst jurisdictions and stakeholders is required so that all parties are well informed and equipped to respond to drug supply issues.  As such, the Government of Canada, in consultation with P/Ts, will explore the possibility of CADTH establishing a list of critical medicines supplied by only one or two companies.  Real-world experience has demonstrated that given the variety of specialties and clinical differences across the country, consensus on such a list would be challenging to achieve.  Any such effort will require the coordinated effort of P/Ts, as well as input from health care professionals, hospitals and clinics to reflect the many specialties, practices and regional differences across Canadian health care delivery. 

As highlighted by Recommendation 2, identified therapeutic alternatives can play an important role in mitigating the impact of drug shortages.  That is why, throughout the most recent supply disruptions at Sandoz, Health Canada adopted internal practices to prioritize and expedite submissions of critical drugs made by alternative manufacturers, resulting in 27 submission approvals for alternative medication.  Submission reviews were prioritised based on input received from the P/Ts, as well as from health care professional associations regarding the importance of the drug product and the severity of the shortage of that product.  Health Canada addressed the most critical shortages first, and re-evaluated priorities regularly.  In addition, the Department's Special Access Program (SAP) authorized 250 requests for alternative supplies of these important drugs.  Prioritizing, expediting reviews and authorizing SAP requests for alternative supplies helps Canadians receive timely access to medically necessary drugs.  

Further, in 2011, I called on industry and health professional associations to not only provide public notification of anticipated or actual shortages, but also to share information on therapeutic alternatives in the event of a supply disruption.  This work continues as part of the mandate of the Canadian pharmaceutical industry-led Multi-Stakeholder Working Group, and I would like to reinforce the importance of their continued efforts.  Health Canada will work with P/Ts to explore the role of CADTH in supporting information sharing. 

Recommendation 4 highlighted the most significant and avoidable cause of drug shortages identified by the HESA Report: reliance on a single supplier, either for the purchase of bulk drugs, or for the supply of raw materials and active pharmaceutical ingredients (APIs).  This was made clear in the Sandoz situation.  Despite multiple manufacturers being authorized for sale in Canada by Health Canada, Sandoz was the sole supplier of many essential medications.  The federal government had learned this lesson following the 2009 H1N1 pandemic, and it has been reflected in subsequent pandemic planning.  I am pleased to say that the drug supply system is beginning to change: contractual arrangements are changing to discourage single source strategies and to require contingency plans in the event that orders cannot be fulfilled.  We will continue to encourage provincial and territorial efforts to make the drug supply more robust.  This is consistent with their role of negotiating contracts with group purchasers and drug manufacturers.  In addition, as Minister of Health, I have instructed that Health Canada apply the same approach examining contracting practices and sharing best practices with other responsible federal parties for their respective federal drug plans. 

With respect to Recommendation 5 regarding generic drug pricing and its effects on drug supply, the Government of Canada will bring this recommendation to the attention of P/T partners, and discuss P/Ts’ receptivity for this work. If support is required to undertake the analysis, several federal arms’ length organizations are well placed to provide it.  For example, the Health Council of Canada recently published a report on generic drug pricing and access in Canada, which provided many recommendations to policy makers on pricing approaches, tendering and contracting specific to generic drugs. Additionally, the Competition Bureau conducted a study on the generic drug industry sector.  The study’s findings on Canada’s comparatively high generic prices were an important impetus for current provincial drug policies. 

In Recommendation 7, the Committee has correctly recognized that the issue of supply disruptions is not unique to Canada.  The very nature of supply chains – a limited number of suppliers worldwide for a given ingredient, for example – means that this is a global challenge that will require international collaboration to address.  Our government continues to consult with its regulatory counterparts, including the U.S. Food and Drug Administration (US FDA) and the European Medicine Agency (EMA), to assess the situation in other countries and the actions being considered or taken.  In addition, the Government of Canada is represented by Health Canada on OECD’s Health Committee, and its Pharmaceutical Pricing and Innovation Expert Group.  Health Canada will continue to be engaged through this committee, as well as with the WHO, on emerging issues and initiatives.

Government of Canada Actions (Recommendations 3 and 6)

Recognizing that we all have a role to play, two of the seven Committee recommendations were directed solely at the federal government: Recommendation 3 proposed considering a regulatory change to require manufacturers to provide Health Canada advance notification of six months for planned discontinuances, rather than the current 30 day requirement; and Recommendation 6 proposed that the Public Health Agency of Canada (PHAC) develop a policy on the role of the National Emergency Stockpile System (NESS) during shortages of essential medicines.

With respect to Recommendation 3, the Government of Canada agrees with the call for increased openness and transparency on the part of industry through advanced notification.  Specifically, advance notification of planned discontinuances may better support the transition of products from one manufacturer to another, as well as enabling patients and their health care providers to take necessary measures.  That is why I strongly and clearly asked industry to establish a plan to minimize drug shortages and increase transparency for Canadians. The Canadian pharmaceutical industry responded to my repeated calls, forming the Multi-Stakeholder Working Group on Drug Shortages to voluntarily provide information to practitioners, patients and the public about drug shortages and therapeutic alternatives online at Since the launch of the site, industry stakeholders have been providing advance notification for a range of drug supply disruptions and I encourage them to continue to use this site to notify publicly of all shortages.  The Government of Canada will continue to carefully monitor industry’s ongoing voluntary efforts to help maintain a stable, resilient, and transparent drug supply system, while assessing all other options to provide the health care system with the information it needs in as timely a manner as possible. 

With respect to Recommendation 6, PHAC is currently reviewing its policy framework for NESS, inherent in which is its role in shortages of essential medicines. The NESS provides surge capacity to P/Ts to help them respond to emergency events.  NESS holdings include medical equipment and supplies, pandemic supplies, emergency social service supplies as well as pharmaceutical products, including chemical, biological and radio-nuclear medical countermeasures.  The NESS supports the federal government’s capacity to respond rapidly to a variety of emergencies, such as influenza pandemics, natural disasters and terrorism events.  The supplies of pharmaceutical products in the NESS are targeted for emergency response, and are not intended to address routine health system requirements. On a case-by-case basis, NESS pharmaceutical supplies may be made available in times of drug shortages to prevent serious harm or death.  The NESS’s capacity must remain focused on responding rapidly to the unforeseen disasters for which it is intended.  Although the Government of Canada did make its very limited supplies of drugs in the NESS available to provinces and territories during the recent Sandoz drug supply situation, no requests were received.


The Government of Canada thanks the Committee for their important work studying the Canadian drug supply system.  There are many players involved across this complex issue: each with its own responsibilities.  It is only through action by all the players, not just the federal government, but the drug manufacturers, distributors and whole sellers, bulk purchasers, provinces and territories, that we will build a stronger, more stable and resilient Canadian drug supply system.  I trust that this response demonstrates the Government of Canada’s commitment to learn from recent drug shortages, and do our part.  The Government of Canada recognizes the important work of all stakeholders and jurisdictions in this endeavor, and is committed to continue working closely with them to help maintain and improve the Canadian drug supply system. 




The Honourable Leona Aglukkaq, P.C., M.P.

Minister of Health



  1. The Minister of Health, in consultation with the provinces and territories (PTs), explore the possibility of the Canadian Agency for Drugs and Technologies in Health (CADTH) establishing a list of medicines supplied by only one or two companies and considered critical to medical care;

  2. The Minister of Health, in consultation with the provinces and territories, request CADTH provide clinical information on the use of therapeutic alternatives.

  3. The Minister of Health consider expanding the regulatory requirement for manufacturers to inform them within 30 days of discontinuing the sale of a product in Canada, to require that manufacturers provide advance notification of six months for planned discontinuances;

  4. Minister of Health work with PT counterparts to encourage Group Purchasing Organizations (GPOs), drug plan operators or other holders of contractual agreements with pharmaceutical companies to:

    • include obligations for drug companies to report disruptions on the drug shortages website, and
    • discourage single source strategies and include requirements that suppliers have contingency plans in the event that they can no longer fill orders.

  5. The Minister of Health encourage her PT counterparts to initiate an examination of policies within their jurisdictions which affect drug pricing, including restrictions on generic pricing, as well as tendering and contracting requirements, in order to the determine implications on drug supply.

  6. The Public Health Agency of Canada (PHAC) develop a policy on the role of the National Emergency Stockpile System (NESS) during shortages of essential medicines.

  7. The Minister of Health continue to cooperate with the World Health Organization and Organization for Economic Co-operation and Development (OECD) to address the issue of drug shortages in order that the global causes of this problem and potential solutions can be examined.