Australia: Civil Liabilities Under The Therapeutic Goods Act

Last Updated: 11 May 2009
Article by Roberta Bozzoli

Civil penalties under the Therapeutic Goods Act.

A recent decision of the Federal Court of Australia in the case of Secretary, Department of Health & Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 (Pagasa Case) confirms that the existence of a compliance program can reduce the risk of penalties being imposed pursuant to the Therapeutic Goods Act 1989 (Cth) (Act).


Civil penalties under the Act include a maximum penalty for individuals of $550,000 and $5.5 million for corporations.

The civil penalties are enforceable in the absence of proven fault and are directed towards regulating commercial activities relating to therapeutic products of corporate entities and deterring breaches of the Act. However, it is important to remember that the liability regime for civil contraventions also extends to executive officers (quite broadly defined in the Act and not just limited to directors).


The Pagasa Case was the first case to consider the application of the Therapeutic Goods Administration (TGA) civil penalty regime.

The case related to goods which were seized from the Pagasa premises in Matraville in Sydney. None of the goods were registered or listed goods, exempt goods or the subject of approval or authority under the relevant sections of the Act. The parties agreed (by way of a Statement of Agreed Facts) that the importation of those goods constituted a breach of the Act by Pagasa and a director of Pagasa.

In determining the amount of the civil penalties to be imposed, Justice Flick had regard to 'all relevant matters' including, by agreement between the parties, the object and purposes of the Act.

In addition, Justice Flick considered relevant the fact that there had been co-operation by Pagasa (including agreement in relation to the facts) and, as the matter progressed through the hearing, substantial agreement as to the relief to be granted.

Adopting the principles applied by the Courts in previous cases relating to the civil penalty regime in the Trade Practices Act 1974, the Court determined that the parties had fixed an appropriate amount for the civil penalty 'within the permissible range of penalties that might properly be imposed'. The $130,000 penalty was noted by Justice Flick to be 'neither sufficiently small so as not to act as a deterrence nor so high as to be oppressive'.

Justice Flick also found that Pagasa did not have a compliance program in place at the relevant time after previous contraventions and an attempt to put a program in place was only undertaken after the current proceedings were instituted.


Co-operation and agreement in relation to civil penalties to be imposed are relevant in determining the final penalties to be imposed by the court.

Provided the court considers the quantum of the penalty to be appropriate within the permissive range, the necessity for prolonged, complex and often lengthy litigation will be alleviated.

As with other statutory regimes, it is clear that the absence of an effective compliance program is a critical aspect which the court will take into account in determining any penalty to be imposed. The compliance program must be effective, current and administered with the appropriate diligence.

In order to assist in minimising the risk of the imposition of a significant penalty, we recommend preparing (or updating, if appropriate) a well and clearly documented compliance program.

The compliance program must be tailored for each organisation and may include:

  • Briefing notes and training for executive officers (who now fall within the ambit of the civil penalty provisions of the Act).
  • Development of a compliance policy and procedures including a reporting and audit system.
  • Compliance risk assessments.
  • Staff roles and responsibilities relating to compliance.
  • Active and ongoing training, improvement and review of compliance elements.

DLA Phillips Fox has experience in advising on regulatory compliance programs for pharmaceutical and biotechnology companies.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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