Bills Digest No. 139  1999-2000Therapeutic Goods Amendment Bill (No. 2) 2000

Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details

Passage History

Therapeutic Goods Amendment Bill (No. 2) 2000

Date Introduced: 9 March 2000

House: House of Representatives

Portfolio: Health and Aged Care

Commencement: On Royal Assent

Purpose

The Bill makes three substantive amendments to the Therapeutic Goods Act 1989 (Cth):

• introducing a new offence of dealing with counterfeit therapeutic goods
• clarifying the operation of the existing offence of importing, exporting, manufacturing or supplying unapproved therapeutic goods, and
• introducing an additional ground on which registration or listing of a therapeutic good can be cancelled, namely for failure to comply with advertising requirements.

Background

The Therapeutic Goods Act 1989 (Cth) establishes a uniform national system of controls on the availability within Australia of therapeutic goods.⁽¹⁾ The basic scheme of the legislation is that, unless exempt, therapeutic goods must be entered as either 'registered' goods or 'listed' goods before they may be supplied in, or exported from Australia.

Before goods are made available to the public they are assessed having regard to:

• their quality, safety and efficacy for the purposes for which they are to be used;
• their conformity with the applicable Australian and international standards;
• the manufacture and quality control procedures used; and
• other matters such as presentation.⁽²⁾

After having been evaluated, the goods may then be registered or listed on the Australian Register of Therapeutic Goods.⁽³⁾

Some therapeutic goods are specified in the Therapeutic Goods Regulations to be exempt from the operation of the registration and listing process.⁽⁴⁾ The Secretary may also specifically grant approval to import, export or supply specified therapeutic goods for special treatment or experimental purposes,⁽⁵⁾ or where similar registered goods are in short supply or are unavailable.⁽⁶⁾ It is only those goods which are either registered or listed, or are exempt or the subject of specific approval, that may be made available to Australian consumers.

New offence in relation to counterfeit therapeutic goods

The Therapeutic Goods Administration possesses entry, search and warrant powers under Part 5A of the Therapeutic Goods Act 1989 (Cth). It can use these powers to ensure that the Act and the Regulations are being complied with, to investigate suspected offences against the Act and to obtain evidence. One of the uses of these powers has been to detect the counterfeiting of medicines. In 1996 the Therapeutic Goods Administration reported:

More recently, the Parliamentary Secretary to the Minister for Health, Senator Grant Tambling stated that 87 of the 577 offences prosecuted between 1992 and 1995 under the Therapeutic Goods Act 1989 (Cth) involved counterfeiting activities.⁽⁸⁾

A World Health Assembly (an organ of the World Health Organization) resolution passed in 1988 requested governments and pharmaceutical manufacturers to cooperate in the detection and prevention of counterfeiting of pharmaceuticals.⁽⁹⁾ The Government has expressed a 'high level of commitment' to the World Health Organization's principles of anti-counterfeiting, and recognised the importance of not permitting, even inadvertently, the production and export of counterfeit products.⁽¹⁰⁾

The measures inserted into the Therapeutic Goods Act 1989 (Cth) by the Bill to deal with the deliberate manufacture and supply of counterfeit therapeutic goods are intended to give effect to the Government's commitment. The amendments create a new offence of intentionally manufacturing, supplying, importing or exporting counterfeit therapeutic goods. Counterfeit therapeutic goods are those that are falsely labelled or advertised as to their composition, manufacture or source. Counterfeit therapeutic goods may also be forfeited to the Crown, if the Secretary gives written notice for them to be treated as prohibited imports or exports by customs officials.

Clarification of offence of dealing with unapproved therapeutic goods

Section 20 of the Therapeutic Goods Act 1989 (Cth) creates an offence of importation, exportation, manufacture and supply of unapproved therapeutic goods. This prohibition is an important part of the system of controls and registration of therapeutic goods.

The Bill repeals the current section 20 and replaces it with a similar offence, differently worded. This amendment is intended to displace the interpretation given to section 20 in a recent prosecution in New South Wales.

In 1995, Pan Laboratories Pty Limited (Pan) was prosecuted in the District Court of New South Wales under the Therapeutic Goods Act 1989 (Cth) for alleged offences arising out of the local supply and export of bulk quantities of Evening Primrose Oil capsules in 1993. Pan had originally imported the Evening Primrose Oil capsules into Australia from Thailand. The jury found Pan not guilty on three counts but guilty on the remaining 13 counts.⁽¹¹⁾

Pan appealed to the New South Wales Court of Criminal Appeal, among other things, against the trial judge's interpretation of section 20. The trial judge had held that the prosecution only had to prove that Pan intended to export and supply the goods. It was then up to Pan to prove that the goods were either registered or listed on the Australian Register of Therapeutic Goods, or were exempt from registration or approved by the Secretary.⁽¹²⁾ This meant that the mental element of the offence, 'knowingly or recklessly', only applied in relation to the import, export and supply, and the prosecution did not have to prove Pan knew the goods were not registered or exempt.

On appeal, the Court of Criminal Appeal unanimously disagreed with the trial judge's interpretation. All three judges on appeal held that whether the goods were listed, registered, exempt or approved was part of the offence which the prosecution had to prove, not a defence which Pan had to prove.⁽¹³⁾ They disagreed as to what the mental element applied to. Meagher JA and Grove J held that 'knowingly or recklessly' applied not only to the fact of export and supply, but also to the fact that the goods were not registered, listed, exempt or approved.⁽¹⁴⁾ Hulme J held that the words 'knowingly or recklessly' applied to the phrase 'for use in humans' but not to whether or not the goods were registered, listed, exempt or approved.⁽¹⁵⁾ A new trial was ordered.

The Director of Public Prosecutions applied for special leave to appeal to the High Court from the orders of the Court of Criminal Appeal quashing the convictions and ordering a new trial. The application was refused on the basis that the case did not raise a question of law of general public importance which would warrant the grant of special leave. Brennan CJ stated that:

Since the offences charged were committed in 1993, section 20 of the Therapeutic Goods Act 1989 (Cth) has been amended.⁽¹⁷⁾ However, these amendments do not address the Government's present concern about the interpretation of section 20.

The aim of the new section 20 is to make it clear that to be guilty of the offence, a person only has to have intended to import, export, manufacture or supply therapeutic goods for use in humans. The person does not have to know that the goods are not registered or listed under the Act or exempt from its operation. This explicitly overrides the interpretation given to section 20 by Meagher JA and Grove J. It also makes it easier for the Government to prosecute people for this offence. In many cases it might be difficult for the prosecution to prove that a person knew the goods were not registered or exempt from the operation of the Act, unless the person made an admission.

New ground to cancel registration or listing

All advertisements in relation to therapeutic goods which display more than simply the brand, price, type of goods and place or time of sale must be approved for publication under the Therapeutic Goods Regulations 1990. Thus, all paid advertisements in the mainstream media that claim a therapeutic use for goods require approval. The goods must comply with the Therapeutic Goods Advertising Code before they will be approved, and approval may be subject to conditions.⁽¹⁸⁾ The Secretary may give a notice to a person preventing publication of certain advertisements that contain false or misleading representations about the goods.⁽¹⁹⁾ In addition, certain representations in relation to specified therapeutic goods are prohibited by the Regulations.⁽²⁰⁾

The Complaints Resolution Panel hears complaints that advertising about particular therapeutic goods contravenes the Regulations or the Therapeutic Goods Advertising Code.⁽²¹⁾ The Panel may request a person to withdraw an offending advertisement or publish a retraction. If the person does not comply with such a request, the Panel may make recommendations to the Secretary, including recommendations that the Secretary withdraw approval for the advertisement, or cancel the registration of the therapeutic goods.⁽²²⁾

Under section 30 of the Therapeutic Goods Act 1989 (Cth), the Secretary may cancel the registration or listing of therapeutic goods in the Australian Register of Therapeutic Goods on a number of grounds. These include:

• where there may be a risk of death, serious illness or injury if the goods remain registered;
• where the goods become exempt goods;
• where the application for registration contained incorrect information; or
• where the goods contain prohibited drugs.

The Bill amends section 30 by inserting a new ground on which the registration or listing of therapeutic goods may be cancelled, namely, where a person fails to comply with a direction or requirement to ensure that advertising for therapeutic goods does not breach the Therapeutic Goods Advertising Code.

The Explanatory Memorandum explains that this ground would apply to directions or requirements made by the Complaints Resolution Panel in relation to advertisements.⁽²³⁾ This purpose may not be achieved by the amendment as presently drafted, as under the Regulations, the Panel only has power to make requests of a person advertising therapeutic goods. However, it is proposed to amend the Regulations after passage of the Act to give the Panel power to give 'directions' or make 'requirements'.

Main Provisions

New offence in relation to counterfeit therapeutic goods

Item 6 of Schedule 1 inserts a new Part 4B (proposed sections 42E and 42F) into the Therapeutic Goods Act 1989 (Cth), dealing with counterfeit therapeutic goods. Proposed section 42E makes it an offence to intentionally manufacture or supply in Australia, import into Australia or export from Australia counterfeit therapeutic goods. 'Counterfeit' is defined⁽²⁴⁾ as containing a false representation on the label or presentation, in a document or record relating to the goods or their manufacture, or in advertising for the goods. The representation must relate to a matter listed in proposed subsection 42E(3), including the identity or name of the goods, their composition or ingredients, the strength or size of the goods or any ingredient, and the sponsor, source or manufacturer or place of manufacture.

The maximum penalty for an individual who commits this offence will be 5 years imprisonment, a fine of up to 500 penalty units (currently $55,000⁽²⁵⁾) or both imprisonment and a fine.⁽²⁶⁾ A corporation that commits the offence may be fined up to $275,000.⁽²⁷⁾

Proposed section 42F deems counterfeit therapeutic goods to be prohibited imports or prohibited exports if the Secretary gives written notice to the Chief Executive Officer of Customs that he or she wishes the Customs Act 1901 (Cth) to apply in relation to a particular import or export of counterfeit therapeutic goods. Prohibited imports and prohibited exports may be forfeited to the Crown under section 229 of the Customs Act 1901 (Cth).

Clarification of offence of dealing with unapproved therapeutic goods

Item 3 of Schedule 1 repeals the existing section 20 and replaces it with a new section 20. It is now clear from the drafting that the mental element of the offence, 'intentionally', only applies to the act of importing, exporting, manufacture or supply of therapeutic goods for use in humans. A person does not have to know or intend that the goods not be registered or listed under the Act or exempt from its operation to commit an offence.

It also appears clearer from the drafting of the proposed new section 20 that the fact that the goods were not listed, registered, exempt or approved is an element of the offence which the prosecution must prove. It is not enough for the prosecution to establish that a person intentionally imported, exported, manufactured or supplied therapeutic goods. The prosecution must also prove that the therapeutic goods were not registered, listed, approved or exempt under the Act. This affirms the interpretation given by the New South Wales Court of Criminal Appeal in Pan Laboratories. It contradicts the trial judge's interpretation in Pan Laboratories, where he considered the fact that goods were registered, listed, approved or exempt to be a defence that would have to be proven by the person charged.

The maximum penalty for committing this offence is not altered, and remains 240 penalty units (currently $26,400).

New ground to cancel registration or listing

Item 4 of Schedule 1 inserts into section 30 a new ground on which the registration or listing of therapeutic goods may be cancelled. Registration or listing may be cancelled by the Secretary if a person does not comply with a direction given or a requirement made by an authority to ensure that the advertisement of therapeutic goods complies with the Therapeutic Goods Advertising Code. This amendment only applies to directions given or requirements made after the commencement of the amendment (item 5).

Endnotes

2. Therapeutic goods are divided broadly into two classes - drugs and devices. Therapeutic products are defined broadly to include items such as prescription medicines and vaccines, non-prescription medicines including vitamins and sunscreens, and traditional or alternative medicines such as herbal products, aromatherapy and homeopathic products. Therapeutic devices include devices such as pacemakers, heart valves, bandages and contraceptives. For further information, see the website of the Therapeutic Goods Administration at:

   http://www.health.gov.au/tga/docs/html/meddef.htm (16/3/00) and

   http://www.health.gov.au/tga/docs/html/meddvinf.htm (16/3/00).

3. Subsection 25(1) of the Therapeutic Goods Act 1989 (Cth).

4. Registration occurs under subsection 25(3) and listing under subsection 26(1) of the Therapeutic Goods Act 1989 (Cth).

5. Section 18 of the Therapeutic Goods Act 1989 (Cth).

6. Section 19 of the Therapeutic Goods Act 1989 (Cth).

7. Section 19A of the Therapeutic Goods Act 1989 (Cth).

8. KPMG, Review of Therapeutic Goods Administration on behalf of the Department of Health and Family Services, January 1997, p. 146.

9. Senator Grant Tambling, 'Government Moves to Prohibit Counterfeiting of Therapeutic Goods', Press Release, 9 March 2000.

10. World Health Assembly Resolution 41.16 of 1988 "Rational use of drugs", in World Health Organization, Handbook of Resolutions and Decisions of the World Health Assembly and the Executive Board, Vol III (1985-1992), p. 89.

11. Government Response to Recommendations arising from the Therapeutic Goods Administration Review (April 1997) p. 44.

12. Pan Laboratories Pty Ltd v Director of Public Prosecutions (Commonwealth) (1997) 41 NSWLR 727 at 728.

13. Within the meaning of paragraphs 20(1)(e), (f), (g) or (h) of the Therapeutic Goods Act 1989 (Cth).

14. Pan Laboratories Pty Ltd v Director of Public Prosecutions (Commonwealth) (1997) 41 NSWLR 727 at 731 per Meagher JA, with whom Grove J agreed; at 735 per Hulme J.

15. ibid., p 731.

16. ibid., p 734.

17. Director of Public Prosecutions (Commonwealth) v Pan Laboratories Pty Ltd (unreported, High Court of Australia, 1 May 1998). Transcript of argument and of the decision can be found at

18. Therapeutic Goods Amendment Act 1996 (Cth), section 3 and Schedule 1 item 13. The amendments changed the mental element of the offence from 'knowingly or recklessly' to 'intentionally or recklessly'. They also removed reference to a person being the 'sponsor of therapeutic goods', and added a reference to goods that are approved under section 19A.

19. Regulation 5G of the Therapeutic Goods Regulations 1990.

20. Regulation 7 of the Therapeutic Goods Regulations 1990.

21. See Regulations 6, 8 and Schedule 2 of the Therapeutic Goods Regulations 1990.

22. Regulation 9AA of the Therapeutic Goods Regulations 1990.

23. Regulation 9AC of the Therapeutic Goods Regulations 1990.

24. Explanatory Memorandum, Therapeutic Goods Amendment Bill (No 2) 2000, 9 March 2000.

25. In subsection 42E(2) of the Therapeutic Goods Amendment Bill (No 2) 2000.

26. The current value of a penalty unit is $110: subsection 4AA(1) of the Crimes Act 1914 (Cth).

27. Subsection 42E(4) of the Therapeutic Goods Amendment Bill (No 2) 2000.

28. Subsection 4B(3) of the Crimes Act 1914 (Cth).

Contact Officer and Copyright Details

Paul Mackey and Katrine Del Villar
29 March 2000
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 2000

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 2000.

Back to top