General policy statement
The Therapeutic Products and Medicines Bill is an omnibus Bill. It is proposed that it be divided at the conclusion of the committee of the whole House stage of the legislative process into 2 Bills. Parts 1 to 5 will then be enacted as the Therapeutic Products Act 2006, and Parts 6 and 7 will become the Medicines Act 2006. This approach is proposed due to the extent of the impact on the Medicines Act 1981 of the changes effected by Parts 1 to 5.
Parts 1 to 5 establish a new joint trans-Tasman regulatory scheme for the regulation of therapeutic products. The joint regulatory scheme will cover: the regulation of the manufacture, supply, import, export, and promotion of therapeutic products; the setting of standards in relation to the quality, safety, and efficacy or performance of therapeutic products; post-market monitoring of therapeutic products; and enforcement of the joint scheme's requirements. Responsibility for regulating aspects of therapeutic products covered by the joint scheme will be transferred from the New Zealand Medicines and Medical Devices Safety Authority (Medsafe), which is part of the Ministry of Health, to the Australia New Zealand Therapeutic Products Authority (the Authority). The Authority's role and governance is defined in the Agreement between the Government of Australia and the Government of New Zealand for the Establishment of a Joint Scheme for the Regulation of Therapeutic Products (the Agreement), signed in December 2003. It will be established by an Australian Act that will be the equivalent to Parts 1 to 5.
Parts 6 to 7 repeal and replace the Medicines Act 1981 (and regulations made under that Act) with updated legislation for controls on medicines, such as the scheduling of medicines, licensing of pharmacies, and prescribing rights, that apply after the medicines have been approved for the market and are in the domestic supply and distribution chain.
The Government is committed to safeguarding the public health and safety of New Zealanders by establishing a new regulatory scheme for therapeutic products. To achieve this goal, the Government is proposing to set up the Authority as a world-class joint regulatory agency (the Australia New Zealand Therapeutic Products Authority) to administer a joint regulatory scheme with Australia.
The joint scheme and the Authority are being established under the Agreement. The Agreement sets out the governance and accountability arrangements for the Authority and how it is to be established. It also provides a framework for the joint regulatory scheme for therapeutic products. Parts 1 to 5 give effect to the joint scheme anticipated by the Agreement. The scheme cannot commence until all Parts of the Bill are passed by Parliament. The Agreement will, similarly, come into effect only once it has been ratified by an exchange of diplomatic notes between New Zealand and Australia. This ratification will not occur until after the Bill is passed.
The objectives of the Agreement are to—
safeguard public health and safety in Australia and New Zealand by establishing and maintaining a joint scheme consistent with international best practice for the regulation of the quality, safety, and efficacy or performance of therapeutic products, and of their manufacture, supply, import, export, and promotion:
establish a world-class regulatory agency to administer the scheme and to be accountable to both parties (the Australian and New Zealand Governments):
establish a Ministerial Council (consisting of one New Zealand and one Australian Minister):
avoid unnecessary barriers to trade.
Key concerns to be addressed by the joint scheme
New Zealand is facing 2 key problems with its arrangements for regulating therapeutic products: outdated legislation, and a regulatory capacity that is not sustainable even in the short to medium term.
Addressing outdated legislation and providing a sustainable future-proofed regulatory regime
The joint scheme will provide a means of maintaining an effective and sustainable regulatory capacity for New Zealand and Australia into the future. While New Zealand faces a capacity problem now, Australia expects to face a similar challenge to its regulatory capacity in the longer term. The Authority will provide for enhanced capacity in terms of technical expertise to evaluate the risks and benefits of increasingly complex therapeutic products. Neither New Zealand nor Australia alone has the capacity to operate a world-class regulatory scheme for therapeutic products on an ongoing basis; together, the 2 nations can pool resources and ensure that citizens of both countries gain the maximum protection in the area of therapeutic products safety.
New Zealand's current regulatory framework for therapeutic products, under the Medicines Act 1981 and the Medicines Regulations 1984, is outdated and gives rise to some significant safety risks, trade barriers, and costs to Crown and industry. Updating the legislation is necessary to ensure that New Zealand meets international best practice for the regulation of therapeutic products.
Ensuring the safety of medical devices and complementary medicines
Regulation of medical devices and complementary medicines in New Zealand is minimal. The joint scheme will regulate all therapeutic products, consistent with international best practice. This includes the risk-based regulation of medical devices and complementary medicines. The scheme will enhance public confidence by subjecting medical devices, and complementary medicines to a regulatory scheme that provides assurance about safety and quality.
The joint scheme will apply the internationally harmonised approach to the regulation of medical devices developed by the Global Harmonization Taskforce partnership of the EU, Japan, USA, Canada, and Australia. For New Zealand, this will mean introducing pre-market approvals, quality requirements, and an enhanced level of post-market monitoring and surveillance.
Complementary medicines include herbal remedies and medicines, traditional treatments, homeopathic remedies, and most dietary supplements. The joint scheme will, for the first time in New Zealand, introduce risk-based regulation of complementary medicines as a subset of therapeutic products. It will use an approach that enables product sponsors to gain marked authorisation by self-certification against the Scheme requirements.
Enhancing closer economic relations and facilitating trade
The new scheme will be a significant enhancement of closer economic relations (CER) with Australia and trans-Tasman regulatory co-operation, consistent with the CER agreement of 1983, and the Trans-Tasman Mutual Recognition Arrangement agreed in 1996. The Authority will be the first example of a true trans-Tasman authority that explicitly acknowledges joint co-operation between our 2 independent nations.
The establishment of the Authority will see New Zealand's profile amongst the international therapeutics community increased. This will facilitate the export of therapeutic products beyond Australia. It will also offer more to other key regulators in terms of information sharing and potential for the Authority to develop mutual recognition agreements with other key regulators such as those in the US, Canada, and Europe. Greater regional and global influence over the development of international regulatory standards and harmonisation initiatives will also be provided.
The Authority will be able to ensure that health and safety objectives are met without imposing unnecessary trade barriers. A credible trans-Tasman regulator will impose a quality standard that will be recognised and respected internationally. This will enable New Zealand firms to prove the quality of their products and make them more attractive in an international market.
The joint scheme will develop the therapeutic products industry in New Zealand, including research and development. The new scheme will mean that manufacturers only need to apply for one product approval in order to access both the Australian and New Zealand markets. It will mean that medicines approved for use in one country would also be approved for use in the other country, helping to limit the licensing and approval costs for the manufacturer and giving New Zealanders and Australians access to the same therapeutic products. Exporters will also have an assurance that products have a recognised regulatory stamp of approval for safety and quality.
Relationship between the Agreement, the Bill, and Rules and Orders
The Agreement between the two countries provides the framework for the joint scheme and the Authority by specifying the scope and framework, and accountability and governance arrangements, of the scheme. The vehicles for establishment under the Agreement are the Agreement itself, the implementing legislation, and jointly made Rules and Orders.
The Agreement sets the scope of the regulatory model, which aims to protect public health and safety, and sets out the corporate governance structure for the Authority. It is through the governance structure that New Zealand sovereignty is managed. The Agreement thus lies at the heart of the model, as it provides for symmetry in relation to the control of the Authority through the Ministerial Council and the Board. The Agreement—
sets the overall objective of regulating the quality, safety, and efficacy or performance of therapeutic products:
establishes a Ministerial Council of the Australian and New Zealand Ministers of Health to oversee the Authority and the regulatory scheme:
establishes the Board of the Authority responsible to the Ministerial Council for the governance of the Authority. The Agreement also sets the composition of the Board, its role, and the process for the appointment of the 5 members:
provides for the appointment of the Managing Director of the Authority to be responsible for the regulatory decisions about therapeutic products and for the day-to-day management of the Authority:
provides for the Authority to be established as a body corporate in Australian law and derive its governance and accountability mechanisms from the jointly signed Agreement and its joint structures—the Ministerial Council and the Board:
describes the high-level accountability provisions for the Authority:
provides that the Ministerial Council may make Rules for a number of purposes:
provides that the Authority may make Orders for a number of purposes to do with the regulation of therapeutic products:
provides for therapeutic products approvals, departures from the scheme in exceptional circumstances, reviews of the Authority's decisions, funding arrangements for the Authority, and a number of other matters.
The Agreement requires both New Zealand and Australia to introduce implementing legislation to confer the necessary rights, powers, and privileges on the Authority to enable it to perform its regulatory functions. Parts 1 to 5 represent New Zealand's implementing legislation. Equivalent implementing legislation will be introduced into the Australian Parliament. Once the legislation is passed in both countries, the Agreement will be ratified and come into force. As it does so, it will establish the Ministerial Council and the Board of the Authority. It will also allow the regulatory details (Rules and Orders) to be formally developed.
Rules and Orders
The Rules are central to the arrangements for the Authority and scheme as they provide the joint decision-making vehicle that ensures equality of voice and freedom from unilateral influence. Rules can be made for a range of purposes as set out in Article 9 of the Agreement, including governance and accountability, fees and charges, and prescribing standards of good regulatory practice. Rules are akin to regulations. Orders issued by the Managing Director of the Authority will provide a further level of regulatory detail. Rules and Orders are given the force of law in each country and are subject to disallowance by the Parliaments of both countries.
Parts 1 to 5 (to be the Therapeutic Products Act 2006)
The key elements of the regulatory framework for therapeutic products are—
pre-market assessment of product safety, quality, and efficacy:
licensing of manufacturers to assure product quality:
setting standards to assure product quality and performance:
post-market monitoring of product safety and quality:
surveillance to check for compliance.
The detail of the regulatory scheme will be covered in Rules. This section of the explanatory note covers the key elements of the scheme that are addressed in Parts 1 to 5.
Governance and accountability
The Agreement, Parts 1 to 5, and the equivalent Australian legislation ensure that both countries have an equal voice in the governance of the scheme and the Authority, and that neither country may take unilateral action in respect of the scheme and the Authority. The Australian and New Zealand implementing legislation have provisions that ensure the same approach across both countries.
Parts 1 to 5—
recognise the Authority established under the Agreement and given legal personality by the Australian implementation legislation. The Authority's governance and accountability arrangements are derived from the Agreement:
makes the Authority accountable to Health Ministers and the Parliaments of both New Zealand and Australia, and to Ministers of Finance, where appropriate:
makes the Authority responsible for a joint regulatory scheme that applies in both New Zealand and Australia. The ability to establish the regulatory scheme comes from the Agreement and the detail of the scheme will be in Rules (made by the Ministerial Council) and technical Orders (made by the Managing Director of the Authority); and
makes the Authority responsible for delivering common regulatory outcomes and implementing and enforcing regulatory arrangements in both countries.
The model for the Authority has been intentionally designed to retain not just the expected government reporting processes but also important parliamentary and public accountability controls. In these regards, the Authority will have very similar accountabilities to a New Zealand Crown entity and to an Australian Commonwealth Authority.
Specifically, the Authority will be—
required to provide an annual report and statement of intent and other accountability documents equivalent to those of a Crown entity, which will be tabled in the New Zealand House of Representatives:
subject to scrutiny of its regulatory decisions through a merits review process and judicial review:
subject to other legislative requirements in both countries, eg, Official Information/Freedom of Information Acts, Privacy Acts, Ombudsmen Acts, and Auditors-General scrutiny.
In addition, the Bill requires Rules and Orders to be presented to Parliament. There is a tailored disallowance scheme based on that in the Regulations (Disallowance) Act 1989, but with differences to reflect the joint nature of the Rules and Orders. Members of Parliament will have 3 months to give notice of motion to disallow a Rule or Order. Parliament will have 21 sitting days, from the notice of motion, to disallow the Rule or Order.
Parts 1 to 5 also provide for other governance and accountability matters such as—
seeking information from Australia:
providing for audit (joint with Australia):
controls on subsidiaries.
The Ministerial Council and its functions are established under the Agreement. The Ministerial Council comprises the Australian and New Zealand Ministers of Health. Its primary role is to oversee the joint scheme. The Agreement also provides for the appointment of a Board of the Authority comprising 5 members. This includes the Managing Director of the Authority. The Managing Director is the chief executive of the Authority and is accountable to the Board for financial and administrative matters. A range of expert advisory committees will provide advice to the Managing Director in relation to regulatory decisions.
Part 4 places governance duties on Board members (eg, duties to act with honesty and integrity, to comply with Acts and Rules, and to act with care, due diligence, and skill). The Bill also provides that Board members are subject to criminal and civil sanctions for failing to comply with their duties. In New Zealand, this means adopting additional measures, consistent with Australia, to ensure a seamless environment under which the Board members are subject to the same duties and sanctions, regardless of their location.
Part 4 also provides for management of conflicts of interest and protection of Board members acting in good faith.
Rules and Orders
The Agreement requires the making of Rules by the Ministerial Council and the making of Orders by the Managing Director of the Authority on details of the regulatory scheme.
The regulatory requirements will be set out principally in Rules (eg, medicines, medical devices, administration, advertising, and fees and charges) made by the Ministerial Council, but also, in the case of technical details such as labelling requirements and standards, in Orders issued by the Managing Director of the Authority. These instruments, and any changes made to them over time, will be subject to scrutiny by the Parliaments in a similar way to domestic regulations. Part 1 includes a discrete disallowance regime to enable this to occur.
The use of Rules and Orders rather than domestic regulations is a central part of the joint scheme. There will be only one set of Rules and Orders for both countries.
Part 2 creates a tiered offence regime that provides for both criminal and civil penalties for breaches of the regulatory regime in relation to the manufacture, import, export, supply, and promotion of therapeutic products, misrepresentation, product tampering, and making false or misleading statements. The starting point for the enforcement regime was the Australian Therapeutic Goods Act 1989, which is a more comprehensive regime than the one set out in the New Zealand Medicines Act 1981.
Part 2, therefore, provides for an enhanced enforcement regime. In some cases, this has resulted in higher penalties for significant breaches of the law (eg, counterfeiting medicines). This is a benefit of the new joint scheme to New Zealand, where enforcement powers and options have previously been seen to be limited. New Zealand has been fortunate not to experience significant non-compliance problems such as have occurred in Australia and internationally, but New Zealand cannot be complacent. The offences regime reflects this.
Part 2 introduces a tiered approach for penalties, with fines of up to $550,000 (and/or 5 years' imprisonment) for an individual, and fines of up to $5,500,000 for a body corporate.
In Parts 1 to 5, monetary penalties are identified by way of penalty units, where one penalty unit equals $110.
The joint nature of the regime requires that there must be no opportunity for regulatory arbitrage; thus the offences and penalties area has been one where there has been particular focus on ensuring the provisions in both countries' Bills are drafted so as to achieve as near a similar outcome as possible. However, the Bill recognizes the value of a broad-based approach to addressing non-compliance. Part 2 provides an opportunity to introduce new enforcement options, short of formal court proceedings, designed to encourage and facilitate early correction of non-compliant activity, such as a non-compliance notice regime and the ability of the Authority to accept enforceable undertakings.
Search and seizure
Part 2 includes search and seizure provisions allowing an authorised officer of the Authority to monitor compliance with the provisions of the Bill, Rules, and Orders. The provisions are similar to current legislation which has search and entry provisions made after the New Zealand Bills of Rights Act 1990 (eg, the Agricultural Compounds and Veterinary Act 1997 and the Animal Products Act 1999). They allow the officer to enter and search a place (excluding a dwelling house or a marae) without a warrant at any reasonable time to monitor compliance, or if the officer has reasonable grounds to believe that it is necessary in the interest of public health in order to avoid an imminent risk of death, serious illness, or serious injury, and it is not practicable in the circumstances to obtain a search warrant. In other circumstances the Authority is required to apply for a warrant to enter and search a place.
Merits review and judicial review
The Agreement requires that the implementing legislation of both countries provides for the merits review of regulatory decisions by a review tribunal. The Agreement also permits each country to provide for judicial review of Rules and of decisions and Orders made by the Authority. Part 3 makes provision for both of these things.
Regulatory decisions of the Authority will be subject to merits review by a New Zealand Review Tribunal, established by the Bill. The members of the Tribunal for a particular review will be drawn from a merits review panel appointed by the Ministerial Council. A similar tribunal will operate in Australia.
A merits review involves a reconsideration of the merits of the decision. There are provisions to enable a review to be transferred between the New Zealand and Australian Review Tribunals in certain cases, and to ensure the same decision is not reviewed by more than one tribunal. There are rights of appeal from the New Zealand Review Tribunal to the High Court.
Decisions of the Authority take effect in both countries subject to any orders made by either Review Tribunal or a court on appeal.
Ombudsmen and Privacy Legislation and Information Management
The Official Information Act 1982, the Privacy Act 1993, the Protected Disclosures Act 2000, the Public Audit Act 2001, and other relevant accountability legislation will apply to the Authority in the same manner as they do to other agencies in New Zealand.
Part 3 allows for the transfer of complaints between Australian and New Zealand Ombudsmen and Privacy Commissioners, where the complaint more appropriately sits within the other jurisdiction. The Bill also continues current policy under the Medicines Act 1981, where it is acknowledged that in certain situations, for regulatory reasons, information will need to be disclosed and will require protection. In the event of a public health and safety risk, information will be able to be placed in the public arena.
Consistent with New Zealand's commitments under the World Trade Organization Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement that protects the data around innovative medicines, innovators will be given protections that ensure the Authority cannot use protected information for a specified period of time in order to approve generic medicines.
While the patent term for therapeutic substances in New Zealand is 20 years, in Australia the patent term for therapeutic products can be extended to 25 years. The Authority can consider an application to register a generic product prior to the expiry of the patent in New Zealand or Australia. The Bill confirms that the supplier can market the generic product in New Zealand following the expiry of the New Zealand patent, notwithstanding that the substance may still be protected by an Australian patent in Australia.
The Agreement provides for regulations to be made regulating any products which are excluded from the joint scheme under Article 12 of the Agreement. This provides for departures from the scheme in exceptional circumstances. There are also provisions allowing regulations to be made setting fees and charges for any functions performed by the Agency that fall outside the scope of the scheme, and to address temporary or transitional measures needed to implement the scheme.
Part 5 provides for transitional arrangements for approvals of medicines and medical devices.
Transfer of employees
Part 5 also provides for the transfer of Medsafe employees and assets to the new Authority.
Parts 6 and 7 (to be the Medicines Act 2006)
Parts 6 and 7 repeal the existing Medicines Act 1981 and Parts 1 to 5 move controls into the trans-Tasman regulatory scheme. Controls in the current Medicines Act 1981 that will not be covered by the new trans-Tasman regulatory scheme will be regulated under Parts 6 and 7 and include—
provisions setting out when, how, and by whom prescription medicines can be prescribed, dispensed, and administered:
scheduling of medicines (eg, prescription, pharmacy only):
transport, storage, and record-keeping requirements for medicines:
provisions covering the licensing and ownership of pharmacies:
a licensing regime covering the retail and wholesale supply of scheduled medicines:
enforcement provisions for such controls (eg, offences, penalties, powers for enforcement officers, etc).
The establishment of a new regulatory scheme for therapeutic products has provided an opportunity to update the Medicines Act 1981. Significant changes have not been recommended because the majority of provisions in the Medicines Act 1981 are sound. Changes include minor technical amendments to fix some inconsistencies and new provisions to update old provisions. Changes are also recommended to ensure that there is seamless and effective regulation of therapeutic products under Parts 1 to 5 and Parts 6 and 7. These Parts, when enacted as separate Acts, need to be compatible to ensure effective regulation and enforcement across the joint scheme and domestically. The end result will be more modern legislation.
Licensing regime and controlled activities
Parts 6 and 7 largely carry over the existing licensing regime and controls on medicines activities. This includes the supply of scheduled medicines by wholesale, supplying medicines by vending machine, dispensing medicines, administering and possessing prescription medicines, and prohibiting and restricting prescribing activities. The licensing authority (the Director-General of Health) issues licences to persons to supply scheduled medicines by wholesale, to supply pharmacy medicines other than by wholesale, to dispense medicines, and to operate pharmacies. Exceptions to rolling over the current provisions of the Medicines Act 1981 are discussed below.
Appeals in relation to the licensing process
Parts 6 and 7 streamline the current appeals process for appeals on licensing decisions. Applicants currently have a statutory right to appeal to the Medicines Review Committee and a subsequent right of appeal on questions of law to the District Court. The New Zealand Medicines Review Committee has not been convened to consider licensing issues for many years, and will be disestablished under the joint scheme. Accordingly, the proposed appeal structure for the new Medicines Act provides for the possibility of 2 appeals from a decision of the Director-General of Health (the licensing authority). A party may make a first appeal to the District Court. From there, a further appeal may be made to the High Court, but only on a question of law and with the leave of the Court. The decision of the High Court would be final.
Parts 6 and 7 update the offence provisions to ensure that they are consistent with the proposed enforcement scheme under Parts 1 to 5. Parts 6 and 7 contain similar search and seizure provisions to those in Parts 1 to 5, providing the Ministry of Health's medicines control officers with the right to enter and search any place (excluding a dwelling house or a marae) without a warrant, at any reasonable time, to monitor compliance, or if the officer has reasonable grounds to believe that it is necessary in the interest of public health in order to avoid an imminent risk of death, serious illness, or serious injury, and it is not practicable in the circumstances to obtain a search warrant. Medicines control officers are required to apply for a warrant to enter and search a place at any other times.
Penalties and offences
Offences from the Medicines Act 1981 that relate to the domestic medicines chain are carried over into Parts 6 and 7. They cover issues such as security, storage, packaging, labelling, delivering, disposing, and prescribing of medicines.
A new continuum of penalties is introduced to reflect the seriousness of each specific offence, and to make penalties comparable with other modern legislation. Penalties range between—
a fine of $5,000 for an individual or a fine of up to $40,000 for a body corporate, for less serious offending; and
a fine of up to $100,000 and up to 12 months' imprisonment for an individual or a fine of up to $250,000 for a body corporate, for serious offending.
Parts 6 and 7 also introduce a higher penalty in respect of offending where it can be proved that the conduct was wilful and endangered public health. The penalty for this conduct, on indictment, is to be a fine of up to $100,000 and up to 12 months' imprisonment for an individual (or both) and a fine of up to $250,000 for a body corporate.
Parts 6 and 7 also change some offences from strict liability offences to normal offences to require an element of intention for consistency with the New Zealand Bill of Rights Act 1990.
Parts 6 and 7 retain the ability for officers under the Act (and police) to obtain a search warrant in respect of offending against the Medicines Act. This is regardless of whether the specific offence features a term of imprisonment. Medicines control officers and police are able to enter, search and seize property, and compel the production of documents. Search and seizure is also possible without consent or a warrant, where this is essential to ensure effective enforcement of the law.
Parts 6 and 7 also include 2 new offences—
to prohibit the prescribing of prescription medicines by individuals who are not prescribers (ie, who are not health practitioners with a prescribing right under the legislation) or veterinarians. The offence will be punishable by a maximum fine of $10,000:
for persons who do not dispose of medicines in the manner prescribed by regulations made under the legislation (eg, environmental requirements for safe disposal). The proposed offence carries a maximum fine of $5,000 for an individual and $40,000 for a body corporate.
Parts 6 and 7 incorporate recent reforms to the licensing regime for pharmacies made to the Medicines Act 1981, in September 2004, in conjunction with the passage of the Health Practitioners Competence Assurance Act 2003. The Bill requires operators of community and hospital pharmacies to be licensed by the Director-General of Health. Ownership of pharmacies is restricted to pharmacists, who must hold at least a 51% share of a pharmacy. Companies may also operate a pharmacy as long as a pharmacist or pharmacists own 51% or more of the company's share capital. Neither a pharmacist nor a company may hold a majority interest in more than 5 pharmacies. Pharmacies legally carrying on business when the Bill comes into force will be deemed to have a licence to operate.
Parts 6 and 7 also incorporate recent reforms made in regulating designated prescribers. The Bill permits regulations to be made to allow new groups of health practitioners to be deemed
“designated prescribers” (eg, nurse practitioners, optometrists etc). The regulations can impose conditions and restrictions on who may be a designated prescriber, and set out requirements for the qualifications, training, and competencies of designated prescribers. The relevant registration authority (eg, Nursing Council) must, by notice in the Gazette, specify the prescription medicines that designated prescribers may prescribe, and must keep this list up to date and make this list publicly available. The registration authorities are also responsible for gazetting the competencies and training for designated prescribers.
If the Minister has a concern about the ability of a registration authority to fulfil its statutory obligations, he or she is able to audit the registration authority's functions, and ask the registration authority to respond to any concerns raised by the audit. If the Minister is dissatisfied with the registration authority's response to the audit, he or she may also revoke the registration authority's Gazette notices and develop regulations setting out new requirements regarding the lists of medicines, competencies and training, and qualifications for designated prescribers. The Bill includes transitional provisions so that existing prescribing regulations are carried over until the registration authorities are able to gazette new prescribing notices.
Parts 6 and 7 also allow the Governor-General, on the recommendation of the Minister of Health, following consultation with appropriate organisations, to make regulations designating a class of health practitioner to be authorised prescribers. This means that, over time, if designated prescribers demonstrate their competence to prescribe safely and appropriately, the regulatory framework covering such health practitioners could be aligned to the framework governing existing prescribers (ie, medical practitioners, dentists, and midwives).
Parts 6 and 7 carry over provisions from Part 7A of the Medicines Act 1981 relating to xenotransplantation (medical procedures involving the transplanting of live tissues or organs from an animal source into people). The Bill allows the Minister of Health to authorise persons to conduct xenotransplantation procedures, if the procedure does not impose an unacceptable risk to the health and safety of the public. The Medicines Bill removes reference to the consideration of ethical, cultural, and spiritual issues, because health and disability ethics committees will consider these issues on a case-by-case basis for each xenotransplantation clinical trial application. To date, the Minister has not authorised any xenotransplantation.
It is proposed that xenotransplantation be covered by the joint scheme, but until new controls are in place to govern the safety of the practice, regulation needs to be covered by the Medicines Act. The provisions will expire on 31 December 2008. This should allow sufficient time for the new controls to be in place under the proposed joint scheme to be administered by the Authority. The Medicines Bill does, however, provide for this date to be extended by Order in Council, should the need arise.
The Bill also updates the definition of xenotransplantation to bring it in line with the Food and Drug Administration's definition, which is considered more straightforward.
Good prescribing practice
Parts 1 to 5 will give force of law in New Zealand to Rules made under the Agreement. These Rules, which are currently being drafted and consulted on, will prohibit the export of a therapeutic product without a product licence. This will stop the export of a medicine (including over-the-counter medicines) from New Zealand by anybody other than the holder of the product licence for the medicine. In particular, the export of medicine in the course of, or for the purpose of, retail sales, following internet sales, will largely be prohibited by the requirement that the exporter must hold a valid product licence. There are, however, current concerns about prescribers in New Zealand issuing prescriptions for overseas clients not in New Zealand, or counter-signing prescriptions issued by doctors who are overseas (eg, via the Internet).
To address this concern, Parts 6 and 7 include a provision that ensures prescribers are only able to prescribe medicines for patients who are physically present in New Zealand or are permanent New Zealand residents temporarily overseas. The intention of this is to guard against inappropriate prescribing of medicines to overseas patients (regardless of whether the subsequent export of therapeutic products to the patients is also illegal). It would also allow for unusual but legitimate prescribing situations where a patient may not have had a face-to-face consultation with their prescriber (eg, a locum prescribing for someone in a remote area).
Parts 6 and 7 also remove some of the restrictions on prescribing practice. The current restriction on dentists' prescribing of prescription medicines is removed, and replaced with a provision that allows dentists to prescribe prescription medicines for up to 3 months. This is consistent with other prescribers and is appropriate, given the changes to the practice of dentistry and availability of medicines useful in dental treatment in recent times.
Parts 6 and 7 also allows for an exception to the requirement that prescribers are not allowed to prescribe prescription medicines for a term exceeding 3 months (or 6 months for oral contraceptives). The Director-General of Health will be able to waive this requirement in special circumstances (eg, army personnel operating overseas).
Supply of unscheduled medicines from vending machines
Since the Medicines Act came into force in 1981, the sale of unscheduled (general sales) medicines from outlets such as supermarkets, dairies, and petrol stations has become commonplace (eg, paracetamol). Parts 6 and 7 recognise the supply of unscheduled medicines from vending machines, but prohibit the supply of scheduled medicines (eg, prescription medicines and pharmacy-only medicines) from vending machines unless permitted in accordance with regulations made under the legislation (ie, the sale of unscheduled medicines from a vending machine would be a controlled activity). The Bill therefore permits the sale, through vending machines, of the same range of medicines currently able to be sold in supermarkets. The risk arising from the supply of medicines from vending machines, which are securely sealed units dispensing one unit at a time, is likely to be less than the risk arising in retail outlets where medicines may be stored on low shelves and purchases of multiple packs are easily made.
Issuing of licences to supply medicines by retail, for premises that do not meet the 10 kilometre rule, if it is in the interests of public health
Parts 6 and 7 include a new provision for a licence to sell medicines by retail to be issued to an outlet other than a pharmacy, where the Director-General considers this to be in the best interests of public health. This would be an extension to the current requirement that pharmacy-only medicines may only be sold from a pharmacy, or from a shop that is at least 10 kilometres, by the most practicable route from a pharmacy. This proposal would still enable licences to be issued in relation to shops in remote areas, but would also enable other outlets to be licensed to sell specific medicines where this was considered appropriate.
Reasons for declining a licence application
Parts 6 and 7 clarify the sorts of considerations the Director-General of Health (acting as the licensing authority) must take into account in granting a licence to a person who is
“fit and proper”. This includes whether the person has previous convictions, has an adequate knowledge of the licence requirements, or has the competencies and resources to reliably undertake the licensed activities.
Elevation of some regulations in the Medicines Regulations 1984 to the Medicines Act
Parts 6 and 7 take a different approach to the current Medicines Act. Rather than prohibiting certain prescribed activities, the Bill provides that an activity can be undertaken unless it is prohibited. There are several provisions set out in the current Medicines Regulations 1984 which are elevated to Parts 6 and 7. These provisions involve quite invasive powers, which are more appropriately dealt with in primary legislation. For example, Regulation 31, which permits a Medical Officer of Health to serve a notice on any owner or occupier of a premise prohibiting the use of the premises for, or in connection, with the manufacture, storage, or packing of any medicine or related product for sale, where there are concerns about the construction or disrepair of the premises or the use or character of neighbouring premises, is elevated to the Bill.
New definitions and regulation-making powers
Parts 6 and 7 add new definitions to clarify current practice in relation to compounding, dispensing, and prescribing. New regulation-making powers relating to prescribing, dispensing, record keeping, and information requirements have been added to allow regulations to be made that take into account advances in technology, such as new developments in electronic transmission and storage of information.
Clause by clause analysis
Clause 1 is the title clause. The intention is that this Bill will eventually be enacted as 2 Acts, the Therapeutic Products Act 2006 (referred to in the Bill as Parts 1 to 5) and the Medicines Act 2006 (referred to in the Bill as Parts 6 and 7).
Clause 2 is the commencement clause. It provides for Parts 1 to 5, and Parts 6 and 7, and for specific provisions of those Parts, to be brought into force by Orders in Council.
Clause 3 states the object of the Act.
Preliminary, and Rules and Orders
Subpart 1—Preliminary provisions
Clause 4 states the purpose of Parts 1 to 5.
Clause 5 provides an overview of Parts 1 to 5.
Clause 6 defines terms used in Parts 1 to 5. All defined terms are listed here, but the actual definition of many terms is given in other clauses or the Agreement. Terms that are used primarily in a particular Part are defined in a clause at the beginning of that Part, with clause 6 merely providing a cross-reference to the clause that sets out the definition.
Clause 7 carries forward the effect of section 32A of the Medicines Act 1981. That section provides for the Crown to import and supply products without having to comply with the usual regulatory procedures under that Act. Clause 7 authorises the Minister to specify that a product that is identical to another product (being a product that has a product licence granted by the Authority under the Rules) is subject to a Crown exemption. A product that is subject to a Crown exemption may be imported and supplied in New Zealand as if it had a product licence. The Minister must consult with the Australian Minister before specifying a product as being subject to a Crown exemption.
Clause 8 provides that Parts 1 to 5 and the Rules and Orders bind the Crown.
Subpart 2—General provisions about Rules and Orders
Rules and Orders having force of law
Clause 9 provides that Rules and Orders (as defined in clause 6) have the force of law as if they were regulations made under an Act.
Clause 10 states that the effect of this subpart, in conjunction with the equivalent provision in the Australian Act, is that a Rule or Order cannot be in force as part of the law of one country without it also being in force as part of the law of the other country.
Clause 11 contain requirements relating to the commencement of Rules and Orders. Rules and Orders cannot come into force before they are published (either on the Authority's Internet site or in the Gazette) or notice of them has been given in the Gazette.
Clause 12 provides that the Minister must not agree to making Rules relating to the governance or accountability of the Authority without the agreement of the Finance Minister, unless the Finance Minister has waived that requirement.
Subpart 3—Publication, presentation, and disallowance of Rules and Orders
Meaning of Rule and Order for publication, presentation, and disallowance purposes
Clause 13 provides that, for the purposes of this subpart, an instrument containing 2 or more Rules or Orders is taken to be a single Rule or single Order.
Publication of Rules and Orders
Clause 14 requires that the Authority must publish and maintain on its Internet site every Rule, Order, and the explanatory statement of every Rule and Order. It may also publish compilations on its Internet site.
Rules and Orders must be published as soon as practicable after they are made. The Internet site must include information about when Rules or Orders, or provisions of Rules and Orders, come into force or cease to be in force.
Clause 15 provides for the correction of published Rules, Orders, and compilations.
Clause 16 provides that a Rule or Order published on the Internet site is to be taken as a complete and accurate record of the Rule or Order, and that a compilation is to be taken to be a complete and accurate record of the compiled Rule or Order as amended and in force on the date of compilation.
Clause 17 requires the Authority to retain the original signed copy of every Rule and Order until it is passed to the appropriate archival authority, and to make hard copies of Rules and Orders available to Ministers on request and to any other person on request and payment of the prescribed fee (if any).
Clause 18 states that no copyright exists in Rules or Orders.
Presentation of Rules and Orders
Clause 19 requires the Minister to present a copy of every Rule and Order to the House of Representatives within 6 sitting days after the date on which the Rule or Order is made. Failure to do so means that the Rule or Order will not come into force or, if it is in force, it ceases to be in force.
It is intended that, following presentation, Rules and Orders should be subject to scrutiny by the Regulations Review Committee. This cannot be provided for in the Act because it involves a matter of Parliamentary procedure. An amendment to the Standing Orders of the House of Representatives will therefore be sought once this Bill is enacted in order to give effect to the intention.
Clause 20 provides that the Minister, when presenting a Rule or Order to the House of Representatives, must also present an explanatory statement of the Rule or Order.
Disallowance of Rules and Orders
Clause 21 explains that the purpose of clauses 22 to 26 is to establish a disallowance scheme enabling the New Zealand House of Representatives to disallow Rules and Orders. A discrete disallowance scheme is required because Rules and Orders are not regulations for the purposes of the Regulations (Disallowance) Act 1989. In order to reflect the joint nature of the Scheme, this disallowance scheme needs to be as similar to the equivalent scheme under the Australian Act as possible.
Clause 22 provides that a Rule or Order can only be disallowed as a whole, and not in part. Individual provisions of Rules and Orders cannot be disallowed.
Clause 23 states that any member of Parliament may give a notice of motion to disallow a Rule or Order. The member must give the notice within 3 months of the date on which the Rule or Order was presented to the House of Representatives.
Clause 24 provides that a Rule or Order be disallowed if—
a notice of motion to disallow the Rule or Order is given by a member of the Regulation Review Committee and no decision on the motion is made within 21 days of it being given; or
a notice of motion to disallow the Rule or Order is given by any Member of Parliament and the notice is called on, moved, and agreed to with 21 days of being given.
A Rule or Order that is disallowed ceases to be in force.
Clause 25 sets out the circumstances in which a notice of motion to disallow a Rule or Order lapses.
Clause 26 requires the Minister to give notice in the Gazette if a Rule or Order is disallowed, and requires the Authority to give notice of any disallowances on its Internet site.
Clause 27 states that a Rule or Order is not in force if it is not in force under the Australian Act as a result of a failure to table the Rule or Order as required by the Australian Act, or disallowance by either House of the Parliament of Australia.
Enforcement of regulatory scheme
Subpart 1—General provisions relating to Part
For the joint regulatory scheme to work, the enforcement regime in each country must be as similar as possible. This is so that the outcome of enforcement action is not dependent upon which country the action was taken in. The starting point in designing the enforcement regime was the Australian Therapeutic Goods Act 1989. This is a more comprehensive regime than the one set out in New Zealand's Medicines Act 1981.
As a result of the need to align the enforcement regime in this Bill with that of the Australian Bill, the provisions of this Part include the following features:
penalties are expressed as penalty units (where 1 penalty unit equals $110) and are high by New Zealand standards. The penalty levels could not drop below existing Australian levels and must be equivalent to them:
some matters normally left to the common law (such as defences, and the precise identification of elements of offences) are spelt out in this Part. This is because the Australian criminal law is codified in the Criminal Code Act 1995 and, in order to provide more certainty of outcome, New Zealand's equivalent rules need to be articulated in this Part:
the enforcement options include 3 varieties of offences as well as civil penalties, non-compliance notices, and enforceable undertakings. These are currently available in Australia in the therapeutic goods context and have been provided for in this Part so that the range of enforcement action currently available in Australia is also available in New Zealand:
a single kind of proscribed conduct (such as manufacturing a therapeutic product without a manufacturing licence) may therefore attract a range of enforcement responses. Court-imposed penalties are set out in up to 4 tiers. The pattern of tiered responses in many (but not all) cases is as follows:
civil penalties—for engaging in the proscribed conduct:
summary offences—for knowingly or recklessly engaging in the proscribed conduct:
indictable offences—for knowingly or recklessly engaging in the proscribed conduct where the conduct results in harm or a serious risk of harm:
strict liability offences—for engaging in the proscribed conduct and the conduct results, or is likely to result, in harm:
in addition, a non-compliance notice provides for a penalty without judicial involvement. It can be issued where a person may be liable to a civil penalty or a strict liability offence. If the recipient pays the amount required under the notice, no further proceedings may be issued:
enforceable undertakings are a new enforcement tool in New Zealand. If a person gives an enforceable undertaking, the Authority may ask the High Court to make a range of orders if the person fails to honour the undertaking.
Definitions and jurisdiction
Clause 28 provides definitions of terms primarily used in subparts 1 to 3 of this Part. These subparts identify the main regulatory offences and provide for civil penalties, offences, non-compliance notices, and enforceable undertakings.
Clause 29 relates to jurisdiction. Clause 29(1) provides that a person may be convicted of an offence under this Part if any part of the conduct constituting the offence occurred in New Zealand or Australia. It does not matter—
Clause 29(2) mirrors the provisions in clause 29(1) in relation to a person liable to a civil penalty under this Part.
General provisions about offences
Clause 30 provides that prosecutions for summary offences under this Part may be commenced at any time within 6 years after the conduct constituting the offence occurred. (The time limit that would otherwise apply under the Summary Proceedings Act 1957 is 6 months.)
Clause 31 sets out sentencing guidelines for offences involving harm, or risk of harm, to any person.
Clause 32 sets out matters relating to the prosecution and available defences in respect of the strict liability offences in this Part.
Clause 33 explains how alternative verdicts are dealt with under Australian and New Zealand legislation.
Clause 34 imposes notice requirements on defendants who wish to raise specific defences to certain indictable offences.
Clause 35 provides that the Managing Director may certify certain matters, and that such a certificate can then be used in evidence in civil or criminal proceedings under this Part.
Proceedings for civil penalties
Clause 36 provides for the Authority to apply to the High Court for a civil penalty against a person who is liable under this Part.
Clause 37 provides that the High Court may order a person to pay a civil penalty if the person has contravened a civil penalty provision, or has aided, induced, or conspired (etc) in such a contravention. The Court must have regard to the criteria set out in subclause (2) when determining the amount of civil penalty that must be paid. Maximum amounts of civil penalties are set out in individual civil penalty provisions.
Clause 38 provides that applications for a civil penalty must be made within 6 years after the conduct giving rise to the liability occurred, and provides for the standard of proof and procedural matters in civil penalty proceedings.
Relationship between civil penalty and criminal proceedings
Clause 39 bars proceedings for a civil penalty under this Part against a person in relation to particular conduct if there are already proceedings underway against that person for a civil penalty under the Australian Act in respect of the same conduct, or if such proceedings have been completed.
Clause 40 bars criminal proceedings under this Part if criminal proceedings relating to the same conduct are underway, or have been completed, in Australia.
Clause 41 allows criminal proceedings for an offence under this Part to commence against a person even if proceedings for a civil penalty, whether in New Zealand or Australia, have commenced against that person in respect of the same conduct.
Clause 42 provides that a person may not be penalised more than once in respect of the same conduct.
Clause 43 describes the effect of the withdrawal or discontinuation of proceedings on any limitation period applying to subsequent proceedings.
Clause 44 provides that evidence given in civil penalty proceedings is not generally admissible in subsequent criminal proceedings relating to the same conduct.
Clause 45 clarifies that nothing in clauses 39 to 44 affects the abuse of process jurisdiction of any court.
Liability of executive officers
Clause 46 provides that an executive officer of a body corporate commits an offence if—
the body corporate commits an offence under this Part; and
the officer knew that the offence was being or would be committed; and
the officer was in a position to influence the conduct of the body corporate in relation to the commission of the offence; and
the officer failed to take all reasonable steps to prevent the commission of the offence.
Clause 47 provides for the civil liability of an executive officer of a body corporate. The grounds of liability mirror those establishing criminal liability under clause 46.
Clause 48 prescribes criteria for establishing whether an executive officer failed to take all reasonable steps to prevent the commission of an offence or the contravention of a civil penalty provision.
Clause 49 applies the notice requirements for adducing evidence, as set out in clause 34, to a defendant charged under clause 46 in relation to specified offences by a body corporate.
Subpart 2—Regulatory offences and civil penalties
Subpart 2 sets out the regulatory offences and civil penalties that are the core of the enforcement regime. Many of these are set out in the tiered approach described above. Most refer to the Rules (and in some cases to Orders) because the Rules and Orders prescribe the detail of the regulatory regime applying to therapeutic products.
Manufacture, import, export, and supply
Clauses 50 to 59 relate to the manufacture, import, export, and supply of therapeutic products. They specify offences and civil penalties in respect of the following conduct—
manufacturing a therapeutic product without a manufacturing licence or the correct manufacturing licence (clause 50):
breaching a condition of a manufacturing licence (clause 51):
manufacturing, importing, exporting, or supplying a therapeutic product without a product licence or the correct product licence (clause 52):
breaching a condition of a product licence (clause 53):
breaching a condition of a special purpose approval or an exemption (clause 54):
importing, exporting, or supplying a product that does not conform to applicable standards (clause 55):
breaching a condition of an authorisation not to conform to applicable standards (clause 56):
breaching a condition of a conformity assessment certificate (conformity assessment certificates apply only to medical devices) (clause 57):
being a manufacturer and supplying or exporting a therapeutic product to which conformity assessment procedures have not been applied (clause 58):
being a person other than a manufacturer and supplying or exporting a therapeutic product to which conformity assessment procedures have not been applied (clause 59).
Clause 60 sets out the purpose of the provisions about advertising therapeutic products, with particular reference to the Advertising Code to be established under the Rules.
Clause 61 provides, for the purposes of clauses 62 to 66, a definition of circumstances as it is used in the context of advertisements.
Clause 62 identifies proscribed advertisements and specifies the civil penalties and offences associated with publishing or broadcasting proscribed advertisements.
Clause 63 sets out the civil penalties and offences associated with broadcasting or publishing an advertisement without an approval in circumstances in which, under the Rules, an approval is required.
Clause 64 sets out the civil penalties and offences associated with making restricted representations in advertisements. Restricted representations are representations identified as such in the Rules or Orders, and that require the Authority's approval.
Clause 65 sets out the civil penalties and offences associated with failing to comply with a direction, issued under the Rules by the Authority, that relates to an advertisement about a therapeutic product.
Clause 66 provides for liability to a civil penalty if a person fails to comply with an information requirement notice given by the Authority.
Clause 67 sets out some guidelines for courts on the level of civil penalty or fine to be imposed in relation to a civil penalty or offence relating to advertising.
Clauses 68 to 72 set out offences and civil penalties relating to the following conduct associated with misrepresentation:
dealing with counterfeit products (clause 68):
setting out a false product licence number (clause 70):
falsely representing that a therapeutic product is subject to a product licence (clause 71):
claiming to supply a therapeutic product when the product cannot be lawfully supplied (clause 72).
Clause 69 provides for relief from liability where a person is, or may be, liable to a civil penalty under clause 68 (dealing with counterfeit products).
Clause 73 makes it an offence for certain people to fail to promptly notify the Authority of circumstances that indicate that therapeutic products have been, or are proposed to be, tampered with.
False or misleading information in applications and declarations
Clauses 74 and 75 create offences and provide for liability to a civil penalty if a person makes a false or misleading statement in certain kinds of applications and certificates, and in declarations relating to conformity assessment procedures.
Adverse effect information
Clause 76 creates an offence and provides for liability to a civil penalty if the holder of a product licence fails to give adverse effect information in relation to a therapeutic product, as required by the Rules.
Compliance with information requirement notice
Clauses 77 to 84 are about the offences and civil penalties associated with failing to comply with information requirement notices. These are notices given by the Authority under the Rules that require the recipient to provide certain information relating to particular therapeutic products. Different offences, civil penalties, and defences apply, depending on who the recipient of the notice is.
Compliance with recovery notice
Clause 85 creates offences and provides for liability to a civil penalty in respect of the failure to comply with a recovery notice. A recovery notice is a notice given by the Authority under the Rules that require the recipient to take specific steps relating to the recovery (which may include the recall) of products.
Clause 86 provides relief from liability where a person is, or may be, liable to a civil penalty under clause 85(2) (failing to comply with a recovery notice).
Clause 87 makes it an offence for a person to intentionally export or supply a therapeutic product that the person knows to be subject to a recovery notice.
Information about sponsors
Clause 88 provides that a person who manufactures, imports, exports, or supplies a therapeutic product commits an offence, or is liable to a civil penalty, if the person—
claims not to be the sponsor of the therapeutic product; and
is required by the Authority to provide information about the identity of the sponsor of the therapeutic product; and
fails to provide that information within the time specified by the Authority, or provides false or misleading information.
Subpart 3—Non-compliance notices and enforceable undertakings
Clause 89 authorises the Authority to issue a non-compliance notice to a person who has, within the last 12 months, engaged in conduct that the Authority has reasonable cause to believe—
A person who is issued with a non-compliance notice may, by paying a specified monetary penalty within a specified time, avoid any further proceedings relating to the conduct.
Clause 90 allows the Authority to withdraw a non-compliance notice at any time before the monetary penalty is paid in full.
Clause 91 specifies the date by which the monetary penalty is to be paid.
Clause 92 specifies the maximum amount of monetary penalty that may be specified in a non-compliance notice.
Clause 93 provides that civil penalty or criminal proceedings may not be commenced against the recipient of a non-compliance notice (in relation to the conduct referred to in the notice) if the person pays the monetary penalty, or the time for paying the penalty has not yet passed.
Clause 94 provides that payment of a monetary penalty must not be construed as an admission of guilt or liability.
Clause 95 provides for regulations prescribing the form of a non-compliance notice and sets out matters that must be set out in the notice.
Clause 96 provides that the Authority may accept a written undertaking (an enforceable undertaking) given by a person in connection with a matter in relation to which the Authority has a power or function relating to the regulation of therapeutic products.
Clause 97 enables the Authority to apply to the High Court to enforce an undertaking if the Authority considers that the person who gave the undertaking has breached any of its terms.
Subpart 4—Search and seizure
Clause 98 provides definitions of terms primarily used in subparts 4 and 5 (which relate to search and seizure, information sharing, and customs matters).
Clause 99 authorises the Managing Director to appoint authorised officers for the purposes of Parts 1 to 5.
Clause 100 requires the Managing Director to issue authorised officers with identity cards.
Entry, search, and seizure without warrant
Clause 101 authorises an authorised officer to enter, at any reasonable time, a place (other than a dwelling house or marae) in order to monitor compliance with the Rules and Orders. It sets out the powers of an authorised officer who enters a place under this clause.
Clause 102 provides that an authorised officer or member of the police may enter a place (other than a dwelling house or marae) without consent or warrant in certain circumstances in order to avoid an imminent risk of death, serious illness, or serious injury, and sets out the powers of the person entering under this clause.
Clause 103 allows the occupier of a place to request that the Authority make an inspection of the place.
Clause 104 provides for the issue of search warrants, which must be in a form prescribed by regulations.
Clause 105 identifies the powers of an authorised officer or member of the police, and any person called on to assist, who enters a place under a search warrant issued under clause 104.
Conduct of entry, search, and seizure
Clause 106 provides that an authorised officer or member of the police may ask any person to assist with a search under this Part.
Clause 107 provides that an authorised officer must show his or her identity card on entering a place, and at any time during the search if requested.
Clause 108 requires that an authorised officer or member of the police must, before entering a place under this Part,—
Clause 109 requires a person conducting a search under a warrant to provide a copy of the warrant to the occupier whose place is being searched.
Clause 110 provides that an occupier whose place is being searched may observe the search as long as he or she does not impede it.
Clause 111 relates to the use of electronic equipment found at a place during a search. A person conducting a search must take care not to damage the equipment or corrupt information stored on it, and the Authority may be liable for damages if the person fails to take care.
Clause 112 provides that documents seized from a place must, if practicable, be copied before the original is removed. A copy of the document seized must be left at the place. If it is not practicable to copy a document before it is seized, a copy must be provided as soon as practicable afterwards.
Clause 113 requires that a person who seizes anything during a search must provide the occupier with a receipt for the thing.
What happens to things seized
Clause 114 provides for the return of things that have been seized and sets out the circumstances in which they may be retained.
Clause 115 provides that an authorised officer or member of the police who wishes to retain a thing seized for more than 90 days may apply to the District Court for an order to retain the thing.
Clause 116 provides for a court to order therapeutic products relating to a conviction or the imposition of a civil penalty to be forfeited to the Crown.
Testing and analysis of samples
Clause 117 imposes requirements on an authorised officer who obtains a sample for testing or analysis (other than under a search warrant).
Clause 118 provides that the analysis and testing of samples must be done in accordance with the Rules and Orders.
Clause 119 provides for how a certificate of analysis may be admissible as evidence.
Clause 120 provides that a person who is convicted of an offence or ordered to pay a civil penalty must pay the fees and expenses of any testing or analysis.
Offences relating to search and seizure
Clause 121 creates a range of offences relating to hindering or interfering with searches and seizures.
Information sharing for law enforcement purposes
Clause 122 provides for the sharing between government agencies and the Authority of information relating to compliance with the law and law enforcement. The information may relate not just to enforcement of this Act but also to related enactments, such as the Biosecurity Act 1993 and the Customs and Excise Act 1996, identified in the clause.
Clause 123 provides for authorised officers to inspect any therapeutic product, and any documents associated with its import or export, if the therapeutic product is in a customs controlled area.
Clause 124 sets out the powers of an authorised officer to seize and otherwise deal with non-compliant therapeutic products that are imported into, or exported from, New Zealand. A non-compliant therapeutic product is one that does not comply with the Rules or Orders, or with regulations, or that constitutes a risk to public health.
Clause 125 is about what happens to a consignment at a port when a sample is taken for analysis.
Clause 126 provides for the relationship between Parts 1 to 5 and the Customs and Excise Act 1996.
Clause 127 confirms that the fact that a product is protected by an Australian patent does not in itself prevent it from being marketed in New Zealand.
Administrative law matters
This Part deals with—
the system for reviewing decisions by the Authority:
how judicial review applies to decisions by the Authority:
how the Ombudsmen in New Zealand and Australia deal with issues relating to the Authority:
how the Privacy Commissioners in New Zealand and Australia deal with privacy issues associated with the Authority:
how the Authority manages the keeping and disclosure of information, including information relating to the governments of New Zealand and Australia, and highly sensitive commercial information, and the application of the New Zealand Public Records Act 2005.
Clause 128 provides definitions of terms used primarily in this Part.
Subpart 1—Merits review
Clause 129 provides an overview of this subpart. This subpart gives effect to Article 13 of the Agreement, which requires New Zealand to provide for the review by a merits review tribunal of the merits of certain decisions made by the Authority.
Application for review
Clause 130 provides that a person whose interests are affected by a reviewable decision may apply to the Review Tribunal (which is the New Zealand Review Tribunal established under clause 135) for a review. A reviewable decision is any decision of the Authority in relation to—
an application for an approval; or
the amendment, suspension, or revocation of an approval; or
any other matter specified in the Rules as being open to merits review.
Clause 131 restricts applications for merits review if an internal review process is available under the Rules.
Clause 132 describes how reasons for a decision, and other information, may be withheld if the Australian Commonwealth Attorney-General has issued a public interest certificate under the Administrative Appeals Tribunal Act 1975 of the Commonwealth of Australia.
Clause 133 bars applications for review to the Review Tribunal if an application for review has already been made to the Australian Review Tribunal (which is the tribunal provided for in the Australian Act).
Clause 134 provides that an application to review a decision of the Authority does not affect the operation of the decision unless the applicant has obtained an order to stay the decision under review.
Clause 135 provides for the establishment and constitution of the (New Zealand) Review Tribunal. A minimum of 3 members of the Merits Review Panel (the members of whom are appointed under the Agreement by the Ministerial Council) is required to constitute a Review Tribunal for a particular review.
Clause 136 provides protection from personal liability to members of the Review Tribunal for any act or omission done in good faith in the course of their duties.
Clause 137 provides for the remuneration of members of the Review Tribunal.
Conduct of review
Clause 138 provides that the parties to proceedings before the Review Tribunal are—
It also provides that the Attorney-General may appear and be heard in proceedings in which the Attorney-General considers that the interest of the public is or may be involved.
Clause 139 states that the Review Tribunal may regulate its own procedure, subject to the Agreement, the Rules, and Parts 1 to 5. It also provides that specific procedural provisions applying to the Review Tribunal are set out in Schedule 2.
Clause 140 provides that the decision of the majority of the members of the Review Tribunal is the decision of the Review Tribunal. If no majority is reached, then the decision of the Review Tribunal is the decision of the chairperson.
Clause 141 specifies the powers of the Review Tribunal when reviewing a decision of the Authority.
Clause 142 provides that if the Review Tribunal remits a matter to the Authority, the Authority must give effect to any directions of the Review Tribunal, reconsider the matter, and issue a fresh decision.
Clause 143 explains the extent to which new information may be considered by the Review Tribunal.
Transfer of review proceedings
Clause 144 enables review proceedings in New Zealand to be transferred to the Australian Review Tribunal if the Review Tribunal is satisfied that it is in the interests of justice to have the review conducted by the Australian Review Tribunal. Review proceedings must be transferred if a public interest certificate has been issued (see the note on clause 132) in respect of information or a matter that is or may be in evidence before the Review Tribunal.
Clause 145 provides for proceedings that are transferred to the Review Tribunal from the Australian Review Tribunal.
Effect of decisions
Clause 146 provides that a decision by the Authority has effect subject to any order of the Review Tribunal, the Australian Review Tribunal, or a decision of a court on appeal from either tribunal.
Appeals and stating case
Clause 147 provides for a party to review proceedings to appeal to the High Court against a decision of the Review Tribunal on a question of law.
Clause 148 provides for the Review Tribunal to state a case for the opinion of the High Court on a question of law arising in any proceedings before the Tribunal. The Tribunal may state a case on its own initiative or on application by any party.
Subpart 2—Judicial review
Clause 149 provides that this subpart applies only to judicial review proceedings relating to decisions of the Authority, and to Rules and Orders.
Clause 150 enables decisions of the Authority, Rules, and Orders to be judicially reviewed under the Judicature Amendment Act 1972.
Clause 151 states the effect of orders made by a court in judicial review proceedings concerning a decision of the Authority, or a Rule or Order.
Clause 152 provides that a court may stay judicial review proceedings on its own initiative or on application by a party. Proceedings may be stayed if the court considers it more appropriate for them to be heard and determined in a court in Australia or if it is satisfied that the matter is the subject of final orders made by an Australian court.
Clause 153 sets out some procedural matters in respect of a court's determination of whether a judicial review proceeding should be stayed.
Subpart 3—Action by Ombudsmen
Clause 154 acknowledges that the Authority is subject to the Ombudsmen Act 1975 and to the Ombudsman Act 1976 of the Commonwealth of Australia.
Clause 155 provides for co-operation between New Zealand Ombudsmen and the Australian Ombudsman when taking acting concerning the Authority. It requires a New Zealand Ombudsman to advise the Australian Ombudsman of any investigation of the Authority under the Ombudsmen Act 1975. New Zealand Ombudsmen may exercise powers under the Ombudsmen Act 1975 to respond to any request for assistance by the Australian Ombudsman. The Australian Ombudsman has reciprocal obligations under the Australian Act to assist and advise New Zealand Ombudsmen.
Clause 156 enables New Zealand Ombudsmen to transfer complaints under the Ombudsmen Act 1975 to the Australian Ombudsman.
Clause 157 provides that a New Zealand Ombudsman may, at the request of the Australian Ombudsman, agree to the transfer of a complaint concerning the Authority from Australia, if satisfied that the matter can be conveniently and effectively dealt with by a New Zealand Ombudsman.
Clause 158 provides that a New Zealand Ombudsman may refuse to deal with—
complaints investigated, or similar to those investigated, by the Australian Ombudsman; or
complaints that will be transferred to Australia.
Clauses 159 and 160 relate to immunities extended to the Australian Ombudsman and others in relation to actions in New Zealand.
Subpart 4—Action by Privacy Commissioners
Clause 161 acknowledges that the Authority is subject to the Privacy Act 1993 and to the Privacy Act 1988 of the Commonwealth of Australia.
Clause 162 modifies the application of privacy principle 11, as set out in section 6 of the Privacy Act 1993, so far as it relates to the Authority. This is necessary for consistency with the Australian Privacy Act 1988.
Clause 163 provides for co-operation between the New Zealand Privacy Commissioner and the Australian Privacy Commissioner in respect of any investigation concerning the Authority. The provisions are similar to those relating to Ombudsmen under clause 155.
Clause 164 provides for the transfer to the Australian Privacy Commissioner of complaints concerning the Authority that are received by the New Zealand Privacy Commissioner.
Clause 165 provides for the transfer of complaints regarding the Authority from the Australian Privacy Commissioner to the New Zealand Privacy Commissioner.
Clause 166 provides that the New Zealand Privacy Commissioner may decide to take no action, or no further action, on any complaint that has been dealt with by the Australian Privacy Commissioner or that is being transferred to the Australian Privacy Commissioner.
Clauses 167 and 168 relate to immunities extended to the Australian Privacy Commissioner and others in relation to actions in New Zealand.
Clause 169 extends to the New Zealand Privacy Commissioner the same level of immunity that is given to the Australian Privacy Commissioner in respect to actions in New Zealand.
Subpart 5—Information management
Clause 170 acknowledges that the Official Information Act 1982 generally applies to information held by the Authority. However, it does not apply to Australian Government information or to information of the Authority that was held by the Australian Therapeutic Goods Agency at the time of the latter's disestablishment.
Clause 171 acknowledges that the Authority is subject to the Privacy Act 1993 and refers to the earlier provisions about the Privacy Commissioner.
Clauses 172 to 177 authorise the release of specific types of information to specific people or organisations in specific circumstances. Some of these provisions authorise releases that would be possible anyway under the Official Information Act 1982, but are included here for the avoidance of doubt and for symmetry with the Australian Act.
Clause 178 authorises the release to the public of specified information held by the Authority in limited circumstances.
Clause 179 protects from civil and criminal liability any person who, in good faith, makes information available under any of clauses 170 to 178, clause 183, or under the Medicines Act 1981 (where clause 184 applies).
Protected active ingredient information
Clause 180 explains the purpose of clauses 181 to 184.
Clause 181 provides definitions of protected active ingredient information and active moiety. Protected active ingredient information is information that—
is about, or relates to, the active moiety of a therapeutic product; and
is submitted in support of an application for a product licence; and
is not in the public domain on the date on which the application is received by the Authority.
Clause 182 prohibits the Authority from disclosing protected active ingredient information during the 2 periods when the information is protected. The first period of protection starts from the date the Authority receives the application for the product licence and ends on the earlier of—
The second period of protection starts on the date on which the Authority decides the application, and ends on the date that is 5 years later.
Clause 183 allows the Authority to release protected active ingredient information during its periods of protection if—
disclosure is under any of clauses 172 to 178; or
the applicant or licence holder agrees; or
the information is in the public domain.
Clause 184 preserves the application of sections 23A to 23C of the Medicines Act 1981 to confidential supporting information (as defined in those sections) in relation to applications dealt with before the Scheme comes into force.
Use of information by Authority
Clause 185 applies if Rules limit the use that the Authority may make of information. It bars civil or criminal proceedings against any person who, in good faith, uses the information in breach of those Rules.
Clause 186 acknowledges that the Authority is subject to the New Zealand Public Records Act 2005 and the Archives Act 1983 of the Commonwealth of Australia. Responsibility for the records will be determined under a memorandum of understanding between the (New Zealand) Chief Archivist and the Director-General of the National Archives of Australia.
Governance and accountability
Clause 187 defines terms used primarily in this Part.
Subpart 1—Ministerial Council, Board, and Board members
Clause 188 provides an overview of the role and functions of the Ministerial Council, which is largely provided for in the Agreement.
General provisions relating to Board
Clause 189 provides an overview of the Board. The Board comprises 5 members who are appointed by the Ministerial Council. The role and functions of the Board are set out in paragraphs 5 and 6 of Article 6 of the Agreement, but more detailed matters relating to the Board will be provided in the Rules.
Clause 190 states Parliament's expectations of the Board. These expectations are derived from sections 49 and 50 of the Crown Entities Act 2004, which impose duties on the Boards of statutory entities to (amongst other things) ensure that the entity acts consistently with its functions and that it performs its functions in a manner consistent with the spirit of service to the public.
Clause 191 prohibits the Minister from appointing to the Board, or concurring in appointing to the Board, any person to whom subclause (1) applies. The restrictions are similar to those that apply to people appointed as members of Crown entities.
Clause 192 provides that the powers, functions, and duties of the Board are not affected by a vacancy in its membership, and that the validity of a Board member's actions is not affected by flaws in that person's appointment.
Clause 193 protects the actions of the Board from being challenged on the grounds that it did not comply with Board procedures.
Clause 194 provides an overview of the role of the Managing Director (which is mainly provided for in the Agreement).
Subpart 2—General matters relating to Authority
Clause 195 provides an overview of the establishment, functions, and powers of the Authority. Although the Authority is not a Crown entity, and is not subject to the Crown Entities Act 2004, it is subject to broadly equivalent financial and accountability controls.
Clause 196 requires the Authority to promptly inform the Minister of any regulatory decision that affects or is likely to affect—
The Authority must also provide the Minister with certain information on request.
Clause 197 requires the Authority to comply with any written request by the Minister of Finance for information about the operations and performance of the Authority or its subsidiaries.
Clause 198 requires the Authority to supply, at the written request of the Secretary to the Treasury, information about the operations and performance of the Authority or its subsidiaries. The Secretary may only request information under this clause if it is for any of the purposes specified in subclause (2).
Compliance with directions
Clause 199 requires the Authority to give effect to any written direction from the Ministerial Council that is about a matter of government policy.
Review of operations
Clause 200 provides for the review of the operations or performance of the Authority or any of its subsidiaries by the Ministerial Council, the Minister, or the Australian Minister.
Employees and others
Clause 201 prohibits a person from disclosing information obtained solely as a result of being—
an employee of the Authority:
a contractor of, or person acting under delegation from, the Authority:
a member of a Board Committee, or expert advisory committee.
Clause 202 makes it an offence for an employee of the Authority to intentionally use his or her position to gain an improper advantage or to cause detriment to the Authority.
Immunities, indemnities, and insurance
Clause 203 provides that clauses 204 to 207 apply to former or current senior officers, members of Board committees, members of expert advisory committees, and employees of the Authority. A senior manager is a person who makes or participates in making decisions that affect the whole or a substantial part of the operations of the Authority, or who has the capacity to significantly affect the Authority's financial standing.
Clause 204 provides that a person specified in clause 203 is not liable for the liability of the Authority merely because he or she is such a person.
Clause 205 provides a person referred to in clause 203 with immunity from criminal and civil proceedings for any act or omission during the course of the operations of the Authority. The immunity does not apply to acts or omissions done in bad faith.
Clause 206 allows the Authority to indemnify any person referred to in clause 203.
Clause 207 authorises the Authority to provide insurance for any person referred to in clause 203.
Clause 208 bars civil and criminal proceedings against the Authority for any act or omission in the course of the exercise or intended exercise of its functions. The immunity does not apply—
Clause 209 acknowledges that, despite clause 208, the Authority is subject to the Health and Safety in Employment Act 1992, but limits those who can be prosecuted under that Act to Board members resident in New Zealand and others working for the Authority primarily in New Zealand.
Clause 210 contains presumptions about documents on which the seal of the Authority is imprinted.
Clause 211 sets out presumptions about documents purported to be signed by the Managing Director.
Subpart 3—Financial and associated matters
Clause 212 provides that the Authority must not borrow or amend the terms of a borrowing except in accordance with the Rules. Subclause (2) specifies other activities that are subject to the same restrictions.
Clause 213 provides that the Authority must not give a guarantee to, or indemnify, another person except in accordance with the Rules. (This clause does not apply to an indemnity given under clause 206.)
Clause 214 restricts the Authority's involvement in derivative transactions (as defined in subclause (2)).
Clause 215 contains requirements relating to the Authority's banking practices.
Clause 216 restricts the circumstances in which the Authority may acquire securities.
Clause 217 restricts the Authority's involvement in other entities such as companies, partnerships, trusts, and unincorporated joint ventures.
Clause 218 requires the Authority to ensure that none of its subsidiaries—
Clause 219 requires Board members to ensure that the annual accounting period of any of the Authority's subsidiaries is the same as the financial year of the Authority.
Clause 220 requires the Authority keep trust money in a separate bank account and to promptly pay into that account any trust money received.
Clause 221 allows the Authority to invest trust money but only in accordance with the Rules.
Clause 222 exempts the income of the Authority from income tax.
Clause 223 describes how goods and services acquired by the Authority are to be treated for the purpose of determining the Authority's input tax under the Goods and Services Tax Act 1985.
Clause 224 explains the Authority's reporting obligations under Article 8 of the Agreement and how the Authority is to discharge those obligations in New Zealand and Australia.
Statement of intent
Clause 225 requires the Board to prepare a statement of intent for the Authority before the start of each financial year.
Clause 226 explains Parliament's expectation that the Board will ensure that the Authority complies with its statement of intent. This reflects the duty imposed on members of Crown entities under section 49 of the Crown Entities Act 2004.
Clause 227 provides that the Ministerial Council may, after consulting the Board, direct the Board to amend the Authority's statement of intent. A direction to amend a statement of intent must be presented to the House of Representatives and be gazetted as soon as practicable.
Clause 228 requires the Board to amend the statement of intent if certain circumstances apply (for example, if the information contained in it is substantially misleading).
Clause 229 requires that the statement of intent, and every amendment made to it, must—
Clause 230 acknowledges that, under the Agreement, the Board is required to prepare an annual report for the Authority for each financial year and provide it to the Ministerial Council.
Clause 231 requires that the Authority's annual report must be presented by the Minister to the House of Representatives within the time specified and be published by the Authority on its Internet site within 10 working days after the annual report is received by the Ministerial Council.
Clause 232 appoints the Auditor-General as an auditor of the Authority and each of its subsidiaries, and acknowledges that the Australian Auditor-General is also appointed (under the Australian Act) as an auditor of the Authority.
Keeping accounting records
Clause 233 requires the Authority to maintain and keep proper accounting records.
Clause 234 provides that a senior officer commits an offence if he or she intentionally contravenes the requirement to keep proper accounting records.
Clause 235 makes it an offence for a person to knowingly—
refuse or fail to produce information as required under this Part or the Rules; or
resist or obstruct any person who is carrying out any function under this Part or the Rules; or
make false representations about his or her authority under this Part or the Rules; or
give false or misleading information in response to a requirement under this Part or the Rules.
Subpart 5—Board members and other senior officers
Board member conflict of interest
Clause 236 describes the obligations of a Board member in a conflict of interest situation. These reflect the obligations on members of Crown entities.
Clause 237 requires a Board member to disclose any material personal interest and specifies the matters that must be disclosed.
Clause 238 allows the Board to permit any member with a material personal interest to participate in a matter (despite any contravention of clause 236) if the Board is satisfied that it is in the public interest.
Clause 239 requires that the Ministerial Council is notified as soon as practicable of any failure by a Board member to comply with clause 236. A failure to comply with clause 236 does not affect the validity of the relevant act or matter.
Clause 240 provides for the Authority to avoid an act done in breach of the provisions about conflict of interest in certain circumstances.
Duties of senior officers
Clause 241 provides that the duties of senior officers set out in clauses 242 to 246 apply regardless of where the senior officer is located at the time of the act or omission.
Clause 242 requires senior officers to act with honesty and integrity when carrying out their duties as senior officers.
Clause 243 requires senior officers not to contravene, or agree to the Authority contravening, Parts 1 to 5, the Australian Act, or the Rules.
Clause 244 requires senior officers to carry out their duties with care, diligence, and skill.
Clause 245 provides that senior officers must—
exercise their powers and carry out their duties in good faith and for a proper purpose:
not pursue their own interests at the expense of the Authority's interests:
not use their position to gain an improper advantage or cause a detriment to the Authority.
Clause 246 provides that senior officers and former senior officers must not misuse any information that they have obtained solely as a result of being, or having been, a senior officer.
Criminal consequences of failing to comply with duties
Clause 247 makes it an offence for a senior officer to contravene certain duties referred to in clauses 245 and 246.
Clause 248 provides that the Finance Minister may require a person to give all reasonable assistance in connection with criminal proceedings under clause 247. The criteria in subclause (2) must be satisfied before assistance is required. Information provided under this clause may not be used in proceedings as evidence against the person who provided assistance.
Civil consequences of failing to comply with duties
Clauses 249 to 254 set out a civil penalty regime in relation to a breach of duties by senior officers. The regime is broadly equivalent to the civil penalty regime provided in Part 2 relating to regulatory matters.
Clause 249 provides that the Minister or the Finance Minister may apply to the High Court for a civil penalty order against a senior officer or former senior officer.
Clause 250 provides that the High Court may order a person to pay a civil penalty if the Court is satisfied that—
the person has breached any of the duties set out in clauses 243 to 246; and
the breach is serious or materially prejudices the interests of the Authority or the Authority's ability to pay its creditors.
The maximum civil penalty is 2 000 penalty units, and is payable to the Crown.
Clause 251 states how and when an application for a civil penalty may be made, and provides for procedural matters.
Clause 252 states the extent to which the Authority may be involved in proceedings for a civil penalty order.
Clause 253 provides relief from liability, in certain circumstances, for a person against whom civil penalty proceedings have been commenced under clause 249.
Clause 254 allows the Finance Minister to require a person to give all reasonable assistance in connection with an application for a civil penalty under this Part.
Disqualification for breach of duty
Clause 255 provides that the High Court may make a disqualification order against a senior officer or former senior officer.
A disqualification order lasts up to 10 years. It must disqualify a person from being a Board member and may do any or all of the following:
disqualify the person from being a promoter or a director of a company in New Zealand:
prohibit the person from involvement in the management of a company in New Zealand:
disqualify the person from being a member of any Crown entity.
A breach of a disqualification order is an offence.
Clause 256 provides for a person who is subject to a disqualification order to apply to the Court for the order to be quashed or amended.
Clause 257 provides for the effect of disqualification under equivalent provisions of the Australian Act.
Clause 258 provides for an application to be made to the High Court for a compensation order against a senior officer or former senior officer if—
Clause 259 provides that an application for compensation must be made no later than 6 years after the alleged breach.
Civil liability of others involved
Clause 260 describes the liability of a person who is involved in the breach by a senior officer of any of the duties specified in clauses 245 or 246.
Defence in criminal or civil penalty proceedings
Clause 261 provides a defence to a senior officer or former senior officer who is proceeded against for a breach of duty. The fact that the person relied on information and advice given by employees of the Authority, professional advisers, or other specified persons is a defence only if the person acted in good faith, made proper inquiries as circumstances required, and had no knowledge that the reliance was unwarranted.
General relief from civil liability
Clauses 262 provides for when a court may relieve a person from liability in civil proceedings under this Part.
Restriction on use of evidence
Clause 263 provides that evidence given by a person in proceedings against that person for a civil penalty may not be used in criminal proceedings against that person.
Relationship between criminal and civil penalty proceedings
Clause 264 bars proceedings for a civil penalty under this Part against a person in relation to particular conduct if there are already proceedings underway against that person for a declaration of breach or for a pecuniary penalty under the Australian Act in respect of the same conduct.
Clause 265 bars criminal proceedings under this Part against a person in relation to particular conduct if criminal proceedings against the person under the Australian Act in respect of the same conduct are underway or have been completed.
Clause 266 allows criminal proceedings for an offence under this Part to commence against a person even if—
proceedings in New Zealand for a civil penalty under this Part have commenced against the person in respect of the same conduct; or
proceedings in Australia for a declaration of breach or for a pecuniary penalty under the Australian Act have commenced against the person in respect of the same conduct.
Any civil penalty proceedings that have commenced against a person under this Part must be stayed if criminal proceedings are commenced against the person in respect of the same conduct.
Clause 267 describes the effect of the withdrawal of proceedings on any limitation period applying to subsequent proceedings.
Clause 268 clarifies that nothing in clauses 264 to 267 affects the abuse of process jurisdiction of any court. This is important where, for example, a person has been acquitted in Australia and charges relating to the same conduct are commenced in New Zealand.
Regulations, and transitional and miscellaneous provisions
Clause 269 is a regulation-making power relating to Article 12 of the Agreement which is about departures from the Scheme. This Article provides that either party may exclude or modify the application of the Scheme to specified products or classes of products (referred to in this clause as excluded products) having regard to
“exceptional public health, safety, third country trade, environmental or cultural factors that affect that Party”. If a product is an excluded product, it will have to be regulated outside the Scheme by regulations made by the relevant country. This clause authorises the making of those regulations, and in particular provides for—
aspects of the Scheme to be applied, with or without modification, to excluded products; and
regulations to provide an alternative way of regulating excluded products.
Clause 270 authorises the making of regulations requiring the payment of fees and charges for any functions performed by the Authority that are outside the scope of the Scheme.
Clause 271 provides for temporary or transitional regulations to be made that are necessary or expedient to fully implement the Scheme in New Zealand. The main transitional measures are spelt out in subpart 2, but this clause allows regulations to be made to help ensure a smooth transition to the new Scheme.
Clause 272 contains standard provisions providing for the making of regulations that do not fall within any category of regulations already provided for.
Subpart 2—Transitional provisions relating to Scheme
The way the transitional provisions for the regulatory aspects of the Scheme work is broadly as follows. Products and activities that were lawful before the Scheme starts will be deemed to have been granted a transitional approval by the Authority on the day the Scheme starts. The effect of a transitional approval is to largely maintain the legal status quo for the product or activity to which it relates. This means that if, under the Medicines Act 1981 (the former Act), a product could be lawfully supplied subject to certain conditions, then after the start date the product can lawfully continue to be supplied as long as those conditions are met. A failure to comply with the conditions will be dealt with as it would have been under the former Act.
If an application is pending under the former Act at the start date (a pending application), the Authority must consider the application in accordance with the former Act (unless the application is withdrawn or lapses). The Authority may then issue a transitional approval. The transitional approval will operate in the same way as transitional approvals that are deemed to have been granted.
Transitional approvals operate only in New Zealand and only during the transition period. The transition periods for different types of products and activities will be set by the Rules. Transitional approvals will be subject to the provisions of the former Act (and any regulations made under it) identified in the Rules, but may also be subject to certain applicable rules. Holders of transitional approvals can apply for approvals granted in accordance with the Rules (Scheme approvals) during the transition period. A Scheme approval will be effective in both New Zealand and Australia, and will be subject to Parts 1 to 5 and the Rules and Orders.
Clause 273 provides an outline of the transitional provisions.
Clause 274 sets out definitions of terms used in subpart 2 of this Part.
Clause 275 provides for the saving of the former Act (and regulations made under it) and describes how to apply that Act after the Scheme starts. For instance, references to the Minister in the former Act must be read as if they were references to the Authority, because the Authority will take over the functions of the Minister when applying that Act during the transition period.
Clause 276 provides that transitional approvals are subject to applicable fees and charges prescribed by Rules.
Medicines: transitional approvals
Clauses 277 and 278 provide for transitional approvals to replace existing consents (ie, consents given under any of sections 20, 23, or 24(3) of the former Act) and existing approvals (ie, given under section 24D of the former Act) relating to medicines.
Related products: transitional approvals
Clauses 279 and 280 provide for transitional approvals to replace existing consents for related products.
Medicines and related products: material changes
Clauses 281 to 283 provide for transitional approvals to be granted by the Authority in relation to applications under section 24 of the former Act, which is about changed medicines.
Medicines and related products: pending applications
Clauses 284 to 288 deal with what happens to a range of different pending applications relating to medicines and related products. Applications may be withdrawn so that they can be dealt with immediately by the Authority under the Scheme. Otherwise, they will generally be dealt with by the Authority in accordance with the former Act. There are provisions for treating certain applications as lapsed, and provisions about refunding fees when an application is withdrawn.
Medicines: existing exemptions under former Act
Clauses 289 and 290 provide for the continuation, for 6 months, of certain exemptions applying to authorised prescribers and medical practitioners.
Medicines: clinical trials approved under former Act
Clauses 291 to 294 provide for transitional approvals for clinical trials approved under the former Act.
Medicines: pending application for approval of clinical trial
Clauses 295 to 297 provide for the Authority to grant transitional approvals in relation to pending applications for clinical trials.
Medicines: transitional approvals for existing licences
Clauses 298 to 300 provide for transitional approvals for existing licences relating to the manufacture and packing of medicines.
Medicines: pending applications for licences
Clauses 301 to 304 provide for the Authority to grant transitional approvals in relation to pending applications for a licence to manufacture or a licence to pack medicines.
Medical devices: transitional approval
Clauses 305 to 309 set out a system for providing transitional approvals for medical devices. During the establishment period (which is after the Authority is established but before the Scheme comes into force), if the sponsor of a medical device provides certain declarations and information to the Authority, then on the start date a transitional approval will be deemed to have been granted in respect of the medical device.
Medical devices: exemptions
Clause 310 provides an exemption from the need to obtain a transitional approval for certain medical devices.
Dietary supplements: transitional approvals
Clauses 311 to 315 set out a system for providing transitional approvals for dietary supplements. Dietary supplements were not regulated under the former Act. During the establishment period, if the sponsor of a dietary supplement that does not have an existing consent, existing approval, or existing licence, provides certain declarations and information to the Authority, then on the start date a transitional approval will be deemed to have been granted in respect of that dietary supplement.
Newly designated therapeutic products: transitional approvals
Clauses 316 to 319 set out a system for providing transitional approvals for newly designated therapeutic products, which are those therapeutic products not already dealt with in this subpart, and which, though lawfully supplied before the start date, were not regulated under the former Act. During the establishment period, if sponsors of those products provide certain declarations and information to the Authority, then on the start date a transitional approval will be deemed to have been granted in respect of the product.
Clause 320 describes what happens after the start date if a notice is issued before the start date under section 36(1) or (3) of the former Act.
Clause 321 provides that advertisements that were lawful to publish under the former Act may continue to be lawfully published after the start date, but only for a limited period.
Clauses 322 and 323 provide for appeals against decisions made either under the former Act, or by the Authority in accordance with the former Act, after the start date.
Clause 324 provides that offences under the former Act or regulations, whether committed before or after the start date, must be investigated and prosecuted, and any penalties must be imposed, as if the former Act had not been repealed.
Clause 325 identify the offences and civil penalties under Parts 1 to 5 that do not apply in respect of holders of transitional approvals. These offences and civil penalties do not apply because the equivalent provisions under the Medicines Act 1981 will apply instead.
Clauses 326 and 327 provide that proceedings that were barred before the commencement of this subpart remain barred, and that any proceedings commenced before the subpart comes into force may be continued and completed as if the former Act were still in force.
Subpart 3—Transitional provisions relating to employees
Clause 328 provides for the transfer of Medsafe employees to the Authority on the transfer date.
Clause 329 provides that the transfer does not break an employee's continuity of service.
Clause 330 provides that there is no compensation payable for any technical redundancy that may occur as a result of the transfer.
Clause 331 preserves the right of Medsafe employees who were contributors under the Government Superannuation Fund Act 1956 to remain in that scheme.
Subpart 4—Transitional provisions relating to assets
Clause 332 provides that the purpose of clauses 333 and 334 is to enable the assets and liabilities of Medsafe to be transferred to the Authority using the mechanisms provided in the Health Sector (Transfers) Act 1993.
Clause 333 amends the Health Sector (Transfers) Act 1993 so that Medsafe assets and liabilities will be able to be transferred to the Authority under that Act.
Clause 334 provides that the transfer may not take place unless the Ministerial Council has agreed to the proposal.
Subpart 5—Miscellaneous provisions
Clause 335 provides that the enactments in Schedule 3 are amended. These amendments relate to the establishment of the Authority.
Clause 336 provides that Schedule 8 sets out other consequential amendments that are consequential upon the enactment of Parts 1 to 5. Schedules 4 to 7 relate only to Parts 5 and 6, but Schedule 8 contains amendments that relate to all Parts of this Bill.
Clause 337 explains the purpose of Parts 6 and 7 and notes that those Parts relate to the law relating to medicines at the consumer end of the supply chain.
Clause 338 provides an outline of Parts 6 and 7.
Clause 339 sets out definitions of a large number of terms used in Parts 6 and 7.
Application and administration
Clause 340 sets out the application of Parts 6 and 7 and clarifies the relationship between those Parts and Parts 1 to 5. The requirements, obligations, and restrictions imposed on activities undertaken with medicines by Parts 6 and 7 are in addition to those imposed on activities undertaken with therapeutic products by Parts 1 to 5.
Clause 341 provides that Parts 6 and 7 bind the Crown.
Clause 342 sets out how certain activities undertaken under Parts 6 and 7 (such as supplying and dispensing medicines) apply in the context of the employee and employer relationship.
Substantive provisions relating to medicines
Subpart 1—Controlled activities
Clause 343 provides an overview of subpart 1, which deals with controlled activities. Controlled activities are defined in clause 339 as activities that are prohibited under subpart 1 of Part 7 unless undertaken by a person otherwise authorised by or under Parts 6 and 7.
In general terms, a person commits an offence if that person undertakes any of the following controlled activities without being authorised by or under Parts 6 and 7:
supplying scheduled medicines by wholesale:
supplying scheduled medicines other than by wholesale:
supplying medicines by auction:
supplying medicines by vending machine:
prescribing prescription medicines:
administering prescription medicines:
possessing prescription medicines:
operating a pharmacy.
Clause 343(4) provides that, despite being otherwise authorised to undertake an activity by or under Parts 6 and 7, a person may still be restricted from undertaking that activity under—
Supplying scheduled medicines by wholesale
Clauses 344 to 346 relate to the supply of scheduled medicines by wholesale. Supplying scheduled medicines by wholesale is a controlled activity, and a person must not supply scheduled medicines by wholesale unless the person—
is authorised to do so by the regulations (clause 345):
holds a licence to do so (whether as a fixed or mobile vendor) and is complying with the terms and conditions imposed by or under the licence (clause 346(a) and (c)):
is an employee of a person who holds a licence to do so as a fixed vendor and is complying with the terms and conditions of the licence (clause 346(b)):
is deemed to hold a licence to supply scheduled medicines by wholesale as a fixed vendor under clause 518(3), being a licence that has been issued under the Misuse of Drugs Act 1975 to sell by wholesale a controlled drug that is also a prescription medicine (clause 346(d)).
A person who supplies scheduled medicines by wholesale other than under the authority of clause 345 or 346 commits an offence (clause 344(2)).
Supplying scheduled medicines other than by wholesale
Clauses 347 to 357 relate to the supply of medicines other than by wholesale. Supplying scheduled medicines other than by wholesale is a controlled activity.
Clause 347 makes it an offence to supply a scheduled medicine other than by wholesale without doing so under the authority of any of clauses 348 to 356.
Clause 348 provides that a prescriber (being an authorised prescriber or a designated prescriber) may supply scheduled medicines other than by wholesale to—
a patient under his or her care or a person who has care of his or her patient; or
another prescriber at his or her request; or
to another prescriber's patient, or a person who has care of that prescriber's patient, at the other prescriber's request.
Clause 349(1) provides that a pharmacist may supply scheduled medicines other than by wholesale—
Clause 349(2) clarifies that, despite being authorised to supply scheduled medicines other than by wholesale under subclause (1), there are certain other factors that need to be complied with when supplying prescription medicines or pharmacist-only medicines. For example, prescription medicines need to be supplied in accordance with a prescription or standing order (clause 349(2)(a)).
Clause 350 provides that a veterinarian may supply scheduled medicines other than by wholesale for the treatment of an animal under his or her care or an animal under the care of another veterinarian.
Clauses 351 to 353 describe the limited circumstances in which an employee working with a prescriber, pharmacist, or veterinarian may supply scheduled medicines other than by wholesale.
Clause 354 provides that a person may supply scheduled medicines other than by wholesale if the person is deemed to hold a licence under clause 518(4) and the person complies with the licence.
Clause 355 sets out the circumstances in which a person may supply pharmacy medicines other than by wholesale under a licence and as an employee of a licence holder of that kind.
Clause 356 provides that a person may supply a scheduled medicine other than by wholesale if authorised to do so by regulations or a standing order.
Clause 357 provides that supply of a scheduled medicine, under clause 456, to a medicines control officer is not supply other than by wholesale for the purposes of clause 347.
Standing orders for supply of scheduled medicines other than by wholesale
Clause 358(1) allows an authorised prescriber to issue a standing order authorising a specified class of persons to supply prescription medicines or pharmacist-only medicines other than by wholesale to any specified class of persons, in certain circumstances. Similar powers are provided to veterinarians under subclause (2).
Supplying medicines by auction
Supplying medicines by auction is also a controlled activity. Clause 359 makes it an offence for a person to supply medicines by auction.
Supplying medicines by vending machine
Clause 360 makes it an offence to undertake the controlled activity of supplying medicines by vending machine unless the person is authorised to so by the regulations.
Clause 361 makes it an offence for a person to undertake the controlled activity of dispensing medicines other than under the authority of any of clauses 362 to 368.
Clauses 362 to 366 describe the circumstances in which medicine may be dispensed by—
prescribers, who may dispense medicines to the same persons they may supply scheduled medicines to other than by wholesale (clause 362):
pharmacists, who may dispense a medicine in the course of pharmacy practice (clause 363):
dispensary technicians, pharmacy graduates, pharmacy students, and pharmacy technicians, who may dispense medicines in a pharmacy, but if the medicine is a prescription medicine, only when under the direct supervision of a pharmacist (clause 364):
veterinarians, who may dispense medicines for the purposes of the treatment of an animal under his or her care or under the care of another veterinarian (clause 365):
employees who work with veterinarians, who may dispense medicines in certain limited circumstances (clause 366).
Clause 367 provides that a person may dispense medicines if authorised to do so by the regulations.
Clause 368 describes the circumstances in which a licence holder and the licence holder's employees may dispense medicines by using an automated dispensing machine.
Prescribing prescription medicines
Prescribing prescription medicines is a controlled activity. Clause 369(1) makes it an offence for a person to prescribe prescription medicines unless the person is a prescriber or a veterinarian. Clause 369(2) to (4) provides that—
authorised prescribers may only prescribe prescription medicines under the authority of clause 370; and
a designated prescriber may only prescribe prescription medicines under the authority of clause 371; and
veterinarians may only prescribe prescription medicines under the authority of clause 372.
Clause 370 describes the circumstances in which an authorised prescriber may prescribe prescription medicines. Authorised prescribers are limited to prescribing prescription medicines for the treatment of patients—
under the prescriber's care or the care of another prescriber at that prescriber's request; and
who are in New Zealand or are usually permanently resident in New Zealand, but are outside New Zealand for a limited period.
Under clause 371(1), a designated prescriber is subject to the same restrictions as an authorised prescriber. In addition, a designated prescriber may only prescribe prescription medicines that are specified in—
Clause 372 describes the circumstances in which veterinarians may prescribe prescription medicines. These are limited to the treatment of an animal under the veterinarian's care or under the care of another veterinarian, at that veterinarian's request.
Clause 373 relates to the requirements for prescribing notices issued by prescribing authorities. A prescribing authority (being a health authority that has designated prescribers registered with it) must, under clause 373(1), issue a prescribing notice in the Gazette, specifying—
Clause 373(2) provides that subclause (1) does not apply to a prescribing authority if regulations have been made under clause 501. Regulations are made under clause 501 on the recommendation of the Minister, in circumstances where he or she is dissatisfied with the outcome of exercising his or her powers under Schedule 4.
Clause 373(3)(a) restricts the types of prescription medicines that may be included in a prescribing notice to prescription medicines that are directly related to the designated prescribers' scope of practice. Clause 373(3)(b) provides that the prescribing authority may only include a prescription medicine in a prescribing notice after considering all relevant public health and safety concerns. Clause 373(4) clarifies that a prescribing notice may impose conditions or restrictions on the circumstances in which a designated prescriber may prescribe prescription medicines listed in a prescribing notice. Clause 373(5) enables a prescribing notice to include a complete prohibition on prescribing certain prescription medicines in certain circumstances.
Clause 374 requires a prescribing authority to review a prescribing notice no later than 6 months after it is issued. A review must consider—
whether a prescription medicine that is not specified in a prescribing notice should be included; and
whether a prescription medicine that is specified in a prescribing notice should no longer, because of public health and safety concerns, continue to be included.
Clause 375 requires a prescribing authority to—
make available for inspection a consolidated list of prescription medicines that designated prescribers registered with the prescribing authority may prescribe; and
ensure that copies of the list may be bought at reasonable cost.
Clause 376 enables the Minister to use the powers set out in Schedule 4 in relation to a prescribing authority's obligations under clauses 373 to 375.
Administering prescription medicines
Administering prescription medicines is also a controlled activity. Clause 377 makes it an offence for a person to administer prescription medicines in the knowledge that he or she is not authorised to do so under any of clauses 378 to 380.
Clauses 378 and 379 describe the circumstances in which prescribers and veterinarians may administer prescription medicines.
Clause 380 permits a person to administer prescription medicine if—
directed by the prescriber or veterinarian who prescribed the medicine; or
authorised by the regulations; or
authorised under a standing order issued under clause 381.
Standing orders authorising administering certain medicines
Clause 381 enables authorised prescribers and veterinarians to issue standing orders allowing a specified class of persons to administer, to a specified class of persons in specified circumstances, specified prescription medicines or pharmacist-only medicines.
Possessing prescription medicines
Possessing prescription medicines is a controlled activity. Clause 382 makes it an offence for a person to possess prescription medicines without a reasonable excuse or sufficient authority.
Clause 383(1) describes some of the circumstances in which a person has a reasonable excuse for possessing prescription medicines. Clause 383(2) provides that the fact that a person did not know that a medicine was a prescription medicine is not, in itself, a reasonable excuse.
Operating a pharmacy is also a controlled activity. It is an offence, under clause 384, for a person to operate a pharmacy unless—
Subpart 2—Instruments prohibiting and restricting activities with medicines
Clause 385 provides an outline of subpart 2.
Clause 386 provides that, even if an activity is otherwise authorised under Parts 6 and 7, it may be restricted or prohibited in the limited circumstances provided for by a prohibition notice, restriction notice, or statement relating to dependency issued under this subpart.
Minister may prohibit certain activities
Clause 387 enables the Minister, if he or she believes there is a risk to public health and safety, to prohibit—
a specified prescriber or veterinarian from prescribing specified prescription medicines or a class or description of prescription medicines:
a specified person from undertaking any activity that he or she is otherwise authorised to undertake by or under Parts 6 and 7. This prohibition may be general or in relation to a specified medicine or class or description of medicine.
A prohibition notice issued under clause 387 must be notified in the Gazette. Under clause 387(3) a person who contravenes a prohibition notice commits an offence.
Clause 388 requires that a prohibition notice issued under clause 387 be made on the recommendation of—
The health authority or the Veterinary Council may conduct an inquiry in order to determine whether a recommendation should be made. The organisation conducting the inquiry have the powers set out in Schedule 5.
Clause 389 relates to restriction notices. A restriction notice may be issued by a Medical Officer of Health who has been authorised to do so by the Director-General under section 510. A restriction notice restricts prescribers and persons supplying medicines from prescribing or supplying a prescription medicine or pharmacist-only medicine to a named individual (the restricted individual).
Clause 390 makes it an offence for a person to knowingly prescribe or supply prescription medicines or pharmacist-only medicines to a restricted individual.
Clause 391 makes it an offence for a restricted individual to procure or attempt to procure a prescription medicine or pharmacist-only medicine from a person whom the restricted individual knows, or ought to know, is restricted from prescribing or supplying the medicine.
Clause 392 enables a restricted individual to appeal or to seek a review of a restriction notice in the manner set out in Schedule 6.
Statement relating to dependency
Clause 393 enables a Medical Officer of Health, who has been authorised by the Director-General under section 510, to issue a statement of dependency in respect of an individual's dependency on a prescription medicine or pharmacist-only medicine.
Clause 394 provides an outline of subpart 3. Subpart 3 contains provisions about the following types of licences:
licences to supply scheduled medicines by wholesale as fixed vendors:
licences to supply scheduled medicines by wholesale as mobile vendors:
licences to supply pharmacy medicines other than by wholesale:
licences to dispense medicines using automated dispensing machines:
licences to operate pharmacies.
Applying for licence
Clause 395 sets out who may apply for a licence.
Clause 396 sets out how an application for a licence must be made.
Contents of application
Clause 397 requires an applicant for a licence to supply or dispense medicines to specify in the application the type of medicines for which the licence is sought. An application for a licence to operate a pharmacy must include the particulars required by clause 421.
Clause 398 requires an application for a licence to contain sufficient information to enable a licensing authority to make a decision under clause 399. Clause 398(2) provides that the licensing authority may require further information from an applicant.
Granting of licence
Clause 399 specifies criteria that the licensing authority must be satisfied of before granting a licence. The criteria include, without limitation,—
that applicant is eligible to apply for a licence; and
that the applicant is not disqualified from holding a licence; and
that the application contains all requested information; and
that the applicant has sufficient knowledge of the obligations of the licence and the hazards associated with the medicines to which it will, if granted relate; and
that the premises and equipment the applicant proposes to use are adequate and suitable.
Clause 400 provides additional criteria in respect of which a licensing authority must be satisfied before granting a licence to supply pharmacy medicines other than by wholesale.
Refusal of licence
Clause 401 requires the licensing authority to give an applicant who is refused a licence—
a reasonable opportunity to be heard; and
the written reasons for refusal, if the applicant so requests.
Authority conferred on licence holder by licence
Clauses 402 to 406 describe the authority conferred on the holder of a licence to—
supply scheduled medicines by wholesale as a fixed vendor (clause 402):
supply scheduled medicines by wholesale as a mobile vendor (clause 403):
supply pharmacy medicines other than by wholesale (clause 404):
dispense medicines by using an automated dispensing machine (clause 405):
operate a pharmacy (clause 406).
Conditions of licence
Clause 407 relates to conditions imposed on a licence. Licence holders must, as a condition of every licence issued under Parts 6 and 7, continue to comply with the criteria referred to in clause 399. Conditions on a licence may be imposed by the licensing authority or by the regulations.
Clause 408 requires the licensing authority to provide, at the licence holder's request, written reasons explaining why a condition is imposed on a licence.
Clause 409 states that a condition of a licence takes effect from the date it is imposed. Clause 409(2) also enables the licensing authority to alter or cancel a licence if the licence holder fails to comply with a condition of the licence.
Suspending, cancelling, and disqualifying holding of licence
Clause 410 provides that if a licence holder gives materially false or misleading information in an application for a licence, the licence may be suspended and eventually cancelled.
Clause 411 requires the licensing authority to provide, at the request of a licence holder, written reasons for cancelling the licence.
Clause 412 sets out the powers of the court in respect of a licence holder who is charged with, or convicted of, an offence under Parts 6 and 7 or the regulations.
Clause 413 requires a licence holder, whose licence has been cancelled or endorsed by a court, to produce the licence as the court directs. Under clause 413(2), a person who fails to produce the licence commits an offence.
Duration of licence
Clause 414 states the duration of a licence. A licence remains in force for 1 year from the date on which it is granted, unless—
Clause 415 provides for the situation where—
Clause 416 requires a licence holder to surrender a licence if the licence holder has ceased to undertake the controlled activity to which the licence relates.
Register of licences and records of licensing authority
Clause 417 requires the licensing authority to keep a register of licences and any other registers or records required by the regulations.
Subpart 4—Operating pharmacies
Clause 418 provides an outline of subpart 4. The requirements placed on a licence to operate a pharmacy under subpart 4 are in addition to the requirements placed on licences generally under subpart 3.
Clause 419 defines what it means to hold an interest in a pharmacy for the purposes of subpart 4. A person holds an interest in a pharmacy if the person has, or acquires, a direct or indirect estate or interest in the pharmacy that affects the ownership, management, or control of the pharmacy practice carried on in the pharmacy.
Additional information for pharmacy licence
Clause 420 ensures that a licence to operate a pharmacy is granted only to applicants who meet the additional criteria specified in subclause (1), being that the applicant—
The criteria apply for the duration of a licence. A licence may be cancelled if the licensing authority is satisfied that the licence holder no longer meets those criteria.
Clause 421 enables the licensing authority to require additional information (over and above that referred to in clauses 397 and 398) from an applicant for a licence to operate a pharmacy.
Clause 422 sets out the circumstances in which a company may be granted a licence to operate a pharmacy. Those circumstances are limited and are the same as the circumstances that exist under the Medicines Act 1981 (as amended by the Medicines Amendment Act 2003).
Majority interest in pharmacy
Clause 423 sets out the circumstances in which an individual may be granted a licence to operate a pharmacy or hold a majority interest in a pharmacy. Those circumstances are limited and are the same as the circumstances that exist under the Medicines Act 1981 (as amended by the Medicines Amendment Act 2003).
Mortgagees in possession
Clause 424 provides that a mortgagee in possession of a pharmacy may be granted a licence to operate that pharmacy for a limited period of 3 months or as determined by the licensing authority.
Mandatory condition on pharmacy licence
Clause 425 imposes a mandatory condition on every licence to operate a pharmacy. A licence holder must not request or require a pharmacist who is employed or engaged in duties at a pharmacy to act in a way that is inconsistent with the pharmacist's professional or ethical standards of pharmacy practice.
Clause 426 enables the licensing authority to impose penalties on a licence holder who fails to comply with a condition imposed on the licence holder's licence.
Restrictions on operating and holding interests in pharmacies
Clause 427 provides that a prescriber must not hold an interest in a pharmacy unless he or she—
Clause 428 prohibits—
Fee on prescriptions
Clause 429 makes it an offence for a pharmacist, a person licensed to operate a pharmacy, or an operator or a manager of a pharmacy to give, offer, or agree to give to a prescriber or any other person any money or other consideration as a fee on prescriptions.
Subpart 5—Certain requirements, restrictions, and offences associated with medicines
Clause 430 provides an outline of subpart 5.
Security, storage, and premises
Clause 431 requires that a person who holds a licence to operate a pharmacy must keep prescription medicines and pharmacist-only medicines secure from public access. A person who contravenes that requirement commits a strict liability offence.
Clause 432 sets out requirements for the storage of scheduled medicines in a person's possession or charge and makes it a strict liability offence to contravene those requirements.
Clause 433 sets out requirements relating to the storage of scheduled medicines in unattended buildings or vehicles. Non-compliance with the requirements is an offence.
Clause 434 relates to premises whose condition may cause the deterioration or contamination of any medicine. A Medical Officer of Health may prohibit such premises from being used to store medicines. It is an offence not to comply with a notice issued under this clause.
Containers and packages
Clause 435 specifies requirements for containers used for supplying, storing, or transporting medicines. A person who contravenes those requirements commits a strict liability offence.
Clause 436 requires a person who is in possession of a medicine to ensure it is in a container that complies with the relevant provisions of Parts 6 and 7 and the regulations. Failure to ensure that the container complies with the relevant requirements is a strict liability offence. A defence in a prosecution for such an offence is available under clause 436(3).
Packing and preparing medicines
Clause 437 prohibits a person from, in the course of business, packing or preparing a medicine for use in a room or on a surface used for food or drink. A person who contravenes this provision commits a strict liability offence.
Clause 438 specifies how a person must deliver medicines for the purposes of supply other than by wholesale. A person who contravenes this provision commits a strict liability offence.
Disposal of medicines
Clause 439 requires a person to dispose of a medicine in the manner prescribed by the regulations (if any). A person who fails to dispose of a medicine in the prescribed manner commits a strict liability offence.
Clause 440 contains requirements about records that must be kept by a person who, in the course of business, supplies medicines. A person who contravenes the requirements commits a strict liability offence.
Clause 441 provides for circumstances when persons who supply medicines in the course of business must allow the inspection of, and provide when requested, records relating to supply.
Knowingly risking public health
Clause 442 provides that it is an indictable offence to knowingly risk public health by failing or refusing to comply with a provision of Parts 6 and 7 or the regulations.
Subpart 6—Enforcement and certain procedural matters
Clause 443 provides an outline of subpart 6.
Clause 444 provides definitions of important terms used in subpart 6, including article, evidential material, occupier, and place.
Medicines control officers
Clause 445 provides for the appointment of medicines control officers.
Clause 446 requires the Director-General to issue medicines control officers with an identification card. The card must state the provisions of Parts 6 and 7 that a medicines control officer is appointed to enforce and any restrictions on the medicines control officer's enforcement powers. Clause 446(4) requires a medicines control officer to produce his or her identification card for inspection—
Powers of entry, search, and seizure
Clause 447 enables a medicines control officer to enter a place (except a dwellinghouse or marae) at any reasonable time, to determine whether a person is complying with Parts 6 and 7. Clause 447(2) lists the powers that may be exercised on entry.
Clause 448 enables a medicines control officer or a member of the police to enter a place (other than a dwellinghouse or marae) if he or she has reasonable grounds to believe that—
Parts 6 and 7 are not being complied with; and
it is necessary in the interests of public health; and
it is not practicable to obtain a search warrant.
Clause 449 empowers a District Court Judge, Community Magistrate, Justice of the Peace, or Registrar to issue a search warrant on application, if he or she is satisfied that—
there are reasonable grounds to believe that there is evidential material at the place to which the warrant relates; or
a search is unable to be conducted or completed under clause 447 or 448 for any reason.
Clause 450(1) lists the powers that may be exercised under a search warrant issued under clause 449 (those powers include the ability to use reasonable force to enter the place or open any thing). The rest of clause 450 sets out certain matters relating to executing a search warrant, including, for example, the requirement to leave a written inventory of things seized.
Matters associated with search
Clause 451 provides that an occupier whose place is being searched may observe the search as long as he or she does not impede it.
Clause 452 relates to the use of electronic equipment found at a place during a search. Medicines control officers and members of the police must take care not to damage the equipment or corrupt information stored on it.
Clause 453 provides that documents seized from a place must, if practicable, be copied before the original is removed.
What happens to seized property
Clause 454 provides for the disposal of things that have been seized.
Clause 455 enables a medicines control officer to apply for an order to retain for more than 6 months any thing that has been seized under this subpart.
Analysis of samples
Clause 456 sets out how a medicines control officer must obtain a sample for analysis other than under a search warrant.
Clause 457 contains provisions relating to the analysis of a sample and the certificate of the analyst.
Clause 458 provides for how a certificate of analysis may be admissible as evidence.
Clause 459 enables a court to order a person who is convicted of an offence (the defendant) to pay the fees and expenses of the testing or analysis.
Clause 460 makes it an offence for a person to willfully obstruct a medicines control officer or member of the police, or person assisting a medicines control officer or member of the police, who is exercising powers under this subpart.
False or misleading statement, declaration, or answer
Clause 461 makes it an offence for a person to knowingly—
make a false or misleading declaration, statement, or answer; or
create or produce a false of misleading document; or
create, produce, or make use of a document that is not genuine.
Powers of Director-General and Medical Officer of Health
Clause 462 enables the Director-General or a Medical Officer of Health to require, in certain circumstances, the production of any document or record.
Clause 463 makes it an offence to fail or refuse to produce a document or record required under clause 462.
Disclosure of information
Clause 464 provides for certain agencies to be able to disclose to each other information (that they are otherwise unable to disclose under information privacy principles 2 and 11 of the Privacy Act 1993)—
in order to ensure the health and well-being of persons using or dealing with medicines; or
for the purposes of maintaining the law, including the prevention, investigation, and detection of offences under Parts 6 and 7 and other listed enactments.
Matters relating to proceedings
Clause 465 states when an information may be laid under Parts 6 and 7 or the regulations and provides for matters that must be served with any summons issued.
Clause 466 provides for the service of documents in proceedings under Parts 6 and 7.
Clause 467 states a presumption that in proceedings, unless the contrary is proved, the contents of a container are the same as the description of its contents on the label.
Clauses 468 and 469 set out presumptions relating to—
Matters arising from conviction
Clause 470 provides for the forfeiture of certain articles of a person being convicted of an offence under Parts 6 and 7 or the regulations.
Clause 471 requires the Court to send the particulars of the conviction of a health practitioner or veterinarian to the appropriate health authority, in the case of a health practitioner, or the Veterinary Council, in the case of a veterinarian.
Matters effecting liability
Clause 472 specifies which offences under Parts 6 and 7 are strict liability offences and explains key aspects of the prosecution and defence in respect of strict liability offences.
Clause 473 specifies the liability of an employer for the actions of an employee who commits an offence under Parts 6 and 7 or the regulations and sets out the defence available to the employer in such proceedings.
Clause 474 specifies the liability of directors and persons involved in the management of a body corporate where the body corporate contravenes Parts 6 and 7.
Clause 475 provides protection from civil or criminal liability for persons acting under any of the functions conferred by or under Parts 6 and 7.
Clause 476 provides an outline of subpart 7.
Appeals against decision of Medical Officer of Health in respect of premises
Clause 477 sets out how a person may appeal to a District Court against a decision made under section 434 that prohibits the use of the premises for certain activities.
Clause 478 enables a person to appeal to the District Court against licensing decisions of the licensing authority.
Clause 479 provides for the status of a decision of the licensing authority pending the determination of an appeal.
Clause 480 sets out procedural matters in respect of an appeal to the District Court.
Clause 481 provides for a further appeal to the High Court, but only on a question of law and with the leave of the Court.
Clause 482 provides for the status of the decision of the District Court pending the determination of an appeal against that decision to the High Court.
Clause 483 provides that the appropriate rules of Court apply to the hearing of appeals.
Clause 484 prevents a person from being deprived of his or her right of appeal merely because the person has accepted a licence or complied with a condition or requirement of a licence.
Clause 485 requires the licensing authority to implement the decision of the Court on appeal.
Subpart 8—Restrictions on xenotransplantation
Clause 486 provides a brief outline of the matters dealt with in subpart 8.
Clause 487 defines—
biological material; and
Clause 488 makes it an offence to conduct xenotransplantation other than as provided under section 489 or 490.
Clause 489 empowers the Minister to authorise a person or persons to conduct a particular xenotransplantation. The Minister's authorisation must be published in the Gazette and presented to the House of Representatives.
Clause 490 provides that xenotransplantation may be authorised by Order in Council on the recommendation of the Minister.
Clause 491 sets out the criteria that must be satisfied before the Minister makes a recommendation under clause 490. If the Minister is not satisfied that the criteria are being met, the Minister may obtain advice from persons whom he or she considers appropriately qualified.
Clause 492 sets out options available to the Minister for the purpose of obtaining advice on the applicability of the criteria referred to in clause 491.
Clause 493 allows a person to apply to the Minister requesting—
Clause 494 provides that the Crown is not liable to pay compensation for loss or damage arising from the restrictions imposed by clause 488.
Clause 495 states the enforcement powers that apply in relation to a prosecution for an offence under clause 488.
Clause 496 applies if the Director-General or a Medical Officer of Health reasonably suspects that a person possesses, in breach of Parts 6 and 7, an article for use in xenotransplantation. The Director-General or Medical Officer of Health may require that person to produce any document or record relating to the prohibited article.
Clause 497 makes an offence for a person to fail or refuse to produce any document or record required under clause 496.
Clause 498 provides for the expiry of subpart 8 on 31 December 2008. There is a power to extend that date by Order in Council.
Subpart 9—Regulations, Orders in Council, ministerial notices, and other instruments
Clause 499 authorises the making of regulations for the purposes specified in subclause (2).
Clause 499(2) includes a range of purposes associated with activities that are authorised under Parts 6 and 7. The regulations are made on the advice of the Minister obtained after consulting organisations and bodies likely to be substantially affected by the regulations.
Regulations designating designated prescribers
Clause 500 authorises the making of regulations designating certain health practitioners as designated prescribers.
Regulations relating to prescribing notices
Clause 501 authorises the making of regulations on the recommendation of the Minister, that—
revoke prescribing notices relating to a particular class of designated prescribers:
prescribe prescription medicines that designated prescribers are authorised to prescribe, and the circumstances in which those prescription medicines may be prescribed:
prescribe conditions or restrictions on the circumstances in which certain prescription medicines may be prescribed:
prohibit the prescribing of certain prescription medicines.
Before recommending the making of regulations under clause 501, the Minister must undertake the steps set out in Schedule 4 and must be satisfied that there is a risk to public health and safety.
Regulations designating authorised prescribers
Clause 502 authorises the making of regulations for designating health practitioners (who are already designated prescribers) as authorised prescribers.
Regulations relating to qualifications, training, and competence of prescribers and veterinarians when prescribing
Clause 503 authorises the making of regulations in respect of qualifications, training, and competence requirements of prescribers and veterinarians when prescribing prescription medicine.
Regulations relating to pharmacy ownership and operation
Clause 504 authorises the making of regulations to provide exemptions from, or modifications of, the restrictions on pharmacy ownership and operation set out in clause 422(1) (in the case of a company) and clause 423(1) (in the case of a person other than a company). The regulations are made on the recommendation of the Minister. The Minister must not recommend the making of the regulations unless he or she considers that the proposed regulations—
Approval and appointments relating to laboratories and analysts
Clause 505 provides that the Minister may approve by notice in the Gazette a laboratory for the purposes of Parts 6 and 7.
Clause 506 provides that the Minister may appoint, by notice in the Gazette, an analyst in charge of an approved laboratory.
Clause 507 authorises an analyst appointed by the Minister under clause 506 to authorise a person to act as an analyst for the purposes of Parts 6 and 7.
Appointment of advisory and technical committees
Clause 508 provides for the appointment of an advisory or technical committee to advise the Minister on matters dealt with in Parts 6 and 7 or the regulations.
Certain powers of Director-General
Clause 509 enables the Director-General to publish, for the purpose of protecting the public, statements in relation to any activities undertaken with medicines under Parts 6 and 7.
Clause 510 provides that the Director-General may authorise a Medical Officer of Health to issue restriction notices or statements relating to dependency.
Subpart 10—Scheduled medicines and referring to medicines
Clause 511 defines the Standard for Uniform Scheduling of Medicines and Poisons (SUSMP) as the electronic register containing the Managing Director's listings of scheduled medicines and poisons, including any additions to that register.
Clause 512 provides definitions of prescription medicine, pharmacist-only medicine, and pharmacy medicine. Each type of medicine requires—
Clause 513 enables the Minister to declare a medicine to be a prescription medicine, pharmacist-only medicine, or pharmacy medicine. The declaration must be made by notice in the Gazette.
Clause 514 enables the Minister to depart from the listing of a scheduled medicine in the SUSMP by notice in the Gazette.
Clause 515 requires the Director-General to keep an Internet register of all declarations and departures of scheduled medicines made under clauses 513 and 514.
Clause 516 provides that a certified copy of the SUSMP, or an extract of it, is prime facie evidence of the matters contained in it. Evidence of a Gazette notice issued under subpart 10 is covered by section 46 of the Evidence Act 1908.
Referring to medicines
Clause 517 provides that an individual, person, or body who is required by Parts 6 and 7 to specify medicine may do so by reference to its name or trade name or its pharmacological action.
Subpart 11—Miscellaneous matters
Relationship to other enactments
Clause 518 describes the relationship between Parts 6 and 7 and the Misuse of Drugs Act 1975. Except as specified in subclauses (1) to (5) of clause 518, the Misuse of Drugs Act 1975 overrides Parts 6 and 7.
Transitional regime for designated prescribers
Clause 519 provides for how designated prescribers appointed under the Medicines Act 1981 (the former Act) may continue to be designated prescribers under Parts 6 and 7.
Transitional regime for standing orders
Clause 520 continues the effect of standing orders issued under the former Act.
Transitional regime for licences
Clause 521 deals with applications made, but not determined, under the former Act for licences to sell medicines by wholesale.
Clause 522 relates to licences to sell medicines by wholesale that were granted under the former Act.
Clause 523 deals with applications made, but not determined, under the former Act for licences to sell medicines by retail.
Clause 524 relates to licences to sell medicines by retail that were granted under the former Act.
Clause 525 deals with applications made, but not determined, under the former regulations for a licence to hawk medicines.
Clause 526 relates to licences to hawk medicines that were granted under the former regulations.
Clause 527 provides for applications made, but not determined, under the former Act for a licence to operate a pharmacy.
Clause 528 deals with licences to operate a pharmacy that were granted under the former Act.
Clause 529 relates to other types of licences that were granted under the former Act, and provides that such licences may be deemed to be a licence under Parts 1 to 5.
Clause 530 provides for conditions on licences that are deemed to be licences under Parts 6 and 7.
Transitional regime for proceedings and appeals under former Act
Clauses 531 and 532 provide for proceedings and appeals that were commenced under the former Act.
Transitional regime for officers under former Act
Clause 533 provides for employees of the Ministry appointed under the former Act.
Clause 534 prevents claims for payment or compensation against the Crown for loss of office or appointment held under the former Act.
Transitional regime for xenotransplantation
Clause 535 provides for the transition of any authorisation relating to xenotransplantation issued by the Minister under the former Act.
Transitional regime for approved laboratory and analyst under former Act
Clause 536 deems laboratories approved under the former Act as approved laboratories for the purposes of Parts 6 and 7.
Clause 537 provides for analysts authorised under the former Act.
Clause 538 repeals the Medicines Act 1981.
Clause 539 provides for the ability to make transitional and savings regulations.
Clause 540 provides that clause 539 expires on the date that is 2 years from its commencement.
Clause 541 revokes the regulations and orders specified in Schedule 7.
Clause 542 preserves the validity of actions done under the former Act or former regulations (listed in Schedule 7).
Clause 543 saves the Medicines (Approved Laboratories and Analysts in Charge) Notice 2000.
Clause 544 saves the Medicines (Standing Order) Regulations 2002.
Clause 545 saves the Medicines (Designated Prescriber: Nurse Practitioners) Regulations 2005.
Clause 546 saves the Medicines (Designated Prescriber: Optometrists) Regulations 2005.
Clause 547 saves Orders in Council made under section 96D(1) of the former Act that authorise the conduct of 1 or more classes of specified biotechnical procedure.
Clause 548 provides for consequential amendments to the enactments specified in Schedule 8.
Schedule 1 sets out the full text of the Agreement.
Schedule 2 sets out procedural provisions relating to the Review Tribunal established under Part 3.
Schedule 3 contains substantive amendments to other enactments relating to the establishment of the Authority. These include provisions such as the amendment to the Ombudsmen Act 1975 which inserts the Authority into Part 2 of Schedule 1, which has the effect of making the Authority subject to both that Act and the Official Information Act 1982.
Schedule 4 sets out the powers of the Minister (under Part 7) in relation to prescribing authorities' obligations.
Schedule 5 sets out the powers of health authorities or the Veterinary Council (under Part 7) when making an inquiry under clause 388(2).
Schedule 6 sets out the procedures associated with reviews and appeals of restriction notices.
Schedule 7 lists regulations and orders revoked as a consequence of the repeal of the Medicines Act 1981.
Schedule 8 sets out consequential amendments relating to the enactment of both Parts 1 to 5 and Parts 6 and 7.
Regulatory impact and compliance cost statement for Parts 1 to 5
New Zealand's regulatory framework for therapeutic products is outdated, unsustainable and in need of reform. It does not adequately manage the public health risks associated with the use of medical devices and medicines. In addition, while the basic regulatory framework for pharmaceuticals is sound, its operation is unsustainable.
Pharmaceuticals (prescription and over-the-counter medicines) have significant health benefits, but can present serious risks, especially if used inappropriately. Before a pharmaceutical product can be offered for supply in New Zealand, the distributor must obtain the consent of the Minister of Health. Applications for consent are assessed by Medsafe to ensure that the benefits of use outweigh the risks if the product is used appropriately, and to identify any appropriate special requirements or restrictions on supply.
While the current regulatory approach is consistent with international best practice, the regime is unsustainable for New Zealand. As pharmaceuticals become increasingly complex and sophisticated, it is becoming increasingly difficult for New Zealand to maintain the expertise necessary to evaluate new products when such expertise is in short supply globally. Without adequate technical expertise, Medsafe will be unable to meet the regulatory objectives for pharmaceuticals within acceptable time-frames.
Most complementary medicines contain ingredients with a very low inherent risk. Most of the risk arises from poor quality in manufacture, or from distributors making unsubstantiated and sometimes outrageous claims about the health benefits of products.
Risks arising from poor quality in manufacture can include—
under or over potency, or complete absence of ingredients stated on the label:
poor formulation leading to non-availability of active ingredients:
adulteration with undeclared ingredients (including prescription medicines such as steroids), or substitution of a toxic herbal ingredient for the ingredient stated on the label:
inaccurate or incomplete labelling, such as non-disclosure of ingredients, or inadequate dosage instructions and warning statements to enable the product to be used safely:
contamination with heavy metals, microbes, radioactivity or other ingredients used by the manufacturer.
Unsubstantiated claims that a product can prevent or treat a serious disease result in a serious risk to the vulnerable consumer who believes the claim and either stops taking prescribed medication or fails to seek appropriate medical treatment.
In New Zealand, complementary medicines are currently marketed as foods under the Dietary Supplements Regulations 1985 (made under the Food Act 1981). The concerns with this regime are as follows:
therapeutic claims on dietary supplements are prohibited. However, in practice only a low level of enforcement has been possible and many are marketed with therapeutic claims, some of which are inaccurate, misleading or potentially dangerous. There is currently widespread and constant distribution (in leaflets and magazines, and on websites) of advertisements for complementary medicines making unsubstantiated therapeutic claims including those for the prevention or treatment of serious diseases such as cancer, tuberculosis, diabetes, heart disease and obesity:
manufacturing standards for food are not adequate for complementary medicines presented in pharmaceutical dose forms, where appropriate formulation, quality in the manufacturing process, and accuracy of labelling and dosage are essential to the safety, effectiveness and appropriate use of the product. It is estimated that up to 10% of the total retail sales value of dietary supplements in New Zealand comes from products manufactured in premises in New Zealand or overseas that do not meet the New Zealand Code of Good Manufacturing Practice for Manufacture and Distribution of Therapeutic Goods (Good Manufacturing Practice) standards. Consumers purchasing products have no way of identifying which products are of high quality and therefore safe to use:
there is no requirement for new ingredients used in dietary supplements to undergo any pre-market safety assessment, or for products to be registered. There is therefore no safety check on ingredients being used, and no register of products or distributors to facilitate efficient investigation and product recall when a safety alert arises:
because it is illegal to make therapeutic claims for dietary supplements, manufacturers and distributors are unable to lawfully provide consumers with the information they need to choose products wisely and use them safely. In many instances consumers are not provided with information about contra-indications, adverse effects or interactions even when these are well recognised and may have a significant influence on whether they can safely use the product.
Medical devices include products ranging from very low risk (eg, gauze dressings) to high-risk devices such as heart valves, which, if they fail, could lead to severe harm or death, with all the associated personal and social costs.
In contrast to most developed countries, New Zealand does not require medical devices to be approved before being marketed. Medsafe's role is limited to market surveillance and dealing with safety issues as they emerge. Because there is no register of medical devices, this is inefficient and costly.
The vast majority of medical devices are imported, mainly from the US, Europe, Japan, and Australia, where devices are required to be registered. Most medical devices in use in New Zealand would therefore meet adequate safety standards, particularly as world standards converge around the Global Harmonization Task Force (GHTF) requirements. However, without similar standards applying in New Zealand, there is a risk that poor quality product that cannot be sold overseas will be dumped on the New Zealand market, with potentially serious health risks. Anecdotal evidence also suggests that the overall risk to consumers from medical devices is increasing.
Magnitude of risk
Risk cannot be eliminated. From society's point of view, the objective is to achieve an appropriate risk reduction at reasonable cost. While lack of data makes it difficult to quantify the risk for complementary medicines and medical devices, the risk can be significant, resulting in serious injury and death.
In most developed countries, regulatory arrangements for therapeutic products are predicated on the assumption that the costs of harm are likely to be far greater than the costs of policies aimed at reducing risk. For medical devices and complementary medicines, New Zealand's regulatory regime is out of step with international practice and World Health Organization recommendations. Given the rising risk profile as products become more widely used and more sophisticated, and the existing evidence of problems and their consequences (discussed above), there is a prima facie case for policy intervention.
Trans-Tasman Mutual Recognition Arrangement (TTMRA)
In the context of closer economic relations (CER), the Australian Commonwealth, States and Territories and New Zealand committed to the Trans-Tasman Mutual Recognition Arrangement (TTMRA) in 1998. One of its objectives is to allow goods and services legally traded in Australia to be also traded without regulatory impediment in New Zealand, and vice versa.
Therapeutic products are 1 of 6 areas where mutual recognition has not yet been achieved. Australian and New Zealand Health Ministers concluded that mutual recognition in any area of the program would not be acceptable at this time, or in the future, unless there were significant changes in the legislative framework that lead to a greater convergence in regulatory arrangements in the two countries.
Public policy objectives
The primary policy objective is to manage the risks to public health and safety from avoidable harm associated with the use of therapeutic products. In particular, to regulate therapeutic products for safety, quality and efficacy to ensure that the benefits of use will outweigh the risks if the product is used appropriately; to regulate products in accordance with international best practice, adopting a globally harmonised approach where possible; and to ensure that health and safety objectives are met while minimising costs to business and Government, and without imposing unnecessary trade barriers.
Policy options can have different impacts on the Government's objectives for trade and industry development. In the context of therapeutic products, secondary policy objectives are—
progression of CER:
facilitation of trans-Tasman trade in therapeutic products:
facilitation of exports of therapeutic products beyond Australia:
development of the therapeutic products industry in New Zealand, including research and development.
There are no non-regulatory options that would adequately achieve the health and safety objectives.
In an unregulated but highly competitive market, there would be a lack of incentive for suppliers of therapeutic products to provide balanced information about the benefits and risks of their products. Consumers would find it extremely difficult or impossible to identify quality product from substandard and potentially harmful product, or to take a case under consumer protection legislation because of the high burden of proof required.
Public education programmes (designed to enable consumers to evaluate the benefits and risks of products, make informed choices and use products safely), would not be effective, since most consumers do not have the knowledge or skills required to assess the accuracy or completeness of the available information or to interpret that information appropriately.
Four regulatory options have been identified.
Continuation of the status quo
Under this option the main focus would be on evaluating and approving pharmaceuticals and on post-market monitoring functions. There would be no pre-market requirements for medical devices. Dietary supplements would remain under food legislation with therapeutic claims prohibited. The current Medsafe budget is $6.7 million, of which $2.9 million is Crown funding and the remainder comes from fees paid by industry.
Enhancing the regulatory framework, with local evaluation to international standards
Under this option, the regulatory framework would be extended to incorporate pre- and post-market controls for the full range of therapeutic products—prescriptions and over-the-counter medicines, complementary medicines and medical devices. There would be local evaluation to international standards, and mutual recognition arrangements with other reputable regulators for some aspects (such as evaluation of medical devices and assessment of good manufacturing practice).
A global shortage of expertise in evaluating increasingly specialised high-tech products makes it unlikely Medsafe could recruit the additional staff required under this option. The estimated budget for Medsafe regulating the full range of therapeutic products to international standards is $43 million per annum.
Enhancing the regulatory framework, but adopting a unilateral recognition scheme
Under this option, the regulatory framework would be extended to incorporate pre- and post-market controls for the full range of therapeutic products. Local evaluation would not occur. Instead, evaluations carried out by competent overseas regulatory authorities would be recognised by Medsafe. Products intended only for the New Zealand market and not approved by any of the recognised overseas authorities would be evaluated under contracts with other regulators that would be managed by Medsafe.
New Zealand would maintain a list of overseas regulatory authorities in whom it had confidence, and only evaluations carried out by those authorities would be recognised for the purposes of approving products for the New Zealand market. New Zealand would have no input into the standards or procedures adopted by those overseas authorities, and no direct access to their medical and scientific expertise. The scheme would be backed up by enhanced local post-market surveillance in recognition of the increased potential for New Zealand to receive product that did not match the safety, quality and efficacy standards of that originally evaluated.
The estimated annual budget for Medsafe operating a unilateral recognition scheme covering all therapeutic products is $29.4 million.
Establishing a joint Australia/New Zealand therapeutic products agency
Under this option, New Zealand and Australia would adopt a single comprehensive regulatory scheme for all therapeutic products marketed in either country. The scheme would be administered by a single trans-Tasman regulatory agency, applying international best practice.
The agency would operate on the basis of full cost recovery with an estimated annual budget of $68 million. The New Zealand industry's share of these costs is estimated at $20 million per annum, based on the assumption that 30% of product licence holders will be based in New Zealand.
Ministers agreed in principle to the establishment of a joint trans-Tasman agency to regulate therapeutic products supplied in Australian and New Zealand markets in December 2000, subject to the development of governance arrangements satisfactory to New Zealand.
The proposed governance arrangements would ensure an equal voice for each country through a Ministerial Council consisting of the Australian Commonwealth and New Zealand Ministers of Health. A Board, appointed by the Ministerial Council, would be accountable to the Ministerial Council for the strategic and financial direction of the agency. The Managing Director would be accountable to the Board for financial and administrative matters, and would be the statutory decision maker accountable to stakeholders through an internal appeal process as well as external judicial review and merits review mechanisms.
Options for resolving the existing special exemption under the TTMRA
The current Special Exemption for therapeutic products will expire on 30 April 2007 and a further 12-month extension will be sought. The longer-term options are permanent exemption, harmonisation of regulatory requirements, or mutual recognition.
Mutual recognition is not a feasible option because New Zealand does not have a sustainable regulatory capacity, the regulatory frameworks are not matched, and there is not an acceptable level of confidence that equivalent regulatory outcomes are achievable under the existing separate schemes. Creation of a joint regulatory scheme is a specialised form of harmonisation that would achieve the trade objectives of the TTMRA, whereas permanent exemption would maintain current trade barriers.
Net benefit of the proposal
A lack of accurate data about some sectors of the therapeutic products industry, the products they market, and the risks arising from use of those products means that any analysis of the costs and benefits is reliant on a qualitative assessment of whether or not any change from the status quo would be of net benefit to New Zealand society. This assessment involves making a judgement about—
the additional benefits to consumer health and safety and the value of better information for consumers; and
the value to New Zealand of potential additional trade opportunities, and improved trans-Tasman and international relationships.
Enhancing the regulatory framework with local evaluation to international standards would fail to meet public health and safety objectives, as it would not be viable in light of the global shortage of appropriate expertise. It is already very difficult to get the expertise needed to evaluate pharmaceutical products to international standards in a timely fashion, and the situation is expected to get worse over time. The same problem would occur with high-risk medical devices. Compliance costs would be high, and existing trade barriers would be maintained.
Enhancing the regulatory framework, but adopting a unilateral recognition scheme could meet public health and safety objectives and be sustainable over time. It would, however, result in a loss of New Zealand's ability to reach independent decisions about therapeutic products supplied in New Zealand or to have any voice in deciding the standards applied in evaluating products. Because of the need for enhanced post-market activities, compliance costs would be high. Existing trade barriers would be maintained and could increase if New Zealand was seen to be adopting a third-world approach to therapeutic product regulation.
Establishing a joint Australia/New Zealand therapeutic products agency would meet public health and safety objectives, and be sustainable over time. While there would be a risk that the joint scheme may not always result in decisions that were the best fit for New Zealand, this risk would be managed by ensuring New Zealand had an equal voice and there was no lesser accountability to Government, stakeholders and the public than at present. An opt-out mechanism would ensure that New Zealand would not be forced to adopt a position to which it had a fundamental objection.
The economies of scale and removal of duplication that would result from regulating jointly with Australia would lower overall administrative and compliance costs. The actual impact on New Zealand would depend on how the costs were shared between the two countries in the longer term, but the overall compliance costs for New Zealand industry would be lower in a joint scheme.
The joint agency option would also meet CER objectives. The immediate impact on trade is likely to be small, given New Zealand's significant reliance on imports from across the globe. An approval from a trans-Tasman regulator with international credibility may make it easier for local manufacturers to break into export markets. However, compared with the status quo, the added compliance costs for medical devices and complementary medicines would reduce export competitiveness and local profitability, which could result in some beneficial products not being marketed locally, and some businesses in those sectors closing.
The following table provides a summary assessment of the benefits and costs of the unilateral recognition and joint agency options, compared with continuation of the status quo.
| ||Consumers||Industry||Government||Additional compliance cost|
|Benefits||Meets health objectives through||Reduced business compliance costs for pharmaceuticals to partly offset higher fees from full cost recovery||Reduced cost and increased efficiency of managing product alert/recalls|| |
| ||•||higher standards|
| ||•||better post-market surveillance|
| ||•||better consumer information|
| ||for complementary medicines and medical devices|
| || || ||Reduced trans-Tasman import duties if Tariff amended to exclude complementary medicines||Reliance on other regulators resolves sustainability concerns|| |
|Costs||Small price increases likely for pharmaceuticals||Higher regulatory fees for all product groups will reduce profitability and be passed on to consumers||Some impact on ACC and health budgets||$24.5 million|
| ||Larger price increases for medical devices and complementary medicines||Higher costs for local manufacturers would reduce international competitiveness||Does not contribute to CER objectives|| |
| ||Reduced choice likely|| ||Loss of import duties of approx. $3.5m (a transfer to industry and possibly consumers)|| |
| ||A precautionary stance may further reduce choice|| || || |
| ||Overseas regulatory decisions may not always “fit” NZ circumstances|| || || |
|Joint agency|| || || || || |
|Benefits||Meets health objectives through||Overall compliance costs will reduce, particularly for importing pharmaceutical companies||As above. Improves wider CER relationship|| |
| ||•||higher standards|| |
| ||•||better post-market surveillance|| |
| ||•||better consumer information|| |
| ||for complementary medicines and medical devices|| |
| ||A possible reduction in pharmaceutical prices||Single regime facilitates trans-Tasman trade||Lower pharmaceutical costs may increase Health and ACC purchasing power|| |
| || || ||Import duties reduce if Tariff is amended to exclude complementary medicines||Combined regulatory resources addresses sustainability concerns|| |
| || || || ||Stronger trans-Tasman agency may improve international reputation|| |
|Costs:||Price increases for medical devices and complementary medicines (but lower than unilateral recognition option), and some reduction in choice||Increased compliance costs and reduced competitiveness for complementary medicines and medical devices, but less so than for unilateral recognition option||Higher cost of medical devices will have some impact on ACC and health budgets, but smaller than unilateral recognition option||$8.3 million|
| || || || ||Foregone tax revenues from duty removal and firms relocating regulatory affairs to Australia|| |
Given the costs of compliance, whether any change from the status quo is seen to be of net benefit to New Zealand depends on judgements as to the additional benefits to consumer health and safety, and the value to New Zealand of potential additional trade opportunities and improved trans-Tasman and international relationships.
For medical devices and complementary medicines, this trade-off depends on a judgement of the emerging risk profile, whether added regulation in New Zealand can influence this, and how much society values the risk reduction. No data are available to assess the magnitude of these factors.
Given the degree of uncertainty, the decision on whether the regulatory framework needs to be extended involves a qualitative assessment about all of the following:
how well consumers are equipped to deal with the risks:
the ability to rectify harm (and the relevance of the precautionary principle):
the perceived bias of producers to understate risks or regulators to over-regulate:
how much risk reduction is valued:
different notions of liberty and responsibility.
With these caveats, the overall conclusion is that, relative to the other regimes considered in this paper, a move to a joint agency has the potential to yield a small net benefit to government, industry, consumers and other stakeholders in both countries.
Medsafe has consulted widely in developing these proposals. In 2000, Medsafe published a discussion document seeking comment on the proposed form of a joint therapeutic products agency. This informed decisions by Ministers in December 2000. In further developing its proposals Medsafe has held regular meetings with consultative groups comprising representatives of the key stakeholder groups affected by the proposal, primarily therapeutic products suppliers. In December 2001 and June 2002, Medsafe distributed further discussion documents, seeking feedback on the design and role of the proposed agency.
Response to discussion paper released in June 2002
While a large number of responses was received, fewer than 15% were commenting on the proposals set out in the discussion paper. Government departments, representative bodies, consumer groups and those in the pharmaceutical and medical device industries broadly supported the proposals.
The bulk of the responses came from consumers, health practitioners and industry players from the complementary medicines sector who did not appear to have seen the proposals in the discussion paper but were reacting to some of the misinformation being circulated during the consultation period. They claimed there was no risk and therefore no need to regulate complementary medicines. They were fearful of increasing prices and decreasing product choice, and objected to decisions about which products they could access being made by an Australian bureaucrat.
Opinion expressed in submissions on the proposals contained in the discussion paper ranged from strong support for the proposals, to support for some aspects and concern about others, to outright rejection of any proposal to enter into a joint agency arrangement with Australia. All sectors of industry rejected the concept of 100% cost recovery, and there was considerable concern about Australian domination and loss of voice for New Zealand, although much of this concern was based on a misunderstanding of both the current system and the proposed governance and accountability arrangements.
The pharmaceutical industry generally supported the proposals, although there was some concern about loss of expertise within New Zealand. Most of the comments related to more detailed aspects that would be the subject of further consultation with stakeholders as subordinate legislation is developed.
Medical device sector
The medical device industry strongly supported the adoption of the GHTF approach to device regulation and was broadly supportive of the joint agency proposals, provided certain aspects of the detail of the regulatory scheme for medical devices can be satisfactorily resolved.
Complementary medicines sector
Opinion amongst those with an interest in the complementary medicines sector was divided. Some rejected any proposal to regulate the sector at all, although much of the industry supported regulation of product quality and claims, recognising that while the ingredients were generally very safe, there were risks from poor quality products and outrageous claims, and these were damaging to the industry.
Much of the negative comment centred on the current Australian regulatory scheme, which was seen as draconian, bureaucratic and expensive. There was considerable concern about the impact of compliance costs on small businesses, with claims that hundreds of small distributors would go out of business if the proposed scheme were introduced.
The larger manufacturing companies (about 10 companies that account for around 80% of the total market value) are broadly supportive of the joint agency concept and the overall approach to regulation. Most of their concerns relate to the detail of how the scheme would be administered and how the agency's accountability to the fee-paying industry would be ensured.
There is no accurate record of the number of small manufacturers and importers who account for the remaining 20% of the market, although it is estimated there could be more than 200 small businesses involved. It was claimed that many of the products they distribute would be low value/low volume products that would not be viable in a regulated market. It is therefore likely that rationalisation of large product ranges or multiple distributors of the same or very similar products would result in some job losses for this group. The impact on importers and small manufacturers would depend on the size and distribution of fees, and on some aspects of the detail of the regulatory scheme, such as labelling requirements and interpretation of the Code of Good Manufacturing Practice.
There was support for the concept of a joint regulatory scheme for aspects such as advertising controls, adverse reactions monitoring and scheduling of medicines, but mandatory licensing of export-only products was considered inappropriate as it would not facilitate export or add any value for exporters.
Business compliance cost statement
Sources of compliance costs
Compliance costs under the joint agency proposal would arise from the following:
Parties likely to be affected
The compliance costs of this proposal will fall directly on—
about 78 pharmaceutical companies and 24 pharmaceutical manufacturing sites with total industry turnover of around $900 million per annum. Two large manufacturing companies are New Zealand based, and are exporting to Australia. Almost all of the remainder are multinational companies marketing in both New Zealand and Australia. Only a small percentage would be expected to maintain separate products licences in the two countries, so that rationalisation of products and regulatory activities will result in reduced compliance costs. Compliance costs will increase for the few companies whose products are only available in New Zealand:
about 10 local manufacturers and about 170 importers of medical devices. It is believed that at least one-third of these companies distribute products in both Australia and New Zealand. Compliance costs will, therefore, fall mainly on those importers sourcing product from countries other than Australia. There would be little impact on compliance costs for those manufacturing locally and exporting:
manufacturers (about 10 large-to-medium companies, half of whom are believed to be exporting to Australia, plus an unknown number of small manufacturers) and importers of complementary medicines (estimated to be 11 major companies and 200 or more small businesses) with local sales of over $100 million per annum. The larger local manufacturers account for at least three-quarters of the total industry turnover.
The complementary medicines industry comprises a broad range of businesses, from large companies with multi-million dollar turnovers that manufacture, distribute and export a range of products, to one-person businesses importing and distributing 1 or 2 products. Because the industry is so diverse and is not currently regulated in New Zealand, it has not been possible to obtain complete and accurate information about the numbers and types of businesses involved. During research for the cost benefit analysis, it was found that there were no official statistics and no comprehensive and reliable data available from industry organisations. Information provided by industry members was inconsistent and sometimes contradictory.
Compliance cost spread for complementary medicines sector
Without accurate information about the makeup of the industry it is difficult to estimate the impact of compliance costs on different types of businesses with any accuracy.
For companies trading in both countries, the extent to which compliance costs will increase will depend on the degree of overlap in product ranges between the two markets, which is currently unknown. For these companies, there would be no additional costs associated with licensing manufacturing premises.
For the unknown number of local manufacturers who do not currently meet Good Manufacturing Practice requirements, costs will vary depending on the extent to which they need to upgrade their premises in order to obtain a manufacturing licence. The greatest impact will be on smaller businesses requiring significant upgrading.
Compliance costs should not change significantly for those companies importing product from Australia (estimated to account for 50% of the total value of imports). For companies importing products from countries other than Australia, the greatest compliance cost impact would fall on businesses with a large product range.
The proposed annual product licence fee is intended to cover the costs of post-market activities such as adverse reactions monitoring, product testing, and handling complaints and recalls. If there were a standard fee per product, the impact would be greatest for those companies with large product ranges, and particularly for those that also had a small annual turnover. Possible mechanisms for managing the impact of compliance costs on small businesses include a fee waiver for low value/low volume products, or charging each company a fee based on a percentage of turnover. The latter is based on the premise that the costs of post-market activities relating to a company's products will be proportional to the level of risk exposure and therefore to the volume of product the company has in the marketplace.
Key issues identified in consultation
Complementary medicines/dietary supplements are viewed by the industry as very low risk. A number of stakeholders questioned the need for additional regulation, particularly if the Dietary Supplements Regulations 1985 were updated. Industry members are concerned that a number of small suppliers in New Zealand, particularly importers, would be likely to exit the market as a result of the additional costs from the proposed regulation. This would be primarily a distributional issue, as most ingredients in imported products are likely to be available in locally manufactured products, and where this is not the case, larger firms would introduce substitutes for affected product lines where sufficient profits could be made. However, some low value/low volume products would be likely to be removed from the market.
The major source of concern for the other sectors is the magnitude of fees. The Medical Industry Association of New Zealand (representing the medical device industry) raised concerns that fees may force many small importers out of business and reduce the range of product available in New Zealand. The Association is also concerned that the proposed harmonisation with Australia would cause many international device manufacturers to cancel contracts with New Zealand-based distributors, and rely on their distributors in Australia to supply product in both countries. The latter appears unlikely, however, as there is nothing to prevent this happening now.
Overlapping compliance requirements with other agencies
Some dietary supplement manufacturers are also covered by regulations administered by the Ministry of Agriculture and Forestry covering meat and dairy based products. However, those controls would not be duplicated by the proposed joint agency controls.
The Environmental Risk Management Authority (ERMA) regulates products incorporating genetically modified organisms. Medicines and medical devices using genetically modified organisms must gain approval from ERMA and from the regulator of therapeutic products before being marketed in New Zealand, as each agency is regulating different aspects of product safety.
Steps to minimise compliance costs
All options employ a risk-based approach, with pre-market entry requirements based on the level of risk. Under the proposed product licensing scheme, suppliers of low-risk therapeutic products would be able to self-certify that the product met specified requirements, and subject to electronic validation of key requirements such as the licence status of the manufacturer, a product licence would be issued immediately. In this way, pre-market evaluation of individual products and delays in getting the product to market would be avoided for an estimated 95% of complementary medicines and a significant proportion of medical devices.
Mutual recognition agreements can continue under each of the options to reduce duplication. Under each of the options, the regulator recognises manufacturing licences and audits conducted by overseas regulators in which it has confidence.
Under the joint agency proposal, product or ingredient approvals need to occur only once to cover both the Australian and New Zealand markets. This reduces duplication, and so reduces the sum of regulatory fees for all (benefiting particularly manufacturers of products that are traded across the Tasman).
There will be a period of transition during which firms will be able to learn about the requirements, compile the required information, and adjust their production, labelling and distribution processes. There would be no application fee for existing complementary medicines and medical devices to get onto an interim product licence register. They could continue to be sold in New Zealand during the transition period. Once full compliance with the joint agency's requirements was achieved, a joint agency product licence would be issued and the product could then be sold in both countries. Annual licence fees would apply from commencement of the new scheme, but there would be no initial licensing fee for products that are not currently required to be registered.
Substances used in existing complementary medicines but not currently permitted in low-risk products in Australia would undergo a safety assessment for inclusion in a new joint agency list. This work would be completed as part of the implementation process for the joint agency, at no cost to industry.
Much of the impact of the new scheme could be managed by—
allowing distributors to place products on the product licence register free of charge (ie, no application fee, although annual licence fees would apply):
adopting appropriate transition times to allow licence holders to achieve compliance with any new requirements.
Distributors of complementary medicines would be required to place their products on an interim register (at no charge), but could continue selling existing products in New Zealand for a transition period of up to five years while full compliance with the new requirements was achieved (such as manufacturers upgrading premises to meet Good Manufacturing Practice requirements). Similarly, a suitable transition period can be selected to permit label stock to be substantially exhausted before new labels are required.
Establishment of an interim register of medical devices
It is proposed to amend the Medicines Regulations 1984 to enable establishment of a register of medical devices as an interim step towards GHTF-style device regulation. There would be no fee for placing devices on the register. This would facilitate transition to the proposed joint agency regulatory scheme, and is well supported by the medical device industry. Many medical devices have a relatively short lifespan and will have been superseded by newer products before the transition period expires.
Regulatory impact and compliance cost statement for Parts 6 and 7
Statement of the nature and magnitude of the problem and the need for government action
Parts 1 to 5 of this Bill implement a new joint trans-Tasman regulatory scheme for therapeutic products. Therapeutic products include prescription and over-the-counter medicines, complementary medicines (currently regulated under the Dietary Supplement Regulations 1985 under the Food Act 1981) and medical devices (ranging from low-risk products such as dressings to high-risk products such as heart valves).
Parts 1 to 5 will house those aspects of therapeutic product regulation that are part of the joint regulatory scheme, including pre-market controls, licensing of manufacturers, and post-market monitoring and surveillance activities. However, controls on activities relating to medicines in the supply chain in New Zealand will not be part of the joint scheme and will remain as New Zealand-specific provisions. These include—
provisions setting out when, how, and by whom medicines can be prescribed, dispensed, or administered:
transport, storage, and record-keeping requirements for medicines:
provisions covering the ownership and licensing of pharmacies:
a licensing regime covering the supply of scheduled medicines by retail and wholesale (but the holder of an approval to manufacture medicines, issued by the joint agency, will not also require a separate licence to supply those medicines by wholesale):
enforcement provisions for such controls (eg, offences, penalties, powers for enforcement officers).
Currently, both the provisions that will be covered by the joint regulatory scheme and the New Zealand-specific provisions are housed in the Medicines Act 1981. Repealing those provisions covered by the new joint regulatory scheme and retaining the New Zealand-specific provisions would result in a Medicines Act that was very piecemeal and difficult to use.
A number of the New Zealand-specific provisions in the Medicines Act 1981 are out of date or will be rendered ineffective when the legislation for the joint regulatory scheme is enacted. These include—
problems with the current offences and penalties in the Act include the following:
the Act uses a general penalty for a range of offences, with no differentiation between more serious and less serious offences:
the amounts of penalties in the Act are out of date and not in line with other more modern legislation:
some penalties do not cater for offending by a body corporate. Because such offending is usually on a larger scale than offending by individuals, larger penalties are warranted:
the Act does not have a higher offence for offending where it can be proved the conduct was wilful and endangered public health:
the mechanism to allow an extra penalty for every day the offence continues has not been applied by the courts under the Act and is no longer considered appropriate by the Ministry of Justice. This is because it is difficult to use this mechanism in practice, and there are other simpler ways of dealing with multiple offending:
some offences require the defendant to establish a reasonable excuse defence and this is inconsistent with the Bill of Rights Act:
under the Medicines Act 1981, licence applicants have a statutory right of appeal to the Medicines Review Committee (section 88) and a subsequent right of appeal to the District Court on questions of law. The Medicines Review Committee has not been convened to consider a licensing issue for many years, and is no longer thought to be necessary:
current regulation-making powers relating to prescribing, dispensing and record keeping are not empowering enough to enable the making of regulations to deal with changes in technology or prescribing practice (for example, to provide for robotic dispensing under prescribed conditions, inclusion of unique patient and prescriber identifiers on prescriptions, electronic storage and transmission of information, or substitution of medicines):
regulations 27 and 28 of the Medicines Regulations 1984 relate to infected persons handling medicines. Regulation 27 prohibits people with communicable diseases (and other conditions) from engaging in, or being employed in, the sale, manufacture, packing, labelling, storage or supply of medicines. Regulation 28 empowers Medical Officers of Health to serve written notices on those who have been in contact with such people and prevent them from engaging or being employed in the same activities. These controls are unduly restrictive in relation to the risks they were originally intended to manage:
the prescribing controls in regulation 39 of the Medicines Regulations 1984 are too restrictive in 3 respects. Firstly, the regulation restricts dentists to prescribing prescription medicines only for dental treatment. This means that a dentist cannot prescribe for an associated condition, such as preventing or treating a side effect caused by a medicine used for dental treatment. The patient must be referred to a medical practitioner for such treatment. Similarly, registered midwives are restricted to prescribing for antenatal, intrapartum and post-natal care. Secondly, the regulation restricts a dentist to prescribing for a maximum treatment period of 10 days (5 days and a repeat of 5 days), whereas other existing prescribers may prescribe up to 3 months' treatment (or 6 months for an oral contraceptive). These restrictions on dentist prescribing are no longer appropriate given the changes to the practice of dentistry and the medicines used in dental treatment. Thirdly, the regulation restricts the period of supply of a prescription medicine that can be prescribed by a medical practitioner or registered midwife to 3 months (or 6 months for an oral contraceptive prescribed by a medical practitioner). This restriction can create a safety risk for New Zealanders travelling for extended periods to places where there is no reliable source of the medicines they require for the treatment of an ongoing condition (eg, army personnel serving overseas for an extended period of time).
Statement of the public policy objective
To ensure that New Zealand has high-quality, modern and efficient medicines legislation that is seamless across the whole of the medicines regulatory regime.
Statement of feasible options
The status quo is the repeal of those parts of the Medicines Act 1981 and Medicines Regulations 1984 that will be covered by the joint regulatory scheme, and the retention of the remaining provisions without amendment. The status quo would see—
retention of the current offences and penalties regime in the Act, with the following features:
a general penalty of imprisonment for a term not exceeding 3 months or a fine not exceeding $500 will apply for a range of offences, with no differentiation between more serious and less serious offences:
some penalties do not include offending by a body corporate:
the Act has no offence for offending where it can be proved the conduct was wilful and endangered public health:
the Act has a mechanism to allow an extra penalty for every day an offence continues:
some offences require the defendant to establish a reasonable excuse defence:
retention of the current appeals process on licensing issues under which licence applicants have a statutory right of appeal to the Medicines Review Committee (section 88 of the Medicines Act 1981) and a subsequent right of appeal on questions of law to the District Court:
retention of the current prescribing, dispensing, and information-keeping requirements:
retention of regulations 27 and 28 prohibiting people with communicable diseases (and other conditions) and those who have been in contact with such people from engaging in medicine-related activities:
dentists able to prescribe only 10 days supply of prescription medicines (5 days and a repeat of 5 days):
the Medicines Regulations 1984 would restrict dentists to prescribing for "dental treatment only" and registered midwives to prescribing for "antenatal, intrapartum and post-natal care:
prescribers other than dentists able to be prescribe prescription medicines for a maximum of 3 months (or 6 months in the case of an oral contraceptive prescribed by a medical practitioner).
While feasible, the status quo would render parts of the legislation unworkable, and the remaining Medicines Act would be piecemeal, fragmented and out of date. It would not be responsive to future technological changes.
This option does not address the public policy objective.
Repealing the Medicine Act 1981 and passing new medicines legislation (preferred option)
Under this option, the Medicines Act 1981 would be repealed and its New Zealand-specific provisions consolidated, reorganised, and recast in a new Bill. The opportunity would also be taken to—
overcome problems with the current offences/penalties regime in the Act, including:
providing a specific penalty for each offence (rather than using the same general penalty for many offences):
introducing a continuum of penalties proportionate to the seriousness of the offence in the Act. This will feature a range of penalties from a fine of up to $5 000 for an individual to a fine of up to $40,000 for a body corporate for less serious offending; and a fine of up to $40,000 or up to 12 months imprisonment for an individual or a fine of up to $100,000 for a body corporate for serious offending:
introducing a higher penalty for all body corporate offending, set at a fine not exceeding $100,000:
introducing a higher-level penalty provision for offending where it can be proved the conduct was wilful and endangered public health. The penalty, on indictment, for this conduct is to be a fine of up to $100,000 or up to 12 months imprisonment (or both) for an individual and a fine of up to $250,000 for a body corporate:
“continuing offence” penalty provisions:
changing some offences from strict liability offences to normal offences: and
a design feature of implementing the above changes may result in loss of the ability to obtain a search warrant for some of the offences in the Act. A new provision is required to ensure this ability is retained:
streamline the appeals process on licensing issues in the Act by providing for a first right of appeal to the Licensing Authority while retaining the existing appeal process to the courts. The Licensing Authority will be the Director-General of Health (or delegate). A statutory requirement will be included that the person who hears such appeals cannot have been involved in the original decision that is being appealed. This process is consistent with other statutory licensing appeal processes (eg, section 114(2) of the Wine Act 2003 provides a mechanism for a person who is dissatisfied with a decision to seek a review of that decision by the Director-General or by a person designated by the Director-General who was not involved in making the original decision):
amending prescribing, dispensing and record-keeping information requirements so that regulations can be made to incorporate advances in technology, such as requiring the inclusion of unique patient and prescriber identifiers on prescriptions, permitting electronic transmission and storage of information, or allowing robotic dispensing. Any regulations developed in the future to implement such changes would be subject to consultation and regulatory impact assessment:
expanding regulation 26 of the Medicines Regulations 1984 so those handling or coming into contact with medicines in the dispensing process will be required to ensure that any open lesions are appropriately covered:
revoking regulations 27 and 28 of the Medicines Regulations 1984:
revoking regulations 39(3) and 39(6)(b) of the Medicines Regulations 1984 and using the framework in the Health Practitioners Competence Assurance Act 2003 to ensure that dentists and midwives prescribe in accordance with the scopes of practice developed by their registering authorities:
removing restrictions on dentists' prescribing of prescription medicines by revoking regulation 39(4) of the Medicines Regulations 1984 so that dentists can prescribe prescription medicines for up to 3 months, consistent with other prescribers:
allowing medicines to be prescribed for longer than 3 months in special circumstances (eg, to allow army personnel serving overseas to be prescribed more than 3 months supply) by expanding regulation 43 of the Medicines Regulations 1984, which allows the Director-General of Health to waive certain regulatory requirements regarding prescription medicines in special circumstances. Standard operating procedures developed by the Ministry of Health and approved by the Director-General of Health would define the special circumstances in which the waiver could apply.
Statement of the net benefit of the proposal, including the total regulatory costs (administrative, compliance and economic costs) and benefits (including non-quantifiable benefits) of the proposal, and other feasible options
Government will have high-quality and modern medicines legislation to help ensure medicines are safe and used safely, including facilitating the recording and follow-up of adverse reaction reports. The direction and specific provisions of the current domestic medicines control will be retained, but updated to ensure their continued applicability. Potential interface issues with the trans-Tasman regulatory scheme will be explicitly dealt with, and all efforts made to ensure a seamless regulatory scheme for medicines and medical devices.
The proposed new offences and penalties regime would alleviate some of the problems with the current Act, including—
providing appropriate deterrent penalties for individuals and bodies corporate; and
repealing continuing offence provisions which have not been applied under the Act; and
addressing some offence provisions which are inconsistent with the Bill of Rights Act 1990.
Subsidisation under the Pharmaceutical Schedule for prescriptions written by dentists is currently limited to 10 days (5 days and a repeat). If PHARMAC was to remove this restriction to bring subsidy rules into line with legal prescribing rights, there should be no increased cost to the pharmaceutical budget. The proposed change to dentist prescribing will mean a shift in who prescribes longer-term treatments, rather than altering the number of patients requiring treatment, the medicines prescribed, or the length of the treatment period. There is potential for cost savings because consumers will only need one prescription to cover the required treatment period, rather than repeat dispensings or multiple prescriptions. In addition, patients will not require a consultation with a medical practitioner, resulting in a cost saving where the patient qualifies for a subsidy. PHARMAC will monitor the impact of dentist prescribing on the pharmaceutical budget in accordance with its operating procedures following any change in the subsidisation rules. If there is a concern about expenditure, PHARMAC may still act to re-impose restrictions on access to subsidies.
Dentists and midwives
Changing the prescribing restrictions for dentists and midwives will align the regulatory arrangements for dentists and midwives with those for other existing prescribers. The change should not impact significantly on the dental registering authority, the Dental Council of New Zealand, as they are already well advanced in the process of defining scopes of practice for dentists and dental specialists (eg, orthodontists, dental surgeons). There is not likely to be a resulting increase in Dental Council registration fees for dentists. Using the Health Practitioners Competence Assurance Act 2003 instead of the Medicines Regulations 1984 to regulate prescribing by midwives would not affect the scope of midwifery prescribing and is supported by the Midwifery Council.
Redrafting of the medicines legislation will make it less cumbersome and easier to understand. The result will be a modern, high-quality medicines regulation scheme that operates seamlessly across both the jointly regulated and New Zealand-specific aspects of the scheme.
Consumers will benefit from a reduction in costs arising from changes to the prescribing rules for dentists. Savings will arise because there will no longer be a requirement for multiple prescriptions to cover an extended treatment period, or the need to consult a medical practitioner for treatment of a condition related to dental treatment. There may be benefits to the health sector overall through a reduction in secondary illnesses or complications as a result of dentists being able to prescribe prompt and appropriate treatment. There may also be benefits to consumers of medicines through the proposed changes to the offences/penalties regime because this should deter offending under the Act, therefore enhancing consumer safety.
Statement of consultation undertaken
In late 2002, Medsafe undertook a targeted consultation with key health professional groups and stakeholders on ways to update or improve the parts of the Medicines Act 1981 that would not be covered by the new joint regulatory regime. A discussion paper was produced after meetings with key sector players, including the councils for the different health professions (eg, the Medical Council, the Dental Council). The paper was also circulated to District Health Boards, universities, and other stakeholders with a direct interest. This was thought to be appropriate given the limited nature of the change and the fact that the main reforms were as a result of the joint scheme.
The consultation emphasised that the focus was not on radically overhauling the New Zealand-specific medicines legislation, or making significant policy changes. There was broad agreement with this approach. Medsafe also consulted with Medical Officers of Health about proposals affecting them.
The main themes identified by submitters were the need to update the legislation to implement or enable the future implementation of—
electronic prescribing; and
robotic dispensing; and
modernised information and record-keeping requirements allowing electronic records; and
substitution of medicines.
The majority of submissions received on the dentist prescribing issues were in support of the proposed changes.
Government departments/agencies consulted
The following government agencies were consulted on the proposal in this paper: the Ministries of Justice, Economic Development, Pacific Island Affairs and Consumer Affairs, the Ministry for the Environment, The Treasury, Te Puni Kokiri, the Police, the New Zealand Customs Service, the New Zealand Food Safety Authority, PHARMAC, the Office of the Privacy Commissioner, and the Parliamentary Counsel Office. No significant issues were raised.