20 January 2004
How many sponsors can a therapeutic good have? The recent decision of Hui v Lane [2003] SASC 401 (11 December 2003) states that there can be more than one sponsor at different points in time, raising questions about sponsors' responsibilities under the Therapeutic Goods Act 1989.
Ms Hui was a pharmacist operating a retail pharmacy in Adelaide. She was convicted of 26 offences in relation to the export of therapeutic goods in breach of Section 20(1) of the Act. The therapeutic goods consisted of prescription products including Zantac, Diamicron, Tegretol, Epilim, Propecia and Zocor tablets.
Section 20 of the Act makes it an offence to import, export, manufacture or supply therapeutic goods which are not registered or listed on the ARTG, which are not exempt goods under the Act, or which are not subject to approval under either Section 19 or Section 19A of the Act. This offence is punishable on conviction by imprisonment for 12 months and/or a fine not more than $110,000.
Was she the sponsor?
On appeal to the Full Court of the South Australian Supreme Court, Ms Hui argued she fell within the defence in section 20(1A) of the Act. Section 20(1A) states that it is a defence to a prosecution under section 20(1) if the defendant proves that the defendant was not the sponsor of the goods at the time of the importation, export, manufacture or supply, as the case may be.
Ms Hui argued that there could only be one sponsor under the Act and that in this case the manufacturer was the sponsor since it had registered the therapeutic goods.
A "sponsor" is defined in section 3 of the Act in relation to therapeutic goods as:
but does not include a person who:
on behalf of another person who, at the time of the exportation, importation, manufacture or arrangements, is a resident of, or is carrying on business in, Australia.
Since Ms Hui was a person who had arranged the export of the goods the subject of the charges and she was not exporting the goods on behalf of any other person who was, at the time, a resident of or was carrying on business in Australia, the Court found that Ms Hui fell within the definition of "sponsor" under section 3. As Justice Mullighan pointed out, "there is no reason to construe section 20(1A) to mean that there can only ever be one sponsor of therapeutic goods at all times." The language of the section suggests otherwise as it says "at the time". At the time of the manufacture of the goods in Australia, the manufacturer is the sponsor at that time. When the goods are exported, the exporter is the sponsor at that time unless doing so on behalf of another person. Subject to the exception provided in the definition of sponsor, the sponsor will be either the exporter, importer or manufacturer.
The court also found that there was on its face no reason why the words "the sponsor" used in section 20(1A) should not pick up the section 3 definition of sponsor. The ordinary meaning of the sponsor in section 21A sits comfortably with the statutory definition and no contrary intention appears.
Which sponsor is responsible?
The case clearly states that there can be more than one sponsor under the Therapeutic Goods Act, namely at different points in time. Just as the court found that there was on its face no reason why the words "the sponsor" used in section 20(1A) should not pick up the section 3 definition of "sponsor", it will be interesting to see whether this interpretation is consistent with other references to "sponsor" under the Therapeutic Goods Act.
For example, there are a number of obligations that are placed upon sponsors under the Act. Sponsors are required to ensure that therapeutic goods comply with all quality and safety criteria. A difficult question that arises is whether sponsors at the time of importation and exportation are required to comply with the obligations under the Act with respect to quality and safety of therapeutic goods.
Sponsors must also hold evidence to support any claim made in relation to therapeutic goods and at any time the TGA may require a sponsor to provide information or documents relating to the formulation, composition, design specifications of the goods. Are sponsors at the time of manufacture, importation or exportation all required to hold this information, or is this definition confined to the sponsor who is listed on the listing certificate? As there can be more than one sponsor under the Act, do sponsors at the time of manufacture, importation or exportation all need to be listed as sponsors on the Certificate of Listing?
In addition, the Uniform Recall Procedures for Therapeutic Goods states that sponsors have responsibilities in relation to recall of therapeutic goods in two general areas:
Do the recall obligations under the Uniform Recall Procedure for Therapeutic Goods apply to the sponsors at the time of manufacture, importation or exportation? Although this is unclear, such obligations would indeed facilitate a recall of therapeutic goods.
It is however economically burdensome to expect all parties in the distribution chain who are sponsors to meet the document retention obligations under the Act. Rather than set up duplicate systems, however, parties in the distribution chain need to set up a system of delegated record-keeping obligations according to agreed parameters. The Act does not prohibit the delegation of a sponsor's duties under the Act, however the sponsor will ultimately remain responsible for the fulfilment of those duties. It is therefore important that if sponsors outsource their record keeping obligations to third parties, they ensure that those third parties are maintaining proper records and that sponsors can access these records on short notice.
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