We are in a transition period in the world of therapeutic goods advertisements (TG Advertisements). Currently, TG Advertisements must comply with either the Therapeutic Goods Advertising Code (No.2) 2018 (Cth) (Former Code) or the Therapeutic Goods (Therapeutic Goods Advertising Code) Instrument 2021 (Cth) (New Code). The transition period ends on 30 June 2022. A caveat that, when referring to TG Advertisements, we are referring only to those advertisements to which the New Code applies (including advertisements of medical devices, complementary medicines and over-the-counter medicines directed to consumers). The prohibition on advertising prescription medicines to consumers remains.
From 1 July 2022, all TG Advertisements must comply with the New Code. There has been significant media coverage on the application of the New Code to influencers, but the impact of the New Code will extend beyond your favourite social media personality. The key changes implemented by the New Code relate to testimonials and endorsements, mandatory statements and samples.
Endorsements and testimonials
The requirements relating to endorsements and testimonials in the Former Code were considered a ‘pain point‘ by industry stakeholders due to a lack of clarity concerning their application. For example, under the Former Code, a TG Advertisement could not contain a testimonial made by a corporation or certain individuals, including individuals engaged in the production, ‘marketing’ or supply of a therapeutic good (known as relevant persons). However, an individual who was not otherwise involved in the ‘marketing’ of a therapeutic good could provide a testimonial in return for valuable consideration and, arguably, would then become involved in the marketing of that good. The Therapeutic Goods Administration (TGA) noted this inconsistency in a Consultation Paper.
These requirements have been clarified and restated in section 24 of the New Code. A note in the New Code specifies that relevant persons include influencers, direct sellers and other persons receiving valuable consideration for making a testimonial. While influencers were not referred to expressly in the Former Code, it is difficult to see how an influencer could have promoted a therapeutic good without becoming involved in the marketing of that good. The New Code does not change the substance of this prohibition. It merely confirms that certain persons, including influencers, are expressly prohibited from making testimonials under the New Code.
On 26 May 2022, the TGA published guidance on testimonials and endorsements in advertising under the New Code (Guidance). The term ‘testimonial’ is not defined in the New Code. However, the TGA has clarified that an endorsement is a form of support, approval or sanction and a testimonial is a type of endorsement which involves a person who claims to have used a therapeutic good making a statement about that good. This means that a person cannot refer to a personal experience with a relevant good in exchange for money or something else of value. However, the New Code does not prevent a person from endorsing, or approving of, the good without referring to a personal experience with the good in return for valuable consideration.
Key takeaways from this Guidance include:
Part 4 of the New Code deals with mandatory statements and other information which must be included in TG Advertisements. The requirements relating to mandatory statements have been streamlined and updated. For example, the requirements relating to short form advertisements have been simplified. Short from advertisements include text only advertisements of 300 characters or less which lack the reasonable capacity to include pictures, logos or other imagery. Advertisements that are published on social media are not considered short form advertisements. This means that social media advertisements must comply with other applicable requirements under Part 4 of the New Code.
However, a TG Advertisement can now include a link to applicable health warnings where more than one health warning applies to the relevant good. The link must provide consumers with direct access to the relevant warnings, such as on a webpage or in a document which sets out the relevant warnings. The changes to these requirements reflect the reality that therapeutic goods are increasingly promoted and sold online. There can be limited space to include mandatory statements in certain online environments, including on social media platforms with character limits. It makes sense to provide advertisers with the option to provide a link to lengthy mandatory statements in circumstances where these statements may not fit in the TG Advertisement itself.
A sample is a therapeutic good given for free, excluding goods offered under a ‘buy one, get one free’ arrangement. Under the Former Code, it was prohibited for a TG Advertisement to include an offer of a sample unless the relevant good was listed in Schedule 3. Under the New Code, it is prohibited for a TG Advertisement to include a sample, or an offer of a sample, unless the therapeutic good is listed in Annexure 2 and certain other conditions are met. The rationale for exempting certain goods from this prohibition is that these goods have an obvious individual or public health benefit and are safe to use without guidance from a health professional.
The list of samples has been expanded under the New Code. Under the New Code, the expanded list of samples includes:
In the therapeutic goods sector, there is likely to be increased regulatory focus on TG Advertisements from 1 July 2022, regardless of the date of publication of an advertisement. Given the overt references to influencers and direct sellers in the New Code, TG Advertisements incorporating content from these individuals should be examined carefully. More broadly, individuals and businesses involved in therapeutic goods marketing would be wise to evaluate their current practices to ensure that existing compliance policies reflect the requirements of the New Code.
The changes to the New Code in relation to testimonials and mandatory statements may be viewed as part of a broader trend whereby regulators continue to provide certainty for stakeholders on the application of laws and regulations to online advertising. For example, the Australian Securities and Investment Commission recently published an Information Sheet which covers applicable requirements when advertising financial products and services online. We anticipate that further measures of this nature will be forthcoming across various highly-regulated sectors.
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Kelly Griffiths, Partner
Joseph Abi-Hanna, Associate