On 23 February 2017 the Competition and Consumer Amendment (Country of Origin) Act 2017 was amended to ‘simplify the tests used to justify a country of origin ‘made in’ claim’. It included the following updates:
- A revision to the definition of ‘substantial transformation’
- Removal of the 50 per cent production cost test.
In March 2018, the ACCC released new guidelines for the interpretation of Australian Consumer Law regarding Country of Origin labelling for Complementary Medicine. These changes mean majority of complementary medicines manufactured in Australia cannot make the “Made in Australia” claim neither as text on a product label or use the Australian Made logo.
In summary, the mechanics of these guidelines preventing the Australian Made claim include:
Encapsulation (Hard capsules and Softgel capsules)
The encapsulation process of imported actives will no longer constitute substantial transformation and therefore, such formulations will no longer qualify to carry the Australian Made logo.
Tablet manufacture
- Direct compression of imported raw material granules into a tablet is unlikely to satisfy the ‘made in’ safe harbour defence – Compression is unlikely to create a fundamentally different end product for the purposes of the substantial transformation test.
- The ACCC requires a granulation process to occur within the manufacturing steps for the tablet to be considered “Australian Made”. However, an argument has been raised by sponsors and manufacturers that:
- By definition, the granulation process is simply to increase the size of the particles of powder and therefore, does not substantially transform the product.
- The granulation process is often unnecessary and compromises the integrity and quality of the product by exposing the ingredients to heat, ethanol and other conditions to turn the fine powder into larger granules.
Sponsors have been advised to review their current list of products and remove the logo from all products which no longer comply. Australian Made Campaign Limited (AMCL) have advised that all packaging and labelling changes must be completed by 1 July 2019.
ACCC Unanticipated Consequences
Demand for Complementary Medicines globally and in Australia is booming. In 2017, the Complementary Medicines industry reached AUD$4.9 billion in revenues. Over the last five years, this sector has achieved AUD$2 billion in growth as a result of our strong exports.
It is proven consumers are willing to pay premiums for Australian Made products due to the high value and trust placed on vitamins being manufactured as medicine in Australia under Therapeutic Goods Administration (TGA) regulations with world-class testing and manufacturing conditions. The manufacture of complementary medicines is undertaken in Australia under the careful oversight of highly skilled workers, in a highly controlled manufacturing environment. In other markets, vitamins, minerals and nutritional supplements are governed by Food authorities and therefore do not undergo the same significant degree of testing and manufacturing conditions required by the TGA who consider these products as medicine.
If complementary medicines that are manufactured and tested in Australia cannot claim “Made in Australia”, the result will cause unnecessary yet serious impact on our industry and wider global reputation including reduction in investment into Australia, job losses and hinder industry growth.
It has been noted, that products from various other industries are still able to claim ‘Australian Made’ despite not undergoing the same level and complexity of transformation compared to Complementary Medicines.
The below comparison of manufacturing steps for Complementary Medicines with products from other industries demonstrates this level and complexity and provides sufficient reason to support the use of the ‘Australian Made’ claim for Complementary Medicines.
As an Australian manufacturer of therapeutic goods, it is Vitex’s responsibility to ensure the identity, purity, uniformity of dose, safety, efficacy and, the shelf-life of the finished product are achieved. Australia’s strict GMP guidelines ensure these qualities are met, placing trust in consumers for our products.
However, the ACCC guidelines on the complementary medicine sector:
- Do not test for the amount of Australian labour involved;
- Do not test for the level of Australian manufacturing involved;
- Do not test for the expertise and investment in research and development;
- Do not recognise that only Australian Government Therapeutic Goods Administration (TGA) manufacturing standards for pharmaceutical medicines have been adhered to.
Vitex has called for a review of the ACCC guidelines on the complementary medicine sector to acknowledge Australian pharmaceutical standards and ensure products that are manufactured in Australia are indeed considered “Australian Made”.
References:
1. Complementary health and the logo (Australian Made Campaign Limited) – https://www.australianmade.com.au/for-business/changes-to-%E2%80%98australian-made%E2%80%99-criteria/
2. Australian Competition & Consumer Commission – Country of origin labelling for complementary healthcare products: A guide for business (May 2018).
Author: Aastha Mathur Shan
