Federal Court of Appeal upholds ‘natural health product’ classification of skin care goods

The Federal Court of Appeal has upheld the “natural health product” (NHP) classification of goods claimed to improve skin appearance.

In Le-Vel Brands, LLC v. Canada (Attorney General), 2023 FCA 177, Le-Vel Brands, LLC sells and markets in Canada the Thrive Premium Lifestyle Derma Fusion Technology Patch, a product claimed to improve the appearance of a wearer’s skin. Health Canada took issue with Patch’s classification as a cosmetic, asserting that it should be classified as NHP.

Under the Food and Drugs Act, a cosmetic includes “any substance or mixture of substances manufactured, sold or represented for use in cleansing, improving or altering the complexion, skin, hair or teeth.” Unlike NHPs, cosmetics do not require a license for sale. Furthermore, cosmetics are not subjected to the same manufacturing, labelling, packaging, distribution, or inspection requirements as NHPs.

The issue between the parties was whether the Patch could be identified as “modifying organic functions in humans, such as modifying those functions in a manner that maintains or promotes health.”

Patch is classified as ‘NHP’

For over five years, Le-Vel and Health Canada exchanged correspondence. Le-Vel provided evidence of why the Patch should be classified as cosmetic, and Health Canada responded with several concerns. Health Canada ultimately issued a final decision which classified Patch as NHP. Health Canada also issued a compliance letter to Le-Vel, requiring it to cease product sales in Canada.

Le-Vel raised the matter to the Federal Court for judicial review. The court found that Le-Vel had failed to demonstrate that Health Canada’s decision was unreasonable or that it was denied due process.

Le-Vel appealed to the Federal Court of Appeal, claiming that the application judge effectively re-drafted Health Canada’s reasons and failed to consider the shortcomings of the initial decision, both in form and substance.

After carefully reviewing the record and parties’ submissions, the appeal court found that the federal court properly determined that Health Canada’s decision to classify Patch as an NHP, as opposed to a cosmetic, was reasonable. The appeal court said that when considered within the overall context of the entire correspondence between the parties, the impugned decision is intelligible, coherent, and well within the applicable legal and factual constraints.

The appeal court explained that the reasons provided by the administrative decision-maker must be examined with “respectful attention” to understand how the conclusion was arrived at. The reviewing court must pay attention to the administrative setting in which the reasons have been given.

Health Canada’s decision is reasonable

Le-Vel argued that Health Canada failed to identify how it reached its decision and that the application judge incorrectly relied on the previous correspondence between Le-Vel and Health Canada to complete its decision.

However, the appeal court found that the application judge addressed all of Le-Vel’s arguments. The court noted that Le-Vel’s promotional materials regarding Patch were somewhat of a “moving target” as they changed repeatedly over time in response to the concerns raised by Health Canada in its correspondence with the company. The court found that some of these concerns were addressed and remedied, but there were still some concerns that were not addressed.

Furthermore, the appeal court noted that Health Canada, throughout its correspondence with Le-Vel, reiterated that classification is not only based on individual statements on the product label or website but also on the overall impression left by the representation of the product and how the product or product line is marketed. The court found that Health Canada made it clear throughout that it did not consider Le-Vel to be making therapeutic claims. Instead, Health Canada believed that the Patch was being represented as operating systematically and, consequently, modifying the body’s internal organic functions.

The court said Health Canada’s final decision, when read in conjunction with its earlier correspondence, provided an internally coherent and rational chain of analysis. The court stressed that the decision must be read in the context of the previous Le-Vel and Health Canada exchanges. The court found that the representations upon which Health Canada relied to conclude that the Patch was represented as having a systemic therapeutic effect were clearly identified. Le-Vel’s argument that it was left in the dark is simply untenable.

It was clear to the court that Health Canada relied on the promotional material and the broad claim of improved skin and systemic delivery system to classify the Patch as an NHP. Furthermore, the court found that even though Le-Vel modified its promotional materials, it was clear that Health Canada was still concerned with the systematic effect associated with the Pach and the representations made for its therapeutic use.

The court concluded that Health Canada’s final decision displayed the hallmarks of reasonableness. It is understandable and reveals a rational chain of analysis, and its outcome is justified in light of the relevant factual and legal constraints. Moreover, the court found that Health Canada did not exceed its jurisdiction by ordering Le-Vel to cease all sales of the Patch.