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Canada plans to implement new pesticide fee schedules

The Canadian Pest Management Regulatory Agency (PMRA) has proposed a new pesticide registration fee schedule to reflect the “more complex and global” nature of the work involved in application review in March 2014.

A list of proposed fee changes can be found below:

• The basic application fee for label review would go from Can$262 (US$ 237) to Can$1,133 (US$ 483).

• The new fee for registering microbials and semiochemicals based on a new food-use active ingredient (AI) would be Can$7,236 (US$ 6,534), representing a cost recovery rate of less than 4%.

• Keep the annual regulatory charge for covering costs not associated with application review. It would be raised from Can$2,690 (US$ 2,429) to Can$3,600 (US$ 3,251).

• Charge for reviewing toxicology data for a new active ingredient (AI): Reduced from Can$98,248 (US$ 88,711) to Can$75,807 (US$ 68,448).

• A new fee of Can$ 21,617 (US$ 19,519) has been added for the generation of a compensable data list.

• The review of unassessed AIs with maximum residue limits would see a fee change from Can$ 8,448 (US$ 7,628) to Can$ 125,461 (US$ 113,283).

• The review of new uses for previously assessed AIs with maximum residue limits would see a fee change of Can$ 8,448 (US$ 7,628) to Can$ 15,838 (US$ 14,301).

In August 2014, PMRA commissioned a Cost Benefit Analysis (CBA) in order to estimate the impacts of the fees and charges proposed on pesticide registrants, manufacturers, distributors, and users. This exercise included a survey component to gauge the extent to which the proposed changes would affect the number of new pesticide applications received by PMRA, the number of product registrations maintained, as well as the degree to which costs would be passed on by manufacturers to the end users.

A total of 45 registrants representing a broad mix of enterprises (in terms of the number of employees, number of product registrations and types of products registered) were surveyed. 24 responses to the detailed survey were received. Those who responded hold 25% of current product registrations.

The overall anticipated effect of the regulatory proposal would be to transfer costs previously borne by taxpayers to industry. PMRA estimated in its previous consultation document that the proposed cost recovery regime would result in an annual shift of Can$ 5.5 million (US$4.8 million) in costs from taxpayers to registrants of pest control products. Can$4 million (US$3.5 million, 70%) was attributable to proposed increases in fees and Can$1.5 million (US$1.3 million, 30%) was attributable to the proposed increase in the annual regulatory charge.

Industry respondents expressed differing views on the extent to which increased regulatory costs would be passed through the supply chain to pesticide users. For the purpose of analysis, the Cost Benefit Analysis assumed that 50% of costs would be passed on to users. An analysis of the effects of the regulatory charge on pest control product prices suggests that an average price increase of 0.11% would result, based on the 50% pass-through estimate and an overall annual domestic pesticide market of Can$2.5 billion (US$2.2 billion). This price increase is small and is not expected to significantly affect pesticide sales.

Other findings of the survey include the following:

• Proposed fee increases are expected to have a small effect on future registrations of both technical grade active ingredients (reduction of no more than two to 6%) and end-use products (reduction of no more than 5%).

• The introduction of fees to register or amend biological pest control products may reduce applications by 30% (this estimate is driven largely by a response from one company).

• Extrapolating survey responses across all registered pest control products suggests that increases in the annual regulatory charge would lead to 150 currently registered products being discontinued or not renewed. Nearly all of these are expected to be dormant or low sales products.

A number of non-quantifiable benefits are also expected: notably improved equity by shifting costs from taxpayers to the direct beneficiaries of cost recoverable pesticide submission review activities; improved fairness of application fees and regulatory charges that better reflect actual costs; and economic benefits of mitigation measures to support low volume products and small businesses. Furthermore, additional benefits would be realized if the increased revenue is respendable by PMRA to address stakeholder priorities.

Through further discussions and consultation, the PMRA has reconsidered compensable data fee and proposed to reduce the fee to Can$2,162 (US$1,870) with a timeline of 365 days from the previously proposed Can$21,617 (US$18,701) and 120 day timeline. In addition, PMRA is committed to developing a generic on-line data base. This tool will ensure that greater information is shared with stakeholders. Upon its completion, the time required for the data compensation assessment will be less than it is currently. This will be considered in future re-assessments of the application fees.

Next, the PMRA will open public comment on this pre-proposal notice until January 27th 2015 and then tables the proposal in the House of Commons and the Senate. The PMRA expects they could implement the new fee schedules as early as April 2016.