TGA Guidelines

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Enforcement GuidelinesTherapeutic Goods Amendment Act (No. 1) 2006Implementation - General Principles


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Therapeutic Goods Administration

Enforcement Guidelines - Therapeutic Goods AmendmentAct (No. 1) 2006 Implementation General principlesSeptember 2008

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Contents

1. General Principles - Civil Proceedings versusCriminal Prosecutions 5

1.1 Background ____________________________________________________________ 5

1.2 Scope ____________________________________________________________________ 6

1.3 Criminal Prosecution ________________________________________________ 7

1.4 Civil Penalties _________________________________________________________ 9

1.5 Double jeopardy _____________________________________________________ 10

1.6 Criteria for undertaking court action ____________________________ 10

2. General principles for issuing infringement notices12

2.1 Introduction __________________________________________________________ 12

2.2 The Issue of Infringement Notices ________________________________ 14

2.2.1 Strict liability v civil penalty contravention as the basis for issuing an ___ 15

infringement notice _____________________________________________________________________ 15

2.2.2 When will an infringement notice be issued? _______________________________ 16

2.3 Applicability of the Infringement Notice Scheme ______________ 17

2.3.1 Provisions with strict liability and civil penalties ___________________________ 17

2.3.2 Provisions with strict liability offences and no civil penalty contraventions19

2.3.3 Provisions with civil penalty contraventions and no strict liability offences19

2.4 What Level of Fines Will Apply for Infringement Notices? ____ 20

2.4.1 Maximum level of monetary penalty for a strict liability offence __________ 20

2.4.2 Maximum level of monetary penalty for a contravention of a civil penaltyprovision _________________________________________________________________________________ 21

2.4.3 Difference in the level of fines for a strict liability offence and a civil penaltycontravention ___________________________________________________________________________ 21

2.4.4 Issuing an infringement notice for a contravention of civil penaltyprovision and the risk multiplier ______________________________________________________ 21

2.4.5 Risk Multiplier _________________________________________________________________ 21

2.5. The Infringement Notice Document ______________________________ 22

2.5.1 What information will be included in the infringement notice? ___________ 22

2.6. What Happens if a Person is Issued with an Infringement

Notice _________________________________________________________________________ 23

2.6.1 Compliance with an infringement notice ____________________________________ 23


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Enforcement Guidelines - Therapeutic Goods AmendmentAct (No. 1) 2006 Implementation General principlesSeptember 2008

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2.6.2 Contesting an infringement notice withdrawal of an infringement notice23

3. General principles of enforceable undertakings 24

3.1 Introduction __________________________________________________________ 24

3.2 Decision to accept enforceable undertakings ___________________ 25

3.3 Acceptance of an enforceable undertaking ______________________ 26

4. General principles for the use of media release toinform the public about regulatory actions taken 28

5. Entry search and seizure and issuing of warrants 29


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Enforcement Guidelines - Therapeutic Goods AmendmentAct (No. 1) 2006 Implementation General principles,Section 1 - General principlesSeptember 2008

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1. General Principles - CivilProceedings versusCriminal Prosecutions

1.1 Background

The enforcement provisions included in the Therapeutic Goods Amendment Act (No. 1) 2006 (the2006 Act) were designed to support regulatory requirements included in the Therapeutic Goods Act1989 (the Act), with the aim of giving effect to the objects of the Act. The Therapeutic GoodsAdministration (the TGA) places a high priority on the protection of public health and safety byensuring as far as possible that the system of controls relating to the quality, safety, efficacy andtimely availability of therapeutic goods, established by the Act, will work. For this reason, the 2006Act introduced further options, including new judicial sanctions, to:

help achieve the objects of the Act and the Therapeutic Goods Regulations 1990 (theRegulations) and the Therapeutic Goods (Medical Devices) Regulations 2002;

maximise compliance with the regulatory requirements under the Act and Regulations;

promote the supply of safe and good quality therapeutic goods; and

maintain public confidence in the supply, manufacture, import and export of therapeutic goods.

The 2006 Act included provisions that inserted a number of parallel civil penalty and criminaloffence provisions in relation to substantially the same conduct. The introduction of new civilpenalties for dealing with breaches of existing regulatory requirements was based on a recognitionthat civil penalties are often more appropriate for sanctioning corporate wrongdoing. Also, wherecriminal culpability is absent but serious breaches of critical regulatory requirements has occurredcivil action rather than criminal prosecution may be more appropriate. Higher pecuniary penalties,which are a main feature of civil sanctions, may also be a more effective deterrent for regulating

commercial activities to cancel any financial gains obtained through corporate non compliance.

General guidelines are outlined below to provide guidance on how the TGA may choose to eitherprosecute a person for committing an offence under the Act, or take civil action by applying to theFederal Court for a civil penalty order for a breach of a civil penalty provision.

In deciding to take a matter to court, the TGA will continue its current approach in choosing courtaction as a last resort for securing compliance with regulatory requirements. The sanctions packageintroduced by the 2006 Act enables the TGA to choose to take a person who breaches a relevantprovision to the Federal Court seeking a civil penalty order instead of prosecuting a person before a


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criminal court. For information about the TGA and its regulatory function and obligations, visit theTGA website, .

1.2 Scope

The sanctions regime introduced by the 2006 Act built on existing offences previously present inthe legislation and, with the exception of two new offences, did not add any new offences orregulatory requirements that industry members must meet.

Those two new offences introduced by the 2006 Act are contained in sections 42YE (Gatheringinformation for application for pecuniary penalty), and 54B (Application of the Act to an executiveofficer of a body corporate) of the Act.

Subsection 42YE(2) provides that if the Secretary, on reasonable grounds, suspects that a personother than the wrongdoer can give information relevant to an application for a civil penalty order inrelation to the contravention, whether or not such an application has been made, the Secretarymay, by writing given to the person, require the person to give all reasonable assistance inconnection with such an application. Subsection 42YE(5) provides that if a person fails to giveassistance as required under subsection 42YE(2), the person commits an offence against subsection42YE(5), which attracts a maximum penalty of 30 penalty units.

Section 54B sets out a criminal offence and a civil penalty in relation to an executive officer of abody corporate if certain conditions are present. Those conditions are that: the body corporate

commits an offence against the Act or contravenes a civil penalty provision; the officer know thatthe offence would be committed or the contravention would occur; that the officer was in a positionto influence the conduct of the body in relation to the commission of the offence or thecontravention; and the officer failed to take all reasonable steps to prevent the commission of theoffence or contravention. The maximum criminal or civil penalty under section 54B is themaximum penalty that a Court could impose in respect of an individual for the offence committed.

An executive officer of a body corporate is defined in subsection 54B(5) of the Act as, for thepurposes of section 54B, a person, by whatever name called and whether or not a director of thebody, who is concerned in, or takes part in, the management of the body. Section 54C of the Actdeals with establishing whether an executive officer took reasonable steps to prevent the

commission of an offence or the contravention of a civil penalty provision for the purposes ofsection 54B of the Act. Subsection 54C(3) of the Act makes it clear that executive officer has thesame meaning in section 54B, a definition which is broadly consistent with the definition ofofficer of a corporation in section 9 of the Corporations Act 2001.

Other than sections 42YE and 54B, no new offences or regulatory requirements have beenintroduced as part of the 2006 Act.

It is also important to note that the enforcement provisions of the 2006 Act will have no effect onthose industry members who are compliant with the Act and the Regulations or who are genuinelyseeking to be compliant.
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In cases where there has been a breach of the Act or the Regulations, the entity liable for sanction

under the legislation will depend on who is required under the legislation to comply with a relevantrequirement. Most of the requirements under the legislation attach or relate to a particular type ofperson. In most cases this will be the sponsor or manufacturer, however in some situationsindividuals or corporate entities generally may be liable if they have acted in a manner thatconstitutes a breach or breaches of the legislation.

For example, in the case of offences or civil breaches relating to the importation into, exportationfrom, or supply in, Australia, of therapeutic goods for use in humans under section 20(1) of the Act,the entity liable would be the sponsor of the therapeutic goods in question, because it is only uponsponsors that the legislation places obligations to include goods in the Register. In the case ofoffences or civil breaches relating to the manufacture in Australia of therapeutic goods without alicence as required under section 35 of the Act, the entity liable would be the manufacturer of thetherapeutic goods in question, as the legal obligations apply to manufacturers.

To establish whether you are a sponsor, check the definition of sponsor in the Act, which isavailable on the TGA website at. Note that thedefinition of sponsor may include persons who do not have goods included in the AustralianRegister of Therapeutic Goods (the Register) because, for example, they are importing ormanufacturing goods illegally.

Section 42YE of the Act, introduced by the 2006 Act, however, would be an example of where anindividual or a corporate entity generally rather than necessarily a sponsor or manufacturer of

therapeutic goods, may be liable for a breach of the Act. Section 42YE deals with gathering ofinformation in relation to the application of a civil penalty provision.

Subsection 42YE(2) provides that if the Secretary, on reasonable grounds, suspects that a personother than the wrongdoer can give information relevant to an application for a civil penalty order inrelation to a contravention of a civil penalty provision (whether or not the application has beenmade), the Secretary may, by writing to the person, require them to give all reasonable assistancein connection with such an application. Subsection 42YE(5) makes it clear that if a person fails togive assistance as required under subsection 42YE(2), the person commits an offence againstsubsection 42YE(5), attracting a maximum possible penalty of 30 penalty units.

1.3 Criminal Prosecution

The Australian Law Reform Commission (ALRC) Report No 95 at paragraph 2.41 described criminalpenalties as:

The main criminal penalties used in Australian legislation are fines and imprisonment.Other criminal penalties include forfeiture of property; and criminal conviction may alsoresult in follow on penalties such as cancellation of licences. The most serious sanctions,like imprisonment, are likely to be reserved for very serious breaches of the law or may beinvoked where the court or Parliament seeks to focus on the immorality of the offence.
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A criminal offence conviction is considered to be the ultimate sanction for breaching the law.According to the ALRC Report No 95 at paragraph 2.9:

The main purpose of criminal law is traditionally considered to be deterrence andpunishment. Central to the concept of criminality is the notation of individual culpabilityand the criminal intention for ones actions.

Where the regulated conduct involves actual harm or injury to the public, or could poseconsiderable harm to the public, and the requisite mental elements relating to the conduct can beestablished, the TGA will generally pursue a criminal prosecution. This is particularly the casewhere the level of culpability of the person warrants criminal sanction.

The need to show a mental element (an intention to commit the offence) in order to successfullyprosecute someone for a criminal offence against the Act will apply to all criminal offences in theAct that are not noted as being offences of strict liability.

A criminal prosecution will generally be pursued where:

there is a significant degree of criminality or culpability on the part of the alleged offender;

previous administrative sanctions or other enforcement measures have not resulted incompliance;

where the Australian Government or the Australian public expects that a crime will be dealtwith by way of a prosecution;

the conduct in question will result, is very likely to result or has resulted in harm or injury to thepublic;

the alleged crime is of such a nature or magnitude that it is important to deter potentialoffenders and prosecution will act as a very effective deterrent.

For the purposes of establishing whether a corporation may be liable to prosecution for a breach ofa regulatory requirement, section 55 of the Act deals with the matter of establishing a mentalelement or intention on the part of a body corporate. Section 55(1) of the Act provides that:

Where, in proceedings for an offence against this Act, it is necessary to establish the state of mind of a body

corporate in relation to particular conduct, it is sufficient to show:

a. that 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. that the director, servant or agent had the state of mind.

Where culpability and criminality of the conduct are not apparent but there is a need to addressbreaches of the Act and effectively deter future non-compliance, particularly by a body corporate, itmay well be appropriate for the TGA to apply for a civil penalty order.


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1.4 Civil Penalties

Civil Penalties have become a recognised means of enforcement under various regulatoryframeworks in Australia as well as other countries including the United States and New Zealand.

A civil penalty is a punitive sanction of a financial nature, with no aggravating element and no faultelement, imposed through a civil court procedure rather than through the criminal court process. Ittakes the form of a monetary penalty only, and does not result in any criminal conviction.

The ALRC Report No. 95 described civil penalties as:

A civil penalty is one imposed by courts applying civil rather than criminal court processes.

Civil penalties may be broadly defined as punitive sanctions that are imposed otherwise than through the normal

criminal process. These sanctions are often financial in nature, and closely resemble fines and other punishments

imposed on criminal offenders .. the process by which these penalties are imposed is decidedly non-criminal.

The focus of a civil penalty is generally the regulation of commercial activity, and is directed againstcorporate or white-collar wrongdoing. Civil penalties are appropriate in regulating commercialactivities involving the manufacture and supply of therapeutic products, particularly where theactivities are undertaken in the main by incorporated bodies, including subsidiaries ofmultinational companies engaged in commercial operations. The financial disincentive that a civil

penalty regime provides to address and deter breaches of the Act is considered most likely to bemore effective in appropriate circumstances.

To quote from paragraph 26.14 of the ALRC Report No. 95, Principled Regulation Report FederalCivil & Administrative Penalties in Australia, The emphasis in deterrence theory is both on pricing theillegal behaviour and having a penalty large enough to deter a well-resourced corporate offender.

Civil penalties are an alternative sanction for activity or conduct that underpins requirementsdesigned to ensure that therapeutic goods used by the community meet acceptable standards ofsafety, quality, and efficacy. These requirements include compliance with standards applicable to

the goods themselves, and compliance with standards in relation to the way these goods aremanufactured.

Civil penalty provisions also apply in relation to breaches of requirements relating to the inclusionof therapeutic goods in the Australian Register of Therapeutic Goods (the Register), or compliancewith conditions applying to exemptions from the need to include goods in the Register.

A decision to pursue a civil action may take into account one or more of the following factors, beingwhether:


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there has been a blatant disregard for, or a significant degree of indifference to, the regulatoryrequirements under the Act or Regulations;

the Australian Government or the community expects that the matter will be dealt with by wayof a serious enforcement action;

the relevant conduct is of such a nature or magnitude that it is important to deter future noncompliance by the same wrongdoer;

the relevant conduct is of such a nature or magnitude that it is important to deter noncompliance by other potential wrongdoers; and/or

the conduct in question was driven by anticipated commercial benefit for the person at theexpense of public health and safety.

1.5 Double jeopardy

The ALRC Report No.95 notes at paragraph 11.20 that the rule against double jeopardy in criminallaw prevents a person being prosecuted for an offence when that person has previously beenprosecuted for substantially the same offence. It was noted by the majority in Pearce v The Queenwhen they noted that:

[W]hen it is said that it is enough if the offences are substantially the same, this should not beunderstood as inviting departure from an analysis of, and comparison between, the elements of thetwo offences under consideration.

When legislation provides for parallel criminal liability and civil penalties for the same conductthere may be concern that the state could make repeated attempts to punish an individual for analleged contravention or offence.

The 2006 Act clearly protects an individual against multiple penalties in relation to the sameconduct or substantially the same conduct. Sections 42YF and 42YH protect a person against a civilcontravention order after that person has been convicted of a criminal offence for the sameconduct, and vice versa.

1.6 Criteria for undertaking court actionThe ALRC Report No. 95 notes at paragraph 10.12 that the factors that influence a regulatorsenforcement strategy include the nature of the contravention (whether one-off or persistent), theseriousness of the contravention, and whether the contravention was careless, negligent ordeliberate.

The ALRC Report No. 95 also notes at paragraph 10.13 that prosecutions are most likely to bepursued where a contravention gives rise to an immediate risk, a direct harm has already resulted,or breaches are flagrant, repeated or extreme in their culpability. Whether a one-off contraventionwill be regarded as an accident or a deliberate contravention will depend on the regulators

assessment. This assessment is in turn likely to be influenced by the regulators overall


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characterisation of the relevant conduct, and whether or not the regulated party has been apersistent offender. If the contravention is regarded as an accident, and the regulated party is not apersistent offender, it is less likely that a punitive approach will be used unless the contravention issevere in nature.


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Enforcement Guidelines - Therapeutic Goods AmendmentAct (No. 1) 2006 Implementation General principles,Section 2 - General principles for issuing infringement noticesSeptember 2008

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2. General principles forissuing infringementnotices

2.1 Introduction

The Act sets out the legislative framework within which the TGA undertakes all its regulatoryactivities.

The purpose of the alternative enforcement measures contained in the 2006 Act has been toprovide strong support to the primary objective of the Act, which is to establish a system of controlsrelating to the quality, safety, efficacy and timely availability of therapeutic goods used in Australiaor exported from Australia.

This objective not only serves to protect consumers and patient groups to whom therapeutic goods

are supplied. It also serves the interests of industry by maintaining international standards fortherapeutic goods and the manner in which they are manufactured to ensure the supply of highquality and safe goods. Unless the regulatory requirements contained in the Act are complied with,the objectives of the Act may be undermined. Non compliant activities therefore should bediscouraged, and as appropriate punished, where non compliance increases the risk of erodingpublic health and safety, and creates an uneven playing field for compliant members of theindustry. Persistent non compliance or non compliance that may lead, or has led to, harm to thepublic could also damage the reputation of the industry as a whole.

The 2006 Act amended the Act to provide greater enforcement options for the TGA in dealing withnon-compliant conduct. These options have provided greater flexibility in managing noncompliance and may constitute a better alternative to regulatory action such as suspending orcancelling manufacturing licences, or cancelling goods from the Register. The new regimeintroduced by the 2006 Act includes a tiered criminal offence regime and a parallel civil penaltyscheme for dealing with specific non-compliant conduct under the Act. One of the new measuresflowing from the introduction of strict liability offences and civil penalty provisions is the option ofissuing infringement notices, in lieu of initiating a prosecution for a strict liability offence orbringing a civil action for a breach of a civil penalty provision.

Strict liability offences are offences which do not involve or require the proving of a mental elementor intention on the part of the alleged offender in order to establish that the offence has beencommitted. The result of a strict liability offence is that a person who contravenes a strict liabilityoffence provision will be found guilty on the basis of contravention alone being proved, unless an

applicable defence is made out in relation to the person.


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Infringement notices are notices signifying to persons in breach of the relevant provision(s) of the

legislation that they have breached the legislation, and affording them the opportunity to pay theinfringement notice amount rather than go through court proceedings, in the form either ofcriminal proceedings in the case of a strict liability offence, or civil proceedings in the case of a civilpenalty. Further details regarding the nature and use of infringement notices under the 2006 Actare set out under the various headings below.

The ALRC Report No. 95 describes infringement notices as:

An infringement notice (sometimes called a penalty notice) is a notice authorised by statute setting out particulars

of an alleged offence. It gives the person to whom the notice is issued the option of either paying the penalty set out

in the notice to expiate the offence or electing to have the matter dealt with by a court. The notice also specifies the

time and method for payment and the consequences if the person to whom the notice is issued fails to respond to

the notice either by making payment or electing to contest the alleged offence

The option for the regulator to issue infringement notices only arises following a decision to takejudicial action against a person for non compliance with a regulatory requirement. This decisionmay be to either prosecute a person for the non compliance, or alternatively to apply to the FederalCourt for a civil penalty order. This decision will be taken only after independent legal advice, suchas from the Australian Government Solicitor or, in the case of a prosecution the CommonwealthDirector of Public Prosecutions, has been received which makes it clear that there are groundseither for laying charges against a person or for applying to the Federal Court for a civil penaltyorder in relation to a breach of the Act or the Regulations. The legal advice to that effect is

important, because where the person issued with an infringement notice does not pay the penalty,the TGA will pursue judicial action.

In deciding to bring a civil action against a person, and in the conduct of any civil litigation, theregulator is bound to observe the Model Litigant Rules applying under the Legal ServicesDirections. The Legal Services Directions are issued by the Attorney-General under section 55ZF oftheJudiciary Act 1903 and apply to legal services provided to the Commonwealth and its agencies,including Commonwealth litigation. The Legal Services Directions set out the framework andrequirements for the performance of Commonwealth legal services and, in particular, the conductof litigation by Commonwealth agencies. The obligations of Commonwealth agencies in relation toacting as model litigants are set out in paragraphs 4.2 and 12 and Appendix B of the Legal Services

Directions (attached at Attachment B to these Guidelines). The Attorney-General has recentlyissued updated Legal Services Directions under section 55ZF of theJudiciary Act 1903, whichcommenced on 1 July 2008.

The Office of Legal Services Coordination, which is responsible for administration and policy inrelation to Australian Government legal services including in relation to the LegalServices Directions issued by the Attorney-General under theJudiciary Act 1903, has noted that thecommunity expects the Commonwealth to act as a model litigant and to be fair, open, honest andreasonable in its dealings. This expectation was expressed by Chief Justice of the High Court Griffithin 1912 in a statement upon which the model litigant principle has stemmed in large part from,when he referred to the old-fashioned traditional, and almost instinctive, standard of fair-play to beobserved by the Crown in dealing with subjects . (Melbourne Steamship v Moorehead (1912) 15 CLR333).


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Once a decision is made to take judicial action, the option of having the matter dealt with by way of

an infringement notice then becomes open to the regulator. If the matter is dealt with by way of aninfringement notice and payment is made in respect of that notice, no further action in relation tothat infringement may be taken by the regulator, and there is no record of either a conviction for anoffence, nor a judgement of the Federal Court against the non compliant person.

Where the regulator believes that the particular non compliance should be the subject of judicialaction, the regulator may choose this course instead of issuing an infringement notice. This wouldbe the case where, for example, the regulator decides that the issue of an infringement notice wouldnot adequately deter future non compliance with regulatory requirements by the same person, orthe non compliance is so severe it should be more appropriately handled by a court.

It should be noted that a person issued with an infringement notice is under no obligation to pay

the penalty stated under the order. The person receiving the notice may elect instead to have thematter dealt with by a court. This was provided for under the 2006 Act.

It is important to note that under no circumstances would the TGA issue an infringement notice inrelation to non-compliance with an applicable regulatory requirement without first having fullydetermined to embark upon the commencement of either criminal or civil proceedings against theperson believed responsible for the non-compliant activities.

Under the 2006 Act, any person issued with an infringement notice would always have the optionof refusing to pay the infringement notice amount, and electing instead to have the matter dealtwith by a court. Given that is the case, it is important and incumbent upon the TGA as the regulatornot to issue infringement notices unless and until it is prepared and committed to undertake court

proceedings (either criminal or civil, as the case may be) in relation to the relevant non-compliance.

In that regard, it should also be noted that paragraph 4.7 of the Legal Services Directions providesthat a Financial Management and Accountability Act 1997(FMA) agency is not to start courtproceedings unless the agency has received written legal advice from lawyers whom the agency isallowed to use in the proceedings indicating that there are reasonable grounds for starting theproceedings. Under paragraph 4.7, in urgent cases an FMA agency may start court proceedings onthe basis of oral legal advice that there are reasonable grounds for starting the proceedings, butconfirmation of that advice is to be obtained in writing at the earliest opportunity.

2.2 The Issue of Infringement NoticesInfringement notices will only be issued where the readily assessable elements of the breach can beidentified. Infringement notices are therefore intended to apply only to conduct regulated underoffences of strict liability or no fault civil penalty provisions.

The following is a general guide to when an infringement notice may be issued:

where the breach has not resulted in serious harm or injury to the public;

where there is no record of any effort or attempt to comply with the regulatory requirementbreached;


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where payment of an infringement notice is considered to be an adequate deterrent to preventfuture breaches;

where the breach or the contravention cannot be effectively addressed by informal enforcementaction;

where the breach occurred for anticipated financial reasons or considerations to the detrimentof public health and safety.

The TGA will only issue an infringement notice in circumstances where, based on independent legaladvice, obtained, for example, from the Australian Government Solicitor, it can be demonstratedthat the TGA has reasonable grounds for pursuing a breach of the Act through the criminal courtsystem or before the Federal Court.

In general, where a contravention has occurred in relation to a person for the first time and there isno threat to public health and safety and the person takes immediate steps to rectify the breach, awarning letter may be given to the person who has contravened the relevant regulatoryrequirement. This is particularly the case where a person may have acted inadvertently or hasmisunderstood what is required under the Act or Regulations, and the non compliance is one thatcan be readily addressed immediately by the person concerned.

Judicial action, including where appropriate, any issue of an infringement notice, may be pursuedby the TGA, where the same person repeats the contravention or makes no effort to comply withregulatory requirements.

Whether or not an infringement notice will be issued in relation to a breach of a strict liabilityprovision or a contravention of a civil penalty provision will depend on the initial decision topursue the breach through a criminal process or a civil process.

Taking into account these considerations, an infringement notice may be issued:

a. in lieu of prosecuting a person for a strict liability offence; or

b. in lieu of applying to the Federal Court for a civil penalty order.

Note that an infringement notice cannot be issued after the expiry of 12 months from the date of therelevant offence or civil breach.

2.2.1 Strict liability v civil penalty contravention as the basis for issuing an

infringement notice

For actions or conduct under the Act covered by a strict liability offence and a parallel civilpenalty provision, the TGA may seek to pursue a criminal conviction where there is an element ofculpability, particular where an individual is involved, and pursue civil penalties in othercircumstances.


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Conviction of a crime carries with it a range of consequences beyond the immediate penalty,

whether the conviction results in imprisonment or a pecuniary penalty or both.

Where culpability and criminality of the conduct are not apparent but there is a need to addressbreaches of the Act and deter future non-compliance, or the non compliance is attributed to acompany, the TGA may opt for a civil penalty fine.

Criminal conviction carries with it a stigma, particularly where the conviction is accompanied byimprisonment. As with other consequences discussed above, this may have more impact on anatural person rather than on a body corporate (as a body corporate cannot be imprisoned). Forthese reasons, it may often be appropriate to opt for a civil penalty where the wrongdoer is acorporation.

2.2.2 When will an infringement notice be issued?

The infringement notice scheme will only be considered where the TGA contemplates judicialaction i.e. where the regulator opts for either criminal or civil sanction.

An infringement notice will only be issued where a decision is made to:

a. prosecute for an offence of strict liability; or

b. commence civil proceedings for a contravention of a civil penalty provision.

The TGA intends to only issue an infringement notice where, based on preliminary independentlegal advice, such as from the Australian Government Solicitor, it can be demonstrated that the TGAhas reasonable grounds for pursuing a breach of the Act through the criminal justice system orbefore the Federal Court for a civil penalty contravention.

An infringement notice is intended to penalise, and deter, future breaches. If payment is madewithin the time permitted the liability for the offence or the contravention of a civil penaltyprovision is discharged. Further proceedings cannot be taken in relation to the offence or thecontravention, and there is no record of a conviction or a contravention. If the decision by thealleged offender is not to pay the infringement notice, the matter will be taken to the appropriatecourt, and it is up to a court to determine whether the person is in breach or not, as well as thenature and level of the sanction to be applied.

However, the TGA will not necessarily issue an infringement notice in all circumstances. There maybe circumstances that warrant direct prosecution or direct application for an order for a civilpenalty contravention.

Matters that may be taken into consideration when determining whether to issue an infringementnotice, based on the level of risk attached to a breach of a regulatory requirement, include the

following:


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a. nature of the breach

b. degree oflikelyharmc. number and frequency of breachesd. nature of the producte. significance of breach in terms of safety, efficacy and qualityf. absence of any effort to ascertain and comply with regulatory requirements

An infringement notice cannot be issued after 12 months of the commission of the alleged offenceor civil penalty contravention.

2.3 Applicability of the Infringement Notice Scheme

The infringement notice scheme will only apply to the offences of strict liability and civil penaltyprovisions in the Act. The tables below provide a current list of the breaches where aninfringement notice can be issued in relation to the strict liability offence or the contravention of acivil penalty provision.

2.3.1 Provisions with strict liability and civil penalties

Provision in the Actexisting before the 2006

Act

Provision in the Actintroduced by the 2006

Act

Description of conduct

Medicine ortherapeuticdevice

MedicalDevice

Strictliabilityoffence

Civil penaltyprovision

Provisions related to compliance with standards (including manufacturing standards) and

conditions applying to exemptions from complying with standards

s14 s41MA 14(2,7,11)41MA(2,6,10)

14A(1-3)41MAA(1-3) Breach of standard applying togoods

s15(2) s41MC(2) 15(3)41MC(3)

15AA41MCA

Breach of condition attaching tostandards

s35(1),s35(4)

s41ME 35(2,7)41ME(2,6)

35A(1,2)41MEA(1,2)

Manufacturing without a licence,not applying manufacturingstandards


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s35(2) s41MN(2) 35B(2)41MN(6)

35C41MNA(2)

Breaching conditions of a licenceor conformity assessment

certificate

s41EI 41EI(2) 41EIA Providing a false/misleadingstatement in connection withconformity assessment certificate

Issues relating to inclusion/retention of goods in the Register

s20(1) s41MI(1) 19B(2)41MI(2)

19D(1) Failure to include goods in theRegister as required

s22(2A)s22A s41FE 21A(2)41FE(2) 21B(1)41FEA Providing false statements whenentering goods in the Register

s31(6) s41JB(4) 31(5B)41JB(5)

31AAA41JBA

Providing false/misleadinginformation in connection withentry or retention of goods in theRegister

s22(3) s41MN(1) 21A(6)41MN(2)

21B(2)41MNA(1)

Breaching condition of registrationor listing

Failure to comply with recovery/notification requirements

s30EC s41KC 30EC(2)41KC(2)

30ECA41KCA

Goods required to be recovered asgoods do not meet standards etc

s30F(5) 30F(4C) 30FA Emergency goods whereactual/potential threat toAustralia, not fit for use

s42V(6) 42V(6A) 42VA Tampered products


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2.3.2 Provisions with strict liability offences and no civil penalty contraventions

Provision in the Act

existing before the 2006

Act


introduced by the 2006

Act



MedicalDevice



Breach of condition applying to exempt goods

s22(7A) and (8) 21A(10) &(13)

------ Supply of goods not in accordancewith authority or conditions

s41MO(1) and (2) 41MO(2) &(6)

------ Misuse of medical devicesexempted for a special use

S20(2C) Importation of goods in breach ofconditions of exemption unders.18A

2.3.3 Provisions with civil penalty contraventions and no strict liability offences


existing before the 2006

Act


introduced by the 2006

Act



MedicalDevice



Provisions related to compliance with standards (including manufacturing standards) and

conditions applying to exemptions from complying with standards

s42E --- 42EA Conduct dealing with counterfeitgoods

s54AB(1) --- 54AC Destruction & falsification ofdocuments

s20(2) --- 19D(3,4) Failure to include ARTG(Australian Register ofTherapeutic Goods) no. on label ofgoods


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s29A(1) s41MP(1) --- 20A Import, export, supply whereSecretary not properly notified

s29B(3) s41MQ(3) --- 29AA(1), 41MPA(1) Fail to notify of adverse events

s29B(4) s41MQ(4) --- 29C(1), 41MR(1) Fail to comply with notice to notifyof adverse events

s41MH--- 29C(2), 41MR(2) False/misleading info when

notifying of adverse events

s22(4) s41ML --- 41MHA False statement in declaration

s22(7AB) 21B(3) 41MLA(1) Representing that medicines ordevices are included in theRegister, or are exempt etc, whenthey are not

22AA

2.4 What Level of Fines Will Apply for InfringementNotices?

The infringement notice scheme should not be viewed as allowing alleged offenders to get awaywith breaches of the Act lightly, in lieu of the TGA prosecuting or commencing civil proceedings.Payment of infringement notices has the effect of precluding the regulator from taking any furtherjudicial action in relation to the breach of a regulatory requirement, and furthermore there is noformal record of any infringement having occurred. The monetary penalties attached toinfringement notices take this into account, and are also intended to reflect the degree of riskpotentially posed by the non-compliant conduct.

2.4.1 Maximum level of monetary penalty for a strict liability offence

The maximum penalty for a strict liability offence range from 60-2,000 (but mostly in the range of1,000-2,000) penalty units for an individual and 300-10,000 (but mostly in the range of 5,000-10,000) penalty units for a corporation. The maximum fine that an infringement notice may beissued for, in relation to a strict liability offence, cannot exceed 1/5th of the offence penalty i.e. 12-400 penalty units for an individual and 60-2,000 for a corporation.

If a decision is made to issue an infringement notice pursuant to a strict liability offence, themaximum level of fine allowable for an infringement notice will be issued.


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2.4.2 Maximum level of monetary penalty for a contravention of a civil penalty

provision

The maximum penalty for a civil contravention ranges from 200-5,000 (but mostly in the range of3,000 to 5,000) penalty units for an individual and 2,000-50,000 (but mostly in the range of 30,000to 50,000) penalty units for a corporation. The maximum fine that an infringement notice may beissued for, in relation to a contravention of a civil penalty provision, cannot exceed 1/10ththepecuniary penalty attached to a civil penalty provision i.e. 20-500 penalty units for an individualand 200-5,000 penalty units for a corporation.

The level of fine will be tiered on the basis of the risk multiplier discussed in paragraph 4.2 below.

2.4.3 Difference in the level of fines for a strict liability offence and a civil penaltycontravention

The difference between the level of penalties under a strict liability offence and a civil penaltyprovision, and the corresponding fines under an infringement notice, reflects the more seriousconsequences and stigma associated with a criminal prosecution and subsequent conviction,compared to the declaration of a contravention of a civil penalty and the consequent pecuniarypenalty imposed on a person.

2.4.4 Issuing an infringement notice for a contravention of civil penalty provision

and the risk multiplier

An infringement notice issued when contemplating a contravention of a civil penalty provision willbe based on a tiered fine system. The tiered system will be applied with a risk multiplier, where themaximum fine attached to an infringement notice for a civil penalty provision will be multiplied by0.25 or 0.5, for the two lower level breaches.

The level of the tiered fine may be based on the following factors:

a. nature and scale of breachesb. recurrence of the same breach;

c. the degree of familiarity with or understanding of the regulatory requirements which theperson ignores or continues to ignore;

d. failure to rectify breach after providing TGA assurances;e. financial gain incurred;f. anticipated cost-cutting measures to the detriment of public health and safety; org. size of the company (for example, in terms of annual turn-over).

2.4.5 Risk Multiplier

For infringement notices issued pursuant to a contravention of a civil penalty provision, a risk

multiplier will be applied to the maximum fine allowed for an infringement notice. The risk


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multiplier will only apply to civil penalty provisions to allow for a reasonable level of fine for aninfringement notice, in light of the higher pecuniary penalties that can be imposed for acontravention of a civil penalty provision. Under a civil penalty provision, the maximum penalty fora corporation is 10 times that of an individual.

Therefore, fines issued under this process will not automatically be at the maximum fine allowed,but rather have a range of fines for a less serious breach of the Act (Tier 1) to a more serious breach(Tier 3), where:

Tier 1 fine (individual) = 1/10th civil penalty for individual x 0.25;

(corporation) = 1/10th civil penalty for corporation x 0.25

Tier 2 fine (individual) = 1/10th civil penalty for individual x 0.5;

(corporation) = 1/10th civil penalty for corporation x 0.5

Tier 3 fine (individual) = 1/10th civil penalty for individual

(corporation) = 1/10th civil penalty for corporation

Attachment A provides examples of breaches under each Tier.

2.5. The Infringement Notice Document

2.5.1 What information will be included in the infringement notice?

Pursuant to part 5A-2 of the Act, the Regulations will specify the information that should beincluded in an infringement notice.

An infringement notice will include:

a. the name of the person on whom the notice is being served;

b. that it is being served on behalf of the TGA and the name of the authorised officer issuingthe notice;

c. the nature and particulars of the alleged offence or contravention;d. the time (if known), the date on and place at which the offence or contravention is alleged

to have occurred;e. the maximum penalty that a court could impose for the alleged offence or contravention;f. the amount of fine payable under the infringement notice in respect of the alleged offence

or contravention;g. a statement that if the person receiving the infringement notice does not wish the matter to

be dealt with by a court, that the person may pay to the TGA, within 28 days of service ofthe notice, the amount of penalty specified in the notice; and

h. a statement that the person may make written representations seeking withdrawal of theinfringement notice;

i. a unique identifier for each infringement notice; and


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j. reasons for issuing the infringement notice.

Other relevant information that may be included in an infringement notice includes:

a. the manner in which payment of the penalty can be made;b. the address or location where payment of the penalty can be made;c. a telephone number or contact address to obtain further information about the allege

offence or contravention or request extra time for payment of the fine; andd. a statement if the penalty is paid within 28 days of the service of the infringement notice

that the person can not be prosecuted for the alleged offence or civil proceedings againstthem for the alleged contravention and will not be regarded as been convicted of theoffence or that they contravened a civil penalty provision.

2.6. What Happens if a Person is Issued with anInfringement Notice

2.6.1 Compliance with an infringement notice

Compliance with an infringement notice is not to be taken as an admission of any contravention ofthe Act. If complied with in relation to an offence, the person will not be prosecuted for the relevantoffence and the person will not be taken to have been convicted of that offence. Similarly, ifcomplied with in relation to a contravention of a civil penalty, the person will not be the subject of a

proceeding in the Federal Court seeking an order in relation to the contravention of a civil penaltyprovision, and the person will not be taken to have contravened the civil penalty provision.

Payment of infringement notices is not mandatory. However, if the person elects to pay aninfringement notice, the person is no longer liable for prosecution nor will the person be the subjectof a contravention order for a breach of a civil penalty provision under the Act.

2.6.2 Contesting an infringement notice withdrawal of an infringement notice

The Regulations will allow for procedures for the withdrawal of an infringement notice. A personissued with a notice will have the opportunity to provide any facts or information that the person

believes ought to be taken into account in relation to the alleged offence or civil penaltycontravention, within a specified period after the service of the notice.

Where the person disputes the notice by notifying the issuer of any facts or matters that the personbelieves ought to be taken into account in relation to the alleged offence or alleged contravention ofa civil penalty provision, the TGA must decide whether to withdraw the notice, taking intoconsideration the information provided by the person. The person will then be informed of thedecision to withdraw or refuse to withdraw the notice.

It should be noted that at no time would a person be compelled to pay a fine in response to theissue of an infringement notice the person issued with such a notice may elect to pay, or maydecline to pay.


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Enforcement Guidelines - Therapeutic Goods AmendmentAct (No. 1) 2006 Implementation General principles,Section 3 - General principles of enforceable undertakingsSeptember 2008

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3. General principles ofenforceable undertakings

3.1 Introduction

Court enforceable undertakings are alternative enforcement measures that are currently availableto agencies such as the Australian Competition and Consumer Commission

(ACCC) (section 87B of the Trade Practices Act 1974), Civil Aviation Safety Authority (section 30DKof the Civil Aviation Act 1988), ASIC (sections 93A and 93AA of theAustralian Securities and

Investments Commission Act 2001), COMCARE (Clause 16, Schedule 2 of the Occupational Healthand Safety Act 1991) and the Australian Communications Authority (sections 38-39 of the Spam Act2003). Section 42YL is drafted consistently with the above provisions, in particular section 87B ofthe Trade Practices Act 1974.

Court enforceable undertakings can provide an alternative means for addressing and remedyingbreaches of the Act in lieu of taking legal action against a person, or taking administrative action,such as the cancellation of a manufacturing licence in relation to a person or the cancellation of atherapeutic good from the Register.

Enforceable undertakings, like infringement notices, cannot be used to coerce sponsors or

manufacturers to address or remedy breaches of the Act or the Regulations. Whether or not anundertaking is proposed by a person in relation to whom regulatory action may be taken is entirelyup to that person, the TGA has no power to require any person to provide undertakings. However,once an undertaking is offered and accepted by the TGA, the undertaking should be honoured, andtherefore enforceable.

As a regulator, where a breach of the Act calls for regulatory action, the TGA has an obligation toprotect public health and safety through the exercise of its powers under the Act and theRegulations. Enforceable undertakings represent an alternative option for addressing breaches ofregulatory requirements by sponsors and manufacturers in a manner that can accommodate theoperations of such parties while at the same time being acceptable to the TGA. Enforceable

undertakings allow some flexibility in the way these breaches are to be addressed or remedied bysponsors and manufacturers. However, no one is under any obligation to provide such anundertaking and, if none is provided to the TGA, the TGA will still be required to take the necessaryregulatory action available to it.

Enforceable undertakings are unlikely to be the appropriate option to resolve every matterinvolving a perceived breach. Enforceable undertakings are remedial in nature, not punitive.

As noted, the TGA is required to address breaches of the legislation it administers. In some cases,the regulatory action available to the TGA may not be the optimal solution in relation to a sponsoror manufacturer for addressing the identified breaches of the Act and the Regulations. Courtenforceable undertakings are a mechanism to enable a person in breach to suggest an alternative


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solution to remedy breaches. Where an alternative suggestion that is offered by a sponsor ormanufacturer is accepted by the TGA, then the proposed action or undertaking must beenforceable, in this case by a court of law, to justify the TGA not resorting to its usual powers.Otherwise the TGA may not be discharging its statutory obligation to protect public health andsafety.

Once an enforceable undertaking is entered into, compliance will be obligatory. If an undertaking isnot honoured, the TGA will seek an order from the court requiring the relevant company or personto comply with the undertaking.

The TGA intends to use the court enforceable undertakings as an option only when it believes that aresolution based on enforceable undertakings offers the best solution to ensure that no furtherbreaches will occur or that the breach will be appropriately remedied.

A party to the undertaking may seek to have the terms of the undertaking varied with the TGAsconsent. In seeking any variation, the party may provide information to the TGA and reasons why avariation is being sought. The TGA will take into consideration the information provided and thereasons why a variation is being sought in determining whether to consent to the variation in theundertaking.

3.2 Decision to accept enforceable undertakings

The TGA will accept an enforceable undertaking if it offers the best and most appropriate solutionfor addressing a breach of regulatory requirements.

In deciding between litigation or other enforcement sanctions and an enforceable undertaking, theTGA may take into consideration the following:

a. the nature of the breach or the alleged breach in terms of:

i. quality, safety, efficacy, or performance of the products; andii. the conduct of the person or the company in relation to the breach; andiii. the type of therapeutic goods that are the subject of the breach; andiv. the impact on public health and safety; andv. the magnitude of the risk created; and

a. the extent to which any meaningful undertakings can be given to remedy the breaches andmitigate the risk; and

b. the likelihood that the enforceable undertaking will be fulfilled; andc. the apparent good faith of the company or person; andd. the ability of the TGA to properly monitor compliance with the enforceable undertaking;

ande. the history of breaches of requirements under the Act and the Regulations, including any

previous convictions or contraventions; andf. the prospect of an effective and timely resolution of the matter; andg. the apparent good faith of the person.


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3.3 Acceptance of an enforceable undertaking

The TGA will not have the power to compel a sponsor or manufacturer to give an enforceableundertaking, and also will not be obliged to accept an enforceable undertaking from a sponsor ormanufacturer. The TGAs primary responsibility is to protect public health and safety, and unlessthe acceptance of an enforceable undertaking will effectively address breaches of regulatoryrequirements and minimize any possible harm to the public, the TGA will not accept undertakings.

Undertakings must address the conduct or circumstance which has given rise to the alleged orperceived breach and its consequences. They must also include detailed future actions to prevent arecurrence of that breach of the Act and/or Regulations. The undertakings must be provided inwriting.

3.4 Where an undertaking is not accepted

Where breaches of the regulatory requirements clearly establish the fault elements or where thebreaches have resulted or will result in harm or injury to the public, the TGA generally will notagree to an enforceable undertaking as an alternative to, for example, prosecution or resorting toadministrative sanctions.

The TGA will also not accept an undertaking if the terms of the undertaking purport to fetter TGAsability to use its regulatory powers or places an obligation upon the TGA.

3.5 Compliance with undertakingsFollowing acceptance of an undertaking, the TGA requires that its implementation and effectivenessbe monitored by the other party to the undertaking. The terms of the undertaking may include themonitoring and reporting of the implementation and effectiveness of the undertakings.

Monitoring will generally be the responsibility of the person concerned. Where the TGA has reasonto believe that the person has not complied with an undertaking, the TGA will try to resolve thematter initially by consultation.

If the approach fails, the TGA will not hesitate to apply to the Federal Court for appropriate orders.

Subsection 42YL(5) of the Act provides that if the court is satisfied that the person has breached aterm of the undertaking, the court may make all or any of the following orders:

a. an order directing the person to comply with that term of the undertaking;b. an order directing the person to pay to the Commonwealth an amount up to the amount of

any financial benefit that the person has obtained directly or indirectly and that isreasonably attributable to the breach;

c. any order that the court considers appropriate directing the person to compensate anyother person who has suffered loss or damage as a result of the breach;

d. any other order that the court considers appropriate.


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3.6 Variations to the terms of an undertaking

Subsection 42YL(2) of the Act allows the person to withdraw or vary undertakings at any time, withthe consent of the Secretary.

This allows negotiations for changes if undertakings are subsequently found to be difficult tocomply with, not practical, the terms do not appropriately address the perceived breach or allegedbreach, or changes in circumstances occur.

The TGA will consider such requests as long as they do not alter the purpose of the originalundertakings. The published undertakings will include the incorporated variations.

3.7 Monitoring an undertaking and information requirements

In order to ensure that the terms of the enforceable undertakings are complied with and to assist inmonitoring that compliance, the TGA will seek the inclusion of provisions in the undertakingsrequiring reporting and the provision of relevant requirements to be made available to TGA.

3.8 Publication of enforceable undertakings

Subsection 42YL(3) of the Act provides that the Secretary must publish details of the undertaking,as in force from time to time, on the Internet. This provision is consistent with subsection 30DK(4)of the Civil Aviation Act 1988. ASIC (refer to subsection 93A(6) of theAustralian Securities and

Investment Commission Act 2001) also makes details of enforceable undertakings available, but onrequest and subject to some qualifications. A copy of the details of such a notice will be given to theperson providing the undertaking before the notice is published. The approval of the personproviding the undertaking is not required in relation to the details of the notice or its publication.

Information relating to a suspension or revocation of a manufacturing licence, criminal convictions,findings by a Court relating to the contravention of a civil penalty provision, and recovery of sometypes of therapeutic goods that have been cancelled from the Australian Register of TherapeuticGoods would likely be information that is publicly available.

As court enforceable undertakings are an alternative enforcement measure for breaches ofregulatory requirements under the Act (where it is considered appropriate), it is appropriate thatinformation about undertakings and the terms of the undertakings are made publicly available.

It is possible that parts of the enforceable undertakings may contain commercially sensitiveinformation or personal information. If that is the case, and the person providing the undertakingrequests that the information not be released, then the TGA may agree that this class of informationbe deleted from the published details relating to an undertaking.


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Enforcement Guidelines - Therapeutic Goods AmendmentAct (No. 1) 2006 Implementation General principles,Section 4 - General principles for the use of media release toinform the public about regulatory actions takenSeptember 2008

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4. General principles for theuse of media release toinform the public aboutregulatory actions takenProvisions already exist in the Act that require a number of regulatory decisions to be made public

through gazette notices. The use of media releases to inform the public about regulatory actionstaken under the Act or Regulations will only be used if there is an imminent public health safetyrisk or threat of such a risk.


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Enforcement Guidelines - Therapeutic Goods AmendmentAct (No. 1) 2006 Implementation General principles,Section 5 - Entry search and seizure and issuing of warrantsSeptember 2008

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5. Entry search and seizureand issuing of warrantsThe Act currently contains provisions for authorised persons to investigate actual or suspectedbreaches of the Act or the Regulations. Provisions exist to enable authorised officers to apply tomagistrates for warrants to conduct searches of premises and to seize evidence.

The 2006 Act establishes a single process for applying to a Magistrate for a warrant to investigateand secure evidence of any breach of the Act or the Regulations, whether the breach is an offence ora breach of a civil penalty provision. This allows material obtained under the search and seizurewarrant to be used as evidence either in a criminal or civil proceeding.

Under the single warrants process introduced by the 2006 Act, and subject to the limitations set outin subsections 47(2) (which provides that an authorised person must not enter premises unless theoccupier of the premises has consented to the entry, or the entry is made under a warrant issuedunder section 50 of the Act) and 47(3) (which provides that an authorised person is not entitled toexercise any powers under subsection 47(1) of the Act in relation to premises if the occupier of thepremises has required the authorised person to produce his or her identity card for inspection bythe occupier and the authorised person fails to comply with the requirement), if an authorisedperson has reasonable grounds for suspecting that there may be evidentiary material in respect ofan offence or a civil penalty contravention, or in respect of both, on any premises, the authorisedperson may:

a. enter the premises;b. search and inspect premises;c. seize goods; andd. exercise other powers under subsection 48(1) of the Act.

It is important to note that when applying for a single-process warrant described above, officersconcerned are required to provide information on oath to satisfy the Magistrate that there arereasonable grounds for suspecting that there may be evidence to establish a breach of the Act or theRegulations. Any evidence so obtained must in turn meet evidentiary requirements before it isadmissible before a Court.


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Enforcement Guidelines - Therapeutic Goods AmendmentAct (No. 1) 2006 Implementation General principlesAttachment A How an infringement notice could be issuedfor a breach of a civil penalty provisionSeptember 2008

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Attachment A

How an infringement noticecould be issued for abreach of a civil penalty

provisionInfringement notices could be issued in relation to a breach of a civil penalty provision where adecision to take judicial action has been made because the breach is considered of such amagnitude and scale that such action is warranted.

Where the TGA should issue an infringement notice in lieu of taking a person directly to the FederalCourt for a breach of a civil penalty provision, the TGA will not necessarily always opt for a Tier 1infringement notice. In lieu of a court action, the TGA may decide to issue a Tier 2 or Tier 3infringement notice depending on, for example, the nature and scale of the non-compliance,

whether there is a recurrence of the breach, whether there is a failure to rectify breachespreviously notified to the person by the TGA, and other factors outlined in paragraph 2.3 above.The level of penalties included in an infringement notice will depend on whether a Tier 1, Tier 2 orTier 3 notice is issued.

The table below provides details of the 3 penalty levels for a breach of manufacturing standards,and a breach of conditions attaching to manufacturing licences.

It is important to note that the table below is concerned only with one example of the operation ofcivil penalties as introduced by the 2006 Act, in the form of a breach of manufacturing regulatoryrequirements. There are many other regulatory requirements, apart from those requirements thatrelate to manufacturing, that could attract civil (or criminal) penalties if breached.

The TGA may be more likely to target serious breaches of regulatory requirements, failures torectify problems previously identified on a number of occasions, or repeated breaches of regulatoryrequirements, rather than one-off incidences of minor breaches of civil penalty provisions of theAct, in contemplating the issuing of infringement notices.


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Level of fine - Individual Level of fine - Corporation

Tier 1 (0.25 of the maximumpenalty applying to therelevant civil penaltyprovision in this case, themaximum penalty is 5,000penalty units for an individual,50,000 penalty units for a bodycorporate)

$13,700 for a breach ofmanufacturing principles

$13,700 for a breach of acondition of amanufacturing licence



Tier 2 (0.5 of the maximumpenalty applying to therelevant civil penaltyprovision - in this case, themaximum penalty is 5,000penalty units for an individual,50,000 penalty units for a bodycorporate))





Tier 3 (Maximum penaltyapplying to the relevant civilpenalty provision - in this case,the maximum penalty is 5,000penalty units for an individual,50,000 penalty units for a bodycorporate)).


$55,000 for a breach of acondition of a

manufacturing licence


$550,000 for a breach of acondition of a

manufacturing licence

Some examples of when an infringement notice might be issued for a breach of a civil

penalty provision relating to the manufacturing of therapeutic goods. These examples are

not an exhaustive or comprehensive list.

Tier 1 Infringement Notice for the contravention of acivil penalty provision

The occurrence of a number of major manufacturing deficiencies identified on the samemanufacturing premises, for example:

Critical deficiencies

raw materials not tested (including proper identification testing) to ensure compliance withspecifications;

lack of sterilisation validation (relevant to all sterile products);


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no master batch documents; and

release of materials or finished products not meeting specifications;

Major deficiencies

damage to walls/ceilings in manufacturing areas where product is exposed indicating thepossibility of ingress of contamination from above;

no or grossly inadequate air filtration system to minimise airborne contaminants (could be aserious risk in relation to sterile medicines or if contaminants are a safety concern);

in relation to equipment: stored equipment is not protected from contamination; and equipmentis not properly maintained;

design of manufacturing area does not permit effective cleaning;

no or inadequate internal audit program;

lack of validation of critical steps in the manufacturing process (eg no Validation Master Planregarding validation and re-validation of critical processes and systems, no testing to verifyconformance with microbiological requirements for antiseptic products);

individuals in charge of quality control procedures and production do not have the necessaryqualifications, skills and experience as required;

insufficient lighting in production or inspection areas;

there is no documented procedure for control of documentation, investigations reveal poorrecords of the manufacturing process, shelf-life of medicines, and sampling;

complex production processes for non-critical products not validated;


The recurrence of a significant number of critical and major manufacturing deficiencies asdescribed above which were previously identified by the TGA, and not rectified by manufacturer as

required by the TGA.


Identification of numerous critical and major manufacturing deficiencies;

Failure to comply with the conditions of a manufacturing licence such as the following:

Manufacture of products or using a step of manufacture, outside those allowed by themanufacturing licence;

No evidence of, or inadequate records relating to:


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Materials used in manufacture, and testing of those materials; Procedures and controls used in manufacture; Testing of finished products and related results.

Evidence of poor quality controls used in manufacture, such as: Inadequate assignment of batch numbers; Inadequate retention of records;

Failure to comply with regulation 22 of the Regulations to the effect that it is not clear that thenew manufacturers ability is capable of complying with the conditions of the licence;

Failure to comply with regulation 21 of the Regulations because nominated persons are nolonger employed by the manufacturer. Therefore it is not clear whether the new employeeshave the appropriate qualifications and experience necessary to carry out the manufacturing ofgoods consistent with the requirements under the Act and Regulations, the code of GoodManufacturing Practice (GMP) and the Quality Management System.

Some examples of where an infringement notice might be issued for a breach of a civil

penalty provision in relation to importing, supplying or exporting goods that do not comply

with standards (breach of section 14A of the Act). These examples are not an exhaustive or

comprehensive list.


The one-off occurrence, after a warning, of a number of major standards-related deficiencies in

relation to therapeutic goods, but where the importation, supply or export of the goods in questionhas not caused harm or injury to members of the public, for example:

goods being imported, supplied or exported with a significant difference in the percentage ofactive ingredient relative to the applicable standard for those goods, or a difference that is likelyto cause a risk of harm, and where the person or company responsible does not have theconsent in writing of the Secretary to the import/supply/export of the sub-standard goods;

importing, supplying or exporting goods to which Therapeutic Goods Order No. 20 (TGO 20)applies (in relation to child resistant containers), where the goods are required by TGO 20 to bein a certain type of container or a container that meets certain description requirements, andthe container is not of the type required or does not meet all or any of the applicablerequirements, and where the person or company responsible does not have the consent inwriting of the Secretary to the import/supply/export of the sub-standard goods;

importing, supplying or exporting goods that depart materially from an applicable standard, andthe departure is likely to cause serious harm to consumers;

importing, supplying or exporting goods that are required by an applicable standard to besterile, either in full or in part, but where the goods in question are not sterile as is required bythe standard, and where the person or company responsible does not have the consent inwriting of the Secretary to the import/supply/export of the sub-standard goods;


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supplying herbal-based goods which, because identity testing of herbal raw materials wascompromised by not using authenticated reference standards, did not meet the applicablestandard;

supplying goods which, because cleaning procedures were not used or followed properly,manufacturing processes and some laboratory methods were not validated during manufacture,and uniformity of content testing was not carried out, featured tablet thickness and hardnesslevels not permitted by the applicable standard;

supplying a herbal material containing an added antimicrobial substance to increase the claimednatural antimicrobial effect of the herb, contrary to the applicable standard;

supplying goods which, because of the design and maintenance of the manufacturing premisesused to manufacture the goods, were contaminated by water and/or other products or theircomponent parts and which consequently did not meet the applicable standard; or

supplying and exporting goods which, as a result of using imported raw materials in themanufacture of the goods without testing the materials for identity, and without testing thefinished goods for chemical composition, failed the applicable standard.


A recurrence of a major standards-related deficiency such as those described above, where thedeficiency was previously identified by the TGA in relation to the person or company responsible,and the person or company has failed to rectify the deficiency despite being asked to by the

regulator, or despite regulatory action taken against the person or company for previous incidentsof the same standards-related deficiency or deficiencies.


Numerous recurrences of a significant number of major standards-related deficiencies such asthose described under the heading Tier 1, where those deficiencies were previously identified bythe TGA in relation to the person or company responsible on a number of occasions, and where theperson or company responsible has not rectified the problems, to the point where the TGA mayhave doubts about the commitment of the person or company responsible to rectifying the

problems previous identified, and where the risk of harm or injury is unacceptable.

Some examples of where an infringement notice might be issued for a breach of a civil

penalty provision relating to a failure to register or list etc of imported, exported,

manufactured and supplied therapeutic goods (breach of section 19D of the Act). These

examples are not an exhaustive or comprehensive list.


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A second occurrence (following a warning) of one of a number of incidents of importing into,exporting from, manufacturing in, or supplying in, Australia, therapeutic goods, where none of thesubparagraphs of section 19D(1)(b) (being: (i) that the goods are registered goods or listed goodsin relation to the person; (ii) the goods are exempt goods; (iii) the goods are the subject of anapproval or authority under section 19, or; (iv) the goods are the subject of an approval undersection 19A) applies in relation to the goods, where the exception noted in section 19D(1) of the Actif person or company was not the sponsor of the goods does not apply, and where the goodsconcerned have not caused harm or injury to members of the public, such as:

unlawful importation of dangerous or potentially dangerous therapeutic goods into Australia

without including the goods on the Register;

importing into Australia prescription medicine, and supplying through the mail that medicine inAustralia and exporting it from Australia without that medicine being registered on orotherwise included in the Register in relation to the person or company responsible, though thegoods are registered on the Register in relation to another person or company(unlawfulparallel importing);

manufacturing in, and exporting from, Australia, therapeutic goods of various kinds, includingregistrable and listable goods (prescription, over-the-counter and complementary medicines),where the goods are not registered or listed on the Register in relation to the person orcompany responsible, or at all; and

unlawful importation into Australia of therapeutic goods without including the goods on theRegister, and importing the goods in containers labelled as a food product completely unrelatedto the therapeutic goods in question;

unlawful importation into Australia without including the goods on the Register, and importingthe goods in boxes labelled furniture; or

unlawfully manufacturing and supplying in Australia complementary medicines containingsubstances which may have serious risk implications especially in products that are self selectedby users for non serious conditions and disorders, such as Aristolochia and Cimicifuga racemosa(Black Cohosh), without the goods being included in the Register in relation to the personresponsible, and without adequately controlling starting materials in the manufacture of thegoods.


Subsequent occurrences (following further warnings) by the same sponsor of one of a number ofincidents of importing into, exporting from, manufacturing in, or supplying in, Australia,therapeutic goods, where none of the subparagraphs of section 19D(1)(b) (being: (i) that the goodsare registered goods or listed goods in relation to the person; (ii) the goods are exempt goods; (iii)the goods are the subject of an approval or authority under section 19, or; (iv) the goods are thesubject of an approval under section 19A) applies in relation to the goods, where the exception


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noted in section 19D(1) of the Act if person or company was not the sponsor of the goods doesnot apply, such as those described under the heading Tier 1.


Identification of numerous major occurrences, following previous regulatory action for the sameoccurrences and subsequent further warnings after that action for recurrences of the samebehaviour, by the same sponsor of one or more of a number of incidents of importing into,exporting from, manufacturing in, or supplying in, Australia, therapeutic goods, where none of thesubparagraphs of section 19D(1)(b) (being: (i) that the goods are registered goods or listed goodsin relation to the person; (ii) the goods are exempt goods; (iii) the goods are the subject of anapproval or authority under section 19, or;

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TGA Guidelines