Guidelines and other health updates

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1 HEALTH Inside: New privacy laws and their impact on research activities Queensland's biotechnology code The ACCC report to the Senate on health funds Guidelines and other health updates Partner Lionel Hogg and Liam Prescott look at new goods tampering crisis management guidelines; Lawyer Karin Clark reviews the new privacy legislation; Senior Associate Alex Feltham and Liam Prescott look at the new Queensland Government biotech code of conduct; and Senior Associate Emma Marsh reviews the ACCC's report to the Senate on health funds. Preparation, preparation, preparation Creating a Crisis Management Plan for therapeutic goods tampering If you are a Sponsor 1 under the Therapeutic Goods Act 1989 you will probably have heard about the new Crisis Management Guidelines (the Guidelines) published by the Australian Self Medication Industry (ASMI). The Guidelines have been specifically tailored to assist in the creation of a Sponsor's Crisis Management Plan (CMP) for the actual, potential or threatened tampering of therapeutic goods. The new Crisis Management Guidelines A Benchmark for CMPs VISIT OUR WEB SITE TO READ ALL FOCUS EDITIONS The Guidelines set out a comprehensive outline of how a Sponsor should prepare for, and respond to, a product tampering crisis both internally (e.g. training staff and creating a crisis management team) and as part of a larger team, defined under the Guidelines as a Crisis Reference Group. The Guidelines detail: the stages of a product-tampering crisis and the process for its management; 1 Loosely defined, a Sponsor means any person or organisation who imports, exports and/or manufactures Therapeutic Goods regulated under the Therapeutic Goods Act 1989

2 who the nominated Commonwealth & State officers and police are, and how and when they should be involved; the application of the Uniform Recall Procedure for Therapeutic Goods (the Recall Procedure) and when a tampered product should be recalled; and what should be done by a Sponsor after a product tampering crisis occurs. How the Guidelines dovetail with the Recall Procedure For the first time, the 2001 edition of the Recall Procedure includes a crisis management component to be implemented, when relevant, as a part of the product recall process. The Recall Procedure sets out a seven-part process for the recall of therapeutic products with a strong focus on integration and cooperation between the Sponsor and the TGAappointed Australian Recall Coordinator, the State/ Territory equivalent officers and the State/Territory health authorities and police. The Australian Recall Coordinator is also the first point of contact for Sponsors reporting product-tampering under the Guidelines. This means that the Recall Procedure is necessarily activated, to a varying degree, in each case of product tampering where the Guidelines are followed. This mechanism is aimed at providing a smooth and well-integrated recall of the tampered products when necessary. As a Sponsor what you need to do To minimise the potential for injury to public health and safety and to avoid adverse public and legal consequences, Sponsors need to: Become familiar with the Guidelines By becoming familiar with the layout of the Guidelines and the suggested model for a CMP, Sponsors will be in a good position to then draft a plan appropriate to their product and circumstances; Create a Crisis Management Plan The Guidelines cannot themselves be used as a CMP. It is necessary that Sponsors draft their CMPs in light of the Guidelines and additional factors including: Being able to classify a threat one issue likely to trouble most Sponsors is knowing when a threat relates to product tampering. A straight-out demand for money or a threat of ' or else' puts the Sponsor in a very difficult position. Both the Recall Procedure and Guidelines state that all threats of criminal tampering with a company's products should be considered to be genuine and therefore serious and be immediately reported to the Australian Recall Coordinator. However neither publication assists in the classification process. This will be a necessary part of any CMP and it may be that professional advice is required in addition to consultation with police. Legal issues the obligations recommended under the Guidelines represent the lowest standard of care upon which a Sponsor might rely in managing a crisis. There are also significant legal obligations for Sponsors under both the Trade Practices Act 1974 and the Therapeutic Goods Act 1989 including last year's amendments imposing mandatory reporting requirements, additional recall powers of the TGA and a prohibition against supplying or selling recalled products. Insurance issues a well-drafted CMP will comply with both the Guidelines and the Sponsor's insurance policy. This requires an awareness of the terms of the policy and the extent to which it will respond to a given product tampering crisis. The Sponsor's insurer should be consulted throughout the drafting process. Put your CMP to the test The requirement of a CMP is clear. Putting it into practice and knowing that it works in a crisis situation is an entirely different matter. There is little point in having a Rolls Royce CMP in the thirddrawer of the Managing Director's filing cabinet. If a the CMP is not successfully carried out during a crisis, not only will this increase the chance of injury to employees and the public, but the CMP itself might later be used as evidence against the Sponsor as to what was reasonably required of the Sponsor during the crisis. Extensive training, mock crises and consultation with relevant authorities, insurers, legal advisers and crisis management experts are ALL necessary features of preparing for a crisis. The benefits A widespread awareness of a Sponsor's established and tested CMP should enhance both employee and public confidence in the Sponsor's product(s) and perhaps deter or prevent tampering of the products. The landscape for therapeutic goods has been irretrievably altered by last year's extortion attempts. The Guidelines have in some ways shifted

3 responsibility for loss and injury from insurers to the Sponsors and if Sponsors are responsive to the Guidelines, product tampering will become a less attractive criminal device. Publications The Guidelines published by ASMI are not available for general distribution and can only be accessed by registered members. To become a registered member of ASMI, go to The Uniform Recall Procedure for Therapeutic Goods is available on the TGA website at New privacy laws to govern research activities From 21 December this year, new Commonwealth private sector privacy laws will come into effect. These laws will govern various categories of personal information that have not previously been subject to regulation in Australia. Under the new laws, many private sector organisations will have to comply with the 10 National Privacy Principles (NPPs), unless they subscribe to another Code approved by the Federal Privacy Commissioner. The new laws will affect the collection, use, disclosure and maintenance of health information in research activities (although the use of health information obtained from Commonwealth Government agencies is already currently regulated). What is health information? Under the new laws, health information includes information or an opinion about matters such as the health or disability of a person, an individual's wishes with respect to the provision of future health services, health services provided to an individual and other personal information collected in order to provide a health service or in connection with organ, body part or substance donation. How will the new laws affect the use of health information in research activities? Health information is a category of sensitive information, which cannot, as a general rule, be collected under the new laws without the person's consent. However, the NPPs also provide an exception which allows the collection, use and disclosure of health information which is necessary for research that is 'relevant to public health' under certain conditions where it is 'impracticable' for the research organisation to seek an individual's consent first. Current Draft Health Privacy Guidelines issued by the Federal Privacy Commissioner (14 May 2001) notes that an example of this might be where there is no current address for a person whose health information is being used in research and also insufficient details exist about a person's identity to find an up to date address (see dhgd.doc). For this exception to apply however, it must also be shown that the research purpose cannot be served by 'de-identified' information (where the identity of an individual cannot be ascertained) and the research must take place in accordance with guidelines approved by the Privacy Commissioner under section 95A of the Privacy Act. Under section 95A of the Act, the Privacy Commissioner may approve Guidelines issued by the NHMRC for these purposes. The NHMRC has now issued draft Guidelines for public comment (see The draft Guidelines provide that a Human Research Ethics Committee must consider a wide range of matters (including whether it has sufficient information, expertise and understanding of privacy issues itself) before deciding whether or not the public interest in the proposed research activity substantially outweighs the public interest in the protection of privacy. If it does, then the research activity can go ahead. It is important to remember that these Guidelines will not necessarily displace the application of other NPPs. For example, the NPPs also stipulate that organisations must take reasonable steps: where health information has been collected without consent, to 'de-identify' it before it is disclosed; to protect personal information from misuse, loss, and unauthorised access, modification or disclosure; to destroy or permanently de-identify personal information when it is no longer required; and to let any person who asks, know what sort of personal information the organisation holds, for what purposes and how it collects, holds, uses and discloses that information. Subject to a number of exceptions, organisations must also give individuals access to any personal information it holds about them, on request.

4 The Victorian version From July next year, private sector organisations involved in research in Victoria will also have to comply with the recently passed Victorian Health Records Act 2001 (The Health Records Act) (see The Victorian Act contains 11 Health Privacy Principles (HPPs). These govern the collection, use, disclosure and maintenance of health information, which is defined similarly to the way it is defined under the Federal legislation (although it more explicitly includes the genetic information and psychological health of an individual). The HPPs contains an exemption similar to the exemption under the Federal legislation. The Victorian exemption is for the collection, use and disclosure of health information that is necessary for 'research in the public interest' if it is impracticable to seek consent from the relevant individual and the research purpose cannot be served by de-identified data. Under the Victorian Act, the collection, use and disclosure can then only be issued or approved by the Victorian Health Services Commissioner. It remains to be seen whether these will be similar to the NHMRC Guidelines. Please contact Karin Clark on if you would like more information about the impact of these new privacy laws. Or visit our website at: Queensland's biotechnology code a legal and regulatory 'bible'? The Queensland Government has taken positive steps to increase public awareness of biotechnology and the standards expected of organisations operating in this industry in Queensland by introducing the Code of Ethical Practice for Biotechnology in Queensland (the Code) effective as of 1 September this year. Registration under the Code has both mandatory and voluntary components. It is hoped that widespread registration of organisations within the industry will enhance public confidence in the regulation of biotechnology as registration requires organisations to comply with a wide range of legal, safety and ethical undertakings. It is proposed that the Code will be redrafted every 3 years to take into account any changes made to the regulatory landscape, and to accommodate changes in public opinion. A first for Australia To date no similar comprehensive code or guideline for the biotech industry has been introduced in any other State or Territory. The Code represents an innovative alternative to mandatory legislation and guidelines imposed by governments. Obligations undertaken by organisations subscribing to the Code include the provision of information and annual reporting to Government with a view to opening the industry up to public scrutiny and encouraging the participation of organisations in ongoing development of biotechnology within the State. If the Code is successful in these respects it is likely that other states will introduce comparable initiatives to assist their state (and Australia as a whole) in improving the biotech industry en masse and attracting foreign investment and activity. To whom does the Code apply? Automatically-registered Queensland Biotechnology Organisations include Queensland Government agencies and organisations funded by the State which undertake or conduct biotechnology activities and cooperative research centres (CRCs) funded by the State or which have the State as a participating member. These organisations are listed in a publicly available register alongside the voluntarily-registered Subscribing Biotechnology Organisations. The Queensland Government expects all organisations undertaking biotechnology activities in Queensland to register under the Code as a gesture of goodwill and a vote of confidence in the Code as a 'best practice' model. Breaches of the Code The Queensland Government has made it clear that the primary means of enforcing the Code's principles will be through application of existing and forthcoming legislation in specialist areas including gene technology, human cloning, food safety and biological resources. In many cases the legislation will establish heavy penalties for non-compliance. Additionally, for Queensland Biotechnology Organisations, including interstate or Federal organisations or CRCs, a failure to comply with the Code will result in the Queensland Government reviewing its funding and/or participation in the activity undertaken. As the Code is not 'law', its aim is not to provide the State with additional regulatory powers but to increase awareness of both the major day-to-day issues relevant to biotechnology practices and the more

5 discreet issues to which those working in the industry may not have been aware or to which they might not otherwise have turned their minds. Aspects of the Code The Code has three main aspects: Scope; Principles; and Specific Industries - medical research & healthcare, agriculture, food, and the environment. There is no doubt that the Code is intended to apply to all aspects of biotechnology. The Scope seeks to reconcile the traditional areas of biotechnology with the new and emerging technologies such as gene mapping, DNA sequencing, diagnostics, genetic modification and cloning. The Code recognises that these new technologies provide [a] greater understanding of, and potentially more control over, living processes at the level of individual cells and genes. These new techniques offer a range of new and practical applications [however] they are raising important issues of safety and ethics which are the subject of this Code. The Principles outlined in the Code are both general and specific. The General Principles describe the fundamental values which it is hoped organisations currently have or aim to adopt. Included in these principles are new ideals such as recognition of community interests and transparency in decisionmaking. Specific Principles cover issues ranging from commercial considerations such as IP management, risk assessment and access to the State's biodiverse resources, to the care and protection of staff and animals, research into GMOs and international obligations. Specific Principles relate to specific issues in certain industries. For example, medical research and healthcare deals with topical ethical issues such as patient confidentiality, genetic testing, cloning and xenotransplantation. On the other hand, agriculture, food and the environment covers issues such as biodiversity and sustainable agriculture, genetic modification in animals and the labelling of GM foods. Further amendments to the Code will no doubt expand on these areas. For further information please contact Alex Feltham on The ACCC report to the Senate on health funds The introduction of lifetime health cover on 1 July 2000 encouraged more people to take up private health insurance which in turn has led to more complaints. The ACCC recently published its third report to the Senate on anti-competitive practices by health funds and providers. From a competition law perspective, the ACCC's report highlights five issues of concern for all health funds, hospitals and practitioners. 1. Misleading conduct A high proportion of complaints relate to waiting periods and pre-existing ailment conditions. The ACCC has warned that, because health insurance products are complex, care must be paid to policy wording, advertising and other promotional activities. It does not matter that a fund did not intend to mislead. If a fund or its agent (which includes call centre staff) makes a false or misleading representation, the fund may be in breach of the Trade Practices Act. The ACCC has recently taken enforcement action against Medibank Private and HCF, among others, in relation to misleading conduct. 2. Mergers The report notes that hospital mergers are providing hospital groups with greater negotiating power, which has the potential to increase the cost of private health. The ACCC will monitor such mergers and their effect on competition. 3. Price-fixing Some funds have proposed to set the benefits under their gap cover schemes by reference to the AMA schedule of fees. The ACCC has said it will be concerned if there is any negotiation between a fund and the AMA, since this might indicate a breach of the price-fixing prohibition. It has also said that if it receives evidence that the AMA fee schedule is leading to a substantial lessening of competition, it will investigate. 4. Boycotts The ACCC considers the introduction of no-gap arrangements a great benefit to consumers. However, there is potential for anti-competitive conduct to arise if practitioners pressure competitors,

6 or reach a collective agreement with them, not to participate in the arrangements. The ACCC is investigating allegations of this type of boycott conduct. It is also investigating allegations that groups of competing specialists at private hospitals have pressured hospital administrators by threatening to boycott the hospital to prevent other specialists from being credentialled at those hospitals. 5. Third line forcing Ancillary services providers must be registered with health funds so that their patients can be paid benefits. Many funds require practitioners to meet certain criteria, including that the practitioner belongs to a particular organisation, to ensure quality assurance. The ACCC considers this may give rise to third line forcing. But it believes the impact on competition can be minimised, if a registration system is set up to provide for an objective, justifiable minimum level of competence acceptable to the whole community and regularly reviewed. Health funds, hospitals and practitioners therefore must ensure that they comply with the Act. The ACCC's report shows that their conduct is subject to the full range of restrictive trade practices and consumer protection provisions, for which penalties are potentially very severe. For further information, please contact: Sydney Melbourne Brisbane Perth Gold Coast Port Moresby Singapore Hong Kong Jakarta Shanghai Bangkok Phnom Penh 6908 Adam Thatcher Partner, Brisbane David McLeish Partner, Melbourne Mark Stubbings Partner, Sydney Steven Cole Partner, Perth

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