Drug Approval Process

How Drugs are Approved and Reimbursed in Canada

This document provides an overview of how drugs are approved and reimbursed for patients in Canada.

1. Drug Approval

For a drug to be prescribed by physicians and used by patients in Canada, it first needs to be reviewed and approved by Health Canada, the federal regulatory agency which is responsible for determining the efficacy, safety and quality of a drug.
The process begins when the drug manufacturer submits a New Drug Submission (NDS) to Health Canada, which includes the results of the preclinical and clinical studies, production of the drug, packaging and labelling, therapeutic claims and side effects.
If Health Canada accepts the NDS, it then conducts a scientific review of the drug, often consulting with advisory committees or experts.
- A Standard Review takes approximately one year (12 months)
- Drugs to treat serious, life-threatening or severely debilitating diseases may be eligible for a faster review – called a Priority Review – which takes approximately 180 days (six months)
If the drug is approved, a Drug Identification Number (DIN) and a Notice of Compliance (NOC) for the product are issued. This means the drug is now approved for use in Canada and physicians can begin prescribing it.
If the drug is not approved, the drug’s manufacturer has the option of providing additional information, re-submitting the application at a later date with additional supporting data, or asking Health Canada to reconsider its decision.

IMPORTANT: Health Canada’s approval of a drug does not automatically mean that the drug will be accessible to patients throughout public drug plans (example: O.H.I.P in Ontario) or private drug plans. To learn more, please see the section below.

If the drug is not approved, the drug’s manufacturer has the option of providing additional information, re-submitting the application at a later date with additional supporting data, or asking Health Canada to reconsider its decision.

2. DRUG REIMBURSEMENT

In Canada, drugs are made available to eligible patients through a combination of private and public drug plans.
- Private drug plans are arranged through an individual employee’s workplace benefits plan.
- Public drug plans include provincial and territorial drug plans and are funded by their respective governments.
Once Health Canada has approved a drug, a Reimbursement Review is administered by a pan Canadian agency called Canada’s Drug Agency (CDA)(formerly the Canadian Agency for Drugs and Technologies in Health, or CADTH). In Quebec, this process is managed by the Institut national d’excellence en santé et en services sociaux (INESSS).
The CDA and INESSS each conduct an evaluation of the clinical and economic evidence for the drug, taking into account patient and clinician input, resulting in recommendations and advice which is used by federal, provincial, and territorial drug plans to determine whether the drug costs will be covered through public programs.
- Patient input and clinician input are key parts of the Reimbursement Review process. Patient groups are invited to share their experiences, perspectives and expectations for the drug under review and clinicians have the opportunity to comment on the benefits of the therapy from a clinical perspective.
- The CDA’s Patient and Community Engagement Team is available to answer questions.
The CDA has a target timeline of approximately six months. However, there are multiple variables that can affect the process and extend it upwards of one year or more.
At the conclusion of the review, one of the following recommendations is made:
- That the drug be reimbursed;
- That the drug be reimbursed with clinical criteria and/or conditions; or
- That the drug not be reimbursed
Final recommendations following CDA’s review are published on: www.cda-amc.ca
In Quebec, INESSS issues its recommendation in a Notice to the Minister, within a target timeline of approximately six months.
The Minister of Health and Social Services is responsible for deciding whether or not to make a listing available in Quebec. If a drug is added to the province’s drug plan, it is published on the Régie de l’assurance maladie du Québec’s list of medications.

IMPORTANT: While these recommendations aren’t legally binding, they are very influential in determining which drugs are covered by public drug plans, and/or specific criteria that a patient must meet in order to be eligible for drug reimbursement through a public drug plan.

Once the CDA Review is complete, the federal, provincial and territorial drug plans generally work together through the pan-Canadian Pharmaceutical Alliance (pCPA) to determine what public reimbursement could look like within each jurisdiction based on negotiation with the drug manufacturer.
Each jurisdiction independently reviews if and how the drug will be covered by its public drug plan. Once the review is complete, the jurisdiction’s health authority (e.g. Ministry of Health) will make the final decision about public drug plan coverage.
Federal, provincial and territorial drug plans choosing to cover the therapy in whole or in part will have a Product Listing Agreement (PLA) with the manufacturer.
pCPA negotiations and PLA finalization can take up to two years to complete, depending on the jurisdiction.
Private insurers may provide coverage based on Health Canada approval, without requiring pCPA agreements or CDA recommendations. Insurers often set their own pricing agreements with manufacturers.
- Increasingly, private health plans are referencing the CDA recommendation when making decisions about whether they will cover the drug.

IMPORTANT: After Health Canada approval, it can take approximately 2 years for a drug to become publicly funded.