Mandatory reporting of shortages of prescription medicines comes in soon - but still some queries about what sponsors must do

By Greg Williams, Sheena McKie and Jessica McMahon
25 Oct 2018
Sponsors must soon report shortages of medicines to the TGA, but there are significant difficulties in the interpretation of the timing of the notification process of the new scheme.

Recent amendments to the Therapeutic Goods Act 1989 (Cth) (TG Act) will introduce mandatory reporting requirements for sponsors of (mainly) prescription medicines to report shortages of, and any decision to permanently discontinue, their products.  Non-compliance will lead to heavy civil penalties.

While the new scheme is intended to improve transparency of supply issues for important medicines and has the potential to positively affect health outcomes for Australians, its introduction may have some unintended consequences, both on the management of global supply chains and (possibly) prescribing behaviour of healthcare professionals.

The problem associated with shortages of medicines

Medicine shortages have increasingly captured headlines across the world in recent years, mainly due to the increasingly globalised nature of the supply chain of medicines and the consequent decrease in the number of local manufacturers of prescription medicines.

In 2014, the TGA launched a Medicines Shortages Information Initiative (MSII) website where sponsors were encouraged to voluntarily notify the Therapeutic Goods Administration (TGA) of medicine shortages. Following reports that a significant number of shortages of critical impact on patients were not reported to the MSII website, a Medicine Shortages Working Party (MSWP) chaired by the Department of Health was created and developed a revised protocol for the management and communication of shortages of medicine.

The Therapeutic Goods Amendment (2018 Measures No. 1) Bill 2018 was introduced (in large part) to make the MSWP protocol mandatory for reportable medicines.  Passed on 10 September 2018, the Bill makes various amendments to the TG Act, the most significant of which will impose new mandatory reporting requirements for sponsors in relation to shortages and permanent discontinuation of prescription products.  With the Bill receiving Royal Assent on 21 September 2018, the changes will become law on 1 January 2019.

The new definitions – Shortage and Reportable medicines

The Bill introduces a mandatory reporting requirement for a sponsor of a "reportable medicine" to the TGA of any "shortage" of the medicine in Australia.

A sponsor will be required to report a "shortage" of the reportable medicine if its supply in Australia "will not, or will not be likely to, meet the demand for the medicine for all of the patients in Australia who take, or who may need to take, the medicine" in the next six months.

The "reportable medicines" which are captured by the new reporting requirements are:

  • Schedule 4 of the Poisons Standard – Prescription Only Medicine
  • Schedule 8 of the Poisons Standard – Controlled Drugs (which require restriction to reduce abuse, misuse and physical or psychological dependence)
  • By legislative instrument, any other medicine the Minister is satisfied of either or both of the following:
    • the medicine is "critical to the health of patients in Australia";
    • the reporting to the TGA of a shortage or discontinuance of the medicine would be in the "interests of public health".

The new scheme does not immediately include Schedule 3 – Pharmacy Only medicines such as EpiPens and Ventolin inhalers. However, the Explanatory Memorandum (EM) to the Bill envisages that such medicines will likely be part of the new scheme in the future if the Minister is satisfied those medicines meet the criteria set out above.

Timeframes for reporting under the new scheme

The sponsor is required to notify the TGA, using the approved form, of any shortage or permanent discontinuation of their product, in accordance with the following timeline:

  • for a shortage of "critical impact"– as soon as possible, but no later than two working days after the sponsor knows or ought to have reasonably known of the shortage;
  • for any other shortage – within 10 working days after the sponsor knows or ought to have reasonably known of the shortage;
  • for a discontinuation of "critical impact" – at least 12 months before the discontinuation would occur or, if this is not possible, as soon as practicable after the sponsor’s decision;
  • for any other discontinuation – at least six months before the discontinuation would occur or, if this is not possible, as soon as practicable after the sponsor's decision. 

A shortage or a decision to permanently discontinue a reportable medicine is of "critical impact" (meaning that the shorter notification timeframes outlined above would apply) where either:

  • there are no other registered medicines that could reasonably be used as a substitute for the medicine or, if there are, it is not likely that there would be enough of such substitutes to meet the demand for the supply of them as a result of the reportable medicine’s shortage or discontinuation; or
  • the reportable medicine is on the Medicines Watch List[1], signalling that the Minister is satisfied that a shortage or permanent discontinuation of that product has the potential to have life-threatening or serious impact on the health of patients in Australia who take, or may need to take, the medicine.

Civil penalties

A civil penalty applies where sponsors do not notify the TGA of a shortage or discontinuation of a reportable medicine within the applicable timeframes outlined above. There is a maximum civil penalty in either instance of:

  • 100 penalty units for an individual (currently $21,000); and
  • 1,000 penalty units for a body corporate (currently $210,000). 

There is only one exception to the application of civil penalties – when a sponsor reasonably considered that their shortage or permanent discontinuation was not of critical impact and reported it in accordance with the non-critical requirements, but the shortage or discontinuation was later identified to be of critical impact and the medicine is not in the Medicines Watch List.

However, the EM does observe that compliance measures for the new reporting requirements will be based on a graduated approach to give sponsors the opportunity to comply with the New Scheme and that civil penalty proceedings are more likely to be pursued only where there is a history of repeated non-compliance by a sponsor. The EM signals the TGA will engage in an education programme targeted at sponsors of likely reportable medicines including those on the Medicines Watch List, to raise awareness of the new scheme to help prevent non-compliance.

Three key challenges for sponsors

Interpreting "demand"

Although the new scheme is intended to benefit Australian patients,  it may present some challenges for sponsors in practice.

First, a sponsor will be required to assess "the demand for the medicine for all of the patients in Australia who…may need to take, the medicine" over a six-month period.  It may well be the case that in normal circumstances, a sponsor may rely on past usage, or in the case of a new listing, economic modelling to predict likely future use of a product.  However, there will be circumstances in which future usage is less predictable. For example, if a clinical study is released that says drug X can be used to treat a new (unapproved) indication Y, which may in turn, increase the demand for the sponsor's medicine. However, if for example, a sponsor:

  • receives (multiple) reports that doctors are prescribing off-label usage; and
  • the new indication is of such potential magnitude or supplies of the drug are so small,

would those situations trigger a requirement to report:

How does a sponsor "reasonably" know of the shortage?

Secondly, the EM explains that the requirement to report shortages to the TGA only applies after the sponsor has "considered all the information that it needs to take account of for the purposes of identifying if its medicine will, or will likely, be in shortage". However, again, the Bill and indeed the EM provide little clarity about what information the sponsor may need to take into account in order to "reasonably" know of the shortage. For example, would the knowledge of an upcoming natural disaster (for example, the recent Hurricane Florence in the US) which may affect the supply of a medicine, be enough to warrant the notification of a potential supply shortage?  

If global demand for or availability of a medicine increases or decreases suddenly, local sponsors will become susceptible to decisions made by their overseas parents or suppliers in relation to allocation of available stock.  It is important that those overseas companies understand the potential ramifications of decisions which may reduce the availability of stock for the Australian market and provide timely information about such decisions to local sponsors.  The Australian obligations and potential penalties will still apply if decisions are made to reallocate stock to another country for valid and important humanitarian reasons.

Who will know about the notification of a shortage?

At least one additional issue is worth considering: whether the notification information about the shortage of the supply of a medicine will be publically available information. Neither the Bill nor the EM makes this clear.

Certainly the Medicines Watch List itself (which may trigger notification requirements and impact timelines) will be public (as it is a legislative instrument).  In addition, the EM implies that the information about supply shortages will be made publically available, since it states that the purpose of making reporting mandatory is "to enable public communication to those impacted, alternative supplies to be accessed and timely discussion by the TGA with the affected sponsor and, separately, other suppliers, regarding suitable therapeutic alternatives". 

Public communication of all notifications of potential shortages (if that is what will occur) have the potential to affect  health care professionals' prescribing decisions. If a sponsor notifies a shortage pursuant in accordance with the legislation, it must then be prepared to provide appropriate and accurate information to prescribers about the anticipated shortage and its consequences for patients.

Getting ready for these mandatory reporting requirements

These examples highlight the potential difficulties for sponsors in interpreting timing and process of the new notification scheme.  Sponsors should consider reviewing any internal processes set up to assess shortages and discontinuation of medicines to ensure compliance with the new scheme when it comes into effect on 1 January 2019. 


[1] The Medicines Watch List will be a legislative instrument, by which the Minister will determine those drugs of which a shortage or permanent discontinuation will have a "critical impact".   The Minister must not determine a medicine unless the Minister is satisfied that a shortage or permanent discontinuation of supply "has the potential to result in" significant morbidity, or the death of one or more patients in Australia (see sections 30EJ, 30EF(2) and 30EG(2)).  Examples provided by the EM include brown snake antivenom and adrenaline.Back to article

Get in touch

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.