Medical Devices & Consumer Health Products 2021

Last Updated August 31, 2021

Australia

Law and Practice

Authors



Clayton Utz is an independent Australian firm established in 1833, with more than 180 partners and 1,300 employees across six offices, and one of the largest commercial litigation practices in Australia, including a specialist five-partner product safety and product liability team. The firm handles the most complex, significant and high-profile matters, for clients including many of Australia’s top financial institutions, multinational corporations operating in a range of sectors, and state and Australian government departments and agencies. Clayton Utz is also a global leader in pro bono, with one of the largest pro bono practices of any law firm outside of the USA.

All products that are considered therapeutic goods in Australia are regulated under the Therapeutic Goods Act 1989 Cth (TG Act) as well as the Therapeutic Goods Regulations (TG Regulations) and the Therapeutic Goods (Medical Devices) Regulations (Device Regulations). All therapeutic goods must be registered on the Australian Register of Therapeutic Goods (ARTG). This legislation and the administration of the ARTG are enforced by the Therapeutic Goods Administration (TGA).

Medical Devices

Medical devices are considered therapeutic goods and are governed by Chapter 4 of the TG Act. Product safety for medical devices is covered in the TG Act's "essential principles", set out in part 4-2. Any medical devices that are also consumer goods will also be subject to the broader product safety requirements in the Australian Consumer Law (ACL), contained at Schedule 2 of the Competition and Consumer Act 2002 (Cth) (CC Act). These laws are administered by the Australian Competition and Consumer Commission (ACCC).

Pharmaceuticals and Blood Products

Pharmaceuticals and blood products are also considered therapeutic goods under the TG Act and are regulated accordingly.

Personal Protective Equipment

Items of personal protective equipment such as aprons, face masks, gloves, goggles, gowns and visors that are intended to be used for the prevention of the transmission of disease, including in surgical or clinical settings, will be considered medical devices under the TG Act and are regulated as therapeutic goods in Australia.

Medical Instruments

Medical instruments are classified as medical devices under Chapter 4 of the TG Act and will therefore be regulated as therapeutic goods.

Cosmetics, biocides and nutritional supplements are regulated across various regimes.

Cosmetics

Cosmetic ingredients in Australia are regulated under the Industrial Chemicals Act 2019 (Cth) which regulates the chemicals used in cosmetics. Since 1 July 2020, this scheme has been administered by the Australian Industrial Chemicals Introduction Scheme (AICIS) (previously NICNAS). Further restrictions and conditions regarding ingredients are also mandated under the Standard for the Uniform Scheduling of Medicines and Poisons (SUSMP). This is a federal standard, but manufacturers should note that state and territory legislation applies in respect of the medicines and poisons caught by the SUSMP, and that legislation is not consistent throughout Australia.

Manufacturers of cosmetics must also be aware that "cosmetics" which make therapeutic claims are governed by the TGA. A cosmetic may fall into being a therapeutic good due to claims made in its marketing, labelling, packaging or because of its intended purpose. This follows from the broad purposive definition of "therapeutic goods" under the TG Act. Such products are considered therapeutic goods (and regulated as such), rather than merely cosmetics.

Biocides

Although dependent on a product's intended purpose, labelling and promotion, generally a disinfectant making biocidal claims (for example, that a product is virucidal, sporicidal, tuberculocidal, or fungicidal) is required to be listed on the ARTG under Part 16, Schedule 4, of the TG Regulations.

Food and Nutrition Supplements

A large range of products fall into this classification, not all of which are regulated in Australia. Supplements include vitamins and sports supplements (such as protein powders).

In Australia, all vitamins are regulated by the TGA for safety and quality as a low-risk complementary medicine. The TGA only permits products to represent that they contain vitamins if they meet certain requirements.

Sports supplements in Australia are regulated either as a food or medicines. It is not always easy to determine which regime is applicable. Sports supplements which contain a substance scheduled under the Standard for the Uniform Scheduling of Medicines and Poisons, or which make therapeutic claims, are likely to be regulated as medicines by the TGA. Otherwise, sports supplements are likely to be regulated under the Australia New Zealand Food Standards Code.

The regulatory landscape must constantly adapt to new technologies and products.

Medical Apps and Wearables

Both wearable devices and medical apps fall, with regard to regulation, under the umbrella description of "software as a medical device", which has been the subject of recent reform in Australia. That reform has been aimed at clarifying whether such devices should be classified as "medical devices", and governed by the TGA, or consumer goods whose sale is regulated by the ACCC.

There are five categories of regulation for software with a healthcare dimension.

  • SaMD (software as a medical device), being software which on a standalone basis is capable of meeting the definition of a medical device and is independently regulated by the TGA as a medical device.
  • SiMD (software in a medical device), being software that is integral to a medical device's functioning, and which is regulated as part of the original hardware medical device.
  • Software accessory, being software which can control or adjust a medical device, and which is specifically intended to be used with the medical device; this is independently regulated by the TGA.
  • Exempt software, which includes certain clinical decision support systems.
  • Excluded products, which are not medical devices and are therefore not subject to TGA regulatory requirements, such as consumer health products, healthcare enabling technology, population-based analytics and laboratory information management systems.

In addition, the reforms have addressed the appropriate risk-based classification for such devices. The previous regulatory framework confined "harm" to the risk arising from physical interaction with a medical device. The reformed classification system takes account of the risk of patient harm where information is the source of harm. For example, the risk that software may incorrectly diagnose a disease, or specify a therapy to be delivered.

Telemedicine

The provision of health services via telemedicine is increasingly common in Australia, especially in light of the COVID-19 pandemic. The manner in which that service is provided, and compliance with a practitioner's prescribing and Code of Conduct duties, are largely matters for medical professionals.

The use of telemedicine relies heavily on the use of electronic prescribing software, and enabling software that allows the provision of telehealth services. Software in this category will generally be exempt from the TG Act, under the Therapeutic Goods (Excluded Goods) Amendment (Software-based Products) Determination 2021.

CBD

The TGA is responsible for governing regulatory standards for medicinal cannabis products in Australia. Medical cannabis, including cannabidiol (CBD) is an unapproved therapeutic good in Australia. However, there are a number of pathways available under the TG Act to access unapproved therapeutics goods of this nature, in circumstances where the TGA is satisfied that existing ARTG-listed medicines are not sufficient or appropriate.

CBD is also scheduled in the Standard for the Uniform Scheduling of Medicines and Poisons, which controls the manner in which listed medicines or poisons are made available to the public. Depending on its dose preparation, CBD is scheduled as either a Schedule 4 (Prescription Medicine) or a Schedule 3 (Pharmacist Only Medicine).

The classification of borderline products is discussed above. Australia does not have any intermediate categories of therapeutic products. This means that products will either be "therapeutic goods" for the purposes of the TG Act, in which case they will be regulated under that Act (noting that there are very limited categories of products which are therapeutic goods, but which are exempted from the regulatory regime) or they are not therapeutic goods, in which case they will not be subject to specific regulation (although they will be subject to general regulatory requirements as appropriate, for example the ACL or the AICIS regime for industrial chemicals).

Entities involved in the manufacture of therapeutic goods are broadly defined under the TG Act, and include entities involved in the assembling, packaging, processing, refurbishing and labelling of therapeutic goods. There are strict requirements for such entities, which are triggered by an application to list a product on the ARTG (rather than marketing a product).

Manufacturers of medicines and biologicals in Australia are required to hold a licence under the TG Act. That licence is generally specific to a manufacturing location. To obtain such a licence a manufacturer must demonstrate compliance with the principles of Good Manufacturing Practice, which are a legislative instrument prescribing the standards, procedures and practices to be employed in the manufacturing of therapeutic goods for use in humans. 

The listing of medicines and biologicals on the ARTG when manufactured by an overseas manufacturer is also dependent on obtaining "GMP Clearance" from the TGA for listed manufacturing steps.

A different regime applies in respect of medical devices (which may include software, see 1.3 New Products/Technologies and Digital Health). In order to be listed on the ARTG all medical devices must comply with the "Essential Principles", which set out the requirements for the safety and performance characteristics of medical devices in Australia. Medical devices are also required to demonstrate compliance with the conformity assessment procedures, which set out the requirements relating to the application of quality management systems for medical devices, and other requirements imposed on manufacturers. Manufacturers are required to provide details of a medical device's design and manufacturing processes. However, the level of detail required varies dependent upon the risk classification of a medical device (as identified by the class of medical device). The medical device classification rules are found in the Device Regulations.

It is a requirement that all therapeutic goods supplied in Australia have a listed "sponsor", being a resident in Australia or an Australian incorporated entity. The sponsor of therapeutic goods maintains ongoing responsibilities in relation to ensuring that the goods continue to conform to terms of their approval, advertising compliance, any corrective actions, adverse event reporting, compliance with reporting requirements and ongoing maintenance of records in relation to the therapeutic good.

There are a range of voluntary codes available to corporations operating within Australia regarding compliance with corporate social responsibility, environment and sustainability outcomes.

However, there are relatively few strict legal obligations imposed upon corporations in this area. Notably, large businesses and other entities in the Australian market with annual consolidated revenue of at least AUD100 million are required to prepare annual Modern Slavery Statements in compliance with the Modern Slavery Act 2018 (Cth).

The advertising of therapeutic goods is required to comply with the Therapeutic Goods Advertising Code (No 2) 2018 (TGAC), made under the TG Act. The TGAC applies to advertising other than advertising directed at healthcare professionals or wholesalers. Advertising of therapeutic goods will also be subject to general consumer laws under the CC Act and the ACL. The advertising of certain therapeutic goods will also be subject to more specific codes of practice, such as:

  • the Medicines Australia Code of Conduct for the promotion of prescription-only medicines;
  • the Generic and Biosimilar Medicines Association Code of Practice;
  • the Medical Technology Industry Code of Practice for medical device and technology companies; and
  • the Pathology Technology Industry Code of Practice, Australia’s industry code of conduct for in vitro diagnostic products.

Each of these codes is predominantly concerned with advertising directed to healthcare professionals.

Under the TG Act, therapeutic goods are defined to include goods which are represented in any way to be for therapeutic use. Therefore, the making of any claims that could be considered therapeutic in nature is strictly prohibited for goods that are not listed on the ARTG. For products that are listed on the ARTG, therapeutic claims (other than indications) may only be made where the sponsor of the goods had, at the time the claim was made, information or evidence that supported the claim and complied with the relevant requirements.

As above, where products are therapeutic goods their promotion of the general public will be subject to both the TGAC and the ACL. Both the TGAC and ACL prohibit the making of claims which are false, misleading or deceptive in relation to products.

The TGAC also contains a number of specific prohibitions in relation to the promotion of therapeutic goods, including a number directed at avoiding encouraging excessive use of therapeutic goods or causing people to delay necessary medical attention or the use of prescribed treatments.

The TGAC also contains specific requirements for advertisements and labelling of some types of medicines and medical devices. It prohibits endorsements of products by health practitioners, health professionals, medical researchers and health consumer organisations and imposes certain restrictions on the use of testimonials.

Furthermore, there are certain types of representations which are either prohibited or restricted in relation to therapeutic goods. Restricted representations, which are representations which mention a serious form of a disease, condition, ailment or defect, may not be used without TGA approval.

The TGA has various mutual recognition arrangements with other countries, and their counterpart regulatory authorities. These agreements recognise the strength and comprehensive nature of the Australian therapeutics goods regime. The mutual recognition arrangements, where applicable, permit Australian manufacturers of therapeutic goods to submit evidence of compliance with Good Manufacturing Practice or conformity assessment to foreign regulators as evidence for approval.

In particular, the Australian regulatory regime for medical devices is closely aligned (although not identical) to the European system, meaning that conformity assessment certificates issued by a European notified body will often be accepted by the TGA.

The Australian regulatory regime places various post-market obligations on the sponsors of therapeutic goods.

Post-market Surveillance Obligations

Sponsors have post-market surveillance obligations to ensure devices continue to meet the regulatory, safety and performance requirements as at the time of their entry onto the ARTG. As mentioned at 2.1 Design and Manufacture, the sponsor of a therapeutic good maintains ongoing responsibilities in relation to manufacturing, advertising compliance, any corrective actions, adverse event reporting, compliance with reporting requirements and ongoing maintenance of records in relation to the therapeutic good. Certain high-risk devices are also required to provide consecutive Annual Reports to the TGA following ARTG listing, to identify any performance or safety issues at an early stage in the product's life.

In addition, any product listed on the ARTG may be selected by the TGA for specific post-market review. A review of this kind may target any aspect of the product, throughout its life cycle on the ARTG.

Record-Keeping Requirements

A sponsor of a therapeutic good is required to keep distribution records for between five and ten years, depending upon the type and classification of the therapeutic good. There may be additional retention requirements in respect of patient health information gathered in relation to a therapeutic good under state and territory privacy laws.

Corrective Actions and Regulators

There are a range of mechanisms available under the TG Act when a sponsor identifies that corrective action is required, due to a safety or efficacy defect, in a therapeutic good. These vary depending upon the type of therapeutic good and the nature of the corrective action required. There are four recall actions available to sponsors: recall, product defect correction, hazard alert and product defect alert.

The appropriate recall action is determined in consultation with the TGA, who co-ordinate and monitor the recall action. While sponsors voluntarily notify most recalls to the TGA, the TGA has the power to mandate a recall action under the TG Act if necessary. Guidance regarding recall action is provided by the "Uniform recall procedure for therapeutic goods" (URPTG), which is intended to assist the sponsors of therapeutic goods to conduct recalls and non-recall actions using a standardised systematic procedure.

Further, for consumer products (which some products described in 1. Applicable Product Safety Regulatory Regimes are), the Australian Consumer Law imposes strict notification obligations upon manufacturers in two scenarios. Firstly, where a supplier takes voluntary recall action because of a safety risk, they must give written notice that such action has been taken. Secondly, any supplier of goods who becomes aware of the death or serious injury or illness of any person that was caused, may have been caused or in the opinion of any other person was or may have been caused by the use or foreseeable misuse of those consumer goods must notify the ACCC of that fact within two days of becoming aware of it. “Serious injury or illness” includes any injury or illness that requires treatment by a healthcare practitioner.

The TGA is responsible for enforcing the TG Act, the TG Regulations, the Device Regulations and for administering the ARTG. The TGA deals with issues surrounding the supply, import, export, manufacturing and advertising of therapeutic goods.

The ACCC is responsible for administering and enforcing the CC Act and the ACL. The ACCC covers a range of areas, including product safety issues, consumer guarantees, and misleading and deceptive conduct (including in relation to products).

The ACCC have regulatory, investigatory and prosecutorial power for all matters under the CC Act and ACL. The investigative powers extend to functions such as seizing goods or documents and interviewing witnesses, typically pursuant to a warrant. The ACCC can also issue substantiation notices and product safety notices, restrict the nature of representations made to consumers, and commence compulsory recall actions. Lastly, the ACCC enforce the CC Act and ACL by issuing penalty notices and can commence court proceedings seeking declaratory relief, injunctive relief or civil penalties. Certain breaches may also be referred to the Commonwealth Director of Public Prosecution to consider criminal prosecution.

The TGA also has various regulatory, investigative and enforcement powers. Firstly, in administering the ARTG, the TGA can issue product defect alerts and product notifications in relation to therapeutic goods listed on the ARTG. Where it finds products are not compliant, the TGA can cancel ARTG listings. The TGA is also empowered to conduct investigative action such as searches and seizures in relation to compliance with the TG Act and on more general public health grounds in certain circumstances. Finally, the TGA can take a range of enforcement measures, including issuing infringement notices, ordering recall action, commencing court proceedings and referring matters for potential criminal prosecution.

A range of product safety offences exist under the TG Act. For example, offences exist in relation to the importing, exporting, manufacturing or supplying of a therapeutic good that is not registered on the ARTG or does not comply with the applicable standards. There are also offences in relation to goods which are registered on the ARTG, such as advertising the goods for indications which are not accepted or making a false statement in relation to an ARTG listing. Penalties include imprisonment for up to five years.

The ACL also provides a range of product safety offences. For example, it is an offence to supply consumer goods that do not comply with the relevant safety standards or information standards. Similarly, it is an offence to not comply with a recall notice, or to supply goods that have been banned. The ACL also contains offences for engaging in misleading and deceptive conduct, which could include making misleading representations in relation to a product's safety. The maximum penalty for a corporation for the most severe of the ACL's offences is the greater of AUD10 million, three times the value of the benefit gained by the contravention, or 10% of the company's turnover in the preceding year. The maximum penalty for an individual is AUD500,000.

In addition to the traditional mechanisms of the common law tort of negligence, breach of contract, or breach of statutory duty, product liability claims may be brought under a number of statutory causes of action found in the ACL.

Part 3-5 of the ACL governs manufacturers' liability for safety defects in products which is based on the European Product Liability Directive. Goods are considered defective if they are not as safe as consumers are generally entitled to expect. The regime is one of strict liability, meaning no fault is required on the part of the manufacturer for liability to arise. Any person who suffers loss or damage because of conduct that contravenes Chapters 2 or 3 of the ACL will be entitled to recover that loss in a claim for damages. A number of defences are available, including a development risks defence.

The ACL also provides that when goods are supplied to consumers, the manufacturers, importers and suppliers of those goods are responsible for any failure by the goods to comply with certain guarantees. One of these statutory guarantees is that the goods are of acceptable quality, which includes being safe and free from defects. The guarantees cannot be excluded by contract.

Under Part 5-4 of the ACL, a range of remedies are available for breaches of consumer guarantees. Claims brought against manufacturers will be limited to an award of damages, but claims brought against suppliers may give rise to a wider range of remedies depending on whether or not a "major failure" has taken place.

Australia has a federal court system as well as a hierarchy of courts in each state and territory. The High Court of Australia hears constitutional matters, as well as appeals from the Full Court of the Federal Court and the Courts of Appeal in each state or territory. Claims relating to medical devices and product safety may fall under the jurisdiction of either federal or state courts. Claims regarding defendants located in Australia and conduct that occurred in Australia can be commenced in any court of competent jurisdiction, but cross-vesting legislation allows the movement of proceedings to another court if they are in a clearly inappropriate forum.

In order for foreign entities to come under the jurisdiction of Australian courts, they are required to be validly served with an originating process. This requires the entity to have a sufficient nexus to Australia to justify the claim being brought in the jurisdiction. There are circumstances in which such entities may be served outside of Australia, which differ depending on the rules of the various courts. However, if it is alleged that conduct has resulted in damage occurring in Australia, that will generally be sufficient to trigger the jurisdiction of an Australian court.

Furthermore, corporations will be subject to statutory claims under the ACL in respect of conduct occurring outside of Australia if the corporation in question is "carrying on business in Australia". The test of whether a corporation is carrying on business in Australia is multifactorial and may extend to the operations of an Australian subsidiary, depending on the degree of control exercised over that subsidiary.

Australia is also party to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 1965. Therefore, where authorised, service may also be effected through means prescribed in the Hague Convention.

In Australian proceedings, costs typically "follow the event", meaning the unsuccessful party will be required to pay the costs of the successful party. Costs will include court filing fees and other expenses, as well as the fees of the lawyers involved.

Costs are calculated in various ways across jurisdictions. In some, the reasonableness of costs are assessed and an order is made on that basis. In others, the courts have a scale which is used to limit the costs recoverable for legal fees and disbursements. In either case, costs ordered will typically not amount to the total of the costs incurred in the proceeding.

Some jurisdictions have limits on costs recoverable specifically for small personal injury claims. However, these limits are subject to exceptions including where valid costs agreements evidence consent to bearing additional costs.

In class actions or representative proceedings, there are statutory provisions that only permit costs orders to be made against the applicant who commenced the proceedings, and not all members of the class.

Finally, rules reflecting Calderbank offers (ie, those made without prejudice save as to costs) also apply in most jurisdictions, whereby offers of settlement that are not accepted may trigger costs penalties for the party that rejected the offer, where they end up no better off than that offer at trial. Many courts have rules which provide for "Offers of Compromise", with similar costs consequences to a Calderbank letter, but which make those consequences more difficult to disturb.

Australia provides various judicial review options for decisions made by public authorities, in respect of which a company is impacted. Australian law also commonly provides for merits review by an administrative appeal tribunal of decisions made by public authorities.

Those mechanisms (and the pathways to judicial review) vary, dependent upon the nature of the administrative law decision. There are, for example, rights to review certain decisions made under the TG Act regarding therapeutic goods, certain decisions made in relation to the listing of medicines on the pharmaceutical benefits scheme and certain decisions made in respect of Freedom of Information requests.

Australian law also provides broad powers to commissions of inquiry, which are regularly tasked by federal or state governments to undertake reviews. Such reviews, when conducted under the auspices of the Royal Commission Act 1902 (Cth), have broad coercive powers to summon witnesses, and obtain relevant evidence. There is a strong link in Australia between the conduct of a royal commission, and a rise in related class actions and regulatory activity. For example, following delivery of the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in 2019, there was a rise in financial services class actions and regulatory action by the Australian Securities and Investments Commission.

Mass tort litigation in Australia is conducted through the class action mechanism. Please refer to 4.7 Class Actions, Representative Actions or Co-ordinated Proceedings?

Class actions or representative proceedings are available in the Federal Court of Australia, and the Supreme Courts of New South Wales, Queensland, Tasmania and Victoria. The class action mechanism is often used for product liability claims concerning medical devices.

The rules governing class actions are mostly identical across the different jurisdictions. In order to bring representative proceedings, seven or more persons must have claims against the same legal person, arising out of the same, similar or related circumstances and giving rise to a substantial common issue of law or fact. The proceedings are led by a lead applicant, and it is not necessary for any other members of the class to be individually identified. Unlike other jurisdictions, it is also not a requirement that the common issues predominate over those which are not common.

Australian representative proceedings operate on an "opt out" basis. This means that all persons who fall within the group definition will be bound by the outcome of the proceedings unless they actively opt out. There is also no certification requirement for Australian class actions, meaning that once a class action that meets the basic requirements is commenced, it is on foot unless the defendants can convince the court that representative proceedings are an inappropriate vehicle to resolve the dispute.

The Pelvic Mesh Case

A prominent current example of a medical device class action is the pelvic mesh case commenced in 2012. The proceeding was brought on behalf of Australian women who allege they sustained injuries as a result of pelvic mesh implants. The first instance trial was held in the Federal Court in 2017, with judgment being delivered in favour of three lead applicants in late 2019. An appeal was heard by the Full Court of the Federal Court in February 2021, with judgment delivered in March 2021 again in favour of the three applicants. The appellants have sought special leave to appeal to the High Court of Australia.

Several avenues exist in Australia to resolve disputes outside of formal litigation. There are statutory requirements for claimants to take genuine steps to resolve claims before commencing litigation. In practice, these rules are often ignored in product liability class actions. Courts also have procedures for both voluntary and court-ordered mediation, which typically takes place confidentially and without prejudice.

For class actions specifically, court approval is required for any proposed settlement order. The court must be satisfied that the settlement is fair and reasonable in the circumstances and in the interests of the group members.

There are a number of other alternative dispute resolution processes available in most circumstances. Arbitration is commonly used in commercial contexts, either voluntarily or court-ordered. Parties select an arbitrator and will be bound by their decision, either contractually or under statute. Mediation is also common, whereby a neutral third party will assist parties to come to an agreement which best accommodates each of their interests.

In highly technical matters, parties may agree to have their disputes referred for expert determination. Here, parties will be bound by the decision of an appointed independent expert in the field.

Where a product is defective (in safety or efficacy) it is possible that there will be simultaneous investigations by the relevant regulator as well as civil proceedings brought by affected consumers. While a civil litigant could report (or threaten to report) a product defect issue, such an action would be unlikely to be utilised to apply pressure to a corporation. This is for two reasons. First, the relevant Australian regulators (the TGA and the ACCC) are vigilant in monitoring product safety risks, and are likely to be aware of claims made by civil litigants and investigate them utilising their own powers. Second, sponsors of therapeutic goods and manufacturers of consumer products, also have ongoing obligations to notify the regulator of adverse events or events where death, serious injury or illness may have eventuated.

Furthermore, Australian legal practitioners are prohibited by their professional conduct rules from threatening an opponent with a criminal consequence for failing to behave in a particular way in respect of a civil claims.

For the reasons set out above, such threats are rare.

The TGA is currently undertaking a programme of reform in relation to the safety of medical devices, as a result of a number of inquiries conducted since 2015 in relation to patient safety. In particular, the TGA has responded to the 2017 Final Report of the Senate Community Affairs References Committee report on the number of women in Australia who have had transvaginal mesh implants and related matters.

These regulatory reforms are ongoing, but have, so far, included the reforms in relation to software in medical devices outlined at 1.3 New Products/Technologies and Digital Health, as well as:

  • aligning the definition of "medical device" in the TG Act more closely with the equivalent definitions in the European Union, to support the harmonisation of the regulatory scheme for medical devices in Australia with international jurisdictions like the EU;
  • reclassifying a number of kinds of devices to better align with their classification in the EU or to respond to perceived areas of risk, including certain high risk medical devices such as spinal implantable medical devices, as well as surgical mesh;
  • addressing the advances in materials science and computing technology that have led to a rise in complex, patient specific, custom-made medical devices, and ensuring that those devices are appropriately classified and their manufacturers captured under the TG Act; and
  • aligning Australia with the regulatory reform undertaken in the USA and the EU in relation to IVD companion diagnostics (pathology tests designed to identify the presence or absence of specific biomarkers and assist in the safe use of precision medicines, such as cell-based therapies, immunotherapies and targeted therapies).

See 5.1 Policy Development.

Brexit has not had any appreciable impact on medical device and healthcare product regulation in Australia.

The pandemic has seen several interesting developments take place with respect to product liability. Firstly, both the TGA and the ACCC have taken a strict stance on any advertising that references COVID-19. The TGA have issued a large number of infringement notices to companies, most commonly for making therapeutic claims in relation to products which are not listed on the ARTG (which is prohibited, as outlined in 2.3 Advertising and Product Claims). The ACCC have been similarly active in the area, regulating any advertising which could be misleading or deceptive to consumers, such as making representations about a product's abilities to protect consumers from the virus. In a high-profile example, a popular manufacturer of "active wear" clothing was the subject of enforcement action by both the TGA and the ACCC in respect of the same conduct. The manufacturer released a line of clothing which it claimed had been treated with a product that would protect its wearers from COVID-19 and stop the spread to others. Both regulators deployed their respective powers to take action.

To manage potential shortages created by the additional demand and global supply chain interruptions, the TGA took a range of measures in relation to ARTG listings aimed at bolstering the national stockpile. Examples of the arrangements include:

  • an emergency exemption for domestically manufactured ventilators that were not ARTG listed but demonstrated compliance with minimum technical requirements;
  • an emergency exemption allowing the government to purchase personal protective equipment such as face masks that were not previously ARTG listed; and
  • excluding hand sanitisers that met certain formulation and advertising requirements from the application of certain therapeutic goods regulations.

However, these measures did not signal a permanent relaxing of product safety requirements. Rather, commencing in late 2020, the TGA began to undertake a post-market review of all face masks on the Australian market to ensure that all masks, including those introduced through in the relaxed requirements under an emergency exemption, were compliant. By May 2021, over 1,000 TGA listings of face-masks have been cancelled, either by the TGA or voluntarily by their manufacturers in anticipation of the review.

Clayton Utz

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Australia

+61 2 9353 4000

+61 2 8220 6700

gwilliams@claytonutz.com www.claytonutz.com
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Trends and Developments


Authors



Clayton Utz is an independent Australian firm established in 1833, with more than 180 partners and 1,300 employees across six offices, and one of the largest commercial litigation practices in Australia, including a specialist five-partner product safety and product liability team. The firm handles the most complex, significant and high-profile matters, for clients including many of Australia’s top financial institutions, multinational corporations operating in a range of sectors, and state and Australian government departments and agencies. Clayton Utz is also a global leader in pro bono, with one of the largest pro bono practices of any law firm outside of the USA.

Across 2020 and 2021, Australian medical device policy and legislation has sought to address dual challenges.

As in all jurisdictions, the COVID-19 pandemic has required adaptation across supply chains and commensurate regulatory exemptions, as well as a need for regulators to maintain high safety and efficacy standards for Australian medical devices and equipment. 

In addition, throughout this period, Australian regulators have sought to advance an ongoing programme of updating Australian medical device regulation to meet the technological challenges posed by a changing world. In particular, advances in health and wellness, in vitro diagnostic (IVD) companion diagnostics and custom medical devices have been the focus of regulatory attention.

Review of Australia's Medical Device Regulation

For a number of years, the Therapeutic Goods Administration (TGA) has been undertaking a process of consultation and reform regarding Australia's aging medical device regulation framework. The fundamentals of that regime date back to 1992; as such, it is ill equipped to deal with a number of modern facets of medical device innovation.

In particular, the TGA has identified that Australia was falling behind in appropriately regulating:

  • medical devices which incorporate software, or are themselves software;
  • IVD companion diagnostics; and
  • custom medical devices

Software as a Medical Device Reform

Australian legislation has a clear definition of a medical device under Section 41BD of the Therapeutic Goods Act 1989 Cth (TG Act). For many years this definition has been adequate to deal with the role of software in medical devices: 

"any instrument, apparatus, appliance, material or other article (whether used alone or in combination, and including the software necessary for its proper application) intended, by the person under whose name it is supplied, to be used for human beings for the purpose of [relevantly], the:

(i) diagnosis, prevention, monitoring, treatment or alleviation of disease;

(ii) diagnosis, monitoring, treatment, alleviation of or compensation for an injury or disability; or

(iii) investigation, replacement or modification of the anatomy or of a physiological process..."

The TGA refers to software which meets this legislated definition as SaMD (software as a medical device).

The need for updated regulation arose from:

  • an exponential increase in the availability of "consumer software products" which sit on the border of medical devices and "health and lifestyle" products;
  • increasingly complex interactions between traditional medical devices and software components or accessories used in conjunction with or to control a medical device;
  • the rise of clinical decision software using artificial intelligence (AI) and computing technology; and
  • an increase in the role of software in the provision of healthcare services, particularly in light of the need for telehealth and virtual healthcare support during the COVID-19 pandemic.

The two central areas requiring regulatory reform were:

  • achieving a uniform and accessible definition of software which is a medical device; and
  • appropriately classifying the risk posed by software as a medical device.

Reform regarding when a software-based product is a medical device

In early 2021, the TGA legislated a number of reforms to clearly define when software with a health dimension would amount to a regulated medical product.

  • SaMD (software as a medical device), being software which on a standalone basis is capable of meeting the definition of a medical device and is independently regulated by the TGA as a medical device.
  • SiMD (software in a medical device), being software that is integral to a medical device's functioning, and which is regulated as part of the original hardware medical device.
  • Software accessory, being software which can control or adjust a medical device, and which is specifically intended to be used with the medical device; these are regulated separately by the TGA.
  • Exempt software, which falls within the definition of a medical device, but which is exempt from the registration requirements that apply to most medical devices (certain clinical decision support systems fall into this category).
  • Excluded products, which are defined not to be medical devices and are therefore not subject to TGA regulatory requirements, such as consumer health products, healthcare enabling technology, population-based analytics and laboratory information management systems.

Risk classification for software as a medical device

Australian has a risk-based approach to medical device regulation. This means that products which are higher risk undergo greater scrutiny in order to be registered, and are subject to a higher degree of ongoing review and supervision by the TGA. Products which pose a higher level of risk require a higher classification. Traditionally, all software which was a medical device (on the pure Section 41BD definition) was classified as Class I. This is the lowest possible risk classification, with the least degree of oversight and management.

In 2019, the TGA reached the view that a blanket Class I classification for SaMD was not appropriate. This view was reached having regard to the possible harm that could flow from an SaMD product. For example, an SaMD product designed to alert a consumer of a risk of heart failure could have potentially fatal consequences were it to fail, or deliver incorrect information to a user.

To appropriately manage the risk posed by software, new classification rules have been introduced. There is a transition period in place for eligible software which is already registered on the Australian Register of Therapeutic Goods (ARTG).

Sponsors and manufacturers will need to consider whether a higher risk classification applies, if they have registered, or are seeking to register, software which:

  • provides a diagnosis or screens for a disease or condition;
  • monitors the state or progression of a disease or condition, or the parameters of a person with a disease or condition;
  • specifies or recommends a treatment or intervention; or
  • provides therapy through the provision of information.

The exact classification will depend on a number of factors such as:

  • the role of a healthcare professional in utilising or mediating the software before it reaches a consumer;
  • whether the software is intended to address a serious disease or condition; or
  • whether there is a risk to public health.

Given the innovation and rapid rate of change in this area, it is likely that further reform and guidance will be required by the TGA over the coming years. In particular, as health services adapt to the post-COVID-19 health space, in which the demand for accessible virtual health services is likely to persist, the line between the facilitation of health services (and the exemptions available for enabling technology for telehealth and health care facility management) and the provision of medical information may be increasingly difficult to draw. It seems likely that there will be increasing consumer appetite for facilitation software which streamlines interactions with healthcare professionals and supports virtual medical decision-making. We foresee that this area will be the subject of ongoing legislative reform and guidance, as the line between software with a medical purpose and its less regulated counterparts is blurred.

Custom Medical Device Reform

In 2002, when the Therapeutic Goods (Medical Devices) Regulations 2002 (Device Regulations) commenced, they included an exemption for "custom made medical devices". These were defined as any medical device designed and manufactured specifically for a particular patient or on behalf of a healthcare professional. The exemption meant that devices of this kind did not need to be listed on the ARTG in order to be supplied in Australia, although they were not entirely unregulated.

Custom made medical devices at this time generally included low risk devices, supplied in low volume and made by accredited professionals, for example, dental devices and orthotics.

However, the custom medical device industry has developed significantly over the past 20 years. With the advent of technological advances, such as 3D printing, persons with little or no medical device accreditation can manufacture personalised medical devices. The regulatory regime required change to address these developments in technology.

In February 2021, the TGA introduced a new framework for distinguishing between:

  • "patient-matched medical devices", which are commonly used in clinical practice, are manufactured according to a production process that can be verified and reproduced, despite specific design features accommodating individual anatomical, physiological or pathological features; and
  • genuine "custom made medical devices", which are produced where a person's needs are so rare so as to be unable to be met by a mass-manufactured device.

Following the reforms, patient-matched medical devices will need to be listed on the ARTG before they can be supplied in Australia. The majority of devices supplied previously as "custom made medical devices" will now be considered "patient-matched medical device", and regulated accordingly.

The exemption for custom made medical devices continues and they do not need to be listed on the ARTG. The rationale being that these devices are so unique and rare that the manufacturer cannot adequately validate the design of the device, or adequately validate and/or verify the production process, at the time the device is requested. As such, custom made medical devices ought to be the exception used where a listed ARTG patient-matched medical device is not available.

Although exempt from the ARTG, custom made medical devices remain subject to regulation. That is, they must satisfy certain "conditions of exemption" relating to information supplied with the device, record keeping, annual reporting and inspection by the TGA.

IVD Companion Diagnostics

In February 2021, the TGA introduced reforms designed to modernise Australia's approach to IVD companion diagnostics, commonly referred to as CDx.

This part of the medical device field has evolved as a result of the genomic revolution in identifying the presence of specific biomarkers for a disease or condition. In combination with the amount of data and testing available regarding individual patients, the ability to identify biomarkers has led to the increased availability and effectiveness of precision medicine.

In particular, the TGA recognised that precision medicine has already made significant in-roads in:

  • diagnosing and preventing genetic disease;
  • cancer diagnosis and treatment;
  • determining the suitability of medicines (pharmacogenomics) to an individual patient; and
  • the ability to prevent entirely, or make an early intervention in, chronic health conditions.

Prior to the recent reforms there was no definition of "IVD companion diagnostics" in the Device Regulations. There was also no guidance on the appropriate classification for such devices.

IVD companion diagnostics are now defined under the Device Regulations in a manner which aligns with the US FDA's definition and the definition in the relevant European Union Regulation. The cornerstone of that definition is that IVD companion diagnostics are essential for the safe and effective use of a particular medicine or biological. There are many tests which aid in the benefit-risk decision-making about the use of a medicine or biological. However, these are complementary diagnostics, and are distinct from IVD Companion Diagnostics.

While there are transitional arrangements in place, all IVD companion diagnostics are now considered Class III medical devices. They are subject to a commensurately high level of scrutiny and ongoing review by the TGA. 

Furthermore, the TGA has made clear that application for an IVD companion diagnostic to be listed on the ARTG will be assessed within the context of, and in conjunction with, its corresponding medicine or biological. This will ensure a comprehensive and collaborative evaluation of the device's safety and efficacy, and clinical validity.

Impact of COVID-19 on Medical Device Regulation

In 2020, the Therapeutic Goods (Medical Devices - Face Masks and Other Articles) (COVID-19 Emergency) Exemption 2020 relaxed regulation around certain medical devices, including face masks, to ensure sufficient stock in the National Medical Stockpile during the COVID-19 pandemic. This allowed some masks to be supplied under contracts with Australian government agencies without needing to demonstrate compliance with particular aspects of the TG Act.

Although Australia continues to battle with the impacts of COVID-19, that exemption ceased in January 2021. Since then, the TGA has acted quickly to ensure that the quality of face masks supplied in Australia has not been diluted by the influx of products in 2020, and that manufacturers of face masks understand their regulatory obligations.

Accordingly, the TGA is undertaking a post-market review of face masks to ensure that all masks included in the ARTG meet their regulatory requirements and are performing as intended. 

The review includes assessments of whether the masks are correctly labelled, whether they have been adequately tested, and whether they perform in the way that the manufacturer claims. Specific areas of concern for the TGA include the face-fit of respirator masks, as well as fraudulent or counterfeit masks.

The far reaching and comprehensive nature of this review is demonstrated by the fact that, as of July 2021:

  • 215 ARTG listings have been cancelled by the TGA;
  • 1069 ARTG listings have been cancelled at the initiative of product manufacturers;
  • a non-compliance notice has been issued for 25 products; and
  • a Product Defect Alert or Product Notification has been issued for 63 products.

The review is ongoing, with the TGA reminding all suppliers of medical devices that it is their responsibility to check whether their products meet the regulatory requirements.

Conclusion

We are likely to see continued guidance from the TGA and reform as Australia's medical device regulation become more specifically adapted to highly innovative and changeable areas of medical device production. Furthermore, as consumer products further develop their capacity to provide targeted health information and diagnostics, the interplay between IVD companion diagnostics, software as a medical device and health/lifestyle products will become increasingly hard to police. This seems likely to be an area of ongoing legislative reform as those boundaries are redefined.

However, while the TGA has shown an inclination towards developing a targeted and adaptive medical device framework, it has also reiterated its commitment to maintaining the safety and efficacy of Australian medical devices and healthcare products. The TGA's powers are extensive and wide-ranging. The post-market review of face masks may be an indication of a larger agenda, in conducting product-specific reviews to ensure compliance.

Clayton Utz

1 Bligh St
Sydney
NSW 2000
Australia

+61 2 9353 4000

+61 2 8220 6700

gwilliams@claytonutz.com www.claytonutz.com
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Law and Practice

Authors



Clayton Utz is an independent Australian firm established in 1833, with more than 180 partners and 1,300 employees across six offices, and one of the largest commercial litigation practices in Australia, including a specialist five-partner product safety and product liability team. The firm handles the most complex, significant and high-profile matters, for clients including many of Australia’s top financial institutions, multinational corporations operating in a range of sectors, and state and Australian government departments and agencies. Clayton Utz is also a global leader in pro bono, with one of the largest pro bono practices of any law firm outside of the USA.

Trends and Development

Authors



Clayton Utz is an independent Australian firm established in 1833, with more than 180 partners and 1,300 employees across six offices, and one of the largest commercial litigation practices in Australia, including a specialist five-partner product safety and product liability team. The firm handles the most complex, significant and high-profile matters, for clients including many of Australia’s top financial institutions, multinational corporations operating in a range of sectors, and state and Australian government departments and agencies. Clayton Utz is also a global leader in pro bono, with one of the largest pro bono practices of any law firm outside of the USA.

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