Introduction

Recent reforms to the Therapeutic Goods Act 1989 (Cth) (the Act) change the classification of therapeutic goods, the way regulatory decisions are published and the advertising requirements in respect of therapeutic goods to reduce potential risks to the public. New criminal offences and civil penalties are also introduced.

 These reforms came into effect as law in February with the enactment of the Therapeutic Goods Amendment (2013 Measures No. 1) Act 2013 (the Amending Act).

When are products therapeutic goods?

“Therapeutic goods” is defined broadly in the Act as “goods that are represented in any way to be, or that are, whether because of the way in which the goods are presented or for any other reason, likely to be taken to be for therapeutic use”.

Under the Act, before the recent amendments, certain goods are declared expressly not to be therapeutic goods.  For example, food-type products will be excluded from regulation under the Act if they are already covered by a standard published under the Food Standards Australia New Zealand Act 1991 (Cth). 

Further, most cosmetic products are not regulated by the Act, as they tend to have a cosmetic rather than therapeutic use.  However, this depends on the ingredients of the cosmetic product and whether therapeutic claims are made on the product labelling or in advertising.

These express exclusions remain. However, the Amending Act introduces a new section 7AA, which gives the Minister for Health (the Minister) further powers to declare specific goods to be excluded entirely, or excluded when used, advertised or presented in a specific way.

Previously, the Minister could only exempt goods from certain parts of the Act.  This new section 7AA is an attempt to address the broad definition of “therapeutic goods” which had previously captured clothing, jewellery and bedding which make therapeutic claims but for which public health is not an issue, for example ‘power band’ bracelets and mattresses which contain bacteria designed to reduce the effects of dust mites.

This amendment also reflects the Australian Government’s preference that therapeutic-type claims for certain products be dealt with under the misleading and deceptive or false representation provisions of the Australian Consumer Law.

The Advertising of Therapeutic Goods

Under the Act, the Secretary of the Department of Health (the Secretary) has the power, by written notice, to cancel the registration or listing of goods on the Australian Register of Therapeutic Goods (the Register) if it appears to the Secretary that the quality, safety or efficacy of the goods is unacceptable (among other things).1

Whilst the Secretary’s power remains, the Amending Act gives the Secretary further powers to cancel the registration or listing of the goods on the Register, if the sponsor (for example, the manufacturer, supplier or distributor) of the good does not comply with the advertising requirements of the Therapeutic Goods Advertising Code (the Code) and any other advertising requirement under the Act or the regulations.

In particular, the Amending Act gives the Secretary the power to cancel the registration or listing of goods on the Register if it appears that the “presentation” of the goods is not acceptable.  The “presentation” of therapeutic goods refers to “the way in which the goods are presented for supply and includes matters relating to the name, labelling and packaging and any advertising or other informational material associated with the goods.”  

This amendment gives the Secretary greater powers to ensure that therapeutic goods continue to satisfy the advertising requirements for as long as they remain on the Register.

Introduction of New Criminal Offences and Civil Penalties

The Amending Act also introduces new criminal offences and corresponding civil penalties.

Under the Act, a person may request that the Secretary vary the information3 on the Register, for example, information relating to product warnings or precautions to be included in the product information sheet or scientific data or evidence relevant to the Secretary’s assessment of the “safety, efficacy or quality of the good.”

This provision still remains in the Act. However, the Amending Act introduces criminal offences and civil penalties for supplying false or misleading information in a request for variation.4 The criminal penalties include, for example, a maximum penalty of 5 years imprisonment or a fine of $680,000 (or both) where the information provided is false or misleading and has or will result in harm or injury to a person and a maximum penalty of 12 months imprisonment or $170,000 (or both) where the information provided is false or misleading but does not cause damage.

Further, the Amending Act introduces a civil penalty for false statements with the maximum penalty for an individual being $850 000, and a maximum $8.5 million penalty for a company.

Changes to Publication Requirements

Previously, where the Secretary cancelled the registration or listing of a therapeutic good, the goods were formally taken off the Australian Register of Therapeutic Goods, in most cases, on the day the notice of cancellation is given.  This would often result in manufacturers, suppliers and sellers being in breach of the Act at that time as the goods in question would still be on the market at the date of cancellation.

Whilst this provision remains, the Amending Act also allows a particular date to be specified in the notice of cancellation as the date that the product will be removed from the Register, which must be a date at least 20 working days after the notice is given to the person.  This gives suppliers, manufacturers and sellers more time to remove their products from the market after cancellation.

Importance for Direct Sellers

The Amending Act is relevant to direct selling companies who manufacture, distribute and sell products that fall within the definition of therapeutic goods.  One category of goods that may be a therapeutic good are weight-loss products.

For example, given the Secretary’s new powers to remove and cancel the registration of a product on the Register, direct selling suppliers and sellers of weight-loss products will need to carefully consider the weight-loss and health claims that are presented on the product's packaging and labelling, as well as any claims made in the advertising of the product.  It will be important to ensure that any therapeutic claims made can be supported by evidence.

We will keep you informed about the impact that these new amendments have in practice, and any action taken by the TGA to exercise their new powers, including the enforcement of the new criminal penalties.