29 April 2020

COVID-19 and the advertising of goods and services to the public in Australia: regulatory frameworks and usual rules continue to apply during public health crisis

This article was written by Luke Hawthorne and Kim O’Connell.[1]

During the COVID-19 pandemic, organisations advertising their goods and services may be tempted to make claims related to their ability to treat, protect from, or otherwise assist with the viral outbreak. Caution is required. Australia has various regulatory and consumer law regimes that govern whether such claims can be made and when they can be used in marketing and promotion. We have already seen a number of businesses finding themselves in breach of these requirements.  Last week, attracting significant media attention, celebrity chef Pete Evans’ company received two infringement notices from the Therapeutic Goods Administration (TGA) for claims made in a Facebook live-stream promotion that his “Biocharger” device could be used for “Wuhan coronavirus”.

Currently, an explicit or implicit reference to COVID-19 in advertising is a restricted representation[2], meaning that specific approval must be obtained from the TGA.  Approval could only be obtained if the representation was true, accurate and balanced and not likely to mislead.

In addition to the examples above, The TGA has already issued warning notices in relation to unauthorised advertisements in several classes of goods. For example, on 7 February, the TGA issued a warning about goods such as complementary medicines or disinfectants being inappropriately promoted for the prevention or treatment of COVID-19 and on 30 March the TGA reminded advertisers of hand sanitisers that they cannot, without specific permission from the TGA, make a therapeutic use claim that directly or indirectly refers to COVID‑19[3].  More recently, the TGA has issued penalties to organisations importing diagnostic tests that are not included on the Australian Register of Therapeutic Goods (ARTG), and organisations making false or misleading statements in their attempts to have diagnostic tests included on the ARTG.

In this alert we cover the basics of the framework regulating advertisement of therapeutic goods to the public and the general prohibition on misleading or deceptive conduct under the Australian Consumer Law and confirm that strict conditions still apply to advertising goods that have a therapeutic use.

In a variety of ways, the activities seen during the COVID-19 pandemic exemplify the potential harms of unlawful advertising of therapeutic goods that these laws are intended to address and it is timely to recap the rules.

Advertising Therapeutic Goods to the public

In Australia, advertising of therapeutic goods[4] to the public is governed by the Therapeutic Goods Act 1989 (Act), Therapeutic Goods Regulations 1990 (Regulations) and Therapeutic Goods Advertising Code (No.2) 2018 (Advertising Code). These frameworks will capture many products that are intended to address or prevent harms related to the outbreak of the COVID-19 virus.

Background: Therapeutic Goods Act, Regulations and Advertising Code

The Therapeutic Goods Administration (TGA), is responsible for overseeing and implementing the Act and Regulations. The Advertising Code sets out the minimum requirements for advertising certain therapeutic goods to the public[5]. It seeks to ensure all advertising, marketing and promotion of therapeutic products to the public is conducted in a manner that:

  • promotes the quality use of the product;
  • is socially responsible; and
  • does not mislead or deceive consumers.

Therapeutic Claims

Therapeutic goods must generally be listed on the Australian Register of Therapeutic Goods (ARTG) before they may be legally supplied in Australia. Making a therapeutic claim generally means that the product will be considered a therapeutic good under the Act and any promotional activities in relation to the product will be subject to the requirements of the Regulations and Advertising Code.

Currently, any explicit or implicit reference to COVID-19 in the advertising of therapeutic goods is a ‘restricted representation’ and requires prior approval from the TGA.

For example as mentioned above, My Kitchen Rules star Pete Evans’ company has, received two infringement notices from the TGA for a “hybrid subtle energy revitalisation platform” that uses “four transmitted energies” to “stimulate and invigorate the entire body to optimise and improve potential health, wellness, and athletic performance” - which, critically, was said in a Facebook livestream promotion to be able to be used for “Wuhan coronavirus”.

Care is also required in any application for listing on the ARTG - for example, Queensland based company, CK Surgitech, received infringement notices for (among other things) alleged false or misleading statements in an application to have its IVD Rapid Test kits for SARS-CoV2 (the COVID-19 virus) included in the ARTG.   In addition, it had allegedly imported diagnostic tests that were not included in the Australian Register of Therapeutic Goods (ARTG), and not within an exemption, as they were not being imported in relation to an authorised pathology laboratory.

Not all impermissible claims are easy to spot. Advertisers need to ensure that they do not impliedly refer to Covid-19 in advertising their product. Advertisers also need to avoid inadvertently making therapeutic claims in relation to their goods, to avoid unintentionally bringing them within the regulatory regime.  While this is generally true in normal circumstances - certain claims may have unintended consequences during the pandemic and in the future. For example, a suggestion that a product will increase immunity towards or assist in preventing the spread of viruses, would potentially be an implied reference to COVID-19. Similarly, medical devices (which can include apps on smartphones, amongst other things) must also comply with the legislative scheme - any app attempting to make a diagnosis of symptoms, for example, would require regulatory approval.

Examples of specific restrictions placed on the advertising of therapeutic goods under the Advertising Code which are relevant to consider if you wish to seek approval from the TGA for an advertisement to refer directly or impliedly to COVID-19, include:

  • Any express or implied claim in relation to COVID-19 must be supported by evidence that is specific to COVID-19.
    • For example, a claim relating to the clinical benefit of a product in relation to COVID-19 must be supported by clinical trials. A claim of the effectiveness of a disinfectant or sanitiser towards COVID-19 must be supported by evidence specific to COVID-19.
  • Any advertising must be consistent with public health campaigns, including information published by the Commonwealth Department of Health and relevant State and Territory health departments. Information released by the Department of Health may be found on its website (https://www.health.gov.au/).
    • For example, an advertising claim that a good is ‘essential’ for individuals and families to combat COVID-19 in circumstances where the Department of Health only recommends (but does not require) that particular good, would be an inconsistent claim.

Advertisers that use a restricted representation (including one relating to COVID-19) or who fail to adhere to the Advertising Code are liable to criminal offences or civil penalties. Criminal offences under the Act range up to 5 years’ imprisonment or fines up to $840,000 for an individual and up to $4.2 million for a body corporate. Additionally, civil penalties range up to $1.05 million for individuals and up to  $10.5 million for body corporates.

Misleading or deceptive conduct

The Australian Consumer Law contains a broad prohibition of misleading or deceptive conduct. Businesses have an overarching statutory obligation not to engage in any conduct that is likely to mislead or deceive consumers. The ACL is far reaching—extending beyond the specific regulation of therapeutic goods to the wider class of consumer goods, and importantly, to services.

Conduct only needs to be likely to mislead or deceive—whether the conduct actually misleads consumers, or whether a business intended to mislead through its conduct, are not relevant factors to whether there is a breach of the ACL. Generally, conduct will be likely to mislead or deceive if there is ‘a real or not remote possibility’ that members of a target audience have been misled. Misleading conduct can include silence, and it can include predictions or representations about future conduct where there is no reasonable basis for making them. The class of people likely to be affected by advertising goods or services that may be used in relation to COVID-19 is likely to be relatively wide. Therefore, careful consideration is warranted when making claims related in any way to the COVID-19 pandemic, as not all consumers have the necessary scientific or technical knowledge to be discerning or understand context. To avoid risk, any therapeutic claim made in advertising should be clear and unambiguous.

Consumers interact differently with different kinds of consumer products in the marketplace—small household items are unlikely to be subject to a lengthy decision-making process, so businesses should be especially cautious of the immediate impression gleaned from medical, environmental, scientific or health claims made in advertising fast-moving consumer goods.

Prohibition on false or misleading representations about goods and services

In addition to the general rule against misleading or deceptive conduct, the ACL also prohibits specific false or misleading representations about aspects of goods and services.

  • Sponsorship – a suggestion that a product has support or backing from another party that it does not have, for example, the unauthorised use of another party’s trade mark may breach this provision.
  • Approval – the suggestion that a product has an approval it does not have, for example a claim to have approval from a government agency or licensing board for its products, when no such approval has been given.
  • Performance characteristics – an inaccurate claim as to the capabilities or effects of goods or services or a claim to have characteristics which have not been scientifically verified.
  • Benefits - companies should not claim that a particular good or service has benefits – including health or wellness benefits - if these claims cannot be substantiated.

The ACL treats these classes of false and misleading representations seriously - they carry potential civil penalties of up to $1.1 million. There are some specific forms of prohibited misrepresentations that are especially relevant to health claims.

Advertisers should be able to substantiate any health claim they make, whether on packaging, in advertising or through representatives. Ensuring that you are able to identify material that substantiates any claims that are made is a good way to ensure you are able to demonstrate there is a good faith basis for making the representation.

Claims that give the impression that a product, or one of its attributes, has an added benefit when compared to similar products and services can be made as long as the claims are not misleading and can be substantiated.

The ACCC provides the following cheat-sheet when considering advertising claims:

What you should do in advertising

What you should not do in advertising

When presenting information about products or services to customers, be sure to:

  • give current and correct information
  • use simple language
  • check that the overall impression is accurate
  • back up claims with facts and documented evidence where appropriate
  • note important limitations or exemptions
  • correct any misunderstandings
  • be prepared to substantiate.

Do not:

  • guess the facts
  • omit relevant information
  • make ambiguous or contradictory statements or use unnecessary jargon
  • make promises you cannot keep, or make predictions without reasonable basis
  • offer goods or services without a reasonable basis for believing you can deliver them.

Conclusion

Globally and domestically, we have entered an unprecedented time due to the outbreak of COVID-19. This public health crisis has led to significant disruptions in the way that we live and work and will lead to more emphasis on on-line and electronic forms of advertising.  Despite the disruptions that have occurred, the rules and regulations that govern the advertising of consumer goods and services continue to apply in the new environment and in relation to therapeutic goods, advertising rules and regulations remain as important and relevant as ever to safeguard and protect the public - and to ensure competitors play fairly.   Any claims or representations concerning COVID-19 currently require specific approval from the TGA.  Like all claims made in advertising therapeutic goods, any claims must be scientifically grounded and supported by specific evidence.  Advertisers should expect that any claims they may wish to make in relation to the efficacy of products in protecting against or treating COVID-19 will continue to be subject to significant regulatory, media and public scrutiny.

We have experts in this area. If you have queries about your own advertising strategy, have enquiries from a Regulator, or are concerned about the conduct of a competitor, our industry-leading life sciences and regulatory disputes team may be able to assist.


[1] The authors would like to thank Suzy Madar, Tim Craven and Brogan Garrod for their helpful comments on this article.

[2] Sections 42DD – 42DF of the Therapeutic Goods Act 1989 (Cth)

[3] To facilitate the supply of hand sanitisers during the COVID-19 pandemic, certain types of hand sanitisers have been excluded from the operation of Therapeutic Goods legislation, for the duration of the pandemic, provided they are used, advertised and presented for supply in a specified way.  See: Therapeutic Goods (Excluded Goods – Hand Sanitisers) Determination 2020 (Cwlth).

[4] Therapeutic goods are defined in s 3 of the Act and include goods which prevent, diagnose, cure, or alleviate a disease, ailment, defect or injury, or influence or modify a physiological process.

[5] Advertising to health care professionals is a different topic, not covered here.

 

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