Purpose of the Bill

The purpose of the Therapeutic Goods Amendment (2018 Measures No. 1) Bill 2018 (the Bill) is to amend the Therapeutic Goods Act 1989 (the Act) to introduce a mandatory reporting scheme for medicine shortages involving higher risk medicines in Australia, to impose penalties for non-compliance with the scheme; and to make a number of miscellaneous amendments to the Act.

Structure of the Bill

The Bill is divided into two Schedules.

Schedule 1 of the Bill introduces the medicine shortages and discontinuation of medicines reporting schemes.

Schedule 2 of the Bill makes amendments to the Act, principally to improve, or to add to, administrative processes that are already set out in the Act.

Background

Therapeutic goods regulation

Therapeutic goods are products that are used in humans to manage illnesses or injuries, alter bodily processes, prevent or test for pregnancy or replace or modify a part of the body.[1] Types of therapeutic goods range from items that can be purchased in a supermarket, such as bandages, condoms and vitamins, to over-the-counter and prescription medicines, through to complex medical devices such as pacemakers.

In Australia, therapeutic goods are regulated by the Therapeutic Goods Administration (TGA), which is part of the Australian Government Department of Health (DoH). The TGA regulates the supply, import, export, manufacturing and advertising of therapeutic goods.[2] The TGA administers the Act to ensure that medicines and medical devices are evaluated and regulated for safety, quality and (in some cases) efficacy before they reach the market. The TGA also monitors therapeutic goods once they are available on the market.[3]

Medicines shortages

Medicines shortages occur when there is a supply issue with a medicine or medicines, which can impact patient care. Due to the multinational nature of the pharmaceutical industry, medicines shortages are a complex global issue. The International Pharmaceutical Federation reports that medicines shortages may be worsening with time.[4]

Australia has experienced a number of high profile medicines shortages in recent years. These include shortages of EpiPen (an adrenalin auto-injector for life-threatening allergic reactions), oestrogen patches (for menopausal symptoms), the antidepressant duloxetine, metformin (for diabetes) and various vaccines.[5]

Global reasons for medicines shortages include ‘manufacturing problems, barriers to competition, business decisions, the impact of new technologies, expensive medicines and fragmented markets’.[6] In Australia, the TGA has listed reasons for shortages as including ‘the moving or closing of manufacturing plants, raw material shortages, natural disasters, logistical difficulties or a batch not meeting the required quality standards’.[7] Regular price reductions for off-patent medicines on the Pharmaceutical Benefits Scheme (PBS) have also been cited as a cause of medicines shortages in Australia.[8]

Reporting of medicines shortages

Dr Bastian Seidel, President of the Royal Australian College of General Practitioners (RACGP), notes that doctors often receive no advanced warning of a medicine shortage, only finding out when the pharmacist calls to say that they cannot supply the prescribed medicine.[9] Similarly, pharmacists may not be made aware of a medicine shortage until they attempt to order the medicine. A 2017 Society of Hospital Pharmacists of Australia (SHPA) survey of hospital pharmacies found that, in 70 per cent of cases, procurement officers only realised a medicine was in shortage when their ordering system displayed ‘out of stock’ or ‘on back order’.[10]

The TGA acknowledges that reporting of medicines shortages does not actually prevent them from occurring. However, the TGA considers that timely reporting and communication can allow strategies to be put in place to mitigate the impact on patients. These strategies can include sourcing alternative supplies from overseas, rationing available stock and identifying alternative medicines.[11]

The current National Medicines Shortage Information Initiative (MSII) was launched in 2014. It was designed to ‘provide doctors, pharmacists and consumers with essential, up-to-date information about shortages of prescription medicines’.[12] The current MSII consists of a protocol for the communication of shortages agreed between the medicines industry and the TGA, an MSII website and a subscription alert service.[13] The MSII is currently a voluntary notification scheme, with most of the information being provided by medicine sponsors.[14] The TGA has the power to publish information about medicines shortages, whether received from the pharmaceutical company or from other sources.[15]

The current MSII system of voluntary notification has experienced a number of issues with the timeliness, accuracy and completeness of the information published on the website. The TGA acknowledges:

... there was increasing frustration expressed by all parties that the information available on the website is neither complete nor current and it is no longer seen as a credible source of information by healthcare professionals or those involved in stock management in healthcare facilities. The information is also not being published in a timeframe to allow alternative supplies, where available, to be accessed and/or to otherwise mitigate serious effects on patients when no alternative supply is available.[16]

The TGA also notes that a number of high impact shortages have not been reported to the TGA by pharmaceutical companies, but rather by concerned patients who cannot access their medication.[17]

The above issues are borne out by the SHPA survey. Of the 365 medicine products reported as unavailable in the survey, only 54 (14.8 per cent) were listed on the TGA’s MSII website on the day of the survey. Even where medicines were listed, the information was often neither current nor accurate.[18]

Proposal for mandatory notification of shortages

In August 2017, the Health Minister Greg Hunt met representative peak bodies for the pharmaceutical industry, pharmacy owners and pharmacists. A working group was formed to develop a better process for managing medicines shortages. The Australian Medical Association (AMA) and the SHPA subsequently joined the working group. The working group unanimously endorsed a revised MSII Protocol which includes mandatory reporting of all shortages to the TGA. State and territory health departments also unanimously endorsed the revised protocol.[19]

The Bill amends the Act to provide for mandatory reporting of medicines shortages and discontinuations to the TGA by pharmaceutical companies.

Therapeutic goods reforms

The regulation of therapeutic goods in Australia has been significantly reformed in recent years. In 2014 the Government announced a review into medicines and medical devices regulation.[20] The review was designed to identify areas where ineffective regulation could be streamlined, as well as opportunities to enhance regulation to respond to global trends. The Expert Panel Review of Medicines and Medical Devices Regulation (Sansom Review) reported in 2015.[21] Its recommendations included expanding pathways for sponsors to seek marketing approvals, enhanced monitoring for therapeutic goods already on the market, and changes to therapeutic goods advertising.[22]

The Government accepted the majority of the recommendations made by the Sansom Review.[23] The reforms were legislated in two tranches by the Therapeutic Goods Amendment (2016 Measures No. 1) Act 2017 (the 2016 Measures Act) and the Therapeutic Goods Amendment (2017 Measures No. 1) Act 2018 (the 2017 Measures Act).[24]

The Bill makes minor amendments to some of the reforms legislated by the 2016 Measures Act to:

• clarify that the Regulations may allow the Secretary to require pharmaceutical companies using the new priority review pathway (which gives faster assessment for important new medicines)[25] to provide supporting information about their application
• allow notifications under the new Special Access Scheme (SAS) Category C pathway (which allows supply of unapproved goods with a history of therapeutic use)[26] to be made by other health practitioners on the treating practitioner’s behalf and
• expand the range of minor, low-risk variations that can be made to registered medicines[27] without triggering a new application for marketing approval.[28]

Committee consideration

Senate Selection of Bills Committee

In its Report 7 of 2018 the Committee noted that it had deferred consideration of the Bill until its next meeting.

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Committee has not commented on the Bill.

Policy position of non-government parties/independents

At the time of writing, no comment by non-government parties or independents specifically relating to the Bill had been identified.

Position of major interest groups

As noted earlier, the revised MSII Protocol (including mandatory reporting of all medicines shortages to the TGA) was unanimously endorsed by a working group. The group included representatives from the National Pharmaceutical Services Association (representing wholesalers), Medicines Australia (MA, representing the innovative medicines industry), Generic and Biosimilar Medicines Association (representing the generic and biosimilar medicines industry), the Pharmacy Guild of Australia (representing pharmacy owners), the Pharmaceutical Society of Australia (representing pharmacists), the Australian Self Medication Industry (representing the non-prescription pharmaceutical industry), the AMA (representing doctors) and the SHPA (representing hospital pharmacists).[29]

The TGA undertook public consultation between 28 March and 30 April 2018 on the revised MSII Protocol and the accompanying consultation paper. The TGA reports that ‘[v]irtually all stakeholders supported the need for better management and timely communication of medicine shortages’.[30] Health professional bodies generally supported the option of stricter (criminal) penalties for failing to report a medicine shortage, whereas industry stakeholders ‘were not convinced a penalty scheme was necessary; and unanimously stated that criminal sanctions were too severe’.[31] The Bill as introduced reflects the revisions that were made to the proposed mandatory reporting scheme following the public consultation.[32] For example, the Bill provides for civil, but not criminal penalties for failing to report a medicine shortage.

A number of consumer health groups also made submissions to the public consultation process. Asthma Australia supported the mandatory reporting of medicines shortages to the TGA, and welcomed the inclusion of emergency non-prescription medicines such as salbutamol inhalers on the proposed watch list.[33] Allergy & Anaphylaxis Australia and Hepatitis Australia proposed additional medicines that should be included on the watch list.[34] All three of these organisations stressed the importance of consumer groups being notified of all medicines shortages that affect their membership, not just those of extreme or high impact.[35]

MA, the Pharmacy Guild and the SHPA have all welcomed the introduction of the Bill. MA believes the Bill takes a ‘balanced approach’ and will ‘go a long way to ensuring there is timely and relevant information available on the supply of medicines’ to assist patients and their doctors.[36] The Pharmacy Guild supports the move to mandatory reporting of shortages, and believes the Bill will ‘significantly reduce the likelihood of sub-standard patient care arising from unforeseen and un-notified medicine shortages’.[37] The SHPA believes the Bill will improve patient outcomes as timely notification of shortages (particularly for medicines on the watch list) allows pharmacy teams to manage and resolve them before they adversely affect patients.[38]

Financial implications

According to the Explanatory Memorandum, the implementation of the Bill’s measures will have no financial implications for the Government’s budget, because the TGA operates on a cost recovery basis.[39] The TGA charges fees for services such as product evaluations, and taxes are also imposed on regulated industries.[40]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[41]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Committee has not commented on the Bill.

Key issues and provisions

Schedule 1

Schedule 1 of the Bill inserts new provisions into the Act, which will have the effect of mandating a scheme for reporting medicine shortages and the discontinuation of supply of medicine. To achieve this, proposed Division 2B—Reporting medicine shortages and discontinuation of supply of medicine is inserted into Part 3-2 of Chapter 3 (‘Medicines and other therapeutic goods that are not medical devices’) of the Act by item 2 of Schedule 1 to the Bill. The new Division contains proposed sections 30EF to 30EJ.

Reportable medicines

Proposed section 30EF requires a person in relation to whom a reportable medicine is included in the Australian Register of Therapeutic Goods (the Register) to notify the Secretary of any shortage of a medicine in Australia.[42]

Proposed section 30EH of the Act describes what is a reportable medicine for the purposes of the Act. This is a medicine which includes either one or more substances included in Schedule 4 or 8 to the Poisons Standard that is current at any point of time or a medicine determined by the Minister in a legislative instrument. [43]

However, the Minister must not determine a medicine unless satisfied:

• the medicine is critical to the health of patients in Australia and/or
• the notification to the Secretary of any shortage of the medicine, or of any decision to permanently discontinue the supply of the medicine, in Australia would be in the interests of public health.[44]

Shortages

Proposed section 30EI of the Act describes what is meant by the expression shortage. There is a shortage of a medicine at a particular time, if at any time in the six months after that time, there will not be (or it is likely that there will not be) enough of the medicine available to meet the demand for the medicine for all of the patients in Australia who take, or who may need to take, the medicine.

The Bill provides that there are two ways in which a shortage will have a critical impact:

• first, the Minister has specified that the medicine should be listed on the Medicines Watch List (a legislative instrument made by the Minister) [45] and
• second, at the particular time:
  • there are no registered goods that could reasonably be used as a substitute for the medicine or in the event that other registered goods could reasonably be used as a substitute—they are not likely to be available in sufficient quantities to meet the demand[46] and
  • the shortage has the potential to have a life-threatening impact on, or a serious impact on the physical or mental health or functioning of, persons who take, or who may need to take, the medicine.[47]

Time for reporting—shortages

Proposed subsection 30EF(1) of the Act sets two time limits for notification that there is a shortage of a reportable medicine–being two working days in the case of a shortage with critical impact; and ten working days otherwise.

The day count starts from when the person in relation to whom a reportable medicine is included on the Register, ‘knows, or ought reasonably to have known’ of the shortage. Notification of the shortage must meet the relevant manner and form requirements.[48]

Penalties for non-compliance

The proposed maximum penalties for non-compliance with the requirement to notify are 100 penalty units for an individual and 1,000 penalty units for a body corporate.[49] The details of any penalties, and the names of non-compliant sponsors and affected products, will also be published on the TGA’s website.[50]

These penalties reflect that this offence is regarded as serious, but involving considerably less culpability than, for example, not complying with a recall of therapeutic goods, for which the maximum penalties are 5,000 penalty units for an individual or 50,000 for a body corporate.[51]

Importantly the Explanatory Memorandum makes clear:

... section 42YCA of the Act provides for daily penalties for continuing contraventions of civil penalty provisions and will apply to subsection 30EF(6). This will have the effect that the obligation of the sponsor to report a medicine shortage will continue until a report has been made, and is not discharged upon expiration of the deadline. A separate contravention of the civil penalty provision will be incurred for every day the obligation is not met.[52]

In addition, section 42YK of the Act allows the Secretary to issue an infringement notice where he, or she, has reasonable grounds to believe that there has been a contravention of a civil penalty provision of the Act. In that case, a sponsor would be able to choose to pay an infringement notice amount as an alternative to having court proceedings brought against them for the contravention.

The penalty provisions are not strict liability. Proposed subsection 30EF(7) of the Bill operates so that penalties will not apply where the person has taken reasonable steps–for example for reporting within 10 days rather than two when they reasonably believed that the shortage did not have critical impact.

Time for reporting—discontinuation

Proposed section 30EG of the Act relates to the discontinuation of the supply of a reportable medicine. In the case of discontinuation the person in relation to whom a reportable medicine is included in the Register:

• must advise of the discontinuation 12 months before it is to occur (or as soon as practicable after the decision is made) if the discontinuation is likely to be of critical impact [53]and
• six months in other cases—or as soon as practicable after the decision is made.[54]

The definition of critical impact is in equivalent terms to those relating to medicine shortages,[55] as are the notification requirements[56] and the civil penalties.[57]

Other provisions

Subsection 31(1) of the Act currently allows the Secretary to give a notice to a person requiring them to give the Secretary, within a reasonable time and in a specified form, information or documents about a variety of subjects. Item 3 of Schedule 1 to the Bill adds proposed paragraph 31(1)(ja) which will add medicine shortages or discontinuation of supply to the subjects about which the Secretary can require that information or documents be provided.

Item 4 of Schedule 1 to the Bill contains application provisions, which specify the date of effect of the new scheme. Proposed sections 30EF and 30EG will apply to shortages or discontinuations which occur after the commencement of the new provisions. However, they will apply to medicines that were on the Register either before or after the commencement date.

Schedule 2

Schedule 2 makes a number of amendments to existing provisions in the Act.

Item 1 of Schedule 2 to the Bill inserts proposed subsection 9D(2D) into the Act to resolve a possible conflict between two current provisions, subsection 9D(2C) and subsection 16(1). Currently Regulations prescribe that certain minor variations can be made to product descriptions without pre-approval. However, despite variations being minor, this can sometimes create a separate product, which would then require a new application for marketing approval. The proposed amendment dispenses with the need for new marketing approval in such a case.

Items 2, 11 and 12 make amendments to sections 10 and 42BAA if the Act to allow references to other documents in legislative instruments, such as documents published by recognised international field leaders, to mean reference to those documents as they are published from time to time. The Explanatory Memorandum argues that it would be in Australia’s interests for such legislative instruments to refer to the most up-to-date information.[58]

These amendments are necessary because subsection 14(2) of the Legislation Act 2003 does not allow a reference to another document in a legislative instrument to mean a reference to amended or new versions of that document unless the legislation underpinning the legislative instrument specifically states that this is intended to be the case.

While there would appear to be a clear interest in referencing up-to-date material, such provisions could be seen as creating uncertainty about the meaning of a Regulation by outsourcing regulatory detail to varying versions of external documents. This may particularly be the case when the external document can only be accessed on the payment of a fee.[59] Nevertheless, this approach has already been taken elsewhere in the Act—for instance in relation to permissible ingredients.

Items 3 to 8 inclusive and 10 build on amendments made by the 2016 Measures Act. That Act allowed the use of some unapproved therapeutic goods in certain circumstances, provided that the treating practitioner advised the Secretary within 28 days of having supplied the product. Items 3, 5 and 10 allow another health professional, and not necessarily the treating health professional, to make the notification (for example, a hospital pharmacist rather than the treating doctor). However, under the penalty provisions of the Act, the onus would remain on the treating health professional to ensure that the notification had occurred.

Items 4, 6, 7 and 8 clarify amendments made by the 2016 Measures Act to allow Regulations to be made for the Secretary to make determinations on applications for priority pathways for expedited assessment of new medicines, biologicals and medical devices. The proposed amendments ensure that Regulations can be made to give the Secretary the power to request further information from applicants where necessary in certain circumstances.

Item 9 corrects a typographical error in subsection 41FN(1) of the Act. This does not change the substance of this section.

Item 13 is a date of application provision. There is no retrospective effect of the amendments, except that certain existing legislative instruments will be taken to fall under the new (reference to another document as it appears from time to time) provision.

Other provisions

Part 2 of Schedule 2 makes a minor amendment to the Act to remove the requirement for certain applications to the Secretary for approval to use a ‘restricted representation’ in a therapeutic goods advertisement to be signed. This amendment is made to ensure that electronic lodgement of such applications complies with the requirements of the Act. This will only apply to applications made after this provision takes effect (on the 28th day after Royal Assent).

Concluding comments

The current voluntary notification system for medicines shortages, introduced in 2014, has proved ineffective. The main purpose of the Bill is to introduce a mandatory reporting scheme for medicines shortages and discontinuation of supply of medicine. The design and implementation of the mandatory scheme was subject to detailed consultation, and appears to have widespread support from industry, pharmacists, health professionals and consumer groups. The position of non-government parties and independents is not known at this time.