Quarterly Report (Spring / Summer 2005)

Natural Health Products Directorate
Health Canada

Published October 2005

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Table of Content

Message from the Director General

Application Review and Assessment

• Status of Submissions
• Chart 1.0 total Incoming and Total Outgoing for each Type of Application since January 1, 2004
• Chart 1.1 Distribution of Applications Currently Under Review
• Chart 1.2 Site Licences Issued per Quarter since January 1, 2004
• Chart 1.3 Product Licences issued per quarter since January 1, 2004
• Update on Business Improvement Initiative
• Important deadline looming for manufacturers and importers of natural health products
• List of approved natural health products now available on Health Canada's Web site

Natural Health Products Research

• Update on the Natural Health Products Research Program
• Research Priority-Setting Consultations on Homeopathic Medicines, Traditional Chinese Medicines and Essential Fatty Acids

Outreach and Stakeholder Relations

• Update on the Education and Outreach Program
• Information Sessions on Clinical Trials for Natural Health Products
• The NHPD's Public Opinion Research: Getting to know you, getting to know all about you
• Keeping you informed: the NHPD Monthly Communiqué

Policy Development and Regulatory Affairs

• Health Canada publishes vitamin K amendments in the Canada Gazette, Part 1
• International trade: The NHPD's International Trade Certificates and proposed amendments to Division 1A of the Food and Drug Regulations
• Dispute Avoidance and Resolution Policy and Procedure.
• The NHPD's External Charging Initiative
• Update on Bill C-420

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Message from the Director General

Nearly two years have gone by since the Natural Health Products Regulations officially came into effect on January 1, 2004 . Since then, the Natural Health Products Directorate has grown significantly, evolving from a small office of few to a much larger, multi-faceted organism consisting of five bureaus, each accomplishing key tasks and projects essential to the Directorate's mission of ensuring that Canadians have access to quality natural health products that are safe and effective.

With this growth have come new responsibilities and new challenges and this past spring and summer has been no exception. Of these, by far our greatest challenge and greatest priority continues to be finding effective means of managing and facilitating compliance of an industry comprising of over 50, 000 unique and diverse products.

That being said, in my short time as Visiting Director General, I have seen first hand the professionalism and stead-fast determination with which the staff of the Directorate face these challenges and I am proud to be a part of such a dynamic and dedicated team.

Indeed, I am pleased to say that great strides have and continue to be made to address these challenges. Most important of these is our Business Improvement Initiative which is enabling us to tackle our application backlog, ultimately allowing us to process our applications in a much timelier manner. As well, new policies and amendments are being incorporated into our Regulations to better respond to the needs of our stakeholders, and various new outreach and communications activities, such as our monthly communiqués are helping to promote our work and to increase industry knowledge and compliance with the Regulations.

Meanwhile, the Natural Health Products Research Program continues to thrive; providing funding to the research community and helping build a strong knowledge base on natural health products and their uses.

Amidst the constant change and evolution that the Directorate is moving through, it is essential that we communicate with our stakeholders as openly and frequently as possible. For this reason, we have created and implemented two new communications initiatives, one of them being this Quarterly Report.

This report is the first of many, aimed at providing stakeholders with a window on the progress of the Directorate as we move forward with the implementation of the Regulations.

On another note, as many of you know, I am currently replacing Philip Waddington, the Director General, while he is away on training. I am aware that there have been concerns expressed about lack of continuity and stability due to Phil's hiatus. While his absence does change the face of the Directorate to a certain degree, the Directorate as a whole and the management team in particular, is committed to providing continuity of service and is progressing in its improvement strategy as initiated by Phil in the spring.

We hope you will enjoy this first quarterly report.

Julia Hill
Visiting Director General

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Application Review and Assessment

Individuals and businesses seeking to market natural health products in Canada or conduct clinical trials for natural health products are first required to obtain authorization from the Natural Health Products Directorate (NHPD). For natural health products, this process involves applying for and obtaining product and site licences by demonstrating that the product is safe, effective, and of the highest quality and that the places, people, and processes involved in the manufacture, packaging, labelling and importation of natural health products follow appropriate good manufacturing practice (GMPs) standards.

With respect to clinical trials, an application for authorization must also be submitted to the NHPD for review. In this instant, the applicant must demonstrate that the trial follows appropriate protocols and procedures which ensure that trial objectives are met and that participants will be treated in a safe and ethical manner.

The area of the Natural Health Products Directorate responsible for assessing licence applications is the Bureau of Product Review and Assessment (BPRA).

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Status of Submissions

The submission review process involves four levels, each of which must be passed before a licence or notice of authorization is granted by the NHPD. These are known as Level 1 Verification (where the application is entered into the system and an acknowledgement and submission number is sent); Level 2 Processing (where the application undergoes an initial classification, assessment, and is then placed in a processing queue); Level 3 Assessment (where the application is assessed against the requirements of the Natural Health Products Regulations), and Level 4 Decision (at this stage, following the application's assessment, the decision is made to issue or refuse a licence or authorize a clinical trial). A map of this process is available on Health Canada 's Web site at http://www.hc-sc.gc.ca/dhp-mps/prodnatur/applications/licen-prod/process/index-eng.php.

The following section provides an overview of the status of submissions currently under review within the NHPD. These figures do not include Amendments, Notifications or ITCs and were generated on September 13, 2005 .

1.0 Total Incoming and Total Outgoing for each Type of Application since January 1, 2004.

The Natural Health Products Directorate has received a total of 7983 product, site, and clinical trial applications since January 1, 2004 . Since then, 901 product/site licences and notices of authorization have been issued. Chart 1.0 provides a breakdown of the incoming and outgoing for each type of application.

1.1 Distribution of Applications Currently Under Review.

7082 applications are currently under review with the Directorate (total incoming - total outgoing = total currently under review). Chart 1.1 illustrates the distribution between product, site and clinical trial applications currently under review.

1.2 Site Licences Issued per Quarter since January 1, 2004.

Of the total number of licences and notices of authorization issued since
January 1, 2004 , 81 of these have been for site licences. Chart 1.2 provides a breakdown per quarter of the site licences issued since January 1, 2004.

1.3 Product Licences issued per quarter since January 1, 2004.

Of the total number of licences and notices of authorization issued since
January 1, 2004 , 772 of these have been for product licences. Chart 1.3 provides a breakdown of per quarter the product licences issued since January 1, 2004. It should be noted that the majority (80%) of the product licences issued have been for compendial submission.

Update on the NHPD's Business Improvement Initiative.

Since the coming into force of the Natural Health Products Regulations, the Natural Health Products Directorate has received over 7800 individual product and site licence applications and has managed to issue just over 850 licences. While the Directorate's input vs. output has steadily increased with each passing quarter, with a mere 1/9 of the applications received having gone through the entire assessment process, there is room for improvement.

With this in mind, over the past year, the Directorate, under the guise of its Business Improvement Initiative, has undertaken an in depth analysis of its current operating resources and processes to identify strengths and opportunities for improvement. Following this analysis, an action plan was put in place to address weaknesses in certain key areas of the Directorate's application review operations.

Additional Human Resources

There are currently ninety (90) full-time employees involved in the review and assessment of product and site licence applications. Additional resources have been hired over the summer and it is anticipated that all vacant assessment officer and submission coordinator positions will be filled by the end of this fiscal year. This will bring the total number of employees involved in application review to 102.

Modifications to requirements and review processes

In addition to increased human resources, the Directorate has made certain operational changes over the past summer and continues to do so. This has included finding ways of grouping similar submissions by medicinal ingredient (for ex: Glucosamine, MSM, and Chondroitin products) in order to minimize the review time of similar, if not identical submissions. We are also revising our current submission prioritization to ensure appropriate allocation of resources. In addition, evidence requirements are currently being revised and increased time and resources are being allocated to monograph development. Completion of the Category IV Monographs and labelling standards is scheduled for this January and we are also looking at developing a monograph policy for multi-ingredient products (such as multi-vitamin and multi-mineral products).

Other operational changes that have already been incorporated are the elimination of a number of steps in the review process, such as peer reviewing of evaluations as well as the number of notices sent to applicants. This has resulted thus far in a significant decrease in the time an application spends at levels 2 and 3 of the review process.

E-Submission/E-Review

Under Health Canada 's E-Review initiative, the Directorate will be developing and implementing several on-line tools within the next 12 months that will facilitate the submission and review of various applications.

The first of these tools is a form builder for site licence applicants. The form-builder is an interactive, electronic version of the site licence application (similar to the QuickTax software offered by Intuit Canada) that will allow applicants to prepare the necessary forms on their computers. The way this software is designed should virtually eliminate the majority of all our level 1 deficiencies and significantly increase the speed with which acknowledgement letters and submission numbers are sent to applicants.

Other tools scheduled for release throughout 2006 are a form-builder for transitional homeopathic medicine applications, as well as an electronic application that would allow for the online approval of compendial submissions.

While it will take time to phase-in these various initiatives, the Directorate is confident that once these changes have been put in place, the overall timeliness and effectiveness of our submission review and assessment will significantly increase, thus allowing us to fulfill our mission of ensuring ready access to a wide variety of safe and effective natural health products.

Important deadline looming for manufacturers and importers of natural health products.

December 31, 2005 is an important deadline for those individuals and businesses that manufacture, package, label, and import natural health products for sale in Canada . According to section 113 of the Natural Health Products Regulations, people that conduct any or all of these activities must have a site licence before December 31, 2005 or will risk seeing their operations come to a halt until a valid licence is obtained.

On January 1, 2004 , Health Canada put into force a brand new regulatory regime for natural health products sold in Canada . According to this regime, individuals and businesses seeking to market natural health products in Canada are required, among other things, to obtain site licences. Site licensing relates to the facilities, people and processes involved in the manufacture, packaging, labelling, and importation of natural health products. Only sites that conduct these activities in accordance with Good Manufacturing Practices (GMPs) will be issued a site licence.

Recognizing that conforming to the GMPs may be a costly and timely process, industry stakeholders were given a two-year transition period within which to obtain the necessary site licences. This period ends December 31, 2005.

Individuals and businesses that have not yet applied for the appropriate site licences are encouraged to do so by October 31, 2005.

Notices encouraging stakeholders to apply for their site licences were sent in May, July, and most recently on September 19, 2005 via the NHPD's electronic bulletin. Further communications are being sent through other industry channels and networks in the hopes of reaching as many stakeholders as possible.

List of approved natural health products now available on Health Canada 's Web site.

In August 2005, the Natural Health Products Directorate published its first list of natural health products that have been authorized for sale in Canada. This list, which is updated on a monthly basis, provides the name of each approved product; the name of the product licence holder; the dosage form; the route of administration, and the Natural Product Number (NPN) or Homeopathic Medicine Number (DIN-HM) issued to the product.

Thus far, stakeholder reaction has been positive. Stakeholders are pleased that a list is finally available on-line. However, many have also requested that a more detailed and user-friendly list be provided; one that would have a search function and would include the list of all medicinal and non-medicinal ingredients, warning information as well as the recommended use(s) of each approved natural health product. The Directorate is currently working towards a more sophisticated system and the current list is only a temporary measure.

It should also be noted that to ensure the accuracy of information being posted, there will be a delay of at least 60 days before new products are added to the list of approved products.

Helpful Tip: How to do a search in the list of approved natural health products?

When looking through the list for a specific product, NPN number, or company, simply press Ctrl + F on your keyboard and a search window will appear. Type in the information you are looking for and press the "Find Next" button. Your computer will then search the page to see if the information you are looking for appears in the list.

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Natural Health Products Research

In addition to its function as a product regulator, the Natural Health Products Directorate has also committed itself to taking a leadership role in fostering and supporting natural health products research in Canada . Following the completion of several research priority-setting conferences, the NHPD, in June 2003, put in place the Natural Health Products Research Program (NHPRP), a five-year initiative aimed at improving knowledge of natural health products, including their safe and effective use, by supporting research initiatives in various forms. The NHPRP has a funding envelope of five million dollars, with a maximum allowance of one million funding dollars per year.

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Update on the Natural Health Products Research Program

Since its inception, the NHPRP on its own and in collaboration with the Canadian Institutes of Health Research (CIHR) has supported a wide range of projects exploring a variety of research topics, such as drug interactions with natural health products, new product uses, their biomedical properties, product quality, safety monitoring, as well as use of natural health products by specific population groups. All of this has played a significant role in strengthening Canada 's health research capacity and creating a robust natural health products research community.

In its first year of operation, a total of $923,000 was awarded to various research projects, with $800,300 the following. Thus far, over thirty individual projects have received funding through this Program. The NHPRP is currently working on an annual report which will summarize its funding initiatives over the past two years. Once completed, this report will be made available on Health Canada 's Web site.

Recent funding opportunities in 2005

In April 2005, the NHPRP released two Request for Proposals (RFPs): Conference Support RFP and Bridging the Regulatory Gap: funding priorities in NHP safety, quality and efficacy RFP.

The Conference Support RFP was developed in order to increase information and knowledge transfer, partnerships and capacity-building. The main purpose of this RFP was to provide support for scheduled conferences or symposia, and for the planning and development of multi-disciplinary networks or partnerships dealing with subjects related to natural health products research.

The second RFP, titled "Bridging the Gap: Funding Priorities in NHP safety, quality and efficacy" was developed to target research projects at their inception and support activities that are relevant to the regulatory function of the NHPD; enable consumers to make informed choices about natural health products, and are sensitive to the needs of the communities and traditions that produce and utilise these products.

Since April, the NHPRP received a total of 34 proposals in response to the two RFPs; 12 for the Conference Support RFP and 22 for the Bridging the Regulatory Gap RFP. Funds have already been awarded to certain projects and peer-review is still ongoing for others. Once this exercise is complete, a total of 14 proposals will have received up to $20,000 in funding; the maximum allowance under these RFPs.

In addition to the two RFPs, funding was also available in early 2005 through Operating Grants and Personnel Training Awards offered in tandem by the NHPRP and CIHR. Funding via the Operating Grants was awarded to projects addressing key research priorities identified by the NHPRP, while the Personnel Training Awards were developed to help increase research capacity by providing assistance to those regions and communities with a lack of research training and resources. A total of 54 proposals were received, 10 of which were awarded funding through one of these joint-offers.

Summaries of the projects that have already received funding under these particular initiatives are currently available on-line. Additional summaries will be added as more funds are handed out.

Upcoming Funding Opportunities

The NHPRP is currently developing new funding opportunities for the upcoming fiscal year (2006-2007). Once complete, these new initiatives will be posted on Health Canada 's Web site at: http://www.hc-sc.gc.ca/sr-sr/finance/nhprp-prpsn/finance/index-eng.php. Notification of their posting will be sent via the NHPD electronic bulletin. Individuals interested in subscribing to this bulletin may do so by filling out the form available on Health Canada 's Web site.

Research Priority-Setting Consultations on Homeopathic Medicines, Traditional Chinese Medicines and Essential Fatty Acids.

In January and March 2005, the NHPRP initiated two priority-setting consultations on homeopathic medicines and traditional Chinese medicines for the purposes of identifying research priorities and developing strategies for moving the research agenda forward.

Each consultation took place in Ottawa and involved a mixed grouping of alternative health care practitioners, domestic and international researchers and research funding agencies, governmental and non-governmental agencies as well as industry stakeholders.

Summary reports detailing the priorities identified at these consultations will be made available on Health Canada 's Web site and notification will be sent via the NHPD's electronic bulletin.

The NHPRP will also be hosting a priority setting consultation on Fatty Acids and Essential Fatty Acids (EFAs) in St-John's, Newfoundland from October 30 to 31, 2005 .

This consultation was organized pursuant to a research paper commissioned by the Program in March 2005, which identified the need for more focused attention on EFAs within the context of natural health products, most notably in the area of partnership building and dissemination of information on Natural Health Products Regulations and the NHPRP.

The objectives of the consultation will be to identify key regulatory issues facing EFAs as well as means of facilitating research in this area and collaboration between various EFA sectors. Further information is available on-line at http://www.hc-sc.gc.ca/ahc-asc/public-consult/col/efa-age/index-eng.php.

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Outreach and Stakeholder Relations

Since its inception in the late 90's, the Natural Health Products Directorate (NHPD) has always strived for an open and collaborative relationship with its stakeholders. Be they industry organizations, health care practitioners, academics, professional associations and the general public, the input and guidance received from our stakeholder groups shaped the Natural Health Products Regulations throughout their development and will continue to be sought as they are implemented. This collaborative approach has become central to our principles and ensures that the decisions, policies and strategies put in place by the Directorate are reflective of the needs of the vast majority of Canadians.

When consulting and communicating with its public, the NHPD has many means and tools at its disposal. These include correspondence, regular meetings and teleconferences, formal committees, frequent electronic messages and monthly communiqués, postings on the Health Canada Web site, various publications as well as special events such as industry workshops, information sessions and consultations. The arm of the NHPD responsible for organizing, developing and coordinating communications with the NHPD's publics is the Bureau of Promotion, Liaison and Development (BPLD).

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Update on the Education and Outreach Program.

One of the major responsibilities of the BLPD is the development, management and implementation of the NHPD's Education and Outreach Program, a multi-year initiative aimed at increasing stakeholders' awareness of the Natural Health Products Regulations and how these benefit the availability of natural health products in Canada . Given that the Regulations cover a range of activities and have implications on various groups, a wide variety of key audiences are targeted by this Program, including: industry stakeholders, health care practitioners, international stakeholders, and of course, Canadian consumers.

Since the coming into force of the Regulations in January 2004, the bulk of the Program's education and outreach efforts have been targeted at industry and have focused primarily on increasing knowledge and understanding of the product and site licensing requirements of new Regulations - this regime's key components. This has resulted in general nationwideinformation sessions in winter 2003 and early spring 2004, as well as more specific industry workshops on product and site licensing in November 2004 and February 2005. During this time, specialized Product and Site Licensing Step-by-Step Guides were also published and made freely available to the public along with the NHPD's other guidance documents.

Following the February workshops, information sessions on clinical trials for natural health products were held this summer in three Canadian cities. In addition, two surveys of the Canadian public were conducted in February and March 2005, with follow-up focus group testing currently underway. Further information is available in this quarterly report.

Following the results of the upcoming focus group testing, the Education and Outreach Program will be updated with new activities scheduled to take place in the next fiscal year. In the meantime, some outreach will take place in the following months, in the form of information kiosks and guest speakers at various conference and events hosted by practitioner and industry associations. The Directorate will also continue to update its stakeholders on important regulatory issues via its electronic bulletin, monthly communiqués, and these quarterly reports.

Information Sessions on Clinical Trials for Natural Health Products.

While issuing product and site licences is at the core of what the NHPD does, the Directorate is also responsible for authorizing clinical trials involving natural health products. People wishing to conduct a clinical trial in Canada must apply for authorization from the NHPD and there are stringent operational and ethical guidelines that must be met before Health Canada will grant a notice of authorization. Although the Directorate's total charge of clinical trials pales in comparison to product and site licensing, authorizing clinical trials is never-the-less a very important and essential function of the NHPD as it is through new and innovative clinical research that the industry and research community alike can compile data and evidence to further support current, and develop new uses, for natural health products.

In June 2005, following the long awaited publication of the Clinical Trials for Natural Health Products Guidance Document, the NHPD held a series of one-day information sessions on clinical trials in three Canadian cities: Vancouver, Quebec City and Ottawa. These sessions, which targeted various groups operating within the clinical trials sector, were used as an opportunity to introduce the newly published guidance document and to provide guidance on the processes to follow in order to obtain authorization to conduct a trial in Canada . The sessions also acted as forums for participants to voice their comments and recommendations regarding the NHPD's clinical trial guidelines.

The June sessions met with a resounding success, with a total attendance of187 participants in the three cities combined; a turnout well above the Directorate's expectations for such a specific topic. Audience members were very open and eager to provide their comments, and the presenters came away with a great deal of useful feedback. Evaluations conducted at the end of each session showed that overall satisfaction with the sessions was very high; an encouraging fact that lets event organizers know that the time and work invested into organizing these events is well worth it.

By far the greatest indicator of the sessions' success is the significant increase in the quality of the clinical trial applications submitted to the NHPD for review. Since the June sessions, applications have been coming in with fewer discrepancies and errors, which has allowed the Clinical Trials Unit to dramatically cut back on its processing time and backlog.

The NHPD has not planned any additional clinical trial information sessions for this fiscal year. Revisions are being made to the Clinical Trials for Natural Health Products Guidance Document based on the feedback received at the June information sessions. Once complete, the new guidance document will be made available on Health Canada 's Web site.

The NHPD's Public Opinion Research: Getting to know you, getting to know all about you.

In order to respond to stakeholders' information needs, it is first essential to know who your stakeholders are, what information they are looking for, and the best means of communicating that information to them. This is a key component of any strategic communication exercise, especially if that exercise is to be successful and effective. As the BPLD prepares the next leg of the NHPD's Education and Outreach Program, answers to these questions are essential if Program organizers are to move forward in the right direction.

To date, the Directorate has relied primarily on meetings with stakeholders, correspondence, feedback from special events and media monitoring as its main means of gauging the public's pulse. While these activities provide some insight, the NHPD recognizes that they are very limited in scope and cannot provide us with the detailed stakeholder profiles needed to make sound strategic communication decisions. In order to gain a better grasp of who our stakeholders are, what they know, what they want to know, and how to get the information to them, the BPLD, undertook extensive public opinion research last spring, with two nationwide surveys taking place in February and March 2005.

The first of these surveys, the Benchmark Survey of NHPD Stakeholders, was conducted by Decima Research Inc. in February 2005, and consisted of a telephone survey of approximately 2188 natural health products stakeholders from across the country. Its purpose was to determine stakeholders' level of satisfaction with the services and information provided by the NHPD. This study was also used to establish a profile of the Canadian natural health products industry.

Following the Decima survey, a second survey entitled the Baseline Natural Health Products Survey Among Consumers was launched in March 2005. This survey, conducted by Ipsos-Reid, also consisted of a telephone survey and focused specifically on Canadian consumers of natural health products. The purpose of this survey was to gain further insight into the level of awareness of natural health products and the regulation of these products among Canadians.

To build upon the results gathered in the two surveys, and to further enrich the NHPD's understanding of its stakeholders, the Directorate will be conducting focus group testing throughout the fall and winter. Moving its public opinion research from the population at large to defined target groups will further assist the Directorate in determining potential communications and marketing strategies and how best to tailor current and future outreach activities to the unique information needs of each target group.

Keeping you informed: the NHPD Monthly Communiqué

On September 7, 2005 , the Natural Health Products Directorate launched its first of many monthly communiqués, a new communications initiative aimed at providing industry stakeholders with the information they need to generate complete and high-quality product, site, and clinical trial applications.

Within each communiqué, stakeholders can find information touching upon a variety of industry specific topics, such as: revisions and modifications to regulatory requirements, review processes and monographs as well as solutions to common errors and deficiencies seen in applications received to date.

Each communiqué is separated into four distinct sections for ease of reference. These are product licensing information, site licensing information, clinical trial information, and other information.

Thus far, stakeholder feedback has been extremely positive. The majority of the comments received have been with respect to the common errors and deficiencies, which stakeholders find very useful in identifying potential pitfalls that could, if left unchecked, lead to unnecessary delays in the review process.

The Directorate is pleased to see that the communiqués have developed such a strong following after only two editions (the second issue was released on October 4, 2005 ). It is hoped that this communications initiative will indeed go a long way in facilitating the compliance process by helping applicants prepare complete and high-quality product, site, and clinical trial applications.

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Policy Development and Regulatory Affairs

The Natural Health Products Directorate's authority is derived from the Natural Health Products Regulations, which came into effect on January 1, 2004. These regulations set out specific and detailed requirements for manufacture, packaging, labelling, importation, distribution, and storage of all natural health products sold in Canada .

Given the complexities of appropriately regulating such a diverse and evolving industry, one which involves multiple stakeholder groups; and taking into consideration emerging industrial issues and developments in science, health research, and technology, modifications and revisions to current policies and practices are sometimes required. This ensures that the guidelines and requirements that the Directorate has in place are appropriate for the natural health products industry and create an environment where Canadians have ready access to natural health products that are safe, effective and of high quality while respecting freedom of choice and philosophical and cultural diversity.

The arm of the Directorate charged with developing amendments, policies and guidelines for the Natural Health Products Regulations is the Bureau of Policy Development and Regulatory Affairs (BPDRA). The following section provides an overview of certain key accomplishments and current work as well as an update on important regulatory issues.

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Health Canada publishes vitamin K amendments in the Canada Gazette, Part 1.

On April 9, 2005 , Health Canada took a major step in facilitating market access to natural health products containing vitamin K with the pre-publication of two amendments in the Canada Gazette, Part 1.

According to section 2(2) of the Natural Health Products Regulations, natural health products must be appropriate for self care and as such market authorization cannot be issued to those products requiring a prescription or the intervention of a health care practitioner. At this time, vitamin K is considered a prescription substance and is listed on Schedule F of the Food and Drug Regulations. This situation has been a source of confusion and frustration for many stakeholders given that other vitamins are currently available as over-the-counter natural health products. In addition, it has also proven a barrier to trade, by limiting market access to certain vitamin K products, which at specific dosage forms and content levels, do not pose any significant health risks and are appropriate for self-care use.

Cognisant of this situation, the NHPD and its colleagues at the Therapeutic Products Directorate (TPD) set out to develop and implement appropriate amendments to both the Natural Health Products Regulations and Food and Drug Regulations which, once incorporated, would ultimately allow for vitamin K to be available without a prescription under certain conditions.

Following an in depth analysis of available safety and toxicity data, adverse reaction reports, and approaches used in other regulatory jurisdictions, two draft amendments were prepared and a notice of intent was published this past spring in the Canada Gazette, Part I.

The first of these draft amendments proposes that modifications be made to Schedule F of the Food and Drug Regulations to allow non-prescription status for vitamin K1 and K2 when they are intended for external use in humans or when their recommended daily dose is equal or less than 120 micrograms (0.120 milligrams).

The second amendment proposes to have Vitamin K with its qualifiers be added to Item 3, Schedule 1 of the Natural Health Products Regulations, thus allowing certain vitamin K products to obtain authorization for sale as over-the-counter natural health products.

With this process well under way, the NHPD is now accepting and processing submissions for natural health products that contain vitamin K as a medicinal ingredient (within the qualifiers mentioned earlier). It is important to note however, that no product licences will be issued until the amendments are officially incorporated into their respective regulatory frameworks.

Feedback received from stakeholders is currently being analyzed and modifications are being made to the proposed amendments where appropriate. Publication in the Canada Gazette, Part II will take place on October 19, 1005.

For an electronic copy of the notice issued in the Canada Gazette, Part 1. Once there, press Ctrl + F on your key board and enter the sentence "Department of Health."

International Trade: The NHPD's International Trade Certificates and proposed amendments to Division 1A of the Food and Drug Regulations.

International Trade Certificates

Canadian firms exporting natural health products from Canada are often asked by foreign customers or foreign governments to supply a certification relating to their products' status in Canada . While other regulatory bodies within Health Canada offer some type of export certification, until a year ago, the Natural Health Products Directorate had no such service in place.

Given the breadth of Canada 's natural health products exports, work began in late 2004 on a certification system that would facilitate the exportation of Canadian-made natural health products to foreign markets. The Directorate began issuing certificates to industry in early 2005 and this past summer officially launched its International Trade Certificates (ITCs) guidance document and forms.

The ITCs provide information as to the regulatory and marketing status of a natural health product in Canada . There are three types of ITCs that a Canadian applicant may obtain depending on their intent and their relative compliance with the Natural Health Products Regulations.

The first of these, the International trade certificate for natural health products will only be issued to products that have received a valid product licence and are manufactured at facilities that have a valid site licence.

In the case where the product truly is for "export only" Canadian firms may obtain the International trade certificate for natural health products intended for export only.

The third and last ITC available is the Certificate of good manufacturing practices (GMP) compliance, which is issued for products that have not yet received a product licence but are manufactured at sites which have been found GMP compliant and have been issued a valid site licence.

To date, the Directorate has processed and issued over 1019 ITCs to various Canadian firms.

Further information on ITCs is available in the guidance document entitled Application for International Trade Certificate for Natural Health Products.

Division 1A amendment

In keeping with the theme of international trade, the Natural Health Products Directorate, in collaboration with the Health Products and Food Branch Inspectorate is currently working on amendments to the Food and Drug Regulations, Natural Health Product Regulations and Establishment Licensing Fees Regulations to ensure that Canadian natural health products manufacturers can continue to benefit from Health Canada's four Mutual Recognition Agreements (MRAs) on exportation.

Prior to the coming into force of the Natural Health Products Regulations, many natural health products were regulated as drugs or as products subject to special measures under the Food and Drug Regulations. As such, persons wishing to market their natural health products in Canada were required at the time to comply with the requirements of this regime. This included obtaining an establishment licence as per Divisions 1A and 2 of the Food and Drug Regulations by demonstrating compliance with the drug Good Manufacturing Practices (GMPs).

With the Natural Health Products Regulations now in place, natural health product manufacturers, packagers, labellers, and importers who were previously issued establishment licences are now required to obtain a site licence by complying with the GMPs for natural health products. These GMPs cover most of the same activities as the drug GMPs, but are less stringent. Establishment licence holders have until December 31, 2005 to obtain their site licences. After this date, their establishment licences will no longer be valid for their natural health product operations.

Under the Food and Drug Regulations, individuals that were issued establishment licences and complied with drug GMPs benefited from four MRAs which were developed to facilitate export of Canadian-made health products to foreign markets. However, with the Natural Health Products Regulations now requiring many establishment licence holders to transition over to a new GMP framework, natural health products businesses that once benefited from the existing MRAs are no longer eligible for them as the MRAs only apply to companies that have demonstrated their compliance with the drug GMPs. Furthermore, under current legislation, natural health products businesses cannot hold a site and establishment licence.

To address this situation and ensure that Canadian natural health product companies are not deprived of export opportunities they currently enjoy, work has begun on a dual licensing arrangement that would see that appropriate amendments are made to the Food and Drug Regulations, the Natural Health Products Regulations and the Establishment Licensing Fees Regulations to permit natural health product companies to hold, in addition to a site licence, an establishment licence, thus allowing them to benefit from the existing MRAs.

It is anticipated that these amendments will be published in the Canada Gazette, Part II by December 31, 2005 . Stakeholders will be notified via the NHPD's electronic bulletin once the amendments have been officially published.

Dispute Avoidance and Resolution Policy and Procedure

The Natural Health Products Directorate is committed to working with stakeholders to resolve concerns and issues relating to the regulation of natural health products. While this cooperative approach ensures that most disputes are addressed without the need of a formal process, in some cases, a framework is required to resolve disputes.

Under the umbrella of the Health Products and Food Branch's (HPFB's) Dispute Resolution initiative, the Directorate is currently developing its " Dispute Avoidance and Resolution (DAR) Policy and Procedure" for the reconsideration of decisions related to product and site licences as well as clinical trial authorizations. The NHPD's approach to dispute resolution is congruent with the HPFB's broader approach to dispute resolution as it will be guided by the key principles of fairness, accountability, and accessibility.

The Directorate's Management Advisory Committee provided comments on an initial draft of the DAR Policy and Procedure. Another consultation with the Expert Advisory Committee is scheduled to take place this winter.

Comments received to date from the Directorate's stakeholders have allowed the Directorate to make significant progress in its initiative to establish a fair and effective DAR process. It is anticipated that the formal policy and procedure will come into effect in spring 2006.

The NHPD's External Charging Initiative

In January, the Natural Health Products Directorate created an External Charging Project Team for the purposes of establishing an external charging framework for the licensing services offered by the Directorate.

External charging is a method of funding government services. It is the process of establishing and collecting user fees from identifiable external recipients (e.g. product, site, and clinical trial applications) who receive a direct benefit or advantage from products, services, regulatory activities, use of government facility, rights or privileges, or access to or use of government-owned or controlled resources. External charging is sometimes referred to as cost recovery, (non-tax) revenue, user fees or user charges.

The Government of Canada has engaged in external charging since Confederation, and today, like most other jurisdictions, applies user fees to a diverse range of activities. There are currently 400 external charging programs government-wide in 47 departments and agencies. External charges contribute approximately $4 billion annually to federal programs.

External charging initiatives are implemented in government programs for many reasons, including:

• to promote an equitable approach to financing government programs by fairly charging those who derive benefits beyond those enjoyed by the general public;
• to allow governments to share costs with those whose activities generate the need for regulation;
• to promote the efficient allocation of resources by reducing or eliminating the frivolous overuse of products or services that are perceived as "free goods"; and
• to increase accountability for the use of government resources.

External charging is viewed as a sound management practice that can foster good governance, since it requires government programs to fully account for the full costs of products and services, and to link the fees charged to service standards. This encourages effective, responsive service delivery, and efficient use of public resources.

To date, the Natural Heath Products Directorate has not charged any fees for the licensing services it provides. This decision is based on a commitment made during the development of the Regulations not to institute any external fees within the first few years of operation in order to minimize burden to the industry. In addition, as the Directorate was only starting in its role as Canada 's natural health products regulator, it lacked the resources, experience, and data necessary to determine appropriate fees for its services. However, with nearly two years experience as a regulator, the Directorate is now in a more stable position to begin exploring options for charging fees.

The next step for the Directorate's External Charging Project Team is to determine appropriate fees with clear and measurable service standards, to then move forward with establishing an appropriate costing scheme. This phase of the project will involve an analysis of the natural health products industry to ensure that any fee structure put in place is reflective of the type of industry we regulate - one that is comprised mostly of micro, small and medium businesses. Once a draft framework is ready, the Natural Health Products Directorate will then undertake an extensive consultation process to get the views of Canadians.

Update on Bill C-420

Bill C-420 is a Private Members' bill introduced by Conservative Party of Canada (CPC) MP, Colin Carrie, which seeks to amend the Food and Drugs Act. Its intent is to classify natural health products as foods, and to repeal the provisions (Section 3 and Schedule A) which prohibit the advertisement and labelling to the general public of any food, drug, cosmetic or device for the treatment, prevention or cure of any of the diseases and conditions listed on Schedule A.

What is the Government of Canada's position?

The Government of Canada is opposed to this Bill and is of the view that, if this it were adopted, Bill C-420 would severely compromise the government's ability to ensure that natural health products are safe and effective, and severely limit the ability of Canadians to make informed health choices.

Adoption of Bill C-420 would result in natural health products - which are therapeutic products currently regulated as a subset of drugs - being regulated as foods. With very few exceptions, foods are not subject to pre-market review and their manufacture, packaging, labelling, and importation does not need to comply with good manufacturing practices. Under the Natural Health Products Regulations, all natural health products must undergo a mandatory pre-market review for safety efficacy and quality and manufactures, packagers, labellers, and importers of these products must comply with appropriate good manufacturing practices.

In addition, foods can only make limited health claims, while natural health products, under their current regime, can make a broad range of claims provided that they are supported by appropriate levels of evidence.

The Natural Health Products Regulations are the result of a comprehensive, multi-year consultative process involving consumers, industry representatives, academics, and health care practitioners. Throughout these consultations, participants consistently requested that an appropriate system be put in place to ensure that the natural health products made available to Canadians are safe, effective, and of the highest quality. The Natural Health Products Regulations do respond to these demands by setting out appropriate guidelines and requirements for pre-market review, good manufacturing practices and adequate labelling and packaging.

Schedule A of the Food and Drugs Act

Bill C-420 also seeks the repeal of Section 3 and Schedule A of the Food and Drugs Act. While the Government of Canada is in agreement that Section 3 and Schedule A require revision and updating, completely repealing these sections from the Act, as Bill C-420 suggests, should not be undertaken until Health Canada has had a full opportunity to assess key issues and consult with Canadians on their views. Indeed, previous consultations have shown that there is still support amongst consumers, industry representatives and health professionals for the principles of these sections.

Long before Bill C-420 was tabled in parliament, Health Canada had already initiated the review of Section 3 and Schedule A of the Food and Drugs Act by establishing the Schedule A External Working Group on February 14, 2003 . This group, which was chaired by the Natural Health Products Directorate and consisted of representatives from academia, industry, media groups, government and consumer groups, was mandated with assessing the Schedule's relevance and making recommendations for short, medium and long term solutions.

Following several months of work, in January 2004, the External Working Group published its recommendations as to the future to Section 3 and Schedule A in two reports known as the Majority and Minority Reports. Health Canada is currently in the process of devising an action plan for Schedule A based on these recommendations.

Since the publication of the reports, lead on the Schedule A file has passed on from the Natural Health Products Directorate to the Therapeutic Products Directorate. Nevertheless, the NHPD remains an active participant on this file as any modifications brought to Section 3 and Schedule A will most certainly have an impact on the sale of natural health products in Canada .

Next Steps

The Standing Committee on Health continues to review the proposed Bill.