ACCC sets its sights on country of origin labelling for complementary medicines

Aside from being regulated under the Therapeutic Goods Act 1989, the Therapeutic Goods Regulations 1990 and the Therapeutic Goods Advertising Code, the advertising of complementary medicines is also subject to the Australian Consumer Law (ACL).

The Australian Competition and Consumer Commission (ACCC) has provided an insight into its views on a specific issue in advertising complementary medicines – country of origin claims – with the release of its guide for business.

Safe harbour defences for "made in" or "manufactured in" claims

Complementary medicines don't have to include mandated origin labelling requirements that foods must, but any claims sponsors choose to make cannot be false, misleading or deceptive in contravention of the ACL.

To this end, the ACL sets out several "safe harbour" defences which may afford sponsors the benefit of a statutory defence against an allegation that a representation as to a product's country of origin is false, misleading or deceptive. The requisite criteria that will apply will ultimately depend upon the nature of the product and the country of origin claim, but broadly any "made in" or "manufactured in" claim will require a product to have undergone its last "substantial transformation" in the named country.

What then is substantial transformation in the context of complementary medicines?

Where a product is comprised of imported ingredients, sponsors must consider whether their end product is fundamentally different in identity, nature or essential character from the imported ingredients or components that have been used to manufacture the product. Generally, a change in form or appearance will not be enough.

The ACCC's guidance sets out the different ways in which the ACCC considers the manufacturing processes used to produce complementary medicines may (or may not) result in a product that is fundamentally different in identity, nature or essential character from its imported ingredients:

• Dry blending: this is the manufacturing process for complementary medicines that are powders. The ACCC considers that the blending of Australian active ingredients with imported excipients is likely to result in a product that is fundamentally different in identity, nature or essential character. The blending of imported actives with Australian excipients and the blending of imported actives and excipients, however, probably won't;
• Encapsulation: this is the process of producing soft or hard capsules that contain a standardised dose, often of a single active. The ACCC considers that encapsulating imported actives is unlikely to result in a product that is fundamentally different in identity, nature or essential character, even where inactive and other excipients are used;
• Tablet manufacture: this describes the more complex tabletting process involving the blending, granulation and compression of actives and excipients into standardised doses. The ACCC considers that the transformation of raw bulk materials (including imported actives and imported excipients) through the use of a full tabletting process in Australia will constitute a substantial transformation. This is not however likely to be the case where imported granules are used in tabletting;
• Herbal extraction: the ACCC considers that extracting actives in Australia from an imported herb will constitute a substantial transformation, whereas the addition of ingredients to imported extracts will not;
• Essential oils: the ACCC considers that the processing of raw imported plant material to draw out essential oils is likely to result in substantial transformation, whereasthe importation and bottling ofessential oils would not; and
• Semi-solid formulations: semi-solid preparations such as creams or ointments probably won't be considered to be substantially transformed if they are imported in bulk and combined with other minor ingredients (such as fragrances or pigments or preservatives).If however, they are produced by the processing of raw imported ingredients in Australia, they may satisfy the relevant criteria.

The ACCC's guidance provides more detailed consideration of each of these different processes, together with a number of practical examples for further consideration.

Acting on the ACCC's guidance

As the ACCC notes, the guide is not intended as binding and it is up to sponsors to seek independent legal advice when deciding how to label their products. Sponsors should therefore review the ACCC's guidance carefully and consider whether their manufacturing processes allow a "made in" or "manufactured in" claim to be made in respect of their products.

If you have any questions in respect of the ACCC's guidance or would like advice on the labelling of complementary medicines, please contact Clayton Utz.