Health Committee on Oct. 31st, 2024

[The Chair, Liberal, Sean Casey]

I call this meeting to order.

Welcome to meeting number 136 of the House of Commons Standing Committee on Health.

In accordance with our routine motion, I am informing the committee that all remote participants have completed the required connection tests in advance of the meeting.

Pursuant to an order of reference of May 29, 2024, the committee will resume its study of Bill C-368, an act to amend the Food and Drugs Act with regard to natural health products.

I would like to welcome our panel of witnesses.

Representing the Canadian Federation of Independent Business, we have Jasmin Guénette, vice-president of national affairs; and Michelle Auger, senior policy analyst, national affairs.

Representing the Canadian Health Food Association, we have Aaron Skelton, president and CEO, appearing virtually; and Jules Gorham, director of regulatory affairs and policy.

On behalf of the Direct Sellers Association of Canada, we have Peter Maddox, president.

Finally, on behalf of Food, Health & Consumer Products of Canada, we have Gerry Harrington, senior vice-president, consumer health; and Roberta Kramchynsky, vice-president, health policy and regulatory affairs.

Thank you all for being with us today. We'll begin with opening statements of five minutes per organization, starting with the Canadian Federation of Independent Business.

I understand that Jasmin Guénette will be speaking for the CFIB.

Welcome to the committee. You have the floor.

[Jasmin Guénette, Vice-President, National Affairs, Canadian Federation of Independent Business]

Good afternoon. My name is Jasmin Guénette. I'm the vice-president of national affairs with the CFIB. I'm here today with my colleague Michelle Auger. We would like to thank the committee for inviting us today. I'll make my presentation in English, but we are available to answer questions in French as well.

The CFIB represents 97,000 SMEs across every industry and region of Canada. Based on our monthly survey, called the “business barometer”, the level of optimism of small business owners is currently very low. Every single line of a small business budget is increasing, and demand is low.

Our members would like to see government reduce the tax and regulatory burden to help them with the rising costs of doing business and give them more chance to grow their business and improve productivity.

I'd like to mention that we are not experts in natural health products, and we therefore cannot answer technical questions related to the specifics of these products. However, we represent nearly 2,000 small businesses across Canada that will be impacted by the recent change by Health Canada regarding natural health products.

I'll now turn it over to my colleague Michelle.

[Michelle Auger, Senior Policy Analyst, National Affairs, Canadian Federation of Independent Business]

Over the past few years, we've seen a piecemeal approach to NHP policies. Instead of a coherent, forward-looking strategy, Canada has been introducing new rules bit by bit, whether it be Vanessa’s Law, increased licensing requirements, increased fees or additional labelling rules. This isolated approach leaves many small businesses scrambling to comply, often without a clear understanding of the long-term vision of the sector. This creates confusion and inconsistency.

Furthermore, our members believe Health Canada's current approach overlooks a crucial fact: NHPs are not pharmaceuticals, and they should not be regulated as such. For instance, the recent introduction of cost recovery fees being layered on top of stricter labelling requirements does not consider the unique realities of small businesses operating within the sector. One of our members imports approximately 800 different types of NHP. He has projected that the cost recovery program could add an extra $500,000 per year to his business expenses.

SMEs operate with tight budgets, and many may find it challenging to absorb these rising costs, especially all the additional costs associated with compliance. This forces many SMEs to make some tough business decisions, such as reducing investment in their operations and their employees, reducing innovations and reducing proper health and safety measures. Such a situation also creates an uneven playing field between small and large businesses. With large companies better equipped to absorb these expenses, this ultimately hinders the ability and the competitiveness of SMEs.

Bill C-368 seeks to repeal sections of Bill C-47, the budget bill. However, it is important to note that Bill C-69, another budget bill, also included further measures impacting NHP businesses.

Our members are not against the modernization of NHP regulation. However, they're concerned about Health Canada's introduction of multiple uncoordinated regulatory changes that risk overwhelming small businesses and complicating their survival in an already very tough economic landscape. As such, CFIB supports the passing of Bill C-368. It's a very important bill to a lot of our members operating within the NHP sector.

Thank you for your attention to these concerns. We look forward to answering your questions.

[The Chair, Liberal, Sean Casey]

Thank you very much.

Next, we're going to hear from the Canadian Health Food Association.

Ms. Gorham, please go ahead.

[Jules Gorham, Director, Regulatory Affairs and Policy, Canadian Health Food Association]

Thank you very much.

Good afternoon, Mr. Chair and members of the committee.

My name is Jules Gorham. I'm the director of regulatory affairs and policy at the Canadian Health Food Association, a trade association that represents natural, organic and wellness products. Aaron Skelton, president and CEO of the association, and I appreciate the opportunity to speak with you today.

The central problem we're bringing to you today is the continued abuse of Health Canada's authority. In 2023 and 2024, Health Canada made significant changes to the laws governing natural health products, or NHPs, through omnibus budget bills, rather than through the parliamentary process. It has undone the hard work done by this committee and by parliamentarians on legislative studies in previous parliaments.

In budget 2023, through division 27 of part 4 of Bill C-47, Health Canada redefined NHPs within the Food and Drugs Act. This redefinition is not just semantics. The passing of that bill fundamentally changed how NHPs are regulated, placing them closer to the likes of pharmaceuticals than the lower-risk products they inherently are.

Adding a change of this magnitude to an omnibus bill was a reaction to the Auditor General's report that would bypass stakeholder consultation and questioning by this very committee, which had already stated Vanessa's Law was too complex for NHPs back in 2014. Catching an entire industry off guard and evading proper parliamentary process has left us with a mess that has severe ramifications for business, trade and public health.

It is upon this committee to remind the department that Canada has laws that compel our public service to respect international trade law and fair, transparent public engagement. In less than three years, the NHP industry has been subject to six major legislative and regulatory changes in the form of two omnibus bills, new labelling laws built on those used to manage prescription medication, a cost recovery program proposed without proper cost-benefit or gender-based analysis, and new inspection and good manufacturing practices guidance similar to that for pharmaceuticals.

The impact of such layered, unchecked powers is not hypothetical. It has already created a staggering and untenable situation for companies across the sector. It fosters an imbalance that makes being compliant an unattractive and risky business.

The Food and Drugs Act and the NHP regulations exist to give industry trust in the regulators and stability in our system. If they can be changed without scrutiny or transparency, what protection exists for the industry or Canadians?

We would like to be clear that CHFA does not represent any smoking cessation or tobacco products. The argument that NHPs must remain defined as therapeutic drugs to keep nicotine pouches behind the pharmacist counter is worthy of a debate of its own.

We would also like to clarify a commonly cited falsehood that CHFA and our members are against regulations. Since 2004, NHPs in Canada have been the most strictly regulated in the world, under a very rigorous framework. However, Health Canada's approach is increasingly focused on creating an overly complex and costly pre-market system requiring extensive resources but without offering corresponding post-market monitoring, which Vanessa's Law will not solve. This burdensome, imbalanced framework still fails to deliver the consumer protection it promises.

Misinformation about the safety of NHPs has been a common thread through multiple testimonies by Health Canada. The serious adverse reactions that Health Canada repeatedly uses to justify the need for more regulations are taken out of context and promote fearmongering to the Canadian public. NHPs have a long history of safe use. Our access to information request and two independent studies have concluded that the 700-plus cases cited by Health Canada and the minister occurred in patients who were also on other treatments. It is impossible to establish a causal relationship.

I also want to take a moment to let this committee know that the lipstick I am wearing today cannot be recalled. It is a cosmetic product, which is not subject to Vanessa's Law, despite being part of the original self-care framework.

As an industry, we continue to support regulation and legislation that protects Canadians and is developed in a transparent, responsible and appropriate manner.

Today, we're asking this committee to support Bill C-368 and demand that Health Canada respect the open government that all industries and all Canadians expect. We cannot underestimate the need to properly address legislative and regulatory changes of this magnitude.

We look forward to your questions.

[The Chair, Liberal, Sean Casey]

Thank you, Ms. Gorham.

Next, from the Direct Sellers Association of Canada, we have Mr. Maddox.

Welcome to the committee. You have the floor.

[Peter Maddox, President, Direct Sellers Association of Canada]

Thank you to the chair and the committee for providing me with the opportunity to speak today.

My name is Peter Maddox, and I'm the president of the Direct Sellers Association of Canada. DSA Canada was founded in 1954. We have over 60 direct seller and supplier member companies, including well-known brands such as Mary Kay, Arbonne, Avon, Usana, Shaklee, SoulLife and Immunotec. We represent a diverse and dynamic industry that is integral to Canadian entrepreneurship, and we care deeply about customer service and consumer safety.

Every year, the direct-selling sales channel accounts for an estimated $3.4 billion in retail sales and contributes $1.5 billion in personal revenue to the approximately one million Canadians who participate as independent sales consultants, 84% of whom are women. Many DSA Canada member companies include NHPs in their product portfolios. Around 45% of current independent sales consultants gain at least some income from selling NHPs.

Our focus today is to raise concerns about process—specifically, the process followed when Bill C-47 brought Vanessa's Law to the NHP space and, more broadly, how this is symptomatic of the imperfect process that industry has seen in the federal regulation of NHPs, which has led to a lack of transparency, clarity and certainty for all stakeholders. This is creating unnecessary economic barriers and risks for both consumers and businesses. Vanessa's Law, including mandatory recalls and label changes, was introduced to NHPs via an omnibus budget bill, without being open to significant levels of debate or consultation.

We question the value of adding these measures when existing tools, such as stop-sales and inspections, are infrequently utilized. Effective regulation must be backed by consistent and proactive enforcement. Otherwise, existing rules and the introduction of new regulation have nominal impact. With the introduction of Vanessa's Law, along with other proposed Health Canada initiatives, such as cost recovery, we were disappointed by the lack of consultation and economic impact assessments, including studies of the impact on women. Our desire is for a world-class NHP system built on best practice, co-operation among all stakeholders, the use of research and data, and an intention to balance the needs of consumers, industry and other impacted parties. Slipping a new requirement into existence via an omnibus budget bill is one piece of evidence that this is not happening.

Uncertainty and lack of clarity in regulatory processes are causing Canadian direct-selling companies to struggle with product innovation, pushing our multinational businesses to consider reducing their product offerings or exiting the Canadian market. Furthermore, international NHP direct-selling companies not yet operating in Canada are choosing to expand into other markets instead. The result is diminished investment, employment and tax contributions. Uniquely in the direct-selling industry, it also reduces earning opportunities for the many Canadians who participate in our channel as a side hustle or gig for supplementary income. A lack of consistency, timeliness and predictability in decision-making, program implementation and ongoing operations is hurting the economy, reducing consumer choice and raising costs.

One area where collective action could help improve the situation for Canadian entrepreneurs and consumers is an enforcement focus on international businesses that undertake commercial activity under the auspices of Canada's personal use exemption. If we do not invest in policing these unregulated products entering Canada, more companies will see the personal use exemption as a way to distribute products to end-consumers without having to do the right thing and go through the Canadian regulatory process. Unapproved products create potential health risks for consumers and punish companies that are deeply committed to the Canadian market while operating here in good faith and good practice.

In closing, DSA Canada supports Bill C-368 as a means of resetting and realigning the NHP regulatory environment, enabling all stakeholders to work together to create a system that prioritizes consumer safety while fostering economic growth.

Thank you, and I welcome your questions.

[The Chair, Liberal, Sean Casey]

Thank you, Mr. Maddox.

Finally, we have the Food, Health & Consumer Products of Canada.

Mr. Harrington, you have the floor. Welcome to the committee.

[Gerry Harrington, Senior Vice-President, Consumer Health, Food, Health & Consumer Products of Canada]

Thank you, Mr. Chairman.

The members of Food, Health & Consumer Products of Canada produce most of the natural health products sold in Canada and the vast majority of over-the-counter medicines also used by Canadians in the practice of self-care. Self-care empowers Canadians to play a greater role in the management of their own health and, in so doing, frees up resources in our health care system to deal with more complex health issues.

Bill C-368 is about a vital Canadian industry, but it's also about a very important part of health care at a crucial time for our struggling health care system. FHCP members greatly appreciate this committee's interest in Health Canada's NHP program, and we agree with virtually all stakeholders that this program, right now, is struggling. Along with the concerns raised by the Auditor General that the committee has already heard about, NHP authorization and site licensing operations are both severely backlogged, at times threatening product launches and even expansion into foreign markets.

The committee has heard a lot about these issues, along with industry's significant concerns about the labelling regulations and cost recovery. These are the problems that are blocking access to NHPs and keeping our members up at night, but Bill C-368 addresses none of those problems.

It's impossible to frame our response to Bill C-368 without reference to Health Canada's self-care framework. The framework emerged from the original debates around Vanessa's Law in 2014. The concern at the time was that it would anchor over-the-counter medicines to the prescription drug framework while leaving natural health products in a separate legislative framework, despite the fact that both categories sit side by side on store shelves and are used by Canadians without the supervision of a health practitioner. The government of the day responded to those concerns with the consumer health products framework, which sought to create a risk-based regulatory system for both product categories separate from the prescription drug regulations.

Since then, the framework has been a source of both promise and frustration. After rebranding in 2016 as the self-care framework, and a series of cross-Canada consultations in 2017, the framework was reorganized into a three-phase project in 2018. First, it proposed new labelling rules for NHPs modelled on previously passed rules for OTC products. Second, it proposed crucial regulatory modernization for OTC medicines to simplify market authorization pathways and provide innovation incentives. Finally, the third phase of the framework would bring NHPs into this modernized framework, including the simpler product application pathways and innovation incentives; it would implement cost recovery and apply Vanessa's Law.

FHCP was alarmed by that proposed plan, because we knew that the OTC rules had been a disaster for industry and for consumers. Nonetheless, the technical discussions on regulatory modernization promised meaningful new efficiencies and innovation incentives, and industry worked hard with the department to move that crucial piece forward.

Then the pandemic hit, and progress on the framework came to a halt. In 2022, those labelling regulations were approved and implementation timelines were set. Less than a year later, the NHP cost recovery proposal was put forward, and Bill C-47 brought NHPs in under Vanessa's Law. The promised regulatory reforms originally targeted for 2019 were characterized as “to be determined” sometime in 2025, or beyond.

At that point, the idea that the self-care framework was about separating self-care products from prescription drugs was hard to defend. All measures undertaken to that point had simply moved NHPs closer to the prescription drug framework. Discussions around broader regulatory modernization had virtually disappeared.

One of the great ironies of this whole process is that the problems identified in the 2021 Auditor General report are all things that the framework would have addressed had it been completed in the original time frames. Simplified product approval pathways, originally proposed under the framework, would have improved consumer access and been much more efficient for industry. They would have also freed Health Canada resources from pre-market approvals, which the AG found robust, and allowed them to be applied to post-market enforcement, which the AG identified as lacking. That, in turn, would have permitted the development of a realistic cost recovery proposal that would generate sustainable funding for Health Canada without punitive costs to industry.

That brings us to today's debate. FHCP and its members appreciate this committee's genuine interest in the sector. However, passing Bill C-368 would not be without risks for industry and wouldn't solve the real, immediate challenges our sector faces. What both consumers and industry need is the modern consumer health product framework that was promised in 2014.

Thank you, Mr. Chairman. Ms. Kramchynsky and I are looking forward to your questions.

[The Chair, Liberal, Sean Casey]

Thank you.

We're now going to begin rounds of questions, starting with the Conservatives for six minutes.

Mr. Doherty, please go ahead.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Thank you, Mr. Chair.

To our guests, thank you for being here. I appreciate your testimony.

I will start with Ms. Gorham.

On Tuesday, Minister Holland, in his opening intervention and his answers to the questions, as well as his officials, stated that over 4,500 consultations, a robust consultation process, took place. I asked the officials repeatedly, twice, if your association, the Canadian Health Food Association, was consulted. Both times they said yes. Is that true?

[Jules Gorham]

We were not consulted on Bill C-47.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Okay.

To the Canadian Federation of Independent Business, were you consulted on Bill C-47?

[Jasmin Guénette]

If my memory is correct, we appeared at the Senate committee on that bill.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Mr. Maddox, were you consulted on Bill C-47?

[Peter Maddox]

No.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Mr. Harrington, were you consulted? Was your association consulted on Bill C-47?

[Gerry Harrington]

My recollection is that there was involvement in the process when the bill was proposed, but I don't recall any Health Canada consultations. Mind you, that was a couple of years ago.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Is it your testimony today that Canada already has a robust system in terms of stop-sale for issues such as what the minister described? I would like to characterize his testimony as sensationalizing issues that can be found in many different areas. He repeatedly talked about rat feces and urine and foreign objects. As we sit today, is there policy in place, legislation in place, that can enforce a stop-sale on a product if that is found?

Ms. Gorham.

[Jules Gorham]

Yes, Health Canada and the minister have stop-sale powers on NHPs.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Okay.

The question that I would ask, then, of all of our witnesses is this. If Bill C-47 is so damaging, if Vanessa's Law is so damaging to our Canadian health food industry, why do you feel that there was so little genuine consultation, and why did Health Canada then proceed without allowing the industry meaningful input? Why?

[Jules Gorham]

I don't know. I think we struggled. Aaron and I and our team spoke about it after Tuesday. I think several times the department said that this is a very compliant industry and that they have very few problems. It was said several times that the industry is very compliant and very co-operative, so we fail to understand why there was no room to follow proper legislative processes, proper parliamentary processes, and why Vanessa's Law had to be done through an omnibus budget bill in the dark of night and take everybody by surprise.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

I might take it even a step further. We saw earlier this year that Health Canada officials characterized this as life-and-death. They used the death of the 18-month-old child in Alberta as a significant reason, as a catalyst to move forward with this, which I then called them on. I was very familiar with the issue and I called them on it repeatedly because this was untrue, yet they refused to capitulate and reverse their decision and apologize for it.

I'll leave it for a comment from anyone on the committee as to why you feel that Health Canada and perhaps the minister have felt the need to vilify an industry that provides so much to so many.

Mr. Harrington.

[Gerry Harrington]

I can't speak to the minister's thinking.

I can say that this industry has an excellent reputation internationally. Since the introduction of the natural health products regulations, one of the first things we saw was that, over the course of the next decade, exports of those products from Canada more than doubled. That's a sign of confidence.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Go ahead, Ms. Auger.