THERAPEUTIC GOODS AMENDMENT BILL 2005 Explanatory Memorandum

Commonwealth of Australia Explanatory Memoranda

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THERAPEUTIC GOODS AMENDMENT BILL 2005

2004-2005 THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA SENATE THERAPEUTIC GOODS AMENDMENT BILL 2005 REVISED EXPLANATORY MEMORANDUM (Circulated by authority of the Parliamentary Secretary to the Minister for Health and Ageing, the Hon Christopher Pyne) THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED

THERAPEUTIC GOODS AMENDMENT BILL 2005 OUTLINE This Bill proposes to provide additional enforcement options to enhance the Therapeutic Goods Administration's (TGA) ability to secure better compliance with the Therapeutic Goods Act 1989 ("the Act"), in order that public health and safety are adequately protected. The Bill will introduce new alternative sanctions or enforcement options that may be more appropriate in particular circumstances than the current available sanctions, and that should achieve better regulatory outcomes with minimum delay. The Bill builds on existing offences under the Act and therefore does not create sanctions for conduct that is not already regulated under the Act, except for the offence that will extend the liability of a body corporate to executive officers in certain circumstances if the body corporate commits an offence, and the introduction of an offence for a failure to provide assistance to the Secretary that is relevant to an application for a civil penalty order where the Secretary has requested this in writing. The purpose of the Bill is to: supplement a number of existing criminal offences with a tiered offences regime, which will include offences of strict liability and higher penalties for more culpable conduct resulting in harm or injury. Penalties for some existing offences are proposed to be increased consistent with penalty levels for other offences contained in the Act. Proposed penalties for criminal offences with aggravating elements are comparable to those contained in other Commonwealth legislation; require a defendant to provide a pre-disclosure notice of evidence in support of an exception to an offence relating to the importation, exportation, manufacture or supply of goods that are not included in the Australian Register of Therapeutic Goods (the Register) prior to the defendant being committed for trial or prior to a hearing by a court of summary jurisdiction; provide for alternative verdicts for various tiered offences to the effect that if the jury acquits a person of an offence specifying an aggravating element, but is satisfied beyond reasonable doubt of facts that prove that the person is guilty of a lesser offence with no aggravating element, the jury may convict the person of the lesser offence; introduce a civil penalty regime for breaches of the Act; introduce infringement notices for strict liability offences under the Act and for breaches of civil penalty provisions; introduce provisions for a person to provide enforceable undertakings to remedy breaches of regulatory requirements, or give undertakings not to engage in future conduct that would breach regulatory requirements; extend the territorial jurisdiction of the Commonwealth for certain offences under the Act to incorporate section 15.2 of the Criminal Code Act 1995 - Extended Geographical Jurisdiction - Category B. This will provide for certain offences to extend to conduct by an Australian citizen or body corporate outside Australia and for an offence to extend to conduct by an Australian resident outside Australia, where there is an equivalent offence in the laws of the local jurisdiction; 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; 1

introduce search warrant mechanisms for the purposes of enabling investigations to take place in relation to civil penalty contraventions and/or criminal offences; enable the release, to the public, of information about actions taken or decisions made under the Act or Regulations and the release, to a person, body or agency of the Commonwealth, a State, a Territory, another country or an international organisation having responsibility or functions relating to therapeutic goods, health or law enforcement, of information relating to an offence or alleged offence or a contravention or an alleged contravention of a civil penalty provision involving therapeutic goods; and include minor amendments to certain advertising requirements; include an amendment to section 61(3A) of the Act to correct a technical omission by including a reference to section 31AA; and amend section 56A to include an instrument of exemption issued under section 18A in the list of certificates that the Secretary may issue as evidence of certain matters. The Bill follows on from a number of changes to the Act and the Therapeutic Goods Regulations 1990 ("the Regulations") made in 2003, as a result of the TGA's action in suspending Pan Pharmaceutical Ltd's manufacturing licence. These changes were made to tighten up the regulatory requirements relating to compliance with standards and to enable manufacturers of therapeutic goods to be more readily identifiable. Further regulatory action taken by the TGA against other manufacturers since the suspension of Pan's licence have identified a need to introduce additional, and more flexible, legislative measures in order to address and deter continuing breaches of regulatory requirements. The kind of measures proposed include providing for alternative sanctions to address breaches, introducing flexible options that will allow the TGA and a person in breach of a regulatory requirement to agree on remedial action where appropriate, and providing more meaningful incentives to deter regulatory breaches that may be commercially driven. Tiered offence regime The Bill proposes a tiered offences regime for a number of criminal offences under the Act, with sanctions that match the degree of seriousness of the consequences of conduct that currently constitutes an offence. The new tiered offences structure will be comprised of the following alternative offences: · a new fault-based offence with an aggravating element (for conduct that results or will result in harm) attracting a maximum penalty of 4,000 penalty units and/or 5 years imprisonment; or · a new strict liability offence with an aggravating element (for conduct likely to result in harm), attracting a maximum penalty of 2,000 penalty units with no term of imprisonment; or · the existing fault-based offence (with no aggravating element), which will be retained as is or with the level of penalty increased, where appropriate, consistent with the level of penalties already in the Act applying to similar offences or to conduct that results or could result in similar consequences. The introduction of the tiered regime of criminal offences is intended to better tailor penalties to criminal conduct so that more serious offences resulting in or likely to cause harm or injury will attract more appropriate sanctions. The penalties for the offences with aggravating elements ("aggravated offences") are significantly higher than the existing offences without 2

the aggravating element, to reflect the fact that breaches of these provisions have resulted in, or will pose, a serious and direct threat to public health and safety. The Bill will introduce an aggravating element to some of the offences that currently exist under the Act that do not have an aggravating element. These offences will directly link the prohibited conduct with the adverse consequences resulting from that conduct (resulting in or likely to result in harm or injury to a person). The aggravated offences are not intended to apply where the harm or injury to a person was caused by reasons other than a breach of the Act. The new fault-based offences that include an appropriate aggravating element will have maximum penalties that exceed the current penalties for the existing offences relating to the same conduct. The test for the strict liability offences is an objective test, where the conduct/use of the goods "is likely to result in harm or injury to any person". The word likely used in this context is an objective test where it is reasonably likely that harm or injury would occur. The strict liability offence will attract a lower penalty, with no imprisonment, compared to the fault-based offence resulting in harm that attracts the highest moral culpability reflected in the size of the maximum penalty. The tiered regime is proposed for existing offences in the Act where the conduct is considered to be of significant importance in the regulatory scheme and thus is intended to apply where: i) the conduct is in relation to the supply of unassessed or unapproved therapeutic goods in the market, which is not otherwise permitted. Such conduct has the potential to increase the risk that consumers may suffer injury or even death by consuming goods the safety, efficacy and quality of which have not been established, where the goods are used for therapeutic purposes; ii) there are breaches of conditions attaching to the inclusion of therapeutic goods in the Australian Register of Therapeutic Goods (the Register). The conditions imposed by the Secretary are designed to maximise the safety of therapeutic goods or their safe use and relate to, amongst other things, ensuring as far as possible that goods granted marketing approval for supply to the general public will remain safe, that appropriate use of the goods will be assured as far as possible, that any requirement to monitor the supply of goods to enable detection of problems will be observed, and that any particular risk associated with the use or misuse of the product is adequately addressed. Breaches of such conditions could compromise public health and safety, and can lead to serious health risks resulting in injury or even death; iii) the conduct relates to compliance with standards applicable to therapeutic goods, including essential principles for medical devices. Standards represent the appropriate level of requirements applying to therapeutic goods that assure their safety, efficacy and quality. Breaches of certain standards may compromise the integrity of products to the extent that their safety, efficacy or quality can no longer be assured. In such circumstances, the potential harm to patients or consumers represent unacceptable consequences that a regulator should seek to prevent as far as possible; iv) the conduct is related to manufacturing standards (including conformity assessment procedures or standards for medical devices). Again manufacturing standards represent benchmarks for ensuring that products will be produced to the 3

specification under which they were approved for general marketing, and that the conditions under which the goods have been manufactured and the various checks required to be placed at various stages of manufacture have been complied with to provide assurance that the purity and quality of the goods remain within acceptable parameters of safety for use in humans; v) the conduct relates to a failure to comply with any condition applying to particular exemptions in relation to the inclusion of goods in the Register. Exemptions to the requirement to include goods in the Register recognizes that in some circumstances, access to unevaluated or unassessed therapeutic goods, or to experimental goods, by an individual or a larger group, may be warranted. However, where it is necessary to reduce the risk of harm to an individual as a result of using such goods, conditions for particular exemptions may be imposed. Breaches of some of these conditions therefore can result in harm or injury to patients that could otherwise be avoided or minimized had the conditions been complied with; and vi) where there is a requirement that therapeutic goods be removed from the marketplace and there is a failure to comply with recovery and notification requirements to remove unsafe or defective goods from the market. Civil penalty provisions The Bill will also introduce an alternative sanction, in the form of a civil penalty provision, to certain existing offences. A civil penalty is a punitive sanction of a financial nature, with no aggravating element and no fault element, imposed through civil court proceedings rather than through the criminal prosecution process. It takes the form of a monetary penalty only, and does not result in any criminal conviction. A criminal prosecution is considered to be a more appropriate sanction where a contravention is deliberate, where fraud may be involved, where the conduct demonstrates recklessness, where there is a serious pattern of continuous intentional contraventions, or where conduct has endangered lives or has caused death or serious injury. The focus of a civil penalty scheme is generally on the regulation of commercial activity. The inclusion of a civil penalty regime is proposed to strengthen the TGA's enforcement options to more quickly and effectively address and deter non-compliance with regulatory requirements, particularly by incorporated bodies. A civil penalty is appropriate to enable sponsors and manufacturers to be fined for breaches of the Act where other sanctions, such as criminal prosecution, may not be as effective or appropriate in the circumstances. The civil penalty regime is also intended to act as a deterrent to behaviour that breaches regulatory requirements, and as an incentive for sponsors and manufacturers to establish systems designed to avoid breaches of regulatory requirements. In these ways the civil penalty scheme is intended to prevent instances where public health and safety is or could be placed in jeopardy. The new civil penalty provisions impose either a maximum of 3,000 or 5,000 penalty units for an individual and 30,000 or 50,000 penalty units for a corporation. It is anticipated that the level of civil penalties will act as an effective financial disincentive against non- compliance with regulatory requirements, especially for corporations for whom imprisonment is not available. 4

Infringement notices The Bill will introduce infringement notices, as an alternative to prosecution for a criminal offence or the commencement of civil penalty proceedings. This enforcement option recognises that a lengthy prosecution process or civil proceedings may not be the optimal way of dealing with some breaches of regulatory requirements. Infringement notices provide a person with the option of paying a fine rather than being dealt with before the courts in relation to breaches of regulatory requirements. An infringement notice will set out the particulars of the breach and will give a person the option of either paying the penalty set out in the notice to expiate the offence/breach or to have the matter dealt with by a court. Infringement notices may be issued in relation to those breaches of the Act where the readily assessable elements of a breach of the Act are identified. These would be offences of strict liability or civil penalty provisions. The relevant offences or civil breaches of the Act in relation to which an infringement notice may apply include conduct amounting to breaches of regulatory requirements that have not resulted in any harm or injury. This could apply, for example, to breaches of standards including advertising standards. Details of the infringement notice provisions are to be prescribed in the Regulations consistent with existing Commonwealth legislation, such as section 117 of the Aviation Transport Security Act 2004 and section 497 of the Environmental Protection and Biodiversity Conservation Act 1999. Enforceable Undertakings The Bill will also introduce provisions to enable the Secretary to accept enforceable undertakings as an alternative means of securing compliance with regulatory requirements. Under this scheme, those in breach of regulatory requirements may have the option of providing undertakings to correct, address or remedy non-compliance, as an alternative to having sanctions imposed. Undertakings will not be mandatory, they may be volunteered by a person who has contravened a regulatory requirement, and any undertaking offered is not required to be accepted by the Secretary. Where undertakings are accepted by the Secretary, they would become enforceable by a court. Court enforceable undertakings agreed to by the Secretary and the relevant person would allow the Secretary to tailor enforcement responses to specific circumstances, taking into account regulatory requirements, public health and safety, and the needs and circumstances of the sponsor, the manufacturer or any other person who is in breach. Undertakings are intended to provide a speedy remedy and, in appropriate circumstances, an alternative to serious sanctions such as revoking or suspending a manufacturing licence or cancelling goods from the Register, which would represent the ultimate penalty for some businesses. 5

Full suite of sanctions The full suite of alternative sanctions refers to the following: 1. Existing fault-based offence in the Act; 2. Fault-based offence with aggravating circumstances (will result in harm); 3. Strict liability with aggravating circumstances (likely to result in harm); and 4. Civil penalty (with no aggravating circumstance). The provisions in relation to which the full suite of alternative sanctions will apply are those considered to be critically important to the supply of safe, quality and efficacious goods. This would include, for example, those provisions dealing with conduct associated with the entry of therapeutic goods onto the Register. The following table lists and describes the existing provisions in the Act that attract the full suite of alternative sanctions. Current Offence Provision Description Medicine or Medical Therapeutic Device Device s14 s41MA Non-compliance with standards for goods imported, exported or supplied for use in Australia. s15(2) s41MC(2) Breaching a condition of consent provided by the Secretary under s14 or s41MA. s20(1) s41MI(1) Offences relating to importation, exportation, manufacture and supply of goods not included in ARTG. s22(2A) s41FE Making a false or misleading certification in connection with the listing of medicines and the inclusion of medical devices in the ARTG. s22(3) s41MN(1) Breaching a condition of registration or listing, or a condition of inclusion in the ARTG s22A s41EI False statements in connection with an application for registration of a therapeutic good or an application for a conformity assessment certificate for a medical device s30EC s41KC Failure to comply with public notification and recovery requirements where therapeutic goods are cancelled from the ARTG or recalled. s30F(5) Failure to comply with requirement to withdraw batches of exempt goods under section 18A not conforming to standards. s31(6) s41JB(4) Providing false or misleading information to a request for information by the Secretary in relation to registered goods, or in relation to an application to register goods. s35(1) and s41ME and Offences relating to manufacturing and licences and (4) 41MF failure to apply conformity assessment procedures (in relation to medical devices) s35(2) s41MN(2) Breaching a condition of a licence or conformity assessment certificate. 6

42V(6) Failure to comply with recall and notification requirements imposed by the Secretary where product tampering suspected. Strict Liability Provisions A number of strict liability offences have been included in the Bill. These offences form part of the 3-tiered alternative criminal sanctions regime that will apply in relation to a number of important offences in the Act. As part of the tiered criminal sanctions regime, the strict liability provisions are considered to be necessary to maintain the integrity of the regulatory scheme and to better achieve the objective of establishing an effective system of controls for the safety, quality, and efficacy (or performance) of therapeutic goods supplied in Australia or exported from Australia. The strict liability provisions all have an aggravating element attached to them. The aggravating element is that engaging in the prohibited conduct is likely to result in harm or injury to a person. The maximum penalty attaching to a strict liability offence is a pecuniary penalty of 2,000 penalty units, with no imprisonment. The proposed three tiers of offences, that will include a strict liability option as part of the alternative criminal sanctions regime, are: the existing offence under the Act for a breach of a relevant regulatory requirement (where proof of intent or recklessness is required), the alternative strict liability offence with an aggravating element (would be likely to result in harm or injury), or an offence incorporating both a mental element (either intent or recklessness), plus the aggravating circumstance of resulting in, or will result in, harm or injury to a person. The strict liability provisions, as part of the tiered alternative criminal sanctions, will apply to the most important regulatory requirements that underpin the regulatory scheme directed at protecting public health and safety. Those requirements relate to, for example, compliance with applicable standards for therapeutic goods; compliance with conditions attaching to exemptions granted in relation to the need to comply with such standards; the inclusion of goods in the Register, following an evaluation or assessment process before their supply; compliance with conditions applying in relation to the inclusion of goods in the Register; compliance with conditions attaching to exemptions granted in relation to the need to include goods in the Register; the provision of information that is not false or misleading in a material particular in connection with applications to include therapeutic goods in the Register; and compliance with manufacturing standards and conditions attaching to manufacturing licences. Where a breach of one of these key requirements of the regulatory scheme for therapeutic goods is likely to cause harm or injury, then non compliance should attract a criminal sanction regardless of any mental element. Where non compliance is not likely to cause harm or injury, but non compliance is either intentional or reckless, the existing offence already present in the Act will apply. Where non compliance is either intentional or reckless, and has resulted in, or will result in, harm or injury to a person, then the highest level of sanction should apply (in most cases, either imprisonment for 5 years or a maximum of 4,000 penalty units, or both). 7

The strict liability offences proposed in the Bill are similar in application to the strict liability offences created under the Trade Practices Act 1974 (the TPA) in relation to the consumer protection provisions in Part V of the TPA. Subsection 75AZC(1) of the TPA, for example, makes it an offence if a corporation, in trade or commerce, in connection with the supply or possible supply of goods, or in connection with the promotion by any means of the supply or use of goods or services, falsely represents that goods are of a particular standard, quality, value, grade, composition, style or model, or have had a particular history or particular previous use. Subsection 75AZC(1) of the TPA is a strict liability offence, with no aggravating circumstances attaching to it, that attracts a maximum penalty of 10,000 penalty units. Given the importance of having an effective deterrent to action that could threaten the health and safety of the Australian public, and the importance of ensuring that sponsors and manufacturers have a high level of care in the course of engaging in commercial activities that have a direct impact on public health, the inclusion of strict liability offences in the regulatory scheme is considered to be warranted. To provide a safeguard in relation to the strict liability offences in the Bill, an aggravating element of likely harm or injury has been added to the physical element of the offence. The defence of honest and reasonable mistake of fact will also be available to a defendant in relation to all the proposed strict liability offences. FINANCIAL IMPACT STATEMENT There is no financial impact. 8

THERAPEUTIC GOODS AMENDMENT BILL 2005 NOTES ON CLAUSES Clause 1 - Short title This clause provides for the Act to be cited as the Therapeutic Goods Amendment Act 2005. Clause 2 - Commencement This clause sets out the different commencement dates for the various provisions or amendments contained in the Bill. With the exception of Items 118 and 158, all the amendments set out in Schedule 1 will commence to operate 28 days after the Act receives Royal Assent. Item 118 is deemed to have commenced retrospectively on and from 27 November 2003. The retrospective application of Item 118 is to remove a requirement placed on advertisers of medicines that commenced to operate on and from 27 November 2003, which is considered to have practical difficulties for advertisers to comply. Clause 3 - Schedule(s) Clause 3 has the effect of amending the Therapeutic Goods Act 1989 (the Act) in the manner specified in Schedule 1. Schedule 1 - Amendments Therapeutic Goods Act 1989 Item 1 - Subsection 3(1) Item 1 inserts a definition for `civil penalty provision' as provided for by new section 42YA of the Act. Where a section or a subsection of the Act contains, at the foot of that section or subsection, the words "civil penalty" accompanied by penalty units, that section or subsection, as the case may be, is a civil penalty provision. Item 2 - Subsection 3(1) Item 2 inserts a definition for `oath' to make it clear that it also includes an affirmation. Item 3- Subsection 3(1) Item 3 inserts a definition for `penalty unit', in relation to a civil penalty provision, to make it clear that it has the same meaning as that given by section 4AA of the Crimes Act 1914, as amended from time to time, as provided for by new section 42YB. Currently, each penalty unit is equivalent to $110. Item 4 - Subsection 3(8) This item makes a consequential amendment to expressly indicate that subsection 3(8) is referring to a maximum penalty for a criminal offence only, and does not extend to apply to any civil penalty. Item 5- At the end of section 5 In view of the introduction of the civil penalty regime in the Act, this item makes a consequential amendment to the current provision providing that the Crown cannot be liable to be prosecuted for an offence. This amendment makes it clear that nothing in the Act 9

renders the Crown to be subject to civil proceedings for a contravention of a civil penalty provision. Item 6 - Section 5A The effect of this item is to apply Section 15.2 of the Criminal Code Act 1995 (extended geographical jurisdiction - category B) to an offence against new subsections 21A(1), (2) and (4) and new sections 22A, 41FE, 42E and 42T. This means that these offence provisions under the Act may apply outside the geographical limits of Australia. Therefore, these provisions may be extended to cover conduct by an Australian citizen or a body corporate incorporated by or under the law of the Commonwealth or of a State or Territory, where the conduct occurs outside Australia. The fact that there is no equivalent local offence in the foreign country is not a defence. Section 15.2 of the Criminal Code also provides that an offence is extended to conduct by an Australian resident outside Australia, but only where there is an equivalent offence in the law of the local jurisdiction. The offences set out in subsections 21A(1), (2) and (4), sections 22A and 41FE relate to making false and misleading statements in a material particular in connection with an application to include therapeutic goods in the Register. Section 42E relates to the manufacture, supply, export or import of counterfeit therapeutic goods. Section 42T relates to the manufacture or supply of tampered goods and the failure to notify the Secretary or the National Manager of the Therapeutic Goods Administration about actual or potential tampering of therapeutic goods. These particular offence provisions have been given extended extraterritorial application in order to ensure that a person who would ordinarily be subject to the laws of Australia, had the conduct occurred within Australia, will be held accountable for the same conduct undertaken whilst the person is not in Australia, on the basis that the conduct, undertaken externally, could result in a significant impact on the health and safety of the Australian community. Item 7 - Sections 14, 14A and 14B This Item has the effect of amending section 14 to the effect that a full suite of alternative sanctions (tiered regime for criminal offences and corresponding alternative civil penalty provisions) now applies to the conduct regulated under this section. The existing section 14 prohibits the importation or supply of therapeutic goods in Australia and the exportation of therapeutic goods, if the goods do not comply with the standards applicable to those goods, subject to certain exceptions. New section 14 A new tiered offences regime, to replace the criminal offences that currently exist under subsections 14(1) and (3) of the Act, will apply in relation to non-compliance with standards for imported goods, goods supplied for use in Australia or goods exported from Australia. The existing fault-based offences are retained, with the inclusion of the new fault-based offences with aggravating circumstances attracting a higher penalty (maximum penalty 4,000 penalty units, or 5 years imprisonment, or both) and the new strict liability offences specifying an aggravating circumstance that the conduct is likely to result in harm or injury to a person (maximum penalty 2000 penalty units). 10

New section 14A Civil penalty provisions may also apply, as alternative sanctions to the offences set out in section 14, in relation to non-compliance with standards applying to imported goods, goods supplied for use in Australia or goods exported from Australia. Exceptions It is not an offence, or a contravention of a civil penalty provision, if the Secretary consents to the supply, exportation or importations of goods not conforming with a standard applicable to those goods. In relation to the importation of goods, it is not an offence or a contravention of a civil penalty provision if the non-conformance to standards only relates to the labelling or packaging of goods. In relation to the exportation of goods, it is not an offence or a contravention of a civil penalty provision if the non-conformance to standards only relates to the labelling of the goods for supply in Australia. New section 14B A separate provision is introduced in relation to the application of the Customs Act 1901 to the importation or exportation of therapeutic goods that attracts a criminal offence or the contravention of a civil penalty provision under sections 14 or 14A of the Act. Where therapeutic goods are imported or exported in contravention of section 14, or in breach of s.14A, then the Secretary may notify the Chief Executive Officer of Customs that she wishes the Customs Act 1901 to apply to that importation or exportation, so that the goods become either prohibited imports or prohibited exports and may be forfeited to the Crown under section 229 of the Customs Act 1901. This is a consequential amendment to the existing subsection 14(4) (re-enacted as proposed section 14B). Item 8 - Sections 15 and 15AA Section 15 Item 8 amends section 15 of the Act so that the full suite of alternative sanctions (tiered criminal offences and civil penalty provisions) will apply to breaches of any condition of consent granted by the Secretary under new sections 14 and 14A to enable relevant therapeutic goods to depart from standards, or any aspect of a standard, applicable to the therapeutic goods when the goods are imported, exported or supplied in Australia. The conditions imposed usually ensure that the granting of the consent to depart from the applicable standards will not result in unacceptable risks to consumers. As a consent for therapeutic goods to depart from applicable standards is granted on the basis that it will not result in unacceptable risks to the public, a breach of the conditions attaching to the consent could defeat the basis upon which the exemption from standards was originally granted. The penalty for the existing fault-based offence will be increased to 500 penalty units, and the new fault-based offence with aggravating elements (the act or omission has resulted in, or will result in harm or injury to a person) will attract a higher penalty of 2,000 penalty units. The new provision for a strict liability offence is included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person, and a penalty of 1,000 penalty units applies. Section 15AA A civil penalty may apply as an alternative sanction to criminal prosecution for a breach of a condition applying to an approval granted for therapeutic goods to depart from applicable standards. 11

Items 9,10, 11, 12 and 13 - Subsection 18A(7)(note); and paragraphs 18A(12)(a), (b) and (f) (notes) These items make consequential amendments to the notes indicating what other provisions of the Act affect the operation of section 18A by adding references to the new civil penalty provisions created under sections 22AA, 30FA and 35A. Item 14 - New sections 19B, 19C and 19D Section 19B This item creates the new tiered offences regime for the offence that currently exists in relation to the importation, exportation, manufacture and supply of goods that are not included in the Register as required (subsection 20(1). Under the tiered regime, the existing offence under subsection 20(1) (which will become the new subsection 19B(4)) will also include an alternative fault-based offence with aggravating circumstances attracting a higher penalty where the conduct constituting the offence results in, or will result in, harm or injury. A new strict liability offence will apply where the conduct constituting an offence is likely to result in harm or injury to a person. The strict liability offence does not attract any term of imprisonment, but a higher pecuniary penalty of a maximum of 2000 penalty units will apply. The defence set out under new subsection 19B(5) repeats the existing defence applying to the importation, exportation, supply and manufacture of therapeutic goods not included in the Register and not otherwise exempted from the requirement to be so included. The reversal of the legal burden of proof for this offence is therefore consistent with the current defence under subsection 20(1A), and 41MI(3) (medical devices), of the Act. Reversal of the legal burden of proof The existing subsection 20(1) of the Act creates one of the principal offences under the regulatory scheme. An obligation is placed on "sponsors" of therapeutic goods to include their goods in the Register before they may import these goods into Australia, manufacture or supply the goods in Australia, or export them from Australia. Before therapeutic goods may be included in the Register, the goods must satisfy statutory criteria that establish their safety, quality and efficacy for their intended use. Hence, requiring goods to be first entered in the Register ensures that an appropriate level of scrutiny in relation to the goods has occurred before they are marketed to the general public. It is therefore an offence (subject to a number of exceptions set out in the Act) for a sponsor to supply goods that are not included in the Register. Very generally, a "sponsor" is defined in the Act to be a principal manufacturer, importer or exporter. The existing subsection 20(1A) of the Act provides that it is a defence to a prosecution under subsection 20(1) of the Act if the defendant proves that the defendant was not the sponsor of the goods at the time of the importation, export, manufacture or supply, as the case may be. The Bill renumbers the existing offence under subsection 20(1) of the Act. Under the Bill the offence will be broken down into the proposed subsections 19B(1), (2) and (4), and the defence under the existing subsection 20(1A) of the Act will be renumbered as the proposed subsection 19B(5) under the Bill. The defence will extend to cover all the offences making 12

up the tiered offence regime applying in relation to the conduct regulated under proposed subsections 19B(1), (2) and (4). Currently this defence also applies to the corresponding offence in relation to medical devices. The defence appears under the existing subsection 41MI(3) of the Act, which has been renumbered under the Bill as the proposed subsection 41MI(6). The offence at proposed subsections 41MI(1), (2) and (4), which applies to medical devices, corresponds with the offences set out at the proposed subsections 19B(1), (2) and (4), which applies to all other therapeutic goods. Again, it is proposed that this defence should also apply to the tiered offences proposed in relation to the same conduct regulated under section 41MI. The existing defence appearing in the current subsection 20(1A) of the Act was inserted in 1996 by the Therapeutic Goods Amendment Act 1996, No 6 of 1996) following consultations with the Commonwealth Director of Public Prosecutions. The amendment was inserted into the Act in response to difficulties experienced in initiating prosecutions against `sponsors' under the then subsection 20(1) of the Act. The Explanatory Memorandum for the Therapeutic Goods Amendment Bill 1996 stated, in relation to the amendment, ie Item 13 (subsections 20(1) and (2) of the Act) that: "... in proceedings under this provision (ie s20(1)), to establish that a person is a sponsor the Crown is required to show, among other things, that there is no agency arrangement. However, it is not possible to establish something that does not exist and a fact that is within the knowledge of the sponsor. The effect of the changes made by Item 13 was to require a "sponsor" in such a situation to establish that there was an agency arrangement, and that therefore the person did not act as a principal in unlawfully importing, exporting, supplying or manufacturing therapeutic goods. The Explanatory Memorandum noted: "The principal/agent relationship, particularly in cases not involving major corporations, can only be ascertained conclusively through confidential commercial arrangements known only to the parties concerned, to which the Commonwealth is not privy and often precluded from discovery for the purposes of establishing who committed an offence under section 20. Until the identity of the sponsor can be established, it is not possible to lay charges under section 20 of the Act so as to effectively preclude the exportation, importation, supply and use within Australia of unapproved therapeutic goods, including counterfeit drugs." The Scrutiny of Bills Committee made no further comment in relation to the introduction of the defence in subsection 20(1A) as described in the Explanatory Memorandum when it was introduced in Parliament in 1996. When the same defence was inserted in 2002 by the Therapeutic Goods Amendment (Medical Devices) Bill 2002 to cover medical devices, there was no objection raised by that Committee. The defence is considered to be essential if future prosecutions against sponsors are to be pursued. The rationale for including the defence in both the proposed subsection 19B(5) (in relation to therapeutic goods), and the corresponding subsection 41MI(6) (in relation to medical devices) in the Bill, remains unchanged. It applies equally to the other tiered offences accompanying those provisions. Present circumstances have not changed to justify a departure from the defence currently provided for under the existing subsections 20(1A) and 41MI(3) of the Act. Reversal of evidential burden of proof, defence for the conduct regulated under the proposed subsections 19B(1) and 41MI(1) A sponsor who attempts to supply goods that have not undergone some form of assessment 13

against statutory criteria under the Act could expose the public to an unacceptable level of risk through the introduction of unevaluated and potentially unsafe or low quality medicines or medical devices into Australia. On that basis, should harm or death occur as a result of the introduction of goods that have not been (as required) assessed for safety, quality or efficacy, which the sponsor must be accountable for under the Act, then that sponsor should be liable for a much higher penalty under subsection 19B(1). An exception under the proposed subsection 19B(6) is available for the new subsection 19B(1) fault-based offence with specified aggravating elements. The defence ensures that a person is not liable for prosecution in circumstances where the harm or injury does not, or would not, directly result from the safety, quality, or efficacy of the goods; or a matter relating to the labelling/packaging of the goods; or to the improper use of the goods. Under this exception the defendant bears an evidential burden (consistent with subsection 13.3(3) of the Criminal Code), as this is information the defendant has or should have, and is not information the regulator is required to obtain or information that the regulator holds. The regulator relies heavily on the information and evidence supplied to it in order to properly make regulatory decisions, such as the granting of marketing approval for therapeutic goods. The importance of the regulator's ability to rely on information provided to it to perform statutory functions is demonstrated by the numerous sanctions imposed under the Act for providing false or misleading information. The current subsection 41MI(1) which makes it an offence to import, export, supply or manufacture medical devices that are not entered in the Register mirrors the existing subsection 20(1) of the Act which relates to therapeutic goods that are not medical devices. The new subsection 41MI(1) inserted by the Bill mirrors the proposed subsection 19B(1). For the same reasons discussed above, a similar defence is proposed for the new subsection 41MI(1). Subsection 19B(7) repeats an existing provision that provides that where therapeutic goods are imported or exported in contravention of the new proposed subsections 19B(1), (2) or (4), the Secretary may advise the Chief Executive Officer of Customs that she wishes the Customs Act 1901 to apply to that importation or exportation, so that the goods become either prohibited imports or prohibited exports and may be forfeited to the Crown under section 229 of the Customs Act 1901. Section 19C The proposed section 19C introduces a pre-disclosure requirement similar to that found in Divisions 3 and 4 of the Criminal Procedure Act 1986 (NSW). It is in particular similar to provisions regarding the notice of alibi under sections 150 and 151 of that Act. It is proposed that the defendant be required to provide at least 21 days notice of any evidence intended to be produced for the purposes of the proposed subsection 19B(6) of the Act. The pre- disclosure requirement is intended to provide the prosecution with a more adequate method of assessing the evidence or defence relied upon by the defendant. The time is needed because the regulator will be required to obtain information about the goods being unlawfully supplied, manufactured, imported or exported, as this would be information the regulator would not normally hold. Section 19D The new section 19D(1) introduces a civil penalty provision for the unlawful importation, exportation, supply and manufacture of therapeutic goods that have not been included in the 14

ARTG and that are not covered by any exemption or other authorisation from the requirement to be included in the ARTG. Consistent with the criminal offence provisions applying to the same conduct, the penalty only applies to sponsors (subsection 19D(2)), but it is up to the person in breach of the penalty provision to establish that the person is not a sponsor, for the same reasons outlined in relation to subsection 19B(5) above (Item 14). Subsections 19D(3) and (4) insert civil penalty provisions for conduct currently regulated under subsection 20(2) of the Act (which will be repealed by the Bill), relating to the that sponsors of registered or listed goods (other than listed therapeutic devices) include the registration or listing number for their goods on the labels of their goods in the prescribed manner before the goods are supplied in Australia. The civil penalty provision will replace the current offence provision in relation to a failure to observe this requirement. A civil sanction is considered to be more appropriate for this breach, in lieu of a criminal offence, as a breach of this requirement is not likely to result in harm or injury to consumers. Subsection 19D(5) provides that where the importation or exportation of therapeutic goods attracts a civil penalty provision under s.19D(1), the Secretary may notify the Chief Executive Officer of Customs that she wishes the Customs Act 1901 to apply to that importation or exportation, so that the goods become either prohibited imports or prohibited exports and may be forfeited to the Crown under section 229 of the Customs Act 1901. This provision mirrors the arrangement in place, under s.19B(7) above, for a failure to include therapeutic goods in the ARTG where this is a requirement, and a criminal sanction applies. Item 15 - Repeal subsections 20(1), (1AA), (1A), (2) and (3) Item 15 is a consequential amendment. The existing subsections 20(1), (1AA), (1A), (2) and (3) of the Act are to be replaced by the new section 19B and subsections 19D(3) and (4), and therefore will be repealed. In addition a note under this Item provides that the current heading for section 20 of the Act will be replaced with the new heading: "Criminal offences relating to notifying the Secretary and to importing goods exempt under section 18A", to reflect the amendments made to section 20 of the Act. Item 16 - Section 20A Item 16 inserts a civil penalty provision for a breach of the requirement that applies where a person who imports, exports from, manufactures in or supplies in Australia therapeutic goods fails to notify the Secretary of the identity of the manufacturer of the goods and the location of the premises used to manufacture those goods. This civil penalty provision provides an alternative sanction to the criminal offence that applies to the same conduct set out in s.20(1B) of the Act. Item 17 - Sections 21A and 21B Item 17 inserts new section 21A, which replaces existing subsections 22(2A) and 22(3) of the Act and supplements subsections 22(7A) and (8) of the Act. Item 17 also inserts new section 21B to provide an alternative civil penalty provision. New Subsections 21A(1), (2), (3) and (4) Existing subsection 22(2A) of the Act creates an offence for making false or misleading statements in connection with a certification of any matter under subsection 26A(2) of the Act, relating to the listing of listable medicines in the ARTG.` New subsections 21A(1), (2), (3) and (4) insert a tiered offences regime, to include offences with an aggravating element, so that where the conduct constituting an offence results in or would result in harm or injury 15

to any person, the highest penalty of a maximum of 5 years imprisonment and/or a maximum of 4000 penalty units will apply. Where the conduct constituting an offence would be likely to result in harm or injury, then a strict liability offence applies, attracting a maximum penalty of 2000 penalty units, but with no imprisonment. The existing criminal offence, subsection 22(2A), is carried over and is replicated under new subsection 21A(4). Subsection 22(2A) therefore is repealed by Item 18. New Subsections 21A(5), (6), (7) and (8) Existing subsection 22(3), which makes it an offence for a person in relation to whom goods have been registered or listed in the ARTG to breach any condition of that registration or listing, has also been replaced by new subsections 21A(5), (6), (7) and (8). These new provisions likewise insert a tiered offences regime, to include offences with an aggravating element, so that where the conduct constituting an offence results in or would result in harm or injury to any person, the highest penalty of a maximum of 5 years imprisonment and/or a maximum of 4000 penalty units will be available. Where the conduct constituting an offence would be likely to result in harm or injury, then a strict liability offence applies, attracting a maximum penalty of 2000 penalty units, but with no imprisonment. The existing criminal offence, subsection 22(3), is carried over and is replicated under new subsection 21A(8), however the maximum penalty has been increased to 12 months imprisonment and/or a maximum of 1000 penalty units, consistent with penalty levels for criminal offences of a similar kind in the Act. The replaced subsections 22(3) and (3A) therefore are repealed by Item 18. Conditions imposed upon the registration or listing of goods in the ARTG represent additional requirements for the right to market therapeutic goods, including importing or exporting such goods. The conditions usually relate to ensuring that the goods are used or supplied in a manner consistent with their proper and safe use. As a breach of those conditions may lead to harm or injury to persons, an increase in the penalty levels for the existing offence with no aggravating circumstance to a maximum penalty of 12 months imprisonment and/or 1000 penalty units is appropriate for the protection of public health and safety. New Subsections 21A(9), (10) and (11) Subsections 19(5), (5A), (5B), (6) and (7) of the Act currently provide a means for enabling individual patients to access therapeutic goods that are not included in the Register and that have not been evaluated or assessed for safety, efficacy or quality. The Secretary may authorise medical practitioners who meet certain requirements to use unregistered or unlisted goods in the treatment of their patients under circumstances prescribed in both the Act and the Therapeutic Goods Regulations. It is an offence under subsection 22(7A) of the Act for a person to act outside the terms of that authorisation and the statutory conditions under which access to such goods is allowed. New subsections 21A(9), (10) and (11) supplement the existing s.22(7A) offence by inserting aggravated offences for the same conduct constituting that offence. Hence, where the conduct constituting an offence results in or would result in harm or injury to any person, the highest penalty of a maximum of 5 years imprisonment and/or a maximum of 4000 penalty units will be available. Where the conduct constituting an offence would be likely to result in harm or injury, then a strict liability offence applies, attracting a maximum penalty of 2000 penalty units, but with no imprisonment. The maximum penalty for the existing offence, with no aggravating circumstance, has been increased from 60 penalty units to 500 penalty units (Item 21 effects this increase). The increase is considered to be appropriate for the protection of the individual patients who will 16

be given access to therapeutic goods that have not been evaluated for safety, efficacy or quality through authorised medical practitioners. New Subsections 21A(12), (13) and (14) Subsection 22(8) of the Act provides that it is an offence for a person to use therapeutic goods that have not been included in the Register when no exemption or authorisation from this requirement applies, for the purposes of treating a patient or for use solely for experimental purposes in humans, unless that use is in accordance with an approval granted by the Secretary under section 19 of the Act, and the use is also in accordance with any applicable conditions made under the Therapeutic Goods Regulations for the purposes of subsection 19(4A) of the Act. New subsections 21A(12), (13) and (14) supplement the offence at subsection 22(8) by inserting a tiered offences regime, so that a higher penalty will apply in relation to conduct that constitutes that offence and which has an aggravating element. Hence, where the conduct constituting that offence results in or would result in harm or injury to any person, the highest penalty of a maximum of 5 years imprisonment and/or a maximum of 4000 penalty units will be available. Where the conduct constituting an offence would be likely to result in harm or injury, then a strict liability offence applies, attracting a maximum penalty of 2000 penalty units, but with no imprisonment. The maximum penalty level for subsection 22(8) of the Act has also been increased from 60 penalty units to a maximum of 500 penalty units. The increase is considered to be appropriate for the protection of the individual patients who will have access to therapeutic goods that have not been evaluated for safety, efficacy or quality under subsections 19(1)(a) and (b) of the Act. New section 21B The new subsection 21B(1) inserts a civil penalty provision as an alternative sanction for sponsors who apply to list their goods in the Register and make a false or misleading statement in a material particular in connection with the certification of any matter required for listing purposes under section 26A(2). This conduct also attracts the tiered offences regime, described above in relation to new subsections 21A(1), (2), (3) and (4). The new subsection 21B(2) inserts a civil penalty provision as an alternative sanction for sponsors who breach a condition of the registration or listing of their goods in the Register. The maximum applicable civil penalty is 5,000 penalty units for an individual, and 50,000 penalty units for a body corporate. The new subsection 21B(3) creates a civil sanction in place of the criminal offence currently set out in the existing subsection 22(4) of the Act (which will be repealed by Item 18). A person who falsely represents that goods are included in the Register when they are not, or that goods are exempt from the requirement to be so included when there is so such exemption, or that goods are exempt under section 18A of the Act when they are not, or that goods are listed goods rather than registered goods, or vice versa, when this is not the case, or that goods not included in the Register are being supplied subject to a section 19 or 19A approval or authority when they are not, will be in breach of new subsection 21B(3) and a civil penalty will therefore apply. The maximum penalty for a contravention of this provision is 5000 penalty units for an individual, and 50,000 penalty units for a body corporate. Item 18 - Repeal of subsections 22(2A), (3), (3A) and (4) These subsections have been repealed because they have been replaced by new section 21A and subsection 21B(3). 17

Item 19 - Subsection 22(7AB) (penalty) This item repeals the existing penalty of 300 penalty units under subsection 22(7AB) of the Act and replaces that penalty with a new level of 2,000 penalty units, which is consistent with penalty levels elsewhere in the Act that are associated with 5 year terms of imprisonment. The relevant offence relates to a breach of a condition applying to an exemption for goods to be included in the Register where the Secretary requires the goods either to be stockpiled or used to deal with a potential threat to public health that may be caused by an actual emergency or a possible future emergency, such as bioterrorism. Item 20 - Subsection 22(7AB) (note 1) This item repeals the note appearing under subsection 22(7AB) which sets out other offences that relate to section 18A of the Act, and substitutes a new note which is to include a reference to another provision that will affect section 18A. That new provision is the new civil penalty provision created under new section 22AA. Item 21 - Subsection 22(7A) (penalty) This item increases the existing maximum penalty level applying in relation to a breach of subsection 22(7A) of the Act from 60 penalty units to 500 penalty units. Subsection 22(7A) makes it an offence for a person, to whom an authority is issued under subsection 19(5) of the Act, to supply unevaluated or unassessed therapeutic goods not included in the Register to patients in breach of the terms of that authority, or any conditions attaching to that authority, or any other requirement prescribed in the Regulations in relation to such supply. Item 22 - Subsection 22(8) (penalty) This item increases the existing maximum penalty level applying in relation to a breach of subsection 22(8) of the Act from 60 penalty units to 500 penalty units. Subsection 22(8) provides that a person must not use therapeutic goods not included in the Register in the treatment of another person, or for experimental purposes in humans, except in accordance with an approval or authority issued under section 19 of the Act or in accordance with a condition of such an approval or authority prescribed in the Regulations, unless the therapeutic goods in question are exempted from the requirement to be included in the Register, or are exempted under sections 18A of the Act or are the subject of an approval under section 19A of the Act. Item 23 - After Section 22 This item inserts a corresponding civil penalty provision as an alternative sanction to the offence that currently exists under subsection 22(7AB) in relation to a breach of a condition applying to goods that are exempt under section 18A. The applicable maximum penalty is 5,000 penalty units for an individual, and 50,000 penalty units for a body corporate. Item 24 - Sections 22A and 22B This item replaces the existing offence under section 22A with a tiered offences regime in relation to the making of false or misleading statements in a material particular in connection with applications for the registration of goods in the ARTG. The existing fault-based offence will be retained and a new fault-based offence with aggravating circumstances will be introduced that will attract a higher penalty. The new provision for a strict liability offence is included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. An alternative civil penalty provision also will apply to this conduct under proposed section 22B. The maximum penalty applying to an individual is 5,000 penalty units, and the maximum penalty applying to a body corporate is 50,000 penalty units. 18

Item 25 - Subsection 29A(1)(penalty) This item replaces the existing maximum penalty level of 400 penalty units that applies under subsection 29A(1), with a higher maximum penalty of 12 months imprisonment and/or 1,000 penalty units. The increase is commensurate with the penalty levels applying throughout the Act for conduct that could result in harm or injury to persons. The relevant offence relates to a failure by a sponsor in relation to whom goods are registered or listed in the Register to provide information to the Secretary that the sponsor becomes aware of, being information of a kind mentioned in subsection 29(2) of the Act. This includes information that use of the goods in accordance with their recommended use may have an unintended harmful effect, or that the goods are not as effective as the sponsor indicated at the time the sponsor included the goods in the ARTG, or information that indicates that the quality, safety or efficacy of the goods is unacceptable. Item 26 - New section 29AA New section 29AA creates an alternative civil sanction for a failure by a sponsor to notify the Secretary of certain adverse events, of a kind set out under section 29A, being information that, among other things, indicates a problem relating to either safety, efficacy or quality of the sponsor's goods included in the ARTG. The maximum civil penalty is 3,000 penalty units for an individual, and 10 times that amount for a body corporate. Item 27 - Paragraph 29B(1)(a) This item makes a consequential amendment to paragraph 29B(1)(a) to include a reference to information that a sponsor is required to provide to the Secretary under the new civil penalty provision created under new section 29AA. Items 28 and 29 - Subsections 29B(3)(penalty) and (4)(penalty) These items increase the existing maximum penalty levels for offences under subsections 29B(3) and (4) of the Act, from 400 penalty units to 12 months imprisonment and/or 1,000 penalty units. The level of penalty is consistent with other penalty levels contained in the Act, and reflects the serious nature of both a failure by an applicant to notify the Secretary of certain adverse effects about goods the subject of a withdrawn or lapsed application to have the goods included in the Register, or where in relation to providing information to the Secretary, a person gives false or misleading information in a material particular. Item 30 - New section 29C This item creates a new civil penalty provision as an alternative sanction for the offences that currently exist under subsection 29B(3) in relation to a failure to give a notice as required under subsection 29B(1), and subsection 29B(4) in relation to the giving of false or misleading information in purported compliance with subsection 29B(1). The maximum civil penalty will be 3,000 penalty units for an individual, and 30,000 penalty units for a body corporate. Item 31 - Paragraph 30(2)(ca) This item makes a consequential amendment to paragraph 30(2)(ca) to include a reference to the civil penalty provision created under new subsection 29AA(1). The existing grounds for cancelling the registration or listing of therapeutic goods in the ARTG under paragraph 30(2)(ca) of the Act will be extended to include a contravention of the civil penalty provision set out in new subsection 29AA(1). 19

Item 32 -Subsection 30EA(1) (table item 5) This item is a consequential amendment. It amends Item 5 of the Schedule set out under subsection 30EA(1) of the Act to reflect the changes made to subsection 20(1), which has been replaced by a tiered offences regime under new subsections 19B(1), (2) and (4), together with a civil penalty provision created under subsection 19D(1). The amendments also reflect the insertion of a new civil penalty provision under subsection 42EA(1) that applies to medical devices. Item 33 - Sections 30EC and 30ECA This item replaces the existing offence under section 30EA for a failure to comply with any of the requirements set out in the table under subsection 30EA(1), relating to the recovery of therapeutic goods and associated notification. The penalty for the existing fault-based offence will be increased to a maximum of 12 months and/or 1,000 penalty units, and the new fault- based offence with aggravating circumstances will attract a higher penalty of a maximum of 5 years imprisonment and/or a maximum penalty of 4,000 penalty units. The new provision for a strict liability offence is included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. An alternative civil penalty provision has also being included under new section 30ECA, with a maximum penalty of 5,000 penalty units for an individual and 50,000 penalty units for a body corporate. The conduct constituting the offences or the contravention relates to conduct associated with a failure to comply with requirements to recover therapeutic goods that have already entered the market or that have already been supplied and that do not conform to a standard applicable to them, or that have not been manufactured in compliance with manufacturing standards, or that have not been manufactured under a manufacturing licence as required, or that have been supplied before the goods were entered into the ARTG. Items 34, 35 and 36 - Subsections 30F(4A), (4B), (4C) and (4D) and Section 30FA These items create a new tiered offences regime for the offence that currently exists under subsection 30F(5) in relation to a failure to comply with a requirement relating to the recovery of goods exempted under section 18A of the Act because they do not conform to applicable standards. The maximum penalty level for the existing fault-based offence will be increased to 1,000 units, in addition to the 12 months imprisonment component that currently applies. The new fault-based offence with aggravating circumstances will attract a higher maximum penalty of 5 years imprisonment and/or 4,000 penalty units. A strict liability offence is included where the aggravating circumstance is that the conduct constituting the offence is likely to result in harm or injury to a person. An alternative civil penalty provision has also being included under new section 30FA, with a maximum penalty of 5,000 penalty units for an individual or 50,000 penalty units for a body corporate. The relevant conduct constituting the offence or the contravention relates to a failure to comply with requirements to recover therapeutic goods that have been exempted under section 18A of the Act, but do not conform to a standard applicable to those goods, or that are not fit for their intended purpose. The availability of a recovery mechanism for therapeutic goods that do not meet standards is considered to be critical to the protection of public health and safety. The failure to recover defective goods that are specifically intended for use in national emergencies, such as in the event of a bioterrorist attack, could result in unacceptable consequences should the need arise to actually use the goods. Therefore, the full suite of alternative sanctions is intended to apply to this particular conduct because non-compliance with the recovery notice could place public health and safety very seriously at risk. 20

Item 37 - Subsection 31(4)(penalty) The penalty for the existing fault-based offence under subsection 31(4) will be increased to 500 penalty units. The increase in the penalty is to encourage effective compliance with any notice issued by the Secretary requiring information from a sponsor or manufacturer about their therapeutic goods, which the Secretary then relies on to make regulatory decisions, such as whether to enter goods in the Register or to cancel the goods from the Register. Inclusion of therapeutic goods in the Register signifies that they meet acceptable standards of safety and quality for use in humans. Items 38 and 39 These items have the effect of creating a new tiered offences regime for the offence set out in subsection 31(6) of the Act. The offence relates to the provision of information to the Secretary that is false or misleading in a material particular about that sponsor's goods following the issuing of a notice under section 31. The penalty for the existing fault-based offence will be increased to a maximum of 12 months imprisonment and/or 1,000 penalty units, and the new fault-based offence with aggravating circumstances will attract a higher maximum penalty of 5 years imprisonment and/or 4,000 penalty units. The new strict liability offence provision will be applicable where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. The relevant conduct constituting the offence (or contravention under new section 31AAA) relates to compliance with a notice from the Secretary to provide certain information that is necessary to enable the Secretary to determine whether goods should continue to be entered in the Register as a listed good, and be legally supplied. Listing of goods under section 26A of the Act is based upon reliance on the certifications made by the applicant at the time an application for listing is lodged. Provided the certification has been made, the goods are required to be listed in the Register. Evaluation of the goods for safety, quality, efficacy and presentation is not undertaken by the TGA. As the listing process is less stringent in comparison to the full evaluation of goods that is required for the registration of goods in the Register, it is essential that any information the Secretary seeks in relation to therapeutic goods entered in the Register as listed goods in this manner be accurate and reliable. It is likewise very important that where the Secretary subsequently requests information or documents in relation to the listed good the sponsor complies with the notice and provides accurate information Item 40 An alternative civil penalty provision has also being included under the proposed section 31AAA, for a failure to comply with a notice issued by the Secretary requiring information to be provided by a sponsor about the sponsor's goods listed in the Register, to enable the Secretary to determine whether the goods should remain listed. The maximum penalty for a contravention of the new civil penalty provision is 5,000 penalty units for an individual and a maximum of 50,000 penalty units for a body corporate. Items 41, 42 and 43 - New subsections 31A(4), 31AA(4) and 31B(5) These items insert provisions to state that information provided to the Secretary under sections 31A, 31AA and 31B of the Act must be given in accordance with software requirements specified by the Secretary at the time she requests the relevant information. This is a consequential amendment as the current provision (section 31C) incorporating this requirement in relation 21

to information provided under sections 31A, 31AA and 31B, will be repealed by Item 44 and replaced with a new section 31C. Item 44 - Section 31C This item repeals the existing section 31C and inserts a new section 31C in its place. The new section 31C increases the penalty for a failure to comply with the Secretary's notice to provide information (for the purposes of sections 31A, 31AA or 31B of the Act), including a failure to comply with any requirement to provide that information in accordance with specified software requirements. The maximum penalty will be 400 penalty units. This higher penalty is proposed to encourage compliance because the information that is required to be provided is necessary to establish that the conditions and constraints applying to the supply of unevaluated and unassessed therapeutic goods to patients or to the public are being met. Items 45, 47 and 49 - Paragraphs 31D(1)(a), 31E(1)(c) and 31F(1) These items make consequential amendments to repeal the reference to subsection 31C(1), which has been replaced by new subsections 31A(4), 31AA(4) and 31B(5). Items 46 and 48 - Subsections 31D(1)(penalty) and 31E(1)(penalty) The existing fault-based offences in relation to the provision of information (subsection 31D(1)) and documents (subsection 31E(1)) that are false or misleading in a material particular, provided in purported compliance with sections 31A, 31AA and 31B, will now include a maximum pecuniary penalty of 1,000 penalty units. This pecuniary penalty is in addition to, or an alternative to, the current 12 months imprisonment for these offences. This addition of a pecuniary penalty to the existing sanction of imprisonment will make the offence consistent with other similar offences relating to the giving of false and misleading information or documents under the Act, such as the existing section 22A (to become the new subsection 22A(4)) and the existing subsection 22(2A) (to be replaced by new subsection 21A(4)). Item 50 - Subsection 31F(2) This item makes a consequential amendment to include a reference to any contravention of a civil penalty provision applying to a failure to provide information or documents under sections 31A, 31AA or 31B, for the purposes of placing restrictions on the use of such information or material, in connection with self incrimination, obtained under those provisions either for a criminal proceeding or for a civil action for a contravention of a civil penalty provision. The current provision already refers to criminal offences. Item 51 - Sections 35, 35A, 35B and 35C This item creates the new tiered offences regime for the offences that currently exist under section 35 relating to manufacturing therapeutic goods without a licence when such a licence is required, and breaching conditions of a manufacturing licence. The existing fault-based offence under section 35 of the Act will be retained and a new fault-based offence with aggravating circumstances that attract a higher penalty will be inserted, the latter applying where there is intention or knowledge associated with the offence. The new provisions for strict liability offences with an aggravating element will be applicable where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. Civil penalty provisions have also being included as an alternative sanction under proposed sections 35A and 35C, with a maximum penalty of 5,000 penalty units for an individual, or 50,000 penalty units for a body corporate. 22

The relevant conduct constituting the offence or the contravention relates to the carrying out of a step in the manufacture of therapeutic goods in Australia. These provisions set out the sanctions applicable to a person who is unlawfully manufacturing therapeutic goods without a licence where there is no exemption from the requirement to obtain a licence, or who fails to comply with licence conditions. These provisions are considered to be of paramount importance in the regulatory scheme. The TGA must be able to regulate manufacturing practices through licences in order to ensure that manufacturing processes meet acceptable standards that assure the quality and safety of therapeutic goods that are manufactured. Therefore, the full suite of alternative sanctions is intended to apply to this particular conduct. Item 52 - After paragraph 38(1A)(b) This item makes a consequential amendment to subsection 38(1A) of the Act which sets out some of the matters the Secretary may take into account for the purposes of determining whether a person is a fit and proper person for the purposes of being granted a manufacturing licence. At present, the Secretary may have regard to whether, for example, a person has any conviction for an offence against a law of the Commonwealth, State or Territory. The consequential amendment makes a reference to breaches of the new civil penalty provisions. The Secretary will therefore be able to take into account any orders issued by a court in relation to the payment of fines for a contravention of a civil penalty provision, for the purposes of determining whether a person is a fit and proper person to be issued with a licence, or to retain a licence. Item 53 - Paragraphs 41(1)(aa), (ab) and (ac) This item makes a consequential amendment to include a further ground for the Secretary to rely upon to revoke or suspend a manufacturing licence, being that the relevant person has been fined by a court for a breach of a civil penalty provision. The current provisions already refer to convictions in relation to criminal offences, but not to breaches of civil penalty provisions. Item 54 - Subsection 41(1A) This item makes a consequential amendment to subsection 41(1A) to include a reference to the new paragraph 38(1A)(ba), relating to a relevant person found by a court to have contravened a civil penalty provision, for the purposes of determining whether a person is a fit and proper person to continue to hold a manufacturing licence. Items 55, 56, 57 58 and 59 - Paragraph 41B(c); Section 41BC; Section 41BC(note); Section 41C(note); and Section 41D(note 1) These items make consequential amendments to a number of provisions or notes in Chapter 4 of the Act (which deals with medical devices) that refer to criminal sanctions, to include appropriate references to civil penalty provisions that are proposed to be inserted by the Bill into Chapter 4 of the Act. Item 60 - Subsection 41EB(2) (note) This item makes a consequential amendment to the note to include a reference to the new civil penalty provision created under section 41EIA. The note describes what sanctions may apply to a person making a false and misleading statement in a material particular in connection with an application for a conformity assessment certificate. 23

Item 61 - Paragraph 41EC(4)(b) Subsection 41EC(4) sets out some of the matters the Secretary must take into account when determining whether a relevant person as a "fit and proper person", for the purposes of deciding whether or not to issue a conformity assessment certificate. Item 61 makes a consequential amendment to subsection 41EC(4), to include a contravention of any civil penalty provision under the Act by a relevant person, as another matter that the Secretary must have regard to in determining whether that person is a "fit and proper person". At present, the Secretary must have regard to whether a relevant person has been convicted for an offence against a law of the Commonwealth, State or Territory. Item 62 - Sections 41EI and 41EIA This item creates a new tiered offences regime for the offence that currently exists under section 41EI in relation to a person who makes a statement, in connection with an application for a conformity assessment certificate (whether orally, in a document or in any other way) and knows that the statement is false or misleading in a material particular. The maximum penalty for the existing fault-based offence will be increased from 60 penalty units to 12 months and/or 1,000 penalty units. The increase is to mirror the existing penalty for making false and misleading statements in a material particular in connection with an application to include therapeutic goods in the Register (under the existing section 22A and subsection 22(2A) of the Act). Conformity assessment certificates are required for most medical devices before the devices may be included in the Register in order to enable the goods to be lawfully manufactured, marketed, exported or imported. This requirement and the conduct regulated under section 41EI correspond to the conduct regulated under existing section 22A and subsection 22(2A) of the Act for a medicine or a therapeutic device. The conduct in question relates to conduct associated with the supply of information that will enable entry of the device or the medicine in the Register for legal supply. The full suite of alternative sanctions is intended to apply to this particular conduct. A new fault-based offence with aggravating circumstances has been inserted as part of the tiered offences regime, and will attract a higher penalty of a maximum of five years imprisonment and/or 4,000 penalty units. The new provision for a strict liability offence is included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. A civil penalty provision has also being included under the proposed section 41EIA as an alternative civil sanction, with a maximum fine of 5,000 penalty units for an individual, or 50,000 penalty units for a body corporate. Item 63 - Division 2 of Part 4-4 (note) This item makes a consequential amendment to the note referring to current sanctions applying to a breach of conditions of a conformity assessment certificate, to include a reference to the civil penalty provision created under subsection 41MNA(2), and the new tiered criminal offences regime created under new subsections 41MN (5), (6) and (8). Item 64 - Subsection 41ET(1A) This item makes a consequential amendment to subsection 41ET(1A) to include a reference to a contravention of a civil penalty provision as a matter the Secretary must take into account in determining whether a person is a fit and proper person for the purposes of continuing to hold a conformity assessment certificate. 24

Item 65 - Section 41FA (note 2) This item makes a consequential amendment to the note referring to criminal sanctions for dealing with medical devices not included in the ARTG, to include a reference to a contravention of a civil penalty provision inserted by the Bill. Item 66 - Subsection 41FC(2) (note) This item makes a consequential amendment to the note referring to criminal sanctions applying for providing false and misleading information or certifications in a material particular when applying to include medical devices in the Register, to include a reference to the new civil penalty provision created under new section 41FEA. Item 67 - Section 41FE This item creates a new tiered offences regime for the offence that currently exists under section 41FE in relation to the making of false or misleading statements or certifications in a material particular in connection with an application to include medical devices in the ARTG. The existing fault-based offence will be retained and the new fault-based offence with aggravating circumstances will attract a higher penalty. The new provision for a strict liability offence is included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. An alternative civil penalty provision has also being included under proposed section 41FEA, attracting a maximum penalty of 5,000 penalty units for an individual, and a maximum of 50,000 penalty units for a body corporate. The full suite of alternative sanctions is proposed to be inserted by this Item in relation to the making of a false or misleading statement or certification in connection with an application to include medical devices in the Register. This is similar to the full suite of sanctions applying to the same conduct for a medicine or therapeutic device under the new subsections 21A(1), (2) and (4), new subsection 21B(1) and new sections 22A and 22B. Item 68 - Division 2 of Part 4-5 (note under the heading to the Division) This item makes a consequential amendment to the note referring to sanctions applying to a breach of any condition attaching to the inclusion of medical devices in the Register, to include a reference to the new civil penalty provision created under subsection 41MNA(1), and the new tiered offences regime created under subsections 41MN(1), (2) and (4). Item 69 - Paragraph 41FN(3)(d) This item makes a consequential amendment to take into account information (about adverse events about a medical device) that will be required to be given to the Secretary for the purposes of the new civil penalty provision created under subsection 41MPA(2), to match the reference to information currently required to be given under the existing offence set out in subsection 41MP(2) of the Act. Item 70 - Section 41GI (note) This item makes a consequential amendment to the note making a reference to an existing offence applying in connection with dealings with medical devices not included in the Register, to include a reference to a contravention of a civil penalty provision (section 41MIB) inserted under Division 3 of Part 4-11 of the Act by this Bill. This Item also replaces the reference to the existing offence referred to above, with a reference to the new tiered criminal offences regime, created under new subsections 41MI(1), (2) and (4), which replaces the existing offence. 25

Item 71 - Paragraph 41GN(1)(d) This item makes a consequential amendment to include a reference to a breach of the alternative civil penalty provision created under new subsection 41MPA(1), as a possible ground for cancelling a medical device from the Register. This refers to a failure by a person, in relation to whom a medical device is included in the Register, to advise the Secretary about certain adverse events in connection with that person's medical device. Currently a failure to advise the Secretary of any of the adverse events set out under the existing offence set out under subsection 41MP(1) is a ground for cancelling medical devices from the Register. Item 72 - Subsection 41HA(1) (note) This item makes a consequential amendment to the note at the end of subsection 41HA(1), which makes a reference to offences relating to dealings with medical devices that are not included in the ARTG, to also include a reference to the new provision that provides for a contravention of a civil penalty provision for dealing with medical devices not included in the ARTG. Items 73 and 74 - Subsections 41HA(2) (note); 41HB(2) and (7) (note). These items make consequential amendments to the notes to take into account changes made to section 41MN of the Act (relating to the offence applying to a breach of conditions attaching to either: exemptions granted to exempt medical devices from the requirement to be included in the Register; or approvals granted to enable persons to access devices not included in the Register), so that a reference to the correct offences set out in subsection 41MN(9) will replace the current reference to subsection 41MN(3). Item 75 - Section 41J (note) This item makes a consequential amendment to the note to include references to the new civil penalty provisions created under sections 41MPA and 41MR. Each of the new civil penalty provisions referred to in the amended note, relate to the alternative civil sanction for the existing offences set out in sections 41MP and 41MQ of the Act, concerning a failure to comply with the requirement to advise the Secretary of certain adverse events about goods included in the Register or goods the subject of a withdrawn application to include goods in the Register, and in the latter case, where information is provided, the provision of false and misleading information in a material particular. Items 76 and 77 - new subsections 41JB(3) and (4); and new section 41JBA The penalty for the existing fault-based offence under subsection 41JB(3), which corresponds with the offence in subsection 31(4), will be increased to 500 penalty units. This is the offence for a person who fails to provide information to the Secretary, as required under section 41JA, to enable the Secretary to make decisions in relation to whether or not to issue conformity assessment certificates or to suspend or revoke these, and whether or not to include medical devices in the Register, or to suspend or remove these from the Register. The increase in the penalty is to encourage compliance with the notice issued by the Secretary requiring information from a sponsor or manufacturer, which the Secretary then relies on to make these regulatory decisions. These items also create the new tiered offences regime for the offence that currently applies under subsection 41JB(4) for providing false or misleading information in a material particular in purported compliance with a notice issued under section 41JA. The penalty for the existing fault-based offence will be increased to 12 months and/or 1,000 penalty units, 26

and the new fault-based offence with aggravating circumstances will attract a higher penalty, where there is intention or knowledge associated with the offence. The new provision for a strict liability offence is included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. A civil penalty provision is also proposed to be included in the regime by Item 77 as an alternative civil sanction under proposed section 41JBA, with a maximum penalty of 5.000 penalty units for an individual, and 50,000 penalty units for a body corporate. Item 78 - Subsection 41JC(2) This item makes a consequential amendment to extend the defence against self-incrimination applying to the offence of failing to give information or a document under section 41JB (except in relation to proceedings brought against an individual relating to the provision of information that is false or misleading in a material particular) so that the same defence and exception to the defence will also apply to breaches of the civil penalty provision under the new section 41JBA. Items 79, 80 and 81 - At the end of sections 41JD, 41JE and 41JF Where the Secretary seeks information pursuant to sections 41JD, 41JE or 41JF regarding, among other things, the supply, handling and monitoring of devices exempted from the requirement to be included in the Register, section 41JG of the Act sets out that the Secretary may require that information to be provided by way of specified software or electronic transmission. Because section 41JG as it currently stands will be repealed by the Bill, provisions dealing with how information is to be supplied to the Secretary has been inserted instead under the relevant sections 41JD, 41JE and 41JF. Items 79, 80 and 81 therefore include a similar software allowance provision to provide that the Secretary may require information to be given in accordance with specified software requirements. The effect is that the software requirements have been moved from the former section 41JG (which is now an offence provision) and included in the appropriate provisions (sections 41JD, 41JE and 41JF) where the power to require the notice is actually specified. Item 82 - Section 41JG This Item restates the offence for failing to provide information required under sections 41JD, 41JE and 41JF. The maximum penalty for a breach of this requirement has been increased to 400 penalty units. This sanction, which applies in relation to medical devices, corresponds to the sanction applying in relation to a breach of the similar requirement to provide information about the supply and monitoring of exempted medicines or exempted therapeutic device under section 31C of the Act. An increase in penalty is considered appropriate to ensure information is readily provided and that procedures established to protect patients are complied with, so as to ensure adequate monitoring of access by patients to therapeutic goods that have not been subjected to evaluation or assessment for safety, efficacy or quality. Items 83 and 84 - Paragraph 41JH(c) and penalty Item 83 makes a consequential amendment to insert the correct reference to any "notice" given under sections 41JD, 41JE or 41JF, rather than a reference to subsection "41JG(1)" which has been repealed and replaced with an offence provision. Item 84 increases the maximum penalty for providing false or misleading information in purported compliance with sections 41JD, 41JE or 41JF from 60 penalty units to 12 months imprisonment and/or 1,000 penalty units. An increase in the penalty for the fault-based offence is to ensure that accurate information is provided that will enable the Secretary to properly and effectively monitor the supply and handling of access by patients to unapproved devices. The sanction 27

created in relation to the provision of false and misleading information about the supply or handling of exempt medical devices corresponds to the sanction created in relation to the provision of false and misleading information about the supply and handling of exempted medicines or therapeutic devices under section 31D of the Act. Items 85 and 87- Paragraph 41JI(1)(c) and 41JJ(1) These Items make consequential amendments to paragraph 41JI(1)(c) and subsection 41JJ(1) in order to correctly refer to any notice which will now be required to be given under section 41JD, 41JE or 41JF rather than the existing section 41JG, which will be repealed and replaced with an offence provision. These Items take into account the changes made to sections 41JD, 41JE, 41JF and 41JG. Item 86 - Subsection 41JI(1)(penalty) The maximum penalty for the fault-based offence in relation to providing false or misleading documents in purported compliance with section 41JD, 41JE or 41JF will be increased from 60 penalty units to 12 months and/or 1,000 penalty units. This increase in the maximum penalty for the fault-based offence is being included in order to encourage the provision of accurate documentation regarding the supply and monitoring of unevaluated devices supplied to patients, to enable the Secretary to properly and effectively monitor compliance with any condition under which such devices are supplied. The sanction set out under this Item for providing documents that are false or misleading in relation to the supply of unevaluated or unassessed medical device corresponds to the sanction created for a providing false and misleading documentation in relation to the supply of unevaluated or unassessed medicines or therapeutic devices under section 31E of the Act. Item 88 - Subsection 41JJ(2) This item makes a consequential amendment to section 41JJ to include a reference to any contravention of a civil penalty provision applying to a failure to provide information or documents under sections 41JD, 41JE or 41JF, for the purposes of placing restrictions on the use of information or documents obtained under those sections either for the purposes of a criminal prosecution or for a civil action for a contravention of a civil penalty provision. Section 41JJ currently restricts use of such information or documents in connection with criminal proceedings only. The defence against self-incrimination is restricted under section 41JJ. A person cannot be excused from providing information or a document required under sections 41JD, 41JE or 41JF on the ground that to do so would tend to incriminate the person or expose them to a penalty. However, any information or document given under those provisions cannot be used in any criminal or civil proceedings except for the purposes of proceedings connected with the offences set out in sections 41JH or 41JI, relating to the provision of false or misleading information or documents. Item 89 - Section 41KC This item creates the new tiered offences regime for the offence that currently exists under section 41KC. This offence relates to a failure to comply with requirements relating to the public notification of non-compliance of devices with certain regulatory requirements, and the recovery of such medical devices under section 41KA. The new fault-based offence with aggravating circumstances will attract a higher maximum penalty, where there is intention or knowledge associated with the offence. The maximum penalty for the existing fault-based offence will be increased from 60 penalty units to 12 months imprisonment and/or 1,000 28

penalty units, and the new provision for a strict liability offence will be available where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. An alternative civil penalty provision has also being included into the regime under proposed section 41KCA, with a maximum fine of 5,000 penalty units for an individual, and 50,000 penalty units for a body corporate. The conduct in question relates to a failure to comply with requirements to recover devices that have already entered the market and in relation to which there is a problem of a kind identified in section 41KA, and/or a failure to notify the public or other class of persons about the problems identified in section 41KA. The provision corresponds to the same kind of conduct for medicines under section 30EC of the Act. The availability of a recovery and notification mechanism for medical devices that do not meet regulatory requirements is considered to be of paramount importance in the regulatory scheme. Therefore, the full suite of alternative sanctions is intended to apply to this particular conduct where non-compliance with the recovery or notification requirements occurs in circumstances where public health and safety is placed at risk. Items 90, 91 and 92 - Part 4-11 (heading), Section 41M and Section 41M(note) These items make consequential amendments to the heading of Part 4-11 of the Act and to section 41M to include a reference to the new civil penalty provisions inserted by the Bill, so that the heading and description of Part 4-11 correctly includes a reference to the new civil penalty provisions inserted into that Part by the Bill. The amendment to the note under section 41M is necessary to reflect the changes made to the earlier Parts of Chapter 4 where civil penalty provisions have been inserted. Item 93 - Sections 41MA and 41MAA This item creates the new tiered criminal sanctions regime for the offence that currently exists under section 41MA in relation to non-compliance with essential principles by medical devices that are imported into or supplied in Australia, or exported from Australia. The existing fault-based offence will be retained and the new fault-based offence with aggravating circumstances will attract a higher maximum penalty, where there is intention or knowledge associated with the offence. The new provision for a strict liability offence is included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. A civil penalty provision has also being included into the regime under the proposed section 41MAA, with a maximum penalty of 3,000 penalty units for an individual or 50,000 penalty units for a body corporate. The elements of each offence in relation to importing, exporting or supplying medial devices are set out in separate provisions, so that a person must not import, export or supply medical devices that do not conform to applicable essential principles, unless that person obtains the consent of the Secretary, or unless, in relation to exported devices, the non-compliance relates to a labelling requirement applying to devices supplied in Australia. Compliance with essential principles is required before devices may be supplied generally to the public, in order to ensure that devices meet acceptable standards. As this requirement is considered to be critical for the protection of public health and safety, the full suite of alternative sanctions apply to a failure to comply with this particular requirement. This measure corresponds to the sanctions created for medicines under section 14 of the Act. 29

Items 94 and 95 - Subsections 41MB(1) and 41MB(2)(note) Section 41MB provides that the offences for importing, exporting or supplying a medical device that does not comply with essential principles, under section 41MA of the Act, do not apply where the device complies with one or more applicable medical standards, and those standards relate to a corresponding requirement under the essential principles. Item 94 makes a consequential amendment to extend the exception applying to the current offence to include a reference to the new civil penalty provision, the proposed section 41MAA, inserted by the Bill. Item 95 amends the note regarding defendants in criminal proceedings bearing an evidential burden in relation to establishing the exception, to reflect that the same arrangement also applies in relation to civil proceedings. Item 96 -Section 41MC This item creates the new tiered offences regime for the offence that currently exists under subsection 41MC(2), which relates to a breach of a condition of any consent granted by the Secretary under section 41MA or new section 41MAA to allow medical devices to be imported, supplied or exported where the devices do not comply with applicable essential principles. The maximum penalty for the existing fault-based offence will be increased from 120 penalty units to 500 penalty units, and the new fault-based offence under proposed subsection 41MC(2) with aggravating circumstances will attract a higher maximum penalty of 2,000 penalty units, where there is intention or knowledge associated with the offence. The new provision for a strict liability offence under the proposed section 41MC(3) will be available where the relevant aggravating circumstance is that the conduct is likely to result in harm or injury to a person. A civil penalty provision has also being included as an alternative sanction under the proposed section 41MCA, with a maximum penalty of 3,000 penalty units for an individual, and a maximum of 30,000 penalty units for a body corporate. These sanctions correspond to the sanctions for a medicine or therapeutic devices set out under new sections 15 and 15A. Item 97 - Paragraph 41MD(a) This item makes a consequential amendment to paragraph 41MD(a) to reflect the changes made to the offence provision set out under section 41MA, and to include a reference to the new civil penalty provision created under section 41MAA. This is necessary to correctly reflect all references to the prohibition applying in relation to the importation or exportation of medical devices that do not comply with applicable essential principles, which is referred to in both sections 41MA and 41MAA. Item 98 - Sections 41ME and 41MEA This item creates the new tiered offences regime for the offence that currently exists under section 41ME, relating to a failure by a manufacturer to apply conformity assessment procedures to medical devices supplied in or exported from Australia by a manufacturer. The existing fault-based offence will be retained and a new fault-based offence with aggravating circumstances will be introduced that will attract a higher maximum penalty, to apply where there is intention or knowledge associated with the offence. The new provision for a strict liability offence is included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. An alternative civil penalty provision will be included in the sanctions regime under proposed section 41MEA, with a maximum penalty of 5,000 penalty units for an individual, and a maximum of 50,000 penalty units for a body corporate. 30

The conduct in question relates to a manufacturer of any medical device for supply in Australia, or for export from Australia, who fails to apply conformity assessment procedures in the manufacture of medical devices. Failure to comply with conformity assessment procedures, which amount to standards for manufacturing practices, can result in the production of poor quality or unsafe devices that could cause harm or injury to a person who has to use them. Compliance with conformity assessment procedures is considered to be of paramount importance in the regulatory scheme in order to ensure that only medical devices of acceptable quality and standard are made available for use by patients. A failure to meet manufacturing standards can result in risks to public health and safety, and the importance of this requirement in protecting the public from possible harm is reflected in the availability of the full suite of alternative sanctions for non-compliance. Item 99 - Section 41MF This item creates a two-tiered offences regime for the offence that currently exists under section 41MF applying to a sponsor who supplies or exports medical devices in relation to which conformity assessment procedures have not been applied. The existing fault-based offence will be retained and the new fault-based offence with aggravating circumstances will be introduced and will attract a higher maximum penalty of 5 years imprisonment or 4,000 penalty units, where there is intention or knowledge associated with the offence. Item 100 - Subsection 41MG(1) This item makes a consequential amendment to include a reference to the new civil penalty provision created under section 41MEA, so that neither the criminal nor civil sanction applying to a failure by manufacturers to apply conformity assessment procedures to devices will apply where the quality management systems applied to those medical devices comply with one or more conformity assessment standards applicable to the devices, in the circumstances set out under section 41MG. Item 101 - Subsection 41MG(2)(note) This item makes a consequential amendment to insert the same requirement, in relation to criminal proceedings (namely that the defendant bears the evidential burden in establishing that the exception to the requirement to apply conformity assessment procedures applies), to civil proceedings for a contravention of a civil penalty provision. The amendment is necessary to take into account the creation of the alternative civil penalty provision applying to manufacturers of medical devices who fail to apply conformity assessment procedures in the manufacture of their devices. Item 102 - At the end of Division 2 of Part 4-11 This item inserts an alternative civil penalty provision, under the proposed section 41MHA, to the existing criminal offence under section 41MH for a manufacturer making false statements in declarations about whether or not conformity assessment procedures were applied to the manufacture of that manufacturer's medical device. The maximum penalty for a breach of the civil penalty provision is 3,000 penalty units for an individual, and 30,000 penalty units for a body corporate. Item 103 - Sections 41MI, 41MIA and 41MIB This item amends section 41MI and inserts new sections 41MIA and 41MIB 31

Section 41MI This section creates the new tiered criminal offences regime for the offence that currently exists under subsection 41MI(1) in relation to the importation, exportation, supply or manufacture of medical devices not included in the Register. The elements of the offence in relation to the importation, exportation, manufacture or supply of a medical device are set out, whereby a person must not import, export, manufacture or supply a device where the device is not included on the Register, or the device is not an exempt device, or where approval for the supply of the device has not been given under section 41HB or section 41HC of the Act. The existing fault-based offence will be retained and a new fault-based offence with aggravating circumstances will be introduced that will attract a higher penalty, where there is intention or knowledge associated with the offence. The new provision for a strict liability offence will be available where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. The reversal of the onus of proof, requiring a person to demonstrate that they are not the sponsor, for the purposes of the provision, is set out under subsection 41MI(6). The reasons for including this provision and justification for its need is explained under Item 14 of the Bill, as subsection 41MI(6), which applies to medical devices, corresponds to subsection 19B(5), which applies to all other therapeutic goods on the same basis. New section 41MIA The new section 41MIA relates to a pre-disclosure requirement placed on a defendant who seeks to adduce evidence in support of an exception under subsection 41MI(7) in relation to a trial for an offence under subsection 41MI(1). This requirement is similar to the requirement in Division 3 and 4 of the Criminal Procedure Act 1986 (NSW), and in particular, to the notice of alibi requirements in sections 150 and 151 of that Act. It is proposed in this amendment that the defendant provide notice in relation to the evidence intended to be produced for the purposes of the defendant's reliance on the exception to the offence set out under new subsection 41MI(7) of the Act more than 21 days before the trial or hearing of the offence begins. This pre-disclosure requirement is intended to provide the prosecution with a more adequate method of assessing the evidence to be relied upon by the defendant. The time is needed because the regulator will be required to obtain information about the goods being unlawfully supplied, manufactured, imported or exported, and this would be information the regulator would not normally hold. New Section 41MIB An alternative civil penalty provision has also being included in the regime under the proposed section 41MIB, with a maximum penalty of 5,000 penalty units for an individual, and a maximum penalty of 50,000 penalty units for a body corporate. Inclusion of goods in the Register signifies that the goods in question meet with applicable standards (essential principles), including manufacturing standards or conformity assessment procedures, thus providing a level of assurance in relation to their safety, efficacy and quality. Therefore, compliance with the requirement to include goods in the Register is considered to be critical in protecting the public from unsafe or substandard products, and as such the full suite of alternative sanctions will be available in order to adequately protect the public when there is a failure to comply. The sanctions correspond to those created under sections 19B and 19C for medicines. 32

Item 104 - Paragraph 41MJ(a) This item makes a consequential amendment to paragraph 41MJ(a) to include a reference to the new alternative sanctions created under sections 41MI and 41MIB. Paragraph 41MJ(a) currently provides that where the importation or exportation of a medical device constitutes an offence under subsection 41MI(1) of the Act, the Secretary may notify the Chief Executive Officer of Customs that she wishes the Customs Act 1901 to apply to that importation or exportation, so that the goods become either prohibited imports or prohibited exports and may be forfeited to the Crown under section 229 of the Customs Act 1901. By including a reference to the new civil penalty provision, Item 104 has the effect of extending the same arrangements where there is a breach of a civil penalty provision in relation to the importation or exportation of devices before these are included in the Register. Items 105 and 106 - Subsections 41ML(1) and (2); and after section 41ML Item 105 repeals the existing offence under subsections 41ML(1) and (2) of the Act in relation to the making of false or misleading representations that medical devices are of a kind included in the Register, are exempt goods, or are the subject of an approval or authority granted under section 41HB or section 41HC of the Act for the supply of devices when either of these situations is not the case, and changes the heading for section 41ML to indicate the repeal and correctly reflect that the amended section will now relate only to an offence for falsely advertising that the devices are for a purpose other than the purpose for which it was included in the Register. In lieu of the repealed subsections 41ML(1) and (2) of the Act, Item 106 creates a civil penalty provision for the making of a false or misleading representation that medical devices are of a kind included in the Register, or that medical devices are exempt devices, or that medical devices are the subject of an approval or authority granted under section 41HB or 41HC. Item 107 - Sections 41MN and 41MNA Section 41MN This section creates the new tiered criminal offences regime for the offence that currently exists under section 41MN in relation to a breach of a condition: - applying to the inclusion of medical devices in the Register, or - applying in respect of the issue of a conformity assessment certificate or - applying to an exemption from the requirement for a device to be included in the Register or - applying to an approval granted under section 41HB or - applying to the use of devices in clinical trials or for experimental purposes. The maximum penalty for the existing fault-based offences will be increased from 60 penalty units to 12 months imprisonment and/or 1,000 penalty units, and the new fault-based offences with aggravating circumstances will attract a higher maximum penalty where there is intention or knowledge associated with the offence. The new provisions for strict liability offences are included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. 33

Section 41MNA An alternative civil penalty provision will also be included in the sanctions regime under the proposed section 41MNA, with a maximum penalty of 5,000 penalty units for an individual, and 50,000 penalty units for a body corporate. The civil penalty provision applies to breaches of conditions attaching to the entry of devices in the Register, and breaches of conditions attaching to a conformity assessment certificate that has been issued to a person. A conformity assessment certificate is issued to a manufacturer of a medical device where: (a) the relevant quality management systems have been applied; (b) the device complies with the essential principles; and (c) other certification requirements of the conformity assessment procedure have been met. Subsections 41MN(5)(6) and (8) make it an offence on the part of a person to do an act or omit to do an act that constitutes a breach of a condition of a conformity assessment certificate issued to that person. Conditions apply to the issue of conformity assessment certificates so that, among other things, manufacturing premises may be monitored to establish ongoing compliance with proper manufacturing procedures and standards, and determinations may be made about whether any changes made by the manufacturer in relation to the quality management system in place could adversely impact on proper manufacturing processes. Similarly, conditions attaching to the entry of devices in the ARTG ensure, among other things, that documentation about manufacturing processes will be readily available to establish or substantiate compliance with essential principles and conformity assessment procedures. A failure to manufacture devices that comply with essential principles, or a failure to apply conformity assessment procedures to devices, could result in poor quality devices or unsafe devices being manufactured and supplied for use in humans. Compliance with conditions to enable, among other things, adequate monitoring of compliance with applicable standards is an important element in the regulatory scheme for the appropriate and adequate protection of public health and safety. Item 108- Division 4 of Part 4-11 (heading) This item makes a consequential amendment to the heading to include a reference to the civil penalty provisions inserted into this Division by the Bill. Item 109 - Section 41MO This item creates the new tiered criminal sanctions regime for the offences that currently exist under subsections 41MO(1) and (2), in relation to the misuse of those medical devices that are exempted from the requirement to demonstrate compliance with essential principles or conformity assessment procedures, but that are permitted to be supplied for special or experimental uses. The maximum penalty for the existing fault-based offence will be increased from 60 penalty units to 500 penalty units, and the new fault-based offences with aggravating circumstances will attract a higher maximum penalty of 5 years imprisonment and/or 4,000 penalty units, where there is intention or knowledge associated with the offence and the conduct results, or would result, in harm or injury. The new provision for a strict liability offence is included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. These provisions are considered to be necessary in order to ensure that medical devices not subject to the usual screening for safety and quality are only used under strict conditions designed to protect classes of patients that are permitted to access such goods. These provisions correspond to proposed subsections 21A(9)-(14) in relation to medicines. 34

Items 110 and 112 - Subsection 41MP(1)(penalty), Section 41MPA and section 41MPB Item 110 increases the maximum existing penalty for the fault-based offence from 400 penalty units to 12 months imprisonment and/or 1,000 penalty units. The offence applies to a person in relation to whom a kind of medical device is included in the Register. The offence relates to a failure by such a person to notify the Secretary, within the prescribed time, of information known to the person. Such information might include, among other things, information regarding any malfunction or deterioration in the characteristics or performance of a medical device or any inadequacies in the design, production, labelling, instructions for use or advertising materials of a kind of device, or any use of that device in accordance with or contrary to the use intended by the manufacturer of the device that might lead to, or might have led to, the death of a patient or a serious deterioration of the patient's health (subsection 41MP(2) of the Act). Item 112 creates the alternative new civil penalty provision for such a failure to notify the matters set out in subsection 41MP(2), with a maximum penalty of 3,000 penalty units for an individual, and/or a maximum of 30,000 penalty units for a body corporate. These sanctions correspond to the sanctions created in relation to medicines under proposed sections 29A and 29AA. New section 41MPB will also be inserted by Item 112. That new provision will set out the circumstances under which a person who is the subject of proceedings for a breach of the civil penalty provision in new section 41MPA may be relieved from liability. Item 111 - Subparagraphs 41MP(2)(a)(i) and (ii) This item makes a minor correction to these provisions to reflect that they are intended to be concerned with information relating to any malfunction or deterioration in the characteristics or performance of, or any inadequacy in the design, production, labelling, instructions for use or advertising materials of "the kind" of device, rather than "a kind" of device as the provision is currently worded. Item 113 - Paragraph 41MQ(1)(a) This item makes a consequential amendment to paragraph 41MQ(1)(a) to include a reference to subsection 41MPA(2) in relation to the kind of information which an applicant (a person who applies for inclusion of a kind of medical device in the Register) may be required to inform the Secretary of in writing if requested. This amendment simply ensures that the requirement to provide information to the Secretary is the same in relation to both the criminal offence, section 41MP, and the new civil penalty provision, section 41MPA. Items 114, 115 and 116- Subsections 41MQ(3)(penalty) and (4)(penalty); and Section 41MR Item 114 has the effect of increasing the existing maximum penalty for the offence relating to a failure to notify the Secretary, where the Secretary requires this, about certain adverse events in relation to a medical device, of a kind set out in either subsection 41MP(2) or 41MPA(2). These subsections apply where a person applies to include a device in the Register but the application either lapses or is withdrawn. The maximum penalty for the offence has been increased from 400 penalty units to 1,000 penalty units and/or 12 months imprisonment. Where the person provides information as required for the purposes of section 41MQ, but the information is false or misleading in a material particular, the current maximum penalty for this offence has been increased by Item 115 from 400 penalty units to a maximum penalty of 12 months imprisonment and/or 1,000 penalty units. 35

Item 116 also insert an alternative civil penalty provision for a failure to notify adverse effects by an applicant as required, where the applicant's application is withdrawn or lapses, or where information is given but is false or misleading in a material particular. The maximum penalty for the civil offences is 3,000 penalty units for an individual, or 30,000 penalty units for a body corporate. These sanctions correspond to the sanctions applying to medicines under proposed sections 29B and 29C. Items 117 and 119 - note after subsections 42C(1) and (2); after subsections 42C(4) and (6) These items insert identical notes under the specified subsections to inform readers that advertising required to be pre-approved before publication under Part 2 of the Regulations must also comply with the Therapeutic Goods Advertising Code. The proposed notes are intended to clarify that whether or not advertising requires pre-approval under the Therapeutic Goods Regulations, all advertising in relation to therapeutic goods must comply with the Therapeutic Goods Advertising Code. Item 118 - Paragraph 42C(4)(a) Due to practicalities and difficulties in implementing the requirement for visual broadcast media to display an approval number, this requirement will be removed from subsection 42C(4) of the Act. The date of commencement of this requirement was 27 November 2003, and thus the Bill will retrospectively remove this requirement placed on sponsors from that date. The effect of the retrospective amendment will be to remove the obligation to display approval numbers given to advertisements published in broadcast media from the date this obligation was first imposed by the Act. The amendment does not have the effect of imposing any requirement retrospectively. Items 120 and 121 - Subsections 42E(1) and (4) The effect of these Items is to remove the penalty provision, subsection 42E(4), that currently applies to this section in relation to counterfeiting, and instead place the penalty immediately below subsection 42E(1) which is the subsection describing the prohibited conduct. At the same time, the maximum penalty for the offence has been increased from 5 years imprisonment and/or 2,000 penalty units to 7 years imprisonment and/or 2,000 penalty units. The increase in the term of imprisonment has been made in recognition of the increasing problems emerging with the manufacture and supply of counterfeit therapeutic goods, and the need for stronger sanctions to deter such conduct. The nature of the conduct under the current section 42E results in a high level of risk to the community, and is more likely to result in serious harm or injury to the public. An increase in the existing imprisonment term for this particular offence is proposed as the nature of the conduct is considered to be highly culpable where the conduct involves deliberate and intentional acts and has the potential to cause serious harm or injury to the public. Counterfeiting of goods is also recognised as a major public health issue and is one of the most serious offences under the Act relating to the supply of goods, and should attract the highest level of penalties. Under the existing subsection 42E(2), goods are counterfeit if either the label or presentation of the goods, any document or record relating to the goods or their manufacture, or any advertisement for the goods, contain a false representation of one or more of a range of factors set out in subsection 42E(3), including the identity or name of the goods, the presence or absence of any ingredient or component of the goods. There is a very serious risk that counterfeit foods may contain excessive or inappropriate levels of active 36

ingredients when compared to the relevant good approved for use in Australia. This occurred in a situation where a company in Australia allegedly imported a large quantity of a male impotence medication to Australia. This batch of goods was tested by the TGA and that testing revealed that the tablets were counterfeit and contained excessive quantities of an active ingredient that could have lead to serious adverse effects. Item 122 - Sections 42EA and 42EB New section 42EA A civil penalty provision, the new section 42EA, has also being inserted to provide an alternative civil sanction for persons engaging in the manufacture, supply, import or export of counterfeit therapeutic goods. The maximum penalty will be 5,000 penalty units for an individual, and 50,000 penalty units for a corporation. New section 42EB Section 42EB set out the circumstances under which a person who is the subject of proceedings for a breach of a civil penalty provision in relation to counterfeiting (section 42EA) may be relieved from liability. This relief however is not available to the manufacturer of the counterfeit goods. Items 123 and 124 - Subsections 42T(1)(penalty) and (2)(penalty) These items increase the existing maximum penalties for the fault-based offences relating to the manufacture or supply of therapeutic goods that are, or have been, the subject of actual or potential tampering, and for non compliance with certain notification requirements to inform relevant persons about actual or potential tampering, from 400 penalty units to 12 months imprisonment and/or 1,000 penalty units. The conduct being regulated in relation to tampering requires the person supplying or manufacturing or proposing to supply or manufacture the goods to have knowledge of actual or potential tampering, or to be reckless to that fact. The increase in penalty is to reflect the importance of this provision in the regulatory scheme in ensuring that the regulator is notified about all circumstances where therapeutic goods have been the subject of, or are subject to, actual or potential product tampering so that proper measures, including the removed of potentially dangerous products from the market, may be put in place. The supply of therapeutic goods that have been tampered with, or that could have been tampered with, could result in serious harm or injury to the public. The proposed penalty levels are consistent with similar breaches of regulatory requirements under the Act such as those relating to compliance with standards applicable to the goods under section 14 of the Act. Item 125 - Subsection 42V(6) This Item create the new tiered offences regime for the offence that currently exists under subsection 42V(6), in relation to a failure to comply with requirements imposed on a person by the Secretary where actual or potential product tampering has occurred or is suspected. The requirements relate to the recovery of products suspected of, or known to have been, subject to actual or potential tampering, and notification of this fact to the public. The maximum penalty for the existing fault-based offence will be increased from 240 penalty units to 12 months imprisonment and/or 1,000 penalty units. The new fault-based offence with aggravating circumstances will attract a higher penalty, where there is intention or knowledge associated with the offence. The new provision for a strict liability offence is 37

included where the aggravating circumstance is that the conduct is likely to result in harm or injury to a person. Item 126 - New sections 42VA and 42VB Section 42VA An alternative civil penalty provision has also being included into the sanctions regime, under proposed section 42VA, for a failure to comply with requirements imposed by the Secretary for the recovery of therapeutic goods because of, and/or notification about, actual or potential tampering of therapeutic goods. The maximum penalty for a breach of this provision will be 5,000 penalty units for an individual, or a maximum of 50,000 penalty units for a body corporate. The conduct in question relates to conduct associated with complying with requirements to recover therapeutic goods which have already entered the market but that are, or could be, subject to actual or potential product tampering. Compliance with recovery and notification requirements in relation to goods tampered with, or suspected of being tampered with, is critical for ensuring that unsafe or potentially unsafe therapeutic goods are not supplied to and used by the public. The full suite of alternative sanctions is therefore intended to apply to this particular conduct because non-compliance with any recovery notice or notification requirements could place public health and safety particularly at risk. New section 42VB Section 42EB sets out the circumstances under which a person who is the subject of proceedings for a breach of a civil penalty provision in relation to a failure to comply with the Secretary's requirements for recovery of therapeutic goods because of, or notification about, actual or potential product tampering (subsection 42V(1)) may be relieved from liability. Item 127 and 128 - Subsections 42W(1)(penalty) and (2)(penalty) These items increase the existing maximum penalty for the existing fault-based offences to 12 months imprisonment and/or 1,000 penalty units, for subsections 42W(1) and (2), in relation to the supply or export of goods that are subject to recovery requirements because of actual or potential product tampering. The increase in penalty is to reflect the importance of this provision in the regulatory scheme in relation to ensuring that products subject to tampering are appropriately removed from the market in order to properly protect public health and safety. The result of supplying therapeutic goods that have been, or could have been, tampered with, could lead to serious harm or injury to the public. The proposed penalty levels are consistent with similar breaches of regulatory requirements under the Act such as those relating to compliance with standards applicable to the goods under section 14 of the Act. Item 129 - New Chapter 5A - Enforcement Item 129 inserts a new chapter in the Act - Chapter 5A - that introduces a range of enforcement measures in relation to breaches of the Act including civil penalties, infringement notices and enforceable undertakings. Enforcement options: Criminal prosecutions vs seeking an order against a contravention of a civil penalty provision 38

A criminal offence conviction is considered to be the ultimate sanction for breaching the law. According to the Australian Law Reform Committee Report No 95 ("the ALRC Report No 95") - Principled Regulation at paragraph 2.9: "The main purpose of criminal law is traditionally considered to be deterrence and punishment. Central to the concept of criminality is the notation of individual culpability and the criminal intention for one's actions." Where the regulated conduct involves considerable harm or injury to the public and the requisite mental elements relating to the conduct can be established, the TGA will generally pursue criminal prosecutions through the Director of Public Prosecutions. This is particularly the case where the level of culpability of the person warrants criminal sanction. Conviction of a crime however carries with it a range of serious consequences beyond the immediate penalty, whether the conviction results in imprisonment or a pecuniary penalty, including ineligibility to hold public office or be a director, principal officer or auditor of a company, or to travel to certain countries, and disqualification from being accredited under various legislation such as under section 57 of the Employment Services Act 1994. Therefore, the TGA would generally elect to deal with breaches by way of a criminal prosecution where there is an element of culpability. Where culpability and criminality of the conduct are not apparent but there is a need to address breaches of the Act and deter future non-compliance, it would be appropriate for the TGA to opt for a civil penalty fine. CHAPTER 5A - ENFORCEMENT Part 5A-1 - Civil penalties Civil Penalties have become a well recognised means of enforcement under the various regulatory frameworks in Australia, as well as in other countries including the United States and New Zealand. As referred to in the document entitled "A Guide to Framing Commonwealth Offences, Civil Penalties and Enforcement Powers" issued by authority of the Minister for Justice and Customs, the focus of a civil penalty is generally the regulation of commercial activity, and is directed against corporate or white collar wrongdoing. Therefore, civil penalties are appropriate in regulating commercial activities involving the manufacture and supply of therapeutic products, particularly where the relevant activities are undertaken in the main by incorporated bodies, including subsidiaries of multinational companies engaged in commercial operations. The financial disincentive that a civil penalty regime provides to address and deter breaches of the Act is likely to be more effective than criminal sanctions in appropriate circumstances. A civil penalty regime is intended to strengthen the TGA's enforcement options to deter non- compliance with regulatory requirements designed to protect public health and safety. A civil penalty is an appropriate enforcement measure for breaches of the regulatory requirements under the Act where other sanctions may not be as effective or appropriate in the circumstances. Civil penalties have been proposed for activity or conduct that underpins requirements designed to ensure that therapeutic goods used by the community meet acceptable standards of safety, quality, and efficacy. These requirements include compliance with standards 39

applicable to the goods themselves, and compliance with standards in relation to the way these goods are manufactured. Civil penalty provisions are also proposed to apply to breaches of requirements relating to the inclusion of therapeutic goods in the Register, or compliance with conditions applying to exemptions from the need to include goods in the Register. A civil penalty regime will be appropriate to enable sponsors and manufacturers, such as those who supply essential products or who have a virtual monopoly over a therapeutic product, to be fined for breaches of the Act and the Regulations in lieu of having their manufacturing licences removed or their products cancelled from the Register. Division 1 - Obtaining an order for a civil penalty New section 42Y The proposed subsection 42Y(1) allows the Secretary of the Department of Health and Ageing to apply, on behalf of the Commonwealth, to the Federal Court for an order that a person contravening a civil penalty provision ("the wrongdoer") under the Act pays the Commonwealth a pecuniary penalty, within 6 years of the contravention. If the Federal Court is satisfied that the wrongdoer has contravened a civil penalty provision, the Court may order the wrongdoer to pay the Commonwealth the relevant penalty amount that the court determines is appropriate for each civil penalty contravention. However, the Court cannot order the wrongdoer to pay a penalty that is higher than the maximum amount specified under the relevant civil penalty provision (the proposed subsection 42Y(2)). The proposed subsection 42Y(3) lists the relevant matters that must be taken into account by the Court when assessing the appropriate level of penalty payable by the wrongdoer under subsection 42Y(2). These relevant matters include the following: (a) the nature and extent of the contravention; (b) the nature and extent of any loss or damage suffered as a result of the contravention; (c) the circumstances in which the contravention took place; and (d) whether the person has previously been found by the Court in proceedings under this Act to have engaged in any similar conduct. Although the contravention of a civil penalty provision results in the imposition of a pecuniary penalty by the Federal Court, and could relate to the same conduct regulated under an offence provision, proposed subsection 42Y(4) makes it clear that the Federal Court must apply the rules of evidence and procedure for civil matters when hearing and determining an application for an order under proposed section 42Y of the Act. The standard of proof for civil proceedings would apply in such proceedings, that is, on the balance of probabilities. Civil procedures such as pleadings, discovery, and interrogatories are also to apply. The proposed subsection 42Y(5) makes it clear that if conduct constitutes a contravention of 2 or more civil penalty provisions, proceedings may be instituted under the Act against a person in relation to the contravention of any one or more of those provisions. However, that person will not be liable to more than one pecuniary penalty in respect of the same conduct. New section 42YA The proposed section 42YA outlines what a civil penalty provision is under the Act. The definition under section 42YA is also referred to in subsection 3(1) of the Act. A provision of 40

the Act will be a civil penalty provision if the words "civil penalty" and one or more amounts in penalty units are set out at the foot of the relevant subsection or section. New section 42YB The proposed section 42YB outlines what a penalty unit is under the Act. The definition under section 42YB is also cross referenced in subsection 3(1) of the Act. Penalty unit in relation to a civil penalty will have the same meaning as given by section 4AA of the Crimes Act 1914, which currently provides that a `penalty unit means $110'. New section 42YC The proposed subsection 42YC(1) prohibits a person from: (a) aiding, abetting, counselling or procuring a contravention of a civil penalty provision; (b) inducing a contravention of a civil penalty provision; or (c) conspiring to contravene a civil penalty provision. The proposed subsection 42YC(2) provides that the Act applies to a person who contravenes subsection 42YC(1) in relation to a civil penalty provision as if the person had contravened the relevant civil penalty provision. New section 42YD Section 42YD makes it clear that the pecuniary penalty imposed by the Court for the contravention of a civil penalty provision is to be paid to the Commonwealth. The section also makes it clear that the payment of the pecuniary penalty is enforceable by the Commonwealth, as if it were a judgment of the Court (ie. as a debt owed to the Commonwealth). New section 42YE The proposed section 42YE applies if it appears to the Secretary that a person may have contravened a civil penalty provision (the wrongdoer). This section applies regardless of whether an application for a civil penalty order has been made under new section 42Y. Under section 42YE, where the Secretary, on reasonable grounds, suspects that a person (other than the wrongdoer) can give information relevant to an application for a civil penalty contravention, subsection 42YE(2) allows the Secretary to require that person to give all reasonable assistance in connection with the application. The request must be made in writing. However, subsection 42YE(3) provides that subsection 42YE(2) does not apply to the legal representative of the wrongdoer, being a legal representative who is qualified as a legal practitioner admitted to practice law. If the person required by the Secretary to provide assistance under subsection 42YE(2) fails or refuse to give assistance, the Secretary may apply under subsection 42YE(4) to the Federal Court for an order that the person comply with the requirement as specified in the order. It will be an offence to refuse or to fail to give assistance as required under subsection 42YE(2), punishable by a maximum penalty of 30 penalty units (subsection 42YE(5)). 41

Division 2 - Civil penalty proceedings and criminal proceedings New section 42YF Section 42YF provides protection against double jeopardy or multiple punishments for the same conduct. Section 42YF prohibits the Federal Court from making a penalty order against a person for a contravention of a civil penalty provision if the person has already been convicted of an offence in relation to conduct that is substantially the same as the conduct constituting the contravention of the civil penalty provision. New section 42YG Subsection 42YG(1) requires that the proceedings for a pecuniary penalty order against a person for the contravention of a civil penalty provision be stayed in specified circumstances. The civil penalty proceedings will be stayed if criminal proceedings are started or have already been started against the person for an offence, and the offence is constituted by conduct that is substantially the same as the conduct alleged to constitute the civil penalty contravention. Under subsection 42YG(2) the civil penalty proceeding will be stayed pending the results of the criminal offence proceeding and can be recommenced if the person is not convicted of the criminal offence. If the person is convicted of the criminal offence, the proceedings for the civil penalty contravention are dismissed (proposed subsection 42YG(2)). New section 42YH The proposed section will provide protection against double jeopardy or multiple punishments for the same conduct in certain circumstances. Section 42YH provides that criminal proceedings may not be commenced against a person for conduct that is substantially the same as the conduct constituting a contravention of a civil penalty provision if a pecuniary penalty order has already been made against the person in respect of that conduct. New section 42YI The proposed section 42YI makes it clear that evidence, in the form of either information given or documents produced, given by an individual in proceedings for a pecuniary penalty order is not admissible in criminal proceedings in circumstances where the conduct alleged to constitute the offence is substantially the same as the conduct that constitutes the contravention of a civil penalty provision. This restriction applies whether or not the order relating to the contravention of a civil penalty provision was made or not. This section does not apply to a criminal proceeding the subject of which is the falsity of the evidence given by the individual in the proceedings for the pecuniary penalty order. Part 5A-2 - Infringement Notices Infringement notices are proposed to be issued where the readily assessable elements of the breach can be identified. Infringement notices are therefore intended to apply only to conduct regulated under offences of strict liability and/or any no fault civil penalty provision. Infringement notices may be paid by a person in lieu of being prosecuted for the offence that person is alleged to have committed, or in lieu of being taken to court pursuant to an application for a penalty order. Infringement notices are intended to be issued only in relation to breaches under the Act that do not result in serious harm or injury to the public. For breaches where intention, recklessness and other mental elements are clearly present, the TGA will normally pursue a criminal prosecution. An infringement notice may be issued in relation to an alleged strict liability offence or contravention of a civil penalty provision 42

where the penalty would act as an adequate future deterrent without the need for a criminal prosecution or a civil penalty proceeding, taking into account the nature of the offence or the contravention. New sections 42YJ and 42YK implement the infringement notice scheme. New section 42YJ This section provides for regulations to be made to enable infringement notices to be issued in respect of offences under both the Act or any Regulations made under the Act. Under subsection 42YJ(2) the proposed infringement notice penalty for an individual committing an offence must not exceed 1/5th of the maximum penalty that could be imposed on an individual for that offence. The infringement notice penalty for a body corporate that has committed an offence must not exceed an amount equal to 1/5th of the maximum amount that can be imposed in relation to the body corporate. New section 42YK This section enables regulations to be made to provide for infringement notices to be issued in respect of breaches of civil penalty provisions. The regulations may provide for a person to pay a penalty in response to an infringement notice, as an alternative to being dealt with before a court pursuant to a civil penalty proceeding. Under subsection 42YK(2) the infringement notice penalty payable in respect of a breach of a particular civil penalty provision must not exceed 1/10th of the maximum penalty prescribed for that civil penalty provision. Each relevant civil penalty provision inserted by the Bill specifies the maximum level of penalty that can be imposed on an individual or a body corporate. Compliance with an infringement notice is not to be taken as an admission of any contravention of the Act. If a person complies with an infringement notice in relation to an offence, the person will not be prosecuted for the relevant offence or be taken to have been convicted of that offence. Similarly, if a person complies with a notice in relation to a contravention of a civil penalty, the person will not then be the subject of a proceeding in the Federal Court seeking orders in relation to the contravention of a civil penalty provision, and the person will not be taken to have contravened the civil penalty provision. Payment of infringement notices is not mandatory. However, if the person elects to pay an infringement notice, the person is no longer liable for prosecution nor will the person be the subject of a contravention order for a breach of a civil penalty provision under the Act. The details of the infringement regime will be provided in the Therapeutic Goods Regulations 1990. The Regulations will provide that each infringement notice must: (a) be uniquely identifiable (for example, each notice is to include an identification number); (b) name the person to whom it is to be issued (or otherwise enable the identity of the issuee to be ascertained); (c) identify the authorised officer by whom it is issued; (d) identify the alleged strict liability offence or civil penalty contravention (including the relevant offence/civil penalty provision) and the time, nature and place of its alleged commission; (e) identify the penalty to be paid and the maximum penalty if prosecuted or brought before the Federal Court; 43

(f) explain that the person issued with the notice may elect not to pay the relevant amount and to instead face prosecution or action before the Federal Court, and indicate that prosecution or action can be averted and liability discharged by making the prescribed payment within 28 days or within any further period permitted by the authorised person; (g) explain the right to seek withdrawal of the notice; (h) explain that payment by a person in accordance with an infringement notice, including payment by instalments, will not be taken to be an admission of liability for the alleged commission of the offence or contravention; and (i) explain that if a person pays an amount owing under an infringement notice within the required time and the notice is not withdrawn, all liability of the person for the offences or contravention specified in the infringement notice is discharged (including liability for any other notices issued for the same offence) and that proceedings cannot be taken against the person for the offence or contravention, and that the person is not regarded as having been convicted of the offence or contravention. The Regulations will also specify that an infringement notice can only be issued within 12 months of the commission of the alleged offence or civil penalty contravention. The Regulations will allow for procedures for the withdrawal of the notice. It is intended that the infringement notice provisions in the Regulations will give the person issued with a notice the opportunity to provide any facts or information that the person believes ought to be taken into account in relation to the alleged offence or civil penalty contravention, within a specified period after the service of the notice. Where the person disputes the notice by notifying the issuer of any facts or matters that the person believes ought to be taken into account in relation to the alleged offence or alleged contravention of a civil penalty provision, the TGA must decide whether to withdraw the notice, taking into consideration the information provided by the person. The person will then be informed of the decision as to whether the notice will be withdrawn, or otherwise. It should be noted that at no time would a person be compelled to pay a fine in response to the issue of an infringement notice - the person issued with such a notice may elect to pay, or may decline to pay. Where the person elects not to pay, then either charges may be laid against that person where the infringement notice is issued in relation to an offence provision, or civil penalty proceedings may be initiated against that person where the infringement notice is issued in relation to a breach of a civil penalty provision. Part 5A-3 - Enforceable Undertakings Court enforceable undertakings provide a further alternative means for addressing and remedying breaches of the Act or Regulations in lieu of taking legal or administrative action against a person such as the cancellation of a manufacturing licence or the cancellation of a therapeutic good from the Register. Enforceable undertakings, like infringement notices, are not intended to be used to "coerce" anyone, such as sponsors or manufacturers, to address or remedy breaches of the Act or the Regulations. As a regulator, where a breach of the Act calls for regulatory action, powers are provided under the Act and Regulations designed to enable the regulator to protect public health and safety. Enforceable undertakings represent an alternative option to the exercise of 44

regulatory powers for addressing breaches of regulatory requirements by those who are regulated, in a manner acceptable to the Therapeutic Goods Administration (TGA). The enforceable undertakings also allow some flexibility in the way these breaches are to be addressed or remedied by, for example, sponsors and manufacturers. However sponsors or manufacturers or any other person are not under any obligation to provide such undertakings and, if none is provided to the TGA, the TGA will still be required to take the necessary regulatory action available to it. The TGA has powers to address breaches of the legislation it administers. In some cases, the regulatory action available to the TGA may not be the optimal solution in relation to a person such as a sponsor or manufacturer for addressing the relevant identified breaches of the Act and the Regulations. Court enforceable undertakings enable the person in breach to suggest alternative solutions to redress and remedy breaches. Where an alternative suggestion offered by a person is accepted by the TGA, the proposed action or undertaking must be enforceable, in this case by a court of law, to justify the TGA not resorting to its usual powers. The TGA would not be inclined to accept undertakings from a person where to do so could negate liability in relation to an existing or future breach of the Act and the Regulations. Where breaches of regulatory requirements clearly establish the fault elements for an offence or where the breaches have resulted or will result in harm or injury to the public, the TGA may not agree to a court enforceable undertaking as an alternative to prosecution. There will also be a stipulated time period within which the undertaking is proposed to operate. The TGA will not have the power to compel a sponsor or manufacturer to give an enforceable undertaking, and also will not be obliged to accept an enforceable undertaking from a person. However, once an enforceable undertaking is entered into, compliance will be obligatory. If an undertaking is not honoured, then the TGA will seek an order from the court requiring the relevant company or person to comply with the undertaking (subsection 42YL(4)). The TGA intends to use the enforceable undertakings only when it believes that a resolution based on enforceable undertakings offers the best solution to ensure that no further breaches will occur or that the breach will be appropriately remedied. In deciding whether enforceable undertaking offer the best option, the TGA may take into account some of the following matters: (a) the nature of the breach or the alleged breach in terms of: (i) its impact on the quality, safety, efficacy, or performance of the products; (ii) the conduct of the person or the company in committing to the breach; (iii) the type of therapeutic goods that are the subject of the breach; and (iv) its impact or possible impact on public health; (b) the history of breaches of requirements under the Act and the Regulations by the person concerned, any previous convictions or contraventions connected to that person under the Act or Regulations; (c) the prospect of an effective and timely resolution of the matter; (d) the prospect that the party to the undertaking will implement the matter which is the subject of the undertaking. 45

Court enforceable undertakings are alternative enforcement options that are currently available to agencies such as the ACCC (section 87B of the Trade Practices Act 1974), Civil Aviation Safety Authority (section 30DK of the Civil Aviation Act 1988), ASIC (sections 93A and 93AA of the Australian Securities and Investments Commission Act 2001), COMCARE (Clause 16, Schedule 2 of the Occupational Health and Safety (Commonwealth Employment) Act 1991) and the Australian Communications Authority (sections 37-40 of the Spam Act 2003). New section 42YL The proposed subsection 42YL(1) allows the Secretary to accept a written undertaking given by a person in connection with a matter in relation to which the Secretary has a power or function under the Act or the Regulations. The proposed subsection 42YL(2) allows the person to withdraw or vary the undertaking at any time, but only with the consent of the Secretary. A party to the undertaking may seek to have the terms of the undertaking varied with the Secretary's consent. In seeking any variation, the party may provide information to the Secretary and reasons why a variation is being sought. The Secretary will then take into consideration the information provided and the reasons why a variation is being sought when determining whether to consent to the variation in the undertaking. The proposed subsection 42YL(3) provides that the Secretary must publish details of the undertaking, as in force from time to time, on the Internet. This provision is consistent with subsection 30DK(4) of the Civil Aviation Act 1988. ACCC and ASIC (refer to subsection 93A(6) of the Australian Securities and Investment Commission Act 2001) also make enforceable undertakings publicly available. Other examples of information that is publicly available in relation to regulatory action taken include information relating to a cancellation of a product from the Register, suspension or revocation of a manufacturing licence, criminal convictions, findings by a Court relating to the contravention of a civil penalty provision, and the recall of therapeutic goods that have been cancelled from the Register. As court enforceable undertakings are an alternative enforcement measure for breaches of regulatory requirements under the Act (where it is considered appropriate), it is appropriate that information about undertakings and the terms of the undertakings are made publicly available. Under subsection 42YL(4), where the person who gives the undertaking is considered by the Secretary to have breached any of the terms of the undertaking, the Secretary may apply to the Federal Court for specific orders. If the Federal Court is satisfied that the person has breached a term of the undertaking, the court may make any one or more, or all, of the following orders: (a) an order directing the person to comply with the terms of the undertaking; (b) an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach; (c) any order that the court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach; and (d) any order that the court considers appropriate. 46

Search warrant process encompassing both the investigation and securing of evidence in relation to a civil penalty contravention and/or the commission of an offence. The Bill introduces civil penalty provisions as an alternative sanction to criminal sanctions for a number of breaches under the Act. In most cases, the civil penalty provisions apply to conduct under the Act that also attract a parallel criminal offence. The Bill, when first introduced into the House of Representatives, included provisions that established a separate process for obtaining warrants to conduct investigations into breaches of civil penalty provisions and to secure evidence of such breaches. This process was the same as the process already in place under the Act for obtaining warrants to investigate criminal offences and to secure evidence of such offences. Following consultations with stakeholders it was suggested that a single warrants process to investigate, or obtain evidence of, any breach of the Act or the Regulations may be more effective and efficient. Accordingly, government amendments were made in the House and Items 131 to 140 of the original Bill have been amended to establish a single process for applying to a magistrate for a warrant to investigate or secure evidence in relation to any breach of the Act or the Regulations, whether or not the breach attracts either a civil penalty provision or a criminal offence, or both. This will, for example, allow material obtained under a search or seizure warrant to be used as evidence either in a criminal or civil proceeding, where the prohibited conduct or action in question is covered by an offence provision and a civil penalty provision. The single process will be the same process already in place under the Act for obtaining a search warrant before a magistrate Item 130 This Item inserts a new definition of evidential material as a consequence of the inclusion of a civil penalty regime in the Act. The current definition of evidential material only relates to evidence in respect of offences against the Act. Evidential material now includes evidence in respect of a contravention of a civil penalty provision for the purposes of Part 6-2 of the Act (Entry, searches and warrants). Evidential material in respect of a contravention of a civil penalty provision means: (a) any thing with respect to which the civil penalty provision has been contravened or is suspected on reasonable grounds, of having been contravened; or (b) any thing as to which there are reasonable grounds for suspecting that it will afford evidence as to the contravention of the civil penalty provision; or (c) any thing as to which there are reasonable grounds for suspecting that it is intended to be used for the purpose of contravening a civil penalty provision. Item 131 Item 131 amends subsection 47(1) as a consequence of the inclusion of a civil penalty regime in the Act. Item 131 amends subsection 47(1) by inserting the words "in respect of an offence against the Act, in respect of a contravention of a civil penalty provision or in respect of both", after "evidential material". The proposed amendment enables the powers under section 47 and subsection 48(1) of the Act to be exercised by an authorised person for the purposes of obtaining evidential material to establish either the commission of an offence, or a breach of a civil penalty provision, or both. 47

Subject to the limitations provided under subsections 47(2) and (3) of the Act, if an authorised person has reasonable grounds for suspecting that there may be evidential material in respect of an offence or a civil penalty contravention, or in respect of both, on any premises, the authorised person may: (a) enter the premises; (b) search and inspect premises; (c) seize goods; and (d) exercise other powers under subsection 48(1) of the Act. Item 131 also amends the heading to section 47 by adding at the end "and civil penalty provisions". Item 132 Item 132 amends paragraph 47(4)(a) by inserting the words "in respect of an offence against the Act, in respect of a contravention of a civil penalty provision or in respect of both", after "evidential material". The effect of this amendment is to remove the restriction placed on an authorised person to exercise the powers under subsection 47 (4) only for the purposes of securing evidence of another criminal offence, so that an authorised person may exercise the powers under that subsection for the purposes of seizing evidence to establish the commission of any other offence or any other breach of a civil penalty provision, or both. Item 133 Item 133 amends paragraph 47(4)(b) to extend the operation of subsection 47(4) of the Act to take into account the civil penalty provisions inserted by the Bill. The effect of the proposed amendment is to enable any other evidential material (of a kind not covered under a warrant being executed at those premises) that may be uncovered during the course of searching premises to be seized if the authorised person believes on reasonable grounds that the material or thing may be evidence of another breach of the Act, and that seizure is necessary to prevent the material or thing from being lost, concealed or destroyed or used to commit, continue or repeat either an offence, or a breach of a civil penalty provision. Item 136 This Item amends section 48C (which relates to the operation of electronic equipment at premises being searched to locate and seize evidential material) to make it clear that this section applies to evidential material in respect of either an offence against the Act or a contravention of a civil penalty provision, or both. Item 137 This Item makes a consequential amendment to paragraph 48E(2)(b) to make a reference to the new civil penalty provisions inserted by the Bill. Subsection 48E(1) requires an authorised person who, under a warrant obtained in relation to premises, seizes specified things that can be either copied or that contain information that can be readily copied, to provide a copy of the things or information as soon as possible after their seizure, if requested to do so by the occupier of the premises or by another person representing the occupier and who is present when the warrant was executed. The amendment to paragraph 48E(2)(b) is to the effect that the requirement under subsection 48E(1) to provide a copy does not apply if the possession by the occupier of the specified kinds of evidence in itself could constitute a contravention of any civil penalty provision. 48

Item 138 The amendment proposed under new Item 138 takes into account the single warrants process and the exercise of the same powers that will be permitted to secure evidence to establish either the commission of an offence or a breach of a civil penalty provision, or both, and will allow a magistrate to permit the evidence obtained under the original warrant to be retained for the purposes of investigation whether any criminal offence has been committed, or any breach of a civil penalty provision has occurred, or for use in criminal or civil proceedings or both, beyond the initial period permitted by the original warrant. Item 139 Item 139 amends subsection 50(2) of the Act to allow the magistrate to issue a warrant, if the magistrate is satisfied by information on oath that there are reasonable grounds for suspecting that there is, or there may be within the next 72 hours, in or on the premises, evidential material in respect of an offence against the Act, in respect of a contravention of a civil penalty, or in respect of both. The warrant issued by the magistrate could therefore allow an authorised person to obtain evidence in respect of any offence under the Act, in respect of any contravention of a civil penalty provision or in respect of both. This is necessary to take into account, amongst other things, that a number of breaches of the Act attract both an offence and a civil penalty. The headings to sections 50 and 51 of the Act are also proposed to be altered by inserting "and civil penalty provision after "Offence" to reflect that warrants that may be obtained under those sections may be for the investigation of, and securing of evidence in relation to, the commission of any offence, or any contravention of a civil penalty provision, or both. Item 141 This Item inserts new section 53A which allows a jury to convict a person for a lesser offence (other than a strict liability offence) as an alternative to the aggravated offence relating to the same conduct. Section 53A provides that if a jury acquits a person of an offence that has an aggravating element (that is, the conduct that results in, or will or would result in, harm or injury to any person), but is satisfied beyond reasonable doubt of facts that prove that the person is guilty of a lesser offence (that specifies no aggravating element) the jury may convict the person of the lesser offence regulating the same conduct. The alternative verdict only applies to offences regulating the same conduct as listed in the table provided in the new section 53A. The offence provisions listed under column 2 of the table are those specifying aggravating elements that attract in most cases, a maximum penalty of 4,000 penalty units or 5 years imprisonment or both. The offence provisions listed under column 3 of the table (the lesser offence for the same conduct) do not specify an aggravating element and attract a lower penalty compared to those offences listed under column 2. The use of alternative verdicts has been incorporated into other Commonwealth legislation, such as the Criminal Code Act 1995 (section 400.14), the Crimes (Torture) Act 1988 (section 10) and the Airports Act 1996 (section 131E). Item 142 This item also makes a consequential amendment to subsection 54(3) to extend the power of a court to make orders relating to the forfeiture of therapeutic goods to the Commonwealth to 49

circumstances where that court orders a person to pay a pecuniary penalty for the contravention of a civil penalty under the Act in relation to those goods. Item 143 This Item increases the maximum penalty for the offence under section 54AB relating to damaging, destroying, altering, concealing or falsifying a document that is created, retained or issued for the purposes of the Act, from imprisonment for 5 years or 2,000 penalty units or both, to 7 years imprisonment or 2,000 penalty units or both. The increase in penalty recognises the increasing importance of proper documentation in establishing compliance with the Act, and the reliance by the TGA on information provided to it by sponsors or manufacturers to establish compliance with regulatory requirements designed to protect public health and safety. Because of the inclusion of an alternative civil penalty in relation to the same conduct regulated under section 54AB (see Item 144), a note is also provided stating that the existing heading for section 54AB is replaced with the heading " Criminal offences for damaging etc documents". Item 144 This Item inserts the proposed section 54AC which is a new civil penalty provision which prohibits damaging, destroying, altering, concealing or falsifying a document created, retained, or issued for the purposes of the Act or for purposes that include the purposes of the Act. However, to establish the contravention, an additional requirement must be established to the effect that the damage, destruction, alteration, concealment, or falsification is likely to interfere with the proper administration of the Act or the Regulations (refer to proposed paragraph 54AC(c)). Item 145 This Item inserts new sections 54B and 54C which have the effect of extending the liability of a body corporate to an executive officer of a body corporate, where the body corporate commits an offence or contravenes a civil penalty provision. New section 54B New section 54B provides that, in certain circumstances, an executive officer of a body corporate commits an offence or contravenes a civil penalty provision if the body corporate commits an offence against the Act or contravenes a civil penalty provision. An executive officer of a body corporate is a person who is concerned in, or takes part in, the management of the business. The meaning of executive officer is not limited to a director of the company. Under subsection 54B(1), the executive officer of a body corporate commits an offence under the Act or Regulations if the following circumstances are established: 50

(a) the body corporate commits an offence against the Act or Regulations; and (b) the executive officer knew that the offence would be committed; and (c) the executive officer was in a position to influence the conduct of the body in relation to the commission of an offence; and (d) the executive officer failed to take all reasonable steps to prevent the commission of the offence. The maximum penalty for the offence is the maximum penalty that a court could impose in respect of an individual for the relevant offence committed by the body corporate. The executive officer of a body corporate contravenes a civil penalty provision if the following circumstances are established: (a) the body corporate is found by a court to have contravened a civil penalty provision; (b) the executive officer knew that the contravention would occur; (c) the executive officer was in a position to influence the conduct of the body in relation to the contravention; and (d) the executive officer failed to take all reasonable steps to prevent the contravention. The maximum civil penalty for the contravention of subsection 54B(3) is the maximum civil penalty that a court could impose in respect of an individual for the civil penalty provision contravened by the body corporate. For example, if a body corporate is found to have contravened new 54AC (civil penalty for damaging etc documents), the maximum civil penalty that could be imposed by a court upon the executive officer found to have contravened section 54AC because of the operation of the new section 54B is 5,000 penalty units. Section 54B is intended to apply to executive officers, such as managing directors or Chief Executive Officers, who are directly involved in or participate in the management of a company, and who should be made accountable for the actions of their company where such officers are in a position to influence their company and are aware of breaches by the company of the Act or Regulations but fail to take reasonable action to prevent the breaches. New section 54C In determining whether an executive officer of a body corporate failed to take reasonable steps to prevent the commission of an offence, or the contravention of a civil penalty provisions, the court is required to have regard to certain matters set out under section 54C. These are: (a) what action the officer took towards ensuring that the body corporate's employees, agents and contractors have a reasonable knowledge and understanding of the requirements to comply with the Act and the Regulations, in so far as those requirements affect the employees, agent or contractors concerned; and (b) what action (if any) the officer took when he or she became aware that the body corporate was committing an offence against, or otherwise contravening the requirements under, the Act and the regulations. 51

Item 146 This Item makes consequential amendments to extend the application of existing subsections 55(1), (2), (3) and (4), which currently apply to proceedings for an offence, to proceedings for a contravention of a civil penalty provision. The current section 55 specifies circumstances where it is necessary in proceedings for offences against the Act to establish the state of mind of a body corporate or an employer in relation to a particular conduct. Item 147 This Item amends the existing paragraph 56A(1)(a) to include a reference to section 18A of the Act. This amendment allows the Secretary to issue a certificate that an exemption under section 18A of the Act applies in relation to particular therapeutic goods. This certificate can be used as prima facie evidence of the matters specified in the certificate issued by the Secretary in court proceedings brought under the Act. Item 148 This Item amends the existing subsection 56A(3) to extend its application to proceedings relating to the contravention of a civil penalty. Subsection 56A(3) will be amended to the effect that in proceedings relating to the contravention of a civil penalty provision, a certificate issued by the Secretary under subsection 56A(1) is prima facie evidence of the matters specified in the certificate issued by the Secretary. The current subsection 56A(3) applies only to offence proceedings against the Act. Item 149 This Item repeals the existing subsection 56A(4) and substitutes a new subsection 56A(4) as a consequence of the inclusion of new sections 14A and 41MAA which insert civil penalty provisions. The application of subsection 56A(4) will be extended to include proceedings for the contravention of section 14A or 41MAA (civil penalty provisions). This means that a certificate issued by the Secretary to the effect that (a) the Secretary did not consent to the importation, supply or exportation that is the subject of the proceedings, or (b) the Secretary consented to that importation, supply or exportation subject to conditions specified in the certificate can be used as a prima facie evidence of the matters specified in the certificate and can be used in the proceedings for the contravention of the civil penalty provisions in sections 14A or 41MAA. Item 150 This Item makes a consequential amendment to subsection 56A(5) to take into account the new civil penalty provisions inserted by the Bill. The amendment provides that in proceedings for a contravention of a civil penalty provision, a document purporting to be a certificate given under section 56A, will be taken to be such a certificate and to be duly given, unless the contrary is proved. Items 151 and 152 These Items amend paragraphs 60(1)(b) and (k) of the definition of "initial decision" in subsection 60(1) to insert references to the new sections 14A and 41MAA respectively. Sections 14A and 41MAA, which have replaced the current section 14 of the Act, are new provisions that confer a power to make decisions which, following this amendment, will 52

become "initial decisions" that may be the subject of an internal review, and subsequently review by the Administrative Appeals Tribunal. These amendments relate to the Secretary's power to refuse to grant a consent under section 14A of the Act, and imposing conditions on the grant of a consent for the purposes of section 41MAA. Item 153 This item corrects a technical omission by including a reference to section 31AA in subsection 61(3A). This will allow the release of information to designated authorities regarding compliance with conditions imposed under section 18A of the Act to monitor the supply and handling of therapeutic goods that are exempted from the registration or listing requirements under Part 3-2 of the Act and are intended to be used in the case of a national emergency, such as to counter bioterrorism. Item 154 This Item inserts new paragraph 61(4)(b) which sets out that the Secretary may release specified therapeutic goods information to the head of an international organisation that has a function relating to therapeutic goods, health or law enforcement. Item 155 This Item inserts new paragraphs 61(4A)(g) to (i). These provisions will allow the Secretary to release additional information relating to therapeutic goods to the head of an authority of the Commonwealth, State or Territory that has functions relating to therapeutic goods, health and law enforcement, and to the head of a national regulatory authority of another country or international organisation that has a national responsibility relating to therapeutic goods, health or law enforcement. This additional information relates to information about an offence committed or alleged to have been committed against the Act, a contravention or an alleged contravention of a civil penalty provision, or a breach of a requirement of the Act or the regulations. Item 156 This Item inserts new subsection 61(4B). Section 61(4B) makes it clear that the power of the Secretary to release therapeutic goods information under paragraphs 61(4A)(g) -(i) will not be taken as being authorised by law for the purposes of paragraph 1(d) of Information Privacy Principle 11 in section 14 of the Privacy Act 1988. This item thus creates a safeguard to ensure that personal information that comes into, or is in, the possession of the TGA in connection with the performance of its functions remains protected under the Information Privacy Principles of the Privacy Act 1988. Item 157 This Item inserts new subsections 61(5A) and (5B). Subsection 61(5A) extends the circumstances in which information about therapeutic goods can be released to the public by the Secretary. Subsection 61(5A) allows the Secretary to release to the public information about any decision or action taken under the Act or the Regulations in relation to therapeutic goods. Currently, the Secretary can release to the public therapeutic goods information, the release of which is necessary to ensure the safe use of particular therapeutic goods, or information relating to reasons for the withdrawal of therapeutic goods from supply in Australia. By allowing the Secretary to release information about decisions or actions taken under the Act or the Regulations the public can be better 53

informed in relation to the exercise of powers by the Secretary or the Minister or a person conferred powers to make decisions or take actions under the Act or Regulations. Subsection 61(5B) makes it clear that the power of the Secretary to release to the public of therapeutic goods information under subsection 61(5A) does not extend to the release of personal information, by adopting the same measure referred to in Item 156. Therapeutic Goods Amendment (Medical Devices) Act 2002 Item 158 This Item amends Item 12 of Schedule 2 of the Therapeutic Goods Amendment (Medical Devices) Act 2002 as a consequence of the repeal of subsection 20(2) of the Act by Item 15 of the Bill. The current Item 12 of Schedule 2 of the Therapeutic Goods Amendment (Medical Devices) Act 2002 is intended to replace existing paragraphs 20(2)(a) and (b) to the effect that it removes the reference to therapeutic devices under subsection 20(2). The requirements relating to the setting out of the registration number and the listing number of the goods on the label of the goods prior to their supply in Australia are now provided for under the new subsections 19D(3) and (4). Therefore the amendment intended for subsection 20(2) is now proposed to apply to the new subsections 19D(3) and (4). 54

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