Consumer protection essay I wrote a few years back by Nick Founder

Consumer Protection: Regulation and Compliance Essay

Words: 6998

Critically analyse the schemes for regulating alternative/complementary medicines and prescription medicines in Australia and evaluate their effectiveness in protecting the interests of consumers, drawing on the literature on regulatory theory and consumer protection principles and considering applicable primary and secondary legislation and other legal instruments.

1. The Therapeutic Goods Act 1989 (Cth) (“TGA”) and the Therapeutic Goods Regulations 1990 (“Regulations”) regulate all medicines (‘therapeutic goods”) in Australia (i.e. relevantly, both prescription and alternative/complementary medicines in Australia). The objects of the TGA, pursuant to section 4 are to “provide for the establishment and maintenance of a national system of controls relating to the quality, safety, efficacy and timely availability of therapeutic goods that are:
​(i)​used in Australia, whether produced in Australia or elsewhere; or
​(ii)​exported from Australia; and
to provide a framework for the States and Territories to adopt a uniform approach to control the availability and accessibility, and ensure the safe handling, of poisons in Australia.”
2. In this essay I will discuss the regulation of both alternative/complementary and prescription medicines with a strong focus on alternative/complementary medicines. The TGA uses the term “complementary medicine” to refer to complementary and alternative medicines which are synonymous. Accordingly, I will use the same term used by the TGA in this essay. Some regulation applies uniformly to complementary medicines and prescription medicines. When this is the case I will refer to regulation of therapeutic goods and this term is used synonymously with the term therapeutic product. When there is discrete and distinct regulation I will refer to either prescription medicine or complementary medicine and where appropriate “conventional medicine” to refer to prescription and over the counter pharmacy medicines.
3. Therapeutic goods are required to be registered or in the case of most complementary medicines, listed (section 23). The system of registration recognises the fact that prescription medicines and some other therapeutic goods are high risk products and consumers need to be protected through regulation via the registration system. At State level such medicines are generally referred to as “poisons” under applicable state legislation. A Complementary Medicines Evaluation Committee evaluates and reports on the registration or listing of complementary medicines. There are some exceptions from listing for complementary medicines. Unless there is an exemption, the manufacture of medicines requires a licence (section 35). There are also labelling requirements under the TGA requiring the inclusion of information such as the names of all active ingredients, dosage form and directions for use.
4. The Therapeutic Goods Administration (“Administration”) administers the TGA and there are other organisations that assist such as the Complementary Medicines Evaluation Committee, Office of Complementary Medicines, Australian Drug Evaluation Committee and State and Territory bodies.
5. Secondary forms of regulation include the Australian Code of Good Manufacturing Practice for Medicinal Products, TGA Enforcement Guidelines, Therapeutic Goods Advertising Code 2006, ASMI Code of Practice and CHC Code of Practice for the Marketing of Complementary Healthcare Products and the National Medicines Policy.
6. Regulation is defined by McEwen in A History of Therapeutic Goods Regulation in Australia as “a mechanism to control an industry sector when the market forces within that sector, or the nature of the sector’s products, may significantly disadvantage its customers.”
7. As part of analysing the regulation that applies to complementary medicines and prescription medicines, I will discuss the enforcement options available to the Administration under the TGA and the enforcement options undertaken by the Administration in light of the Administration’s “Enforcement Guidelines”. I will also consider the regulation of advertising complementary medicines and prescription medicines.
8. My focus will be to examine the difference in regulation between complementary medicine and prescription medicine in detail. In Australia, pursuant to the TGA, complementary medicines are far less regulated than prescription medicines. They are considered by the Administration to be low risk and accordingly do not face the same scrutiny as prescription medicines where the sponsor must prove that the medicine works for its intended purpose. I will consider the views of different commentators and present my own view of whether the regulation of complementary medicines is too weak, too strong or about right, taking account of principles of regulatory theory and consumer protection.
9. I will discuss the regulation of complementary medicines and prescription medicines in light of regulatory theory. Good regulation inter alia requires that: regulation be proportionate to the risk; there should be accountability; there should be consistency in enforcement and regulations should be transparent and targeted to activities that give the most serious risks.

Regulation of Complementary and Prescription Medicines
10. By way of background, complementary medicines are defined in the TGA as medicinal products containing vitamins, minerals, herbs, homoeopathic medicines, traditional Chinese medicines, Ayurvedic (Indian) medicines and Australian Indigenous medicines. Alternative medicine encompasses “a diverse set of holistic therapies, tending to emphasis the integration of body, mind and spirit.” A 1993 study found that Australians spend twice as much on complimentary medicines (A$621 million per year at the time) as on pharmaceuticals.
The Administration defines prescription medicines as medicines that:
a. “follow the route of evaluation described in Part 1 (mainly prescription) of Schedule 10 of the Therapeutic Goods Regulations;
b. may include ingredients described in Schedule 4, Schedule 8 or Schedule 9 of the SUSDP [Standard for the Uniform Scheduling of Drugs and Poisons];
c. are usually only available on prescription.”
11. The regulation of prescription and complementary medicines is not totally uniform across the country. This is because the Commonwealth does not have a general power to legislate with respect to health or medicine but relies on powers such as the corporations power and the interstate and overseas trade and commerce power. Hence there is only complete uniformity with New South Wales and Tasmania (through mirror State legislation) and Victoria (through referral of legislative power to the Commonwealth in this regard).
12. The States and Territories remain responsible for the control of the retail supply of therapeutic goods and their scheduling. Thus at the State level there is the Standard for Uniform Scheduling of Drugs and Poisons. There is also sale of goods legislation and fair trading legislation dealing with product quality and selling practices.
13. Under the TGA there is a requirement that all therapeutic goods be entered on the Australian Register of Therapeutic Goods (ARTG) unless there is an exemption. Most complementary medicines are considered low risk and are therefore listed, but not required to be registered. Listed medicines may only contain ingredients that have been evaluated by the Administration to be low risk.
14. The following factors are considered by the Administration in evaluating complementary medicines: toxicity of the ingredients; dosage form; proposed use and whether the use is likely to result in significant side effects and whether there may be adverse effects from prolonged use or inappropriate self-medication. The Administration randomly reviews this information in about 20% of cases.
15. When a sponsor submits an application to the Administration to include a medicine on the ARTG as a listed medicine, the product details required include: name of the sponsor; product name; dosage form; manufacturer of the product; names and quantities of the active ingredients names of excipient ingredients (colours, flavours, binders etc.) and indications for the product.
16. Complementary medicines are defined as a therapeutic good consisting wholly or principally of one or more designated active ingredients each of which has a clearly established identity and traditional use over an extended period. They include: herbal medicines; vitamins and supplements; homeopathic medicines, aromatherapy products, ayurvedic medicines and traditional Chinese medicines. Proven product efficacy is not a requirement for listing. The Administration relies on the sponsor to be truthful in its application and verify that the product satisfies the quality and safety requirement. In this vein, sponsors are required to certify that they hold supporting evidence for the indications and claims about the product. Evidence may be asked for and evaluated by the Administration should a concern arise. The Administration and the Complementary Medicines Evaluation Committee (“CMEC”) have developed guidelines to assist sponsors in determining the appropriate evidence to support indications and claims made in relation to listed medicines.
17. Complementary medicines need only be registered if they contain an active ingredient that is not permitted for use in listed medicines. If that is the case quality, safety and efficacy of the complementary medicine must be evaluated by the Administration upon the recommendation of CMEC.
18. Certain complementary medicines do not need to be included in the ARTG such as medicines that are prepared for individual patients (e.g. a herbal mixture prepared by a herbalist) and homeopathic medicines if all the ingredients in the preparation are at a dilution greater than 1000-fold; the preparation is not required to be sterile and it does not contain ingredients of human origin or ingredients derived from animals and parts specified in Schedule 5, item 8 of the Regulations.
19. The Office of Complementary Medicine (“OCM”) was established in 1999 within the Administration to focus exclusively on the regulation of complementary medicines through increased transparency of complementary medicines regulation and the development of more formal links with industry, the academic community, consumers and government. The OCM consults with such groups; evaluates data in order to make assessments for listed and regulatory complementary medicines; provides support to CMEC and the Minister and the Administration on the regulation of complementary medicines and associated matters.
20. Prescription medicines, by contrast, undergo a thorough evaluation by the TGA for safety, quality and efficacy before they are registered. Generic medicines must demonstrate therapeutic equivalence. Registration fees for conventional medicines are not inexpensive, whereas listing complementary medicines is relatively cheap.
21. Manufacturers of therapeutic goods must hold a manufacturing licence unless the goods are exempt. Licence holders must comply with the Australian Code of Good Manufacturing Practice for Medicinal Products, which is based on the international standard. Furthermore, all therapeutic goods must be manufactured in plants with acceptable Good Manufacturing Practice (“GMP”) standards. The GMP and licensing requirements are set out in Part IV of the TGA and described in the Administration’s publication Australian Code of Good Manufacturing Practice for Medicinal Products. Goods manufactured overseas must also comply with this standard to be included in the ARTG.
22. The Administration conducts post-market regulation for both listed and registered therapeutic goods. This includes targeted and random audits and testing of listed products, recalls and controls on advertising.
23. The Administration also regulates compliance with the Australian Code of GMP for medicinal products which regulates the quality of therapeutic goods; ensures appropriate qualifications, experience and training for personnel; ensures premises where manufacturing takes place is suitable; that appropriate documentation is held and that there is quality control to ensure that all batches of products are in compliance with established specifications before their release.

Therapeutic Goods Advertising
24. Prescription Medicines cannot be advertised direct to consumers pursuant to the TGA and a fine of $6,600 applies for a contravention of this ban. It is interesting to note that in the United States advertising of prescription medicines is allowed and has been shown to affect consumer behaviour. In Australia, the justification for the ban is to ensure quality, accurate and non-promotional health information. There is clearly a balance to be struck between overly lenient regulations and overly restrictive to balance consumer choice versus consumer safety.
25. Complementary medicines on the other hand can be advertised provided the Complementary Healthcare Council (for print media) or the Australian Self-Medication Industry (for broadcast media or films) approves the advertising. The Therapeutic Goods Advertising Code 2006 contains provisions including that advertising should not arouse unwarranted and unrealistic expectations of product effectiveness; be likely to lead consumers to self-diagnosing or inappropriately treating potential diseases; mislead or be likely to mislead or contain a claim of a sure cure. Complaints about direct consumer advertising are considered by the Complaints Resolution Panel, which was established by the Administration. The Administration can intervene when there is a serious breach, especially where consumer safety is a concern.

Enforcement by the Administration
26. The TGA was amended in 2006 pursuant to the Therapeutic Goods Amendment Act (No. 1) 2006 to introduce new civil penalties for breaches of existing regulatory requirements. The purpose of this was to allow civil penalties as an alternative to criminal sanctions where appropriate. The Administration’s current regulatory approach is to pursue court action as a last resort for securing compliance with regulatory requirements. Pursuant to sections 42YF and 42YH, a person (including a corporation) cannot be penalised for both a civil contravention and criminal offence involving the same conduct. In my view, this approach accords with good regulatory practice, which will be discussed later.
27. There are two new provisions: subsection 42YE(2) which gives the Secretary the power on reasonable grounds to require a person to give all reasonable assistance in an investigation pursuant to a civil penalty order; and section 54B imposes civil and criminal liability on officers of corporations under certain circumstances.
28. The Administration will generally pursue a criminal prosecution if the regulated conduct involves actual harm or injury or could pose considerable harm to the public, and the requisite mental elements relating to the conduct can be established and there is a significant degree of culpability and the alleged crime is of a magnitude that prosecution is warranted. A corporation will be criminally liable under section 55 of the TGA if (a) the conduct was engaged in by a director, servant or agent of the body corporate within the scope of his or her actual or apparent authority; and (b) the director, servant or agent had the state of mind”.
29. The Administration takes the view that where culpability and criminality of the conduct are not apparent but there is a need to address breaches of the Act and effectively deter future non-compliance, particularly by a body corporate, it may well be appropriate for the Administration to apply for a civil penalty order.
30. A civil action can be pursued on account of one or more of the following:
a. blatant disregard for, or a significant degree of indifference to, the regulatory requirements under the Act or Regulations;
b. Government or community expects the matter will be dealt with by way of a serious enforcement action;
c. conduct is of such a nature or magnitude general deterrence is required;
d. the conduct in question was driven by anticipated commercial benefit for the person at the expense of public health and safety.
31. Whether an offence is a one-off will be a factor, as will whether an offender is a persistent offender. An accident is not likely to result in punitive action unless the contravention is severe in nature. The ultimate consideration is the protection of consumers to ensure they receive high quality and safe medicines and to uphold the objects of the TGA.
32. Another regulatory method used by the Administration is the issuing of infringement notices, in lieu of a prosecution for a strict liability offence or bringing a civil action for a breach of a civil penalty provision. This may occur where the Administration decides that the severity of the offence does not justify more severe action. However, before an infringement notice can be issued, there must have been a decision to take judicial action, upon receipt of independent legal advice, against a person or corporation for non-compliance, by way of either prosecution or application to the Federal Court for a civil penalty order where there are reasonable grounds for pursuing a breach of the TGA through the criminal court system or before the Federal Court. An infringement notice cannot be issued after the expiry of 12 months from the date of the relevant offence or civil breach
33. If payment is made on the infringement then no further action is taken. Infringement notices are intended to apply to conduct regulated under offences of strict liability or no faulty civil penalty provisions, where for example:
a. the breach has not resulted in serious harm or injury to the public;
b. it is considered to be an adequate deterrent to prevent future breaches; and
c. the breach or the contravention cannot be effectively addressed by informal enforcement action.
34. Infringements can be issued for offences which include:
a. breach of standard applying to goods;
b. breach of condition attaching to standards;
c. manufacturing without a licence.
35. It is noted that in general, for first time offenders where there is no threat to public health and safety and the person takes immediate steps to rectify the breach, a warning letter may be given to the person who has contravened the relevant regulatory requirement, through possible inadvertence or misunderstanding of TGA legal requirements.
36. Another regulatory option is court enforceable undertakings where compliance is obligatory. The Administration only uses this regulatory method when it believes that enforceable undertakings offer the best solution to ensure that no further breaches will occur or that the breach will be appropriately remedied.
37. In determining the appropriateness of an enforceable undertaking compared to other regulation such as litigation or other enforcement sanctions, the Administration may consider the following:
a. “the nature of the breach or the alleged breach in terms of:
i. quality, safety, efficacy, or performance of the products; and
ii. the conduct of the person or the company in relation to the breach; and
iii. the type of therapeutic goods that are the subject of the breach; and
iiii. the impact on public health and safety; and
v. the magnitude of the risk created; and
b. the extent to which any meaningful undertakings can be given to remedy the breaches and mitigate the risk; and
i. the likelihood that the enforceable undertaking will be fulfilled; and
ii. the apparent good faith of the company or person; and
iii. the ability of the Administration to properly monitor compliance with the enforceable undertaking; and
iiii. the history of breaches of requirements under the Act and the Regulations, including any previous convictions or contraventions; and
v. the prospect of an effective and timely resolution of the matter.”
38. The Administration will not agree to an undertaking if it would fetter its regulatory powers or if the breaches have resulted or will result in harm or injury to the public.
39. Section 42YL(3) requires the Secretary to publish details of the undertaking on the Internet. The Administration may agree not to release commercially sensitive information.
40. Aside from undertakings, there are general provisions in the TGA that require a number of regulatory decisions to be made public through gazette notices, although the use of media releases to inform the public about regulatory actions taken under the TGA or Regulations will only be used if there is an imminent public health safety risk or threat of such a risk.
41. An example of when strong enforcement action was taken by the Administration In Australia was in 2003 when Pan Pharmaceuticals Ltd (“Pan”), then Australia’s largest manufacturer of vitamins, minerals and herbal medicines, had its manufacturing licence suspended for breaches of the TGA. Two products manufactured by Pan, Travacalm Original and Travacalm HO hycscine hydrobromide caused 87 adverse reactions such as hallucinations and 19 people were hospitalised as a result. In relation to complementary medicines Pan were found guilty of substituting beef cartilage in place of shark cartilage and falsifying tests of some vitamin preparations. Substandard manufacturing practises had also been employed. Additionally the Administration instigated a product recall of more than 2000 complementary medicines manufactured by Pan. This event illustrated safety issues arising from complementary medicines not being manufactured in accordance with standards of safety and quality. Ordinarily audit frequency is between 12 and 24 months or even less frequent for low risk products (12-36) months. The Pan case illustrates that the Administration will take tough action where it is required in the interests of consumers.

Regulatory Theory
42. The Better Regulation Commission (“Commission”) in Five Principles of Good Regulation discusses five principles of good regulation:
a. Firstly, that regulation should be proportionate to the risk and intervention should only occur when necessary. The Commission argues that you must not use a sledgehammer to crack a nut.
b. Secondly, regulators should be publicly accountable for their decisions and be subject to public scrutiny by Ministers, the Parliament and the public. In that vein, there should be fair and effective, accessible and well-publicised complaints and appeals procedures.
c. Thirdly, there should be consistency in enforcement and application and regulation must be implemented fairly.
d. Fourth, regulations must be transparent and regulators should be open and keep regulations simple and user-friendly. In this light, there should be public consultation before regulations are implemented and the consequences of non-compliance should be made clear.
e. Finally, regulations should be targeted and focused on the activities that give rise to the most serious risks.
43. McEwen in A History of Therapeutic Goods in Australia takes the view that market failures requiring regulation may occur when an industry player has a monopoly, where customers lack information or where there are community risks associated with the product. He submits that good regulation is where “the correct balance is reached between adequate protection of consumers without undue restriction on the industry”. McEwen observes that good regulation can greatly assist industry by encouraging innovation and trade and enhancing customer confidence. Good regulation can comprise of a shared or co-regulatory approach with the industry or self regulation by an industry itself.
44. The Council of Australian Governments (“Council”), in Principles and Guidelines for National Standard Setting and Regulatory Action by Ministerial Councils and Standard-Setting Bodies, also considers theories of regulation. The Council asks whether regulation is needed at all and asks what the problem that needs addressing is. The Council looks at where there is a market failure and considers whether it is a type of market failure that can be addressed without recourse to government regulation. The Council states that when assessing the need for regulation, an essential first step is to review the adequacy of existing bodies of law, which, wherever possible, should be used instead of industry specific regulation.
45. The Council also considers what the costs, risks or benefits of maintaining the status quo are and whether regulation is likely to improve upon market outcomes. In addition, the Council gives consideration to whether non-regulatory action would deal with the problem. Furthermore, the Council considers what the benefits of regulation are including risk reduction. The final considerations and steps are:
a. the likely costs of the proposed regulation and how these costs will be borne;
b. obtaining feedback from public consultation;
c. level of support for the proposed regulations;
d. the burden of proof that a regulation is necessary remains with the proponents of regulatory action;
e. regulations should not be applied in a way that creates unnecessary obstacles to international trade; and
f. regulation should be designed to have minimal impact on competition.
46. Finally the Council states that “regulatory measures should contain compliance strategies which ensure the greatest degree of compliance at the lowest cost to all parties…measures to encourage compliance may include regulatory clarity, brevity, public education and consultation and the choice of alternative regulatory approaches with compliance in mind.” The Council’s position is that regulation is only justified where there are positive net social benefits. The Principles thus highlight the need to move away from overly prescriptive standards towards performance-based standards that focus on outcomes rather than inputs.
47. In the present context, the Department of Health and Ageing prescribes the following regulatory principles in the National Medicines Policy, based on the principle that medicines available in Australia should be equal to that of comparable countries in terms of quality, safety and efficacy:
a. rational and transparent criteria and processes should govern nationally standardised regulation of medicines;
b. “regulation should ensure that appropriate practices are followed in the development, production, supply and disposal of medicines, and that any problems are met with a quick, effective and appropriate response”;
c. the level of regulation should be proportionate to the potential benefits and risks to the public and based on appropriate risk-assessment processes;
d. assurance of quality, safety, and efficacy, and timely availability should be the aim of the pre-marketing assessment of medicines;
e. to ensure ongoing assessment of safety there should be an effective post-market monitoring system (for example, for adverse drug reactions);
48. To achieve optimum use of medicines the National Medicines Policy prescribes that:
a. There be timely access to accurate information and education about medicines and their use for consumers and health practitioners;
b. Australian Governments as well as others in this partnership should coordinate public health and health education programs, and other programs relating to quality use of medicines;
c. health practitioners and industry should make a contribution through information, education and promotion activities; and
d. there be accurate and responsible reporting by the media of issues relating to use of medicines.
49. In New Zealand, the Code of Good Regulatory Practice 1997 contains guidelines for the government to follow in creating new regulatory systems. “The guidelines identify five fundamental principles for good regulatory practice:
a. efficiency: to adopt and maintain only regulations for which the costs on society are justified by the benefits to society, and that achieve objectives at lowest cost, taking into account alternative approaches to regulation;
b. effectiveness: regulation should be designed to achieve the desired policy outcome;
c. transparency: the regulation-making process should be transparent to both the decision-makers and those affected by regulation;
d. clarity: regulatory processes and requirements should be as understandable and accessible as practicable; and
e. equity: regulation should be fair and treat those affected equitably.”
50. Applying the above regulatory theory to the issue at hand, namely the regulation of therapeutic goods, the issue of question of whether regulation is needed is easily answered. McEwen in A History of Therapeutic Goods in Australia takes the view that therapeutic goods are a relatively clear cut example of the need for regulation, because medicines can be potent and toxic. What is subject to debate is whether the regulation of complementary medicines should be less strict than the regulation of prescription medicines and if so to what extent. At present the regulation of complementary medicines is less strict than the regulation of prescription medicines in Australia. Some commentators argue for stricter regulation of complementary, some advocate lesser regulation and others such as myself would support the status quo.
51. Weir in ‘A new model for the regulation of Complementary and Alternative Medicine in Australia’ states that the current regulatory system for complementary medicines is anti-competitive and based on an “outdated outdated modernist view of healing that fails to integrate a postmodernist perspective on how many people think about their health and the appropriate role for health care professionals.” Weir asserts that the Australian system for regulating complementary medicines is overly restrictive and disproportionate to the risk and therefore not in line with principles of good regulation, especially the principle that regulation should be proportionate to the risk.
52. Brownie in ‘The development of the US and Australian dietary supplement regulations – What are the implications for product quality?’ argues that the regulation of complementary medicines in Australia is too stringent. Brownie argues that “strict liability compliance that is not risk-based and the ever increasing recovery of Administration operating costs are forcing consumers to pay ever higher prices for complementary medicines.” There is evidence that some consumers are being priced out of the market as a result, for example in the case of glucosamine. The cost of compliance is evidence by recent Administration accounting figures indicating that there has been a substantial drop in listings and registration applications and annual fees for complementary medicines. Brownie expresses the view that “this situation indicates that companies may no longer be viewing the industry as a viable and sustainable one.”
53. Brownie also asserts that as compliance with Australian regulations becomes too difficult and costly, Australian manufacturers of complementary medicine are also suffering as manufacturing is now undertaken overseas (with product imported back into Australia), with the result that Australian manufacturers are finding it increasingly difficult to compete with overseas manufacturers. There is also anecdotal evidence suggesting that overseas business is not being drawn to Australia as the current regulatory requirements are considered to be one of the most onerous of western nations; being too difficult and expensive in contrast to other countries. Brownie observes that overseas facilities are not subjected to the same regulatory requirements as in Australia and accordingly Australia’s current regulatory environment is putting Australian sponsors and manufacturers of therapeutic goods at a disadvantage compared to their overseas counterparts.
54. Thus Brownie takes the view that following Pan, a regime of strict compliance and liability has been developed by the Administration that is not based on sound risk management. Brownie submits that Australia is now recognised as one of the most greatly regulated environments for complementary medicines in the world. The main argument for the regulation of complementary medicines is that it will improve consumer safety by protecting consumers from unsafe products or products that make misleading claims.
55. Harvey, Korczak, Marron and Newgreen in ‘Commercialism, choice and consumer protection: regulation of complementary medicines in Australia’ argue for greater regulation of complementary medicines and propose the following reforms:
a. Complementary medicines should include on their labels a statement, such as “This medicine has not been evaluated by Australian health authorities for efficacy” and there should be a public campaign to inform the public that complementary medicines are not evaluated for efficacy in the same way that conventional medicines are before they are listed.
b. There should be streamlined ethical codes of conduct and complaint procedures for complementary medicines and conventional medicines governed by one Administration.
c. Sponsors of complementary medicines should be required to supply supporting evidence for each indication and this information should be publicly available on the Internet.
d. The Administration should check the analysis of herbal products more thoroughly.
e. The listing system should be abandoned and complementary medicines (including homoeopathic medicines) should be assessed for efficacy and delisted if evidence is lacking.
56. Some examples of proposed Government reform include the following agreed to in 2005 detailed in Government Response to the Recommendations of the Expert Committee on Complementary Medicines in the Health System:
a. The Administration ensuring that quality standards for all ingredients for use in complementary medicines are legally enforceable. This was to be implemented as part of reforms to set up a joint trans Tasman therapeutic products regulatory agency. This has not yet occurred as the New Zealand Parliament has not agreed to the proposed legislative changes.
b. The Administration to substantially increase random and targeted assessment of the evidence to support the indications and claims held by sponsors for listed medicines. The Administration has increased the proportion of random and targeted assessment of sponsor-held evidence to approximately 20% of all newly listed medicines.
c. The Administration, in consultation with the National Medicines Policy (NMP) and its partners, better inform consumers of the potential risks associated with the importation of complementary medicines that may not be manufactured to the same standards of medicines available in Australia. A communication strategy has not yet been developed.
d. “Internet advertising be considered part of mainstream advertising, and be subject to mainstream advertising requirements and protocols, including complaints resolution through a centralised complaints and appeals process.” This recommendation has been implemented and Internet advertising is now considered mainstream advertising and is subject to a centralised complaints and resolution processes. However, Internet advertising is exempt from pre-clearance requirements.
57. In my view, a prime role of government is to ensure public health and safety for its citizens. If government did not regulate therapeutic goods through legislation and relied on industry to self-regulate, the consumer and health outcomes would be at the hands of market forces and industry. Even if most manufacturers and sellers of therapeutic goods did the right thing to ensure consumer safety and quality of their products, the risk of some manufacturers and sellers not doing the right thing would be too great. Market failure resulting from lack of accurate information or the ability of consumers to judge the information can lead to consumers not obtaining quality therapeutic goods, but worse still the safety of products could not be guaranteed and consumers’ health would be in jeopardy leading to serious illness and potentially deaths. Thus regulation is necessary in order to ensure public safety in a high-risk situation.
58. I consider one of the greatest risks for consumers in the health industry and relevantly as consumers of both prescription and complementary medicines is not having access to accurate information. If consumers are poorly informed or misinformed then they can make poor choices that may be harmful to their health. At present in Australia, complementary medicines are treated differently to prescription medicines as they are considered low risk by comparison. This is the view of the Administration and supported by the Government in the current version of the TGA.
59. As the law stands in Australia, sponsors of complementary medicines do not need to prove that their product produces the alleged outcomes compared to taking other products or no product. That is a risk the consumer is made to bare as a consequence. Sponsors are required to attest to the level of quality and efficacy as discussed earlier. The regulation of advertising is more lenient with complementary medicine. In my view, the status quo strikes the right balance on the basis that the regulation is proportionate to the risk and there is a balance between consumer interests (protection of consumer health and safety) and the interests of industry in not unnecessarily burdening competition.
60. In my opinion, there should be a slight but important change requiring complementary medicines to state something to the effect that the Administration does not endorse the product and that the product has not been tested for efficacy (i.e. there is no proof that it works). Then it comes down to consumer choice, recognising that as the law stands, the Administration will remove unsafe goods from the market as they did with Pan Pharmaceuticals, being further evidence that the current regime has been effective in striking a regulatory balance. Another useful change would be if there are known risks in taking a certain complementary medicine, by itself, or especially in conjunction with a particular prescription medicine, there should be a labelling requirement to advise of this risk or some other requirement to provide information, perhaps through an information sheet to be provided with the product as occurs with prescription medicines.
61. Also, good regulation requires frequent reviews to ensure that the objectives of regulation (i.e. protecting consumer health and balancing that with economic considerations) are still being achieved. If there are failings in the system of regulation then good regulatory theory requires amendments to regulation to respond to any market failures.

Overseas Comparison
62. Internationally, there is a trend toward self-regulation, co-regulation, quasi-regulation, process regulation and performance regulation as an alternative to full government regulation.
63. In the United States complementary medicines are classed as foods and regulated by the Dietary Supplement Health and Education Act of 1994 and the Food and Drug Administration (“FDA”) regulates dietary supplements as such, and not as drugs. While pharmaceutical companies are required to obtain FDA approval of the safety or effectiveness of their products prior to their entry into the market, dietary supplements, like food, do not need to be pre-approved by FDA before they can enter the market. Based on limited powers granted by the DSHEA, the FDA Secretary may remove a dangerous or adulterated supplement only when it poses an “imminent hazard to public health or safety”. However FDA approval is required for products intended to be used as alternatives to prescription drugs. The manufacturing of complementary medicines must comply with current good manufacturing practices, and be manufactured with “controls that result in a consistent product free of contamination, with accurate labeling.” Furthermore, “all serious dietary supplement related adverse events” must be reported to the FDA.”
64. Pursuant to the DSHE Act there are labelling requirements for complementary medicines and manufacturers of complementary medicines must ensure that information on product labels is truthful and not misleading. Therapeutic claims are permitted on labels of dietary supplements provided it is stated that in addition to any therapeutic claim, that the claim has not been evaluated by the FDA, and that “the product is not intended to diagnose, treat, cure or prevent any disease”.
65. In New Zealand, the NZ Government has resisted changes that would bring New Zealand into line with Australia on the regulation of complementary medicines. The regulation in New Zealand compared to Australia is lax. In New Zealand there are no requirements for pre-market assessment of ingredient safety, product quality or efficacy. Manufacturers are not required to meet good manufacturing standards and dietary supplements can be manufactured and sold in New Zealand without pre-market regulation.

66. In this essay I have examined the regulatory schemes for regulating prescription medicines and complementary medicines in Australia. The principal piece of regulation is the TGA. Prescription medicines are subject to tougher regulation than complementary medicines under the TGA. The essential difference is that sponsors of complementary medicines are not required to prove efficacy and advertising is allowed for complementary medicines. Manufacturing standards are the same for both.
67. The Administration has numerous enforcement options including criminal sanctions, civil penalties and enforceable undertakings. Which option is used depends on the Administration’s “Enforcement Guidelines” giving consideration to deterrence and the seriousness of the breach, among other things.
68. Regulatory theory provides that regulation should be proportionate to the risk and that there should be a balance between adequate protection of consumers and the needs of industry, in particular competition. A key element is considering whether there is a market failure that needs addressing by regulation and what form that regulation should take.
69. Some commentators argue that the regulation of complementary medicines is too stringent in Australia and that consumers are therefore forced to pay higher prices and business is going overseas as a result. Other commentators argue that there needs to be more stringent regulation such as better labelling to inform consumers that efficacy has not been evaluated by the Administration while some advocate abandoning the listing system and regulating complementary medicines in the same way as prescription medicines.
70. In my view, as stated above, the status quo strikes the right balance on the basis that the regulation is proportionate to the risk and there is a balance between consumer interests (protection of consumer health and safety) and the interests of industry in not unnecessarily burdening competition. I agree with reforms to labelling that would require consumers being made aware that the product is not endorsed by the Administration and that efficacy has not been proven and further to advise of any risks arising from taking a complementary medicine alone or with a particular prescription medicine.
1. McEwen, John, A History of Therapeutic Goods Regulation in Australia (2007) Therapeutic Goods Administration (accessed 8 December 2009)
2. Haigh, Richard, ‘Alternative medicine and the Doctrine of Patient Disclosure’ (2000) 8 Journal of Law and Medicine 197
4. Weir, Michael, Complementary Medicine: Ethics and Law (3rd ed, Prometheus Publications, 2007)
5. TGA, The regulation of complementary medicines in Australia – an overview, (2006) Therapeutic Goods Administration (accessed 8 December 2009)
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