The Canadian Health Food Association (CHFA) reports the consultation for Proposed Fees to Natural Health Products (aka Cost Recovery) closed Thursday, August 10, 2023. It provided the following summary of its response:
The basis for our arguments against the fee proposal is centred around three main areas of concern:
- Serious fundamental legal issues with the current proposal.
- A blatant disregard for the 53 recommendations that formed the foundation of the Natural Health Product Regulations (NHPR).
- Lack of transparency and stakeholder engagement
We believe there is a substantial legal argument against the current proposal, corroborated by Ottawa University Professor Paul Daly, who specifically calls out that a large portion of what Health Canada is trying to recover is considered a tax. Health Canada has no authority to impose a tax. In our constitutional system, only Parliament and the legislative assemblies have this power.
Our work, along with our legal team and the opinion of Professor Daly, further confirms our allegations of Health Canada’s sub-par analysis and mismanagement of the file (Natural Health Product (NHP) sector).
Highlights from the Response
Fundamental Legal Concerns
Based on our consultation with legal counsel, the fees (as currently structured), purport to “recover” anticipated costs for the future development of Health Canada infrastructure to administer the NHP program. This is not legally permissible. Based on the expert opinion obtained by Gowling WLG on behalf of CHFA, the proposed fees are taxes imposed without constitutional authority.
In addition, the fee proposal is not reasonable given the legal constraints that confine Health Canada in establishing fees for service and is, therefore, beyond the authority of the Minister of Health.
Disregard for the 53 Recommendations and the Self-Care Framework
Two decades ago, the House of Commons Standing Committee on Health put forth 53 recommendations that formed the basis of the Natural Health Product Regulations (NHPR) — the number one recommendation being that NHPs are not drugs.
With that recommendation in mind, it is difficult to understand why Health Canada has proposed the exact same fee ratio (the proportion of program costs to be charged to the industry in service fees) to NHPs as those currently in place for non-prescription and prescription drugs.
The sale of NHPs in Canada generates hundreds of millions of dollars in GST revenues annually, while prescription drugs are exempt. Given this significant difference in the public/private benefit, and the wide range of factors that must be based on accurate data, CHFA has serious concerns that the Natural and Non-Prescription Health Products Directorate (NNHPD) did not conduct a thorough analysis of the public/private benefit as required by the Treasury Board’s guidance.
Lack of Transparency and Stakeholder Engagement
CHFA continues to be troubled by the NNHPD’s limited openness and transparency and the continued lack of meaningful, balanced, and accountable consultation with stakeholders throughout the development of and consultation of this proposal.
A recap of events:
February 2022 – CHFA wrote to the NNHPD following the first stakeholder information session on cost recovery. Our letter included detailed questions, concerns, and suggestions that would help CHFA’s members understand the data underpinning the development. The NNHPD responded five months later, advising that our questions had been shared and there would be opportunity for stakeholder engagement on the draft proposal.
May 2023 – with less than 24-hour’s notice CHFA was advised of the launch of the consultation that coincided with the publication in Canada Gazette Part I. CHFA was shocked and disappointed at the lost opportunity for meaningful consultation. This was exacerbated by Health Canada’s failure to include specific and essential information previously requested by CHFA.
June 2023 – despite CHFA’s request for that the consultation period be extended by 120 days, the NNHPD only granted an extension of 15 days. This continued to place the consultation period over the summer months, which is an apparent disregard for the Treasury Board’s guidelines, which at a basic level state “officials should develop realistic timelines, including “determin[ing] the appropriate time of year for the consultations to take place (e.g., account for summer holidays)”
Overall, this consultation process has been marked with limited opportunities for two-way communication with stakeholders. None of the information sessions or technical briefings held to date can be reasonably construed as “consultations”.
We are urging Health Canada to halt anticipated regulatory changes impacting NHPs and reset priorities based on proper consultations with key stakeholders to ensure that the NHP framework is well-informed, balanced, and in the best interest of Canadians.
Implementation of cost recovery should only occur as part of the final phase of any NHP framework.
Although the consultation is now closed, the fight is not over to #SaveOurSupplements.
We encourage you to continue our push, write to your MP, book a meeting, spread the word, or join us at one of our upcoming webinars or our Regulatory Forum, where the NNHPD will be joining us in person.
