Thank you, Mr. Chairman.
Mr. Chairman and honourable members, on behalf of the 45-member companies of the Direct Sellers Association and our 600,000 independent sales contractors across the country, I want to thank you for the opportunity to participate in this consultation.
Our independent businesspeople represent such well-known names as Avon, Mary Kay, Shaklee, NuSkin, and Quixtar, whose retail sales in 2007 approached $2 billion. Some of the products sold include those regulated as natural health products, and as such, the efficient and effective regulation of these products is of great importance to our industry.
I last appeared before this committee three years ago as it studied Bill C-420. At that time, I suggested that the bill was a product of the frustration of Canadians who wanted ready access to natural health products and of the companies who wanted to market those products to Canadian consumers.
Three years later, the frustration continues, with long delays in the approval process and a significant application backlog. However, there have been improvements, and NHPD has certainly made real efforts to increase efficiency in product approvals. These are laudable efforts, but the situation remains bleak.
So what has caused the backlog? We believe that Health Canada was never prepared for the number of applications that came in, and we believe that the directorate is optimistic to think it will have the backlog cleared by April of 2010. To date, the directorate has received product licence applications for approximately 27,000 products.
The reality is that the backlog has led many companies to delay submitting product licence applications or even to pull out of the marketplace altogether.
Let me give you a snapshot of our NHP experience. Our member companies have submitted 380 applications. Of these, 369 have been acknowledged and only 131 completed. However, “completed” does not mean approved; it means dealt with. In this case, 70 of the applications are now licensed, 34 have been refused, and 27 have been withdrawn. So far, only 18% of member applications have been approved and licensed.
Part of the backlog has to do with the standards of evidence required by NHPD. While compendial applications do increase the efficiency of the process, they only work for single-ingredient products, whereas the market is largely made up of multiple-ingredient products. And the evidence required is, in our opinion, excessive. The directorate's statistics confirm that their biggest challenge is dealing with non-compendial, non-traditional product licence applications for multi-ingredient products. Without improvements in this area, all available products will have the same materials, dosages, benefits, and wording on the labels. There will be no perceived difference from one company to the next.
I want to focus now on the thousands of product licence applications that have been rejected by the directorate. While the regulations provide for appeals, the actual process is, seemingly, known only to Health Canada. The directorate continues to promise that this policy will be released, but it has been almost four and a half years since the regulations took effect. Given the lack of transparency about the appeals process, it is no wonder that the industry is frustrated.
I want to offer you one more illustrative example of how deep the problems have become for the direct selling industry. The distribution channel of our industry, multi-level marketing, is regulated by the Competition Bureau under sections 55 and 55.1 of the Competition Act. Some provinces in Canada require a written opinion from the Competition Bureau on the marketing plans of a company before they will issue a licence to the company to operate in their respective province. The written opinion covers all of the provisions in the act pertaining to the operation of an MLM plan.
The bureau is now invoking its powers under other sections of the act to review all materials and product claims relating to product performance, and in order to provide the written opinion it is requesting similar evidence to that required for licensing of NHPs. This is new and troubling for an industry sector that is already regulated in a number of different areas, both federally and provincially. In our discussions with the bureau on this matter, we asked if they were aware that Health Canada regulated these products under similar criteria. The response was that, in their opinion, the process at Health Canada was not working and that they were fulfilling their mandate under the act.
Of course, it makes no sense whatsoever to have two agencies of government duplicating the work of each other. But the inadequacies of the process at the NHPD have driven our industry to this point, and as such, I can see no greater proof of a problem than this.
The DSA is encouraged by the recent activity on Canada's food and consumer safety action plan. The frustration of our industry is matched only by our willingness to work with the government and this committee to effect constructive changes to the Food and Drugs Act and the natural health product regulations.
Mr. Chairman, on behalf of the Direct Sellers Association and its members, I want to thank the Standing Committee on Health for the opportunity to participate in this consultation process.