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Finance and Public Administration Legislation Committee

HORNER, Ms Philippa May Beddison, Principal Legal Adviser, Therapeutic Goods Administration

WOODLEY, Mr Peter, Assistant Secretary, Blood, Organ and Regulatory Policy Branch, Regulatory Policy and Governance, Department of Health and Ageing


CHAIR: I welcome officers from the Department of Health and Ageing and the Therapeutic Goods Administration. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I remind witnesses that the Senate has resolved that an officer of the department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted.

The committee has your joint submission. I now invite you to make a short opening statement. At the conclusion of your remarks, I will invite my colleagues to put some questions to you. Are you both going to make an opening statement?

Mr Woodley : I think neither of us.

CHAIR: That saves us some time. In that case, we will go straight to Senator Di Natale.

Senator DI NATALE: Can you very quickly give a short summary of the progress that has been made since the government released its position paper on the promotion of therapeutic goods? Can you give a chronology?

Mr Woodley : I will do my best. Firstly a working group was established under Ms Anne Trimmer, as I think has been discussed a number of times this morning. That group produced a report containing a series of recommendations and put them to the government. The government responded to these recommendations in the context of a document known as the TGA blueprint. From memory, that was in December 2011.

The recommendations could be characterised as falling into three tranches. There were recommendations that industry continue to take steps to self-regulate, and the government accepted those recommendations. There was a tranche of recommendations that involved further steps to self-regulate but which would benefit from some further government support. They were noted but ultimately responded to in the budget of May last year. I can talk further about that. Then there was a third tranche of recommendations that the government begin to move into a co-regulatory space and the government chose not to support those recommendations.

Senator DI NATALE: Perhaps you could let us know the middle group of those recommendations. I think you are going to discuss the money which has been allocated and could we have an update about progress?

Mr Woodley : The measure involves $1.4 million being provided over four years to support a range of activities to be guided by an advisory group. Since that decision was taken, then Parliamentary Secretary for Health and Ageing, the Hon. Catherine King MP, appointed Professor Lloyd Sansom to head up that group. Nominations were sought from a range of organisations to constitute that committee and the committee was put together. In fact it has met twice to date. The first time was on 5 March and the second time was just last week on 23 April by teleconference. The group is advisory. Its responsibility is to report on its considerations to the Parliamentary Secretary for Health and Ageing but I can state that the committee has been active in pursuing a number of tasks it is charged with. The Anne Trimmer group recommended, for example, that there be a common educative complaints portal established. So the group has discussed at length the architecture and governance around such a portal and is due to provide some advice on that this calendar year.

The group is also responsible for advising on a review of the state of play—if you like, a stocktake or instruction for a roadmap—of industry codes of conduct across therapeutic goods industries. That is to occur in the coming financial year, 2013-14.

Senator DI NATALE: What is the objective of that?

Mr Woodley : Essentially to set a benchmark to establish what the state of play is and the extent to which there is or is not compliance with codes.

Senator DI NATALE: Hang on: there are two things there and this is important. Firstly, what are the codes and, secondly, there are compliance issues. Is the objective there to rationalise the codes and in some way?

Mr Woodley : It is to take a snapshot of the state.

Senator DI NATALE: I can read the codes and I will get a snapshot, but it must do more than that. You do not have a high-level committee set up to read the codes.

Mr Woodley : If I could finish: to the extent that there is evidence available to the committee between now and the end of the calendar year, that evidence will be used to form advice on not only whether there are codes or what they cover but also the extent to which there is compliance. This committee is charged with a further process and that is to evaluate progress. I think that occurs in 2015-16, towards the end of this particular measure. So one would expect that would contain a reasonably robust set of information about the state of compliance with codes across members and non-members.

Senator DI NATALE: I am still not clear. I understand compliance is one issue. When you say 'take a snapshot', a snapshot of what?

Mr Woodley : We are talking about the first of those processes or the second?

Senator DI NATALE: You used the words 'take a snapshot'—I am not sure where you are relating to.

Mr Woodley : It is to provide to the parliamentary secretary an objective and informed view based on whatever evidence is available at the time of the extent to which codes comply, for example with the high-level principles which were recommended by the Trimmer group.

Senator DI NATALE: Okay, so not compliance of the individual member bodies to their code but whether the codes themselves are compliant with the high-level principles?

Mr Woodley : The terms of reference have not been nailed down, so that is how specific I can be.

Senator DI NATALE: That is my next question.

Mr Woodley : But I would be very surprised if the review did not contain whatever information and evidence there is available about issues around compliance or noncompliance at that time.

Senator DI NATALE: Perhaps we need to go back a step because obviously this is where some of the confusion is. I was going to ask you whether the terms of reference are publicly available.

Mr Woodley : Not at this stage.

Senator DI NATALE: So we do not have terms of reference yet?

Mr Woodley : The group has had two meetings. At the second meeting it endorsed the minutes of the first meeting. So this advice needs to go to the new parliamentary secretary who will make a call on the extent to which this information is made public.

Senator DI NATALE: At this stage, we do not have an established set of terms of reference?

Mr Woodley : Correct.

Senator DI NATALE: Is the membership of the group publicly available?

Mr Woodley : Yes. It consists of, as far as I am aware, all the major industry players as well as a couple of representatives of healthcare professionals and a consumer representative. I can run down the list if that is required.

Senator DI NATALE: Perhaps you could take it on notice and provide that.

Mr Woodley : I am happy to table that.

Senator DI NATALE: Great. It sounds as if it is not going to be particularly fruitful to pursue the work of the committee just because it appears that we do not have a solid program outlined yet.

Mr Woodley : I think the committee has hit the ground running.

Senator DI NATALE: We do not have terms of reference so how do you hit the ground running without terms of reference? They might be running but in all sorts of different directions.

Mr Woodley : No, as I said, the committee's first responsibility is to report the parliamentary secretary and at that point I expect we will be in a position to provide more detail.

Senator DI NATALE: I just want to be clear here. We do not have terms of reference—

Mr Woodley : We do not have publicly available terms of reference for the committee. Are we talking about the committee or the review itself?

Senator DI NATALE: We are talking about the advisory group's terms of reference. I am going to try to pin you down here. You said they have not signed off on terms of reference. Now you are saying they are not publicly available. Which of those two things is it?

Mr Woodley : I said what they have not signed off on is terms of reference for a review they are required to manage.

Senator DI NATALE: Which means they do not actually have terms of reference.

Mr Woodley : For that review.

Senator DI NATALE: For their program of work.

Mr Woodley : For their program of work. They have provided comment on their terms of reference which will need to be conveyed to the parliamentary secretary who will need to consider their advice. I suggest at that point the terms of reference might be publicly available.

Senator DI NATALE: In the interests of time, I do not want to get bogged down on this but it is an important point. One of the issues we have heard time and time again and we have heard from Medicines Australia that they are setting a benchmark. We have also heard that there are a number of other codes which do not reach that benchmark. Even those that might be inferior in many ways, there are industry players who are not compliant. In one of the presentations we heard earlier—I think, in Professor Harvey's submission—the generic company Ranbaxy offered pharmacists a whole lot of free stock. It seems to me a clear breach of the code, yet they are not signed onto the code. So the question for me is: what is the point of having the code if we have a big industry player who is not signed on? While this bill will be amended to include all healthcare professionals, including pharmacists, it seems to me that that will be a significant issue that needs to be addressed. Given that the government has not agreed to recommendation 5, which to me seems a very sensible one which is that it is a requirement of the application for any new therapeutic product that it participate in an industry code, what can be done about it? What can the TGA do when there is quite clearly a breach of the code by somebody who is not signed onto it?

Mr Woodley : With respect, I think we are straying into areas of comment on policy. I am not sure I can help you.

Senator DI NATALE: No. I am asking you what are the powers of the TGA. This is not government policy. What are the powers of the TGA in this instance where you have an industry code, and I won't be rude about it, but they effectively say, 'We're not interested and we're going to keep going doing what we are doing.'? What can the TGA do about that?

Ms Horner : It is a question of whether that conduct is regulated under the Therapeutic Goods Act. The supply of pharmaceutical products to a pharmacy is not regulated under the Therapeutic Goods Act. The Therapeutic Goods Act is concerned with approving medicines and medical devices in Australia. What happens after that and the relationship sponsors have with healthcare professionals is part of this co-regulatory regime that will be looked after both through the codes and through the rules that apply to professionals.

Senator DI NATALE: But they said they are not going to participate in the code.

Ms Horner : That does not alter the extent to which the Therapeutic Goods Act does or does not apply.

Senator DI NATALE: I take your point. So the short answer is the TGA can do nothing about it because it is outside of their mandate. It really is a question for the industry code. Is that a summary of what you just told me?

Ms Horner : All I am telling you is what is in the Therapeutic Goods Act. I am not making any commentary on what is or is not in the code.

Senator DI NATALE: The TGA cannot do anything about this. Giving a whole lot of free stock in an effort to try and get their product out is a clear breach, in my view, of the code. We have got a key industry player who is saying they are not interested in the code. I will not continue to go down that line of questioning.

I want go through some of the progress on the recommendations that has been made. You mentioned the first tranche and I think you include the educative complaints process. Could you explain that a bit more.

Mr Woodley : The former working group recommended that there be a common portal or place where consumers, health professionals and anybody else could go if they wished to register a complaint involving the inappropriate promotion of therapeutic goods rather than have a range of places they need to go. The committee has considered that in some detail. They have established a subcommittee to work out some detail. The principle is that there is one well publicised place to go if one wishes to register a complaint or a concern about the promotion of therapeutic goods. It may be that such a complaint having being registered through that portal may be redirected to a place where it is most appropriately dealt with. The idea was to have one point.

Senator DI NATALE: It seems from the evidence we have heard that there is a suggestion that the TGA would be the appropriate body to house the disclosure provisions that are being worked on by the transparency working group. What is the response of the TGA to that proposal?

Mr Woodley : The TGA has been an observer of those discussions and has provided useful information but is not part of the decision-making process. It is one of the options being considered from a range of considerations. If this is to be truly part of a self regulatory arrangement, is it appropriate for a government website to host such a portal? This is one of a range of questions that the committee has conjured with. Nevertheless it is a relatively well known point of contact on a range of issues to do with therapeutic goods. There are arguments for and against and the committee is working through those now.

Senator STEPHENS: Thank you for being here today and for putting some sense around some of our discussions. The TGA blueprint you referred to, I have not seen it in our materials pack.

Mr Woodley : I think it was an attachment to our submission but I am happy to provide a copy separately.

Senator STEPHENS: I have it, sorry. One of the issues we heard this morning is that those people who are outside the scope of membership of Medicines Australia do not participate in the codes of practice or do not adhere to the codes of practice. This is problematic in terms of how a regulatory environment can capture them and manage their behaviours. What is the department's view on how to encourage greater participation through, if not a mandatory code, a more substantial obligation to participate in the code?

Mr Woodley : I am sorry; again, I think that is straying into comment on policy. I could really only reiterate the position put through this blueprint document.

Senator STEPHENS: Fair enough. In the previous submission there was some comment, made by previous witnesses, from Medicines Australia. It says:

If the Senate Committee has concerns about the conduct of companies that are not Medicines Australia members and their potential impact on maintaining the integrity of the health system and safeguarding patient confidence in health care professionals, it should consider supporting mechanisms to ensure all companies involved in the sale or promotion of therapeutic products abide by a relevant industry Code of Conduct. This is consistent with the recommendations of the Trimmer Review, which specifically recommended that government implement a mechanism to ensure that all companies would be bound by a relevant industry self-regulatory code through the product registration process, whether or not the company was a member of an industry association. The Government has recently established the Codes of Conduct Advisory Group, chaired by Emeritus Professor Lloyd Sansom, to progress implementation of these initiatives …

Can the committee understand that this issue is one that is being pursued by the Code of Conduct Advisory Group?

Mr Woodley : Yes, it can. There has been robust discussion—I think I can reveal—about the issue of non-members and I would be very surprised if any advice that comes out of that group to the parliamentary secretary does not deal fairly comprehensively, backed by whatever evidence is available at the time, with the issue of compliance or non-compliance by non-members. If I could quote a short piece from the blueprint document, it may help a little. It establishes what the government's position is. It says:

Further changes will be considered if it is found that there is a need to provide greater encouragement to non-members of industry associations to nominate and sign up to an appropriate industry code, including the TGA seeking notification of a sponsor’s nominated code of conduct at the point of including a product on the ARTG.

It is there as an anticipatory comment.

Senator STEPHENS: On reading the submissions, it did seem to me that this was the view of the ACCC as well, that there should be a stronger code of conduct if it were not going to be a mandatory code of conduct, that there did need to be incentives for those who are not members to actually participate. So thank you for that. The second issue we heard about today was concern from other witnesses about the complaints mechanisms. I was interested that you told us this morning the code of conduct committee has been looking at an educative portal for complaints. Could you give us just a bit more detail?

Mr Woodley : Noting that this is still under discussion and has not yet been the subject of advice to government, in nuts and bolts terms, I would imagine an internet site which may be advertised through one means or another whereby consumers, health professionals and anyone else with a concern around the manner in which therapeutic goods are promoted could go in order to learn more about what is or is not considered appropriate behaviour and to formally be directed to where an appropriate complaint ought to be lodged and will be dealt with.

Senator STEPHENS: I am just making this up in my head as we are talking, but one of the challenges with that would be a consumer who perhaps has been prescribed medication and then the doctor prescribes generic medication and the consumer then does not feel that it is effective enough and that they should have been given the more expensive medication. Would you imagine that that is the kind of stuff that is going to end up being on this portal or there is going to be an opportunity, as you say, to educate people as well?

Mr Woodley : I imagine such a portal would attract attention and complaints on a vast range of issues, a subset of which might be legitimately to do with the promotion of therapeutic goods by a sponsor. Some may be to do with the advertising of a specific therapeutic good, which would need to be dealt with differently—and my colleague, I think, might inform us that that might be legitimate territory for the TGA to consider under its legislation—or it might be to do with the behaviour of a prescriber or a clinician, in which case a different route again would be appropriate. But the point is that it would be a point of triage for complaints of a range of natures.

Senator STEPHENS: My next question is on a slightly different tangent. We have spoken mostly about the pharmaceutical industry today, because that is the focus of the bill, but where do you see alternative medicines—Chinese herbal medicines, for example—might fit into this regime?

Ms Horner : It is interesting, because the definition used in the bill actually picks up—and I am sure Senator Di Natale is aware of this—a much wider range of manufacturers and sponsors than the pharmaceutical industry. By defining it in terms of companies that import, supply or manufacture listed or registered goods, the definition is actually picking up over-the-counter and complementary medicines. It is even picking up therapeutic devices. The advertising of complementary medicines is regulated under the Therapeutic Goods Act because they can be advertised to the public, as can most over-the-counter medicines. They can be advertised straight to the public and there is a whole regime in part 5-1 of the act which regulates that advertising. What becomes important—as I think is pointed out briefly in the explanatory memorandum—is the fact that prescription medicines and S3 medicines (pharmicist only) cannot be advertised to the public under our act, but our act does not purport to regulate advertising to healthcare professionals, which is where the codes of conduct come in.

I should just mention one more thing. I do not think it is quite right to say that drug companies are free to communicate with doctors that prescribe medicines. Even apart from the code, the TGA has—and I do not know how long this practice has been in place—as a condition of registration of prescription medicines, both innovator and generics, there has been a practice of imposing a condition. I might just read it out. It is not particularly expressed as well as one might hope. It says:

Promotional material

and that is a concept that is used in the Medicines Australia code—

other than product information relating to the registered good

and that is both innovator and generic—

must comply with the requirements of the code of conduct of Medicines Australia, formerly of the Australian Pharmaceutical Manufactures Association.

That might be indicative of how long this condition has been relooked at.

The important thing to note is that it says 'relating to the registered good must comply with the requirements of the Code of Conduct of Medicines Australia'. In the Code's 17th edition the material that relates to the promotion of particular goods, as opposed to the promotion of the company or the company's name, is really the first four parts, which are all about promotional material. They reflect very much the kinds of regulation in the Therapeutic Goods Act in relation to therapeutic goods that can be advertised to the public—that is, they cannot be misleading, must give all the material and must be supported by evidence. It is the same kind of idea. In a way, those ideas have been incorporated by reference into this condition.

I am aware of at least one occasion on which a company complained to Medicines Australia about the conduct of one of its competitors in the promotion of that company's goods. There was an issue about the status of this condition. I am not aware of what the outcome was, but if it was the case that the conduct of the company amounted to a breach of those requirements, in that the same promotional material given to doctors on that particular good was misleading or breached any of these kinds of rules set out in the Medicines Australia code, then that could amount to a breach of a condition under our act. A breach of condition has three possible consequences: it allows the Secretary of the Department of Health and Ageing to consider suspension or cancellation of the product itself; it is an offence under the act; and it exposes the company to civil penalties.

I am not aware of whether this condition has been breached or not becoming an issue—I just raised it in the context of complaints being made. I am not aware of it being a common source of complaint, but it is certainly there. I mentioned that because I would not want the explanatory memorandum, which says 'drug companies are free to communicate with the doctors that prescribe medicines', to be considered entirely accurate in the sense that there is some regulation in relation to particular therapeutic goods. That is a condition of registration. I think that is important to make clear.

Can I make one other thing clear when we are talking about possible unintended consequences in the bill. This might be quite intentional, but the bill covers the promotion of complementary medicines as well as prescription medicines. People may not realise that the whole of the discussion has really been about the promotion of prescription medicines, and that is because the prescriber determines what the patient gets. For complementary medicines and OTCs the patient can go into a pharmacy or Woollies and make the choice themselves, so promoting it to a healthcare professional is not going to make much difference. Pharmacist-only goods are a bit different because if you go into a pharmacist and ask, 'What do you think is good for me?' the pharmacist makes the choice.

The other thing is the definition in the bill of the company, which refers to someone who is importing, supplying or manufacturing in Australia. I suspect that definition was picked up from the definition of 'sponsor' in our act. I think what is really intended to be referred to is the company in relation to whom the product is entered in the register. Is that right?

Senator DI NATALE: Yes.

Ms Horner : In which case, if you are thinking of amendments this may be something you need to look at. The way it is defined at the moment—and I think this was picked up in the submission from the University of Sydney—it may have the unintended consequence of picking up everyone who imports or supplies the medicine which is on the Australian Register of Therapeutic Goods. I am sure that was not the intent. I would be very happy to commit some of this to writing so that you have a record of some of these comments for your convenience.

CHAIR: A lot of our evidence today, and the discussion and interaction, has been in relation to sponsorship of education, trips away and inducements having an impact on patient care. Does the department have any substantial evidence that demonstrates that inducements are having an impact on patient care?

Mr Woodley : I guess we are aware of anecdotal evidence. I am not sure that it amounts to a substantial body of coherent evidence. Nevertheless, the government has chosen to respond. It recognises that this is an issue that needs to be addressed and at this point has chosen to go down a self-regulatory route with the prospect, if you like, that if by 2015-16 it does not work it will consider other options. So, on that basis, I guess there are some concerns that the consequences may, ultimately, be to the detriment of the consumer.

Senator DI NATALE: I have a question about the number or proportion of companies that do not subscribe to industry codes. I want to get a sense of perspective. I think MA said that they are not aware of any innovator companies that are not members.

Ms Horner : I think they said three companies.

Senator DI NATALE: Sorry, obviously my attention was elsewhere—three companies. What about in the generic medicines area? What proportion of companies are members?

Mr Woodley : The working group has made it one of its jobs, with our support, to establish quite precisely the proportion of members to nonmembers. In the Medicines Australia area, clearly they have some concrete views about that. The evidence is not quite so uniform across some of the other industry sectors, but we and that advisory group are keen to establish precisely what proportion of sponsors and of the market we are talking about here.

Senator DI NATALE: What about medical devices? I know you cannot give me hard numbers, but are most of the key players members of the code?

Mr Woodley : It is a question probably best addressed to their association, the MTAA. I understand that a substantial number of individuals sponsors are not members, but there is another question as to what proportion of the market they represent.

Senator DI NATALE: It sounds like the work of the committee might give us some answers on that.

Mr Woodley : I think that is fundamental.

Senator DI NATALE: The other thing is approval of the codes. Obviously, the Medicines Australia code needs sign-off by the ACCC. Is that what happens with the others?

Mr Woodley : It varies. Our advice is that it is not absolutely mandatory but that Medicines Australia for a number of years has chosen to go down the route—

Senator DI NATALE: Why the difference?

Mr Woodley : That is a question I would have to take notice, I am sorry, but we have recently established that it is not a mandatory condition of establishing a code that it—

Senator DI NATALE: So Medicines Australia have done this off their own bat?

Mr Woodley : Yes.

Senator DI NATALE: Perhaps I should have been a bit more generous to them. What about some of the other players? What is the process of developing a code? I am not familiar with the development of industry codes. Do they all just sort of get together in a room and say, 'We're all happy with it—the code's done'? Or is there some official process outside of the ACCC?

Mr Woodley : I suspect it varies from one organisation to the next. I am sorry, I would have to take that on notice as well, or perhaps it could be addressed to the individual associations.

Senator DI NATALE: It seems to be a major issue, doesn't it, that we have such variation between the different codes, and even as fundamental as the process through which they arrive at their own code?

Mr Woodley : The extent of compliance of individual codes with the high-level principles recommended by the former working group and agreed by the government would certainly be a subject for the review I referred to earlier.

Senator DI NATALE: We are moving towards individual disclosure, where the financial relationship between a doctor and a pharmaceutical company will be disclosed at an individual level. Do you have any concerns around privacy or anything that I should be aware of regarding that issue?

Mr Woodley : I am not sure we have a position on that, I am sorry, but certainly privacy would be a fundamental consideration.

Ms Horner : I think the importance of ensuring complete accuracy was mentioned by one of the other witnesses. I assume another issue would be the fact that its reporting is prospective and not retrospective so that everybody is aware that future behaviour may be subject to certain reporting and not prior behaviour—just the normal things that would say: this is how you treat people fairly.

Can I raise one further issue. My understanding—it may be worth committee pursuing this—is that agreeing to be bound by a code is not necessarily the same as agreeing to be a member of the industry association. Medicines Australia may have a view on this, but this is one of the issues which has emerged from the discussion about whether the codes should somehow be given legislative recognition, which was recommendation 5 of Ms Trimmer's group. I do not know whether the industry organisations are exploring this a bit more—whether it is necessarily the case that you have to be a member of the industry organisation for you to agree to the regime and the code might apply to you. That creates another opportunity for companies that do not necessarily want to become members. The recommendation from Ms Trimmer's group seems to be described in different forms. What it actually says is that:

… TGA include on its application forms (whether electronic or paper) a requirement for an applicant to nominate the relevant code of practice to which it will subscribe as a condition of registration …

That was what they recommended, that you nominate a code of practice to which you will prescribe. It is not a condition. It was not recommended that you abide by a code, merely that you nominate one. I am reading what it was because I think it is important.

Senator DI NATALE: It is important. You are absolutely right. Could you read that out again?

Ms Horner : Yes. Recommendation 5:

The working group recommends that TGA include on its application forms (whether electronic or paper) a requirement for an applicant to nominate the relevant code of practice to which it will subscribe as a condition of registration/listing on the ARTG.

I was not involved so I do not know whether those words were chosen very carefully but those words do not amount to it being a condition of registration that you comply. That is not what it says.

Senator DI NATALE: What does 'subscribe' mean in that context?

Ms Horner : Certainly it says 'nominate the code to which it will subscribe'. So in theory if you put down Medicines Australia or GMIA code, then you have complied with the condition. I do not imagine that that is maybe what some people thought the effect of this condition would be. I suppose one of the issues that needs to be thought about when you say, 'Why don't we just adopt this recommendation?'—I am not saying it did or did not have any sway on the government's decision not to adopt it—if it were the case that the condition operated such that as soon as the company did not comply in any way with the code then that would be a breach of condition for all its products, not just for one product but for all its products subject to the condition. So in theory the secretary would be able to suspend or cancel every one of the products. That is very different from the condition which says, 'If you promote this particular therapeutic product in a way that is unfair or whatever, we will take that product off.' What you are saying is that, 'If you don't comply with the code, every product can be cancelled from the register.' So it is different in kind from the other condition that I mentioned.

Senator DI NATALE: Okay, that is helpful.

CHAIR: Thank you, Ms Horner and Mr Woodley, for your submission and also for appearing before us.

Committee adjourned at 12:38