Cost Recovery Program - Our letter to the Natural and Non-Prescription Health Products Directorate
Cette lettre est disponible en anglais seulement
August 7, 2023
Mrs. Natalie Page Director general
Natural and Non-Prescription Health Product Directorate
The outline for the proposed fees for cost recovery for natural health products starts with the preface that “Health Canada is the federal department responsible for helping the people of Canada maintain and improve their health”.
Considering that the proposed fees will unequivocally have a negative impact on manufacturers which would affect the availability of existing NHP’s and discourage the development of new ones in the future, we purport that Health Canada is not upholding its own stated Mission.
Reducing accessibility of NHP’s to consumers and healthcare practitioners can only have a negative effect on those Canadians who rely on these products to maintain and improve their health.
As a stakeholder, members of the Canadian Homeopathic Association submit our perspectives as outlined below.
Proposed fee structure and fee amounts
Health Canada has proposed fees that do not reflect the nature of the NHP industry nor do they align with the risk associated with most Natural Health Products.
Many manufacturers of NHP’s are small businesses and the proposed fees would be cost prohibitive for them to continue operations as they have been doing for many years. In the homeopathic industry specifically, the majority of the manufacturers are small businesses.
The effect would result in either:
i. increased costs passed down to the consumer -
As costs have already increased in the last few years due to many factors associated with the pandemic (like supply chain issues, increased cost of gas and inflation) at some point it becomes unsustainable and becomes more than the market can bear. This can’t be an avenue if, as a nation, we consider health prevention, sustenance and care to be a necessity and not a luxury. Taking only the example of Vitamin D and C and their essential role on immunity, significantly lower market sales will obviously end up in the augmentation of infectious diseases with its consequences: increased pressure on the health care system, increased prescription of antibiotics, etc.
ii. Companies scaling down their product lines -
We were made aware that this will likely be the case, even if there was no cost recovery program, as indicated by a survey conducted by Deloitte in early 2023 with the whole NHP industry. 76% of the respondents declared that they will have to remove products because of the cost implementation of the new labeling regulation.1
Adding to this, the cost recovery proposition presented in May, for the homeopathic industry specifically, this will have tremendous, not to say horrendous, negative effects. Indeed, amongst NHP’s manufacturers, the homeopathic industry is most probably the one that markets the largest amount of products, tailoring to the needs of the practitioners who prescribe or recommend daily, thousands of different available remedies that come in multiple potencies. As homeopathic practitioners and professionals, we are keenly aware that some of those single remedies/potencies are very seldomly prescribed. But they need to be made available to ensure homeopaths have complete access to their homeopathic pharmacopeia. Undoubtedly, the cost recovery proposition on the table will make the HM industry drop the ‘low sellers’ thus impacting both the consumers and the health care practitioners. And since homeopathy is based on individualized treatment (a specific remedy in a specific potency for a specific individual) one HM can never be substituted for another.
But we hadn’t realized the scope of what we are laying out above until we contacted Boiron, one of the biggest providers of a large catalog of single homeopathic medicines. In order to stay in business, Boiron will have to completely eliminate the dose form, and will reduce the drop form by 88% and the pellet form by 82%.
Need we say more? This cost recovery program, as it is, will eliminate 90% of the pharmacopeia available for practitioners and Canadian consumers. This is jeopardizing homeopaths and homeopathy to an unprecedented extent.
The ability to practice effectively and efficiently will be reduced enormously since there will be a delay in care for 90% of the orders that will be forced to be done outside of Canada. In the end, it is the Canadians, consulting with Homeopaths for their health care, that will be losing therapeutic opportunities to enhance their health in the way they had chosen to. Freedom of choice of therapeutics is definitely imperiled.
How can Canadians still believe that HC is “helping the people of Canada [to] maintain and improve their health”?
Having so little HM’s on the shelves will also reduce the exposure of Homeopathy to consumers seeking OTC self-care products which could result in loss of potential users of homeopathy that may seek professional care in the future.
iii. closure of businesses - and the risks of monopolies
Effectively the proposed costs could create a monopoly for a small number of larger companies that could eliminate choice for consumers of OTC NHP’s. The disadvantages of monopolies include price-fixing, low-quality products, lack of incentive for innovation, and cost-push inflation.
In addition to being an effect of the prospective monopolies, the fees proposed would also create cost barriers to innovation.
Loss of products and/or loss of business also affect the employees working in these companies and the tax revenue that goes with the sales of the products and the income for the employees. According to the CHFA analysis Health Canada is looking to fully recover approx. $20 million in Department expenditures, but this could cost tax revenues of approximately $560 million due to the loss of GST associated with the sale of fewer NHPs. The net effect on government revenue will be a loss over half a Billion dollars. 3
Holding NHPs to the same standard as chemical drugs amounts to discrimination against the whole NHP industry whose products amount to a small fraction of both the income and the risks of the Pharmaceutical Industry.
Proposed service standards and penalties for missed standards
The service standards proposed have not been evaluated by stakeholders to determine if they are appropriate to the activities; and while having service standards is a positive thing, they need not be tied to fees.
Proposed mitigation measures, including small businesses
The proposed mitigation measures are wholly insufficient to prevent the loss of products and the companies that make them.
Going back to the example of single remedies, a reduced fee on the right to sell, to $406 instead of $542, will not enable the Industry to keep their catalog of available products for practitioners and Canadian consumers. A drastic cut of 90% (or near) of the pharmacopeia will still be unavoidable.
Proposed timeline for implementation (April 1, 2025)
The fees will be imposed at the same time that industry must implement the costly label changes and that will mean even more loss of access for Canadians. As stated earlier, a survey done by Deloitte early 2023, for CHFA, has already shown the huge impacts of the changes that the industry will need to undergo to comply with the new labeling regulation. 39% of respondents indicate that it will affect employment and 76% already indicate that there is a high likelihood of removing products.
Now, on top of the new required labeling for HM’s implementing and the inevitable losses that will follow, the cost recovery plan implemented at the same time would be adding insult to injury, unequivocally propelling many members of the industry to business closure in no time.
Regarding the process outlined on Health Canada’s own website:
The Standing Committee on Health recommended that Health Canada analyze the impact of overall cost recovery for natural health products; and that Health Canada does so in consultation with the industry to determine appropriate fee structures and amounts (recommendations 38, 39 and 40).
The Office of Natural Health Products will be responsible for undertaking further consultation with the different sectors of the natural health products industry to determine appropriate fee structures and amounts.
It is our understanding that no such consultation has taken place prior to the development and publication of the cost recovery plan for NHP’s. How on such a sensitive and complex issue, the industry was not at least consulted? How come no preliminary discussions were attempted to build strong foundations, based on mutual understandings on the need of cost recovery and the reality of NHP’s manufacturers, before submitting a cost recovery proposal? The result speaks volume as this fee proposal is perceived as completely untimely and unfitted.
Because of this reason, and the reasons outlined above, we ask that Health Canada STOP the cost recovery process and return to the development of a more efficient and appropriate set of policies and administration for NHPs in collaboration with the industry and fitted to the reality of NHP’s.
Marie Lamey, homeopath Director of Canadian Homeopathic Association
Paul Labrèche, homéopathe Directeur de l’Association homéopathique Canadienne
1 Deloitte LLP (2023) « Economic Contribution Study of Canada’s Natural Health Product Sector », 40 p.