Importing Therapeutic Goods into Australia

UNDERSTANDING TGA SPONSORSHIP COMPLIANCE OBLIGATIONS AND HOW TO AVOID COMMON PITFALLS

In Australia, all therapeutic goods must be approved by the TGA before being sold, and a local sponsor is required to manage regulatory compliance.

While appointing a distributor as sponsor may seem convenient, it often results in loss of control. This makes it essential, for foreign businesses to give though consideration to their sponsorship structure through an owned Australian entity to safeguard long-term market access.

 

VIDEO SCRIPT

Last week I talked about how to set up a foreign owned subsidiary in Australia. Today I would like to briefly talk about some requirements for foreign businesses wishing to import goods which are classified as therapeutic goods and fall under the oversight of the Therapeutic Goods Administration or the ‘TGA’ as we call it here.

All goods classified as therapeutic must be approved by the TGA before they can be sold in Australia. Therapeutic goods cover a very wide range of products. They include traditional medicines, alternative medicines including vitamins and minerals, herbal and aromatherapy products and medical devices. Medical devices themselves range from sticky plasters or band aids through to products such as pacemakers, artificial and contact lenses. There’s a very broad range of products that need the approval of the TGA to be sold here in Australia.

The process for approval, depending on the product, is quite rigorous and can include a requirement that the factory where the goods are manufactured be inspected and approved. Any foreign business who wants to import therapeutic goods into Australia requires a local sponsor for the products.

A local sponsor is responsible in Australia for the importation or for arranging for the importation of the goods into Australia and is responsible for applying for the TGA, to have the therapeutic goods listed or included in the Australian Register of Therapeutic Goods before they can be sold in Australia. The sponsor must be an Australian resident. Importantly, that can either be a person or an Australian incorporated body.

The sponsor has fairly onerous ongoing legislative requirements to fulfil under the Therapeutic Goods Act. These include;

• Allowing the TGA to enter and inspect the premises, including outside of Australia, where the goods or devices are manufactured.
• Delivering samples to the TGA on request.
• Ensuring that the TGA has access to all technical documentation that demonstrates compliance.
• An obligation to provide information requested by the TGA within their given timeframes.
• Ensuring that any advertising material relating to the goods complies with the regulatory requirements.
• Reporting details of accidents, performance issues and any adverse events that occurred with a product either in Australia or in another country if the product was involved in the same batch or production run that was supplied in Australia.
• Taking corrective action where necessary, including being responsible for recalls and informing the public about any issues as needed; and finally
• Maintaining distribution records for the products supplied in Australia.

You can see that the sponsor is in a position of great power in respect to the TGA.

In the last five to ten years, I’ve come across quite a few businesses who have appointed their local import agent to be the Australian sponsor of the goods that they wish to import into Australia.

This might seem like a cheap, easy and practical option. However, it is important to understand that it is the Australian sponsor and not the foreign manufacturer who holds the relevant TGA approval that permits the importation of the goods into Australia.

What I’ve seen happen repeatedly is difficulties arising in the relationship between the Australian distributor and the foreign business who is actually the owner of the goods. The problem is the sponsor controls a relationship and approvals with the TGA and has the power to cancel the sponsorship and remove the goods from the TGA register. This can put an immediate end to your ability to import the goods into Australia. In order to restart the business, you must then go through the whole process of appointing a new sponsor and having the goods re-registered and approved.

There are three particular scenarios where I have commonly seen this become a problem:

1. The sponsor is a disgruntled employee who lives unhappily for whatever reason
2. The sponsor is the local Australian distributor, and difficulties have arisen in the relationship.
3. There is a complaint made to the TGA about your product and the control of how that complaint is dealt with is in the hands of your sponsor and not you.

For this reason, what I typically recommend is that an Australian corporate entity owned and operated by the foreign parent company is set up to hold the sponsorship. Whilst there are some costs associated with that, and you need to have an Australian resident director this keeps the sponsorship in the control of the foreign owned parent company and not the local subsidiary. Directors can be easily removed from a company without affecting the sponsorship.