Liability of Directors and Officers for Breaches of Australian Therapeutic Products Act

Directors and officers of companies involved in the importation, marketing, advertising and supply of “therapeutic goods”[i] (including drugs, herbal remedies, supplements, medical devices and other goods marketed or advertised for “therapeutic use”[ii]) in Australia have a legal responsibility to know the regulatory regime and are responsible for compliance with the Therapeutic Goods Act 1989 (Cth), Therapeutic Goods Advertising Code and other relevant laws. Ignorance of the law is no excuse. Recent monetary penalties for violating the Therapeutic Products Act for corporations have ranged from $2 million to $10 million.[iii]

The non-respect of the Therapeutic Products Act 1989 (Cth) or the Therapeutic Products Advertising Code may result in the issuance of infringement notices and legal action by the regulator against the company and its directors and officers. The director of Oxymed Australia Pty Ltd (Oxymed) has been fined $1 million by the Federal Court of Australia for his involvement in the company’s breach of the Therapeutic Goods Act in the supply and advertising of unregistered medical devices used to administer hyperbaric oxygen therapy[iv]. The director was involved in the day-to-day running of the company and its marketing and advertising campaigns, including posting offensive advertising material on the company’s website, Facebook page, and personal Linkedln page.

The company, Oxymed, and its director failed to heed warnings issued by the regulatory body, Therapeutic Goods Administration (“TGA”) and continued to supply the unregistered medical device and post advertising material on the company’s website and social media sites. The director maintained that the material he displayed was not advertising but educational material, including scientific literature, and that the devices he provided did not require registration. The TGA issued notices of violation, followed by proceedings in Federal Court against the company and its director seeking an injunction and the imposition of monetary penalties for violations of the Therapeutic Products Act. During the legal proceedings, the company and the administrator admitted the violation of the law. The court also imposed a monetary penalty of $2 million on the company.

Case examples

Secretary, Department of Health v Enviro Tech Holdings Pty Ltd (2022) FCA 865

Date and Court: Federal Court of Australia on July 27, 2022

Background: In August 2020, Enviro Tech Holdings Pty Ltd (first responder) imported 500,000 face masks into Australia, which are “medical devices” under the Therapeutic Products Act 1989 (Cth) (TG law). The face masks were imported when the importation of ‘medical devices’ could only be imported, exported, manufactured or supplied by a person under a contract between the person and the Australian Department of Health or another Commonwealth agency acting on behalf of the department[v] in breach of the Therapeutic Goods (Cth) Act 1989 (TG Act). Face masks are “medical devices” within the meaning of the Therapeutic Products Act 1989 (Cth) (TG law). The face masks were then distributed and advertised on the first defendant’s website before the defendants met the TGA’s regulatory requirements. The Second Defendant (Connie Triantos) and Third Defendant (Jerry Triantos) were also found to have violated TG Law by aiding, abetting, advising or procuring a breach of TG Law by the First Defendant.

Civil Penalty Orders – to the order of the Commonwealth of Australia:

  • The first defendant was ordered to pay a fine of $80,000; and
  • The second respondent and the third respondent, who were officers of the first respondent’s company, were also ordered to pay a fine of $8,000 each.

In making the orders, Judge Hespe noted that:-

  • the defendants were inexperienced with the TGA’s regulatory regime and had no intention of violating the TG law;
  • it turned out that [the Respondents] “found themselves overwhelmed and confused by the regulatory regime and, rather than engaging with the Department, turned a blind eye to their predicament.”[vi]
  • The fines concerned a singular event limited in time and unlikely to have caused any damage.[vii]

However, Judge Hespe concluded that ultimately, “ignorance of the requirements of TG law and regulations, and inexperience in managing the regulatory regime, is no excuse. Those who wish to engaging in commercial activities involving therapeutic goods have a responsibility to be aware of the applicable legal regime and to comply with relevant regulatory requirements”[viii]

Secretary, Department of Health v Oxymed Australia Pty Ltd (2021) FCA 1518

Date and Court: Federal Court of Australia on December 2, 2021

Background: The respondent was found guilty of breaching the Therapeutic Goods (Cth) Act 1989 (TG Act) by advertising unregistered “medical devices” – in this case, devices intended to administer hyperbaric oxygen therapy (HBOT devices) – and making multiple claims about Oxymeds. website and Facebook page which were prohibited and restricted under the TG Act. Judge Rofe also found that the second defendant, Malcolm Hooper, aided, abetted, counseled or caused the first defendant’s breaches of the TG Act.

Penalty orders: – Noting that “specific deterrence was very important in this case”[ix]Judge Rofe ordered:-

  • the first defendant was ordered to pay a fine of $2,000,000 to the Commonwealth of Australia;
  • the second defendant pays a monetary penalty in the amount of $1,000,000 to the Commonwealth of Australia

In reaching his decision, Judge Rofe was unmoved by the Respondent’s alleged ignorance of the requirements of the TG Act.[x]judging that “it is the responsibility of any person wishing to carry out an activity involving the use of therapeutic goods or the provision of health services to become aware of the applicable legal regime, prohibited behaviors and to comply with the relevant regulatory requirements established under TG law, from the time they begin to provide these services, if not before. »[xi]

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