The Therapeutic Goods Administration’s (TGA) new advertising code aimed at tackling false and misleading advertising by social media influencers has come into force following a six month transition from the old code.

The Therapeutic Goods Advertising Code 2021 (Code) was introduced by the TGA in response to rising incidences of insincere reviews of products by social media influencers, bloggers and brand ambassadors who received incentives from businesses associated with those products.

The Code introduced new restrictions on the giving of testimonials and endorsements in advertisements for therapeutic goods, while also simplifying and clarifying the existing rules for advertising therapeutic goods.

Given the transition period (during which compliance with the old advertising code was allowed) ended on 30 June 2022, advertisers and other individuals or businesses engaged in the marketing of therapeutic goods (Advertisers), must now adhere to the Code.

Application of the Code

Broadly, the Code applies to ‘advertisements’ about ‘therapeutic goods’ targeted at general consumers (as distinct from advertisements directed at medical practitioners or that form part of a public health campaign).

‘Advertisement’ for the purposes of the Code means any statement, pictorial representation or design that is intended to promote the particular therapeutic good. On its website, the TGA confirms that a social media post that promotes the use or supply of a therapeutic good will be considered an advertisement.

A ‘therapeutic good’ refers generally to goods likely to be considered as for therapeutic use or for use as a component in the manufacture of therapeutic goods. Some examples of therapeutic goods that often feature on social media include herbal remedies, protein powders, sunscreen and vitamins.

The scope of the Act is wide and Advertisers should take care when assessing whether the Code applies to the advertisement of their products.

Testimonial and Endorsements

The Code states that a testimonial or endorsement about a therapeutic good must not be inconsistent with the good’s label, directions for use, or indicated or intended purpose.

The Code also prohibits endorsements or testimonials in advertisements from being given by hospitals, healthcare facilities, healthcare professionals, medical researchers, or other persons who represent themselves as being qualified to diagnose, treat, or prevent disorders. Organisations representing healthcare consumers or healthcare professionals may only provide endorsements if they disclose the organisation’s name, and whether the organisation receives valuable consideration for the testimonial or endorsement.

While not defined in the Code, the TGA’s website defines a ‘testimonial’ as a statement made by a person who claims to have used that good. An ‘endorsement’, on the other hand, refers to any form of support, approval or sanction of a therapeutic good.

Testimonials specifically

Testimonials are prohibited in advertisements for therapeutic goods if they are made by persons engaged in the production, marketing or supply of the goods. The Code specifically states that influencers who receive valuable consideration for testimonials fall within this class of persons and are prohibited from making testimonials in advertisements. ‘Valuable consideration’ in this context is not restricted to monetary payments, but may include gifts, discounts, or promises of future benefits.

Notably, the Code does not restrict genuine testimonials from being given by persons who have not received valuable consideration for the testimonial, and in any event, endorsements that do not amount to testimonials are still allowed. However, in circumstances where testimonials are permissible, Advertisers must still verify the identity of the person making the testimonial, as well as its content.

Safe and Proper use

In pursuance of the TGA’s objective of ensuring advertisements are accurate, balanced and do not mislead, the new Code also introduces a prohibition on advertisements that cause, or are likely to cause, undue alarm, fear or distress. Accordingly, advertisers and influencers must refrain from employing scare tactics to market their therapeutic goods.

Penalties and enforcement

Contravention of the Code may lead to a takedown notice from the TGA being issued, and even the imposition of civil or criminal penalties. Individuals in contravention may be liable for imprisonment of up to five years or face a fine of up to $1.11 million, while body corporates could be liable for a fine of up to $11.11 million.

It is also worth noting that social media influencers who conceal having received incentives for endorsements or testimonials may be liable for misleading and deceptive conduct under Australian competition and consumer laws.

Next steps

Advertisers should review their advertising polices and strategies to ensure compliance with the new restrictions under the Code. Particular attention should be paid to adhering to the new prohibition against incentivised testimonials. Advertisers are also advised to remove past advertisements that contravene this prohibition (and any other provision of the Code).

If you need advice in relation to the Code or have any questions about how it may affect you or your business, please contact a member of Thomson Geer’s Intellectual Property Team.