Raising the standard of the natural health products industry

By ELEANOR BLACK

For the past 20 years Gary Mabey has sold natural products to people who prefer to cure their ills without using prescription medication. He deals in a vast array of products from the simple - garlic, aloe vera gel and chamomile - to the more exotic.

The dietary supplements industry, worth an estimated $90 million to $200 million a year, has provided satisfaction and a comfortable lifestyle.

But the softly spoken Mabey, who sounds wrung out, fears that with the stroke of two pens, one on each side of the Tasman, his livelihood could soon be squashed.

A joint New Zealand-Australia agency could be operating by mid-2004. It would regulate the manufacture, distribution and sale of healthcare products, including prescription medicines, dietary supplements and medical devices such as heart valves, and charge heavily for the service.

The proposal would replace New Zealand's medicines regulatory body, Medsafe, and Australia's Therapeutic Goods Agency (TGA). It was mooted in 1999 and worried supplements producers, suppliers, distributors and importers - who have never had to apply or pay for the privilege of selling their wares - have been consulting the Ministry of Health since then.

Most are opposed to the proposal, which is seen as a greedy lunge by Australians to cash in on New Zealand's thriving supplements business, but nearly everyone agrees that some sort of regulation is overdue.

A 195-page consultation document was released to the public in June. Submissions closed last week and a working party is expected to present its findings to the Government by Christmas. Those opposed to the plan are in a lather of last-minute lobbying. Even if what is known as the "harmonisation project" is rejected, some sort of legislation will be developed.

At present, supplements straddle the divide between foods and medicines. Dietary supplements fall under the Food Act 1981, which has a set of 1985 regulations devoted to permissible dosages and labelling requirements. But supplements may only be linked with therapeutic purposes after they are approved under the Medicines Act 1981, which classes herbal remedies as medicines, at a minimum cost of $8000.

Instead, many supplements are accompanied by stacks of pamphlets which state the claims their labels cannot. Sometimes those claims overstate the product's capabilities.

Producers and suppliers argue that dietary supplements are, in fact, safer than many foods we eat and vastly safer than prescription medication.

Citizens For Health Choices, which Mabey co-ordinates, is a group of 1000 consumers, natural health practitioners and companies, whose members argue there is no need for a regulatory body to oversee low-risk supplements. They claim that in the past decade regulated and properly prescribed medications have killed 14,000 New Zealanders.

Mabey admits there have been problems with supplements sold in New Zealand but says the media attention directed at such hiccups is out of proportion to the harm these products pose to the public.

He has a point - the number of people affected by adverse reactions to supplements, while not recorded, is agreed by all parties to be minimal when compared to adverse reactions to prescription medications. Nonetheless, consumer safety has been compromised. Some examples:

* Cheng Kum/Shen Loon - sold as an aid for healthy skin, joint mobility and painful menstruation, it contained a potent steroid, betamethasone, normally used under medical supervision for treating arthritis. Prolonged use of betamethasone is associated with acne, susceptibility to infection, osteoporosis and diabetes. The steroid was not listed on the label.

* Boron with phytase - contained toxic levels of selenium, a trace mineral found in the body which protects against cell damage. Overdosage of selenium can lead to liver damage and gastrointestinal upset.

* Lyprinol - a green-lipped mussel extract which was marketed as fighting cancer and arthritis. Sales topped $1 million in one day. Trials found it had no effect.

* K4 - an Indian herbal product which was implicated in the deaths of two men. Causes liver damage.

Advocates of the proposed agency - and even some of those who reject it - agree that the body would reduce instances of harmful dietary supplements making it to shop shelves and allow safe supplements to make legitimate health claims on the label.

The agency would be overseen by the health ministers of New Zealand and Australia and a board of five members, including a managing director and chairperson. The board would comprise health sector experts from both countries and a member with commercial knowledge of the Australian supplements market, a $1 billion concern. There would be offices in both countries.

The proposed agency would:

* Implement controls on the import, manufacture and supply of therapeutic goods.

* License and monitor products.

* Recall products and issue warnings.

* Set requirements for advertising and marketing, labelling, packaging, distribution, storage.

* Impose sanctions for breaching the regulations.

Harmonisation project manager Susan Martindale says 95 per cent of the dietary supplements sold in New Zealand could be approved almost immediately under the proposed regulations using a "smart" computer software programme.

Suppliers would go online, enter the details of their formulations and therapeutic claims and provide the address of the manufacturer. If the formulations were accepted, the claim considered reasonable and the manufacturer approved, registration would be complete - except for the charge.

Martindale says it will cost between an estimated $300 and $400 to register each product. Around 230 supplements suppliers, manufacturers, distributors and importers operate in New Zealand. Most sell between 200 and 600 products and employ around five people, says supplements industry consultant Ron Law.

Paying between $60,000 and $240,000 each year just to maintain the right to sell their goods would topple between a half and two-thirds of these businesses, he says.

On top of that would come a fee to have manufacturer's premises inspected. There are around 10 supplements manufacturers in New Zealand, and the cost of inspecting each would include airfares plus two days' wages for each inspector.

Those factories that passed with an "A" might be inspected only once every two or three years. Those who passed with a "C" might need annual inspection.

Mabey, who imports products from 16 different North American companies, is particularly concerned by this cost, which his research shows could be as high as $15,000 a factory.

If a fee structure similar to that used in Australia was adopted here, Mabey would, at the least, have to drop some products off his catalogue, or hike prices considerably. His preliminary costings for a Canadian product used to treat thrush indicate a price hike from $30 for 20 capsules to $130 for the same bottle.

Martindale, who has the cheerful demeanour of someone who is putting out a series of small fires, says those factories which have already been approved by foreign regulatory bodies such as the Food and Drug Administration in the United States may not need to be inspected by the new agency.

The concern for Mabey, and most people who rely on dietary supplements for a living, is the lack of detail in the proposal. Costs will be set after the Government has approved it. Stakeholders will again be consulted, but given that some are dismissive of the three years of consultation that have already taken place, this is not reassuring.

"The devil may be in the details," says Nutra-Life Health and Fitness managing director Mark Matthews, summing up a popular view. His company - a member of the Natural Nutritional Foods Association (NNFA), which represents more than 100 companies that reject the proposal as too expensive - has supported the proposed regulatory agency, but is cautious.

While he can see benefits of sharing costs and clinical expertise between two countries, he is concerned that in Australia the price of bureaucratic control of supplements is recovered from industry. "They don't agree that there is a public good factor and the Government should put some money up," says Matthews.

Law, a clinical biochemist, would prefer to see a New Zealand-only supplements-only body established. He places the threat of dying from a bad supplement somewhere between the chances of being struck by lightning and death by meteorite.

Rather than borrowing heavily from the Australian system, we should be looking to incorporate best practices from around the world, he says.

Shailer Cottier, Nutra-Life technical services manager, agrees the proposed registration fees would be catastrophic for some smaller businesses. As a member of the NNFA, that worries him, but he still wants the industry tightened.

"There is no independent scrutiny of the quality of dietary supplements before they enter the market," says Cottier. Furthermore, consumers often don't know what they are meant to do with the hundreds of supplements lined up at the local health shop.

But consumers also deserve fair prices and choice. There are 200 natural ingredients which can be used in New Zealand today which are banned in Australia. And, says Cottier, any costs incurred by suppliers will be promptly passed on to the consumer.

NNFA president Bill Bracks, chairman of Comvita, says in Australia the fees for product registration rose 6.8 per cent last year, above the level of inflation.

"It's almost like a tax-gathering exercise and it can become extortionate," says Bracks, who is unhappy with the proposed agency's governance. "The natural attitude of Australia is that it looks down on New Zealand and dominates it."

Rather than the proposed five-person board - which would automatically be staffed by three Australians and two New Zealanders if there was disagreement over membership - he wants a board of eight, with four members from each country. He wants the board to set key indicators for the managing director, who he believes could become "just a little God-like".

Bracks says the intense consultation between industry stakeholders and the working party is not reflected in the document released to the public in June.

"Our worry is we don't want this thing forced through in a tight time-frame. They haven't listened. I have put a huge amount of time into this. It's just not reflected [in the consultation document]. After three years we would have anticipated a much more flexible document."

Law, who describes the proposed agency as "the TGA dressed up in drag", is particularly scathing. "As far as I'm concerned the Ministry of Health is irrelevant in determining the future regulation of our industry.

"They have acknowledged they have no knowledge of our industry. It's now a political issue, it's not a bureaucratic issue. They've made up their minds. This whole consultation period is a sham."

Not so, says the unflappable Martindale, who has been surprised at the panic that has taken hold of the supplements industry. The fact is, she says, no decision has been made. Her working party is still to review the public submissions and the results of a soon-to-be-released economic impact report by the New Zealand Institute of Economic Research.

If and when the Government approves the proposal, another round of consultation with stakeholders will begin. Martindale says it is possible that fees for smaller suppliers could end up being lower, to prevent them from being jeopardised.

Additionally, low-risk products could benefit from a lower registration fee. Supplements which claimed benefits for sufferers of serious conditions, such as diabetes or blood clots, may undergo a tougher, and consequently more expensive, evaluation system.

"Clearly, if these products don't work, consumers are placed in a dangerous situation," says Martindale.

Among supplements suppliers on this side of the Tasman, there is a fierce whisper about the fate of compatriots in Australia. They say that hundreds of small players were forced out of the game when the TGA opened its doors in 1991.

Pamphlets have popped up at natural health shops around the country, warning of the potential loss of hundreds of popular products if the proposal is approved.

One, produced by Citizens For Health Choice, boldly proclaims: "Your health choices are under threat."

A chubby cartoon man in a suit points to a medicine bottle labelled "red tape" yelling, "Step right up! Headaches, lightened wallets and fits of frustration guaranteed!"

"Not true," says Martindale of the assertion that smaller Australian suppliers were forced out of business by inflated compliance costs. "I haven't spoken to anyone who can substantiate that. It's a word-of-mouth thing which has taken on a life of its own."

But Australian suppliers are less than delighted with the TGA. Val Johanson, executive director of the Complementary Healthcare Council, the Australian industry's professional body, estimates the cost of registering products and having factories approved could be halved. She views the transtasman body as an opportunity to keep the best elements of TGA but simplify others.

Her interpretation of the proposal is that it "looks very much like the TGA", which Australian supplements businesses regard as overly complex and too expensive.

The computer registration system is time-consuming and confusing, says Johanson. The application form is highly detailed. Pop-up menus multiply as every ingredient contained in a product is individually entered into the computer. It takes 29 pages of form-filling to register a vitamin C pill.

Interpretation of factory standards is inconsistent and some supplements producers have been judged as stringently as manufacturers of sterile injectible medicines.

The rumours about businesses being forced out of the market are true. "Yes, there were some small players who went out of business," says Johanson. "I guess you would have to ask about the commercial viability of those companies."

On the up side, the supplements industry is unanimous in support of having quality standards and has benefited from increased consumer confidence. Most Australian supplements businesses support the principles behind the TGA, but dislike the bureaucratic beast it has become.

Helen Hopkins, executive director of Australia's Consumers Health Forum, says TGA regulations have meant more, and better, information about supplements is available to consumers. The average Australian is more sophisticated today than 10 years ago when it comes to choosing supplements, because labelling tells them what the product is used for and warns of possible interactions with prescription medications.

Mabey is fed up. He was an advocate for what was the Healthcare and Therapeutic Products Bill, which was proposed in 1992 and laid aside when the harmonisation plan surfaced in 1999. He has had enough of consultation and does not relish the idea of starting again next year if the new agency gets the green light.

But his lifestyle depends on it, and he is determined he will not go out of business after two decades of success and happiness. But he might have to reconsider how he does business.

"Seriously, I don't know where it goes from here. After 10 years, to be very honest, I'm tired. As an industry we really need closure on this."

The history

* 1992 - Discussions begin on a new bill to cover the manufacture, distribution and sale of healthcare and therapeutic products within New Zealand.

* May 1993 - Australia's Therapeutic Goods Agency and New Zealand's Medsafe agree to share information and co-operate. A memorandum of understanding is signed.

* May 1998 - Transtasman Mutual Recognition Act 1997 comes into force. All goods and business regulatory standards adopted in New Zealand are recognised in Australia, and vice versa. Therapeutic goods are exempted.

* 1999 - New Zealand and Australian health ministers agree to the "harmonisation" of regulatory requirements for prescription medications, medical devices and dietary supplements.

* June 2000 - Consultation paper is given to industry stakeholders.

* December 2000 - New Zealand Government agrees in principle to a transtasman agency to regulate therapeutic goods.

* July 2001 - Australian Government agrees in principle to the proposal.

* June/July 2001 - Public consultation on the proposal.

* August 2002 - Submissions close.

* Mid 2004 - Proposed agency may begin work.