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Episode 62
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Substantive Law
Avoid at Your Own Risk: the Secrets of Regulatory Investigations
Law as stated: 5 September 2022
What is this?
This episode was published and is accurate as at this date.
Tristan Dimmock of the Therapeutic Goods Administration takes Hearsay: The Legal Podcast through the secrets of regulatory investigations.
Substantive Law| What area(s) of law does this episode consider? | Regulatory investigations; including the powers available to investigators, how to respond when a regulator makes first contact, and how to best engage throughout the investigation. |
| Why is this topic relevant? | Dealing with regulators is a key skill for any Australian lawyer. From the Australian Competition & Consumer Commission (ACCC) to the Australian Taxation Office (ATO) and the Therapeutic Goods Administration (TGA), Commonwealth regulators play an almost daily part in the practices of many lawyers. These agencies monitor, investigate, and enforce compliance with relevant legislation and regulations. But the process of investigation and the powers available to regulators can be a bit of a mystery. This episode uses examples from the work of the TGA to demonstrate the powers available to a Commonwealth regulator and to illustrate how best (and how not) to respond to an investigation. |
| What legislation is considered in this episode? | Therapeutic Goods Act 1990 (Cth) (TG Act) Evidence Act 1995 (Cth) (EA 1995) Poisons Standard June 2022 (Cth) (Poisons Standard) |
| What cases are considered in this episode? | Australian Competition and Consumer Commission v Lorna Jane Pty Ltd [2021] FCA 852
Secretary, Department of Health v Oxymed Australia Pty Ltd & Malcom Hooper [2021] FCA 1518 (Jade link)
Secretary, Department of Health v Evolution Supplements Australia Pty Ltd (No 2) [2021] FCA 872 (AUSTLII link)
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| What are the main points? |
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| What are the practical takeaways? |
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| How to: | How to ensure screen captures will be effective as evidence
For further details on these tips, listen to Tristan’s episode from 57:25. |
| Show notes: | National Drug Strategy Household Survey 2019 |
| David Turner:
| Hello and welcome to Hearsay the Legal Podcast, a CPD podcast that allows Australian lawyers to earn their CPD points on the go and at a time that suits them. I’m your host David Turner. Hearsay the Legal Podcast is proudly supported by Lext Australia. Lext’s mission is to improve user experiences in the law and legal services and Hearsay the Legal Podcast is how we’re improving the experience of CPD. The ACCC, ASIC, AHPRA, the ATO, AUSTRAC and the TGA. Now, whether those acronyms give you the cold sweats or whether you’re an admin law boffin, Commonwealth regulators play an almost daily part in the practices of many Australian lawyers. Now, agencies such as these have the broad responsibility of ensuring that those playing in their jurisdictional sandpit are behaving well. This means monitoring, investigating, and enforcing compliance with the legislation that they have responsibility for. Responding to a regulatory investigation is a key skill for any Australian lawyer, especially those specialising in administrative law, in private practice, in house or working for regulators themselves, and who better to speak about regulatory investigations than a leader in investigations from one of Australia’s most important regulators. With me today to talk about how regulators gather evidence in the internet age and the tools that regulators have at their disposal and how to appropriately respond in the event a regulator makes first contact is Tristan Dimmock, Assistant Director in the Advertising and Product Investigations section in the Regulatory Compliance Branch at the Therapeutic Goods Administration. Thanks so much for joining me on Hearsay the Legal Podcast, Tristan. |
| Tristan Dimmock: | Thanks, David. Thanks for having me. |
| DT: | It’s a pleasure. Now, you’re a government lawyer, you work in Canberra, in our nation’s capital, but you’re originally from Sydney. Tell me how you came to work for the TGA. What’s your career journey been like? |
| TD: | So, I grew up in Epping in the Northwest to a teacher and a musician. Had no legal pedigree in the family, but developed a love for public speaking and debating throughout high school. I grew up with a stutter and my way of conquering my stutter was to get involved in anything that involved speaking and that led me in year 11 to making a pact with my best friend that we’d one day become partners in a law firm. Unfortunately, he hasn’t taken the legal route and I’m the last man standing, but coming to the end of high school, my mom was adamant that I was to attend university outside of Sydney and gain some real life experience. So, I attended the open day at ANU in Canberra and ended up doing a Bachelor of Arts and a Juris Doctor there and I thought I would return to Sydney to practice law, but I was successful in obtaining a clerkship at MinterEllison in Canberra and ended up getting my legal training at MinterEllison, staying in Canberra and I fell in love with administrative law and regulatory law and from there a job advertisement about six months before the outbreak of the COVID-19 pandemic, and I say that because I had no idea what was coming, but there was a job advertisement at the Therapeutic Goods Administration. They wanted a litigation lawyer. They wanted somebody with admin law experience and I had no science experience, had no pharmacology, couldn’t tell you one molecule from another, but I got such a great vibe from the interview, ended up getting the job as a lawyer at the TGA and I’ve now been there for nearly four years and over the last year, I’ve been given the opportunity to move into a pseudo legal role where I’m managing a team of regulatory investigators, progressing cases. I still consider all of my files in a similar way that I did when I was a lawyer. Progressing those from anywhere from a warning email, to court and my practice today is exceptionally broad and I love it. |
| DT: | What a fantastic story and I love that you are maintaining your commitment to yourself, to take on any public speaking engagement you can by being here today. Now, you’re in the Advertising and Product Investigations section, which must be a fascinating area of the TGA to be involved in at the moment, not just because of the COVID-19 pandemic and the kind of products that’s no doubt given rise to, but also just seeing the TGA’s news and notices section this morning on its website, there’s a lot of products that fit within the TGA’s remit that a listener might not think of as a therapeutic good. I’m thinking about vaping products, for example, seem to be a big regulatory priority or a big regulatory occupation of the TGA. What does your section do on a day to day basis? What does a day in your life look like? And how does that fit into the TGA’s overall responsibilities as a regulator? |
| TD: | David, it’s interesting that you mentioned nicotine vaping products and perhaps I’ll start with that. That is my primary responsibility at the moment. I’m the internal compliance manager for nicotine vaping compliance. |
| DT: | Yeah, right. |
| TD: | And that has been a whirlwind journey since September last year, when from October 1 all nicotine vaping products became prescription only medicines and fell squarely within the remit of the TGA, as opposed to the ACCC or state and territory health bodies and that’s a good place to start. The Advertising and Product Investigation section primarily focuses on investigations, relating to what we colloquially call unapproved therapeutic goods and the TGA’s regulatory scheme is centered on an apparatus of a register and for a therapeutic good, which, as you indicated, David, refers to such a broad category of goods. It’s not just your medicines, your medical devices, your blood and tissue products and the vitamins and complementary medicines that you see on your shelves at the supermarket. It is anything, any product, that makes what we call a “therapeutic use claim” and that is exactly what it sounds. It’s a product that is indicated or promoted to be used in the treatment or prevention of a medical illness or disease |
| DT: | And I imagine the therapeutic use claim for vaping products is usually that they’re a quit smoking aid. |
| TD: | Correct and the law change moved nicotine vaping products into a schedule in the Poisons Standard which is a legislative instrument, which designates controls over substances and those controls can vary from very low controls to very high controls where licensing and restrictions are in place and the two most common controls that the TGA encounters are schedule 4, which is prescription only substances and the substance of nicotine was included in schedule 4 when used in a device for inhalation and that’s an important distinction to make, because you can imagine that if nicotine itself, as a substance was included in schedule 4 to the poison standard, without a caveat of how that particular substance was to be administered, that would bring in a whole ream of other nicotine products of which, to tie this off, the TGA already regulates nicotine replacement therapy products. |
| DT: | Talking about gum, patches. |
| TD: | Exactly and so nicotine vaping products were brought in to be treated similarly to other nicotine replacement therapies and so the regulation, compliance and enforcement in relation to nicotine vaping products has been the primary objective of my team’s role at the TGA. TIP: Now, nicotine vaping products have enjoyed a meteoric rise in popularity in the last six years or so, especially amongst young people. According to the National Drug Strategy Household Survey in 2019, nicotine vaping product use increased 7 times between 2016 and 2019. And the Therapeutics Good Administration has a particular interest in nicotine vaping products as a therapeutic good because, increasingly, studies are suggesting that there is not very much evidence to promote the use of so-called e-cigarettes for smoking cessation. The TGA’s position on the health impacts of nicotine vaping can be found in Therapeutic Good Order 110 which states that “the long-term health risks of nicotine vaping products are still unclear and evidence of their potential efficacy for smoking cessation is currently mixed, with more reliable, large-scale studies required.” TGO-110 also provides guidance on the minimum safety and quality requirements for nicotine vaping products that aren’t registered by the Australian Register of Therapeutic Goods (ARTG) but are imported into, supplied in or exported from Australia. And that guidance in TGO-110 has a few different objectives:
On a day to day basis, the Advertising and Product Investigation section commences investigations or compliance activities where the starting point for the investigation is the advertising of the good, and that can be distinguished from some other compliance areas within our branch and within the TGA that may commence their inquiries from other activities such as the import or the manufacture or the supply and so our section primarily deals with the advertising and commences the investigation in that way. |
| DT: | And does the advertising of a nicotine vaping product, or any other kind of product that might fall under your team’s remit, does that come to the attention of your team because you’re actively searching for those advertisements or because a member of the public brings them to your attention? How does that come to your team’s attention so that you can commence that investigation? |
| TD: | The TGA undertakes intelligence led risk based approaches to the compliance and enforcement of therapeutic goods. There are two main ways of obtaining the information to then make an assessment of who to investigate and what approaches to take and those two signals, so to speak, are primarily from reports, from both members of the public and from other government agencies or internally within the TGA. But secondly, through our own scoping or our own intelligence that we obtain and I say that by way of that we receive hundreds, if not thousands of reports of alleged unlawful, in our case, advertising of therapeutic goods and our section is a team of about 30 and you can imagine that it would be very difficult for a team of 30 to investigate every single report and referral that comes to us. |
| DT: | Absolutely. Yeah. I can understand why you need to take one, a risk based approach because you need to prioritise these investigations in some way with finite resources as any organisation does, but then you also need to, and I love that you used the word signals, you need to take one complaint, not as ‘well, now we have to go and conduct a full scale investigation because we received a complaint’, but that’s one signal of a possible contravention that we need to take into account, but what is the net effect of all of those signals and when do we reach that critical mass where we decide to move forward with an investigation? And I guess that’s what my next question was going to be. At what point are those signals sufficiently strong that you feel compelled or persuaded to commence an investigation and then who makes that decision at the TGA? |
| TD: | Great question. The primary threshold is, does the report referral signal relate to a compliance priority or compliance project and the TGA has just released its 2022/2023 compliance priorities and when you have a look at those, you’ll see that compliance in relation to nicotine vaping products is there. Medical cannabis, therapeutic goods relating to COVID-19. Social media advertising is a priority. There are a number of others, but the primary threshold is, does it fall within one of those priorities? Does it fall within those operations that we have publicly committed to taking strong compliance and enforcement action in relation to, and then from there, the individual matters are then assessed in relation to their risk to public safety, the seriousness of the breach or the alleged breach and the two main ways that that’s assessed is the seriousness of the product itself or the claims made about the product and then I guess, lastly, are we dealing with serious non-compliance? Are we dealing with repeated non-compliance? Has this entity come to our attention before? Are they aware of their regulatory obligations? What is the size of that entity? And there’s no clear formula for which ones go through and which ones don’t, but that whole calculus is then assessed. And there are two main ways that it then I guess, gets triaged in terms of who makes the decision and how does it get from a signal to an investigation team? And there is a triage section that receives this and does that sort of preliminary analysis and then there are two committees that form the primary basis of how then cases are allocated, either because it’s already been decided that certain compliance priorities are to be pursued or because the matters come to that committee and the decisions being made to proceed and those two committees are the operations committee and the enforcement committee, which the names suggest, I guess what they do. |
| DT: | Exactly what it says on the tin. |
| TD: | Yes. |
| DT: | I wanted to go back to a couple of things you said. First, you talked about, in terms of looking at the severity of the breach or the alleged bridge and the impact of the breach, you talked about both the impact of the therapeutic good or the unapproved therapeutic good and the claims that it makes as being to alternatives for the way you might assess that. Is that, on the one hand, a product that is fairly benign in its impact on the human body, but claims to do something quite dramatic, for example, if I claim that I grew a special kind of lettuce that could cure cancer, and then, on the other hand, a product that might make a fairly modest claim in terms of its health benefits, but actually has some pretty deleterious health benefits if you use it, I guess we’re talking about arguably nicotine vaping products, they’re making a claim about their ability to assist you in quitting smoking, but actually having some pretty severe impacts on your health. |
| TD: | A good example, I think, is the case, the regulatory action that was taken against Lorna Jane in relation to their promotion of activewear for the prevention of COVID-19 |
| DT: | Right? TIP: Now, Tristan just mentioned the example of Lorna Jane. For those not aware, in July 2020, the activewear fashion brand Lorna Jane advertised that its “LJ Shield Activewear” could eliminate or stop the spread of viruses like COVID-19. In representations on its website, its Instagram profile, and in media releases the brand stated that LJ activewear “makes transferral of pathogens impossible by eliminating the virus on contact.” Another regulator, in this case the Australian Competition and Consumer Commission, launched and won a Federal Court action against Lorna Jane for false and misleading advertising. Lorna Jane admitted that the representations were false and misleading. The Court ordered the brand to pay a penalty of $5 million, stating that “the behaviour of Lorna Jane can only be described as exploitative, predatory, and potentially dangerous”. |
| TD: | Where you take a clothing garment, which you wouldn’t ordinarily consider to be a therapeutic good but then the claim made about that garment at the height of the pandemic or in mid-2020, the seriousness of that claim and the impact that it was perceived that would have on the uptake of personal protective equipment such as face masks and whether consumers would seek out appropriate medical treatment or whether they’d walk into a Lorna Jane store and purchase clothing garments, I guess is an example of where you do have quite a benign product, but a serious claim. |
| DT: | I suppose you’re worried about substitutes, whether they might substitute an ineffective product that makes a spurious claim for an entirely legitimate therapeutic product that has an effective claim. |
| TD: | Correct. Yes and the Lorna Jane example is something that comes across my section’s desk very regularly and I raise it because compliance in relation to therapeutic goods is not just in relation to paracetamol or COVID vaccines or products that we ordinarily will think of. |
| DT: | Yeah, absolutely. I think looking through the notices section of the TGA website earlier today, I was surprised at the broad remit in terms of the products that the TGA investigates because they aren’t the, kind of, chemical compounds that, I guess, would come to mind, the sort of things that you might go and buy at a pharmacy, because it really is anything that has a therapeutic claim. I did want to go back to one other thing you said, and, I suppose, this is more an example of the TGA as a regulator, generally, rather than the TGA specific regulatory responsibilities. That focus on compliance priorities or enforcement priorities is a common one amongst Commonwealth regulators. If you go to the ATO’s website, you’ll be able to see the ATO’s enforcement priorities. Phoenix activity has been a big one for the ATO and for ASIC over the past few years, for example and I can understand why those enforcement priorities play such a large role in the decision to commence an investigation or an inquiry. I can also imagine that there are conceivably matters that are contrary to the legislation or regulations that your agency is responsible for, but don’t really fall within one of the enforcement priorities. What’s the threshold for commencing an investigation into a, kind of, non-priority area, which is nevertheless contrary to law? |
| TD: | There are two main ways that those other cases might proceed through to an investigation. And that goes back to those factors that I referred to before. What is the public health risk? What is the nature of the breach? What is the nature of the entity involved? What is the risk to the integrity of the regulatory scheme itself? And those cases are considered on a case by case basis and, whilst there’s no clear threshold, there are, of course, many of those and each compliance unit takes on many of those sorts of cases in addition to their BAU, which might be managing the COVID-19 priority area or, in my case, the nicotine vaping priority area. |
| DT: | So, at the end of the day, it’s a risk based assessment. It’s about that severity of the harm or extent or likelihood of the harm, kind of, calculus but that being in a priority area certainly elevates that assessment or that calculus for that particular case. Now, once you’ve determined to commence an investigation based on that assessment, what happens then? What’s the first step and what tools are available to you at that stage? |
| TD: | So, an investigation in very simple terms can be broken down into three main stages. There’s the preliminary investigation or preliminary stage and that’s where the investigator who’s been assigned the case undertakes those initial inquiries. Who is alleged to have contravened the relevant provision? What provision has been alleged to have been contravened? What inquiries, evidence, need to be obtained to substantiate the elements of those allegations? And, I guess, forming a preliminary view on whether the allegations are substantiated on a reasonable suspicion basis and I say reasonable suspicion because at this stage, all we might have is what the reporter has sent to us and what we might have been able to see on a website or a social media platform but in some cases you can imagine that by the time we look at it, the offending advertisement actually may not be visible, or it may be on a private group, or it may be on a password protected area of a website where we need to undertake some further enquiries to substantiate it. And that then, I guess, moves onto that second phase in the sort of general process and that’s the evidence gathering stage and usually there’s an investigation plan, some sort of plan of how you are going to obtain that evidence and the main ways that, in the advertising space, evidence is obtained is, firstly, by being able take essentially captures from a website of what is being promoted, secondly, by issuing statutory notices or otherwise seeking the provision of information on a voluntary basis from, for example, payment providers, web developers, or web designers from social media influencers themself, or from the advertiser themself and the third main way of obtaining evidence can be through the execution of a warrant at, for example, a warehouse where it is believed that the products that are advertised on a website might exist and for at least the advertising contravention it might be that on those premises, there’s a computer or other business records that we might be able to obtain under the warrant and that’s usually explored in that investigation plan but most of the investigations we undertake primarily on the basis that they are usually investigating what’s been publicly promoted on a website or social media. Our investigations are largely desktop. |
| DT: | I suppose you’d also call them open source in the sense that information is available directly or indirectly to the public, if you’re looking for it. I love that you use the word reasonable suspicion because I suppose a lot of our listeners, as lawyers are thinking in terms of the burden of proof that they typically encounter in their day to day practice, whether that’s the balance of probabilities or beyond reasonable doubt, but of course the threshold for undertaking the investigation necessarily has to be much lower. So, talk about what a reasonable suspicion is for a minute and maybe talk about that in the context of the level of reasonable suspicion that you might have to develop to pursue something like a warrant. |
| TD: | Reasonable suspicion is a low bar, but there must be something you can point to to substantiate or give some basis to form that suspicion and what I mean by that is that with an advertisement, for example, it might be that we haven’t been able to obtain a copy of the advertisement ourself, but we’ve got the advertisement from the reporter. At that stage, we could point to that representation of the advertisement taken by, of course, the reporter to form the basis to say that there at least appears that there may have been a contravention. The best way, I think, of explaining reasonable suspicion might be by comparing it to reasonable belief and then balance of probabilities and then beyond reasonable doubt and reasonable belief is a critical standard of proof for regulators and that is because the reasonable belief standard is usually that marker from which enforcement action is then taken and so you’ll frequently see in infringement notice provisions, for example, that an infringement notice can only be given if the relevant person who’s been delegated with the powers to give such a notice has formed a reasonable belief that the contravention has occurred and reasonable belief does require more than just a superficial tenuous, small piece of the puzzle. Reasonable belief does require you to, I would say, physically hold some evidence in relation to each element of the offense or civil penalty provision to support the finding but reasonable belief is lower than balance of probabilities and I think we could have a whole episode of what is actually meant by balance of probabilities and I think you would get different answers from each person that you speak to but the way I look at balance of probabilities is; does the evidence go more than 50/50? And I know that that might be putting it too low, but I think that’s a good way of looking at it. If it is on the scales and you’ve got your evidence on one half of the scale and exculpatory evidence or other unknowns on the other side, is your evidence heavier? |
| DT: | Yeah. Is it more likely than not? |
| TD: | Exactly. |
| DT: | Yeah. |
| TD: | Whereas with reasonable suspicion, it doesn’t necessarily need to be more likely or not, but of course, forming a finding on a reasonable suspicion doesn’t then usually allow you to take enforcement action. So, there are some controls in terms of the coercive nature of a regulatory response based on the evidence that you have in front of you. |
| DT: | I wonder if I’m about to infuriate both criminal lawyers and investigators, but I wonder if it’s almost the reverse of reasonable doubt in the sense that, maybe you can tell me if I’m thinking about this right or not, if reasonable suspicion rises to the level that knowing what you know, that’s a possible or valid explanation. |
| TD: | Yeah. I think that’s a good way of looking at it and that when you, of course, get up to that criminal standard, the beyond reasonable doubt, I think speaks for itself… |
| DT: | Yes. |
| TD: | And you can imagine that as I’m sure listeners are aware that is a very high standard, and that is the highest standard and there’s huge obligations on the investigator in submitting briefs of evidence to prosecutors to substantiate all of the elements beyond reasonable doubt, and also that there is evidence that the defenses available are beyond reasonable doubt as well and I guess I’ll finish with this, that an investigator should start an investigation with court in mind and so whilst we might have focused on reasonable suspicions and reasonable belief, but right from their commencement of the investigation they’ve got in their mind, how is each step I’m taking, each evidence I’m obtaining, all of the information I’m receiving, going to be used or could be used in court? Is it going to be admissible if there are any issues? During the investigation those are attempted to be ironed out. |
| DT: | That’s such a good point because of course with those standards of proof being different and not being so constrained by the rules of admissibility when you are trying to satisfy yourself of a reasonable suspicion, of course, it’s going to be difficult to achieve those enforcement priorities unless you have admissibility in mind and I want to ask you a little bit about the admissibility of some of that open source web based documentation a little later. I imagine, especially in the wake of the COVID-19 pandemic which is no doubt enforcement and regulatory priority for almost every regulator in Australia, I can imagine in some form or another, you must work quite closely with a lot of other Commonwealth and state based regulators and in the TGA, I imagine that’s especially true of the ACCC and of the state based fair trading bodies being, you know, consumer protection agencies. How do you work with those other agencies in terms of intelligence gathering and collection and in terms of the enforcement action that you take? |
| TD: | As a consumer protection agency, the TGA does work closely with, as you’d mentioned, the ACCC, fair trading bodies, law enforcement and state and territory health departments. It also works quite closely with AHPRA – the Australian Health Practitioner Regulation Agency – and that is because the Therapeutic Goods Administration administers the Therapeutic Goods Act which deals as I’ve said with the products themself, but AHPRA then mainly regulate the people who provide the services in relation to those goods and I think that’s a critical distinction to understand in terms of the role of the TGA and that there will be crossovers. For example, if a pharmacist is allegedly unlawfully advertising or supplying a therapeutic good, there may also then be professional practice issues that AHPRA or a professional body might be interested in and so there are information sharing arrangements between us and all of the bodies that you’ve mentioned, David, and AHPRA to ensure that the right information is given to the right people and in relation to nicotine vaping products, which is the area that I’ve closely managed for the last year, there are regular meetings amongst commonwealth and state bodies around the regulation of nicotine vaping products and those meetings are to ensure that at all the different areas of the supply chain, the appropriate body is considering the best regulatory approach and I’ll just provide an example. The TGA, for example, in conjunction with the Australian Border Force has primary responsibility for preventing the importation of those goods but when those goods then make it into the country, either because they’ve been missed, because, of course, the Border Force can’t stop everything, or because they’re already here because they’re being manufactured. Each state and territory with nicotine vaping products, for example, regulates it so differently. At the supply level, some local councils take primary responsibility. In some states, it’s the police that take primary responsibility and of course the TGA sits over that and as long as there’s jurisdiction in the matter, and a lot of Commonwealth laws rely on the corporations power for its constitutional authority and the Therapeutic Goods Act is no different. So, the one way that supply can be regulated by the TGA is if it’s done by a corporation. TIP: Now, as Tristan said, in 2020, the TGA made the decision to include nicotine vaping products in Schedule 4 of the Poisons Standard, which means the products are prescription only. Notice of that decision can be found on the TGA’s website dated the 21st of December, 2020. Notwithstanding the TGA’s decision, the regulatory and enforcement situation for these nicotine vaping products is kind of complex. In NSW, for example, the suspected retail sale of e-cigarettes containing nicotine is dealt with by NSW Health investigators under state regulations. However, in Victoria, where it is suspected that a retailer is selling e-liquids that contain nicotine, Victorians are encouraged to report that breach to the Police. Now, there are of course, many other ways of incorporating the jurisdiction of the TGA into supply of therapeutic goods around the country but the point I’m trying to make is that with the regulation of therapeutic goods, the TGA is merely one cog in a much larger machine and that the example, I think I’ve given shows that one product can involve many different authorities all with the consumer protection function and aims in sight. |
| DT: | That’s such a great point and a great explanation of why we haven’t been saying goods and services when we’ve been talking about some of these topics earlier in the episode. I can just imagine an example of where your role and AHPRA’s role overlap in that someone who’s selling e-cigarettes and then unlawfully supplies nicotine with them is both selling an unapproved therapeutic good which breaches the regulations for which you’re responsible but I imagine also that’s probably regulated under some kind of regulation for pharmacists as well in that there are probably restrictions on providing prescription medications, unless you’re a registered pharmacist. Now, we’ve been talking a bit about how you collect information to satisfy yourself that you should commence an investigation, how you collect information once you have commenced an investigation, at some point in that investigative process, you contact the person you’re investigating – that initial approach. Tell me a bit about how you contact that person in the first instance and how important the response of the investigated person is in the first instance in influencing how the investigation progresses from there. |
| TD: | Cooperation with a regulator is strongly encouraged. |
| DT: | I think every regulator would say that, yes. |
| TD: | And the main ways that, at least, the Advertising and Product Investigation section will make that first contact is through an initial phone call and you can understand that talking it through with the alleged contravenor can be a really good way of building that trust and rapport and being able to speak to the owner of a business, for example, or a pharmacist over a 10 to 15 minute phone call, can save you hours in preparing a beautifully crafted cease and desist letter, and can go a long way in promoting voluntary compliance. It may also give the alleged contravenor an opportunity to clarify some obligations that they may be unsure of and now, it might be difficult in those phone calls because, and I’m sure most regulators would say this, that, in particular, if you are an investigator, you’re not there to provide to an alleged contravenor and we would encourage all persons, at least engaging in therapeutic goods, to obtain their own independent regulatory or legal advice. However, that first phone call can be a really good opportunity to build that connection and work towards voluntary compliance but you can imagine that sometimes we don’t have a phone number or we are unable to make that contact and so some sort of written correspondence is provided and I’ll just add that, of course, after a phone call, there’s always a follow up written correspondence, whether it’s an email or whether it’s a letter and that warning letter or cease and desist letter, if it requests that something is done, the regulator, including the TGA, expects that thing is done within the timeframe and they expect that the alleged contravenor will respond. |
| DT: | And I suppose that, as you alluded to, that could be a cease and desist, stop advertising this product, or it could be a request for further information. |
| TD: | Correct or it could be a sort of education letter where it’s not as strong as a cease and desist but it’s very clearly providing, in our case, the advertiser with an overview of their regulatory obligations and requesting that they undertake a review of their advertising material but, David, if I might say something and I think this would be a consistent message from all regulators and I wanted to quote Justice Rofe in a recent TGA case of the Secretary of the Department of Health against Oxymed and Malcolm Hooper. And what she said was “it is the responsibility of anyone who wishes to engage in a business which involves the use of therapeutic goods or the provision of health services to be aware of the applicable statutory scheme, the conduct that is prohibited, and to comply with the relevant regulatory requirements… from the time they start the provision of those services, if not before“, and why I raise that is a person should not wait to receive contact from the regulator before coming into compliance with the Act and so whilst cooperation following contact with the regulator may, of course, go a long way in the regulator deciding not to escalate the matter, by no means will the alleged contravenor be immune from subsequent action being taken. TIP: Now, the case that Tristan just quoted was the Secretary, Department of Health v Oxymed Australia Pty Ltd & Malcom Hooper [2021] FCA 1518. Oxymed promoted devices that were intended to administer hyperbaric oxygen therapy on their Facebook page and website. If you don’t know, hyperbaric oxygen therapy is where oxygen is delivered at an increased concentration and at a pressure that’s above normal atmospheric pressure. Oxymed’s promotion claimed that these devices would help with conditions like Alzheimer’s, autism, COVID, depression and PTSD. A notable aspect of the decision was the lack of insight expressed by the second respondent, Malcolm Hooper. In imposing penalties on Oxymed and Mr Hooper totaling around $3 million, Justice Rofe noted at [260] that, and I quote, “I am also concerned that Mr Hooper lacks insight into the contravening conduct, in particular the seriousness of the conduct and why the conduct should not continue.” We’ll leave a link to the decision in the show notes. |
| DT: | You said the regulator shouldn’t be advising someone that they’re investigating. I suppose there is a, and you used the word education, I think that’s a great word for it, there is an educational role that all regulators really have for both the consumer that they’re trying to protect and for the potential contravenor to make the existence of those regulations known and, I suppose, in that framing of education rather than advice, ‘did you know that this responsibility exists, perhaps you should think about whether you comply with it.’ I can definitely see the value in saving the taxpayer from a lengthy piece of litigation or investigation, if that educative step is what really ends up resolving the matter that can be really important. Now, there’s a case that we wanted to discuss today, which I think highlights the importance of that initial response to an investigation and it’s actually the largest ever civil penalty for a contravention of the Therapeutic Goods Act, a 2021 decision in relation to Evolution Supplements and its sole director. Can you tell us a bit about that case and why it really demonstrates the importance of that first response to a regulator? |
| TD: | So, David, Evolution Supplements was the first case that I had carriage of as a lawyer at the TGA and it was a two year journey for me and what that case concerned was the alleged unlawful advertising of sports supplements and you may say ‘how do sports supplements fall within the therapeutic goods framework?’ It’s exactly what we were talking about before, that where they make a therapeutic use claim even something as simple as building muscle can be construed, and I put that exceptionally simply, as a therapeutic use claim, but what Evolution Supplements involved was much more serious than just some run of the mill sports supplements. The sport supplements that were being advertised contained substances included in schedule 10 to the Poisons Standard and schedule 10 to the Poisons Standard are for substances that are prohibited from sale and use. |
| DT: | Not just prescription only, but prohibited completely. |
| TD: | Correct and in a couple of the substances, such as cardarine for example, clinical trials in, I think, the 80s indicated that the substance was carcinogenic and was causing cancer in the mice that were part of the treatment and so those sort of substances were found in about 200 products on the website. |
| DT: | Wow. |
| TD: | And it was due to the seriousness of those substances, the extent of the unlawful advertising, so 200 products, and then, what I’ll get to now, the attitude to compliance that resulted in the commencement of civil penalty proceedings in that case and so Mr. Keskin, the sole director of Evolution Supplements, received a routine warning from the TGA, a low level document requesting that him and the company review the website. There was no response to that, but there was some sort of confirmation that was received. That was then followed up with a cease and desist letter, so you can see an escalation. ‘You have 48 hours. If you don’t bring your website into compliance, then coercive action is going to follow.’ Now, there is usually some step between a cease and desist letter and seeking an injunction and that step, at least in the Therapeutic Goods Act, is usually giving the person a statutory direction to cease advertising and that is what Evolution Supplements and Mr. Keskin received, a statutory direction saying you must cease advertising a very long list of products. That document went unanswered. And in some respects, then the regulator’s hands were tied and an injunction was subsequently sought and court proceedings were instituted of which, as you started with David, it was because of the nature of those substances that I alluded to before and the complete disregard for the regulatory responsibilities that a penalty of over $10 million was imposed on the company and $1 million personally on Mr. Keskin, but David, it gets worse. So, it wasn’t just a, ‘I’m receiving all these correspondence from the TGA. I’m just going to ignore it. You’ll go away.’ What actually happened was Evolution Supplements and Mr. Keskin took down the website during business hours and started advertising the products between 8:00 PM and 4:00 AM in what you can imagine appeared to be an attempt to evade the detection of the investigators investigating the case and I’ll be very honest with you. It would’ve nearly worked and I say that by way of up until then it was not standard practice to check a website at odd hours. I can assure you it now is, but going back to working with other regulators, we actually received a tip off from another regulator that the website was up at what was called ‘the after dark hours‘ and we received that tip off and this is I think a valuable point I’ll say about working in the regulatory industry is that we received that tip off from a person who I had met at a regulatory conference, a couple of weeks before and I say that by way of sometimes networking can specifically assist you in obtaining information and you never know when it might help and we had commenced proceedings at that time and I was in conversation with a person saying, just filed this exciting case. Of course I could talk about it then because it had been filed and a couple weeks later something had obviously triggered his memory. |
| DT: | Wow. You do think of regulatory investigations as being very formal by the book, sort of, processes and I imagine for the most part they are but that sort of happening on information from a personal contact is pretty exciting and a great demonstration of the value of networking. Now, you mentioned that they’d been taking the offending content down during business hours was a damning admission as to the contravention itself but I imagine often investigated people might take down that content from the website permanently, or they might otherwise try to obfuscate or conceal an earlier breach. How do you find that material is archived information from the Wayback Machine, for example, is that something that you can use in your investigation? Is it admissible if you were to bring enforcement proceedings? How do you respond to those attempts to conceal behaviour online? |
| TD: | I’ll start by saying that alleged contravenors similar to Mr. Keskin and Evolution Supplements are increasingly taking more savvy and sophisticated ways of evading detection and the TGA is also taking steps to enable our investigators to be able to identify similar sorts of evasion techniques. I’m not going to expand on that. |
| DT: | Probably for the best. |
| TD: | However, I will say that you can imagine that is a real risk and based on our experience in Evolution Supplements, you can understand if we perhaps don’t at first glance accept an email from a contravenor saying the website is down but in terms of the Wayback Machine, the admissibility of evidence from the Wayback Machine, I think could be a whole podcast topic and there is an emerging case law in Australia about the admissibility of the Wayback Machine and, for those of you who are not aware what the Wayback Machine is, it is an internet archive managed by, I think the company’s called the Internet Archive and it’s based in California in the USA and for the last couple of decades, it has exactly what it says, archived the internet. So, it trawls the internet at random points in time and takes snapshots of websites and that is a tool that I’m sure more regulators are starting to use, including the TGA to obtain, at the very minimum, information about how long an advertisement was on the internet, what its content was, how it changed over time but because it is not the contemporaneous evidence that the investigator visually saw on their screen, it is technically, or at least, there could be an argument that it is hearsay and, as I alluded to, there are a number of cases that have gone through the Australian courts. There’s at least three or four main Federal Court cases that have considered the admissibility of the Wayback Machine and then one very recent Federal Circuit Court decision, which the long and the short of it is that the courts are starting to take what I’ll call judicial notice of the Wayback Machine. In a number of cases, an employee from the Wayback Machine has given evidence in court… |
| DT: | Really? Wow. |
| TD: | As to how the software works, what it does and, for all intents and purposes, authenticates the material and that there is actually a standard affidavit on the Wayback Machine’s website that provides that authentication of the software that was taken and the courts, as I generally put it, have taken judicial notice of the Wayback Machine and are starting to take a more liberal view to its admissibility and that Federal Circuit Court case is a 2021 case, and that is Home Grown Brands v Sperling Enterprises. I won’t go through the facts, but essentially the Court held that the Wayback Machine evidence comprised of knowledge that was not reasonably open to question. They essentially admitted the evidence as what I’ll call authentic documents under section 57(1) of the Evidence Act, which means evidence is admitted on the basis of what the party claims it to be and essentially, as I said, judicial notice under subsection 144(1) of the Evidence Act was given to the Wayback Machine evidence and critical to this was that the court was persuaded that those captures were an accurate representation of what was on the webpage at that particular point in time. |
| DT: | That’s so interesting and it makes so much sense because, a screenshot is far more manipulable, far less reliable as a document, as a record, as hearsay, really of the actual content of the website than the Wayback Machine is, I can edit a screenshot after I take it, that might make my screenshot unreliable. I can also edit the document object model of a website and then take a screenshot of that to create a screenshot that doesn’t appear to be edited at all. So, it makes sense really that courts are starting to rely on this really impartial expert on the state of the internet at any point in time. It’s really exciting. |
| TD: | If I may, David, make some observations on screen capture evidence itself just following up on your point about the opportunity to manipulate digital evidence and I’ve got at least five sort of key tips that I tell my investigators and that have been incorporated in our procedure that may be of use to others, including lawyers who may need to take screen captures for the purposes of their litigation and the first one is that the capture itself should be complete. It shouldn’t have glitched and it should be representative of what you saw on the screen. Why I say it should be complete is that if you’re just taking snips from a page, you haven’t taken the whole context in which that particular representation appears and whilst you might not think that’s relevant at the time you capture it, it may well be down the line. Also it prevents any challenge that there was this other statement, a bit further down that totally changes the way in which a reasonable consumer would’ve seen that particular representation. So, my tip number one, take a complete capture, use a scrolling capture. The capture itself should include information as to when it was captured, what was captured – so the URL itself – and who captured it. There is software and we use Snagit that imposes this at the bottom of the captures. So, it follows the evidence through as a contemporaneous note of sorts. My third tip is have a consistent method. Follow it. If you don’t follow it, take a note of how you departed. This will be relevant because if you get cross-examined, you want to be able to say, ‘I followed my standard process. My standard process is… when I don’t follow my standard process, I take a file note and I explain how I deviated. I didn’t do this in this case,’ because you can imagine, you might have to give evidence of something you did three years ago. Going back to the complete picture, where you want to show how various web pages link together or collaborate together, you might want to take a video capture and you might want to show how you consider a reasonable consumer is navigating either through a website or to a website from a search engine or from social media and lastly, and this goes to your point, David, about how do you know that the capture’s not manipulated. Once you save it, lock it down. There are, I’m sure in most case management systems, a way of saving the file in a way that it then can’t be edited in its final form and then if that’s your standard process, then the risk of an allegation that the capture’s been doctored is much harder to make out. |
| DT: | And I think the other benefit of a video capture that you mentioned is you can take a video of yourself, refreshing the page. So, you can show that the capture isn’t a consequence of manipulating the website itself, as well as the capture. All of those are great tips and I think useful, not just for regulatory investigators, but really anyone who’s relying on online evidence. I imagine there’s another fact finding challenge for the TGA and for other regulators as well. Really, every regulator I can imagine is encountering this challenge, whether they’re regulating financial services or cryptocurrency advice or consumer goods or therapeutic goods or really anything is marketing goods and services through social media rather than on a website because that’s not publicly available. It might be available to a large section of the public through what’s effectively a daisy chain of word of mouth, but is not actually hosted anywhere statically. How do you, as a regulator, respond to issues of influencer marketing or social media marketing, where that is taking place by communications from one user to another, even if that’s en masse? |
| TD: | I think perhaps one area that was implicit in your question was through TikTok or through Snapchat where a short video might only be up for five seconds, or might only be given to certain people who either follow that person or are on a list and I’ll start by saying that can be very difficult and the main way that we are trying to deal with social media advertising is firstly through education and so the TGA’s recently put out a social media influencer advertising guide, in a similar sort of way to what ASIC has recently put out in terms of social media influencers who are promoting financial services. So, the TGA’s done something similar. |
| DT: | Finfluencers, I think they’re called. |
| TD: | Yes and you can imagine in my space, the nicotine vaping space, that influencers form a very large part… |
| DT: | Absolutely. |
| TD: | Of the marketing ploy of many of the vaping websites but our second strategy is actually working with these social media companies to proactively work with them to ensure that the content on their websites is complying with Australian law and I’m not saying that to palm the problem off onto somebody else, but really the short answer is it can be very difficult to investigate a social media advertisement that only appears for a few seconds. |
| DT: | And, I suppose, it isn’t palming it off to say that social media platforms do have a quasi-regulatory role in terms of the content that they host and disseminate and I think that quasi-regulatory role has really been at the forefront of public debate when it comes to the availability of defamatory material through Google searches, for example, indexing material that might attract liability to publish is a great example of the way the law is starting to impose obligations on these platforms for the content that they host, publish and disseminate. Tristan, we started with a question about how you came to practice at the TGA. If any of our listeners, in particular, any of our student listeners wanted to follow in your footsteps and start working in regulatory investigations, what’s something that they could be doing now to start themselves off on that path. |
| TD: | I’ll start off by saying I wasn’t aware in law school, that being a regulatory investigator was a career path open to lawyers and I can safely say that there are many lawyers, both at the TGA and at other, at least Commonwealth regulators who either started off as lawyers or did a law degree and fell in love with regulatory investigations and what I will say is that you get the opportunity to engage with many areas of the law, from criminal law to administrative law, to evidence, to contract law and you get similar opportunities to running cases at law firms. What you can do to set yourself up is make contact with people who are in those positions, take them out for coffee, show a genuine interest because most of the jobs, including for law students might not actually be advertised but I know in my role, I’ve hired two law students who reached out to me and indicated that they were interested in this sort of work and because they were passionate, they were genuinely interested in the work, I was able to bring them on as paralegals and so I’d encourage you, if you are interested in working at ASIC or the ACCC or the ATO, or indeed the TGA, use LinkedIn. Find people who work there. Take them out for coffee. The worst they can do is say no. |
| DT: | There you go. Networking, not just useful for obtaining evidence in regulatory investigations. Occasionally it can help your career as well. Tristan, thanks so much for joining me today on Hearsay. |
| TD: | Thank you, David. It was my pleasure. |
| DT: | As always, you’ve been listening to Hearsay the Legal Podcast. I’d like to thank my guest today, Tristan Dimmick from the Therapeutic Goods Administration, for coming on the show. Now, if you listened to this episode because you’re interested in the intersection of health medicine and the law, why not check out episode 54 about medical negligence with Clare Eves from Shine lawyers next? Or, for something a little different, try our episode on modern legal research with barrister, Jade founder and legal research guru Michael Green SC. Now, if you’re an Australian legal practitioner, you can claim one Continuing Professional Development point for listening to this episode. As you well know, whether an activity entitles you to claim a CPD unit is self-assessed but we suggest this episode entitles you to claim a substantive law point. More information on claiming and tracking your points on Hearsay can be found on our website. Now, we all love continually professionally developing and we have some amazing guests and episodes coming up in season three but did you know that we’re also releasing a completely new podcast this year? It’s called Hearsay: Sidebar and it’s a 20-30 minute show where the Hearsay team gathers around the microphone to talk about the legal side of what’s in the news. Sidebar is totally free and the first five episodes are already available on Spotify and Apple Podcasts right now. We talk about the Johnny Depp vs Amber Heard trial, whether Artificial Intelligence can own intellectual property, the laws of cyber warfare and more so have a listen when you get a chance and if you feel like leaving us a rating and following the new show, so you don’t miss any, that would be great. Hearsay the Legal Podcast is brought to you by Lext Australia, a legal innovation company that makes the law easier to access and easier to practice and that includes CPD. I’d like to ask you a favour. If you like Hearsay the Legal Podcast, please leave us a Google review. It helps other listeners to find us, and that keeps us in business. Thanks for listening and I’ll see you on the next episode of Hearsay. |
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