Revisions to proposed fees for natural health products

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Background

Health Canada is the regulator responsible for helping people in Canada maintain and improve their health. As the regulator of natural health products (NHPs), among other activities, Health Canada:

Under the Food and Drugs Act, Health Canada currently charges fees for its regulatory services, including those related to human and veterinary drugs, and medical devices. NHPs are the only health product line for which the department does not currently charge fees and instead relies on taxpayer funding.

Expanding cost recovery to NHPs is an important next step to support the long-term sustainability of the program, as Health Canada moves towards fully implementing the Self-Care Framework. Cost recovery will allow the program to recover some of the costs of reviewing NHP applications and conducting oversight activities. Recovering these costs means the program can continue to:

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Initial proposal and consultation process

Health Canada ran a public consultation on proposed fees for NHPs from May 12 to August 10, 2023, following early engagement with stakeholders in 2022. Stakeholders took part by submitting comments and participating in technical briefing sessions. Stakeholders were asked to provide submissions across these categories:

During the consultation period, Health Canada received:

The submissions included stakeholder concerns about fee amounts and their potential impacts on:

Stakeholders indicated strong support for:

Since the end of the consultation period, Health Canada has continued to engage and communicate with stakeholders. This includes hosting an engagement session with industry associations on March 27, 2024, to discuss revisions to the proposed fees.

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Revisions to the proposed fees

The consultation submissions received were instrumental in the development of significant revisions to the proposed fees, which include:

For example, stakeholders shared concerns that overall fee amounts were too high. To address this, the department lowered fees by limiting planned program enhancements. This reduced the overall annual cost of the program from the proposed $100.8M per year to $51.1M each year. However, the costs for the ongoing NHP good manufacturing practices (GMP) program, which has expanded from an initial pilot stage, are now included.

These cost reductions result in fees lowered by 38% to 72% (depending on the fee) once fully implemented. The small business discount will then be applied to these new lower fees for qualifying businesses, further reducing the applicable fees.

Furthermore, the department also lowered the fee-setting ratio for the first 4 years. The fee-setting ratio is the portion of costs included in the fee that is charged to industry versus paid through taxpayer dollars. Health Canada bases the ratio on several factors, including the public-private benefit.

Recognizing that the fees may create an undue burden on small businesses, the department has established mitigation measures such as small business measures. These discounts as described in the May 2023 proposal continue to apply and are fully paid for by the Canadian taxpayer.

Stakeholders also shared concerns about bringing in fees at a predictable and manageable pace. As a result, Health Canada is introducing a phase-in structure over a 7-year period. Phasing in fees will provide additional relief on top of the temporary adjustment to fee-setting ratios.

All fees will be phased in by similar percentage levels each year. The first 4 years of the phase-in occur at temporarily lowered fee-setting ratios. Starting in Year 5, fees will then be phased in using the ratios from the initial fee proposal, until reaching the full fee in Year 7.

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As described, the fees are significantly reduced from the May 2023 fee proposal. The initial fee framework was based on:

These revisions focus on recovering costs for existing program activities, including costs for the inspection program as it currently exists, plus costs for the administration of the fee regime.

The revisions no longer include costs for most prospective program activities, including:

These revisions will make it easier for industry to adapt to paying fees. At the same time, implementing the fee framework now will position the program to fully implement the Self-Care Framework by ensuring a sustainable program for the oversight of NHPs. Health Canada will continue to implement the Self-Care Framework in the coming years.

The department acknowledges the important role that small businesses play in the NHP industry, and therefore, the small business discounts from the initial proposal will continue to apply to the new, lower fees. These discounts will result in further relief for qualifying businesses, and include:

To qualify as a small business, a company, including its affiliates, must have:

Updated fees

Based on the outlined program changes, fees have been significantly lowered. The tables below show the fees from the May 2023 proposal compared against the revised fees for, regular businesses (Table 1) and small businesses (Table 2). As the revised fees are implemented over a 7-year period, the fees for each year of the phase-in are shown.

Beginning in Year 2, all fees will also be adjusted annually on April 1 using the Consumer Price Index from the previous fiscal year, rounded up to the nearest dollar. This is consistent with the fee adjustments Health Canada makes for other health products.

Table 1: Fee schedule with 7-year phase-in (without small business discount)
Fee line Fee category Fees as per initial proposal (published May 12, 2023) Fee-setting ratios temporarily lowered:
Pre-market evaluation (EVAL): 50%
Site licensing (SL): 75%
Right to sell (RTS): 50%
Fee-setting ratios raised to levels from the initial proposal:
Pre-market evaluation (EVAL): 75%
Site licensing (SL): 100%
Right to sell (RTS): 67%
Year 1 December 1, 2025 to March 31, 2027 Year 2 April 1 2027 to March 31 2028 Year 3
April 1 2028 to March 31 2029
Year 4
April 1 2029 to March 31 2030
Year 5
April 1 2030 to March 31 2031
Year 6
April 1 2031 to March 31 2032
Year 7
April 1 2032 to March 31 2033
Pre-market evaluation (EVAL) Class I application or amendment $1,124 $128 $157 $177 $196 $236 $265 $294
Class II application or amendment $2,761 $513 $631 $710 $788 $946 $1,064 $1,182
Class III application or amendment $7,209 $1,799 $2,214 $2,491 $2,768 $3,321 $3,736 $4,151
Site licensing (SL) SL applications or amendments $4,784 $1,147 $1,412 $1,588 $1,765 $1,882 $2,117 $2,353
Annual SL: manufacturing (sterile and non-sterile dosage form) $40,071 (sterile)
$23,071 (non-sterile)
$4,661 $5,737 $6,454 $7,171 $7,649 $8,605 $9,561
Annual SL: importation $20,035 $3,995 $4,917 $5,531 $6,146 $6,555 $7,375 $8,194
Annual SL: packaging and labelling $7,650
(packaging)
$6,921 (labelling)
$1,448 $1,782 $2,005 $2,227 $2,376 $2,673 $2,970
Right to sell (RTS) NHP RTS $542 $154 $189 $213 $237 $254 $285 $317
Table 2: Fee schedule with 7-year phase-in (with small business discount)
Fee line Fee category Fees as per initial proposal (published May 12, 2023) Fee-setting ratios temporarily lowered:
Pre-market evaluation (EVAL): 50%
Site licensing (SL): 75%
Right to sell (RTS): 50%
Fee-setting ratios raised to levels from the initial proposal:
Pre-market evaluation (EVAL): 75%
Site licensing (SL): 100%
Right to sell (RTS): 67%
Year 1
December 1, 2025 to March 31, 2027
Year 2
April 1 2027 to March 31 2028
Year 3
April 1 2028 to March 31 2029
Year 4
April 1 2029 to March 31 2030
Year 5
April 1 2030 to March 31 2031
Year 6
April 1 2031 to March 31 2032
Year 7
April 1 2032 to March 31 2033
Pre-market evaluation (EVAL) Class I application or amendment $562 $64 $79 $89 $98 $118 $133 $147
Class II application or amendment $1,381 $257 $316 $355 $394 $473 $532 $591
Class III application or amendment $3,605 $900 $1,107 $1,246 $1,384 $1,661 $1,868 $2,076
Site licensing (SL) SL applications or amendments $3,588 $860 $1,059 $1,191 $1,324 $1,412 $1,588 $1,765
Annual SL: manufacturing (sterile and non-sterile dosage form) $30,053 (sterile)
$17,303 (non-sterile)
$3,496 $4,303 $4,841 $5,378 $5,737 $6,454 $7,171
Annual SL: importation $15,026 $2,996 $3,688 $4,148 $4,610 $4,916 $5,531 $6,146
Annual SL: packaging and labelling $5,738 (packaging)
$5,191 (labelling)
$1,086 $1,337 $1,504 $1,670 $1,782 $2,005 $2,228
Right to sell (RTS) NHP RTS $407 $116 $142 $160 $178 $191 $214 $238

The phase-in of fees will be divided into two parts. Part 1 covers years 1 to 4, where the fee-setting ratios will be temporarily lowered to:

Part 1 fees will be phased in as a percentage of these lowered fee-setting ratios.

Part 2 covers years 5 to 7, where the fee-setting ratios will return to the levels from the initial proposal:

Part 2 fees will be phased in as a percentage of these fee-setting ratios.

The following tables are examples of how fees will be phased in across 7 years (excluding the CPI adjustments that will be made, as described above). The fees at the end of this period will be lower than in the initial proposal.

Learn more about the phase-in structure.

Table 3: Pre-market evaluation phase-in example (Class I application or amendment)
Articles Year 1
December 1, 2025 to March 31 2027
Year 2
April 1 2027 to March 31 2028
Year 3
April 1 2028 to March 31 2029
Year 4
April 1 2029 to March 31 2030
Year 5
April 1 2030 to March 31 2031
Year 6
April 1 2031 to March 31 2032
Year 7
April 1 2032 to March 31 2033
Cost to Health Canada $392 $392 $392 $392 $392 $392 $392
Fee using fee-setting ratio from May 2023 proposal $294 $294 $294 $294 $294 $294 $294
Revised fee $128 $157 $177 $196 $236 $265 $294
Revised fee for small businesses $64 $79 $89 $98 $118 $133 $147

Note that the discount is 100% for a small business's first-ever NHP product submission.

Table 4: Site licensing phase-in example (applications and amendments)
Articles Year 1
December 1, 2025 to March 31 2027
Year 2
April 1 2027 to March 31 2028
Year 3
April 1 2028 to March 31 2029
Year 4
April 1 2029 to March 31 2030
Year 5
April 1 2030 to March 31 2031
Year 6
April 1 2031 to March 31 2032
Year 7
April 1 2032 to March 31 2033
Cost to Health Canada $2,353 $2,353 $2,353 $2,353 $2,353 $2,353 $2,353
Fee using fee-setting ratio from May 2023 proposal $2,353 $2,353 $2,353 $2,353 $2,353 $2,353 $2,353
Revised fee $1,147 $1,412 $1,588 $1,765 $1,882 $2,117 $2,353
Revised fee for small businesses $860 $1,059 $1,191 $1,324 $1,412 $1,588 $1,765
Table 5: Right to sell phase-in example
Articles Year 1
December 1, 2025 to March 31 2027
Year 2
April 1 2027 to March 31 2028
Year 3
April 1 2028 to March 31 2029
Year 4
April 1 2029 to March 31 2030
Year 5
April 1 2030 to March 31 2031
Year 6
April 1 2031 to March 31 2032
Year 7
April 1 2032 to March 31 2033
Cost to Health Canada $474 $474 $474 $474 $474 $474 $474
Fee using fee-setting ratio from May 2023 proposal $317 $317 $317 $317 $317 $317 $317
Revised fee $154 $189 $213 $237 $254 $285 $317
Revised fee for small businesses $116 $142 $160 $178 $191 $214 $238

Next steps

Health Canada invites industry and stakeholders to submit final comments on the revisions to the proposed fees between March 27 and April 25, 2024. A feedback form is available online during this period.

Learn more about how to submit your feedback on the revisions to the proposed fees.

The department will gather input and consider it before finalizing the fees for NHPs. Once finalized, Health Canada will publish fees in the Canada Gazette, Part II ahead of implementation (targeted for December 1, 2025).

Appendix A: Details on revisions made to the proposed fees

Health Canada made several revisions to the proposed fees after analyzing stakeholder feedback, including:

Significantly lowering fees by scaling down planned program enhancements & temporarily lowering the fee-setting ratio to ease the introduction of fees

Stakeholder comments on the May 2023 proposal indicated strong concerns about the fee amounts and their potential impacts on consumers, businesses, and product innovation in the NHP sector. In response, Health Canada lowered fees by scaling down planned program enhancements and temporarily adjusted the fee-setting ratio to ease the impact of fee implementation.

In the initial proposal, the fee-setting ratio differed across each of the 3 fee lines:

The department also recognizes that the NHP industry is not used to paying fees at this time. As such, Health Canada is temporarily lowering these ratios for the first 4 years of a 7-year phase-in of fees.

During years 1 to 4, the fee-setting ratios will be as follows:

This temporary reduction will give industry additional fee relief as fees are gradually phased in.

Example

If the full unit cost of an activity fee is $392 and the fee-setting ratio is 75%, then the fee is $294, using this calculation:

Temporarily reducing the fee-setting ratio to 50% reduces the fee to $196, using this calculation:

From year 5 onward, the fee-setting ratio returns to the levels from the initial proposal.

Further easing the introduction of fees through a 7-year phase-in

Health Canada will specify the fee collection schedule in the fee order, which will be published in the Canada Gazette, Part II before implementation.

Beginning in Year 2, the department will annually adjust all fees on April 1 using the Consumer Price Index. This is consistent with the fee adjustments the department make for other health products.

How the phase-in structure will work depends on the year.

Year 1 to year 4

Based on the temporarily reduced fee-setting ratios:

  • December 1, 2025 to March 31, 2027 (year 1):
    • 65% of each fee charged
  • April 1, 2027 to March 31, 2028 (year 2):
    • 80% of each fee charged
  • April 1, 2028 to March 31, 2029 (year 3):
    • 90% of each fee charged
  • April 1, 2029 to March 31, 2030 (year 4):
    • 100% of each fee charged

Example

If the unit cost is $392 and the fee-setting ratio is 50%, then the fee is $196. This fee is then phased in as follows:

  • Year 1 fee: $196 x 65% = $128
  • Year 2 fee: $196 x 80% = $157
  • Year 3 fee: $196 x 90% = $177
  • Year 4 fee: $196 x 100% = $196 (fee now fully phased-in at the reduced fee-setting ratio)
Year 5 to year 7

Based on the fee-setting ratios from the May 2023 proposal:

  • April 1, 2030 to March 31, 2031 (year 5):
    • 80% of each fee charged
  • April 1, 2031 to March 31, 2032 (year 6):
    • 90% of each fee charged
  • April 1, 2032 to March 31, 2033 (year 7)
    • 100% of each fee charged (phase-in complete)

Example

If the unit cost is $392 and the fee-setting ratio is 75%, then the fee is $294. This fee is then phased in as follows:

  • Year 5 fee: $294 x 80% = $236
  • Year 6 fee: $294 x 90% = $265
  • Year 7 fee: $294 x 100% = $294 (fee now fully phased-in at the fee-setting ratio from the initial proposal)

Removing the proposed Class III-Novel category and its associated fees

Health Canada proposed the new Class III-Novel category to ensure the Class III fee was not skewed by exceptional applications. The department expected the Novel category to apply to just 1% of applications going forward, but stakeholders expressed concern with:

Therefore, Health Canada is removing this category and its associated performance standards and incorporating the associated costs into Class III. Combined with the overall cost reductions described above, removing this category reduces the highest possible fee for pre-market product applications. Fees will be reduced from over $58,332 to $1,799 in the first year, gradually increasing to $4,151 by year 7. For small businesses, the highest possible pre-market evaluation fee will drop from over $29,166 to $900 in the first year, gradually increasing to $2,076 by year 7.

The following table shows the revised performance standards with the Class III-Novel category removed.

Table 6: Revised performance standards
Fee line Fee category Current performance standards in calendar days Proposed performance standards in calendar days of (initial proposal) Proposed performance standards in calendar days of (revised)
Pre-market Evaluation
(EVAL)
Class I application or amendment 60 60 60
Class II application or amendment 90 120 120Footnote 1
Class III application or amendment 210 210 210
Class III novel application 210 (if treated as a Class III) 300 Class III Novel category removed 210
(if treated as a Class III)
Class III novel safety and efficacy amendment 210 (if treated as a Class III) 210 210
(if treated as a Class III)
Class III novel quality amendment 210 (if treated as a Class III) 210 210
(if treated as a Class III)
Site licence (SL) SL applications or amendments 30 to 90 180 180
Annual SL - manufacturing - sterile dosage form 30 to 90 90 90
Annual SL - manufacturing - non-sterile dosage form
Annual SL - importation
Annual SL - packaging
Annual SL - labelling
Right to sell (RTS) NHP RTS (per NPN or DIN-HM) N/A 60 to update licensed NHP database 60 to update licensed NHP database
Footnote 1

Service standards for Class II maintain the proposed increase from 90 to 120 days to better align with current and projected program volumes and to better ensure that the existing application backlog can be eliminated.

Return to footnote 1 referrer

Health Canada will remit 25% of the fee paid if the published performance standard is not met. Note that the department may use this provision in conjunction with our established approach for other health products, known as pause-the-clock. This would allow for the count (in days) of a performance standard to be paused under specified circumstances.

Pause-the-Clock allows for a performance standard to be paused if Health Canada is unable to process the file within the timeline due to circumstances beyond Health Canada's control. A company can request a pause-the-clock if it needs more time to respond with required information, such as when an information request notice (IRN) has been issued. (IRNs provide applicants the opportunity to address non-administrative deficiencies or information omissions, as per sections 15 and 37 of the NHPR.)

Additional guidance will be published outlining the conditions and processes for the pause-the-clock mechanism and other operational aspects.

Streamlining the fee categories under Annual Site Licensing from 5 fees to 3

Health Canada originally proposed a tiered annual site licence fee based on the complexity of regulated activities conducted at the site. Only the fee for the most complex activity conducted will be charged. The department proposed these categories:

Stakeholders expressed concerns about high fees and the fee line's complexity. As a result, Health Canada is streamlining:

The fee categories are now:

Although grouped into only 3 categories, all costs are still included under the fees. Only the fee for the most complex activity conducted at a site will be charged.

Appendix B: Fee framework from the May 2023 proposal

The following table summarizes the overall fee framework from the May 2023 proposal.

Table 7: Fee framework from the May 2023 proposal and subsequent revisions
Category Description
Fee-setting ratios
(ratios that are applied to the full costs to determine what the fee should be)
Fee-setting ratiosFootnote * proposed for NHPs are the same as the established ratios for human drugs and medical devices:
  • 100% for SL fees
  • 75% for EVAL fees
  • 67% for RTS fees

Footnote * Revised: In addition to removing most prospective costs from each fee line (and thus lowering fees), Health Canada will also temporarily lower the fee ratios for the first 4 years of a 7-year phase-in of fees, targeted to begin December 1, 2025.

Annual fee adjustments

Annual fee adjustments will be tied to the Consumer Price Index of the previous year, rounded up to the nearest dollar.

Small business mitigation Registered small businesses will be eligible for the following fee remissions:
  • 100% for first-ever NHP EVAL product submission
  • 50% for all subsequent EVAL submissions
  • 25% for SL and RTS fees

To qualify for small business mitigation, companies must meet our small business definition (fewer than 100 employees or between $30,000 and $5 million in gross annual revenue, including affiliates).

Performance standard Each fee categoryFootnote * has a corresponding performance standard.

Footnote * Revised: the Class III-Novel performance standards are now removed.

Penalty provision (through remission) Applicants will receive a 25% fee remission when Health Canada is unable to meet a performance standard (note that the pause-the-clock mechanism may be applied). Additional operational guidance will provide more detail on the penalty provisions and processes.
Pre-market evaluation (EVAL) fees The applicable Class I, II, III or III novel feeFootnote * will be charged for:
  • a product licence application
  • an amendment of an application

Footnote * Revised: Class III-Novel category is now removed (associated costs incorporated into Class III fees).

Site licensing (SL) fees There are 2 types:
  • fee per application for new SL application and amendment to an existing SL (per site)
  • annual fee per site listed on the SL (a tiered fee based on the complexity of regulated activities conducted at the site)

Footnote * Revised: Annual site licence fee categories have been streamlined from 5 to 3.

Right to sell (RTS) fees Annual fee for each individual NPN or DIN-HM held by a company

Footnotes

Footnote 1

Areas that are now revised are marked with an asterisk (*).

Return to footnote * referrer

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