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2002-2003
THE PARLIAMENT OF THE
COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
THERAPEUTIC GOODS AMENDMENT BILL (NO. 2)
2002
SUPPLEMENTARY EXPLANATORY
MEMORANDUM
Amendments and New Clauses to be Moved on Behalf of
the Government
(Circulated by authority of the Hon Trish Worth
MP,
Parliamentary Secretary to Minister for Health and Ageing)
THERAPEUTIC GOODS AMENDMENT BILL (No. 2) 2002 – AMENDMENTS AND NEW
CLAUSES
OUTLINE
The purpose of these amendments to the
Therapeutic Goods Act 1989 (the Act) is to tighten the existing
requirements placed on manufacturers and sponsors of therapeutic goods to
further ensure the quality, safety and efficacy of therapeutic goods that are
supplied in Australia or exported from Australia. The need for these amendments
arises from the recent failure of the manufacturer, Pan Pharmaceuticals Ltd, to
meet the requirements of good manufacturing practice, and the difficulties
encountered in quickly identifying affected therapeutic goods for the purposes
of recall.
That case has highlighted the need to more clearly define the
responsibilities and obligations of both sponsors and manufacturers of
therapeutic goods, and the need for such persons to be held more accountable for
their statutory responsibilities and obligations. The offences and penalties
require strengthening to provide a more adequate deterrent to breaches of
standards and other statutory requirements designed to maintain the safety and
quality of therapeutic goods. However, penalty levels are higher than for
similar offences in the Criminal Code, such as falsifying documents, because of
the potential to expose the general public to an unacceptable level of risk.
These amendments will:
• Increase maximum penalties for a
range of existing offences under the Act including where there has been a
failure to comply with standards, false statements made in applications for
entry of goods on the Australian Register of Therapeutic Goods (the Register),
breach of a condition of a manufacturing licence (including failure to comply
with the manufacturing principles), false statements made in a conformity
assessment declaration and the counterfeiting of therapeutic
goods;
• Create new offences for falsification of any document that
has been created, retained or issued for the purposes of the Act and for
supplying goods originating from a manufacturer or manufacturing site that has
not been notified to the Secretary;
• Expand the compulsory public
notification and recall provisions which may be used where there is a problem
with a product or its manufacture;
• Insert a “fit and proper
person” test into the provisions for granting a manufacturing licence or
conformity assessment certificate and suspending or revoking a manufacturing
licence or conformity assessment certificate;
• Insert new
statutory conditions of licence to ensure compliance with the manufacturing
principles and reporting of adverse effects known to a
manufacturer;
• Require sponsors of therapeutic goods to maintain
records of all manufacturers involved in the manufacture of each batch of
therapeutic goods and have them available for inspection at any time or risk
cancellation of the goods from the Register, as well as requiring them to notify
the Secretary of any change of manufacturer;
• Provide for better
identification of therapeutic goods in the event of a recall or where a sponsor
applies for re-entry of previously cancelled goods on to the
Register;
• Improve adverse event reporting for listed
goods.
The amendments have no significant financial impact.
Clause 1: Commencement
Clause 1 replaces items in the
table containing commencement information to provide for division of Schedule 1
into Parts and commencement of new Part 3 on day of Royal
Assent.
Clauses 2 and 3: New Part headings
Clauses 2 and 3
insert Part headings into Schedule 1 for the existing amendments to the
definition of therapeutic goods and to the advertising provisions in the
Act.
Clause 4: Schedule 1, Part 3
Clause 4 inserts into
Schedule 1 a new Part 3 dealing with other amendments to the Act.
Items 20 and 21: insert into subsection 3(1) in the definition of
‘authorised person’ a reference to ‘a Customs officer
exercising powers in a Customs Place’ and define those
terms.
Item 22: amends the description of what constitutes
unacceptable presentation of therapeutic goods in subsection 3(5) to also
include the presentation of goods capable of being misleading or confusing at to
their identification. Regulations can be made under paragraph 3(5)(e) to the
effect that presentation is unacceptable if the name applied to the goods is not
sufficiently unique to allow identification for the purposes of
recall.
Items 23, 24, 25, 27 and 28: increase the maximum penalty
for a failure to comply with standards, unapproved supply and false statements
in applications for entry of goods on the Register, to imprisonment for 12
months or 1,000 penalty units, or both.
Given the recent experience with
the suspension of Pan Pharmaceuticals Ltd’s manufacturing licence and, as
a consequence the necessity to recall large numbers of therapeutic goods, it has
become clear that the current levels of penalties provided under the Act are an
inadequate deterrent to suppliers of therapeutic goods placing commercial
interests over and above public health and safety. Many goods are supplied at
high volume, high profit margins making current penalties for breaches of
regulatory provisions insignificant in a commercial sense. The supply of unsafe
or poor quality therapeutic goods represents a very serious risk to public
health and there is a need for strong deterrents against illegal, and
potentially dangerous, supply of these goods. For this reason, a message needs
to be sent to the industry that an unacceptable level of risk to public health
will not be tolerated. Also for this reason, a level of penalty commensurate
with the dire consequences to consumers of a failure to comply with a range of
safety issues must be included in the legislation.
As these are
regulatory style offences they need to be dealt with in a timely fashion. This
is why the period of imprisonment has been limited to a maximum of 12 months to
enable the offences to be dealt with in a summary jurisdiction. For lower level
breaches of offences of this kind it is also appropriate that a case not be
required to go to trial.
Item 26: inserts a new offence into
section 20 to cover situations where a sponsor changes the manufacturer of goods
on the Register, or the manufacturing site of those goods, without notifying the
Secretary of that change. Such conduct not only causes difficulties for tracing
the goods in the event of a recall but also increases the level of risk to the
public that the goods may not be manufactured in accordance with appropriate
standards. The maximum penalty for this new offence is to be 12 months
imprisonment or 1,000 penalty units, or both. This level of penalty is
necessary for the same reasons given in respect of items 23, 24, 25, 27 and 28
described above.
Items 29 and 30: insert into the registration
and listing provisions of the Act (sections 25 and 26) a requirement that
applicants nominate all manufacturers that will be used in the manufacture of
the therapeutic goods that are the subject of the application.
Item
31: provides that where a medicine has been previously cancelled from the
Register it cannot be the subject of an automatic listing application under
section 26A of the Act. Applications for listing of such goods must be dealt
with under section 26 of the Act.
Item 32: inserts new statutory
conditions of registration or listing under subsection 28(5) of the Act. These
new conditions require a sponsor of therapeutic goods (i) to keep a record of
all the manufacturers involved in the manufacture of each batch of goods
supplied. These records are to be kept at least until the end of 12 months
after the expiry date for the goods and are to be made available for inspection
by an authorised person at any time; (ii) to notify the Secretary of any change
of manufacturer or manufacturing site; and (iii) to comply with any other
reporting requirements prescribed in the regulations.
Items 33 to 36:
extend the requirement under sections 29A and 29B to notify adverse effects
of therapeutic goods to listed goods and add a requirement to provide
information to the Secretary that indicates that the quality, safety or efficacy
of the goods is no longer acceptable.
Item 37: inserts an
additional ground for immediate cancellation of a registration or listing of
therapeutic goods where a sponsor fails to provide records containing details of
manufacturers involved in the manufacture of each batch of goods supplied, as
required under the new statutory condition inserted into subsection 28(5),
within the specified time.
Item 38: removes a breach of the new
condition under subsection 28(5) relating to provision of details of
manufacturers involved in the manufacture of each batch of goods supplied from
the grounds for cancellation of a registration or listing after notice to the
sponsor. A breach of this condition is to be a ground for immediate
cancellation, as set out in item 37.
Items 39, 40 and 41: repeal
existing public notification and recovery provisions which are in sections 30,
30A and 30B as these are to be replaced by more comprehensive provisions, new
sections 30EA to 30ED. Requirements already imposed under these provisions are
not affected.
Item 42: Inserts new sections 30EA to 30ED into
Part 3-2 of the Act.
Section 30EA provides in subsection (1)
that the requirements set out in subsection (2) may be imposed on various
specified persons where therapeutic goods (including in some cases those to
which exemptions apply) have been supplied which do not comply with standards,
where manufacturing principles have not been observed or manufacture has been
carried out by a manufacturer who did not hold a current licence, where the
goods are not listed or registered nor the subject of an exemption from entry on
the Register, where the goods are counterfeit and where goods have been
cancelled from the Register.
Subsection 30EA(2) provides that the
requirements are recovery of distributed therapeutic goods (except those which
have been administered to or applied in the treatment of a patient) and public
notification of identified circumstances, or of specified information, in a
specified manner and period. One or more requirements may be imposed. Recovery
may be limited to particular batches that are affected by the identified
circumstances (subsection (3)).
Section 30EB provides that a
notice setting out any requirements under section 30EA is to be published in the
Gazette.
Section 30EC creates an offence for failure to comply
with the requirements imposed under section 30EA.
Section 30ED
provides that the Secretary may still cancel the goods from the Register
despite the imposition of a requirement under section 30EA.
Items 43
to 45: increase the maximum penalty for manufacture without a licence and
breach of condition of a licence under section 35 of the Act to imprisonment for
12 months or 1,000 penalty units, or both. The supply of therapeutic goods that
have not been produced in licensed premises or in accordance with the
manufacturing principles or other conditions of licence significantly increases
the risk that public health could be seriously jeopardised. As for the other
penalty increases provided in these amendments, there is a need for a strong
deterrent against illegal supply in these circumstances because of the
significant threat to public health and safety.
Items 46 to 53:
provide for a new ‘fit and proper person’ test to be inserted in
section 38 of the Act where the grant of a manufacturing licence is under
consideration.
In addition to the existing requirements that the
Secretary be satisfied an applicant for a manufacturing licence is in a position
to comply with the manufacturing principles and has satisfactory manufacturing
premises, the Secretary should also be satisfied that the applicant is a fit and
proper person to hold a licence. Further, the Secretary should be satisfied
that all the persons who participate in or are likely to participate in managing
the affairs of an applicant for a manufacturing licence or otherwise have
effective control over the applicant are also fit and proper
persons.
New subsection 38(1A) sets out matters which the
Secretary must have regard to in considering whether the applicant for a licence
or persons of influence are fit and proper persons. The Secretary must consider
not only the business record of the applicant or person in relation to the
particular business which is the subject of the application, but also the
business record of any other business controlled by the applicant or person, and
the business record of any other business or person who controls the applicant
or person. Relevant matters include any previous suspension or revocation of a
manufacturing licence, any conviction for an offence against a law of the
Commonwealth or a State or Territory, and any previous failure to comply with a
condition of a manufacturing licence. These matters are not the only matters to
which the Secretary may have regard in considering whether the applicant or
person is a fit and proper person.
Items 54 to 60: amend section
40 of the Act to provide for the insertion of two new statutory conditions of
licence and, at the same time, saving existing conditions of licence and the
ability of the Secretary to impose any other conditions the Secretary thinks
appropriate. Authorised persons are also to be able to take photographs of
manufacturing premises, goods and processes without first getting the agreement
of the licence holder (item 58).
The first statutory condition set out in
item 56 requires the licence holder to ensure that the goods manufactured
conform to any applicable standard and that manufacturing principles are
observed in the manufacture of the goods (paragraph 40(4)(a) of the Act). The
second, set out in items 57 and 59, requires the licence holder to provide any
information the holder becomes aware of relating to adverse effects (described
in subsection 40(5)) of the goods to the Secretary (paragraph 40(4)(ab)). These
new statutory conditions apply to existing licences as well as those granted
after commencement of this amendment (item 60).
Items 61 to 64:
amend section 41 of the Act to expand the circumstances for suspending or
revoking a manufacturing licence where the holder of a licence or any of the
persons who participate in managing the affairs of, or otherwise have effective
control over, the licence holder cease to be considered fit and proper persons
to hold a licence. The circumstances that are to be considered in relation to
‘fit and proper’ for the purposes of the suspension or revocation
are similar to those provided under section 38 in respect of the granting of a
licence.
Item 65: provides for a new ‘fit and proper
person’ test to be inserted in section 41EC of the Act where the issue of
a conformity assessment certificate is under consideration.
In addition
to the existing requirements that the Secretary must consider in deciding
whether to issue the certificate, the Secretary should also consider whether the
applicant is a fit and proper person to hold a certificate. The Secretary
should also consider whether all the persons who participate in or are likely to
participate in managing the affairs of an applicant for a conformity assessment
certificate, or otherwise have effective control over the applicant, are also
fit and proper persons.
New subsection 41EC(4) sets out matters
which the Secretary must have regard to in considering whether the applicant for
a conformity assessment certificate or persons of influence are fit and proper
persons. The Secretary must consider not only the business record of the
applicant or person in relation to the particular business which is the subject
of the application, but also the business record of any other business
controlled by the applicant or person, and the business record of any other
business or person who controls the applicant or person. Relevant matters
include any previous suspension or revocation of a conformity assessment
certificate, any conviction for an offence against a law of the Commonwealth or
a State or Territory, and any previous failure to comply with a condition of a
certificate. These matters are not the only matters to which the Secretary may
have regard in considering whether the applicant or person is a fit and proper
person.
Items 66 and 67: amend section 41ET of the Act to expand
the circumstances for suspending or revoking a conformity assessment certificate
where the holder of a certificate or any of the persons who participate in
managing the affairs of, or otherwise have effective control over, the
certificate holder cease to be considered fit and proper persons to hold a
certificate. The circumstances that are to be considered in relation to
‘fit and proper’ for the purposes of the suspension or revocation
are similar to those provided under section 41EC in respect of issuing a
certificate.
Items 68 to 77: increase the maximum penalty in
respect of offences for false statements in applications for inclusion of
medical devices on the Register (s41FE), non-compliance with the essential
principles (s41MA), failure to apply conformity assessment procedures (s41ME and
41MF), false statements in conformity assessment declarations (s41MH), and
unapproved supply of medical devices (s41MI) to imprisonment for 12 months or
1,000 penalty units, or both. The justification for the level of penalty for
these offences relating to medical devices is the same as for similar offences
relating to therapeutic goods dealt with above. The emphasis is on public
health and safety and the necessity to avoid serious harm or death to large
sections of the community.
Item 78: increases the maximum penalty
for counterfeiting of therapeutic goods (s42E) to imprisonment for 5 years or
2,000 penalty units, or both. Dishonesty offences such as counterfeiting and
deliberate falsification of records (see new section 54AB below) warrant even
higher penalties than other regulatory style offences because of the intentional
disregard of the risk to public health and safety and the malicious nature of
such actions. Hence the offences for counterfeiting and falsification of
records have been given high pecuniary penalties and are to be treated as
indictable offences.
Item 79: corrects a minor drafting error in
subsection 54AA(1).
Item 80: inserts a new offence provision,
section 54AB, where a person falsifies any document or otherwise damages,
destroys, alters or conceals any document that has been created, retained or
issued for the purposes of the Act, or for purposes that would include the Act.
The maximum penalty for this offence is imprisonment for 5 years or 2,000
penalty units, or both.