By Rohan Vasudevan, Solicitor
7 March 2022
In a recent article, we outlined some recent determinations by AdStandards focusing on influencers and advertising disclosures, as the compliance and regulatory world slowly catches up to the (not-so-new) world of influencer marketing. In a similar vein, the Therapeutic Goods Administration (TGA) has recently announced changes and updates to the Therapeutic Goods Advertising Code (TGAC). The TGAC is the Code applicable to all therapeutic goods manufacturers that sets out the minimum requirements to lawfully advertise therapeutic goods to customers in Australia. The TGAC is enforced by the TGA, and in some key areas mirrors the provisions of the Australian Consumer Law. Changes to the TGAC can significantly impact agencies, advertisers and social media influencers, especially given the TGAC covers the advertising of, amongst other things, skincare products, protein powders, vitamins and supplements – all of which are popular for Australian consumers and represent a large proportion of influencer activity. While the regulator has encouraged brands and advertisers to comply with the updated TGAC, there is a transition period of 6 months whereby the previous TGAC from 2018 (the “2018 TGAC”) can be followed. This will be the case up until July 2022, where the updated TGAC will be in full effect and must be strictly adhered to.
As many readers will be aware the therapeutic goods landscape is a complex regulatory minefield that has to be traversed with caution, and the TGAC is part of that. This is especially so given that a failure to comply with the TGAC can result in both criminal and civil penalties. Many have been eagerly awaiting the 2018 TGAC to be updated and hoped the regulator would clarify its position on key issues affecting the advertising industry, particularly pertaining to testimonials and mandatory statements. In fact, many of our clients have enquired about the changes and what needs to be done to ensure compliance moving forward. So, what does it all mean?
Since the time the 2018 TGAC was implemented, the marketing sphere has evolved, especially with the rise of prominence and popularity of influencer marketing. In fact, some influencers are currently fetching more than $1.5 million per post, which indicates the significant impact some of these individuals have. As the space grows and their effectiveness in reaching audiences increases, influencers must be taken seriously and not simply treated as the “Wild West” of the advertising world any longer.
The object of the TGAC is to promote safe and proper use of therapeutic goods including promoting ethical advertising that does not mislead or deceive consumers or create unrealistic expectations about a product’s performance. However, since its inception, many have noted that the 2018 TGAC was ambiguous and difficult to adhere to in some key areas. In 2020, an independent review of the 2018 TGAC was undertaken and the TGA began collating numerous reviews and recommendations from those within industry, to consider which areas of the TGAC could be updated or improved and whether new guidance needed to be released to ensure the TGAC was correctly followed. The TGA particularly noted many complaints about the 2018 TGAC such as that it was unclear, inconsistent and difficult to work with. The TGA noted that these opinions were made from numerous entities including advertising companies, media organisations, therapeutic manufacturers, health professionals, industry bodies and consumer organisations.
Just what the doctor ordered
Upon reviewing the large amount of feedback, the TGA sought to improve the TGAC by, amongst other things:
- Simplifying the language and structure of the TGAC to improve clarity and reduce complexity;
- Revising and streamlining mandatory statements required in advertisements;
- Clarifying the requirements regarding testimonials and endorsements to remove inconsistencies; and
- Expanding the types of therapeutic goods that can be offered as a sample.
Of course the TGA is in precarious position of wanting to simplify, clarify and streamline the TGAC in a manner that strikes an appropriate balance between industry best practices and ensuring the objectives of the TGAC are not undermined.
What are the updates?
Importantly, contrary to some of the industry chatter, these new updates to the TGAC do not ban influencers promoting therapeutic goods. Rather, the TGA has clarified their position and have outlined that influencers cannot provide paid testimonials for therapeutic goods. That is, influencers cannot state that they have used a specific product and attest to its effectiveness and therefore one cannot state, for example, “I used X product and it helped to reduce my acne” or “I use Y vitamins and they have certainly improved my health”. Influencers can offer genuine, unpaid testimonials about therapeutic goods so long as no valuable consideration has been given for such testimonial. Importantly, this was always the case and the new rules are not different to the old rules. Previously, influencers were not able to provide a testimonial as they were considered a person involved in the marketing of the product (section 17 (2) of the 2018 TGAC).
Similarly, influencers may endorse therapeutic goods, so long as no statement as to personal experiences with any given therapeutic good is expressed. In other words, they may act as a brand ambassador, but must not provide any testimonials. An example of an endorsement is when someone outlines what can be expected from the use of the product without any mention of direct or personal experience. Importantly, though, the updates to the TGAC outline that specific people cannot endorse therapeutic goods including those who are current and former health practitioners, health professionals or medical researchers as well as those who present themselves as being trained or qualified within the health field. This also means that these specific people cannot be brand ambassadors for therapeutic goods. It looks as though the TGA is trying to attenuate misinformation within the health sphere, especially in light of the COVID-19 pandemic, seeing that the TGAC has been updated to prohibit advertising which causes or is likely to cause “undue alarm, fear or distress”.
Other notable changes include the streamlining of mandatory statements. For example, the statement “ASK YOUR PHARMACIST ABOUT THIS PRODUCT” must be present in advertisements where the therapeutic good is only available at a pharmacist. Likewise, the statement “THIS PRODUCT IS NOT AVAILABLE FOR PURCHASE BY
THE GENERAL PUBLIC” is required for therapeutic goods only available through a health professional and any short form advertisement must display “ALWAYS FOLLOW THE DIRECTIONS FOR USE”. These may be difficult to include in all advertising, for instance short-form social media posts.
Penalties if you get this wrong
As outlined above, non-compliance with the TGAC can result in substantial penalties and the TGA has a wide range of powers. This includes releasing notifications to the public outlining the non-compliant advertisement/s alongside issuing fines of up to $2,664 per infringement for individuals and $13,320 per infringement for incorporated bodies.
In addition to this, non-compliance can result in criminal prosecution and penalties can be up to 5 years imprisonment or $888,000, with offences committed by corporations being up to $4,440,000. Civil penalties for wrongdoing are up to $1,110,000 for individuals and up to $11,100,000 for body corporates, for each contravention.
What does it all mean?
The TGA has outlined that they will be issuing further guidance with regards to the updates to the TGAC sometime later this year but no specifics have been released. Our view is that the recent updates have not significantly changed the TGAC. Rather, our view is that the TGA’s focus was on clarifying their position on the advertising of therapeutic goods. While the changes to the TGAC have been welcomed, if for no other reason than it clarifies the playing field, there are still questions to be clarified. Mainly, we envisage questions from industry regarding what constitutes an endorsement as compared to a testimonial – after all, speaking about one’s love of a brand without speaking specifically about a specific product’s efficacy seems like a cynical distinction.
As time goes on, it will be interesting to see whether or not the regulator will continue to clarify the TGAC, the guidance that they will offer and the effect it will have on the industry.
If you would like further information on advertising regulations, including clearance advice and therapeutic goods in-market claims, please contact one of our experts.