Therapeutic Goods Amendment Bills: Delayed until next year...

In its final parliamentary session this year, the Senate deferred voting on the Therapeutic Goods Amendment Bill 2005 and the Therapeutic Goods Amendment Bill (No.2) 2005. Both Bills remain at the second reading stage in the Senate and debate has been adjourned until 2006. It is expected that the delay in passing the Bills will have some significant implications for the Therapeutic Goods Administration and the pharmaceutical industry with ongoing uncertainty about this important legislative process. This Alert identifies the principal implications of the delay.

The Bills: Encouraging compliance by manufacturers and patent conflict searches

The Therapeutic Goods Amendment Bill 2005 ("Bill No. 1") was first introduced into Federal Parliament on 17 August 2005. Broadly speaking, the purpose of Bill No. 1 is to arm the Therapeutic Goods Administration ("TGA") with greater powers to deal with non compliance by manufacturers under the Therapeutic Goods Act 1989 (Cth) ("the Act"). Key amendments proposed by Bill No. 1 include the introduction of a tiered regime of criminal offences, civil penalty provisions and other alternative sanctions such as enforceable undertakings or infringement notices giving the TGA wider enforcement options. Our article, The TGA gets set to get tough: Likely new enforcement options in the September 2005 edition of Life Sciences Insights, contained a detailed discussion of the implications of these new enforcement options.

The Therapeutic Goods Amendment Bill (No.2) 2005 ("Bill No. 2") was introduced into Federal Parliament on 14 September 2005. Under the current legislation, sponsors of both listed and registered medicines are subject to patent certification requirements under the Act. Before applying for the inclusion of a product on the Australian Register of Therapeutic Goods ("ARTG"), sponsors must conduct patent searches to certify to the TGA that they will not enter the market in a manner which will infringe a patent, or if they intend to enter the market before the expiration of a patent, that they have notified the patent owner prior to their entry. This requirement has been in place since 1 January 2005.

Listed medicines include most complementary medicines and a small number of over-the-counter products (such as sunscreens). The purpose of Bill No. 2 is to remove the patent certification requirement for listed medicines and to restrict the requirement to only those applicants who have to submit safety or efficacy data for their products as part of their application for inclusion on the ARTG (such as sponsors of prescription medicines, a majority of over-the-counter medicines and a small number of complementary medicines). In effect, Bill No. 2 will eliminate the need for patent searches by sponsors of low risk medicines which will result in significant cost savings for sponsors.

What will be the impact of the delay?

The delay in passing Bill No. 1 obviously deprives the TGA of its strengthened armoury against manufacturers allegedly involved in contravening conduct under the Act. In part, such measures are seen as a way to ensure that compliance is actually enforced across the whole of the therapeutic goods industry so as to give long standing compliant manufacturers access to a level competitive playing field.

It is also possible that there will be a relatively unsettled period of time before the measures introduced under Bill No. 1 are potentially superseded by legislation governing the proposed establishment of the proposed Australia New Zealand Therapeutic Products Authority ("ANZTPA"). The recent announcement that a consultation draft of the rules relating to the ANZTPA will be ready in early 2006 and that a consultation draft of the legislation will be available in mid 2006 suggests that the ANZTPA will now be delayed beyond the anticipated commencement in July 2006. It is to be hoped that those co-ordinating the legislation and the ANZTPA are sensitive to the needs of users in settling transitional arrangements.

It is expected that the delay in passing Bill No. 2 will have a negative effect on sponsors of complementary medicines and over-the-counter products. Until Bill No. 2 is passed as law, many sponsors of these products may be forced to hold back listing applications in order to avoid the costly expense of conducting patent searches prior to making applications for inclusion of their products on the ARTG. In the short term, this will have the consequence of delaying new products coming on to the market.

The next sitting date for the House of Representatives and Senate is 7 February 2006.