Directors and officers of companies involved in the importation, marketing, advertising and supply of “therapeutic goods”[i] (including medicines, herbal medicines, supplements, medical devices and other goods marketed or advertised for “therapeutic use”[ii]) in Australia have a legal responsibility to be aware of the regulatory regime and are responsible for compliance with the Therapeutic Goods Act 1989 (Cth), the Therapeutic Goods Advertising Code and other relevant laws. Ignorance of the law is no excuse. Recent pecuniary penalties for contravention of the Therapeutic Goods Act for companies have ranged between $2 million and $10 million.[iii]
Non-compliance with the Therapeutic Goods Act 1989 (Cth) or the Therapeutic Goods Advertising Code can result in infringement notices and court proceedings being issued by the regulator against the company and its directors and officers. The director of the company Oxymed Australia Pty Ltd (Oxymed) was ordered to pay a penalty of $1 million dollars by the Federal Court of Australia for his involvement in the company’s contravention of the Therapeutic Goods Act in the supply and advertising of unregistered medical devices used to administer hyperbaric oxygen therapy[iv]. The director was involved in the day-to-day management of the company and its marketing and advertising campaigns including the posting of offending advertising material on the company’s website, Facebook page and also on his personal Linkedln page.
The company, Oxymed, and its director failed to comply with warning notices issued by the regulator, Therapeutic Goods Administration (“TGA”) and continued to supply the unregistered medical device and post advertising material on the company’s website and social media sites. The director contended that the material he posted was not advertising but educational material including scientific literature and that the devices he was supplying did not require registration. The TGA issued infringement notices, followed by Federal Court proceedings against the company and its director seeking injunctive relief and imposition of pecuniary penalties for the contravention of the Therapeutic Goods Act. In the course of the court proceedings, the company and director admitted the breach of the law. The court also imposed a $2 million pecuniary penalty in respect of the company.
Case Examples
Secretary, Department of Health v Enviro Tech Holdings Pty Ltd (2022) FCA 865
Date and Court: Federal Court of Australia on 27 July 2022
Background: In August 2020 Enviro Tech Holdings Pty Ltd (First Respondent) imported into Australia 500,000 face masks, which are ‘medical devices’ under the Therapeutic Goods Act 1989 (Cth) (TG Act). The face masks were imported when importation of the ‘medical devices’ could only be imported, exported, manufactured or supplied by a person under a contract between the person and the Australian Government Department of Health or another agency of the Commonwealth acting on behalf of the Department[v] in contravention of the Therapeutic Goods Act 1989 (Cth) (TG Act). Face masks are ‘medical devices’ within the meaning of the Therapeutic Goods Act 1989 (Cth) (TG Act). The face masks were subsequently distributed and advertised on the First Respondent’s website before the Respondents had completed the TGA’s regulatory requirements. The Second Respondent (Connie Triantos) and Third Respondent (Jerry Triantos) were also found to have breached the TG Act by aiding, abetting, counselling or procuring a contravention of the TG Act by the First Respondent.
Civil Penalty Orders – payable to the Commonwealth of Australia:
- First Respondent ordered to pay a penalty of $80,000; and
- The Second Respondent and Third Respondent, who were company officers of the First Respondent, were also ordered to pay a penalty of $8,000 each.
In making the orders, Justice Hespe noted that:-
- the Respondents were inexperienced with the TGA regulatory regime and had no intention of contravening the TG Act;
- it appeared that [the Respondents] “became overwhelmed and confused by the regulatory regime and, rather than engage with the Department, closed their eyes to their predicament.”[vi]
- The contraventions related to a singular event that was time limited and is unlikely to have been the cause of any damage.[vii]
However, Justice Hespe found that ultimately, “Ignorance of the requirements of the TG Act and regulations, and inexperience in dealing with the regulatory regime, are not an excuse. Those who wish to engage in business involving therapeutic goods have a responsibility to be aware of the applicable statutory scheme and to comply with the relevant regulatory requirements”[viii]
Secretary, Department of Health v Oxymed Australia Pty Ltd (2021) FCA 1518
Date and Court: Federal Court of Australia on 2 December 2021
Background: The Respondent was found to have contravened the Therapeutic Goods Act 1989 (Cth) (TG Act) by advertising unregistered ‘medical devices’ – in this case, devices intended to administer hyperbaric oxygen therapy (HBOT Devices) – and making multiple representations on Oxymeds’ website and Facebook page which were prohibited and restricted under the TG Act. Justice Rofe also found that the Second Respondent, Malcolm Hooper, had aided, abetted, counselled or procured the First Respondent’s contraventions of the TG Act.
Penalty Orders: – Noting that “specific deterrence was very important in this case”[ix], Justice Rofe ordered:-
- the First Respondent ordered to pay a pecuniary penalty in the sum of $2,000,000 to the Commonwealth of Australia;
- the Second Respondent pay a pecuniary penalty in the sum of $1,000,000 to the Commonwealth of Australia
In making his decision, Justice Rofe was not moved by the Respondent’s alleged ignorance of the requirements of the TG Act[x], holding that “It is the responsibility of anyone who wishes to engage in a business which involves the use of therapeutic goods or the provision of health services to be aware of the applicable statutory scheme, the conduct that is prohibited, and to comply with the relevant regulatory requirements established under the TG Act, from the time they start the provision of those services, if not before.”[xi]
Authored by Katarina Klaric, Principal, Stephens Lawyers & Consultants; The contribution of Rochina Iannella, Lawyer, in researching and authoring the Case Examples is acknowledged.
© Stephens Lawyers & Consultants. 11 October 2022.
This update is not intended to be a substitute for obtaining legal advice.
For further information contact:
Katarina Klaric
Principal
Stephens Lawyers & Consultants
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[i] See definition of ‘therapeutic goods’ in section 3 (1) of the Therapeutic Goods Act 1989 (Cth)
[ii] See definition in ‘therapeutic use’ in section 3 (1) of the Therapeutic Goods Act 1989 (Cth)
[iii] Secretary, Department of Health v Enviro Tech Holdings Pty Ltd (2022) FCA 865; Secretary, Department of Health v Oxymed Australia Pty Ltd (2021) FCA 1518
[iv] See Summary of Secretary, Department of Health v Oxymed Australia Pty Ltd (2021) FCA 1518 further below in article.
[v] Secretary, Department of Health v Enviro Tech Holdings Pty Ltd (2022) FCA 865 [1]
[vi] Ibid. [64] [65]
[vii] Ibid. [76]
[viii] Ibid. [76]
[ix] Secretary, Department of Health v Oxymed Australia Pty Ltd (2021) FCA 1518 [253]
[x] Ibid. [252]
[xi] Ibid. [251]