New federal regulations requiring the licensing of natural health products sold in Canada probably won’t result in higher prices to the consumer – but many companies are facing the fact they’ll have to shoulder the extra expense to comply with the regulations that came into effect at the start of the year.

“The reality of it is that we are in a hyper-competitive situation. So we’re just going to have to eat the cost,” says Farid Ibrahim, CEO of Kelowna-based Nutravite Herbals & Supplements.

Nutravite and other manufacturers, packagers, labellers and importers have two years to ensure that their facilities follow federally mandated “good
manufacturing practices” in order to obtain a site licence, spending the money to upgrade their facilities if
necessary.

Added to that is the cost of gathering the data to support their applications for a Natural Product Number (NPN) that will be required on the label of every natural product sold in Canada.

Jan Mansfield photos, Business Edge
Many natural health product companies accept the fact they’ll be forced to shoulder the extra expense of complying with new federal licensing regulations.

“The one (outcome) that we are trying to achieve with the regulations is that the consumer will be able to make an informed choice,” says Phil Waddington, director general of Health Canada’s natural health products
directorate (NHP), which formulated the regulations over several years and is in charge of licensing.

“The consumer will be able to choose and use natural health products with safety and confidence.”

Besides the NPN, product labels will have to state what the product is to be used for and what benefit the consumer can expect.

Waddington notes that in the United States, where the regulations for natural health products aren’t as stringent, the sales of those products have declined over the past five years. When claims are exaggerated and the products don’t do what the manufacturers say they will do, he says, consumers decide that natural products don’t work and stop buying them.

Companies will now have to attest that their products adhere to the new practices, and will be licensed over a period of six years. Products that already have a Drug Identification Number (DIN) – about 10,000 of the approximately 50,000 natural products on the market in Canada – will have up to six years to apply.

Enerex’s Barrie Carlsen says new regulations could hinder product research.

The cost of applying for a product licence depends on the complexity of each product and the amount of
available documented research on its safe dosage range and efficacy for certain conditions.

In the case of newer products, where that data is not readily available, the cost could be substantial.

According to Barrie Carlsen of Burnaby-based Enerex Botanicals Ltd., it could hinder the research and development of new natural health products in Canada.

“It is going to take away innovation in dietary supplements,” says Carlsen, whose experience in the industry dates back 25 years to when he founded Quest Vitamin Supplies Ltd., which was subsequently sold to German pharmaceutical giant Boehringer-Ingelheim.

“Everybody will have the same
products. There won’t be any uniqueness in the marketplace.”

Carlsen says in principle, he has
nothing against the regulations. However, he questions their
enforcement and the power of Health Canada to determine if enough
scientific evidence has been supplied in support of an application.

“If they don’t want it on the market, they will make it so onerous that no one can afford to provide the data they say they need. So it is putting huge power with the bureaucrats to dictate what is acceptable scientifically,” Carlsen says.

The Alliance of Natural Health Suppliers Inc., headed by legal and
political consultant Trueman Tuck of Belleville, Ont., is planning to challenge the validity of the regulations in Federal Court in Ottawa.The proposed lawsuit is similar to one that Carlsen was involved with in 1967 when Health Canada decided that all natural health products would have to have a DIN. Health Canada subsequently withdrew that requirement.

Tuck says he has gathered about 100,000 signatures on a petition against the new regulations and will proceed with the lawsuit if efforts to get a meeting with the federal health minister or a senior official aren’t successful. He says five associations, including the Canadian Coalition for Health Freedom, Alliance of Natural Health Suppliers, Canadian Alliance of Health Retailers, Freedom of Choice in Health Care and Friends of Freedom, are backing the lawsuit.

Although Ibrahim also questions what standards of evidence will be required, he says he won’t be joining the lawsuit. “There was plenty of opportunity for input. This has been six years in the works,” he says. “Every industry needs regulations. Our industry has been
operating in a vacuum.”

Ibrahim says the only way prices of natural products might increase is if competition decreases because of the new regulations. “But that’s not necessarily a bad thing because you’re going to get better-quality products out there.”

Another Canadian manufacturer of nutritional products, Natural Factors Nutritional Group Inc. of Coquitlam, said it anticipates the regulations will have a positive impact on the natural health product industry.

“It will help level the playing field regarding manufacturing standards,
quality control and label claims,”
company chairman Roland Gahler said in a recent statement.

Susan Lutz, who heads Alberta Agriculture’s functional foods and health products initiative, sees another benefit of the regulations. “We will see a variety of products which will reflect the multi-cultural backgrounds that we have in the country,” she says.

Penny Mah, the senior trade director with Alberta Economic Development, agrees. “Canada’s whole approach
collectively is our products are going to be science-based,” she says.“That is a very positive selling point, in my
opinion, on the international market.”

Lutz says the definition of what is a natural health product, and thus subject to the new regulations, will greatly depend on what the NHP directorate perceives the public is using a product for.

Products requiring NPNs include any natural product that is ingested in any form, or any natural product that makes a health claim, such as aromatherapy oils. It may also include foods, such as herbal tea, if the NHP thinks the public is going to buy it for a health benefit.

Waddington couldn’t estimate how long an application will take to review and approve, although he said Health Canada is gearing up to turn it around within a couple of months, depending on the complexity of the application. He says that although there is currently no licence application fee, once the
regulations are in place the government will be looking at a cost recovery plan.

Enforcement of the new regulations and responding to complaints is the responsibility of the Health Products and Food Branch Inspectorate, which already looks after compliance and enforcement of pharmaceutical regulations. Questioned about that body’s
ability to handle the increased workload, Waddington conceded that the government is stretching its dollars as far as it can. “We’re trying to do a lot of things with a little bit of money,” he says.

Deborah Yu, acting director for the NHP bureau responsible for the public education campaign for the regulations, says she can’t comment on the budget her department has to educate industry, consumers and the other stakeholders affected by the regulations.

“But I can assure you that this is one of the highest priorities we have, to make sure that the public understands our regulations and the industry also has the appropriate tools and data and requirements so that they can comply with the regulations as they should,” she says.

The educational campaign opened with four-day public information
sessions held in Vancouver, Toronto, Montreal and Ottawa in November and December, which drew more than 1,000 participants.

However, several calls to health food stores selling natural health products indicates that Yu’s bureau has a big job ahead.

“To be honest, as far as I know, nobody really knows what’s going on regarding new regulations,” says Yvetta Carlsen, owner of The Health Connection in Coquitlam. “I didn’t get any instructions as a retailer what I can sell and what I cannot sell.”

Rudi Cheung, owner of the Vitamin House in West Vancouver, says he knows generally what the regulations entail. He’s also confident Canadian-made products are better than those manufactured in the U.S., which he also sells, because of the stricter
guidelines in this country.