Proposed improvements include changes to the manner in which testimonials and endorsements may be used in the advertising of therapeutic goods.
On 7 May 2021, the Therapeutic Goods Administration (TGA) released a consultation paper (the Paper) regarding proposed improvements to the Therapeutic Goods Advertising Code (the Code). Our overview of the Paper is available here. This Insight focuses on the use of testimonials and endorsements.
Public submissions can be made in respect of these proposals until 18 June 2021.
The TGA has proposed amendments to improve the clarity and interpretation of provisions of the Code that have been identified as being unclear, inconsistent or otherwise difficult to work with. Key changes which have been proposed or raised in the Paper include amending the regulation of endorsements and testimonials, such as:
- introducing a new clause to prohibit endorsements by former health professionals whose name and reputation may continue to carry significant weight;
- permitting testimonials from those involved in the direct sale or marketing of therapeutic goods to the public (provided that any perceived conflict of interest is adequately disclosed to consumers); and
- ensuring that testimonial disclosure requirements are clearly expressed, consistent and adequate to protect consumers.
Endorsements – current position under the Code
Currently, section 16(2) of the Code prohibits endorsements from health practitioners, health professionals, medical researchers, or a group of any of these persons. The objective of this prohibition is to avoid consumers being unduly influenced to purchase a therapeutic good by the weight they attach to statements made by healthcare-related professionals or bodies.
This prohibition also applies to endorsements from individuals who would be perceived to be health practitioners, health professionals or medical researchers (because these would be construed as implied endorsements).
Stakeholders have proposed changes to the endorsement prohibitions to, for example:
- include a new clause prohibiting endorsements from former health professionals as their name and reputation ‘may continue to carry significant weight’.
- further distinguish between an endorsement and a testimonial to make it easier to comply with the Code requirements. For example, is an influencer’s post an endorsement or testimonial and is sponsorship an implied endorsement or testimonial?
Testimonials – current position under the Code
Currently, section 17 of the Code prohibits those involved in the production, sale, supply or marketing of therapeutic goods from providing testimonials. Testimonials are also required to disclose, for example, whether the person providing the testimonial:
- has received (or will receive) any valuable consideration for providing the testimonial; or
- is an immediate family member of an individual involved in the production, sale, supply or marketing of the therapeutic goods.
Many stakeholders have expressed frustration over the application of the current Code to testimonials from social media influencers and brand ambassadors. This is because people involved in ‘marketing’, but not the manufacture or supply of therapeutic goods, often do not have a stake in the sale of the advertised good.
Stakeholders have proposed amendments to the testimonial requirements to:
- permit testimonials to be provided by those involved in direct selling or marketing of therapeutic goods with an added precaution that information regarding any actual or perceived conflict of interest be disclosed for consumer protection (eg by way of mandatory statements);
- review the current wording to ensure requirements for testimonial disclosure are “clearly expressed, consistent and adequate” for consumer protection and advertiser guidance; and
- clarify the requirements for verifying the details of individuals providing testimonials.
The Paper is seeking comments about three options for testimonials and endorsements which are briefly summarised below. If implemented,
- Options 2 would broaden the range of people who may provide testimonials to:
- persons involved solely in the marketing of therapeutic goods (including brand ambassadors);
- family members of those involved in the manufacture or supply of therapeutic goods; and
- Option 3 would further broaden the range of people who may provide testimonials to direct sellers (in addition to those persons permitted to provide testimonials under Option 2).
Option 1– clarifying the existing testimonial and endorsement provisions
Option 1 maintains the current requirements as well as proposes the following:
- prohibiting former health professionals from making endorsements;
- affirming that endorsements which promote health benefits which are inconsistent with product indications or instructions are prohibited;
- clarifying the requirements for verifying the details of a person providing a testimonial (their identity and testimonial content); and
- clarifying that paid testimonials are “marketing” and prohibited – genuine testimonials are considered to be those made by individuals who are not paid any valuable consideration for providing the testimonial.
Option 2 – broadening the range of people that can provide testimonials in conjunction with greater disclosure requirements
Option 2 aligns with Option 1 but also permits those involved in the marketing of therapeutic goods to provide testimonials. Individuals involved solely in the marketing of therapeutic goods (including brand ambassadors and social media influencers) would be permitted to provide testimonials. Family members of those involved in supplying/manufacturing therapeutic goods would also be permitted to provide testimonials.
All testimonials falling within this category would be required to include the following statements which must be prominently displayed or communicated, where relevant in the circumstances:
(a) “Testimonials may not be reliable in determining whether a product is appropriate for others”;
(b) where an individual will receive valuable consideration for providing a testimonial: “This is a paid testimonial”; and
(c) where a testimonial is being provided by a family member of an employee, officeholder or shareholder of a business responsible for the manufacture or supply of therapeutic goods: “This testimonial has been provided by a family member of someone involved in the manufacture or supply of this product”.
Option 3 – removing the of prohibition on testimonials from direct sellers
Option 3 goes further than Option 2 by permitting direct sellers to use their own testimonials in advertisements for therapeutic goods provided that the statements required in Option 2 above, namely statements (a) and (c), are prominently displayed or communicated where relevant together with the following additional statement: “I benefit from the sale of these goods”. (Statement (b) in Option 2 would not be displayed.)
A definition of “direct seller” would also be inserted into the Code being “a person who is an independent contractor, dealer, distributor or representative (however described), without fixed retail location, and who is responsible for the advertisement and supply of therapeutic goods to consumers”.
For more information regarding the proposed amendments to the Code, or the regulation of therapeutic goods generally, please contact a member of the Addisons team.