21 September 2005
Key Points:
Sponsors of complementary medicines, over-the-counter products and medical devices should familiarise themselves with the provisions of Code 2005.
The trans-Tasman therapeutic products agency, which will replace Australia's Therapeutic Goods Administration and New Zealand's Medicines and Medical Devices Safety Authority, is due to commence on 1 July 2006. Following commencement, a new trans-Tasman therapeutic products advertising scheme will come into force in relation to the advertising of therapeutic goods to be supplied in Australia and New Zealand.
Until the new advertising regulatory arrangements have been agreed bilaterally, the advertising of therapeutic goods in Australia must comply with the Therapeutic Goods Act 1989 (the "Act"), Therapeutic Goods Regulations 1990, Therapeutic Goods Advertising Code and the Trade Practices Act 1974. The Therapeutic Goods Advertising Code does not apply to prescription medication.
On 19 August 2005, the Therapeutic Goods Advertising Code was amended ("Code 2005") following recommendations made by the Therapeutic Goods Advertising Code Council to the Minister for Health and Ageing. Code 2005 took legal effect on 24 August 2005.
What are the key changes incorporated in Code 2005? What are the implications for sponsors of these changes in the lead up to implementation of the trans-Tasman scheme?
Endorsement by healthcare professionals
Under the previous Code, advertisements were not permitted to contain or imply endorsement by an individual healthcare professional. Subject to particular conditions, Code 2005 now allows healthcare professionals to endorse therapeutic goods in advertisements.
Section 4(6)(b) of Code 2005 states that any endorsement by a healthcare professional and/or groups of healthcare professionals in an advertisement must:
To what extent are sponsors required to "acknowledge any valuable consideration" a healthcare professional receives for endorsing a therapeutic good? A sponsor is required to prominently display in an advertisement whether any payment was made to a healthcare professional endorsing that product. In addition, any endorsement by a healthcare professional employed by the sponsor, for example, those involved in the development of the product, would need to include prominent acknowledgement of that employment.
There is a requirement under Code 2005 for any endorsement by healthcare professionals to be authenticated, that is, genuine and bona fide. It would therefore be prudent for sponsors to obtain a statutory declaration from any healthcare practitioner endorsing their products to serve as authentication of the endorsement.
Sponsorship of a government agency
Under the previous Code and Code 2005, an advertisement for therapeutic goods is not permitted to contain or imply endorsement by any government agency, hospitals and other like facilities providing healthcare services ("government agency").
However, section 4(6)(a) of Code 2005 states:
"Advertisements may include reference to sponsorship of any government agency or hospital or other facility providing healthcare services, provided that sponsorship is explicitly acknowledged and is not presented as an endorsement of a therapeutic good."
Although there is no specific guidance in Code 2005 as to what sponsorships statements would be permissible, it would appear that the following are likely to be acceptable:
"[Name of sponsor] is an official sponsor of the Australian Institute of Sport ["AIS"]";
"Product X is an official sponsor of AIS".
However, under Code 2005, statements which would be unacceptable include, "AIS recommends use of this product" and "Official supplier of Product X to the AIS". Such statements would clearly be construed by consumers to be an endorsement of a therapeutic good.
As there is a requirement for any sponsorship to be "explicitly acknowledged", an advertisement of a therapeutic good merely containing a logo of a government agency is not permissible, as a consumer may be misled into thinking that the government agency has endorsed the product appearing in the advertisement.
It remains to be seen to what extent sponsors will be able to invoke section 4(6)(a) of Code 2005 relating to advertising of sponsorship of a government agency. It does appear that such claims will be limited.
Reflection of provisions in draft trans-Tasman advertising code
The draft Australia New Zealand Therapeutic Products Advertising Code (Version 11) has been developed to underpin the proposed trans-Tasman therapeutic products advertising scheme. Subject to any further amendments, the draft code will apply to all advertising of therapeutic products to be supplied in Australia and New Zealand after commencement of the joint trans-Tasman therapeutic products agency.
The changes with respect to endorsement by healthcare professional(s) and sponsorship of any government agency reflect provisions in the draft trans-Tasman code. Sponsors are therefore encouraged to review the draft trans-Tasman code which provides guidance as to what statements in advertisements are likely to be both acceptable and unacceptable in these circumstances.
Changes to advertising of weight loss products
Section 7(3) of Code 2005 states:
"Advertisements for therapeutic goods containing claims for weight management, meaning weight loss, measurement reduction, clothing size loss and weight control/maintenance, must have an appropriate balance between the claims and references to healthy energy-controlled diet and physical activity."[emphasis added]
These amendments incorporated in Code 2005 are significantly more stringent than the requirements of the previous Code. It is now no longer sufficient to merely include in advertising small disclaimers and/or other references to sensible lifestyle factors such as diet and exercise alongside weight loss claims. Advertisements are now required to have an "appropriate balance" between these claims and references to a "healthy energy-controlled diet" and "physical activity".
The new terms which have been incorporated into section 7(3) of Code 2005 have not been defined. It appears that sponsors are required to communicate a balanced message about the need for lifestyle changes such as regular exercise, relative to the benefits of the advertised weight loss product. The message of a healthy energy-controlled diet and physical activity must now be equally portrayed in advertisements, in effect, against the benefits of a particular weight loss product.
Testimonials
Testimonials are common in the weight loss industry and are intended to motivate overweight consumers to commence and remain on a weight loss program. Testimonials by product users whose results were exceptional were permitted in advertisements under the previous Code provided that such advertisements made clear that the testimonials were in fact "exceptional cases" not "typical cases", and provided that they complied with Australian legislation in relation to advertising of therapeutic goods.
However, under section 4(7) of Code 2005, only testimonials illustrating "typical cases" are permitted to be used in the advertising of therapeutic goods. Testimonials are required to comply with Code 2005, be documented, genuine and not misleading.
It is important that sponsors keep evidence of compliance with this provision of Code 2005, including evidence to substantiate the testimonial as typical. Sponsors should also obtain a signed statutory declaration and/or a copy of the signed testimonial from the person giving the testimony.
Although couched in broadly similar terms, Section 4(7) of Code 2005 is somewhat different to the requirements for testimonials which are outlined in the draft trans-Tasman Code. The draft trans-Tasman Code also requires testimonials to be "current", (that is, they must be up to date and hold true at the time of publication of the advertisement), and they arerequired to acknowledge any valuable consideration received by the person making the testimony. Hence, these additional requirements may be added in mid 2006.
Approval numbers must be prominently displayed
Sponsors must seek advertising approval for advertisements for therapeutic goods intended to be published or inserted in "specified media". The term "specified media" includes "mainstream media", such as any magazine or newspaper for consumers.
Under the Act, all mainstream media print advertisements for therapeutic goods must display the current approval number allocated to that advertisement. A penalty of $6,600 can be imposed for publishing or inserting in mainstream media an advertisement that is not an approved advertisement. A penalty of $3,300 will be imposed on a person who publishes or inserts in mainstream media an approved advertisement without its approval number.
Advertisements for complementary healthcare products in specified media must be submitted to the Complementary Healthcare Council ("CHC"). Advertisements for all other therapeutic goods (other than devices) must be submitted to the Australian Self Medication Industry ("ASMI").
Section 6(4) of Code 2005 specifies that approval numbers need to stand alone, be prominently displayed and located in the bottom right hand corner of advertisements.
The provision applies not only to advertising by sponsors, but also to retailers' catalogues inserted in magazines or newspapers. In circumstances where such catalogues contain photographic images of complementary healthcare products and other over-the-counter products such as analgesic products with visible therapeutic claims, retailers are required to prominently display approval numbers provided by the CHC and/or ASMI which must stand alone and be located at the bottom right hand corner of advertisements.
Conclusion
Code 2005 represents the first amendment to Australian legislation incorporating recommendations to the Minister for Health and Ageing by the Therapeutic Goods Advertising Code Council. In particular, the new provisions reflect provisions in the draft trans-Tasman Code in relation to endorsement by healthcare professionals and sponsorship of government agencies, hospitals or other facilities providing healthcare services. It represents a positive step in the direction of effectively integrating the therapeutic products regulatory systems of Australia and New Zealand.
As all advertising of complementary medicines, over-the-counter products and medical devices by sponsors are now required to comply with Code 2005, sponsors should familiarise themselves with the provisions of Code 2005 to ensure that all current and future advertising complies with Code 2005. For sponsors of weight loss products, the need for review is critical. In this sector, advertisements may include testimonials portraying exceptional cases and may not portray a balanced message of the importance of a healthy energy-controlled diet and physical activity contrary to the new and more stringent requirements of Code 2005.
Further, retailers advertising therapeutic goods in catalogues containing therapeutic claims and distributed in mainstream media must ensure that approval numbers obtained from ASMI and/or the CHC are prominently displayed pursuant to the requirements of Code 2005.
For further information, please contact Andrew Morrison.
