24 August 2005
The Therapeutic Goods Amendment Bill 2005 ("the Bill") has just been tabled in the Federal Parliament. When enacted, the provisions will significantly expand the powers of the Therapeutic Goods Administration ("TGA") in the enforcement of the Therapeutic Goods Act ("the Act"). The reforms appear to reflect a political conclusion that the Act, which was amended in the wake of the Pan Pharmaceuticals recall, still does not give the TGA an adequate range of enforcement measures.
The Government also appears intent on further amendments to the Act in order to address a perceived continuing failure by manufacturers to adequately comply with regulatory requirements. Whether this is true or not for the majority of national and international manufacturers is a matter of conjecture. However, it is notable that the Bill proposes new enforcement options for the TGA rather than new offences under the Act.
In this Alert we outline the proposed amendments. Given the extent of the changes, we will examine the Bill more closely in the September edition of Life Sciences Insights.
The principal changes are:
1. Tiered regime of criminal offences: The Bill proposes a tiered regime of criminal offences intended to better tailor penalties for criminal conduct. In essence, more serious offences which result in, or are likely to cause, harm or injury will attract heavier criminal sanctions. The Bill also introduces an aggravating element to some of the offences currently available under the Act.
The new tiered offences structure will comprise the following alternatives:
It is intended that penalties for offences with an aggravating element will be comparable to those available under other Commonwealth legislation. The level for some penalties will be increased so as to ensure consistency across the Act.
2. Liability for executive officers: The Bill proposes to extend the liability of a body corporate to executive officers who are directly involved in the day-to-day management of the company, if the body corporate commits an offence or contravenes a civil penalty provision under the Act.
In particular, executive officers who are held to have been in a position to prevent a contravention by the body corporate will be deemed liable for the contravention if they fail to take reasonable steps to do so. This is a very significant measure which taps directly into the increasingly demanding obligations of corporate governance in Australia and is ahead of occupational health and safety legislative measures which have been mooted by the States for some time.
3. Alternative verdicts: The Bill allows for alternative verdicts in respect of the various tiered offences under the Act. A jury will be entitled to convict a person of a lesser offence if the jury acquits the person of an offence specifying an aggravating element but is satisfied beyond reasonable doubt of facts which prove the person guilty of the lesser offence in respect of the same conduct.
This approach is modelled on similar 'alternative verdict' provisions in other Commonwealth legislation.
4. A civil penalty regime for breaches of the Act: The Bill also proposes an alternative sanction, in the form of a civil penalty provision, which will apply to certain existing offences. These new provisions impose a maximum penalty of $330,000 or $550,000 for an individual and $3,300,000 or $5,500,000 for a corporation.
Unless conduct is regarded as criminal or likely to cause or has caused harm or injury to consumers, then it is likely that the civil penalty regime will be the TGA's preferred course of action in response to breaches of the Act. A useful analogy in this regard is the approach taken by the Australian Competition and Consumer Commission ("ACCC").
5. Infringement notices: Recognising that a lengthy prosecution process or civil proceedings may not be the optimal way of dealing with certain regulatory breaches, the Bill proposes to introduce infringement notices as an alternative to prosecution.
An infringement notice will set out the particulars of the alleged breach and will give the recipient the option of either paying the penalty set out in the notice to expiate the offence/breach or having the matter dealt with by a court.
Infringement notices may apply to offences or breaches of regulatory requirements that have not resulted in any harm or injury. For example, breaches of advertising standards.
6. Enforceable undertakings: The Bill proposes to introduce provisions that will enable the Department of Health and Ageing (the department responsible for the TGA) to accept enforceable undertakings as an alternative means of securing compliance with regulatory requirements.
Under this scheme, those in breach of certain regulatory requirements may have the option of providing undertakings to correct, address or remedy non-compliance, as an alternative to having sanctions imposed. Where undertakings are accepted, they would become enforceable by a court.
The power to accept enforceable undertakings is already given under Commonwealth legislation to other regulators such as the ACCC and the Australian Securities and Investments Commission.
7. Overseas conduct: The Bill proposes to extend the reach of the Act to cover certain overseas conduct by an Australian citizen, or an Australian body corporate. The relevant offences will relate to:
8. Greater power to release information to the public: The Bill proposes to extend the circumstances in which information about actions taken or decisions made under the Act can be released to the public. There is also increased scope for information about an offence or contravention (actual or alleged) to be released to overseas regulatory bodies. A lack of transparency and timely information was a major criticism levelled in respect of the TGA's action against Pan Pharmaceuticals and the consequential severe impact on the Australian complementary healthcare sector.
The Government says that this extra capacity to disseminate such information will assist in improving the TGA's ability to protect public health and safety.
9. New warrant mechanisms: The Bill also proposes to extend the powers available under monitoring warrants for the investigation of civil penalty contraventions.
A new search and seizure warrant relating to contraventions of civil penalty provisions will also be introduced.
10. Notice of evidence in support of exception to offence: The Bill proposes to create an exception to the offence relating to the importation, exportation, supply or manufacture of medical devices not included in the Register. If a defendant is committed for trial over this offence or both parties agree that the charge is to be determined summarily, and the defendant chooses to rely on the exception, the defendant must provide to the Director of Public Prosecutions notice of the particulars of the exception including the name and address of any person that the defendant intends to call to give evidence in support of the exception (if possible), at least 21 days before the trial or hearing of the offence begins.
When enacted, it is important to note that the amended Act may only have effect for a short time because of the impending establishment of the trans-Tasman agency on or about 1 July 2006. While the Act may remain in force during a transition period after the trans-Tasman agency commences, in due course a new regulatory environment will be developed following negotiations between the Australian and New Zealand governments. It is reasonable to expect that the enforcement regime which will be created by this Bill will transfer into the new regulatory environment.
