Review of Medicines and Medical Devices Regulation Secretariat
Department of Health
MDP 67
GPO Box 9848
CANBERRA ACT 2601
REVIEW OF MEDICINES AND MEDICAL DEVICES REGULATION
This submission responds to the discussion paper released by the Review of
Medicines and Medical Devices Regulation in relation to the Therapeutic Goods
Administration (TGA) regulatory framework and processes in respect of prescription,
over-the-counter, and complementary medicines and medical devices.
The following paragraphs –

summarise concerns regarding the TGA regime,

identify the basis of the submission,

provide overall comments regarding the TGA regime.
As a preliminary comment we note that there is a strong disagreement within the
Australian community regarding the functions and purpose of the Therapeutic Goods
Administration (TGA). An overall response to the question asked at the outset of the
discussion paper – whether there is a shared understanding amongst stakeholders of
the issues and options for the future in respect of the regulation of medicines and
medical devices in Australia – must therefore be a resounding no.
There is no “shared understanding” about the regulation of medicines and medical
devices. On the basis of discussion with clinicians, service providers, researchers,
litigators, officials and consumer advocates over several years we caution against an
assumption that there is unanimity on the part of different industry bodies, that
government agencies are in agreement or that key stakeholders endorse the TGA’s
perception of its effectiveness and priorities.
A detailed analysis of the discussion paper is inhibited by the absence of information
about what we have characterised as peering. Based on the information provided in
the discussion paper it is difficult to conceptualise how a trusted overseas regulator
program might operate. Presumably such an arrangement would need to be
underpinned by harmonisation of regulatory criteria and a multipartite international
agreement between countries governing allocation of applications. In the absence of
such an arrangement countries could conceivably end up cross-subsidising each
others regulatory systems with no clear framework for accountability and a worrying
scope for regulatory arbitrage. Given that Australian consumers currently lack legal
recourse to negligent direct acts by the TGA further interpolation to third party
country agencies will further erode already fragile consumer confidence. Any
international sharing of registration must be accompanied by robust post market
approval information sharing of adverse outcomes that in turn must be
communicated actively and prominently to the Australian community.
Analysis is also inhibited by assumptions in the paper regarding performance relative
to bodies such as the US Food & Drug Administration (FDA). The disparity between
approval times for applications made to the TGA and those made to the FDA and
2
other regulators is not large. That disparity is not necessarily an indicator of
inappropriate regulatory burdens, or quality of outputs. It may instead be a function of
the available resources.
One response to perceived delays is to strengthen the TGA’s capacity – in the first
instance to provide extra staff with appropriate expertise and appropriate support –
rather than weaken rules that ultimately should exist to protect Australian consumers
of therapeutic goods.
The Review
The Australian pharmaceuticals, medical devices and complementary substances
regime is need of substantial reform to address concerns regarding regulatory
capture, administrative inefficiencies and institutional unresponsiveness.
The Review is welcomed on that basis. The members of the Review are encouraged
to actively engage with underlying issues so that their report – and the Government’s
response – is not determined by corporations that seek to minimise regulatory costs
without offsetting benefits to both the Australian taxpayer (eg via the public health
system) and consumer.
Incapacity on the part of the Therapeutic Goods Administration is at odds with the
performance of peers such as the US Food and Drug Administration (FDA) (which in
contrast to Australia acted quickly and publicly to deal with substantive problems
regarding generic medicines) and other overseas entities (eg action in France
regarding Poly Implant Prosthese (PIP) that was both more timely and more
transparent than in Australia). It has resulted in costs to the national health system
(and reduced national productivity, which we discuss below) that far outweigh the
TGA budget, alongside fundamental erosion of the quality of life of numerous
Australians.
That incapacity is fostered by the immunity provisions in section 61A of the
Therapeutic Goods Act 1989 (Cth). Repeal of the section would instil an appropriate
discipline in a key agency. Repeal would complement the move to establishment of
the Australia New Zealand Therapeutic Products Agency (ANZTPA) and is
consistent with the development of the international framework for trusted peers that
appears to be implicit in the discussion paper.
Incapacity is exacerbated by the unresponsiveness of the TGA to issues regarding
generic medicines, where the TGA – in contrast to peers – appears to have
complacently accepted assurances by overseas manufacturers who have a history of
fraud and product contamination. That complacency contrasts with import bans and
substantial penalties by the FDA and counterpart agencies in other jurisdictions.1 It is
evident in problems relating to the promotion and dissemination of complementary
medicines 2 and, more broadly, homeopathic goods that are claimed to have
therapeutic value despite recurrent authoritative studies demonstrating that those
claims are empirically unsustainable.
1
See for example the FDA itemisation at
http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/EnforcementActivitiesbyFDA/
ucm118411.htm and Meera Kay, ‘Indian generics manufacturer Ranbaxy agrees to pay $500 m to settle
US fraud and drug safety charges’ (2013) 346 BMJ: British Medical Journal f3536.
2
Given criticisms in Australian National Audit Office, Therapeutic Goods Regulation: Complementary
Medicines (ANAO Audit Report No.3 2011–121) it is regrettable that the discussion paper omits the
chapter on complementary products.
3
We have referred to incapacity because underperformance by the TGA is systemic,
rather than a matter of isolated failures that have now been fully addressed.
Underperformance reflects a culture in which therapeutic goods enterprises are the
organisation’s clients. Under-performance is ongoing and will not be addressed by
‘cutting red tape’ in order to reduce the cost of applications, fundamentally speed up
approvals and minimise post-approval surveillance. 3 Process improvement is not
identical with the elimination of appropriate rules or discouragement of proactive
identification of potential issues and responses. For example, past TGA cost savings
appear to mean that the failure to conduct due diligence regarding the distributor’s
insurance left the victims of PIP without a solvent defendant.4
Given substantive concerns within the health profession, the legal profession and
consumers at large we accordingly invite the Review Panel to recommend that –

funding — the Government reviews and enhances the TGA’s funding
model, so that it is better equipped to act in the national interest.
Prevention of harm will increase reduce burdens on the taxpayer at the
macro level, improve the lives of individual citizens and maintain
national productivity.

statutory immunity — s 61A of the Act be repealed, on the basis that
the section currently frees the TGA from an essential discipline. The
TGA (and ANZTPA) should not be allowed, and tacitly encouraged, to
get things wrong, at the expense of the very consumers it exists to
protect.

administration — the TGA, through for example the Australian National
Audit Office, conduct a rigorous evaluation of its ‘back office’ functions,
given that there appears to be scope for systemic and ongoing business
process improvement in areas such as financial management and public
communication.5

engagement — the TGA be strongly encouraged to actively engage
with civil society advocates and not, for example, rely on assertions that
‘everything anyone needs to know’ is available on its web site. That
engagement will foster trust. 6 It should include establishment of an
independent and expert advisory body on the model of the Advisory
Council on Intellectual Property. 7 That body must include consumer
representatives. As we discuss below, it is inherently problematic that
the word ‘consumer’ does not appear in the objectives section of the
Act; indeed consumer protection is not identified specifically as a focus
anywhere in the Act.8 It is disquieting that clinicians and stakeholders in
We note that the Panel is to identify “Opportunities for reducing red tape burden in the short and long
term, Strategies for ensuring red tape reduction can be sustained, Issues threatening the achievement of
reductions in regulatory burden”, all of which presuppose that regulation is inappropriate and
excessive.
4
We note PIP because the due diligence failure is egregious and did not necessitate special expertise or
certification, for example did not require a TGA or other Commonwealth official to have postgraduate
qualifications in pharmacology.
5
One metric of efficiency would be the gross number and duration of TGA staff with workplacerelated disorders, what some observers have cruelly but aptly characterised as the ‘ComCare Metric’.
6
Frederic Bouder, ‘Handling pharmaceutical risks in post-trust society’ in Trade, Health and the
Environment: The European Union Put to the Test (Routledge, 2013) 91.
7
http://www.acip.gov.au
8
The Act features a mere five references to ‘consumer’, none of which relate to protection of the
community. The Act is not informed by the National Medicines Policy.
3
4
Australia were reliant on what they were reading in the New York Times
and on the FDA site about problems with Ranbaxy and other generics
manufacturers, given the TGA’s choice to remain silent and disregard of
questions by medical journalists, researchers and others.

verification — the TGA be required to adopt a more timely, transparent
and proactive stance in dealing with overseas therapeutic goods
manufacturers, in particular with manufacturers in jurisdictions such as
India where regulatory frameworks are inadequate (eg there is an
ongoing history of fraud and product contamination and where
regulators have been ineffective). 9 We have referred to transparency
because the TGA in responding to serious problems in the Indian
generics sector, for example, issued no public statement and appears to
have taken no action. In contrast the FDA was seen to take meaningful
action, including import bans and imposition for example of over
US$500 million penalties on Ranbaxy.10

proactive investigation — the TGA not be encouraged to rely on
quality statements by enterprises and by overseas peers in for example
emerging economies such as India, a reliance that embodies a ‘penny
wise,
pound
foolish’
approach
that
benefits
some
manufacturers/distributors but potentially imposes grossly inappropriate
burdens on Australian individuals, families and the taxpayer. Due
diligence failures and other administrative failures in recent years were
readily avoidable. The consequences of an inappropriate reliance on
statements by regulators (particular in jurisdictions where the regulator
has recurrently failed to detect and prevent fraud regarding
pharmaceuticals) will result in costs that dwarf the budget of the TGA.
To adopt a classical military aphorism, the TGA should on an informed
basis trust its partners but actively confirm.

surveillance — the TGA strengthen its post-approval surveillance of
both pharmaceuticals and devices. There is a particular need for active
surveillance; experience overseas (where leading corporations such as
Glaxo and Johnson & Johnson have paid multibillion dollar penalties)
demonstrates that trust can be misplaced, that harms may be
discernable after approval and that particular commercial stakeholders
may be conflicted and thus not proactively report.

devices — the TGA formally recognise and address concerns regarding
the regime for regulation of devices, including emerging ‘smart’ devices,
and developments such as direct to consumer genetic testing. The
regulatory framework for devices is immature, there are questions about
the TGA’s expertise and there is a policy vacuum in some areas
because different regulators assume that their counterparts will take
Deepti Ramesh, ‘FDA charges Ranbaxy with falsifying data at India plant’ (2009) 171(7) Chemical
Week 25; U.S. v. Ranbaxy USA, Inc., JFM-13-CR-0238 (D. Md.); U.S. ex rel. Thakur v. Ranbaxy
Laboratories Limited, Case No. JFM-07-962 (D. Md.); Lori Clapper, ‘India Drug Regulator Releases
Steps To Improve Drug Manufacturing Quality’ (August 2014) PharmaceuticalOnline.
10
The New York Times last year noted the complaint by India’s top drug regulator that he lacked staff
and that if “If I have to follow U.S. standards in inspecting facilities supplying to the Indian market, we
will have to shut almost all of those”. The complaint followed instances where ostensibly global best
practice enterprises, exporting products outside India, were found to have engaged in destruction and
forgery of records, disregarded quality standards, and operated facilities that were contaminated with
rodent faeces and other matter.
9
5
responsibility or that sectoral priorities override concerns regarding
privacy, consumer misuse and so forth.11

objects — the Objects (s 4) of the Act be revised to more fully articulate
the public policy objectives of the TGA, which go beyond administration.
The operation of the TGA is a means to an end, rather than an outcome
as such and the TGA is not primarily a mechanism for the support of the
Australian and overseas therapeutic goods manufacturers. Its emphasis
should necessarily be on consumer protection. We note references in
the discussion paper to the National Medicines Policy, which does
acknowledge safety and efficacy concerns regarding medicines. That
policy is not express in the Act. Consumers (as recipients of therapeutic
goods, as carers of recipients and as taxpayers funding those goods)
should be clearly recognised in the statute and thence in the TGA’s
policy statements and operational documents. Protection of those
consumers has a higher importance than reducing the cost of business
for therapeutic goods enterprises, most of which are based offshore and
which historically have taken advantage of tax minimisation strategies.
(In reminding the Panel of those facts we are not characterising the
business practice as exceptional; rather we are noting that assertions by
industry should be placed in context.)

peering — the Government, through for example the Review Panel’s
report, should clearly identify its expectations regarding peering with
regulators in other jurisdictions and the framework for that peering. Such
an articulation is fundamental for a meaningful critique by Australian
policy analysts. It is also fundamental for critique by policymakers and
analysts overseas. What tests would the TGA use in mutual recognition?
What guarantees would it – and Australian consumers – have that the
performance of its peers was effective and was not for example affected
by institutional corruption (a systemic problem in some jurisdictions),
under-reporting or what Midler characterised as the quality evaluation
game.12
Based on the information provided in the discussion paper it is difficult to
conceptualise how a trusted overseas regulator program might operate. Presumably
such an arrangement would need to be underpinned by harmonisation of regulatory
criteria and a multipartite international agreement between countries governing
allocation of applications. In the absence of such an arrangement countries could
conceivably end up cross subsidising each others regulatory systems with no clear
framework for accountability and a worrying scope for regulatory arbitrage.
Given that Australian consumers currently lack legal recourse to negligent direct acts
by the TGA further interpolation to third party country agencies will further erode
already fragile consumer confidence. Any international sharing of registration must
be accompanied by robust post market approval information sharing of adverse
outcomes that in turn must be communicated actively and prominently to the
Australian community.
Basis of the Submission
11
The differing stances of the TGA and FDA (and FTC) regarding Direct To Consumer (DTC) genetic
testing are one illustration of the problem.
12
Paul Midler, Poorly Made in China: An Insider's Account of the China Production Game (Wiley, 2nd
ed, 2010).
6
The submission is made by Assistant Professor Bruce Baer Arnold and Assistant
Professor Dr Wendy Bonython, both of the Law School at the University of Canberra.
Assistant Professor Arnold teaches intellectual property, privacy and competition and
consumer law. He has published widely on the Australian patents and competition
regimes, and is co-author of a forthcoming study of Australian health law. His work
has been cited with approval by a range of law reform bodies and parliamentary
committees. He is a member of the OECD health informatics working party.
Assistant Professor Dr Bonython teaches health law and tort law. She has published
widely on tort and health law, and is lead author of a forthcoming study of Australian
health law. Her work has been cited with approval by a range of law reform bodies
and parliamentary committees.
The submission does not present what would be reasonably construed as a conflict
of interest.
The submission reflects the authors’ research into Australian and overseas
frameworks for the regulation of medical devices and pharmaceuticals. That research
is evident in presentations at leading academic conferences, participation in
Australian Competition & Consumer Commission consultations regarding the
Medicines Australia Code, submissions to the TGA and parliamentary committees,
and publication in leading peer-reviewed journals.
The submission also reflects an awareness of Australian statute/case law (for
example relating to Pan Pharmaceuticals) and co-regulatory frameworks (for
example the Medicines Australia Code under the Competition & Consumer Act 2010
(Cth)).
It is informed by

an engagement with international practice (for example regulatory failures
that are evident in India in relation to the manufacture of generic
medicines by entities such as Ranbaxy and Wockhardt).

recognition of substantial penalties imposed by overseas regulators such
as the US Federal Trade Commission on pharmaceutical corporations
that have espoused global best practice (for example the US$3 billion
paid by GSK13 in 2012 and US$2.2 billion paid by Johnson & Johnson in
2013), 14 litigation and settlements by medical device and drug
manufacturers relating to defective products.15
US Department of Justice, ‘GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud
Allegations and Failure to Report Safety Data’ (2 July 2012). See also State of Michigan Attorney
General’s Office, ‘Schuette Announces $2.6 Million for Michigan in Consumer Protection Settlement
with GlaxoSmithKline for Unlawful Marketing of Asthma Drug, Antidepressants’ (4 June 2014)
14
US Department of Justice, ‘Johnson & Johnson to Pay More Than $2.2 Billion to Resolve Criminal
and Civil Investigations’ (4 November 2013).
15
In that respect we note litigation currently underway in Australia and elsewhere regarding joint
implants. The failure of the TGA to identify concerns regarding implants and its slow response once
concerns were identified overseas is disquieting and substantiates our assessment of problems within
the organisation. See also Jennifer Racine, ‘Orthopedic medical devices: ethical questions, implant
recalls and responsibility’ (2013) 96(6) Rhode Island Medical Journal 16.
13
7

an awareness of the very substantial burden on the Australian taxpayer
and national productivity through regulatory incapacity (for example the
cost of readily foreseeable harms attributable to defective joint implants).

concerns within the legal and medical communities about the
unresponsiveness of the TGA, an unresponsiveness that is exacerbated
by that organisation’s legal status.

disquiet within those communities regarding tacit resistance to meaningful
process improvement and regarding wariness about regulatory capture.16

a fact-based analysis for the determination of risks and benefits in
assessing competition initiatives and institutional reviews, including
concerns regarding regulatory capture and the TransPacific Partnership
Agreement
Assessment of the Regime
The contemporary Australian therapeutic goods regime reflects –
16

globalisation – evident in for example global, regional and bilateral trade
agreements (such as the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS), Korea-Australia Free Trade
Agreement (KAFTA) and the proposed TransPacific Partnenership
Agreement (PPA)), 17 in the dominance of overseas therapeutic goods
suppliers (in terms of operation within Australia or licencing) in the
Australian market, and the emergence of generic medicine suppliers
within Australia and offshore.

the imperatives of high tech medicine, involving consumer expectations
that therapeutic goods will be readily available and affordable, and
involving a shift over the past forty years from acute to chronic health
conditions, particularly where consumers may need ongoing treatment
through a variety of goods.

autonomy on the part of consumers, clinicians and service providers such
as pathology service providers that is shaped by national, state and
territory government funding (through for example the Pharmaceutical
Benefits Scheme, public hospitals and clinics).

an institutional culture in which the TGA, as the primary regulator, is
dependent on fees paid by its ‘clients’ (ie manufacturers/distributors of
therapeutic goods), construes its role in terms of those clients and is wary
of public scrutiny after successive official reports have strongly criticised
its operation.
Questions about capture and responsiveness will, we believe, be fostered by the constitution of the
expert panel, which – whilst representing policymakers, medical practitioners, and manufacturers –
significantly does not feature representation by anyone associated with consumer protection, either
from within the healthcare sector or elsewhere.
17
Deborah Gleeson and David Legge, ‘Strengthening public health engagement in trade policy:
PHAA's policy on trade agreements and health’ (2012) 36(1) Australian and New Zealand journal of
public health 7; Christopher Arup, ‘The Governance of Patents and Pharmaceuticals: The Regional
FTA Contribution’ in Christoph Antons (ed) Intellectual Property and Free Trade Agreements in the
Asia-Pacific Region (Springer, 2015) 287; Ruth Townsend and Thomas Faunce, ‘Challenges to
Australia’s national health policy from trade and investment agreements’ (2012) 196(5) Medical
Journal of Australia 354; Matthew Rimmer, ‘The High Price of Drug Patents: Australia, Patent Law,
Pharmaceutical Drugs, and the Trans-Pacific Partnership’ (2014).
8

coexistence of statutes and public/private sector regulators at the national
and state/territory levels (for example the TGA and the Australian
Competition & Consumer Commission) regarding the promotion and
delivery of therapeutic goods/services and goods/services (such as
homeopathic products) that are claimed to have therapeutic attributes.

conceptualisation of regulation as ‘red tape’ that is contrary to national
economic growth and as ‘red tape’, with a consequent emphasis on
cutting costs on an agency by agency basis without adequate
consideration of impacts across the Australian economy.18 The effect of a
doctrinaire ‘eliminate all red tape’ philosophy in the therapeutic goods field
is to shift – and potentially significantly increase – costs rather than to
eliminate them. The same philosophy shifts expertise to the private sector
in instances where the national interest requires a vigorous, informed and
independent national regulator.

Industry policy statements by Governments regarding the encouragement
of Australian life-sciences enterprises that are at odds with the paucity of
substantive support for start-ups, with policymaking regarding intellectual
property (notably patents) and with a commitment to free trade
agreements that have been strongly condemned by government agencies
(eg the Productivity Commission) 19 and by independent analysts as
egregiously favouring overseas enterprises (eg members of PhRMA) at
the expense of Australian consumers and the Pharmaceutical Benefit
Scheme.20
In placing that analysis within a global context it is useful to recall that Australia has
been, is and will remain a desirable market for sales and direct investment by entities
in the advanced economies (eg the US, Japan, European Union) and emerging
economies (eg India, where generics manufacturers are building scale and are
recurrently acknowledged by the national government to be inadequately regulated).
Enhancement of the Australian regime is thus not predicated on cutting regulatory
requirements at the behest of the World Trade Organisation, the US Special Trade
Representative or particular industry bodies. As a range of health analysts have
noted, Australia does have scope for action in dealing with therapeutic goods
enterprises and should exercise that scope.21 Participants in the Australian market
both can and should pay for access to that market.
In addressing claims regarding red tape it is axiomatic that the Review Panel should
not take industry and TGA claims at face value. Australia’s national interest is not
necessarily identical with the interests of the members of PhRMA. Billion dollar
penalties and import restrictions imposed overseas on leading US and Indian
enterprises – all of which recurrently claim to embody global best practice, a strict
18
It is not axiomatic that deregulation is necessarily the highest priority. Neeraj Sood, Han de Vries,
Italo Gutierrez, Darius N. Lakdawalla and Dana P. Goldman, 'The Effect Of Regulation On
Pharmaceutical Revenues: Experience In Nineteen Countries' (2009) 28(1) Health Affairs w125 for
example notes that globally there has been a strengthening rather than relaxation of regulation.
19
Productivity Commission, Bilateral and Regional Trade Agreements (2010).
20
Deborah Gleeson, Ruth Lopert and Papaarangi Reid, ‘How the Trans Pacific Partnership Agreement
could undermine PHARMAC and threaten access to affordable medicines and health equity in New
Zealand’ (2013) 112(30 Health Policy 227; and Michael Blakeney, ‘The Pacific Solution: Australia
and Negotiation of the Trans-Pacific Partnership Agreement (TPPA)’ (2014) 37(2) University of
Western Australia Law Review 123.
21
See for example Agnes Vitry, Joel Lexchin and Peter R. Mansfield, ‘Is Australia's National
Medicines Policy Failing? The Case of Cox-2 Inhibitors’ (2007) 37(4) International Journal of Health
Services 735
9
adherence to law and a disinterested care for consumers – demonstrates that
caution is appropriate. The discussion paper notes industry unhappiness about
perceived delays, relative to practice in comparable jurisdictions, regarding approval
of medicines and devices.22 One response to that unhappiness is to “cut red tape”.
We suggest that are more appropriate response is to ask what is the basis of the
delays and what are the appropriate costs for minimising delays. If delays are
primarily attributable to under-resourcing of the TGA – ie insufficient expert staff who
are underpinned by support staff and are encouraged through a positive corporate
culture – that under-resourcing can be addressed through mechanisms such as
training, recruitment and efforts to increase retention. Those mechanisms are
different to reducing requirements.
TGA performance can be further enhanced through a rigorous review of the
organisation’s back office activity, consistent with anecdotal reports about substantial
inefficiencies in information handling by staff who are not required to be specialists in
the evaluation of pharmaceuticals and devices.
Reliance by the TGA on the good faith and expertise of overseas regulators, such as
that in India, is institutionally naive. That naivety is exacerbated by the unwillingness
of the TGA to acknowledge and actively address concerns expressed by academics,
clinicians and civil society advocates.
The Review
The Review comes after a succession of inquiries into the TGA, all of which have
highlighted concerns regarding the organisation’s culture, structure and direction.
Overall, the TGA has not embraced valid criticisms. Given the organisation’s
significance its unresponsiveness is of real concern and should be addressed on a
considered holistic basis. An observer could be forgiven for questioning the
willingness of the previous and current Governments to engage with the
organisation’s problems: stakeholders appear to be seeing a succession of inquiries,
continued bureaucratic indifference and administrative band-aids rather than
systemic performance improvement.
Unsurprisingly, in an environment where improvement is construed as ‘cutting red
tape’ and reducing cost, rather than necessarily improving quality of outputs, the
organisation has continued to lose capacity, with a reluctance to engage with
industry and other stakeholders. The concatenation of material on its website is not a
substitute for a dialogue or for the necessary recognition that the TGA has failed
significantly in recent years (for example with implants) and appears likely to fail in
future (eg its apparent indifference to contamination and fraud problems in the Indian
generics industry).
Policymaking under the current and preceding national Governments has been
driven by perceptions that regulation is necessarily a burden, is largely unnecessary
and should be substantially reduced in order to enhance Australia’s international
competitiveness.
In providing this submission we are not advocating regulation by the TGA as an end
in itself. Instead, we suggest that the TGA use its resources more effectively, with an
emphasis on national benefits (ie avoiding both perceived and substantive capture by
22
We note that the delays referred to in the discussion paper involve weeks rather than years.
10
the commercial entities whose therapeutic goods are legitimately regulated by the
national government).
In preceding paragraphs we have referred to productivity. The impact of regulation, in
particular inappropriate burdens attributable to unnecessary regulation, is of salient
concern. In responding to the discussion paper we however offer a caution. Little of
the official literature – in particular the successive reviews of the TGA that have
recurrently identified problems with that organisation’s corporate culture, governance
and expertise – has addressed concerns about the impact on national
competitiveness and economic growth of failures by regulators. In the therapeutic
goods sector a regulator that fails to readily foreseeable harms shifts costs from the
regulated entity – for example a pharmaceutical manufacturer – to consumers and
the wider community. The taxpayer for example bears the burden of paying for users
of the public health system: people injured because the regulator failed to prevent the
harm. The taxpayer also bears a burden because both the injured and their carers
have a reduced ability to engage in the sustained fulltime work that results in
economic growth at the macro level and that broadens the tax base. A commitment
to ‘cutting red tape’ may please the TGA’s clients at the expense of penalising
ordinary Australians and disappointing any national Treasurer who looks beyond the
election cycle.
Neither the discussion paper nor independent authoritative research has
demonstrated a market failure, ie an inability or unwillingness, on the part of local
and overseas therapeutic goods manufacturers to service the Australian market.
Difficulties faced by Australian start-up enterprises reflect the thinness of the
Australian innovation capital sector and the small size of the Australian market
relative to that of the EU and US rather than fundamental problems with TGA red
tape.
We suggest three overall responses to the problems noted in the discussion paper.
Those responses look ahead and seek systemic improvement rather than fixing
historic failures.
1
Under section 61A of the Therapeutic Goods Act 1989 (Cth) the TGA
is immune from civil litigation regarding all activity that was undertaken
in good faith. That section appears to have been a response to the
acknowledged misbehaviour by the TGA in relation to Pan
Pharmaceuticals. The section should be deleted from the Act. Liability
for negligence is a basic principle in Australian law. Immunisation from
that liability is inappropriate. Liability provides a fundamental discipline
that is necessary for an organisation where inadequate administration
has a clear risk of resulting in significant injury to individuals, burdens
on the taxpayer through increased health costs and reduced national
productivity. Our preliminary research indicates that the cost to the
taxpayer of injury that was reasonably foreseeable and could thus
have been readily prevented by the TGA is over $1 billion, ie around
ten times the cost of running the TGA.
2
The TGA currently has an anomalous status within the national
bureaucracy. Alongside the removal of immunity we suggest that it be
established as a more autonomous body, one that is depoliticised and
for example has the same status as the Australian National Audit
Office under the Auditor-General (ie reporting directly to Parliament
rather than to the Health Minister of the day and to the head of the
Health Department). Such a move should be accompanied by the
11
establishment of a independent statutory advisory body, for example
similar to that advising the national statistician, as a mechanism for
encouraging meaningful TGA engagement with stakeholders that are
broader than members of Medicines Australia and other industry peak
bodies. As noted above, a model is provided by the Advisory Council
on Intellectual Property, advising the Australian Patent Office. The
body must be adequately resourced (given that under-resourcing
traditionally vitiates engagement), must be committed to active
provision of advice, and given concerns regarding regulatory capture
must bring together a range of stakeholders – including consumers.
3
23
Both the current Review discussion paper and the TGA appear to
construe the organisation’s mission as one of administration that is
driven by the reduction of costs, ie lower fees paid by the commercial
enterprises that are regulated by the TGA. The Review (at page i)
indicates that the paper has been released to “promote discussion”
and “form a view about whether there is a shared understanding”
about the regulation of medicines and medical devices. There is
clearly considerable disagreement – albeit little acknowledged by the
TGA – regarding the organisation’s performance, its raison d’etre and
the broader framework that encompasses the Therapeutic Goods Act
1989 (Cth), the Competition & Consumer Act 2010 (Cth), other
statutes and industry codes.23 We suggest that disagreement within
the TGA and outside the organisation can be minimised through
inclusion of a revised Objects clause in an updated Therapeutic
Goods Act. The usefulness of an Objects clause was highlighted in a
range of submissions regarding proposed changes to the Patents Act
1990 (Cth). The core element of such a clause – ahead of industry
support – would be ensuring Australia’s health. Such an element
would not conflict with obligations under the TRIPS agreement and
would, of course, be useful in public consideration of restrictive
provisions in proposed free trade agreements such as the
TransPacific Partnership Agreement. (Such consideration is
particularly important given consistent indications of conflicting policy
positions on the part of the Department of Foreign Affairs & Trade,
Department of Health, Department of the Treasury and Productivity
Commission.) As noted above, inclusion of an express primary object
of consumer protection is not obviated by the existence of the National
Medicines Policy. Australian courts and officials have recurrently
noted that policy statements may be informative but are not
justiciable. In undertaking its mission the TGA needs the discipline
that is provided by a statute that clearly requires it to treat its duty to
Australian consumers as a having a higher priority than the reduction
of costs incurred by the therapeutic goods suppliers it appears to
regard as its clients.
It is clear for example that the Australian Competition & Consumer Commission (along with many
clinicians and researchers) takes a quite different view of the Medicines Australia Code to that of
Medicines Australia.