The objective of this audit is to examine the effectiveness of the TGA’s administration of complementary medicines regulation in Australia. The primary focus is on listed complementary medicines, which comprise about 98 per cent of these medicines.
1. Some two-thirds of all Australians use complementary medicines—also known as ‘traditional’ or ‘alternative’ medicines—including vitamins, minerals, herbal, aromatherapy and homoeopathic products.1 Popular examples of complementary medicines in Australia include fish oil, St John’s Wort and glucosamine. These and many other complementary medicines are generally available for self-medication by consumers. There are about 10 000 such medicines available on the Australian market.2 Consumption has continued to rise in recent years and, together with increasing exports of Australian-manufactured complementary medicines, market growth has been estimated at between three and twelve per cent a year. Sales of complementary medicines in Australia were estimated at $1.2 billion a year in 2010. Similar growth has been observed across other industrialised countries and the global market has been estimated at $US 83 billion annually.
2. Growth in the use of complementary medicines has been attributed to concerns about adverse effects from conventional drugs and the desire to pursue alternative treatments. These medicines are also widely considered to offer a gentler means of managing chronic conditions associated with greater life expectancy.3 However, there are potential risks as well as benefits in the use of all medicines, including complementary medicines, and this is recognised in Australia’s National Medicines Policy (NMP).
3. The community expects medicines on the Australian market to be safe, of good quality, effective and to be available promptly. The Commonwealth regulates complementary medicines, along with other therapeutic goods (medicines and medical devices) through the Therapeutic Goods Act 1989 (the Act). The object of the Act is to provide for a system of controls relating to the quality, safety, efficacy and timely availability of therapeutic goods. The Minister for Health and Ageing has responsibility for the Act and the Therapeutic Goods Administration (TGA), part of the Department of Health and Ageing (DoHA), has the regulatory role.
4. The TGA has operated over the last two decades with an evolving regulatory framework. The Act has been amended frequently since it came into effect and the regulation of complementary medicines has changed, generally to provide easier market access for the low-risk category of these products. An important development in this respect was the introduction, in 2001, of a system of self-assessment for certifying that low-risk complementary medicines satisfy the regulatory requirements that allow them onto the Australian market. Consistent with the view that such complementary medicines are low-risk, this mechanism provides only limited assurance to the public about the characteristics of these medicines.5
5. The TGA’s regulation of complementary medicines attracted attention in 2003 when it recalled more than 1600 products manufactured by Pan Pharmaceuticals, then Australia’s largest contract manufacturer of complementary medicines. The Government subsequently appointed the Expert Committee on Complementary Medicines in the Health System (the Expert Committee) to review the regulation of these medicines. The ANAO also undertook a performance audit of the TGA in 2004, focusing on the regulation of non-prescription medicines (which includes complementary medicines). The review and the audit report generated a number of recommendations for change, almost all of which were accepted.
6. A substantial change to the governance of therapeutic goods regulation was planned for mid-2006 with a project to introduce a joint regulatory agency for therapeutic products in both Australia and New Zealand. After extensive preparation, the project was suspended in mid-2007 when the New Zealand Government announced it was not proceeding with the legislation. Regulation of complementary medicines was the stumbling block to implementing the joint scheme at this time. This initiative has recently been revived by the prime ministers of Australia and New Zealand.6
7. The regulation of complementary medicines came to public attention in Australia when DoHA reported in late 2010 that, based on 2009–10 data, as many as 90 per cent of products reviewed were found to be non-compliant with regulatory requirements, despite the system of self-assessment by sponsors. Among the medicines the TGA reviewed, 31 were selected at random, for which the following compliance issues were recorded (with a number of products recording multiple breaches):
- 20 medicines had labelling issues such as non-compliance with labelling requirements and/or breaches which may mislead consumers.
- 12 included incomplete and/or inappropriate information on the Australian Register of Therapeutic Goods (ARTG).
- 22 were found to have manufacturing and/or quality issues.
- 14 did not have adequate evidence to substantiate claims made about the medicines.
8. A significant number of products subsequently required removal from the ARTG. This information was contained in DoHA’s incoming government brief, which was released to the public in late 2010.7 The information in the brief attracted significant interest and debate on the topic has persisted.
Audit objective and scope
9. The objective of this audit is to examine the effectiveness of the TGA’s administration of complementary medicines regulation in Australia. The primary focus is on listed complementary medicines, which comprise about 98 per cent of these medicines.
10. The scope of the audit encompassed the TGA’s administration of complementary medicines regulation, including the systems and processes that the TGA employs to: develop guidance documentation; list complementary medicines; undertake post-market review of products; regulate advertising; and collect evidence of the efficacy of listed complementary medicines.
11. The last performance audit of the TGA was ANAO Audit Report No. 18 2004–05, Regulation of Non-prescription Medicinal Products, which took place after the major recall of Pan Pharmaceutical products. That audit focused substantially on the regulation of manufacturing practice by the suppliers of non-prescription medicines. The current audit also follows up the implementation of the recommendations of the 2004 audit.
12. The system for the regulation of complementary medicines in Australia was designed to have a ‘light touch’,8 due to the relatively low risk ascribed to the proper use of the majority of complementary medicines. The regulatory system has been further amended since its inception, twenty years ago, to ensure that market access for these products is not impeded unnecessarily. Because market access has been made easy, quick and low cost, an important safeguard to the integrity of the regulatory system is that easy entry be balanced by an effective post-market monitoring of compliance with regulatory requirements that is commensurate with the relatively low risk profile of these products.
13. The results of TGA post-market monitoring in recent years have shown that non-compliance by sponsors of complementary medicines with regulatory requirements has been consistently high. In 2006, on the basis of a random sample, the TGA found a non-compliance rate of 75 per cent. DoHA has recently reported non-compliance as high as 90 per cent for the products reviewed. While the recent data is based on small sample sizes, making it difficult to gauge the magnitude of non-compliance with any precision, TGA figures nevertheless show that a high level of non-compliance has endured for some years and that a substantial proportion of the cases of non-compliance are categorised as ‘moderate’ or ‘significant’. The TGA has expressed concern that this situation presents potential risks to the public, the industry and confidence in the regulatory system.10 In this context, the available evidence indicates that the regulation of complementary medicines in Australia has been of limited effectiveness. The administration of the regulatory framework could be strengthened by the TGA making changes to improve the integrity of the self-assessment process for pre-market listing, using a risk-based approach to better target its post-market reviews, and improving the transparency of information available to consumers, health professionals and industry.
14. Listing new medicines was intended to be based largely on self-assessment by the sponsor of the medicine. However, risks arise in the operation of this self-assessment model because it permits inappropriate or misleading claims and indications to be made by sponsors through the deliberate or inadvertent entry of information in the ‘free-text’ field of the TGA’s online Electronic Listing Facility (ELF).11 Given the importance of self-assessment to listing new medicines, placing restrictions on the ability of sponsors to enter free text in ELF would mitigate the risks, while maintaining the promptness and ease of listing. The TGA is currently progressing work on a ‘coded indications’ project to this end and the ANAO has recommended that this project be finalised as soon as practicable.
15. At present, the TGA does not use in any systematic way the knowledge it gains from post-market reviews of complementary medicines listed on the ARTG to identify and target consistent non-compliance with the regulatory framework. There is a significant opportunity for the TGA to cost-effectively strengthen its post-market review activities. Improved analysis of existing information could inform a more targeted and risk-based approach to monitoring non-compliance. In particular, the ANAO recommends that the TGA use its random sampling review of listed medicines to develop risk profiles against the most significant characteristics of listed medicines and the less compliant sponsors and manufacturers.12 These profiles would inform the TGA’s targeted review strategy and enable it to direct efforts into improving compliance on a risk basis, whether through providing information or education to sponsors or, where necessary, through regulatory action. Against the background of 3000 sponsors and 10 000 listed medicines, a risk-based approach to compliance monitoring has the benefit of directing limited resources to those products presenting the greatest risk of non-compliance. The TGA could also benefit from developing a more active, but targeted, approach to monitoring compliance with advertising requirements, with options to be considered in the context of developing the risk profiles.
16. The Government’s recent review of the transparency of the regulatory framework was prompted by concern about the lack of information made available by the TGA about its regulatory processes and decisions. That review examined what information should be made more public and made recommendations about how that information could be better conveyed.13 The ANAO has concluded that transparency could be strengthened significantly by making information available in a timely manner to the Australian public for each listed complementary medicine, stating whether it has been subject to post-market review, when, and the outcome of that review. The options for doing so include the provision of information on the TGA website, such as by adding fields to the publicly-viewable elements of the ARTG.14
17. The most challenging aspect of regulating complementary medicines, which also affects the transparency of the system as a whole, is the public availability of evidence relating to their efficacy. It has been government policy since March 2005 that the TGA collect a summary of evidence from sponsors, an item which sponsors were required to hold when listing their medicine. The TGA developed an understanding that the requirement would be legislated in the context of the ANZTPA project but implementation faltered after the suspension of that project. In the course of the audit, the TGA advised that it had taken steps in May 2011 to restart implementation of this policy.
18. In summary, the regulatory framework for complementary medicines is important for consumers, health professionals and industry, and is now operating in the context of a growing domestic and international market with numerous sponsors and listed medicines. The effectiveness of the TGA’s administration of the framework would be improved by limiting the capacity which currently exists for sponsors to enter inappropriate claims as part of the pre-market listing process, adopting a risk-based approach to compliance monitoring and by implementing the existing government policy that the TGA collect a summary of evidence of efficacy for each listed complementary medicine. The public release of those summaries would have the further benefit of improving transparency by making relevant information available to consumers and health professionals about the effectiveness of complementary medicines. The ANAO has made five recommendations aimed at strengthening the integrity and transparency of the framework within existing policy settings, in large measure by refining the TGA’s existing systems and processes and better targeting the utilisation of resources.
Guidance documentation (Chapter 2)
19. The TGA uses a range of guidance documents to help regulate complementary medicines. These documents provide essential information to sponsors about how to engage with the regulatory system. Their currency and completeness are important to effective regulation. In each of the cases examined by the audit, the review of guidance documentation for complementary medicines has taken and continues to take a long time. While the subject matter is complex and necessarily must draw on particular expertise, excessive delay creates uncertainty for industry, has implications for consumers and carries risks for the authority and perceived regulatory integrity of DoHA and the TGA.
20. The TGA’s Office of Complementary Medicines (OCM), which has day-to-day responsibility for the regulation of complementary medicines, has identified outdated guidance documents as a potential contributing factor for poor regulatory compliance. It has been aware that regulatory compliance has been poor since at least 2007. This makes it all the more urgent that work on finalising guidance documentation be completed expeditiously.
21. The OCM has also identified ‘Sponsors that intentionally use delaying or obstructive tactics’ as a factor in poor regulatory compliance. While it is very difficult to determine how often such behaviour occurs, to the extent that it does, outdated or unfinalised guidance documents can potentially enhance the opportunity for such ‘tactics’ to be deployed successfully.
22. The TGA has clearly set out to achieve a consensus among stakeholders over its guidelines. While this is a desirable goal, in practice the regulation of complementary medicines has attracted polarised opinions at times. In these circumstances, there may be only marginal benefit in artificially drawing out the processes.
Pre-market assessment of products (Chapter 3)
23. The pre-market assessment process for listed products has a light touch, as was intended. There is little to inhibit a sponsor from having a new medicine listed, whether or not they understand the regulatory requirements, or even where they do not have full regard to these requirements. Self-certification is the primary test at this point. There are limits to what the TGA can do, within the existing legal framework, to gain any greater assurance about claims made for a product until after that product has been listed.
24. When the regulatory system was put in place there may have been little understanding of the likely level of non-compliance of complementary medicines with the regulatory framework. This was likely to have been the case in 2001 when the amendments were made that introduced self-assessment by sponsors. Even in 2005, the then Government’s perception was that ‘the results of the TGA’s limited audits may not justify a conclusion that there is widespread non-compliance with the Guidelines.’ 15
25. In April 2010, post-market compliance review work by the TGA revealed a high level of non-compliance by complementary medicines, with only three products in a random sample of 31 being found to be wholly compliant with regulatory requirements. Later in the year (December 2010), DoHA published on its website its incoming government brief, including an item on compliance of complementary medicines. This reported that ‘based on 2009–10 data, as many as 90 per cent of products reviewed are found to be non-compliant with regulatory requirements, with a significant number of products requiring removal from the ARTG.’ These findings attracted public comment which has persisted.16
26. Working within the current framework, there are opportunities for improvement in several areas. In particular, the TGA has advised the ANAO that the greatest opportunity for improving pre-market assessment of listed products lies in restricting or removing the free text field in the ELF system as a means of limiting the use of inappropriate claims or indications for products listed on the ARTG. A change to the pre-market self-assessment rules would involve a policy change—a matter for ministers and DoHA advice.
27. While it is difficult for the regulator to assess whether apparent failure to understand the rules and guidance documents is genuine, this is not a reason to reduce the effort to ensure that guidance is clear, comprehensive and current. The ANAO suggests that additional effort could be worthwhile to keep systematic records of sponsor errors made at data entry (including repeated attempts to submit an application for the same product with slightly different supporting data) and apparent failure to understand the rules on the part of sponsors. This data could indicate where greater clarity or educational effort might be warranted. It would also form a basis for assessing risk in new applications. Such assessments could then form an additional guide for targeted post-market review of new and existing listed products associated with sponsors with a poor record.
28. The TGA has agreed to consider enhancements to its IT systems to capture further information about application validation errors as this information is not currently recorded.
Post-market review of products (Chapter 4)
29. Under the current legislation, post-market review is the key element in effective regulation of listed complementary medicines. This is because listing is based substantially on self-assessment.
30. Currently, the TGA provides the public with no information about the outcomes of its post-market review of complementary medicines. The public release of such information, which could be readily achieved by introducing a publicly-viewable part of the ARTG, would contribute to informing consumers and would enhance transparency of the regulatory system. This matter has received separate attention, concurrent with this audit, through the work of the Transparency Review and the working group on complementary medicines.
31. The TGA has concluded and reported that the levels of non-compliance observed during its post-market review are very high—‘up to 90 per cent reviewed’. It has then gone on to conclude that this presents potential risks to the public, the complementary medicines industry and to confidence in the regulatory system. These results were based partly on a targeted sample, which could be expected to show a higher-than-average rate of non-compliance. Nevertheless, on the data available it is apparent that, on the occasions it has been measured, non-compliance has been high for at least the last five years.17
32. Further work on the actual state of compliance by careful and thorough examination of a random sample of listed complementary medicines could establish with greater confidence the likely level of non-compliance. If done thoroughly, this could also provide insight into those characteristics, if any, which correlate with non-compliance and provide a basis for further, targeted review.
33. There is benefit in the TGA evaluating the merits of using sponsor behaviour as a basis for targeting its compliance reviews. This could be done without necessarily forming an adverse view of sponsor intent. The ANAO proposes that the TGA consider developing a system of risk profiling for sponsors to inform a program of targeted compliance reviews. A risk-based approach would enable the TGA to direct appropriate efforts into improving compliance on a risk basis, whether through providing information or education to sponsors or, where necessary, through regulatory action.
34. In addition, there would be merit in adopting a targeted approach to identifying complementary medicines which are most likely to be non-compliant with the regulatory requirements. The ELF system currently randomly selects newly-listed products for review, and the systematic analysis of the results of those reviews could provide a cost-effective basis for a more targeted approach.
Regulating the advertising of complementary medicines (Chapter 5)
35. Dealing with complaints about the advertising of therapeutic goods to consumers is an important aspect of administering the advertising regulations. It is also an increasing part of the workload for the Complaints Resolution Panel (CRP) and the TGA.
36. Within the three-tiered system of controls for regulating the advertising of therapeutic goods, the TGA carries primary responsibility for effective management of the system as a whole. The TGA is also authorised to receive and investigate advertising complaints.
37. An Internet search by the ANAO for advertisements of therapeutic goods containing claims that are not permitted by the regulations identified numerous instances which included these claims, and the TGA’s own search identified the use of prohibited terms including ‘cancer’. There would be benefit in the TGA developing a more active, but targeted, approach to monitoring compliance, to be considered in the context of the proposal for the list of sponsors discussed earlier. A targeted, risk-based approach would help provide the TGA with greater assurance while limiting the resource requirements.
38. While the TGA does conduct some complaint handling practices in line with better practice principles, an analysis of complaint investigations also identified that the TGA does not have timeframes for completing investigations of advertising breaches; and that more detailed performance information could be collected and used by the TGA to gauge its performance and effectiveness in this area.
39. The ANAO has recommended the development of a standard operating procedure that specifies timeframes for completing investigations of advertising breaches; and the reporting on progress and trends to the TGA executive.
Providing evidence of efficacy (Chapter 6)
40. Obtaining evidence of the efficacy of listed complementary medicines has been a difficult issue. The ANAO understands that there is no substantial precedent for collecting this information from sponsors in any other jurisdiction. Nevertheless, the TGA has not identified any policy or practical impediments to implementing government policy, announced in March 2005, to collect a summary of evidence.
41. The TGA developed an understanding that the requirement would be legislated, would involve collecting the evidence summary before or at listing, and that legislation would be introduced as part of the ANZTPA project. Thus, when the project was suspended, the proposed means for implementing the recommendation was no longer available. However, it is open to the TGA to collect the necessary material at some point after the listing of the medicine has taken place.
42. As the audit was being concluded, the TGA provided evidence that options for addressing the issues raised in the remaining recommendations of the Expert Committee were being considered as part of reviews on transparency and on complementary medicines reform. The reviews were initiated or endorsed by the Parliamentary Secretary.
43. It would enhance transparency and help inform both consumers and healthcare professionals if the TGA were to place the summary of evidence it collects from sponsors, as received, on its website—with a clear indication of whether it had been assessed or evaluated by the TGA. DoHA-sponsored research conducted by the National Prescribing Service (NPS) has shown the need for improving the availability of information about complementary medicines and, hence, awareness for Australian health professionals and consumers. The NPS concluded that strategies to improve decisions by consumers about complementary medicines should focus on enhancing the information resources preferred by consumers, including the Internet.18,19
44. The publication of summaries of evidence on the TGA website would enable potential consumers of the listed item or their advisers to access this information, should they wish, and form a view about the merits of that summary of evidence when considering whether to purchase and use the medicine.
Previous ANAO and Parliamentary inquiry recommendations (Appendix 1)
45. The last ANAO performance audit on regulation of therapeutic goods was tabled in December 2004, ANAO Audit Report No.18 2004–05, Regulation of Non-prescription Medicinal Products. This audit took place after the major recall of Pan Pharmaceutical products. The audit focused substantially on the regulation of manufacturing practice by the suppliers of non-prescription medicines.
46. As part of the current audit, the ANAO examined DoHA’s progress with the recommendations of the 2004 performance audit and the additional recommendations of the subsequent inquiry by the Joint Committee of Public Accounts and Audit (JCPAA). The assessment of the implementation of the 32 recommendations from these two previous reports on the operation of the TGA found that the work was nearly complete:
- 29 recommendations are implemented;
- two recommendations are substantially implemented; and
- one recommendation is partially implemented.
47. The Department of Health and Ageing provided the following response to the report:
The Department of Health and Ageing thanks the Australian National Audit Office (ANAO) for its report regarding the regulation of complementary medicines in Australia.
The Department has accepted all recommendations and has commenced work on developing a plan to implement all of the findings.
The recommendations are consistent with other work affecting complementary medicines regulation, including the recent reviews on Transparency, Advertising and Complementary medicines reform and the broader reform of the TGA under the TGA 21 project. The recommendations will be implemented in concert with recommendations arising from these other reviews, to the extent that their recommendations are accepted by the Government.
 National Institute of Complementary Medicines, ‘Facts and Statistics’, January 2009, available from <www.nicm.edu.au/content/view/65/36/> [accessed 4 August 2011].
 Of the 10 000 complementary medicines, only about 200 are in the higher risk ‘registered’ category; the remainder are in the lower-risk ‘listed’ category. There are about 3000 sponsors of complementary medicines, including both listed and registered medicines. The sponsor is, generally, the manufacturer, importer or exporter of the medicine.
 WHO Traditional Medicine Strategy 2002–2005, Geneva, 2002, p. 2, available from <www.who.int/medicines/publications/traditionalpolicy/en/> [accessed 4 August 2011]. Similarly, the National Prescribing Service Limited has reported that many Australian consumers see their complementary medicine use as natural and ‘part of a holistic view of health’. The research also revealed that many users associated ‘natural’ with complementary medicines being harmless and unlikely to cause any adverse effects.
 In addition, the Australian Competition and Consumer Commission (ACCC) is reported as having applied the provisions of the Competition and Consumer Act 2010 relating to misleading and deceptive conduct to claims relating to a complementary medicine (The Australian newspaper, 25 June 2011).
 Reported risks associated with listed complementary medicines are: delay in seeking treatment for serious conditions; unexpected side-effects; adverse interactions between the complementary medicine and prescription medicines; and the costs to consumers of purchasing products which, in some cases, are not effective in treating the conditions they claim to treat. See <www.betterhealth.vic.gov.au/bhcv2/bhcarticles.nsf/pages/Complementary_therapies_safety_and_legal_issues?open> [accessed 4 August 2011].
 See <www.tga.gov.au/about/international-anztpa-factsheet.htm> [accessed 4 August 2011]. A contentious factor leading to the suspension was concern about the possible adverse effect of the new arrangements on Maori traditional medicines. The New Zealand Government is introducing a separate scheme to regulate complementary medicines in the New Zealand market.
 DoHA, Incoming Government Briefing—Volume 1, item D27. See: <www.health.gov.au/internet/main/publishing.nsf/Content/min-briefs> [accessed 5 August 2011].
 TGA, advice to the Secretary, DoHA, ‘Medium Term TGA Direction’, January 2010.
 See Table 4.3, Chapter 4.
 DoHA, Incoming Government Briefing—Volume 1, item D27. See: <www.health.gov.au/internet/main/publishing.nsf/Content/min-briefs> [accessed 5 August 2011].
 'Indications’ means the specific therapeutic purposes of the medicine. The term ‘claims’ is generally taken as having a broader meaning, and includes statements made about the product in advertisements.
 In the context of its regulation of accredited residential aged care providers, DoHA has recently developed a Service Providers of Concern list, which the department has identified as representing a high risk of non-compliance. Similarly, the Aged Care Standards and Accreditation Agency Ltd maintains a ‘Homes of Interest’ list.
 The Transparency Review of the TGA, chaired by Professor Dennis Pearce AO, was announced on 16 November 2010 by the Parliamentary Secretary for Health and Ageing. The review, which was completed in July 2011, ran concurrently with the present performance audit. At the time this audit was being finalised the Government was considering the Review’s recommendations. The report of the Review is available from <www.tga.gov.au/newsroom/review-tga-transparency-1101.htm> [accessed 4 August 2011].
 This was originally suggested by the Expert Committee on Complementary Medicines in the Health System in its 2003 report.
 Government Response to the Recommendations of the Expert Committee on Complementary Medicines in the Health System, Attachment 2, p. 12, available from <www.tga.gov.au/pdf/archive/committees-eccmhs-response-050309.pdf> [accessed 4 August 2011].
 See the Sydney Morning Herald, 29 and 31 December 2010; the Sunday Canberra Times, 6 February 2011; ABC Radio National, the Health Report, 16 and 24 May 2011, available from <www.abc.net.au/rn/healthreport/index/> [accessed 4 August 2011]; various reports on ‘Croakey: the Crikey Health Blog’ available from <blogs.crikey.com.au/croakey/> [accessed 4 August 2011] and the 6 minutes.com.au website, available from <www.6minutes.com.au/news/complementary-medicines-fail-audits> [accessed 4 August 2011]. It should also be noted that, on 13 May 2011, the TGA published, for the first time, data on its post-market review compliance review work. This is available from <www.tga.gov.au/industry/cm-post-listing-compliance-reviews.htm> [accessed 4 August 2011]. This information was the basis of subsequent press articles.
 Use of figures drawn from the TGA’s post-market random reviews requires some caution as they are based on small samples and include a substantial component of minor non-compliance. It would be unfair to characterise all the compliance failure in the same way. However, it also appears likely that there is a substantial proportion—between a quarter and a half—where the OCM considers that the compliance failure is in the categories ‘moderate’ or ‘serious’.
 NPS, Review of the Quality of Complementary Medicines Information Resources: Summary Report. National Prescribing Service, Sydney, March 2009, p. 5.
 NPS, Information Use and Needs of Complementary Medicines Users, December 2008, p. 61.