Following Health Canada's cost-recovery proposal for natural health products ("NHPs") in May 2023 (discussed here), and extensive feedback submitted by industry stakeholders and consumers during the associated consultations, a revised fee proposal was published March 27, 2024. Health Canada has only provided a 30-day consultation period for the revised fee proposal, with comments due April 25, 2024.

Under the current proposal, Health Canada has proposed to lower fees, remove the Class III Novel fee category, and phase-in fees over a seven-year period starting December 1, 2025. The categories of fees remain the same: pre-market evaluations for products, site licensing, and annual right to sell (RTS) fees.

The small business mitigation measures originally proposed have not been revised. Businesses with fewer than 100 employees or $30,000 - $5 million CAD in annual revenue will qualify for reductions in fees typically ranging from 25 per cent to 50 per cent. While small business mitigation measures are welcomed, the overall fee approach continues to disadvantage small businesses, in particular those importing products.

The lower fees and phase-in are largely based on a reduction in the fee ratios, particularly during the first five years. However, there continues to be many questions as to how Health Canada determined the underlying costs, the extent to which the costing aligns with other Health Canada initiatives and proposed changes to the over-arching regulatory framework for NHPs and other self-care products, and the expected impact of the fees on Canadian's access to marketed NHPs and the industry as a whole.

Moreover, Health Canada has signaled its intent to only publish the Regulatory Impact Analysis Statement (RIAS) and associated cost-benefit analysis as part of Canada Gazette Part II of the final fees – the RIAS and cost-benefit will not be available for review or comment while the fee proposal is under consultation.

Proposal overview

NHP product licences

Health Canada's proposal includes fees for all NHP applications and amendments based on the class of PLA, see Table 1 below. Notably, Health Canada responded to industry concerns regarding the proposed Novel Class III category, which was initially proposed as $58,332.

Table 1: Fee schedule with seven-year phase-in (without small business discount) - Click to view table

NHP site licences

Site licence fees will be charged to review applications and amendments.

In addition to fees for assessing new NHP site licence applications or amendments, Health Canada proposes an annual site licence fee based on the most expensive fee category conducted at the site. This is a one-size-fits-all fee, whether a license holder has one site with one product, or 20 sites with hundreds of products.

Table 2: Fee schedule with seven-year phase-in (without small business discount) - Click to view table

Right to sell

Rather than the initial RTS fee of $542 per NPN or DIN-HM, the revised proposal will start with a RTS fee of $154 in year one, increasing to $317 by year seven.

Conclusion

While Health Canada's stated goal is to promote access to safe, effective, and high-quality NHPs for Canadian consumers, and some revisions have been made based on industry feedback to the previous proposed, the proposed fees continue to have the potential to create unintended effects and it remains to be seen how this proposal will accomplish Health Canada's goals.

Health Canada is proposing an implementation date of December 1, 2025. Cost recovery for NHPs has been a major topic of discussion over the past year, and Health Canada has been clear that implementation of fees, in some manner, is on the horizon. Reach out to a Gowling WLG professional to discuss how we can help you and your business understand this proposal and how it will impact your business.