Date:
20121211
Docket:
T-410-12
Citation:
2012 FC 1465
[UNREVISED
ENGLISH CERTIFIED TRANSLATION]
Ottawa, Ontario,
December 11, 2012
PRESENT: The
Honourable Mr. Justice Scott
BETWEEN:
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ZEN CIGARETTE INC
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Applicant
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and
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HEALTH CANADA
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Respondent
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REASONS FOR
JUDGMENT AND JUDGMENT
I. Introduction
[1]
Zen
Cigarette Inc. (Zen) is
seeking judicial review of the decision dated January 18, 2012, by Health
Canada, prohibiting the entry of electronic cigarettes into Canada because of
several violations to the Food and Drug Regulations, CRC, c 870
(Regulations).
[2]
For
the following reasons, this application for judicial review is dismissed.
II. Facts
[3]
On
October 26, 2011, the Border Integrity and Emergency Preparedness Unit within
the Inspectorate Program of Health Canada, Quebec Region, recommended that Zen’s
200 cartridges, each with 18 mg of nicotine, bearing customs identification
number A1X-7897333776
be
prohibited entry. The
label on the cartridges subject to the prohibition indicated that they each contain
18 mg of nicotine. Nicotine is a drug identified in Schedule F of the
Regulations.
[4]
Vincent
DeBlois was importing
those electronic cigarettes on behalf of Zen, which he is the founder, President
and majority shareholder of. The exporter, C&M
Technology (C/O Bilstar International Limited), is a company with a business
address in Hong
Kong.
[5]
The
entry prohibition recommendation was based on subsection C.01.045(1)
of the
Regulations.
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C.01.045. (1) Subject
to subsection (2), no person other than
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C.01.045. (1) Sous réserve du paragraphe (2), est interdite
l’importation d’une drogue de l’annexe F par toute personne autre qu’un
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(a) a
practitioner,
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a) praticien;
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(b) a
drug manufacturer,
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b) fabricant de drogues;
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(c) a
wholesale druggist,
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c) pharmacien en gros;
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(d) a
registered pharmacist, or
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d) pharmacien inscrit; ou
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(e) a
resident of a foreign country while a visitor in Canada,
shall
import a Schedule F Drug.
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e) résident d’un pays étranger,
durant son séjour au Canada.
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[6]
In
accordance with the terms of section A.01.043 of the Regulations, the entry
prohibition recommendation was sent to the Canada Border Services Agency (CBSA)
and the importer.
[7]
Zen
operates a business selling its electronic cigarettes in Canada through its internet site, Zencig.com.
[8]
On
November 3, 2011, Mr. DeBlois, Zen’s President, gave an interview with the Journal
de Montréal. He
stated that the electronic cigarettes helped him quit smoking tobacco
cigarettes but that Zen [translation]
“does not claim to help people quit smoking”. He also stated that Zen does not intend
to complete the registration process for the electronic cigarettes because [translation] “what company would want to
pay to open the market to other companies” (Respondent’s Record, Exhibit MP-9).
[9]
On
November 7, 2011, François Lévesque, counsel for Zen, wrote to Health Canada. He maintained that [translation]
“nicotine and/or its derivatives are not prescription drugs, but are sold
freely in Canada” (Respondent’s Record, Exhibit MP-11).
[10]
On
November 29, 2011, Manon Parent, a supervisor with the Border Integrity
and Emergency Preparedness Unit within the Inspectorate Program of the
Department of Health Canada, Quebec Region, replied to Zen. She explained the
reasons for the recommendation that the Zen cartridges be prohibited entry to Canada, namely, the absence of a marketing authorization from Health Canada for the electronic
cigarettes and the fact that nicotine appears in Schedule F of the Regulations.
[11]
On
November 30, 2011, François Levesque replied to Ms. Parent. He argued
that the electronic cigarette cartridges imported by Zen deliver 4 mg or less
of nicotine per dosage. Consequently, they cannot, according to him, constitute
a Schedule F drug and cannot be prohibited for importation or over-the-counter
sales.
[12]
On
January 18, 2012, Ms. Parent specified Health Canada’s official position in a
letter sent to Mr. Levesque. She reiterated the reasons listed in her letter
dated November 29 and added that Zen must hold an establishment licence to
legally import and sell electronic cigarettes in Canada.
[13]
On
February 23, 2012, Zen filed its application for judicial review with respect
to Health Canada’s official decision.
III. Legislation
[14]
The
applicable provisions of the Food and Drug Regulations, CRC, c 870, Schedule F of the said
Regulations and the Food and Drugs Act, RSC 1985, c F-27, are reproduced
in the annex to this decision.
IV. Issue and standard of
review
A. Issue
•
Is
Health Canada’s decision to prohibit the entry of the electronic cigarettes
imported by Zen reasonable?
B. Standard of review
[15]
In
Dunsmuir v New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 at paragraph 62 (Dunsmuir),
the Supreme Court of Canada described
the two steps that need to be taken in order to determine the applicable
standard of review:
[62] In summary, the process of
judicial review involves two steps. First, courts ascertain whether the
jurisprudence has already determined in a satisfactory manner the degree of
deference to be accorded with regard to a particular category of
question. Second, where the first inquiry proves unfruitful, courts must
proceed to an analysis of the factors making it possible to identify the proper
standard of review.
[16]
In
this case, Health Canada justified its refusal to allow the entry of the electronic
cigarettes imported by Zen by relying on the Regulations. Health Canada applied the definition of “drug” in the Food and Drugs Act, RSC 1985, c F-27
at paragraph 2(b) (Act) to nicotine to determine that Zen violated
subsection of the Regulations. This case therefore involves the application of statutory
provisions to specific facts.
[17]
In
Canadian Pharmaceutical Technologies International (C.P.T.) Inc v Canada
(Attorney General), 2006 FC 708, 295 FTR 285, at paragraph 17, Justice Kelen
found that the applicable standard of review for such cases is reasonableness (see
also Hospira
Healthcare Corp. v Canada (Attorney General), 2010 FC 213 at
paragraph 33).
[18]
Because
the applicable standard is reasonableness, the Court must determine whether
Health Canada’s decision falls within a range of “possible, acceptable outcomes
which are defensible in respect of the facts and law [applicable in this case]”
(see Dunsmuir, above, at paragraph 47).
V. Position
of the parties
A. Zen’s
position
[19]
Zen
contends that electronic cigarettes are not a drug under the Act and the
Regulations. As a result, Health Canada cannot prohibit the entry of electronic
cigarettes into Canada.
[20]
Zen
claims that Health Canada considers electronic cigarettes a drug because the cartridges
contain nicotine. Nicotine is found in Schedule F of the Regulations. Zen also
argues that they fall under the exception set out in paragraph (d) of
Schedule F because the electronic cigarette cartridges that it imports deliver
4 mg or less of nicotine per dosage unit.
[21]
Zen
claims that Health Canada erred by attributing a dosage unit of 18 mg of
nicotine per cartridge for several reasons. First, Zen argues that [translation] “electronic cigarettes are
not a medicament, so there is no dosage” (Applicant’s Record, page 17, paragraph
10). Second, given that one electronic cartridge is intended to replace
twenty-five tobacco cigarettes and that it is used one inhalation at a time,
Zen contends that the dosage unit should instead be the dosage delivered per
inhalation, which does not exceed 4 mg of nicotine.
[22]
According
to Zen, given the low nicotine content delivered by one electronic cigarette
inhalation, it should not be considered a drug under Schedule F of the
Regulations or under the Act. As a result, Zen submits that Health Canada’s decision
is ultra vires.
[23]
Zen
is therefore asking the Court to allow its application for judicial review and
declare that the electronic cigarettes that it imports are not subject to
Schedule F of the Regulations.
B. Health
Canada’s position
[24]
Health
Canada argues that its decision dated January 18, 2012, recommending the
refusal of the entry of the electronic cigarettes imported by Zen is justified
and reasonable. The Inspectorate, through the National Border Integrity Program
and in partnership with CBSA, ensures the compliance of health products with
the Act and its associated Regulations as well as their administration. The
January 18 decision identified several failures to comply with the provisions
of the Regulations. Zen is challenging only the violation with respect to
subsection C.01.045(1).
[25]
Moreover,
Health Canada points out that Zen violated three separate provisions of the
Regulations. Some are not being challenged by Zen. The first offence concerns
subsection C.01.014(1) of the Regulations, which states that no manufacturer shall
sell a drug in dosage form unless a drug identification number has been
assigned. The second offence relates to the need to obtain a notice of
compliance to sell a drug that meets the definition of a new drug under section
C.08.001 of the Regulations. The third offence concerns subsection C.01A.004(1)
of the Act, which states that no person shall, except in accordance with an
establishment licence, import or sell a drug.
[26]
Health
Canada alleges that the electronic cigarettes imported by Zen fall under the
definition of “drug” under paragraphs 2(a) and 2(b) of the Act.
Because electronic cigarettes contain nicotine, which modifies organic functions,
they thus meet the definition of a drug set out under paragraph 2(b)
of the Act. Health Canada relies on Doctor Thea Christa Mueller’s
affidavit, which identifies several modifications to human functions caused by
nicotine consumption:
Such modifications include . . . increased heart rate
and blood pressure, stimulation of the nervous system, constriction of blood
vessels causing a temperature drop in the hands and feet, altered brain waves
and muscles relaxation. (Respondent’s Record, page 140, paragraph 11)
[27]
Health
Canada contends that electronic cigarettes also meet the definition of drug
in paragraph 2(a) of the Act because Zen claims that they can be used
for the treatment of the addiction to nicotine. In her affidavit, Doctor
Mueller explained the following:
When drugs containing nicotine are manufactured,
sold or represented for use for the treatment of the addiction to nicotine,
they also fall within paragraph a) of the definition of drug since nicotine
addiction is a chronic, relapsing, disease that results from prolonged effects
of nicotine on the brain (Respondent’s Record, pages 140‑141,
paragraph 12).
[28]
Health
Canada relies on a passage from the Zen Web site that states that electronic
cigarettes “[m]ay help you to stop smoking” in the “Top 10” reasons for using Zen
E-cigarettes (Respondent’s Record, page 85).
[29]
Health
Canada also claims that Zen violated subsection C.01A.004(1) of the
Regulations because it did not obtain an establishment licence before importing
its electronic cigarettes. Health Canada also points out that Zen is not
challenging this claim.
[30]
Under
subsection C.01.014(1) of the Regulations, a drug sold in dosage form must have
been assigned a drug identification number. According to Health Canada, Zen failed to comply with this requirement because its electronic cigarettes each contain 18
mg of nicotine (Health Canada’s Record, Thea Christa Mueller’s affidavit, at
paragraphs 15 to 19).
[31]
Paragraph
C.08.002(1)(b) of the Regulations states that no person shall sell a new
drug under section C.008.001 unless the Minister has issued, under section
C.08.004, a notice of compliance to the manufacturer of the new drug in respect
of the submission. The submission must include data and studies that convince
Health Canada of the safety and effectiveness of the drug. Health Canada points out that no notice of compliance was issued for the electronic cigarettes imported by Zen
(Health Canada’s Record, Thea Christa Mueller’s affidavit, at paragraphs
13-14). This therefore constitutes a violation of the Regulations by Zen.
[32]
Health
Canada also alleges that electronic cigarettes are a drug under Schedule F of
the Regulations. In light of subsection C.01.045(1), Zen cannot import
them if it does not comply with the Regulations because the cigarettes deliver
more than 4 mg per dosage unit and do not fall under exception (d) of
Schedule F. Health Canada considers the dosage unit to be 18 mg, that is, the
quantity of total nicotine contained in each cartridge.
[33]
Health
Canada compares electronic cigarettes to a Nicorette inhaler, the only nicotine
inhalation system approved by the Department. Nicorette cartridges contain 10 mg
of nicotine and deliver 40% of its content, that is, 4 mg. Assuming that
electronic cigarette cartridges deliver the same percentage, Health Canada claims that the electronic cigarettes sold by Zen would deliver 7.2 mg per
dosage unit (Respondent’s Record, Thea Christa Mueller’s affidavit, page 144,
paragraph 21).
[34]
Furthermore,
Doctor Mueller found that the electronic cigarettes sold by Zen deliver a
higher percentage of nicotine than Nicorette inhalers:
The above calculation is conservative, given the two
distinct modes of nicotine delivery represented by the Nicorette Inhaler on the
one hand and the e-cigarette on the other. . . . The nicotine delivered by the
e-cigarette is generated by devices that are activated by the inhalation of the
user. In particular, e-cigarettes operate by way of an electric circuit that
vapourizes nicotine. This process creates the potential for delivering much
higher amounts of nicotine than what would be possible with a passive form of
delivery such as a [Nicorette] inhaler. . . . This line of reasons suggests
that the 18mg nicotine Zen e-cigarette cartridge delivers much more nicotine
than the conservative estimate of 7.2mg. (Thea Christa Mueller’s affidavit at paragraph
22).
[35]
Health
Canada therefore found that [translation]
“electronic cigarettes do not fall under the exception of an ‘inhalation device
delivering 4 mg or less of nicotine per dosage unit’ set out in paragraph (d)
of Schedule F of the [Regulations]” and that Zen violated subsection C.01.045(1)
of the Regulations by importing them.
VI. Analysis
•
Is
Health Canada’s decision to prohibit the entry of the electronic cigarettes
imported by Zen reasonable?
[36]
For
the following reasons, the Court finds that Health Canada’s decision to
prohibit the entry of the electronic cigarettes imported by Zen is reasonable.
[37]
First,
it is necessary to determine whether electronic cigarettes are a drug under the
Act. It is clear from the evidence submitted by Health Canada that electronic cigarettes are used primarily to deliver nicotine. Schedule F of the
Regulations defines “nicotine and its salts” as being a drug. Section 2 of the
Act specifies the following:
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“drug”
includes any substance or mixture of substances manufactured, sold or
represented for use in
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«
drogue » Sont compris parmi les drogues les substances ou mélanges de
substances fabriqués, vendus ou présentés comme pouvant servir :
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(a) the diagnosis,
treatment, mitigation or prevention of a disease, disorder or abnormal
physical state, or its symptoms, in human beings or animals,
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a) au diagnostic, au traitement,
à l’atténuation ou à la prévention d’une maladie, d’un désordre, d’un état
physique anormal ou de leurs symptômes, chez l’être humain ou les animaux;
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(b) restoring,
correcting or modifying organic functions in human beings or animals, or
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b) à la restauration, à la
correction ou à la modification des fonctions organiques chez l’être humain
ou les animaux;
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(c) disinfection in
premises in which food is manufactured, prepared or kept;
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c) à la désinfection des locaux
où des aliments sont gardés.
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[38]
Health
Canada claims that electronic cigarettes are a drug under paragraph 2(a)
of the Act because Zen promotes them for the treatment of the addition to
nicotine, a disease, according to Doctor Thea Christa Mueller. Health
Canada also relies on the interview of Mr. DeBlois, President of Zen, in the
Journal de Montréal and on a passage from the Zen internet site. The Court,
after reviewing the evidence submitted by each party, agrees that electronic
cigarettes meet the definition of a drug contained in paragraph 2(a) of
the Act because Zen promotes them for the treatment of the addition to nicotine.
Electronic cigarettes can therefore be used [translation]
“to treat . . . a disease”, in this case, the addition to nicotine.
[39]
The
Court also finds that electronic cigarettes are a drug under paragraph 2(b)
of the Act because the evidence submitted clearly shows that nicotine modifies organic
functions in human beings. In her affidavit filed into the Court Record, Doctor
Mueller listed some of the physical modifications caused by nicotine. The Court
agrees with Health Canada’s argument that electronic cigarettes are sold to
meet the physical needs of consumers who are addicted to nicotine.
Consequently, electronic cigarettes also meet the definition of a drug
according to paragraph 2(b) of the Act.
[40]
In
its letter dated January 18, 2012, Health Canada raised several violations of
the Regulations to support the prohibition of the entry of the electronic
cigarettes imported by Zen. One of the objectives of the Inspectorate (a unit
of Health Canada) is to ensure, through the National Border Integrity Program:
[translation]
the administration of the Act . . . at the
Canadian borders by systematically assessing the compliance of health products
that are suspected to be in violation of the Act and its associated Regulations
(Respondent’s Record, page 190).
[41]
Where
there is a violation of the Act or one of its associated Regulations, the Court
recognizes that it therefore becomes reasonable to prohibit the entry of
products that violate statutory provisions.
[42]
Subsection
C.01.045(1) of the Regulations states that no person other than a practitioner,
a drug manufacturer, a wholesale druggist or a registered pharmacist shall
import a Schedule F drug. Nicotine and its salts are part of Schedule F of the
Regulations except when they are, in particular, “(d) in a form to be
administered orally by means of an inhalation device delivering 4 mg or less of
nicotine per dosage unit”.
[43]
Dr.
Mueller attributed a dosage unit of 7.2 mg of nicotine to each electronic
cigarette cartridge containing 18 mg. Is that reasonable? Zen also maintains
that an electronic cigarette’s dosage unit is only one inhalation, which would
be less than 4 mg, and therefore below the threshold set out by the exception
in paragraph (d) of Schedule F.
[44]
The
evidence submitted makes it possible to determine that the seized boxes
indicated that one cartridge is equivalent to 25 regular cigarettes (Respondent’s
Record, Exhibit MP-8). Zen did not submit any evidence that made it possible to
scientifically establish the quantity of nicotine delivered by inhaling its
electronic cigarettes. It argues that it is less than 4 mg, but the record
contains no scientific evidence establishing the truthfulness of that
statement. Furthermore, by drawing a parallel with a Nicorette inhaler approved
by Health Canada, Health Canada nevertheless argues that the threshold of 4 mg per
inhalation was exceeded. One electronic cigarette cartridge contains the
smallest dosage form analyzed by Health Canada. Even if the Court found that
the appropriate threshold is one inhalation rather than the cartridge itself, in
the absence of concrete evidence on the dosage unit, Health Canada’s finding that the 18 mg contained in the cartridge constituted the dosage unit for
the purposes of the application of the Regulations falls within the range of
possible outcomes. Because Zen failed to submit scientific data or other
evidence to Health Canada making it possible to find that the dosage unit fell
under exception (d) of Schedule F of the Regulations, Health Canada’s finding seems reasonable in the circumstances. It is within the range of possible
outcomes in light of the facts and the applicable law.
[45]
The
Court dismisses Zen’s argument based on the exception contained in paragraph (d)
of Schedule F. A drug that satisfies the criteria of exception (d) of
Schedule F would fall outside the scope of subsection C.01.045(1) of the
Regulations but would not lose its drug status under the Act.
[46]
The
Court agrees that it was reasonable for Health Canada to find that Zen violated
paragraph C.01A.004(1)(a) of the Regulations by importing a drug with a view
to selling it without an establishment licence. Having already established that
electronic cigarettes meet the definition of a drug under the Act and its
associated Regulations, it is clear from the evidence in the record that Zen
imported electronic cigarettes to sell them in Canada and that it did not hold
an establishment licence.
[47]
Subsection
C.01.014(1) of the Regulations states the following: “No manufacturer shall
sell a drug in dosage form unless a drug identification number has been
assigned for that drug . . .” According to subsection C.01.014.1(1), in the
case of a drug imported to Canada, the importer of the drug may make an
application for a drug identification number for that drug. Health Canada claims that no drug identification number was issued for Zen’s electronic cigarettes,
and as a result, Zen is in violation of subsection C.01.014(1) of the
Regulations by selling them. However, Zen maintains that electronic cigarettes
are not a medicament and are therefore not sold in dosage form.
[48]
A
drug under the Act is not, however, a medicament. In Flora Manufacturing
& Distributing Ltd v Canada (Deputy Minister of National Revenue – MNR),
[2000] FCJ No 1196, 258 NR 134 at paragraph 12, the Federal Court of Appeal
stated the following: “The
definition of ‘drug’ in the Food and Drugs Act is considerably broader
than the meaning of ‘medicament’”. Furthermore, the definition of “a
drug in dosage form” can be found in subsection C.01.005(3) of the Regulations
and reads as follows: “For the purposes of this section and section C. 01.014,
‘a drug in dosage form’ means a drug in a form in which it is ready for use by
the consumer without requiring any further manufacturing”. In light of these
elements, the Court finds that it was reasonable to conclude that Zen was
violating subsection C.01.014(1) of the Regulations by selling the electronic
cigarettes.
[49]
Paragraph
C.08.002(1)(b) of the Regulations states that no person shall sell a new
drug under section C.008.001 unless the Minister has issued a notice of
compliance to the manufacturer of the new drug in respect of the submission. The
purpose of that provision is to ensure the safety and effectiveness of all new
drugs before they are consumed by the Canadian public. The evidence in the
record does not make it possible for the Court to determine whether Zen took
steps to comply with that part of the Regulations. In the absence of
such evidence and given the other evidence submitted by Health Canada, the Court determines that the finding by Health Canada that Zen violated that part of the
Regulations also falls within a range of possible outcomes.
[50]
For
these reasons, the Court finds that the determination by Health Canada that Zen violated the Act and the Regulations is reasonable.
JUDGMENT
THE
COURT ORDERS AND ADJUDGES that this application for judicial
review be dismissed, with costs against Zen Cigarette Inc.
“André F.J. Scott”
Certified
true translation
Janine
Anderson, Translator
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