Proposed Trans-Tasman Australianisation of Regulations Governing the Dietary Supplement Industry Will Result in Approximately 50% of New Zealand Dietary Supplement Companies Being Forced Out of Business.

An explanatory note in the Dietary Supplement Regulations, 1985, states;

“The dietary supplement regulations, in a sense, fill the gap between the Food Regulation 1984 and the Medicines Regulation 1984, in that dietary supplements are not ‘food’ or ‘medicine’ in the ordinary sense of those words. However, they are ‘food’ within the meaning of the Food Act 1981, and will be ‘related products’ within the meaning of the Medicines Act 1981 if therapeutic claims are made for them.”

With very few exceptions, no New Zealand dietary supplement company has registered dietary supplements as ‘related product’ under the medicines act, simply because of the inordinate costs involved.

They could, and that would bring them into line with Australia’s draconian regulatory regime that provides the basis for the proposed Trans-Tasman Joint Therapeutic Goods Agency.

But they don’t, because it would be economic suicide to do so.

The NNFA’s conclusion that approximately 50% of the New Zealand dietary supplements industry will not survive the proposed Australianisation of dietary supplement regulations in New Zealand as proposed is conservative.

Consultation with typical companies suggests that some will downsize and stop supplying a wide range of products resulting in considerable loss of employment.

A typical example is a family owned employing 4 extra staff. They have calculated that by reducing their available product line by 80% and focussing on their high prifit lines, they will remain profitable for themselves, but sacrifice four full time positions in the process. This is at a time when the government prides its achievements relating to regional and small business development.

Another company which is focussing on providing scientifically based Maori medicines employs 5 staff and will be forced to cease production given that they would not be able to afford the exorbitant fees involved in getting their ingredients approved.

A few large companies would enjoy increased market share as a result of small competoitors being forced to liquidate. They are unlikely to generate significant extra employment as a result; these companies (5-6 predominantly Australian companies and two or three New Zealand companies) have recently changed their opposition to the proposed model. All of these companies are managed by professional managers accountable to shareholders; they are not the family owned and operated businesses that dominate the market.

Therefore, the NNFA’s calculation that approximately 50% of New Zealand business in the natural healthcare & therapeutic products industry will be forced to the wall are made on the following assumptions:

Estimate of Size of Industry

The NNFA industry database and a search of advertisements reveals approximately 200 suppliers of dietary supplement products in New Zealand.
The New Zealand retail market is about $210 million dollars and is made up of sales through health food shops, pharmacies, supermarkets, direct marketing, direct selling, practitioners and internet trade.

Number of Consumers

In 1997, the Ministry of Health’s national food nutrition survey of approximately 4,000 households revealed that approximately 60% of New Zealanders consume dietary supplements. The market volume has expanded approximately 25% in the past five years; it is reliably estimated that 70% of New Zealanders now consume dietary supplements.

Estimate of Size of Businesses

The dietary supplement industry is similar to the rest of the economy in that approximately 85% of businesses employ 5 or fewer staff.
There are few medium/large businesses in the New Zealand dietary supplement industry.
Many dietary supplement suppliers carry 300-500 products – a few as many as 1,000; some operate in small niche markets with a few specialised products.
There is no “average” business.

Estimate of Business Compliance Costs

A listing fee of $500 (as occurs in Australia) plus related internal and external consultant costs/fees means that on average, it costs $1,000 to $1,500 per product to gain bureaucratic approval to market hitherto safe product.
If an application has a small pedantic error it is returned and another $500 fee is required to be paid on resubmission.
On top of that compulsory pre-vetting of advertisements costs approximately $90 per 15 minutes, or $90 – $150 per advertisement – even if the advert itself costs only $60! Multiplied by one advert per week this equates to $5,000 per year; 5 adverts per week equates to $25,000 per year. That does not include in-house or consultant fees.
On top of that is the cost of unnecessary conditions imposed to reach unrealistic pharmaceutical GMP (Code of Good Manufacturing Practice) standards.
For many importers, this means that each source of product requires inspection at a cost of $10,000 – $15,000. In one worst case, a company with 15 overseas suppliers would be required to spend over $200,000 for Pharmaceutical GMP certification alone, despite the fact that the companies already have appropriate dietary supplement GMP certification.
All up, it will cost a typical New Zealand company over $300,000 in extra compliance costs, regardless of size.
In many cases this will be more than the existing profits of the company.

Estimate of Business Closures

On the basis that small (micro by world standards) family companies operate on profit margins of less than $300,000 per annum, and following discussions with a range of company owners, it is guestimated that approximately 50% of the 200 companies would become unviable due to the regulatory regime proposed.

Comments

A very few larger companies have recently supported the proposed trans-Tasman agency.

They may well benefit for two reasons.

Some of them already operate substantial markets in Australia and therefore already incur the Australian costs.
1. Some will also benefit from increasing market share and increased margins due to reduced competition as small businesses are strangled to death by unnecessary regulation.
The NNFA supports Trans-Tasman harmonisation so long as the opportunity is taken to develop affordable regulations commensurate with the exceedingly low risks associated with our industry, and do not deny consumers free and informed choice.

There have been no deaths recorded from legal dietary supplements in New Zealand – ever.

Industry Compliance Costs

The compliance costs to New Zealand industry will clearly be in the millions of dollars.
Even if the proposed regime was changed to reduce direct fees and compliance costs to $5-10,000,000, and even if the proposed burdensome regulations reduced the number of [non-existent] deaths by one per decade, that would amount to an industry cost of $50,000,000 to $100,000,000 per life saved. In the interests of avoiding claims of inflating figures, the following calculations are based on the low figure of $5,000,000.
If the food industry had compliance costs of $50 million per life saved and spent that reducing only the 75 highly preventable deaths due to properly regulated food in New Zealand, the industry would be spending over $3.75 Billion compliance dollars per year.
If the pharmaceutical industry spent that equivalent amount reducing the 669 highly preventable deaths due to properly registered and properly used drugs in New Zealand, they would be spending over $30 Billion compliance dollars per year.
If the government spent that equivalent amount reducing the 1,584 highly preventable medical injuries in our public health system, they would be spending over $75 Billion compliance dollars each year—fully 75% of the nations GDP.
If a petrol tax was imposed to fund an equivalent amount to reduce road deaths, it would equate to more than $25 billion and petrol would cost about $10 per litre. (2,900 million litres used in NZ per annum).
If regulations were imposed to force such expenditure, there would be ridicule from all sectors of society; the regulators would be shamed into retirement.

Such regulation would simply be dumb!

Industry is appalled that the Ministry of Health has deliberately prevented the release of the economic impact report undertaken by New Zealand Institute of Economic Research.

The NZIER was commission to undertake the study after industry was able to show that officials previous attempts to assess economic impact failed to assess the impact on the natural healthcare & therapeutic products industry as an industry in its own right. The Ministry’s previous approach had been the equivalent of assessing the impact on the motor vehicle industry and assuming that would be the same as the impact on the push-bike industry.

The economic impact review was undertaken by NZIER in January/February 2002.
The NZIER submitted their report to the Ministry of Health in March 2002.
The Ministry of Health sent the report back, and very reliable sources from within the Ministry of Health itself told the NZIER that they didn’t want the report completed until the Ministry had given the NZIER further information and that that information would not be provided until after the consultation period finished.[1]

The figures provide to the NZIER clearly show that even medium sized companies in New Zealand will have to significantly review their operations if they are to survive the economic impact of the proposed agency.

Small companies simply would not survive.

Is there a safer industry sector?

Causes of death in New Zealand – All ages	Fatalities	% of all fatalities	Population at risk	Fatalities per year per million at risk	Life time Risk (LE 78 yrs)	Risk relative to legal dietary supplements
Associated with medical injury * (27)	4,222	15.3%	727,342	5,805	0.453	268,191
Highly preventable medical injury -65+ yrs * (27)	701	2.5%	218,203	3,213	0.251	148,444
Highly preventable medical injury -45-64 yrs * (27)	312	1.1%	130,922	2,387	0.186	110,256
Highly preventable medical injury – All ages * (27)	1,584	5.7%	727,342	2,177	0.170	100,585
Adverse drug reaction * (27)	1,524	5.5%	727,342	2,095	0.163	96,803
Highly preventable medical injury – 30-44 yrs * (27)	236	0.9%	112,738	2,090	0.163	96,549
Cardiovascular disease (1)	6,369	23.1%	3,850,000	1,654	0.129	76,428
Highly preventable medical injury – 15-29 yrs * (27)	187	0.7%	116,375	1,611	0.126	74,423
Cot Death – All ethnic groups (20)	84	0.3%	55,130	1,524	0.119	70,394
Motorcycle accidents (18)	50	0.2%	50,000	1,000	0.0780	46,200
Highly preventable medical injury – 0-14 yrs * (27)	147	0.5%	149,105	985	0.0769	45,527
Highly preventable adverse drug reaction * (27)	669	2.4%	727,342	920	0.0717	42,494
Cerebrovascular disease (5)	2,565	9.3%	3,850,000	666	0.0520	30,780
Cot Death – Pakeha (20)	20	0.07%	35,984	556	0.0434	25,678
Lung cancer (2)	1,412	5.1%	3,850,000	367	0.0286	16,944
Breast cancer (1)	620	2.2%	1,953,300	317	0.0248	14,664
Prostate cancer (1)	525	1.9%	1,896,700	277	0.0216	12,788
Diabetes (1)	633	2.3%	3,850,000	164	0.0128	7,596
Suicide (3)	561	2.0%	3,850,000	146	0.0114	6,732
Traffic accidents (7)	531	1.9%	3,850,000	138	0.0108	6,372
Second hand smoke (4)	388	1.4%	3,850,000	101	0.00786	4,656
Accidental falls (1)	242	0.9%	3,850,000	63	0.00490	2,904
Melanoma (7)	201	0.7%	3,850,000	52	0.00407	2,412
Water related (11)	150	0.5%	3,850,000	39	0.00304	1,800
Cervical cancer (21)	73	0.3%	1,953,300	37	0.00292	1,727
Alcohol related (non medical) (4)	142	0.5%	3,850,000	37	0.00288	1,704
Working for government (23, 27)	3	0.009%	72,600	34	0.00269	1,591
Workplace accidents (8, 24)	56	0.2%	1,900,000	29	0.00230	1,362
Unintentional drowning (all activities) (22)	108	0.4%	3,850,000	28	0.00219	1,296
Food (est – USA (32, 33, 40) Aus (34)	75	0.27%	3,850,000	19	0.001519	900
Murder (1)	69	0.2%	3,850,000	18	0.00140	828
Firearms – suicide (7)	56	0.2%	3,850,000	15	0.00113	672
Boating – Recreational (12, 19)	20	0.07%	1,591,000	13	0.000981	581
Meat products and Poultry (est, 40)	38	0.14%	3,850,000	10	0.000770	456
Influenza (41)	34	0.12%	3,850,000	9	0.000689	408
Fire (7)	33	0.12%	3,850,000	9	0.000669	396
Food – Highly preventable (est – USA (32, 33, 40) Aus (34)	30	0.11%	3,850,000	8	0.000608	360
Aviation accidents (10)	30	0.11%	4,500,000	7	0.000520	308
Railway accidents (18)	25	0.09%	3,850,000	6	0.000506	300
Drowning (swimming) (13)	20	0.07%	3,850,000	5	0.000405	240
Menningitis (7)	20	0.07%	3,850,000	5	0.000405	240
Boating – Commercial (12)	11	0.04%	3,850,000	3	0.000223	132
Firearms – Assault (7)	11	0.04%	3,850,000	3	0.000223	132
Sport (26)	7	0.025%	3,200,000	2.2	0.000171	101
Electrocution (7)	8	0.029%	3,850,000	2.1	0.000162	96
Acceptable risk for cancer due to chemicals in foods (42)	4	0.014%	3,850,000	1.0	0.000100	46
Insect bites/stings (39)	1.4	0.0052%	3,850,000	0.4	0.000028	17
Bitten by animal (7)	1.0	0.0037%	3,850,000	0.3	0.000020	12
Shark attack (est – 14, 17)	0.1	0.0004%	727,342	0.14	0.000011	6.4
Lightning (Est – 42 )	0.4	0.0015%	3,850,000	0.10	0.000008	4.8
Bee sting (est – 15, 16)	0.4	0.001%	3,850,000	0.10	0.0000081	4.8
Wasp sting (est – 16)	0.10	0.0004%	3,850,000	0.03	0.0000020	1.2
Natural healthcare & therapeutic products	0.05	0.0002%	2,310,000	0.02	0.0000017	1
Meteorite	0.000231	0.0000009%	3,850,000	0.000006	0.0000000005	0.0003

Numbers relate to over 40 government, official or evidence based reports/studies evaluated by R Law who retains copyright of the above information. In the interests of supporting industry’s commitment to an evidence base and proportionate regulation, if you see errors of fact or judgement in the above information, please advise via Juderon@clear.net.nz. Despite numerous requests to officials to prove these figures wrong they have acknowledged that they can’t.

The NNFA is, therefore, opposed to the unnecessary, burdensome and restrictive regulation as proposed by Australian and New Zealand Officials.

A question for industry, the public of New Zealand and politicians to answer

Why are our New Zealand regulators proposing to bankrupt the heart and soul of the dietary supplement industry when it not only does no significant harm, by any measure of risk, but offers so much to improving the wellbeing of humanity?

NOTE: ‘Advisors’ often refer to the so-called ‘unscientific’ basis of dietary supplements; please refer to the following scientific appetizers:

Harvard University:

“Daily multivitamin use for at least 15 years can cut the risk of colon cancer in half. Folic acid is likely to be the key protective nutrient.”

http://www.hsph.harvard.edu/cancer/publications/reports/vol3_summary.html

[In fact the Harvard University’s extensive scientific studies suggest that the figure is closer to a 75% reduction in colon cancer. According to the Ministry of Health, there are approximately 750 deaths per year due to colon cancer. Routine use of folic acid containing multivitamins could save approximately 500 colon cancer deaths per year.]

Journal of the American Medical Association:

“Most people do not consume an optimal amount of all vitamins by diet alone. Pending strong evidence of effectiveness from randomized trials, it appears prudent for all adults to take vitamin supplements.”

http://jama.ama-assn.org/issues/v287n23/abs/jsr20001.html

New England Journal Of Medicine

“Eat Right and Take a Multivitamin”

N Engl J Med 1998; 338:1060-1061, Apr 9, 1998. Editorials. Available at http://www.chiro.org/links/discontinued/eat_right_and_take_a_multivitamin.html

Even if there was no evidence, where is the evidence of harm? The NNFA is able to provide access to hundreds of thousands of scientific articles on dietary supplements, including a three volume summary of the science surrounding vitamin C along – and that volume was published in 1989!

The evidence used by regulators to warrant such a draconian and crippling regulatory regime is in fact an indictment on the regulators themselves as they have publicly admitted that;

They don’t have any expertise relating to the regulation of herbs and the like, and;
They have not administered the plethora of regulations that already exist for several years.

In fact, the Ministry of Health has rather allowed mothers to be to be denied access to scientifically proven multivitamins containing 400 ug of folic acid than change the regulations as they have often promised they would.

It is industry’s contention that the Ministry of Health have deliberately failed to endorse the use of dietary supplements containing 400 ug of folic acid for women simply because they do not want the existing regulatory environment to be seen to be working – then they can justify their ‘career enhancing’ joint agency.

c:\aaa\nnfa\tth\discussion document\economic impact of proposed regulatory framework.doc

[1] Personal communication: Ron Law is prepared to name the senior official heavily involved in te TTH project under oath if need be.

Nature and extent of market failure or regulatory failure?

The primary purpose of regulation is to respond to market failure where public health or fair trading issues arise.

In a PR-SPIN “fact sheet“ posted on the TTH TGA website AFTER the consultation document was released, and with no notification to any stakeholder, a very subjective attempt has been made to validate the so-called risk base of the proposed regulatory regime.

This PR-SPIN “fact sheet” was prepared as a “communications Strategy” by Allen & Clarke. It is a simple PR SPIN to try and distort reality.

It is very sad that a regulatory framework supposed to be risk based is demonstrably SPIN based. – So much for good regulatory practice.

The “COMMS Strategy” PR-SPIN file says;

“Under a joint agency, dietary supplements represented to be for therapeutic use would be regulated as therapeutic products.

In New Zealand, dietary supplements are currently regulated as foods. As it is not lawful for foods to carry therapeutic claims manufacturers and distributors of many dietary supplements are not permitted to provide consumers with the information they need in order to make informed choices. Furthermore, there is no independent scrutiny of the quality and safety of dietary supplements before they enter the New Zealand market. Under an effective regulatory scheme, companies supplying ‘therapeutic-type’ dietary supplements would be able to make truthful claims about the health benefits of their products on labels and in advertisements and consumers would have an assurance of the quality and safety of these products.”

The assumption here is that the only way that legitimate claims can be made is under medicines law. The folly of this argument is that the FSANZ is moving to establish a database of therapeutic claims under food law. It is fallacious and factually incorrect to use the future ability to make claims as being the basis of such a crippling regulatory framework. The proposition that only therapeutic medicines can make a claim is ideologically driven and ignores the stated benefit of TTMRA; namely;

The benefits of the TTMRA are particularly significant where regulatory differences mainly reflect national historical or institutional arrangements, rather than the objective assessment of risks to public health, safety and the environment…
The benefits of trade liberalisation under CER cannot be fully realised until these impediments are reduced.”[1]

There is no rational reason why truthful claims can not be made under any regulatory framework if fair trading law is the basis for adverting, in conjunction with appropriate principles driven codes of practice.

The PR-SPIN “fact sheet” then says;

“Why do dietary supplements need to be regulated?

Many New Zealanders use dietary supplements. When purchasing these products, consumers have a right to expect they will be safe and of high quality, while maintaining choice. Consumers also have a right to receive adequate, truthful information to enable them to choose wisely and use products safely.

Under current dietary supplement legislation, safety and quality are not regulated. This means that the Government and consumers cannot be certain that:

The ingredients of the dietary supplements or the products themselves are safe and effective; and

Adequate steps have been taken to ensure product quality – for instance, that products contain only the stated ingredients in the quantities specified on the label, and that they are free from contamination with micro-organisms, heavy metals and so on.”

Of course, dietary supplements are already heavily, but inappropriately, regulated

Therefore the need for regulation is not at issue – industry has always advocated APPROPRIATE regulation.

The PR-SPIN statement that many New Zealanders use dietary supplements is true. In fact a Ministry of Health survey in 1997 found that 60% of New Zealanders used supplements in the previous 12 months. Market growth since then suggests that the figure is now closer to 70%; a similar figure recently researched in Australia.

Industry agrees with the totally logical statement, “consumers have a right to expect they will be safe and of high quality, while maintaining choice.” As discussed elsewhere, the proposed regulations will result in thousands of products, and perhaps as many as 200 ingredients being stripped from the market place for no other reason than “Australia says so.”

Industry agrees with the totally commonsensical statement that Consumers also have a right to receive adequate, truthful information to enable them to choose wisely and use products safely. the problem is that regulators have prevented consumers from receiving truthful information – even in Australia where it is illegal for suppliers to tell consumers that long-term use of folic acid supplements prevents 50-75% of colon cancer – not to mention all the other benefits.

The New Zealand Ministry of Health even allow breakfast manufacturers to make claims about the health benefits associate from folic acid intake – even when there is no scientific data the 40 ug allowed makes a difference, and yet they have deliberately refused to allow suppliers of scientifically proven supplements from making such claims.

This statement is at best fallacious and at worst a deliberate attempt to distort reality. It is idealogically driven – not good regulatory practice based.

The PR-SPIN “fact sheet then says;

“The products referred to in the discussion paper as complementary healthcare products generally contain active ingredients that are found in nature or are identical to substances found in nature. However, this does not necessarily mean they are safe.”

Again, there is no evidence provided to back up this statement. The statement that “this does not necessarily mean they are safe” is of course true, arsenic is natural, and not even the food chain is totally safe – in fact the evidence shows that the food chain is about 900 times more hazardous than dietary supplements. But no one in industry has said that natural substances are totally safe. Generations – well before the advent of well-meaning regulators – have removed toxic substances from the ‘orally consumed substances’ chain.

This statement is a mischief that is not evidence-based – and certainly not risk based. It is ideologically and assumption based.

The PR-SPIN ‘fact sheet’ then says,

“It is well recognised that in herbal medicine, for example, isolating and concentrating a particular constituent of a plant can produce a substance more hazardous than the herb from which it was extracted.

Well recognised by whom? What’s the evidence? Even with that knowledge, the industry has succeeded in reducing risk levels to 2% of de minimis levels – how safe is that?

Of course “safety of ingredients is, therefore, an important issue for complementary healthcare products” but it does not require crippling regulation to address those issues.

The PR-SPIN “fact sheet” states;

“Under the proposed new legislation, all products represented to be for a therapeutic purpose would be regulated according to the risk associated with their use.”

And yet no evidence of the level of risk is provided to justify the crippling risk.

The PR-SPIN ‘fact sheet’ then says,

“The regulatory controls applied to most complementary healthcare products would be less stringent than those applied to prescription medicines, in recognition of the different levels of risk. Due to their relatively low risk, most dietary supplements in New Zealand would continue to be available from herbalists, supermarkets, health food stores and other retail outlets.”

The PR-SPIN here is that NZ product is only ‘relatively low risk’ whereas when referring to Australian product it is referred to as ‘low risk.’ There is no evidence that New Zealand ‘unregulated (so-called) product is any less safe than Australia’s regulated product.

Of course regulation of natural healthcare & therapeutic product should be “lkess stringent” than that required to regulate pharmaceuticals; they are proven to be approximately 100,000 times safer!!

The PR-SPIN “fact sheet” says;

“It is proposed that an expert committee with members who are knowledgeable about complementary medicine and complementary healthcare products, selected from relevant experts in New Zealand and Australia, would provide advice on the safety of products and ingredients, to inform decisions on the level of controls applied to the various products.”

Such an expert committee is so large to be impotent, and has only just approved the use of colostrum as a therapeutic good – the delays being safety concerns — despite it being freely available by the tin full as a food, and safety tested by every baby calf born since Adam was a boy… Expert committees need to include people who understand proportionate risk management and are not hamstrung by regulation and rules that prevent discussion outside of committee.

The PR-SPIN then says;

How are these products regulated in other countries – and how would the new system compare?

“Appendix 3 of the discussion paper provides a comparison between the regulatory systems for complementary medicines and therapeutic-type dietary supplements in several countries, and those proposed for the new, joint New Zealand/Australia regulatory system. Many other countries apply, or in the future will apply, a risk-based framework to the regulation of these products – as is proposed under the joint agency project.”

Australia in fact does not utilise a risk based regulatory system – if it did then there would be publicly available risk analysis documents to provide transparency; risk management decisions, such as those surrounding royal jelly, selenium, boron, and the like would be quite different to what prevails at present.

The analysis referred to conveniently left New Zealand off the list, and forgot to mention that the EU is stripping vitamin and mineral dietary supplements from medicines law to come under the gambit of food law as exists in the USA, and New Zealand. South Africa is in the process of doing the same, and Canada has appropriately stripped dietary supplements from the gambit of both food and pharmaceutical regulations.

The analysis in Appendix three is frugal with the truth.

The SPIN-PR “fact sheet” says;

“The World Health Organization has also recently developed a strategy on complementary medicines.”

This is a half truth – the WHO focus is on herbals, not vitamins and minerals.

The PR-SPIN “fact sheet” then goes n to paint the picture that there is market failure in New Zealand that needs the attention of MORE regulation.

The PR-SPIN “fact sheet” says;

Are there examples of these products having caused problems?

“There have been instances where complementary medicines and dietary supplements have caused problems in New Zealand and overseas. Examples are presented below. With an increasing use of products, and an increasing number of products available from a wide range of sources, there is consequentially an increased level of risk to the New Zealand consumer. It is common (and appropriate) for regulatory controls to be applied to prevent problems occurring rather than just applying controls in response to harm having occurred.”

The fact that the word PREVENT is underlined is worth highlighting.

Products containing hazardous ingredients or excessive levels

Product	Problem/Issue	Existing regulation to prevent this that was breached?
K4 (Indian herbal)	Liver toxicity	Causality assumed – not proven; Medicines Act
Tentex Forte	Presence of strychnine	Medicines Act and Food Act
Metaliv (Ayuverdic)	Contained black nightshade. Also contained a pesticide with known toxic effects	Medicines Act and Food Act
Collodial Silver products	Contained levels of silver to be classified as a medicine. Made therapeutic claims.	Medicines Act
Thyroid extracts	Suppression of TSH	Causality assumed, not proven. Soy also affects thyroid, as does excessive iodinated salt
Boron with Phytase	Contained 2-3 times the toxic dose of selenium	Medicines Act & dietary supplement regulations
Chapparal	Liver toxicity	Not proven – no problems in New Zealand
Several Indian herbal medicines	Excessive levels of heavy metals	Medicines Act and Food Act

Incorrect or absent content disclosure

Product	Problem/Issue	Existing regulation to prevent this that was breached?
Weilong (Chinese herbal)	Found to contain sildenafil (Viagra) – not stated on label	Medicines Act
Cheung Kum capsule (Chinese herbal)	Found to contain chlorpheniramine and betamethasone (prescription medicines) – not stated on the label	Medicines Act
Rejuvenesse Cream with Fematin	Found to contain progesterone (prescription medicine) – not stated on the label	Medicines Act
PC SPES & SPES	Found to contain warfarin and alprazolam (prescription medicine) – not stated on the label	Medicines Act
Pi Yan Ping Cream	Found to contain betamethasone – not stated on the label	Medicines Act
Wild Yam Cream	Found to contain progesterone – not stated on the label	Medicines Act, dietary supplement regulations
Boron with Phytase	Found to contain selenium at toxic levels – not stated on the label	Medicines Act, dietary supplement regulations

Products making unsubstantiated claims

Product	Problem/Issue	Existing regulation to prevent this that was breached?
Lyprinol	Claims for cancer	Medicines Act, dietary supplement regulations, Fair Trading Act. The pharmaceutical company (not dietary supplement company) was rightfully convicted.
Natural OPC (antioxidant)	Claims for a variety of ailments, including cancer, asthma, Alzheimers, bacterial infections, diabetes, stroke	Medicines Act, dietary supplement regulations, Fair Trading Act.

Interactions with some prescription medicines

Product	Problem/Issue	Existing regulation to prevent this that was breached?
St John’s Wort	Life threatening interactions with some prescription medicines	These ‘life threatening’ interactions have been proven to be largely hypothetical – despite millions of doses being consumers every year there has never been a death associated with St John’s wort. This problem relates only to hyperforin not hypericin, and no regulation could prevent it, only educations and labelling. The same issue occurred in Australia who in fact addressed the issue some five months *AFTER* New Zealand.

Contamination

Product	Problem/Issue	Existing regulation to prevent this that was breached?
Metaliv	Contained black nightshade. Also contained a pesticide with known toxic effects	Medicines Act, Food Act.

The PR-SPIN “fact sheet” also says

“Additionally, both the Survey of Herbal Remedies Available on the NZ Market: Overall Summary June 1995 and the Herbal Remedy Assessment by ESR (1996) indicated excessive levels of microbial contamination and/or excessive levels of heavy metals in several herbal remedies.”

If the Ministry of Health was concerned about these issues it would have discussed them with industry. It never has. Those problems raised are everyday manufacturing quality control issues and food law, and dietary supplement regulations address them more than adequately.

Regulatory failure or market failure.

The Ministry of Health & TGA PR-SPIN doctor provides stunning evidence that in fact it is the regulators who have failed to conform to good regulatory practice and put the public at risk – not market failure?

How can such a preposterous statement be justified?

Simply because if the above is the regulators risk assessment of the natural healthcare & therapeutic product industry, then it has failed to show that more regulation is required.

With out exception, existing regulation in “cowboy” New Zealand makes each of the above activities illegal – NOW!! In New zealand’s unregulated market!!

What can demonstrably be shown is that apart from one case (as is known to industry) not a single prosecution took place – despite, apparent serious breaches of public health law, and serious concerns by regulators.

Why is this so?

According to Bob Boyd, Stewrat Jesasamine and Susan Martibdale in a presentation to the Parliamentary Health Select Committee in 2001, t”the Ministry of Health has not been administering the dietary supplement regulations for some time.”

It is quite apparent that since the Ministry of Health’s bungled imposition of Australian mandated warning label on bee products they have held their collective heads in shame, and stealthily channelled their efforts to getting Australia’s even more crippling regulatory regime in place. Why? The only logical assumption is that officials see the natural healthcare & therapeutic product industry as a cask cow ready to harvest empire building and career enhancing health and advertising taxes from.

Of course, the final irony is that with few exceptions, the above products are still on the market as we speak – regulated ( in the case of St John’s wort) and illegally in many of the other examples given. Australia only has to visit the TGA’s website to realise that Australia has a major contraband market for illegal therapeutic goods

In summary:

What has failed is not the market – it is the regulatory system that has failed – not only to “guarantee” safe product – which of course no amount of regulation can acieve – but also to enforce what regulation exists.

Therefore, the problem that does exist is one of enforcement, not the need for MORE regulation. What is needed is APPROPRAITE regulation, as outlined in the discussion on the Healthcare & Therapeutic Products Bill.

Some more ‘Safety’ discussion

In terms of public health safety, the evidence provided in this analysis clearly demonstrates that there is no public health issue that could be construed as a market failure due to unsafe product.

Further more, in a briefing paper to the incoming Minister of Health, Annette King, in January 2000, Ministry of Health Officials stated that there were no safely issues regarding the regulating of natural healthcare products.

Despite this reassurance, there have been a number of recent examples where regulators have appeared to have ramped up the apparent need for more regulation.

Bee products

In 1999, the Ministry of Health followed Australia in imposing the harshest warning labels on any food anywhere in the world. The Regulation Review Select Committee found in favour of industry’s contention that the Ministry had failed to follow due process and had thereby abused its regulating power.[2]

A subsequent five-person independent scientific review appointed by the then Minister of Health found against the Ministry of Health on all five terms of reference. As a responsible industry, we had already responded in an appropriate manner by implementing voluntary warning labels on 95% of product sold.

The review undertook a scientific risk assessment and determined that for two products (bee pollen and propolis),

“risk management should be limited to ingredient labelling of all products… by whatever means.”[3]

100% of product on the market already met this recommendation.

For royal jelly, the recommendation included ingredient labelling (which already occurred on 100% of product) and the warning label already in use voluntarily. The Select Committee noted that to impose a prescribed [and unjustly harsh] mandatory

warning of these products at a time when such a high proportion already carry voluntary labels,

“is an unusual and unexpected use of the regulation-making power.”

The natural healthcare industry has been scrutinised by perhaps the highest non-judicial ‘court’ in the land (Regulations Review Committee). As a consequence, a thorough scientific risk assessment of three products identified by the Ministry of Health as “the most dangerous foods in the country” found that the risks associated with propolis and bee pollen were “extremely low” and that the risks associated with royal jelly were deemed to be higher than the other two products, but still low.

The review agreed that contrary to the Ministry of Health’s and the Australian Authorities opinions, the risk management actions implemented, voluntarily, by the natural healthcare product industry was appropriate and consistent with best practice.

Therefore, in the most recent “worst case” scenario, there was no market failure regarding adoption of responsible risk management practiced by the New Zealand natural healthcare product industry.

K4

The Ministry used K4 as an example for requiring harsher regulation of the natural healthcare industry is its recent presentations to the Health Select Committee.

In the case of K4 causality of death was never established despite extensive toxicological testing and a coronial inquiry.
K4 was in fact marketed as an illegal medicine which proves that even medicine regulations can not prevent illegal activities.
Ayurvedic products similar to K4 have been used safely for hundreds of years.
It is grossly misleading and unfair to use K4 as an excuse for introducing the proposed regulatory regime.

St John’s wort

In early 2000, several medical publications – mostly letters to the editor – linked St John’s wort to increased liver activity thereby increasing the rate of excretion of some drugs.

In New Zealand, industry immediately invited the Ministry of Health to meet with twenty industry stakeholders in Auckland where it was agreed to voluntary caution statements and an extensive education program.
The Ministry and Industry shared scientific information, co-produced educational material and industry provided the Ministry with an extensive contact database of industry contacts, all in the space of three weeks.
The Ministry has said that it mailed out more than 10,000 information packs. The Ministry and the National Nutritional Foods Association released a joint press statement.
Australia, despite their prescriptive and tightly controlled regulatory system, took five months to respond, and then insisted on immediate product recalls and expensive over labelling within a few short weeks.
The Ministry solicited adverse reaction reports from health professionals regarding St John’s wort.
It received 6 such reports – five of them are implausible, but are still used as evidence of harm! None involved serious harm.
Australia’s expensive pre-market approval system offered no advantage regarding the St John’s wort situation. In fact it was slow to respond initially, and created a great deal of cost and angst in imposing unreasonable mandatory warning statements.
Not a single person has died as a result of St John’s wort use in at least three thousand years of extensive use – 55,000 people die from humble Aspirin use each year – there are no warning labels regarding that fact on Aspirin containers.

Aristolochia

In the late 1980’s a single manufacturer supplying a series of weight-loss clinics run by registered medical practitioners in Belgium supplied a product that is alleged to have cause some kidney failure. Several drugs known to cause problems were also being used, but they have been conveniently excluded from causality assessments.
It was established that a herb called Stephania was mistakenly replaced by a herb known to contain aristolochic acid, a known kidney toxin.
Australian product, which is supposed to be manufactured to the highest standards in the world, was shown to contain small amounts of Aristolochic acid – there is no evidence that New Zealand product has been contaminated.
Approximately ten years later, follow-up studies have revealed that a proportion of those affected at the clinics have developed a urinary tract cancer.
As a result of this one manufacturing incident, and a handful of cases involving herbalists substituting the two herbs over the following years(their Chinese names are similar) regulators around the world have banned Aristolochia spp from the market place.
The regulatory response has been near identical regardless of whether the regulatory environment is minimalist, as in New Zealand, or maximalist, as in Australia.

In other words, the Ministry of Health’s use of Aristolochia as an opportunity to convince the Parliamentary Select Committee of the need for more regulation is grossly misleading – they have no evidence at all (at least not that they have shared with industry) that New Zealand product was contaminated. In Australia, even with their self proclaimed “high quality standards,” their product was contaminated!

Minister’s letter to Members of Parliament, 3 October 2001

It is acknowledged that the letter and supporting documents provided to all MPs in October 2001 were prepared by officials responsible for implementing TTMRA.

Unfortunately, the letter contains several false and/or misleading points related to both the dietary supplement regulations and to the safety of dietary supplements.

The background document states that “the dietary supplement Regulations 1985 are outdated and give rise to significant safety risks…[4]

The Minister’s officials have never substantiated these claims – The first is partially true, but that is primarily because officials have deliberately refused to amend regulation in light of changing circumstances as required under good regulatory practice. Folic acid and B12 provide excellent testimony to that.

The second statement is blatantly false – there are no “significant” safety risks.

Officials have used the above specific examples in attempting to make their case;

in the case of the bee products, the ministry’s own assessment and regulatory response was found to be woefully out of step with best practice. In fact, the current regulations did not fail at all, and market forces responded appropriately to new, albeit low level, evidence. Indeed, the Ministry was found by the select committee to have been unduly influenced from across the Tasman in the name of ‘harmonisation.’
St John’s wort has not proven to be the problem anticipated, although the Ministry recently made public statements that were reported in the press that women should exercise caution when using the contraception pill and taking St John’s wort – that was after two women using St John’s wort fell pregnant whilst also using the pill – in Sweden!
They never mentioned that every year 500,000 women get pregnant around the globe due to contraception pill failure – without the help of St John’s wort. Interestingly, the Ministry has never issued press comments about the fact that humble grapefruit juice has a much more significant effect on drug metabolism than St John’s wort.
In over 3,000 years of recorded use, there are no reports ever of death due to St John’s wort consumption. Several thousand women die every year from the adverse effects due to the contraception pill.
The circumstances regarding St John’s wort were exactly the same in countries with stringent prescriptive laws as in Australia, and Germany or countries with a lighter regulatory environment such as the USA, UK, Canada and New Zealand.
In fact, New Zealand industry responded responsibly (and in what has proven to be a very appropriate manner) to the St John’s wort issue fully five months earlier than Australia did.
The Aristolochia ‘problem’ had been proven to have occurred in Australia even with its prescriptive and pre-market approval system.
There is no evidence that Aristolochia dietary supplements have been a problem in New Zealand, the USA or Canada where the regulatory environment is more market led.
- None of the examples above indicate market failure, nor has their been an established risk that could have been managed any more effectively than occurred.
The background document says, new legislation is required to enable New Zealand to protect public health and safety using regulation that is risk based and is consistent with international best-practice.
The evidence provided in this document proves that the present regulatory system for natural healthcare products already protects public health and safety.
It is already risk-based; what is proposed is not – it is philosophically and perception based.
The Australian system is not international best practice. At the International Alliance of Dietary/Food Supplement Associations regulatory summit in Cape town, Sth Africa in March 2001, it was unanimously agreed that Australia’s system is in fact out of step with the rest of the world. One could argue that it is internationally famous in Australia.
The background paper says that there have been and will continue to be opportunities for stakeholders to be involved in the project.
- Industry has been involved in this project for four long years; every input made to date has been ignored.
- The NNFA has seen no evidence in any of the discussion papers that any of our extensive and pragmatic inputs have even been considered and then rejected.
- There would be near unanimous agreement amongst industry that the consultation process is a sham.
The background paper says that the dietary supplement regulations have not been enforced for many years and are now regarded as outdated.
- That statement is simply not true.
  - If it were, then it is an indictment on the Ministry of Health for failing in its duty to do its job of protecting the public.
- Industry is continually being harassed by the Ministry regarding the dietary supplement regulations – especially regarding illegal, but truthful, product claims.
- More recently the Ministry has facilitated the expansion of the role of the voluntary Advertising Standards Authority’s advertising codes of practice.
- They are now compulsory, even though they have no legal standing.
- What’s more, the industry is having to pay tens of thousands of dollars for the privilege of advertising.
- In some cases, $60 dollar advertisements cost $100 dollars in approval fees.
The background paper says that the current system does not enable the public to distinguish good quality product from poor quality product.
- The Ministry has no evidence that that is the case.
- The Australian system failed to prevent the sale of contaminated product.
- It is reliably estimated that at least 80% of New Zealand product is made under GMP conditions VOLUNTARILY.
- Good quality is simply good business.
The safety issues mentioned on page 7 of the background document are ubiquitous. Apart from new ingredients, dozens of officially assessed and approved pharmaceutical medicines are recalled or removed from the market each year despite the best efforts of the regulator to ensure safety before entry to the market.
The simple fact is that no regulatory system is bullet proof. The Ministry of Health has no evidence whatsoever that the Australian system is any more effective in protecting public safety than New Zealand’s.
On page 15 of the background document the question, “Why regulate dietary supplements in New Zealand?” is asked.
- It says that NZ has a minimalist approach to regulating dietary supplements; this is an interesting statement given that previously the Ministry of Health stated that they gave up administering the existing regulations some time ago!
- If there is a safety problem, then the Ministry has incriminated itself by acknowledging that it has failed in its duty of care.
- Fortunately, the evidence overwhelmingly confirms that there is no public health crisis.

This in itself means that by its own admission, neither the Ministry of Health, nor the existing regulations have played any role in achieving the exceedingly safe profile of the natural healthcare product industry!

The same paragraph says that New Zealand and other countries have found problems with some products.
- These ‘other countries’ include Australia; there is no evidence that Australia has experienced any fewer quality problems as a result of its very prescriptive and costly regime.
The paper says there are no controls over quality.
- Again, this is simply not true.
- All food product must be fit for purpose.
- It is illegal to sell unsafe product.
- Fair trading law and indeed the dietary supplement regulations require correct accurate and prescribed labelling respectively.
- There are far more voluntary controls implemented in the manufacture of natural healthcare products than most foods.
- Industry can not be held responsible for the Ministry’s failure to undertake its own statutory responsibilities.
The bottom of page 15 says that dietary supplements will not be regulated by adopting the Australian system for complementary medicines.
- This is the opposite to what is proposed in the discussion document. Regulators in New Zealand and Australia have continually affirmed that TGA rules will apply – New Zealand officials have stated that they can’t think of a better system!

In short, there are major inconsistencies between what the Minister has conveyed to Members of Parliament on behalf of her officials, and reality.

It would appear that the people of New Zealand and the House of Parliament have been mislead by the Minister as a result of disinformation provided by officials.

Dietary supplements are not regulated?

The Allen&Clarke PR-SPIN “fact sheet” makes the following totally false statements.

There are no regulatory controls on the quality and safety of products placed on the market.
The Regulations imprecisely define dietary supplements. This can create loopholes, such as the recent incident where a psychoactive CD cleaning substance was able to be marketed as a dietary supplement. Additionally, it creates two (overlapping) interfaces – between dietary supplements and food and between dietary supplements and medicines.

There is so much SPIN on these statements that one wouldn’t need a CD-Driver to operate the CD player.

Firstly the first statement is factually incorrect. It is so factually incorrect that the regulators who advised Allen&Clarke to include such a statement in their PR-SPIN “fact sheet” must either be ignorant of both food AND medicine law, or they have deliberately lied – there is no other choice.

Similar statements have been repeated in the press.

We draw your attention to the following:

Suppliers are required, by law, to comply with at least the following legislation and all related amendments:

Food Act 1981,
Food Regulations 1984,
Food Regulations 1996,
Dietary Supplement Regulations 1985,
The Food Hygiene Regulations 1974,
Weights and Measures Regulations 1999,
Medicines Act 1981,
Medicines Regulations 1984,
Consumers Guarantee Act 1993,
Sales of Goods Act 1908,
The Fair Trading Act 1986,
Various agricultural product acts related to meat and dairy products such as,
Animal Products Act 1999
Meat Act 1981,
Dairy Industry Act 1952
Agricultural Chemicals and Veterinary Medicines Act 1997
Hazardous Substances and New Organisms (HSNO) Act 1996
Various other acts relating to management of companies.

Industry is even compelled to spend good money to gain advertising approval from the Advertising Standards Authority’s Therapeutic Advertising Advisory Service (TAAS) under what is called TAPS, even though there is no legal obligation to do so.

TAAS & TAPS were set up by the ASA and Medsafe and applies to dietary supplements even though they are not legally defined as therapeutic products.

Often, the cost of getting adverts pre-vetted is more than the advert itself, and it still prevents truthful statements of purpose.

All product has to be fit for purpose. It is illegal to knowingly sell unsafe product.

It is currently illegal to make truthful claims – clearly an absurdity in modern society and nothing to do with the need to introduce the Australian system – even in Australia they are not allowed to make truthful statements.

To say that dietary supplements are unregulated is at odds with the facts, and given the official nature of the statement it can only be seen as a deliberate attempt to distort natural justice by officials who should know better.

Either that, or it demonstrates gross incompetence on the part of the regulators concerned.

The PR-SPIN Doctor then asks the question;

Will there be regulation of Maori traditional remedies?

And then fails to answer the question, but instead addresses practitioners and the products they supply only.

Susan Martindale is on written record as saying any products supplied to practitioners for them to ‘personalise’ for their clients will not be bound by any new regulatory system. Given that most contamination and adulteration has occurred through practitioner-only products this is a patent absurdity. It will only encourage so-called unsafe small players to shift their supplies to such markets.

The current provisions that exempt traditional Maori healers (and the products they supply) from regulation will continue, but innovative New Companies that provide high quality and safe Maori medicinal products will be unable to supply the open market as it is impossible to get such product approved under regimes such as that existing in Australia.

c:\aaa\nnfa\tth\discussion document\submission\nature and extent of market failure.doc

[1] http://www.dfat.gov.au/geo/new_zealand/ttmra_users_guide.pdf

[2] Complaint relating to the New Zealand Food Standard 1996, Amendment No. 11, Report of the Regulations Review Committee FORTY-FIFTH PARLIAMENT, (RT HON JONATHAN HUNT, CHAIRPERSON), July 1999, Presented to the House of Representatives

[3] Report On The Findings Of The Bee Product Warning Scientific Review Working Group, [AD10-02-3-7 (F)] 16/17 August 1999, Associate Professor Lynn Ferguson (Chair)

[4] Page 2, Background information