01 December 2006
Key Points:
New provisions in the Therapeutic Goods Advertising Code have been introduced to reflect the draft trans-Tasman Code. Particular regard is given to testimonials illustrating "typical" cases and mandatory requirements for direct consumer marketing and advertising therapeutic goods on the internet.
Progress towards the proposed harmonisation of the regulation of therapeutic goods between Australia and New Zealand remains slow despite the fact that the second phase of consultation is now underway. Until the new advertising regulatory arrangements have been agreed between the Australian and New Zealand Governments, the advertising of therapeutic goods in Australia must comply with the Therapeutic Goods Act 1989 (Cth) (the "Act"), the Therapeutic Goods Regulations 1990, the Therapeutic Goods Advertising Code and the Trade Practices Act 1974 (Cth).
The Therapeutic Goods Advertising Code was recently amended ("Code 2006") following recommendations made by the Therapeutic Goods Advertising Code Council ("TGACC") to the Parliamentary Secretary. Code 2006 replaces the previous code known as the Therapeutic Goods Advertising Code 2005 ("Code 2005", which we looked at here) and took legal effect on 18 July 2006. Accordingly, all advertisements for therapeutic goods (apart from prescription medicines which are subject to a separate regulatory regime) are now required to comply with Code 2006.
Summary of key changes
The following amendments have been incorporated into Code 2006:
(Since the term "consumption", previously contained in section 4(2)(f) of Code 2005, could in consumers' mind imply "by ingestion only", the term "use" was considered by the TGACC to be more appropriate and has, therefore, been inserted into this provision.)
Changes to section 4(2)
The TGACC has indicated that the purpose of the amendments to section 4(2) is to strengthen the existing provisions in relation to misleading advertisements.
The changes to section 4(2)(c) are that the words "or be likely to mislead" were added to the list of conduct prohibited by the Code. This wording mirrors the wording of section 52 of the TPA (and provisions in State and Territory Fair Trading Acts), which prohibits conduct "which is misleading or deceptive, or is likely to mislead or deceive" [emphasis added]. In this respect, the amendments to the Code do not impose new legal obligations on sponsors, and it is therefore arguable that the changes were unnecessary.
However, there is a practical effect in terms of complaints handling. Co-regulatory and self-regulatory arrangements exist in respect of complaints resolution for therapeutic goods. Depending upon the type of product, and whether the advertisements are published in "specified media", complaints regarding contraventions of the Code can be made to and are dealt with by the Complaints Resolution Panel, the Australian Self Medication Industry and the Complementary Healthcare Council. Previously, when dealing with a complaint, these bodies could only make an adverse finding where an advertisement is found to be actually misleading. Now, and adverse finding can be made where if is found that an advertisement is likely to mislead consumers.
Similarly, the threshold has been lowered in respect of section 4(2)(f). Now all that is required is a finding that an advertisement is likely to encourage inappropriate or excessive use. A good example of where this may be relevant is in relation to advertisements for "two for one" offers. There are difficulties with an argument that a two for one offer will encourage inappropriate or excessive use, because encouraging consumers to stockpile a product is not the same as encouraging use of the product. However, it may be that such an offer is "likely" to encourage excessive use, on the basis that a consumer is more likely to use (and overuse) a product if they have a large store of the product on hand.
Testimonials and the impact for product sponsors
Testimonials by product users whose results were exceptional were permitted in advertisements prior to August 2005, 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, Code 2005 was amended to only allow testimonials illustrating "typical" cases to be used in the advertising of therapeutic goods.
As the term "typical" was not defined in the Code, many sponsors and advertisers of therapeutic goods sought guidance as to what particular type of testimonial illustrated a "typical" case.
Accordingly, a definition for "typical" now appears in Code 2006. The term is defined as meaning "that which reflects the characteristic of a group that is a result obtained from the use of a product which would be likely to be attained by most people using the product within the audience to which the advertisement is directed".
This definition of "typical" in Code 2006 is identical to that included in the draft trans-Tasman advertising code.
We do not consider that the new definition provides sufficient clarity for sponsors. Testimonials are perhaps most commonly used by sponsors of weight loss/maintenance products, and the definition is particularly unclear when considering its application to these types of products.
The theory behind weight loss is simple - where energy out is greater than energy in, weight loss will occur. All people will lose weight if they follow a diet and exercise program that meets this criteria. All weight loss products must be considered in this context. Weight loss products typically fall into one (or more) of three categories:
Each of these effects could be reflected in a testimonial as weight loss, for example, "product X really helped me to control my appetite and stick to my diet. I lost 50kg with product X".
"Most" people will lose weight if they follow a diet and exercise program correctly. The problem is one of compliance, in that "most" people may not stick to the program (and will therefore not lose weight). By which standard (the program or actual human behaviour) is "typical" to be measured?
The definition also refers to the "result" that most people will likely to attain using the product. What does "result" mean? Using the above example, is the "result" controlling appetite, or the weight loss?
Further, again using the above example, if the "result" is the weight loss, what aspect of the weight loss is to be considered? A significant amount of weight? Some weight loss? Fifty kilograms? Twenty percent? Most people do not have 20 percent or 50kg to lose (meaning that if the "result" is 50kg, then the above example would not be typical). Yet, the obese are the people who, from a policy perspective, would benefit most from weight loss in terms of health benefits.
These issues need to be clarified so that sponsors may determine what evidence will be required to substantiate what represents a "typical" case. Is it sufficient for sponsors to demonstrate that the active ingredient of the product being advertised has the effect (in terms of the three categories described above) claimed - eg. appetite suppressant qualities - and that weight loss will occur if you follow the recommended diet and exercise program? Or will sponsors need to demonstrate through a clinical trial that "most" people who used the product lost a significant quantity of weight, taking into consideration problems with compliance?
We believe that the changes represent a retrograde step given the present obesity crisis. It is clear that these changes are targeted at sponsors of weight loss products. As discussed above, advertisements for therapeutic goods must not be misleading (or be likely to mislead). Consumers are therefore adequately protected from the use of testimonials that will (or may) mislead consumers. If a testimonial is not misleading, then there should be no issues with its use. Testimonials from people who have successfully lost weight are a powerful motivating tool, and can be of great assistance in motivating people to commence and maintain a weight loss program.
Direct to consumer marketing and advertising on internet
The least controversial of the changes are the provisions relating to direct to consumer and internet marketing.
Direct to consumer advertising of prescription medicines is currently prohibited in Australia.
Section 6(3)(c)(i) of Code 2006 has been amended to add further warning disclosure requirements in relation to direct to consumer marketing and internet advertisements for therapeutic goods as follows:
an appropriate warning of those effects must be given, prominently displayed on each page that features the relevant medicine(s).
This amendment to section 6(3)(c)(i) addresses previous complaints from consumers that warning statements appearing on labels were not included in mail order catalogues and therefore consumers only became aware of these issues upon reading the product labels after the goods had been purchased. For instance, many therapeutic goods contain warnings in relation to use of the product during pregnancy and/or while breastfeeding. The above amendments ensure that any such warnings would appear in mail order catalogues and/or on the internet to allow consumers to make an informed choice prior to purchasing a product via these sources. In our view, these changes are sensible, and do not impose an unreasonable burden on industry.
These additional warning disclosure requirements reflect provisions contained in the draft trans-Tasman advertising code relating to direct to consumer marketing and internet advertisements for therapeutic goods.
Conclusion
The new provisions of Code 2006 reflect provisions in the draft trans-Tasman Code in relation to testimonials illustrating "typical" cases and mandatory requirements for direct to consumer marketing and advertising therapeutic goods on the internet.
As all advertising of complementary medicines, over-the-counter products and medical devices by sponsors is now required to comply with Code 2006, sponsors should familiarise themselves with the provisions of Code 2006 to ensure that all current and future advertising complies with it. The review is critical for all sponsors who advertise their products on the internet and whose products are the subject of direct to consumer advertising.
Sponsors are also encouraged to familiarise themselves with the provisions of the draft trans-Tasman Code. 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 ANZTPA.
For further information, please contact Jocelyn Kellam.
