TGA Guidelines

Enforcement Guidelines
Therapeutic Goods Amendment Act (No. 1) 2006 Implementation - General Principles
Therapeutic Goods Administration
About the Therapeutic Goods Administration (TGA)
TGA administers the Therapeutic Goods Act 1989 (the Act), applying a risk management approach designed to ensure therapeutic goods supplied in Australia meet acceptable standards of quality, safety and efficacy (performance), when necessary. The TGA relies on the public, healthcare professionals and industry to report problems with medicines or medical devices. TGA investigates reports received by it to determine any necessary regulatory action. The work of the TGA is based on applying scientific and clinical expertise to decision-making, to ensure that the benefits to consumers outweigh any risks associated with the use of medicines and medical devices.
The TGA is a division of the Australian Government Department of Health and Ageing, and is responsible for regulating medicines and medical devices.
To report a problem with a medicine or medical device, please see the information on the TGA website.
Copyright Commonwealth of Australia 2006
This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Attorney Generals Department, National Circuit, Barton ACT 2600 or posted at http://www.ag.gov.au/cca
Enforcement Guidelines - Therapeutic Goods Amendment Act (No. 1) 2006 Implementation General principles
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Contents
1. General Principles - Civil Proceedings versus Criminal Prosecutions
1.1 1.2 1.3 1.4 1.5 1.6
Background ____________________________________________________________ 5 Scope____________________________________________________________________ 6 Criminal Prosecution ________________________________________________ 7 Civil Penalties _________________________________________________________ 9 Double jeopardy _____________________________________________________ 10 Criteria for undertaking court action ____________________________ 10
2.
General principles for issuing infringement notices12

2.1 2.2 Introduction __________________________________________________________ 12
2.2.1 2.2.2 2.3.1 2.3.2 2.3.3 2.4.1 infringement notice _____________________________________________________________________ 15
The Issue of Infringement Notices ________________________________ 14
Strict liability v civil penalty contravention as the basis for issuing an ___ 15 When will an infringement notice be issued? _______________________________ 16 Provisions with strict liability and civil penalties ___________________________ 17 Maximum level of monetary penalty for a strict liability offence __________ 20
2.3
Applicability of the Infringement Notice Scheme ______________ 17
2.4
2.4.2 Maximum level of monetary penalty for a contravention of a civil penalty provision _________________________________________________________________________________ 21 2.4.4 Issuing an infringement notice for a contravention of civil penalty provision and the risk multiplier ______________________________________________________ 21 2.4.5 2.5.1 2.6.1 Risk Multiplier _________________________________________________________________ 21 What information will be included in the infringement notice? ___________ 22 Compliance with an infringement notice ____________________________________ 23
What Level of Fines Will Apply for Infringement Notices? ____ 20
Provisions with strict liability offences and no civil penalty contraventions19 Provisions with civil penalty contraventions and no strict liability offences19
2.4.3 Difference in the level of fines for a strict liability offence and a civil penalty contravention ___________________________________________________________________________ 21
2.5.
The Infringement Notice Document ______________________________ 22
2.6. What Happens if a Person is Issued with an Infringement Notice _________________________________________________________________________ 23
September 2008
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3. General principles of enforceable undertakings

3.1 3.2 3.3
2.6.2
Contesting an infringement notice withdrawal of an infringement notice23
24
Introduction __________________________________________________________ 24 Decision to accept enforceable undertakings ___________________ 25 Acceptance of an enforceable undertaking______________________ 26
4. General principles for the use of media release to inform the public about regulatory actions taken 28 5. Entry search and seizure and issuing of warrants 29
September 2008
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1. General Principles - Civil Proceedings versus Criminal Prosecutions

1.1 Background
The enforcement provisions included in the Therapeutic Goods Amendment Act (No. 1) 2006 (the 2006 Act) were designed to support regulatory requirements included in the Therapeutic Goods Act 1989 (the Act), with the aim of giving effect to the objects of the Act. The Therapeutic Goods Administration (the TGA) places a high priority on the protection of public health and safety by ensuring as far as possible that the system of controls relating to the quality, safety, efficacy and timely availability of therapeutic goods, established by the Act, will work. For this reason, the 2006 Act introduced further options, including new judicial sanctions, to: help achieve the objects of the Act and the Therapeutic Goods Regulations 1990 (the Regulations) and the Therapeutic Goods (Medical Devices) Regulations 2002; promote the supply of safe and good quality therapeutic goods; and maximise compliance with the regulatory requirements under the Act and Regulations;
The 2006 Act included provisions that inserted a number of parallel civil penalty and criminal offence provisions in relation to substantially the same conduct. The introduction of new civil penalties for dealing with breaches of existing regulatory requirements was based on a recognition that civil penalties are often more appropriate for sanctioning corporate wrongdoing. Also, where criminal culpability is absent but serious breaches of critical regulatory requirements has occurred civil 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 either prosecute a person for committing an offence under the Act, or take civil action by applying to the Federal Court for a civil penalty order for a breach of a civil penalty provision.
maintain public confidence in the supply, manufacture, import and export of therapeutic goods.
In deciding to take a matter to court, the TGA will continue its current approach in choosing court action as a last resort for securing compliance with regulatory requirements. The sanctions package introduced by the 2006 Act enables the TGA to choose to take a person who breaches a relevant provision to the Federal Court seeking a civil penalty order instead of prosecuting a person before a
Enforcement Guidelines - Therapeutic Goods Amendment Act (No. 1) 2006 Implementation General principles,
Section 1 - General principles September 2008 Page 5 of 48
criminal court. For information about the TGA and its regulatory function and obligations, visit the TGA website, <http://www.tga.gov.au>.
1.2 Scope
The sanctions regime introduced by the 2006 Act built on existing offences previously present in the legislation and, with the exception of two new offences, did not add any new offences or regulatory requirements that industry members must meet.
Those two new offences introduced by the 2006 Act are contained in sections 42YE (Gathering information for application for pecuniary penalty), and 54B (Application of the Act to an executive officer of a body corporate) of the Act.
Subsection 42YE(2) provides that if the Secretary, on reasonable grounds, suspects that a person other than the wrongdoer can give information relevant to an application for a civil penalty order in relation to the contravention, whether or not such an application has been made, the Secretary may, by writing given to the person, require the person to give all reasonable assistance in connection with such an application. Subsection 42YE(5) provides that if a person fails to give assistance as required under subsection 42YE(2), the person commits an offence against subsection 42YE(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 a body 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 that the offence would be committed or the contravention would occur; that the officer was in a position to influence the conduct of the body in relation to the commission of the offence or the contravention; and the officer failed to take all reasonable steps to prevent the commission of the offence or contravention. The maximum criminal or civil penalty under section 54B is the maximum 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 the purposes of section 54B, a person, by whatever name called and whether or not a director of the body, who is concerned in, or takes part in, the management of the body. Section 54C of the Act deals 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 of section 54B of the Act. Subsection 54C(3) of the Act makes it clear that executive officer has the same meaning in section 54B, a definition which is broadly consistent with the definition of officer of a corporation in section 9 of the Corporations Act 2001.
Other than sections 42YE and 54B, no new offences or regulatory requirements have been introduced as part of the 2006 Act.
It is also important to note that the enforcement provisions of the 2006 Act will have no effect on those industry members who are compliant with the Act and the Regulations or who are genuinely seeking to be compliant.
For example, in the case of offences or civil breaches relating to the importation into, exportation from, 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 upon sponsors that the legislation places obligations to include goods in the Register. In the case of offences or civil breaches relating to the manufacture in Australia of therapeutic goods without a licence as required under section 35 of the Act, the entity liable would be the manufacturer of the therapeutic 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 is available on the TGA website at <http://www.tga.gov.au/industry/legislation.htm>. Note that the definition of sponsor may include persons who do not have goods included in the Australian Register of Therapeutic Goods (the Register) because, for example, they are importing or manufacturing goods illegally. Section 42YE of the Act, introduced by the 2006 Act, however, would be an example of where an individual 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 of information in relation to the application of a civil penalty provision.
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 relevant requirement. Most of the requirements under the legislation attach or relate to a particular type of person. In most cases this will be the sponsor or manufacturer, however in some situations individuals or corporate entities generally may be liable if they have acted in a manner that constitutes a breach or breaches of the legislation.
Subsection 42YE(2) provides that if the Secretary, on reasonable grounds, suspects that a person other than the wrongdoer can give information relevant to an application for a civil penalty order in relation to a contravention of a civil penalty provision (whether or not the application has been made), the Secretary may, by writing to the person, require them to give all reasonable assistance in connection with such an application. Subsection 42YE(5) makes it clear that if a person fails to give assistance as required under subsection 42YE(2), the person commits an offence against subsection 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 criminal penalties as: The main criminal penalties used in Australian legislation are fines and imprisonment. Other criminal penalties include forfeiture of property; and criminal conviction may also result 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 be invoked where the court or Parliament seeks to focus on the immorality of the offence.
Section 1 - General principles September 2008
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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:
Where the regulated conduct involves actual harm or injury to the public, or could pose considerable harm to the public, and the requisite mental elements relating to the conduct can be established, the TGA will generally pursue a criminal prosecution. This is particularly the case where 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 successfully prosecute someone for a criminal offence against the Act will apply to all criminal offences in the Act 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 in compliance;
The main purpose of criminal law is traditionally considered to be deterrence and punishment. Central to the concept of criminality is the notation of individual culpability and the criminal intention for ones actions.
the conduct in question will result, is very likely to result or has resulted in harm or injury to the public; For the purposes of establishing whether a corporation may be liable to prosecution for a breach of a regulatory requirement, section 55 of the Act deals with the matter of establishing a mental element or intention on the part of a body corporate. Section 55(1) of the Act provides that:
corporate in relation to particular conduct, it is sufficient to show: a. b. her actual or apparent authority; and that the director, servant or agent had the state of mind. Where, in proceedings for an offence against this Act, it is necessary to establish the state of mind of a body that the conduct was engaged in by a director, servant or agent of the body corporate within the scope of his or
where the Australian Government or the Australian public expects that a crime will be dealt with by way of a prosecution; the alleged crime is of such a nature or magnitude that it is important to deter potential offenders and prosecution will act as a very effective deterrent.
Where culpability and criminality of the conduct are not apparent but there is a need to address breaches of the Act and effectively deter future non-compliance, particularly by a body corporate, it may well be appropriate for the TGA to apply for a civil penalty order.
1.4 Civil Penalties
Civil Penalties have become a recognised means of enforcement under various regulatory frameworks 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 fault element, imposed through a civil court procedure rather than through the criminal court process. It takes 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 are an alternative sanction for activity or conduct that underpins requirements designed to ensure that therapeutic goods used by the community meet acceptable standards of safety, 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 are manufactured.
To quote from paragraph 26.14 of the ALRC Report No. 95, Principled Regulation Report Federal Civil & Administrative Penalties in Australia, The emphasis in deterrence theory is both on pricing the illegal behaviour and having a penalty large enough to deter a well-resourced corporate offender.
The focus of a civil penalty is generally the regulation of commercial activity, and is directed against corporate or white-collar wrongdoing. Civil penalties are appropriate in regulating commercial activities involving the manufacture and supply of therapeutic products, particularly where the activities are undertaken in the main by incorporated bodies, including subsidiaries of multinational 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 be more effective in appropriate circumstances.
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.
Civil penalties may be broadly defined as punitive sanctions that are imposed otherwise than through the normal
Civil penalty provisions also apply in relation to breaches of requirements relating to the inclusion of therapeutic goods in the Australian Register of Therapeutic Goods (the Register), or compliance with 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, being whether:
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the Australian Government or the community expects that the matter will be dealt with by way of a serious enforcement action; the relevant conduct is of such a nature or magnitude that it is important to deter future non compliance by the same wrongdoer; the relevant conduct is of such a nature or magnitude that it is important to deter non compliance by other potential wrongdoers; and/or the conduct in question was driven by anticipated commercial benefit for the person at the expense of public health and safety.
there has been a blatant disregard for, or a significant degree of indifference to, the regulatory requirements under the Act or Regulations;
1.5 Double jeopardy
The ALRC Report No.95 notes at paragraph 11.20 that the rule against double jeopardy in criminal law prevents a person being prosecuted for an offence when that person has previously been prosecuted for substantially the same offence. It was noted by the majority in Pearce v The Queen when they noted that:
[W]hen it is said that it is enough if the offences are substantially the same, this should not be understood as inviting departure from an analysis of, and comparison between, the elements of the two offences under consideration. When legislation provides for parallel criminal liability and civil penalties for the same conduct there may be concern that the state could make repeated attempts to punish an individual for an alleged contravention or offence.
The 2006 Act clearly protects an individual against multiple penalties in relation to the same conduct or substantially the same conduct. Sections 42YF and 42YH protect a person against a civil contravention order after that person has been convicted of a criminal offence for the same conduct, and vice versa.
1.6 Criteria for undertaking court action
The ALRC Report No. 95 notes at paragraph 10.12 that the factors that influence a regulators enforcement strategy include the nature of the contravention (whether one-off or persistent), the seriousness of the contravention, and whether the contravention was careless, negligent or deliberate.
The ALRC Report No. 95 also notes at paragraph 10.13 that prosecutions are most likely to be pursued 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 contravention will 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 a persistent offender. If the contravention is regarded as an accident, and the regulated party is not a persistent offender, it is less likely that a punitive approach will be used unless the contravention is severe in nature.
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2. General principles for issuing infringement notices

2.1 Introduction
The Act sets out the legislative framework within which the TGA undertakes all its regulatory activities.
The purpose of the alternative enforcement measures contained in the 2006 Act has been to provide strong support to the primary objective of the Act, which is to establish a system of controls relating to the quality, safety, efficacy and timely availability of therapeutic goods used in Australia or 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 for therapeutic goods and the manner in which they are manufactured to ensure the supply of high quality 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 be discouraged, and as appropriate punished, where non compliance increases the risk of eroding public health and safety, and creates an uneven playing field for compliant members of the industry. Persistent non compliance or non compliance that may lead, or has led to, harm to the public 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 with non-compliant conduct. These options have provided greater flexibility in managing non compliance and may constitute a better alternative to regulatory action such as suspending or cancelling manufacturing licences, or cancelling goods from the Register. The new regime introduced by the 2006 Act includes a tiered criminal offence regime and a parallel civil penalty scheme for dealing with specific non-compliant conduct under the Act. One of the new measures flowing from the introduction of strict liability offences and civil penalty provisions is the option of issuing infringement notices, in lieu of initiating a prosecution for a strict liability offence or bringing 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 element or intention on the part of the alleged offender in order to establish that the offence has been committed. The result of a strict liability offence is that a person who contravenes a strict liability offence 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 the infringement notice amount rather than go through court proceedings, in the form either of criminal proceedings in the case of a strict liability offence, or civil proceedings in the case of a civil penalty. Further details regarding the nature and use of infringement notices under the 2006 Act are 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
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
of an alleged offence. It gives the person to whom the notice is issued the option of either paying the penalty set out
The option for the regulator to issue infringement notices only arises following a decision to take judicial action against a person for non compliance with a regulatory requirement. This decision may be to either prosecute a person for the non compliance, or alternatively to apply to the Federal Court for a civil penalty order. This decision will be taken only after independent legal advice, such as from the Australian Government Solicitor or, in the case of a prosecution the Commonwealth Director of Public Prosecutions, has been received which makes it clear that there are grounds either for laying charges against a person or for applying to the Federal Court for a civil penalty order 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, the regulator is bound to observe the Model Litigant Rules applying under the Legal Services Directions. The Legal Services Directions are issued by the Attorney-General under section 55ZF of the Judiciary 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 and requirements for the performance of Commonwealth legal services and, in particular, the conduct of litigation by Commonwealth agencies. The obligations of Commonwealth agencies in relation to acting 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 recently issued updated Legal Services Directions under section 55ZF of the Judiciary Act 1903, which commenced on 1 July 2008.
The Office of Legal Services Coordination, which is responsible for administration and policy in relation to Australian Government legal services including in relation to the Legal Services Directions issued by the Attorney-General under the Judiciary Act 1903, has noted that the community expects the Commonwealth to act as a model litigant and to be fair, open, honest and reasonable in its dealings. This expectation was expressed by Chief Justice of the High Court Griffith in 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 be observed by the Crown in dealing with subjects . (Melbourne Steamship v Moorehead (1912) 15 CLR 333).
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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 an infringement notice and payment is made in respect of that notice, no further action in relation to that infringement may be taken by the regulator, and there is no record of either a conviction for an offence, 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 judicial action, the regulator may choose this course instead of issuing an infringement notice. This would be the case where, for example, the regulator decides that the issue of an infringement notice would not adequately deter future non compliance with regulatory requirements by the same person, or the 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 the matter 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 in relation to non-compliance with an applicable regulatory requirement without first having fully determined to embark upon the commencement of either criminal or civil proceedings against the person believed responsible for the non-compliant activities.
Under the 2006 Act, any person issued with an infringement notice would always have the option of refusing to pay the infringement notice amount, and electing instead to have the matter dealt with by a court. Given that is the case, it is important and incumbent upon the TGA as the regulator not 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 provides that a Financial Management and Accountability Act 1997 (FMA) agency is not to start court proceedings unless the agency has received written legal advice from lawyers whom the agency is allowed to use in the proceedings indicating that there are reasonable grounds for starting the proceedings. Under paragraph 4.7, in urgent cases an FMA agency may start court proceedings on the basis of oral legal advice that there are reasonable grounds for starting the proceedings, but confirmation of that advice is to be obtained in writing at the earliest opportunity.
2.2 The Issue of Infringement Notices
Infringement notices will only be issued where the readily assessable elements of the breach can be identified. Infringement notices are therefore intended to apply only to conduct regulated under offences 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 requirement breached;
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The TGA will only issue an infringement notice in circumstances where, based on independent legal advice, obtained, for example, from the Australian Government Solicitor, it can be demonstrated that the TGA has reasonable grounds for pursuing a breach of the Act through the criminal court system or before the Federal Court. In general, where a contravention has occurred in relation to a person for the first time and there is no threat to public health and safety and the person takes immediate steps to rectify the breach, a warning letter may be given to the person who has contravened the relevant regulatory requirement. This is particularly the case where a person may have acted inadvertently or has misunderstood what is required under the Act or Regulations, and the non compliance is one that can be readily addressed immediately by the person concerned. Judicial action, including where appropriate, any issue of an infringement notice, may be pursued by the TGA, where the same person repeats the contravention or makes no effort to comply with regulatory requirements. Whether or not an infringement notice will be issued in relation to a breach of a strict liability provision or a contravention of a civil penalty provision will depend on the initial decision to pursue the breach through a criminal process or a civil process. Taking into account these considerations, an infringement notice may be issued: a. b. in lieu of prosecuting a person for a strict liability offence; or in lieu of applying to the Federal Court for a civil penalty order.
where the breach occurred for anticipated financial reasons or considerations to the detriment of public health and safety.
where the breach or the contravention cannot be effectively addressed by informal enforcement action;
where payment of an infringement notice is considered to be an adequate deterrent to prevent future breaches;
Note that an infringement notice cannot be issued after the expiry of 12 months from the date of the relevant 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 civil penalty provision, the TGA may seek to pursue a criminal conviction where there is an element of culpability, particular where an individual is involved, and pursue civil penalties in other circumstances.
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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 address breaches of the Act and deter future non-compliance, or the non compliance is attributed to a company, the TGA may opt for a civil penalty fine.
An infringement notice will only be issued where a decision is made to: a. b.
The infringement notice scheme will only be considered where the TGA contemplates judicial action i.e. where the regulator opts for either criminal or civil sanction.
Criminal conviction carries with it a stigma, particularly where the conviction is accompanied by imprisonment. As with other consequences discussed above, this may have more impact on a natural person rather than on a body corporate (as a body corporate cannot be imprisoned). For these reasons, it may often be appropriate to opt for a civil penalty where the wrongdoer is a corporation.
2.2.2
When will an infringement notice be issued?
The TGA intends to only issue an infringement notice where, based on preliminary independent legal advice, such as from the Australian Government Solicitor, it can be demonstrated that the TGA has reasonable grounds for pursuing a breach of the Act through the criminal justice system or before the Federal Court for a civil penalty contravention. An infringement notice is intended to penalise, and deter, future breaches. If payment is made within the time permitted the liability for the offence or the contravention of a civil penalty provision is discharged. Further proceedings cannot be taken in relation to the offence or the contravention, and there is no record of a conviction or a contravention. If the decision by the alleged offender is not to pay the infringement notice, the matter will be taken to the appropriate court, and it is up to a court to determine whether the person is in breach or not, as well as the nature and level of the sanction to be applied.
prosecute for an offence of strict liability; or commence civil proceedings for a contravention of a civil penalty provision.
However, the TGA will not necessarily issue an infringement notice in all circumstances. There may be circumstances that warrant direct prosecution or direct application for an order for a civil penalty contravention. Matters that may be taken into consideration when determining whether to issue an infringement notice, based on the level of risk attached to a breach of a regulatory requirement, include the following:
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An infringement notice cannot be issued after 12 months of the commission of the alleged offence or civil penalty contravention.
a. b. c. d. e. f.
nature of the breach degree of likely harm number and frequency of breaches nature of the product significance of breach in terms of safety, efficacy and quality absence of any effort to ascertain and comply with regulatory requirements
2.3 Applicability of the Infringement Notice Scheme

The infringement notice scheme will only apply to the offences of strict liability and civil penalty provisions in the Act. The tables below provide a current list of the breaches where an infringement notice can be issued in relation to the strict liability offence or the contravention of a civil penalty provision.
2.3.1
Provisions with strict liability and civil penalties
Provision in the Act existing before the 2006 Act Medicine or therapeutic device s14 Medical Device
Provision in the Act introduced by the 2006 Act Strict liability offence
Description of conduct
Civil penalty provision
Provisions related to compliance with standards (including manufacturing standards) and conditions applying to exemptions from complying with standards s41MA 14(2,7,11) 41MA(2,6,10 ) 15(3) 41MC(3) 35(2,7) 41ME(2,6) 14A(1-3) 41MAA(1-3) 15AA 41MCA 35A(1,2) 41MEA(1,2) Breach of standard applying to goods
s15(2)
s35(1), s35(4)
s41MC(2) s41ME
Breach of condition attaching to standards
Manufacturing without a licence, not applying manufacturing standards
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s35(2)
s41MN(2) s41EI
35B(2) 41MN(6) 41EI(2)
35C 41MNA(2) 41EIA
Breaching conditions of a licence or conformity assessment certificate
Issues relating to inclusion/retention of goods in the Register

s20(1) s41MI(1) s41FE 19B(2) 41MI(2) 21A(2) 41FE(2) 31(5B) 41JB(5) 19D(1) 21B(1) 41FEA 31AAA 41JBA
Providing a false/misleading statement in connection with conformity assessment certificate Failure to include goods in the Register as required
s22(2A)
s22A
s31(6)
s41JB(4) s41MN(1) s41KC
Providing false statements when entering goods in the Register
s22(3) s30EC
Failure to comply with recovery/notification requirements

30EC(2) 41KC(2) 30F(4C) 30ECA 41KCA 30FA 42VA
21A(6) 41MN(2)
21B(2) 41MNA(1)
Providing false/misleading information in connection with entry or retention of goods in the Register
Breaching condition of registration or listing Goods required to be recovered as goods do not meet standards etc Emergency goods where actual/potential threat to Australia, not fit for use Tampered products
s30F(5)
s42V(6)
42V(6A)
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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 Medicine or therapeutic device Medical Device
Provision in the Act introduced by the 2006 Act Strict liability offence
Description of conduct
Civil penalty provision ----------Supply of goods not in accordance with authority or conditions Misuse of medical devices exempted for a special use Importation of goods in breach of conditions of exemption under s.18A
Breach of condition applying to exempt goods s22(7A) and (8) S20(2C) 21A(10) & (13)
s41MO(1) and (2)
41MO(2) & (6)
2.3.3
Provisions with civil penalty contraventions and no strict liability offences

Provision in the Act introduced by the 2006 Act Strict liability offence ------Description of conduct
Provision in the Act existing before the 2006 Act Medicine or therapeutic device s42E Medical Device
Civil penalty provision
Provisions related to compliance with standards (including manufacturing standards) and conditions applying to exemptions from complying with standards 42EA 54AC Conduct dealing with counterfeit goods Destruction & falsification of documents
s54AB(1) s20(2)
19D(3,4)
Failure to include ARTG (Australian Register of Therapeutic Goods) no. on label of goods
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s29A(1) s29B(3) s29B(4) s22(4)
s41MP(1)
s41MQ(3) s41MQ(4) s41MH s41ML
--------21B(3) 22AA ---
29AA(1), 41MPA(1) 29C(1), 41MR(1) 29C(2), 41MR(2) 41MHA 41MLA(1)
20A
Import, export, supply where Secretary not properly notified Fail to notify of adverse events False/misleading info when notifying of adverse events
Fail to comply with notice to notify of adverse events False statement in declaration
s22(7AB)
Representing that medicines or devices are included in the Register, or are exempt etc, when they are not
2.4 What Level of Fines Will Apply for Infringement Notices?
The infringement notice scheme should not be viewed as allowing alleged offenders to get away with 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 further judicial action in relation to the breach of a regulatory requirement, and furthermore there is no formal record of any infringement having occurred. The monetary penalties attached to infringement notices take this into account, and are also intended to reflect the degree of risk potentially posed by the non-compliant conduct. The maximum penalty for a strict liability offence range from 60-2,000 (but mostly in the range of 1,000-2,000) penalty units for an individual and 300-10,000 (but mostly in the range of 5,00010,000) penalty units for a corporation. The maximum fine that an infringement notice may be issued for, in relation to a strict liability offence, cannot exceed 1/5th of the offence penalty i.e. 12400 penalty units for an individual and 60-2,000 for a corporation.
2.4.1
Maximum level of monetary penalty for a strict liability offence
If a decision is made to issue an infringement notice pursuant to a strict liability offence, the maximum 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 of 3,000 to 5,000) penalty units for an individual and 2,000-50,000 (but mostly in the range of 30,000 to 50,000) penalty units for a corporation. The maximum fine that an infringement notice may be issued for, in relation to a contravention of a civil penalty provision, cannot exceed 1/10th the pecuniary penalty attached to a civil penalty provision i.e. 20-500 penalty units for an individual and 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 penalty contravention
The difference between the level of penalties under a strict liability offence and a civil penalty provision, and the corresponding fines under an infringement notice, reflects the more serious consequences and stigma associated with a criminal prosecution and subsequent conviction, compared to the declaration of a contravention of a civil penalty and the consequent pecuniary penalty 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 will be based on a tiered fine system. The tiered system will be applied with a risk multiplier, where the maximum fine attached to an infringement notice for a civil penalty provision will be multiplied by 0.25 or 0.5, for the two lower level breaches. The level of the tiered fine may be based on the following factors: a. b. c. nature and scale of breaches recurrence of the same breach; the degree of familiarity with or understanding of the regulatory requirements which the person ignores or continues to ignore; failure to rectify breach after providing TGA assurances; financial gain incurred; anticipated cost-cutting measures to the detriment of public health and safety; or size of the company (for example, in terms of annual turn-over).
d. e. f. g.
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 an infringement notice, in light of the higher pecuniary penalties that can be imposed for a contravention of a civil penalty provision. Under a civil penalty provision, the maximum penalty for a 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; Tier 2 fine (individual) = 1/10th civil penalty for individual x 0.5; (corporation) (corporation) (corporation) = 1/10th civil penalty for corporation x 0.25 = 1/10th civil penalty for corporation x 0.5
Tier 3 fine (individual) = 1/10th civil penalty for individual
Attachment A provides examples of breaches under each Tier.
= 1/10th civil penalty for corporation
2.5. The Infringement Notice Document

Pursuant to part 5A-2 of the Act, the Regulations will specify the information that should be included in an infringement notice.
2.5.1
What information will be included in the infringement notice?
An infringement notice will include: a. b. e. f. c. d. g. i.
h.
the name of the person on whom the notice is being served; that it is being served on behalf of the TGA and the name of the authorised officer issuing the notice; the nature and particulars of the alleged offence or contravention; the time (if known), the date on and place at which the offence or contravention is alleged to have occurred; the maximum penalty that a court could impose for the alleged offence or contravention; the amount of fine payable under the infringement notice in respect of the alleged offence or contravention; 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 of the notice, the amount of penalty specified in the notice; and a statement that the person may make written representations seeking withdrawal of the infringement notice; a unique identifier for each infringement notice; and
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Other relevant information that may be included in an infringement notice includes: a. b. c.
j.
reasons for issuing the infringement notice.
d.
the manner in which payment of the penalty can be made; the address or location where payment of the penalty can be made; 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; and 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 against them for the alleged contravention and will not be regarded as been convicted of the offence or that they contravened a civil penalty provision.
2.6. What Happens if a Person is Issued with an Infringement Notice

Compliance with an infringement notice is not to be taken as an admission of any contravention of the Act. If complied with in relation to an offence, the person will not be prosecuted for the relevant offence and the person will not be taken to have been convicted of that offence. Similarly, if complied 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 penalty provision, and the person will not be taken to have contravened the civil penalty provision.
2.6.1
Compliance with an infringement notice
Payment of infringement notices is not mandatory. However, if the person elects to pay an infringement notice, the person is no longer liable for prosecution nor will the person be the subject of a contravention order for a breach of a civil penalty provision under the Act. The Regulations will allow for procedures for the withdrawal of an infringement notice. A person issued 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 penalty contravention, within a specified period after the service of the notice.
2.6.2
Contesting an infringement notice withdrawal of an infringement notice
Where the person disputes the notice by notifying the issuer of any facts or matters that the person believes ought to be taken into account in relation to the alleged offence or alleged contravention of a civil penalty provision, the TGA must decide whether to withdraw the notice, taking into consideration the information provided by the person. The person will then be informed of the decision 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 the issue of an infringement notice the person issued with such a notice may elect to pay, or may decline to pay.
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3. General principles of enforceable undertakings

3.1 Introduction
(ACCC) (section 87B of the Trade Practices Act 1974), Civil Aviation Safety Authority (section 30DK of the Civil Aviation Act 1988), ASIC (sections 93A and 93AA of the Australian Securities and Investments Commission Act 2001), COMCARE (Clause 16, Schedule 2 of the Occupational Health and Safety Act 1991) and the Australian Communications Authority (sections 38-39 of the Spam Act 2003). Section 42YL is drafted consistently with the above provisions, in particular section 87B of the Trade Practices Act 1974. Court enforceable undertakings can provide an alternative means for addressing and remedying breaches 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 a therapeutic good from the Register. Court enforceable undertakings are alternative enforcement measures that are currently available to agencies such as the Australian Competition and Consumer Commission
As a regulator, where a breach of the Act calls for regulatory action, the TGA has an obligation to protect public health and safety through the exercise of its powers under the Act and the Regulations. Enforceable undertakings represent an alternative option for addressing breaches of regulatory requirements by sponsors and manufacturers in a manner that can accommodate the operations 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 by sponsors and manufacturers. However, no one is under any obligation to provide such an undertaking and, if none is provided to the TGA, the TGA will still be required to take the necessary regulatory action available to it. Enforceable undertakings are unlikely to be the appropriate option to resolve every matter involving a perceived breach. Enforceable undertakings are remedial in nature, not punitive.
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 an undertaking is proposed by a person in relation to whom regulatory action may be taken is entirely up 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, and therefore enforceable.
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 sponsor or manufacturer for addressing the identified breaches of the Act and the Regulations. Court enforceable undertakings are a mechanism to enable a person in breach to suggest an alternative
Section 3 - General principles of enforceable undertakings September 2008
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solution to remedy breaches. Where an alternative suggestion that is offered by a sponsor or manufacturer is accepted by the TGA, then the proposed action or undertaking must be enforceable, 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 and safety.
Once an enforceable undertaking is entered into, compliance will be obligatory. If an undertaking is not honoured, the TGA will seek an order from the court requiring the relevant company or person to comply with the undertaking. The TGA intends to use the court enforceable undertakings as an option only when it believes that a resolution based on enforceable undertakings offers the best solution to ensure that no further breaches 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 TGAs consent. In seeking any variation, the party may provide information to the TGA and reasons why a variation is being sought. The TGA will take into consideration the information provided and the reasons why a variation is being sought in determining whether to consent to the variation in the undertaking.
3.2 Decision to accept enforceable undertakings
The TGA will accept an enforceable undertaking if it offers the best and most appropriate solution for addressing a breach of regulatory requirements.
In deciding between litigation or other enforcement sanctions and an enforceable undertaking, the TGA may take into consideration the following: a. the nature of the breach or the alleged breach in terms of: i. ii. iii. iv. v. quality, safety, efficacy, or performance of the products; and the conduct of the person or the company in relation to the breach; and the type of therapeutic goods that are the subject of the breach; and the impact on public health and safety; and the magnitude of the risk created; and
a. e.
b. c. d. f. g.
the extent to which any meaningful undertakings can be given to remedy the breaches and mitigate the risk; and the likelihood that the enforceable undertaking will be fulfilled; and the apparent good faith of the company or person; and the ability of the TGA to properly monitor compliance with the enforceable undertaking; and the history of breaches of requirements under the Act and the Regulations, including any previous convictions or contraventions; and the prospect of an effective and timely resolution of the matter; and 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 enforceable undertaking, and also will not be obliged to accept an enforceable undertaking from a sponsor or manufacturer. The TGAs primary responsibility is to protect public health and safety, and unless the acceptance of an enforceable undertaking will effectively address breaches of regulatory requirements 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 or perceived breach and its consequences. They must also include detailed future actions to prevent a recurrence of that breach of the Act and/or Regulations. The undertakings must be provided in writing. Where breaches of the regulatory requirements clearly establish the fault elements or where the breaches have resulted or will result in harm or injury to the public, the TGA generally will not agree to an enforceable undertaking as an alternative to, for example, prosecution or resorting to administrative sanctions.
3.4
Where an undertaking is not accepted
The TGA will also not accept an undertaking if the terms of the undertaking purport to fetter TGAs ability to use its regulatory powers or places an obligation upon the TGA.
Following acceptance of an undertaking, the TGA requires that its implementation and effectiveness be monitored by the other party to the undertaking. The terms of the undertaking may include the monitoring and reporting of the implementation and effectiveness of the undertakings.
3.5
Compliance with undertakings
Monitoring will generally be the responsibility of the person concerned. Where the TGA has reason to believe that the person has not complied with an undertaking, the TGA will try to resolve the matter 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 a term of the undertaking, the court may make all or any of the following orders: a. b. c.
d.
an order directing the person to comply with that term of the undertaking; 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 is reasonably attributable to the breach; any order that the court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach; any other order that the court considers appropriate.
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Subsection 42YL(2) of the Act allows the person to withdraw or vary undertakings at any time, with the consent of the Secretary.
3.6
Variations to the terms of an undertaking
This allows negotiations for changes if undertakings are subsequently found to be difficult to comply with, not practical, the terms do not appropriately address the perceived breach or alleged breach, or changes in circumstances occur. The TGA will consider such requests as long as they do not alter the purpose of the original undertakings. The published undertakings will include the incorporated variations.
In order to ensure that the terms of the enforceable undertakings are complied with and to assist in monitoring that compliance, the TGA will seek the inclusion of provisions in the undertakings requiring reporting and the provision of relevant requirements to be made available to TGA.
3.7
Monitoring an undertaking and information requirements
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 the Australian Securities and Investment Commission Act 2001) also makes details of enforceable undertakings available, but on request and subject to some qualifications. A copy of the details of such a notice will be given to the person providing the undertaking before the notice is published. The approval of the person providing the undertaking is not required in relation to the details of the notice or its publication.
3.8
Publication of enforceable undertakings
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 some types of therapeutic goods that have been cancelled from the Australian Register of Therapeutic Goods would likely be information that is publicly available. As court enforceable undertakings are an alternative enforcement measure for breaches of regulatory requirements under the Act (where it is considered appropriate), it is appropriate that information about undertakings and the terms of the undertakings are made publicly available.
It is possible that parts of the enforceable undertakings may contain commercially sensitive information or personal information. If that is the case, and the person providing the undertaking requests that the information not be released, then the TGA may agree that this class of information be deleted from the published details relating to an undertaking.
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4. General principles for the use of media release to inform the public about regulatory actions taken
Provisions 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 actions taken under the Act or Regulations will only be used if there is an imminent public health safety risk or threat of such a risk.
Section 4 - General principles for the use of media release to inform the public about regulatory actions taken September 2008
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5. Entry search and seizure and issuing of warrants

The Act currently contains provisions for authorised persons to investigate actual or suspected breaches of the Act or the Regulations. Provisions exist to enable authorised officers to apply to magistrates 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 investigate and secure evidence of any breach of the Act or the Regulations, whether the breach is an offence or a breach of a civil penalty provision. This allows material obtained under the search and seizure warrant 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 out in subsections 47(2) (which provides that an authorised person must not enter premises unless the occupier of the premises has consented to the entry, or the entry is made under a warrant issued under section 50 of the Act) and 47(3) (which provides that an authorised person is not entitled to exercise any powers under subsection 47(1) of the Act in relation to premises if the occupier of the premises has required the authorised person to produce his or her identity card for inspection by the occupier and the authorised person fails to comply with the requirement), if an authorised person has reasonable grounds for suspecting that there may be evidentiary material in respect of an offence or a civil penalty contravention, or in respect of both, on any premises, the authorised person may: a. b. c. d. enter the premises; search and inspect premises; seize goods; and 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, officers concerned are required to provide information on oath to satisfy the Magistrate that there are reasonable grounds for suspecting that there may be evidence to establish a breach of the Act or the Regulations. Any evidence so obtained must in turn meet evidentiary requirements before it is admissible before a Court.
Section 5 - Entry search and seizure and issuing of warrants September 2008
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Attachment A How an infringement notice could be issued for a breach of a civil penalty provision
Infringement notices could be issued in relation to a breach of a civil penalty provision where a decision to take judicial action has been made because the breach is considered of such a magnitude and scale that such action is warranted.
Where the TGA should issue an infringement notice in lieu of taking a person directly to the Federal Court for a breach of a civil penalty provision, the TGA will not necessarily always opt for a Tier 1 infringement notice. In lieu of a court action, the TGA may decide to issue a Tier 2 or Tier 3 infringement 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 breaches previously 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 or Tier 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 of civil penalties as introduced by the 2006 Act, in the form of a breach of manufacturing regulatory requirements. There are many other regulatory requirements, apart from those requirements that relate 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 to rectify problems previously identified on a number of occasions, or repeated breaches of regulatory requirements, rather than one-off incidences of minor breaches of civil penalty provisions of the Act, in contemplating the issuing of infringement notices.
Attachment A How an infringement notice could be issued for a breach of a civil penalty provision September 2008
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Tier 1 (0.25 of the maximum penalty applying to the relevant civil penalty provision in this case, the maximum penalty is 5,000 penalty units for an individual, 50,000 penalty units for a body corporate) Tier 2 (0.5 of the maximum penalty applying to the relevant civil penalty provision - in this case, the maximum penalty is 5,000 penalty units for an individual, 50,000 penalty units for a body corporate))
Level of fine - Individual
$13,700 for a breach of manufacturing principles $13,700 for a breach of a condition of a manufacturing licence
Level of fine - Corporation
$137,000 for a breach of manufacturing principles
$137,000 for a breach of a condition of a manufacturing licence $275,000 for a breach of manufacturing principles
Tier 3 (Maximum penalty applying to the relevant civil penalty provision - in this case, the maximum penalty is 5,000 penalty units for an individual, 50,000 penalty units for a body corporate)).
$275,000 for a breach of a condition of a manufacturing licence $550,000 for a breach of manufacturing principles
$550,000 for a breach of a condition 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 a civil penalty provision
The occurrence of a number of major manufacturing deficiencies identified on the same manufacturing premises, for example:
Critical deficiencies
raw materials not tested (including proper identification testing) to ensure compliance with specifications;
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 the possibility of ingress of contamination from above;
in relation to equipment: stored equipment is not protected from contamination; and equipment is 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 Plan regarding validation and re-validation of critical processes and systems, no testing to verify conformance with microbiological requirements for antiseptic products); there is no documented procedure for control of documentation, investigations reveal poor records of the manufacturing process, shelf-life of medicines, and sampling; complex production processes for non-critical products not validated; insufficient lighting in production or inspection areas;
no or grossly inadequate air filtration system to minimise airborne contaminants (could be a serious risk in relation to sterile medicines or if contaminants are a safety concern);
individuals in charge of quality control procedures and production do not have the necessary qualifications, skills and experience as required;
The recurrence of a significant number of critical and major manufacturing deficiencies as described above which were previously identified by the TGA, and not rectified by manufacturer as required by the TGA.

Failure to comply with the conditions of a manufacturing licence such as the following: Identification of numerous critical and major manufacturing deficiencies; Manufacture of products or using a step of manufacture, outside those allowed by the manufacturing licence; No evidence of, or inadequate records relating to:
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Failure to comply with regulation 21 of the Regulations because nominated persons are no longer employed by the manufacturer. Therefore it is not clear whether the new employees have the appropriate qualifications and experience necessary to carry out the manufacturing of goods consistent with the requirements under the Act and Regulations, the code of Good Manufacturing 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.
Failure to comply with regulation 22 of the Regulations to the effect that it is not clear that the new manufacturers ability is capable of complying with the conditions of the licence;
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;
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 question has not caused harm or injury to members of the public, for example:
importing, supplying or exporting goods that depart materially from an applicable standard, and the departure is likely to cause serious harm to consumers; importing, supplying or exporting goods that are required by an applicable standard to be sterile, either in full or in part, but where the goods in question are not sterile as is required by the standard, and where the person or company responsible does not have the consent 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 be in a certain type of container or a container that meets certain description requirements, and the container is not of the type required or does not meet all or any of the applicable requirements, and where the person or company responsible does not have the consent in writing of the Secretary to the import/supply/export of the sub-standard goods;
goods being imported, supplied or exported with a significant difference in the percentage of active ingredient relative to the applicable standard for those goods, or a difference that is likely to cause a risk of harm, and where the person or company responsible does not have the consent in writing 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 was compromised by not using authenticated reference standards, did not meet the applicable standard;
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 hardness levels not permitted by the applicable standard; supplying goods which, because of the design and maintenance of the manufacturing premises used to manufacture the goods, were contaminated by water and/or other products or their component 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 the manufacture of the goods without testing the materials for identity, and without testing the finished goods for chemical composition, failed the applicable standard.
supplying a herbal material containing an added antimicrobial substance to increase the claimed natural antimicrobial effect of the herb, contrary to the applicable standard;
A recurrence of a major standards-related deficiency such as those described above, where the deficiency 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 incidents of the same standards-related deficiency or deficiencies.
Numerous recurrences of a significant number of major standards-related deficiencies such as those described under the heading Tier 1, where those deficiencies were previously identified by the TGA in relation to the person or company responsible on a number of occasions, and where the person or company responsible has not rectified the problems, to the point where the TGA may have 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 the subparagraphs of section 19D(1)(b) (being: (i) that the goods are 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 the subject of an approval under section 19A) applies in relation to the goods, where the exception noted in section 19D(1) of the Act if person or company was not the sponsor of the goods does not apply, and where the goods concerned 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 in Australia and exporting it from Australia without that medicine being registered on or otherwise included in the Register in relation to the person or company responsible, though the goods are registered on the Register in relation to another person or company(unlawful parallel importing);
unlawfully manufacturing and supplying in Australia complementary medicines containing substances which may have serious risk implications especially in products that are self selected by 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 person responsible, and without adequately controlling starting materials in the manufacture of the goods.
unlawful importation into Australia without including the goods on the Register, and importing the goods in boxes labelled furniture; or
unlawful importation into Australia of therapeutic goods without including the goods on the Register, and importing the goods in containers labelled as a food product completely unrelated to the therapeutic goods in question;
manufacturing in, and exporting from, Australia, therapeutic goods of various kinds, including registrable 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 or company responsible, or at all; and
Subsequent occurrences (following further warnings) by the same sponsor of one of a number of incidents 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 goods are 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 the subject of an approval under section 19A) applies in relation to the goods, where the exception
Attachment A How an infringement notice could be issued for a breach of a civil penalty provision September 2008 Page 35 of 48
noted in section 19D(1) of the Act if person or company was not the sponsor of the goods does not apply, such as those described under the heading Tier 1.
Identification of numerous major occurrences, following previous regulatory action for the same occurrences and subsequent further warnings after that action for recurrences of the same behaviour, 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 the subparagraphs of section 19D(1)(b) (being: (i) that the goods are 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 the subject of an approval under section 19A) applies in relation to the goods, where the exception noted in section 19D(1) of the Act if person or company was not the sponsor of the goods does not apply, such as those described under the heading Tier 1.
How an infringement notice could be issued for a breach of a strict liability provision
An infringement notice for a breach of a strict liability provision may be issued where a significant number of critical manufacturing deficiencies have been identified which may result in a significant risk of producing a product that is very likely to result in harm to the public. Examples of critical deficiencies include: In relation to the same manufacturing premises: not carrying out identification tests for starting materials used to manufacture medicines; deliberately mislabelling products so that they are represented to be only 50% strength of the actual strengths of the tablets/capsules supplied; absence of control of the Master manufacturing records, so that formulations are inconsistent; and Apart from critical deficiencies, there are also a number of major manufacturing breaches detected.
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Attachment B Legal services directions 2005
Attached are those provisions (paragraphs 4.2 and 12 of the Schedule to the Legal Services Directions, and Appendix B of the Legal Services Directions) of the Legal Services Directions 2005, issued by the Commonwealth Attorney-General (as amended on 1 July 2008) that concern the model litigant obligations of the Commonwealth and its agencies.
The new Legal Services Directions are registered on the Federal Register of Legislative Instruments (FRLI), and can be found in full along with their accompanying explanatory statement and briefing note on the Office of Legal Services Coordinators website, <http://www.ag.gov.au/olsc>.
Attachment B Legal services directions 2005 September 2008
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Legal services directions 2005

(Issued by the Attorney-General under section 55ZF of the Judiciary Act 1903)
1 Name of instrument [see Note 1] Commencement
This instrument is the Legal Services Directions 2005. This instrument commences on 1 March 2006.
Repeal of previous instrument
The Legal Services Directions issued with effect from 1 September 1999, as amended on 9 February 2000, 28 May 2000, 1 July 2000 and 30 September 2004, are repealed on the commencement of this instrument. Schedule 1 to this instrument sets out Directions made by the Attorney-General under section 55ZF of the Judiciary Act 1903.
Schedule 1
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Schedule Legal services directions
Part 1: FMA agencies
4. Claims and litigation by or against the Commonwealth or FMA agencies
The Model Litigant Obligation 4.2 Claims are to be handled and litigation is to be conducted by the agency in accordance with the Directions on The Commonwealths Obligation to Act as a Model Litigant, at Appendix B, noting that the agency is not to start legal proceedings unless it is satisfied that litigation is the most suitable method of dispute resolution. NOTE. For the application of this provision to Australian Government bodies other than FMA agencies, see paragraph 12.
12. Extended application of Directions to non-FMA bodies

12.1 This paragraph deals with the application of the Directions to bodies which are not FMA bodies. Obligations of non-FMA bodies 12.2 A non-FMA body which handles claims, or conducts litigation in the name of, or on behalf of, the Commonwealth, is to comply with the Directions in respect of such claims and litigation. a.
12.3 In all other circumstances, a non-FMA body, that is not a government business enterprise prescribed under the CAC Act or a Corporations Law company controlled by the Commonwealth, is to:
inform the Attorney-General or OLSC of the details of any litigation (including threatened or proposed litigation) which gives rise to constitutional issues and comply with any
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b. c. d. e.
specific instructions given by the Attorney-General concerning the conduct of the litigation (including as to the choice of lawyers to be used and the arguments to be put on constitutional issues) inform the Attorney-General or OLSC of any claim or litigation proposed to be brought against, or involving, another Commonwealth agency handle claims and conduct litigation in accordance with the Directions on The Commonwealths Obligations to Act as Model Litigant, at Appendix B
engage counsel in accordance with the Directions on Engagement of Counsel, at Appendix D, and
12.3A A CAC body is also to comply with paragraphs 11.1(da), 11.2(ba), 11.3, 11.4 and 11.5. Attorney-General may make decisions about compliance with Directions
comply with the requirements of paragraph 7 of these Directions, concerning the handling of claims of public interest immunity.
12.5 If the Attorney-General makes a decision under paragraph 12.4, the Attorney-General is to tell the body about the decision.
12.4 In addition, the Attorney-General may decide that a particular body or person is to comply with some or all of the Directions that apply to FMA agencies.
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Appendix B The Commonwealths obligation to act as a model litigant

1 2
The obligation
Consistently with the Attorney-Generals responsibility for the maintenance of proper standards in litigation, the Commonwealth and its agencies are to behave as model litigants in the conduct of litigation. The obligation to act as a model litigant requires that the Commonwealth and its agencies act honestly and fairly in handling claims and litigation brought by or against the Commonwealth or an agency by:
Nature of the obligation
a) dealing with claims promptly and not causing unnecessary delay in the handling of claims and litigation aa) making an early assessment of: (i) (ii) the Commonwealths potential liability in claims against the Commonwealth
b) paying legitimate claims without litigation, including making partial settlements of claims or interim payments, where it is clear that liability is at least as much as the amount to be paid c) acting consistently in the handling of claims and litigation
the Commonwealths prospects of success in legal proceedings that may be brought against the Commonwealth; and
d) endeavouring to avoid, prevent and limit the scope of legal proceedings wherever possible, including by giving consideration in all cases to alternative dispute resolution before initiating legal proceedings and by participating in alternative dispute resolution processes where appropriate e) where it is not possible to avoid litigation, keeping the costs of litigation to a minimum, including by: (iii) (iv) (ii) (i) not contesting liability if the Commonwealth or the agency knows that the dispute is really about quantum
f)
ensuring that arrangements are made so that a person participating in any settlement negotiations on behalf of the Commonwealth or an agency can enter into a settlement of the claim or legal proceedings in the course of the negotiations not taking advantage of a claimant who lacks the resources to litigate a legitimate claim
monitoring the progress of the litigation and using methods that it considers appropriate to resolve the litigation, including settlement offers, payments into court or alternative dispute resolution, and
not requiring the other party to prove a matter which the Commonwealth or the agency knows to be true
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g) not relying on technical defences unless the Commonwealths or the agencys interests would be prejudiced by the failure to comply with a particular requirement h) undertaking and pursuing appeals unless the Commonwealth or the agency believes that it has reasonable prospects for success or the appeal is otherwise justified in the public interest, and i) apologising where the Commonwealth or the agency is aware that it or its lawyers have acted wrongfully or improperly. Note 1 The obligation applies to litigation (including before courts, tribunals, inquiries, and in arbitration and other alternative dispute resolution processes) involving Commonwealth Departments and agencies, as well as Ministers and officers where the Commonwealth provides a full indemnity in respect of an action for damages brought against them personally. Ensuring compliance with the obligation is primarily the responsibility of the agency which has responsibility for the litigation. In addition, lawyers engaged in such litigation, whether Australian Government Solicitor, in-house or private, will need to act in accordance with the obligation and to assist their client agency to do so.
Note 2 In essence, being a model litigant requires that the Commonwealth and its agencies, as parties to litigation, act with complete propriety, fairly and in accordance with the highest professional standards. The expectation that the Commonwealth and its agencies will act as a model litigant has been recognised by the Courts. See, for example, Melbourne Steamship Limited v Moorhead (1912) 15 CLR 133 at 342; Kenny v State of South Australia (1987) 46 SASR 268 at 273; Yong Jun Qin v The Minister for Immigration and Ethnic Affairs (1997) 75 FCR 155. Note 3 The obligation to act as a model litigant may require more than merely acting honestly and in accordance with the law and court rules. It also goes beyond the requirement for lawyers to act in accordance with their ethical obligations. Note 4 The obligation does not prevent the Commonwealth and its agencies from acting firmly and properly to protect their interests. It does not therefore preclude all legitimate steps being taken to pursue claims by the Commonwealth and its agencies and testing or defending claims against them. It does not preclude pursuing litigation in order to clarify a significant point of law even if the other party wishes to settle the dispute. The commencement of an appeal may be justified in the public interest where it is necessary to avoid prejudice to the interests of the Commonwealth or an agency pending the receipt or proper consideration of legal advice, provided that a decision whether to continue the appeal is made as soon as practicable. In certain circumstances, it will be appropriate for the Commonwealth to pay costs (for example, for a test case in the public interest.)
Merits review proceedings

4
Note The term 'litigation' is defined in paragraph 15 of these Directions in terms that encompass merits review before tribunals. There are particular obligations in relation to assisting a tribunal engaged in merits review to arrive at a decision. Agencies should pay close attention to the legislation under which a tribunal is established, and any practice directions issued by the tribunal.
The obligation to act as a model litigant extends to agencies involved in merits review proceedings. An agency should use its best endeavours to assist the tribunal to make its decision.
Note 5 The obligation does not prevent the Commonwealth from enforcing costs orders or seeking to recover its costs.
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In the case of the Administrative Appeals Tribunal see in particular subsection 33(1AA) of the Administrative Appeals Tribunal Act 1975 and the explanatory memorandum to the Administrative Appeals Tribunal Amendment Bill 2005. 5.1
Alternative dispute resolution

5.2
a) participate fully and effectively, and b) subject to paragraph 2 (e) (iv), have authority to settle the matter so as to facilitate appropriate and timely resolution of a dispute.
When participating in alternative dispute resolution, the Commonwealth and its agencies are to ensure that their representatives:
The Commonwealth or an agency is only to start court proceedings if it has considered other methods of dispute resolution (eg alternative dispute resolution or settlement negotiations).
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Attachment C Flowchart of and information relating to the processes following a possible breach of the Therapeutic Goods Act 1989
Context
The Act and its supporting legislation define the levels of protection established by Parliament as appropriate for the users of therapeutic goods in Australia. Manufacturers and suppliers of therapeutic goods must accept those responsibilities for the supply of goods onto the Australian market and, to a defined extent, for their export.
It is recognised that these Guidelines are only relevant to a small segment of the Industry as most will comply with their legal responsibilities.
Breaches of the legislation are breaches of those responsibilities and can have serious implications both for the protection of consumers and the reputation and standing of the Industry.
The Act establishes penalties and sanctions for breaching the legislation. The provisions recognises that breaches can range from minor to major, from unintended to intended from low public risk to high public risk. The regulatory responses to breaches take account of what will avoid future breaches and in some cases, punishment for reckless action (see flow chart).
Attachment C Flowchart of and information relating to the processes following a possible breach of the Therapeutic Goods Act 1989 September 2008 Page 44 of 48
In cases of reckless behaviour, more severe responses are warranted. If the breach is such that independent legal advice supports criminal or civil prosecution, there are several options.
In cases of minor but persistent breaches, applying conditions on the manufacturing license or the supply of the goods may be appropriate. The person who committed the breach may decide to offer an enforceable undertaking as an indication of intent.
In cases of minor, inadvertent breaches, bringing the matter to the attention of the responsible person is often adequate to educate and avoid further breaches.
If the breach has resulted in actual harm or injury, criminal prosecution will be undertaken. If the breach could have caused injury or was otherwise reckless, civil penalties may be appropriate, or an infringement notice may be considered where this is considered timely and would be capable of deterring further breaches.
The vast majority of breaches are minor and are resolved by negotiation however serious breaches must be followed up. The entity liable for prosecution will depend on the nature of the breach. While in most cases this will be the sponsor or manufacturer, in some cases other individuals may be liable.
Attachment C Flowchart of and information relating to the processes following a possible breach of the Therapeutic Goods Act 1989 September 2008
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Flowchart breach of the Therapeutic Goods Act 1989

Is the breach serious? Eg critical GMP breach
NO
YES
NO Breach was due to ignorance, lack of expertise and able to be corrected YES Issue warning and monitor NO
Repetitive or deliberate breach and/or potential or actual harm or injury
YES, and independent legal advice supports judicial action
Breach caused serious harm or injury?
NO Infringement notice *
YES
Consider regulatory action such as licence or ARTG qualification Offender offers Enforceable Undertaking
Possible fine, but no criminal record
Likely to cause
Tiered punishment depending on consequences of breach, and criminal record
Criminal Prosecution
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Options for Recipient of Infringement Notice

Criteria No serious harm or injury Breach is blatant
Infringement notice is considered to be an effective deterrent to rescind or modify the Notice Provide further information to TGA
Infringement Notice
28 days to consult TGA re possible withdrawal of the Notice Allow the matter to proceed to civil action (use the court to test)
Pay fine, no record
Enforceable Undertaking Option that can be offered by a person in breach of a regulatory requirement Details of Undertaking must be published Figur Offer may be accepted by TGA Leads to judicial action if Undertaking breached
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PO Box 100 Woden ACT 2606 Australia Email: info@tga.gov.au Phone: 02 6232 8444 Fax: 02 6232 8605 www.tga.gov.au

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

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About the Therapeutic Goods Administration (TGA)

Copyright Commonwealth of Australia 2006

Therapeutic Goods Administration

General principles for issuing infringement notices12

The Issue of Infringement Notices ________________________________ 14

Applicability of the Infringement Notice Scheme ______________ 17

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

The Infringement Notice Document ______________________________ 22

2.6. What Happens if a Person is Issued with an Infringement Notice _________________________________________________________________________ 23

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3. General principles of enforceable undertakings

Contesting an infringement notice withdrawal of an infringement notice23

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1. General Principles - Civil Proceedings versus Criminal Prosecutions

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1.3 Criminal Prosecution

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1.4 Civil Penalties

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2. General principles for issuing infringement notices

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2.2 The Issue of Infringement Notices

Section 2 - General principles for issuing infringement notices September 2008

Therapeutic Goods Administration

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

When will an infringement notice be issued?

Section 2 - General principles for issuing infringement notices September 2008

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2.3 Applicability of the Infringement Notice Scheme

Provisions with strict liability and civil penalties

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Manufacturing without a licence, not applying manufacturing standards

Section 2 - General principles for issuing infringement notices September 2008

Therapeutic Goods Administration

35B(2) 41MN(6) 41EI(2)

35C 41MNA(2) 41EIA

Breaching conditions of a licence or conformity assessment certificate

Issues relating to inclusion/retention of goods in the Register

s41JB(4) s41MN(1) s41KC

Providing false statements when entering goods in the Register

Failure to comply with recovery/notification requirements

Section 2 - General principles for issuing infringement notices September 2008

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Provisions with strict liability offences and no civil penalty contraventions

s41MO(1) and (2)

41MO(2) & (6)

Provisions with civil penalty contraventions and no strict liability offences

Civil penalty provision

Section 2 - General principles for issuing infringement notices September 2008

Therapeutic Goods Administration