Canada proposes to increase pesticide registration fee

Date:07-28-2016

The Canadian Pest Management Regulatory Agency (PMRA) of Health Canada proposes to carry out new Pesticides Fees Regulations, to replace the current fees regulation which remained unchanged since 1997 despite the increased costs of providing these services.

Update of existing fee schedules in the Regulations

Overall, the proposed Regulations would increase pesticide application fees to cover a higher share of Health Canada’s costs to review these applications. The proposed fees would be equivalent to approximately 30%, on average, of service delivery costs, with adjustments to several specific fees where necessary to ensure they do not exceed the corresponding fee of the U.S. EPA Office of Pesticide Programs, which is the U.S. government authority responsible for pesticide regulation. Requiring a higher private sector share would have resulted in a large number of specific application fees exceeding comparable U.S. EPA fees. Such a scenario could create a disincentive to registering new pesticides in Canada.

The proposed fees are listed in Schedules 1, 2 and 3 below. Details are also provided where proposed fees deviate from the 30% level of cost recovery; represent a new approach from the 1997 fees; require an explanation of rationale; or were changed as a result of stakeholder comments.

Fees for the issuance or amendment of a certificate of registration of a pesticide may be based on one or several of the components listed in Schedule 1.

Schedule 1 — Fees for applications to register, or to amend the registration of, a pesticide other than a semiochemical or microbial agent

Item	Component of Application	Proposed Fee (CAD)	Current Fee (CAD)	Average Cost to Health Canada (CAD)	Proposed Fee / Cost to Health Canada
1	Product chemistry — active ingredient	4,873	1,172	16,244	30%
2	Product chemistry — end-use product or manufacturing concentrate	2,713	1,172	9,042	30%
3a	Toxicology data accompanying an application to register a pesticide that consists of or that contains a new active ingredient	75,807	98,248	252,690	30%
3b	Toxicology data accompanying an application to register a pesticide — or to amend the registration of a pesticide — that contains a registered active ingredient	15,830	35,456	52,768	30%
3c	Toxicology data — acute studies only	2,954	4,274	9,847	30%
4a	Exposure data accompanying an application to register a pesticide that consists of or that contains a new active ingredient	17,498	24,384	58,325	30%
4b	Exposure data accompanying an application to register a pesticide — or to amend the registration of a pesticide — that contains a registered active ingredient, when a new risk assessment is necessary	5,758	24,384	19,192	30%
4c	Exposure data — other	5,214	9,742	17,380	30%
5	Metabolism data	28,943	6,034	96,475	30%
6	Residue data	15,838	8,448	52,794	30%
7a	Environmental fate data accompanying an application to register a pesticide that consists of or that contains a new active ingredient	42,685	26,953	142,284	30%
7b	Environmental fate data accompanying an application to register a pesticide — or to amend the registration of a pesticide — that contains a registered active ingredient, when a new risk assessment is necessary	23,637	26,953	78,790	30%
7c	Environmental fate data — other	11,546	6,738	38,488	30%
8a	Environmental toxicology data accompanying an application to register a pesticide that consists of or that contains a new active ingredient	37,277	14,882	124,257	30%
8b	Environmental toxicology data accompanying an application to register a pesticide — or to amend the registration of a pesticide — that contains a registered active ingredient, when a new risk assessment is necessary	23,690	14,882	78,966	30%
8c	Environmental toxicology data — other	2,465	3,720	8,216	30%
9	Value and effectiveness data for a pesticide¹	906	906	35,042	3%
10	Identification of compensable data²	2,162	—	6,486	33%
Explanatory Note: 1. Health Canada has recently changed processes for assessing value; costs for this new approach have not been quantified. Consequently, Health Canada proposes to maintain the existing fee at this time. Any future changes to this fee would be made following stakeholder consultation. 2. The compensable data assessment is a component of an application for a pesticide subject to the data protection provisions of the Pesticides Regulations. Health Canada has committed to developing a database of compensable data that applicants can consult when seeking to register generic pesticides. 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. Resultant savings will be considered in future re-assessments of the application fees.

Establishing fees for microbial agents and semiochemicals

When Health Canada’s current fees came into effect in 1997, the pesticidal use of microbial agents and semiochemicals (e.g. bacteria and insect pheromones) was considered to be a new and emerging technology. Since the scientific methodologies and data requirements remained under development, it was not possible to accurately determine the full costs to review applications to register products within this class. Therefore, these substances were exempt from application fees associated with scientific review; currently, applicants are only required to pay the basic administrative fee payable for all types of applications.

Since this time, Health Canada has gained considerable experience with reviewing these products. In developing proposed fees for this class of products, Health Canada reviewed applicable U.S. EPA fees, where applications to register these types of products normally receive the maximum fee reduction available. Given the U.S. EPA’s approach to fees for these products, and to facilitate the registration of products with lower risk profiles, the proposed Canadian fees for this class of product are equal to the minimum U.S. EPA fee.

Schedule 2 — Fees for applications in respect of a pesticide that is a semiochemical or microbial agent

Item	Type of Application	Proposed Fee (CAD)	Current Fee (CAD)	Average Cost to Health Canada (CAD)	Proposed Fee / Cost to Health Canada
Semiochemicals, other than straight-chain lepidopteran pheromones, and microbial agents
1	Registration of a new active ingredient — food use	7,236	262	197,844	3.6%
2	Registration of a new active ingredient — non-food use	4,341	262	213,783	2.0%
3	Amendment of registration — new risk assessment necessary — environmental fate data, environmental toxicity data or exposure data	2,894	262	176,897	1.6%
4	Amendment of registration — data required, label changes	1,447	262	107,983	1.3%
5	Amendment of registration — data required, other¹	1,158	262	79,369	1.5%
6	Amendment of registration — no data required	290	154	7,207	4.0%
Straight chain lepidopteran pheromones
7	Registration of a new active ingredient	579	262	39,239	1.5%
8	Amendment of registration	290	262	85,982	0.3%
Explanatory Notes: 1. Includes change in source of active ingredient or formulation.

Fees for other applications in respect of a pesticide

Health Canada prescribes fees for a number of review activities that may not result in the registration of a pesticide, or the amendment of an existing registration, or do not otherwise fit within the fee schemes of Schedule 1 or 2. These activities and their proposed fees are described in Schedule 3.

Schedule 3 — Fees for other applications in respect of a pesticide

Item	Type of Application	Proposed Fee (CAD)	Current Fee (CAD)	Average Cost to Health Canada (CAD)	Proposed Fee / Cost to Health Canada
1a	Research authorization — major crops, other than research authorizations set out in paragraphs (c) and (d)	5,080	150	16,932	30%
1b	Research authorization — minor use crops, other than research authorizations set out in paragraphs (c) and (d)¹	5,080	150	16,932	30%
1c	Research authorization — microbial agents, semiochemicals and any substance listed in subparagraph 1(d)(ii) of these Regulations²	1,217	150	16,932	7%
1d	Research authorization — greenhouse crops and non-agricultural uses³	1,217	150	16,932	7%
2	Research notification⁴	247	0	1,841	13%
3a	Registration of active ingredient to be used in pesticide manufactured only for export⁵	7,827	4,601	25,948	30%
3b	Amendment to registration of active ingredient used in pesticide manufactured only for export⁶	1,133	154	7,498	15%
4a	Specification of maximum residue limit for a previously unexamined pesticide⁷	125,461	8,448	259,520	48%
4b	Specification of maximum residue limit for an unregistered use of a previously examined pesticide⁸	15,838	8,448	58,113	27%
Explanatory Notes: 1. This fee would be required only in limited circumstances as the size of trials needed to support a minor use registration would normally fall under a research exemption or the research notification criteria. 2. In order to continue to support low-volume, niche products and non-conventional products, the proposed fee would be comparable to the U.S. EPA Pesticide Registration Improvement Extension Act of 2012 fee for experimental use permit for biopesticides (straight chain lepidopteran pheromones). 3. Research authorizations are not normally required for studies conducted to support minor use registrations as the studies are usually conducted on fewer than five hectares and would normally fall under the research exemption or research notification criteria established in the Pesticides Regulations (with the exception of operational/demonstration trials and research in greenhouses). The original proposed fee presented in the March 2014 consultation document was $5,080; however, research in these areas do not qualify for a fee exemption or for the research notifications fee. To not impede research on greenhouse crops, which is typically submitted by smaller companies, Health Canada proposes that the fee be aligned with fees charged for Item 1c of this schedule. 4. The original proposed fee presented in the March 2014 consultation document was $552. After consideration of stakeholder comments, Health Canada reduced the proposed fee to $247 to better align with the minimum fee related to the average level of effort required by Health Canada to process an application. 5. These fees are based on relevant component costs from Schedule 1 (Items 1, 4b, and 9) to better reflect the data requirements required to do the assessment. 6. The activities associated with this type of amendment are similar to the costs associated with processing an application; the fee is set at the same level (e.g. section 3 of the proposed Regulations). 7. The proposed fees for Maximum Residue Limits (MRLs) are based on resources required to conduct such reviews rather than on whether they are for domestic use or for imported food commodities, which is consistent with the goals of the World Trade Organization Sanitary and Phytosanitary Agreement. The proposed fees are significantly lower than the equivalent U.S. EPA fee for an import tolerance. It was recognized that the proposed fees should be reflective of the costs to Health Canada for evaluation services in respect of MRLs and at the same time be both affordable to industry and be reflective of the smaller Canadian market. Should a submission for a Canadian registration follow an existing import MRL, the fees for the Canadian registration would take into account the work already completed so as to not charge for components already assessed. Under the current cost recovery framework, MRLs for new active ingredients and previously registered active ingredients are charged a fee of $8,448; however, this does not reflect the amount of work that is actually required to review these applications. Consequently, the proposed fees have been raised to $125,461 for the specification of MRLs for a previously unassessed pesticide. 8. Fees related to MRLs have been divided to better reflect the higher level of work required for previously unassessed active ingredients. Fees are now proposed to be based on all relevant component costs from Schedule 1 (basic application fee, chemistry, metabolism, human acute and chronic toxicology, and residue data) to reflect more robust data required for the application — currently only the residue data fee is charged for a previously assessed active ingredient.

Basic application fee

An updated basic application fee of $1,133 is proposed and would apply to each application made under Schedule 1 and for pesticides listed in section 3 of the proposed Regulations. The current basic application fee is $262, and the average cost to Health Canada of processing an application is $3,777. Thus the proposed fee represents 30% of the cost to Health Canada.

Minimum fee

The minimum fee is for applications that are received through streamlined processes and do not require significant science review. This proposed minimum fee would be applicable to those applications not included in either Schedule 1, 2 or 3. The proposal would see the minimum fee increased to $247 from the current amount of $150 set in 1997. This amendment to the minimum fee is directly related to the average level of effort required by Health Canada to process an application that does not require significant science review. The average cost to Health Canada for processing these applications was $825. The $247 represents approximately 30% of the average costs.

Annual adjustment of application fees

The proposed Regulations would establish an annual adjustment to increase user fees associated with applications in relation to pesticides by 2%. The annual fee increase would be applied automatically on April 1 of each year rounded up to the nearest dollar.

Consistent with other policies already in place at Health Canada, the 2% annual fee adjustment is based on a five-year weighted average of public service wage adjustments and the Core Consumer Price Index (CPI) — Weighted Index.

Annual fee adjustments are consistent with other international jurisdictions, which make adjustments to their fees to reflect changing costs and workload. For example, the U.S. EPA pesticide application fees increase by 5% every second year.

The current lack of adjustment capability has not allowed fees to keep up with inflationary increases to Health Canada costs. Increasing fees in small increments on an annual basis would provide sustainable funding, operational predictability for both Government and industry, and lessen the impact of more substantial increases at a later time.

Annual charge

The annual charge applies to each registered product. Revenues from the annual charge help defray the costs of post-market regulatory activities essential to health and environmental protection, including the cyclical reevaluation of older pesticides and special reviews. These regulatory activities help ensure that registered products continue to meet evolving scientific requirements and are adequately regulated throughout their lifecycle. Under this proposal, the maximum annual charge would be increased from $2,690 to $3,600 and the minimum annual charge would be increased from $75 to $100. These proposed increases were calculated based on applying a cost of living increase to the current minimum and maximum annual charge, taking into account similar charges in other jurisdictions, the results of the costbenefit analysis and stakeholder input.

The United Kingdom and Australia apply annual charges in combination with annual levies based on a percentage of product sales for each registered pesticide. The U.S. EPA has the authority to charge each registrant a maintenance fee up to a maximum amount, which is updated every five years through its regulations. To accommodate small business, the U.S. EPA can adjust the maintenance fees based on company size.

The proposed annual charge applied to each registered product is the lesser of $3,600 or 4% of annual sales with a minimum of $100. The policy of providing incentives to register niche products with low sales has been in effect since the cost recovery regime was first established in 1997. This policy supports the availability of niche products of importance to Canadian users (e.g. the agriculture sector).

The annual adjustment of 2% would not apply to the annual charge, as this could result in the annual charge rapidly exceeding the average comparable charge applied by the U.S. EPA.

Visit Health Canada’s website to know more details.

http://www.gazette.gc.ca/rp-pr/p1/2016/2016-06-11/html/reg3-eng.php

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