Over the past nine years, Canada has seen a marked increase in governmental authority and intervention in the natural products industry, often characterized by what many perceive as anti-industry attitudes and a lack of transparency in public engagement processes.
One of the most significant developments has been the approach of Health Canada, the federal department responsible for public health, towards regulating Natural Health Products (NHPs—the Canadian term for dietary supplements).
Health Canada's current trajectory aims to align the regulation of NHPs with that of pharmaceuticals, a shift that has sparked considerable debate and concern within the industry.
Health Canada's regulatory actions
Health Canada has implemented and is compounding several initiatives that mirror the stringent regulations typically reserved for prescription drugs. For instance, new label regulations, originally intended to reduce medication errors, are now being applied to NHPs.
These regulations require changes in labeling practices that significantly affect the packaging and presentation of dietary supplements. Despite industry feedback, these measures have been enforced with minimal public consultation, raising concerns about the practicality and necessity of such stringent rules for NHPs.
Additionally, Health Canada has been granted new powers that allow it to impose regulations on health product manufacturers without needing to justify these actions based on actual health risks. This expansion of authority, introduced under the guise of "uncertainty" management, has been criticized for its potential to disrupt the industry without sufficient evidence of risk.
Vanessa's Law and legislative backlash
Another stark example of the Government's expanded regulatory power is Vanessa's Law, formally known as the Protecting Canadians from Unsafe Drugs Act. Initially intended for pharmaceutical drugs, this law introduces fines of up to $5 million per day for non-compliance, a drastic increase from the previous $5,000 per offense.
The law controversially slipped NHPs into its definition through an omnibus budget bill without prior consultation, bypassing the usual public and industry engagement channels. This opaque behavior has raised significant concerns within the NHP sector, as it underscores the government's willingness to apply pharmaceutical-level penalties to natural health products without adequate consultation or risk assessment.
In response to the backlash, a new Private Members' Bill has been introduced to undo the changes brought by Vanessa's Law. This bill is currently making its way through Parliament, highlighting the ongoing legislative efforts to rectify the situation and ensure that NHPs are not subjected to disproportionate penalties intended for pharmaceuticals.
Cost recovery and impact on small businesses
Another critical issue is Health Canada's new cost recovery model for NHPs, which has been informed by the pharmaceutical sector. This approach is expected to significantly increase costs for NHP manufacturers, disproportionately affecting small and medium-sized businesses that makeup 80-90% of the sector.
The model lacks analysis of its impact on these smaller players, potentially jeopardizing their viability.
Furthermore, American and foreign companies exporting legally to Canada face additional challenges; they are required to pay multiple fees if their products are listed under various site licenses, creating a discriminatory cost burden.
This model not only raises costs but also undermines fair competition by placing an undue financial strain on businesses that are essential to the diversity and accessibility of natural health products.
Implications for the industry
A recurring issue within the Canadian regulatory framework is the lack of transparency in the consultation processes.
The current regulatory environment in Canada poses significant challenges for the NHP or dietary supplement industry. The stringent and often opaque regulatory processes have led to uncertainty and confusion, particularly regarding compliance and enforcement. The lack of clear guidance and the absence of coordinated timelines for regulatory changes have left many in the industry struggling to adapt.
As Canada moves forward, it is crucial for the government to address these transparency issues and engage more openly with industry stakeholders. The natural health products sector, including dietary supplements, plays a vital role in public health and its regulation should be based on sound evidence and transparent processes that involve all relevant parties.
For American stakeholders and the broader international community, understanding these developments in Canada is essential.
The regulatory changes in Canada could have far-reaching implications for global trade and the availability of natural health products in the North American market. As the situation evolves, continued vigilance and engagement will be key to navigating the challenges ahead.
The Canadian Health Food Association (CHFA) is Canada’s largest trade association dedicated to natural, organic and wellness products. As a national not-for-profit association, our members include manufacturers, retailers, wholesalers, distributors, and importers committed to getting more healthy living products into the hands of more Canadians.
