Personal Use Importation – Canada’s best kept regulatory secret for supplements?

December 5, 2013 By

Reprinted from Functional Ingredients

Many are already aware of Canada’s much more stringent and cumbersome regulatory model for supplements (called Natural Health Products, or NHPs, in Canada). Every product needs to be licensed by Health Canada, which requires a tedious application for one, but then takes forever to receive a response from the government. And then there are the importation requirements. Things like an importer of record, domestic site license, annexation of foreign sites and other unfamiliar and confusing things have to be put in place before any company outside of Canada can send any product in.

What’s surprising to most is that there’s actually an exemption to all of these rules. That statement usually stirs a lot of excitement in companies we talk to. It’s what Health Canada calls Personal Use Importations. The intent of the whole exemption is to allow Canadian citizens access to medicines that are not available in Canada. Essentially, Canadians can order product from any foreign country and that product does have to be reviewed and licensed by Health Canada and the importation requirements mentioned above do not have to be met.

There are, however, five firm rules.

  • One, the customer is only permitted to import (per shipment) a 90 day or less supply based on the directions of use.
  • Two, the product must be for that individual’s own use, and not for resale.
  • Three, it must be shipped directly to the end user, and not a commercial establishment.
  • Four, there can be no Canadian intermediary (such as a broker or salesperson).
  • Five, it cannot contain any Schedule F (prescription) ingredients.

If any of these rules are not met, and the Canadian Border Services Agency (CBSA) notices it, product may be required to be immediately returned to the country of origin, disposed of, or forfeited to Health Canada.

We suddenly realize that this is not the type of business model most companies can operate under, especially if your product is being distributed to retail locations. For some business models, however, it has worked tremendously well. Two in particular: E-commerce websites shipping orders to customers in Canada, and Direct Sellers. Since the inception of our regulatory system for NHPs in 2004 these companies have been able to ship products to their customers in Canada without having to meet any of the regulatory requirements. And there’s nothing wrong with that!

Actually, there is one problem. It’s been used a lot lately and the frequency is increasing. Health Canada is well aware of this and during recent bilateral meetings and government workshops the health authority has expressed its concern that the exemption clause is being abused. Talks about tightening up the rules have emerged. Health Canada believes that some foreign companies are taking advantage of this clause to skirt the regulatory requirements. They’re not alone in thinking this. “Part of the driving force behind Health Canada’s desire to tighten up the Personal Use exemption and how it is applied is industry itself,” reports William Morkel, Director of QA at dicentra. “Many companies see this clause as giving an unfair advantage to foreign companies who don’t have to abide by site licensing and product licensing requirements.”

If, how and when the rules are tightened remains to be determined. One point to keep in mind is that the entire Personal Use clause was primarily developed to allow access to Canadians medicines that are not otherwise available in Canada. If someone wants to ship a common product, say 500mg Vitamin C, which is already abundantly available in Canada, then technically the Personal Use clause would not apply. This may be one of the ways in which Health Canada and the CBSA cracks down on these types of imports. Companies with significant business in Canada are already taking the necessary steps to license their products and assign an importer even though they continue to operate under the Personal Use requirements. The ride’s been nice up until now. The time has come to take some measures to secure future business and minimize any potential risk.

Peter Wojewnik is the Vice President of Business Development for dicentra. dicentra provides sought-after regulatory and scientific guidance on product and marketing compliance, quality assurance, research and development, new ingredient assessments and overall regulatory strategies for health-related products sold in North American marketplaces.

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