In early March The Australian published an article claiming that the Therapeutic Goods Administration (TGA) was moving to ‘crack down’ on social media influencers by banning ‘paid or incentivised testimonials for health products’. Protest against this news was vigorous, with The Australian’s corresponding Instagram post rife with commentary. However, many soon pointed out that the ‘crack down’ had already been in effect for three months, with the TGA’s new Advertising Code (Code) enlivened on 1 January this year. So, what does the new Code actually say, and who, in reality, does it effect?
Although many of the updates to the Code (officially the Therapeutic Goods (Therapeutic Advertising Code) Instrument 2021 (Cth)) simply clarify wording and definitions, there are three main areas where substantive changes can be seen. These are: mandatory statements, testimonials and endorsements, and sample products.
Let’s take a closer look.
Mandatory statements
Following 18 months of community and stakeholder engagement, the TGA has reduced the number of mandatory statements required when advertising TGA-listed products. Previously, all advertisements were required to display a specific health warning defined in a table in Schedule 1 of the Code. The amended Code no longer contains this table. Instead, in Part 4, it details specific mandatory statements that must be ‘contained, prominently displayed or communicated’ in the advertising of certain kinds of goods. Notably, these mandatory statements are only required for products that are sold directly to consumers but cannot be inspected prior to purchase. These statements include:
| Statement | Mandatory | Relevant section of the amended Code |
|---|---|---|
| ‘ASK YOUR PHARMACIST ABOUT THIS PRODUCT’ | Goods only available for purchase from a pharmacist | 15 |
| ‘THIS PRODUCT IS NOT AVAILABLE FOR PURCHASE BY THE GENERAL PUBLIC’ | Goods only available to be supplied by a healthcare professional (i.e. that are not available for purchase by the general public) | 16 |
| ‘ALWAYS FOLLOW THE DIRECTIONS FOR USE’ | Goods being advertised in short-form (less than 15 seconds on radio or less than 300 characters through text) | 17 |
| ‘ALWAYS READ THE LABEL AND FOLLOW THE DIRECTIONS FOR USE’ | Medicinal goods | 19 |
| ‘ALWAYS FOLLOW THE DIRECTIONS FOR USE. ALWAYS READ THE LABEL AND FOLLOW THE DIRECTIONS FOR USE’ | Medical devices | 20 |
| ‘ALWAYS READ THE LABEL AND FOLLOW THE DIRECTIONS FOR USE’ | All other therapeutic goods where a label is attached to the product | 21 |
| ‘ALWAYS FOLLOW THE DIRECTIONS FOR USE’ | All other therapeutic goods where a label is not attached to the product | 21 |
Testimonials and endorsements
With most popular social media platforms possessing caption limits over 300 characters, the short-form statement offered by section 17 will likely not be an option for most influencer advertising, instead requiring the inclusion of one of the other listed statements. While this may be to the detriment of the ‘aesthetic’ many influencers subscribe to, the revised mandatory statements at least provide an increased degree of standardisation and streamlining across product advertising – arguably making it easier for consumers to identify the kind of the therapeutic good being promoted.
The ‘intimate’ para-social relationships constructed through social media platforms like Instagram and Tik-Tok make these mediums prime locations for product marketing. Like the new mandatory statement rules, updated regulation around testimonials and endorsements aligns closely with the Objects of the Code found in section 2: to prevent misleading and deceptive advertising, as well as advertising that creates unrealistic expectations about the performance of a product – something which has arguably been perpetuated through influencer marketing.
While the standards relating to testimonials and endorsements remain largely unchanged, the notion of a ‘relevant person’ has been introduced for testimonials under the newly created section 24, defined as a person ‘who is engaged in the production, marketing or supply of the goods’. Unlike the previous Code, which made no mention of influencers, the new Code specifically notes that a ‘relevant person’ includes influencers, as well as ‘direct sellers and other persons who have, or will receive, valuable consideration for making the testimonial’.
In practice, this means that testimonials cannot be used in advertising TGA-listed goods where the person giving the testimonial has received an incentive. If no incentive has been provided, testimonial advertising can still occur. Notably, incentivised endorsements are still permitted under the new Code.
So, what does this mean?
Although the Code does not distinguish or define ‘endorsements’ as opposed to ‘testimonials’, the TGA’s guidelines on Advertising to the public state that an endorsement (unlike a testimonial) does not reference a person’s individual experience in using the product. Therefore, although advertising referencing an influencer’s individual experience with a TGA-listed product can still technically occur, in such a lucrative market we are much more likely to see products being advertised through influencers offering their general support for a good.
In addition, former health professionals and practitioners, or anyone who has represented themselves as being one of these, have been excluded from providing paid testimonials as well as endorsements of any kind. This rule previously only applied to those currently working in healthcare, and again signals an attempt by the TGA to ensure that consumers have the ability to make informed health care choices, free from undue influence.
Sample products
Finally, the Code has significantly expanded the list of products that can be used as samples when advertising therapeutic goods. Samples were only briefly regulated by section 20 of the 2018 Code and were not defined. The new Code seeks to resolve this through a newly created Part 7, which defines a ‘sample’ as ‘any good given for free’ and clarifies that this free good must be a product listed on the Australian Register of Therapeutic Goods (in other words, a TGA-listed product). The expanded options for samples in the new Code is as follows:
| 2018 Code (Schedule 3) | 2021 Code (Annexure 2) |
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While there aren’t many products on the updated list that we can foresee being touted heavily on social media, the increased options nonetheless provide advertisers with a greater number of tools that can be added to their TGA product marketing toolkit.
Do I need to act?
As aforementioned, the Code and its amendments only apply to goods listed on the Australian Register of Therapeutic Goods. Suppliers, sellers and advertisers of TGA-listed products, particularly those who engage social media influencers, should become familiar with the Code, and consider how it could affect their business. Although the Code is already in effect, the TGA has permitted use of the current 2018 Code until 30 June 2022, so there is a transition period for businesses to adapt to the new requirements. After this time however, those found in breach of the Code will commit a criminal offence or be subject to a civil penalty under the Therapeutic Goods Act 1989 (Cth), with the maximum penalties being 5 years’ imprisonment or, for body corporates, a fine of $11,110,000.
Not sure how the Code might affect you and your business? HWL Ebsworth can help. Contact our IP, Technology and Media Team today.
This article was written by Luke Dale, Partner and Annabel Bramley, Law Graduate.
