Health Canada Ordered to Grant Licence for Resolve

A recent Federal Court decision—holding that Health Canada denied The Winning Combination Inc. (TWC) procedural fairness in TWC's application for a Natural Health Product licence—highlights the requirements of administrative fairness that Health Canada must consider in the context of marketing approvals.

What You Need To Know

• As a government body, Health Canada is subject to administrative law obligations. The Federal Court held that the government failed to meet those obligations, and repeatedly denied TWC procedural fairness.
• Health Canada's demand for "conclusive proof" of efficacy in the form of unimpeachable human clinical studies was held to be overly strict, unreasonable and incorrect as a matter of statutory interpretation.
• During the approval process, Health Canada is required to notify an applicant of all deficiencies in its application, and allow a reasonable time for a response.
• Health Canada cannot engage in speculation in an attempt to refute the data presented by an applicant.
• The Federal Court’s decision can be leveraged by future applicants where Health Canada or another government body does not appear to meet requirements of administrative fairness and reasonableness.

Background and Analysis

Until 2007, Resolve, a smoking cessation aid, was marketed by TWC as a natural way to reduce smoking. The lozenge was made with an undisclosed active ingredient then listed on Health Canada’s Dictionary of Natural Products' list of natural substances.

Resolve had filed, but not yet received, a Natural Health Product (NHP) licence, and was operating under the Natural Health Products (Unprocessed Product Licence Applications) Regulations—temporary regulations that allowed lower-risk NHPs meeting safety and efficacy requirements to be legally sold and labelled with exemption numbers while awaiting full review.

Health Canada's Natural Health Product Directorate (NHPD) rejected TWC’s NHP licence application twice. The first time, the NHPD determined that TWC had submitted insufficient evidence to support the safety and efficacy of Resolve, alleging that it contained a substance acquired from passionflower that was harmful. Following this decision, TWC filed a request for reconsideration.

The second time, the NHPD refused TWC's NHP licence application on the basis that Resolve’s active ingredient was allegedly not naturally occurring and was a drug under the Food and Drug Regulations (rather than an NHP under the Natural Health Product Regulations). As a result of the reclassification, Resolve was determined to be an unlicensed drug and effectively prohibited from sale in Canada.

TWC filed an application to the Federal Court for judicial review of the decisions made by Health Canada. The Court quashed both of Health Canada’s refusals, and all of the subsequent decisions. ¹ The Court held that Health Canada had denied TWC procedural fairness on the basis that information was deliberately withheld from TWC, targets were moved, standards were changed and biased personnel prevented any true independent assessment.

To summarize the Court’s findings:

• Improperly applied standards : Health Canada demanded "conclusive proof" of efficacy from TWC in the form of unimpeachable human clinical studies. The Court held that Health Canada’s adoption of this strict test was both incorrect as a matter of statutory interpretation and unreasonable in the context of the Natural Health Product Regulations. The Court held that Health Canada’s application of a strict test—a test that would appear to be higher than what is required under the Food and Drug Regulations—lends credence to the argument that Health Canada was simply applying any standard that would deny TWC’s product licence application.

• Absence of prior notice and withholding of information: Health Canada is required to notify an applicant of a deficiency in its application, and allow a reasonable time for a response. Here, TWC was not notified that its efficacy information was deficient or what would be required to rectify the application before the notice of refusal was issued. TWC was also not given notice that classification was a problem, nor was TWC given an opportunity to submit expert evidence to show that the active ingredient occurs in nature.

• Reasonable apprehension of bias: NHPD did not conduct its own laboratory testing to refute the evidence from TWC experts, and the NHPD experts were found to have engaged in speculation which strayed from the duties to be fair, objective and non-partisan. TWC also performed research on the same databases cited by the NHPD and found an article that confirmed the active ingredient is natural substance. Yet, NHPD remained resolute on classification, suggesting a reasonable apprehension of bias.

The Minister was ordered to grant TWC a licence for Resolve within 30 days because Health Canada had conceded that the product was safe for its prescribed uses, information submitted by TWC supported efficacy and evidence showed that the active ingredient is naturally occurring. Subject to an appeal, this decision can be leveraged by future applicants where Health Canada or another government body does not appear to meet requirements of administrative fairness and reasonableness.

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¹ The Winning Combination Inc. v. Minister of Health et al. 2016 FC 381.  Health Canada has appealed the Federal Court’s decision.

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