What is the likely benefit of each option?

This section analyses the impacts of the options in relation to the following:

• Public health and safety: changes to the risks and benefits of using medicines
• Costs: financial impacts likely to be experienced, whether direct or indirect
• Access: impacts on the availability of medicines in Australia

On this page: Option 1: No change | Option 2: Update the guidance on best practice for medicines labelling in Australia | Option 3: Introduction of new Therapeutic Goods Orders (TGOs 91 and 92)

Option 1: No change

This option would involve no change to current arrangements. TGO 69 would continue in its current form, supported by voluntary guidelines:

• Best practice guidelines on prescription medicine labelling
• ARGOM
• ARGCM

From the extensive consultations to date, stakeholder groups, including industry, consumer and health professional groups, consider that this option fails to adequately address fundamental concerns that have been identified with the current arrangements for medicine labels.

Maintaining the status quo is also not supported by the evidence published by the TGA and other major international regulators.^[86]

The costs to the healthcare system over time will increase and health outcomes will decrease as a greater percentage of an ageing population find it more difficult to read and interpret medicine labels.

Net benefit

This option would provide the lowest net benefit as there is no reduction in the risk to consumers and, further, associated costs to the healthcare system are anticipated to increase.

Direct costs

There are no direct costs associated with this approach.

Under this option the TGA would continue with its current system for reviewing proposed labels as part of the pre-market approval of registered medicines. Industry will continue to operate under a business as usual mode and will apply to vary labels as required or planned.

Indirect costs

There are no additional indirect costs associated with this option.

Option 2: Update the guidance on best practice for medicines labelling in Australia

Given the voluntary nature of compliance with new arrangements under Option 2, there is stakeholder concern that there would be some within the industry who would follow best practice while others would not. They consider that those within the industry who choose to follow the guidance on best practice for medicines labelling in Australia would be disadvantaged in comparison to their non-compliant counterparts.

There was a perception expressed by some companies that use of the current labelling requirements could offer a market advantage over adopting best practice guidelines. However, available evidence shows consumers and healthcare professionals favour the changes that are included in Option 3 (for example, because labels would be more readable and consistent) and there could, therefore, be a market advantage afforded to any company that improved their current labels.

In this section: Net benefit | Direct costs | Indirect costs | Regulatory burden estimates | Benefits to other stakeholders | Risks to other stakeholders | Consumer expectations and safety

Net benefit

Under this option, a small benefit will be observed from the introduction into the marketplace of medicine with labels that are consistent with best practice. For these medicines, consumers should be able to more easily identify and read critical information.

However, if only a small percentage of companies choose to follow best practice, then the resulting benefits will be reduced proportionately. Although the TGA does not collect data on voluntary compliance with guidelines, from experience, levels vary depending on the associated perceived risk. Compliance has been high on safety related issues for prescription medicines, for example vinca alkaloid medicine labelling. Lack of adoption of other principles related to readability issues may be perceived as presenting a lower risk.

Recent studies in Canada report that only 44% of a randomly selected pool of 45 pharmacies met the minimum guideline of 12-point print size in accordance with labelling guidelines.^[87] This figure highlights the potential uptake if such requirements were put into guidelines in Australia.

It is possible that, in the longer term, consumer demand for improved labels will result in better uptake of 'best practice' principles by sponsors. However, this is likely to be inconsistent as sponsors balance these benefits against brand recognition for individual products. Additionally, as noted earlier, these principles are already well known and, while adoption is not precluded by the current Australian regulations, there is little uptake in the existing marketplace.

If there is uneven adoption of guidelines intended to improve medicine labels, the intended benefits of consistent labelling for public health safety will not be realised.

Direct costs

There are no direct costs associated with this approach.

It is anticipated that businesses would not seek to change medicine labels to meet new 'best practice' unless there were other business reasons to do so (e.g. a change in business address, a change in label design for marketing reasons). As such, it is estimated that the costs to these businesses will be negligible as the timing of change will coincide with other changes in the course of business as usual. This is especially the case for prescription medicines where it is reported that relabelling occurs more frequently. It is likely that some businesses will choose to adopt aspects of the new guidance (perhaps in response to consumer demand). However this would be part of their usual business practice and therefore not result in additional costs.

Indirect costs

Given the voluntary nature of adopting the guidance, businesses and sponsors are not expected to pass on any costs in the form of price increase to consumers. It is likely that they will adopt the guidance where it is beneficial to maintain or improve their market share for a product.

Regulatory burden estimates

There is no enforcement of compliance with these guidelines and businesses will only apply the best practice recommendations if and when they choose. Many businesses are not currently applying key best practice principles, such as prominence of active ingredient information, despite being exposed to the concepts over several years. Industry submissions emphasise concerns with loss of brand recognition if these requirements are adopted and, therefore it is assumed that there would be a very low compliance going forward.

If businesses do choose to adopt the guidelines, it is expected they would do so in line with other changes and therefore costs would be negligible.

If only 10 per cent of manufacturers and sponsors choose to observe or follow best practice then the net benefits will be reduced accordingly. It is assumed that of the companies that would ordinarily update labels, some would choose to adopt some aspects of the new best practice guidelines even if they are not legislated.

Assumptions:

• There are 1,254 medicine sponsors identified in the TGA's business systems.
• 10 per cent of sponsors will comply with the guidance and apply some of the best practice guide to around 10% of their products and businesses will only apply a non-mandated change to a label if they are already making a change for some other business purpose.
• The cost applicable is the same as those applying under Option 3 but only affecting a proportion of the sponsors and products.
• Time required per sponsor to brief manufacturers and raise awareness is estimated at 3.34 hours applicable to 125 sponsors;
• Marginal costs associated with packaging changes are 5% where the average costs of packaging is estimated at $1.00 per package. It is estimated that around 1% of the volume (volume is based on PBS statistics on prescription and non-prescription medicines) or 29 million prescription medicines and close to 9 million non-prescription medicines will be affected;
• Time required per sponsor to notify retailers of changes is estimated at 4 hours each.
• Labour rate of $80.20 per hour is estimated.

Benefits to other stakeholders

Benefits to consumers that may be realised by implementation of this option are difficult to quantify. This is due to the high likelihood of an uneven uptake of best practice principles by medicine sponsors.

Consumers and healthcare practitioners will benefit when using the individual medicines whose labels have been updated in line with best practice principles. Critical information should be easier to identify and read on these labels. Over time, with increasing consumer awareness of this type of labelling, there may be increased market pressures that encourage more sponsors to adopt revised labelling.

Risks to other stakeholders

The risk to consumer health and safety would lie with the inconsistency of label presentations that would result from uneven and unpredictable uptake of best practice principles.

Inconsistencies between labels would be across and within groups of medicines. There may be some improvement to medicine labels that address some of the risks to consumer safety, but this would take place in a limited and inconsistent way. This in turn leads to only a minimal reduction in negative patient health outcomes, and has limited impact on the burden on healthcare providers and hospitals.

Consumer expectations and safety

This option will most likely not address many of the consumer and health practitioner concerns relating to readability of medicine labels and placement of active ingredient information because it is dependent on cooperation with best practice guidelines by all of industry. It is expected there may be minimal compliance with guidelines under this option.

Option 3: Introduction of new Therapeutic Goods Orders (TGOs 91 and 92)

In this section: Net benefit | Direct costs | Indirect costs | Benefits to other stakeholders | Risks to other stakeholders | Consumer expectations and safety | Regulatory burden estimates

This option is considered by many stakeholders as providing a balanced approach between addressing potential risks to consumer safety related to medicine labels and the regulatory cost to industry and will provide the greatest net benefit.

Net benefit

It is expected that there will be a reduction in costs to the public health system related to less incorrect and inappropriate use of medicines as a result of improvement to medicine labels. It has been estimated, conservatively, that this cost is approximately 2.5 per cent of the total costs from incorrect medicine use or $30 million per annum, for hospital admission attributed to medication errors. This estimate does not consider reductions in visits to general practitioners and other healthcare providers in the event of incorrect or inappropriate medication use.

Improved consumer understanding of active ingredients rather than reliance on recognition of trade names may result in a more competitive marketplace, contributing to the net benefit of this option.

Direct costs

Under this option the new Therapeutic Goods Orders, TGO 91 and TGO 92, would require the majority of businesses to update their medicine labels to comply with the requirements of the new legislation.

There are fees associated with the variation of labels and sponsors would be required to pay these fees to the TGA. Compliance with the new labelling orders would therefore likely involve a one-off cost for some businesses that are not otherwise changing their labels during the transition period^[88] in the natural course of their business. After the transition period, costs would revert back to the status quo levels. This is because once the changes are made, the business returns to normal business practices. The new TGOs will not impose any additional ongoing regulatory burden to that of the current Order.

A survey of industry conducted in early 2014, using contact companies provided by the relevant industry associations for innovator and generic prescription medicines, over the counter medicines and complementary medicines, revealed that companies regularly change labels for commercial advantage within 3 years as part of normal business practice. Further, submissions from industry during the 2014 public consultation identified that some product label changes are less frequent, especially in the non-prescription sector which could extend to around 7 years. Therefore, in costing the regulatory impact of the proposed changes, we have recognised that the primary costs to industry would be associated with the timing of the proposed changes, recognising that the changes may not be in line with the timing of the label changes under a business as usual scenario.

Transition periods of 2, 3 and 4 years were considered. The longer the transition period, the less cost that industry would incur independent of any other label changes undertaken as part of normal business. However, it is also recognised that the longer transition period means that the immediate benefit to public safety would be delayed.

Many sponsors would be updating labels as a matter of normal business practice. The costs calculated here indicate the additional costs to industry as a result of the changes being made.

Indirect costs

Depending on the transition period chosen under this option, there may be some costs that businesses will pass on to consumers. The longer transition (Option 3C) will have the smallest cost impact and hence, least likely for flow-on costs. The risk that that the new labelling orders will lead to businesses transferring costs to consumers has been identified as part of public consultation feedback received. However, due to the volume of medicines sold, it is not expected that the unit cost transfer impact will be high.

Benefits to other stakeholders

Consumers may benefit from increased competition associated with active ingredients being more prominent on medicine labels. This improved awareness of the active ingredient and the equivalence between different brands may reduce reliance on brand recognition. For example, the cost of clotrimazole anti-fungal creams from a local Canberra pharmacy, containing the same active ingredient, can cost anywhere between $9.99 and $12.99. Likewise, there is a price range of 3 to 35 cents per paracetamol tablet (500mg) across 16 different products. An increased active ingredient text size and consistent location of this information will arguably increase competition as consumers will become better informed as to what medicine they are taking.

Under Option 3, consumers will have easier access to information on substances other than the active ingredients in a medicine. This information will now be available for prescription medicines. Its presentation in a consistent location for non-prescription medicines will reduce confusion and lessen the time taken by a consumer when self-selecting medicines in a pharmacy or shop.

For sponsors, consistency with international trends for labelling could potentially facilitate international trade.

Risks to other stakeholders

Due to the long transition period, there will be a number of years where labels continue to display information inconsistently, delaying the realisation of benefits. Educational activities will help to manage consumer and health professional expectations about the transition period.

Consumer expectations and safety

Consumers, through the Consumer Health Forum (CHF), advocate the importance of labelling and the need for improved labels and packaging.^[89] As provided earlier, the evidence indicates the risk to consumers from incorrectly taking medicines can be linked to the poor readability and inconsistent placement of the names of the active ingredients.

Risks associated with medicines are primarily addressed by the level of consumer access and healthcare professional interaction associated with purchase and use of the goods. This is determined by the scheduling of the medicine under the Poisons Standard. The new TGOs recognise that there are different information needs for consumers self-selecting medicines rather than using medication prescribed by a practitioner and also for healthcare professionals administering medicines in a clinical setting. Appropriate labelling of the medicine is an important factor in managing on-going use of that medicine.

There are medication errors that can be reduced through labelling, such as taking multiple substances containing the same active ingredient. For example, it is quite easy for someone to inadvertently exceed 4000 mg of paracetamol in a single day by taking two products each containing 500-1350 mg paracetamol three times a day, one for 'pain' (in particular osteoarthritis pain) and the other for 'cold and flu'. At these dosages, toxicity can occur with an associated risk to liver function; paracetamol toxicity is the most common cause of acute liver failure. A recent study found that paracetamol is responsible for one in five deliberate poisonings which present to emergency departments, Australia-wide.^[90]

Paracetamol, the most common household medicine, has been found to poison around 150 Australians a week, equating to 8000 poisonings a year.^[91] While there are controls in place to avoid this problem, such as the restriction on the number of paracetamol tablets available as single packs in non-pharmacy settings such as supermarkets, paracetamol toxicity frequently occurs when the patient was unaware that they were taking more than one product containing the ingredient. This can be addressed through clearer identification of the active ingredient(s) and consistent placement of this critical information on medicine labels.

Similarly, active ingredient awareness is paramount for prescription medicines. Government policy encourages the use of generic medicines as they provide a reduced cost to consumer, pharmacy and Government. However, patients are often confused when they move from a trade-branded medicine to a generic brand as the packaging may be different, the trade name differs and they do not identify that the active ingredient is the same. The new TGOs would ensure that the active ingredient(s) is readily identifiable to assist patients in recognising that the branded medicine and the generic form are essentially the same.

Increased prominence of the active ingredient name also assists when patients move between different generic brands. If patients are more aware of the fact that the two brand names are actually the same active ingredient, these moves are less confusing and the chance of medication errors is lessened.

Non-prescription medicines, while generally regarded as low risk, may also be dangerous in high doses, for example iron supplements. Iron is important in the transportation of oxygen around the body and individuals who are iron-deficient are often recommended to take iron supplements. However, many people are unaware that iron is also contained in other multivitamin and mineral products. If these medications are taken concurrently, this can lead to excessive iron stores which are highly dangerous and result in organ damage. In the USA, iron overdose has been documented as the leading cause of poisoning deaths in children.^[92] Improved labelling including more prominent display of active ingredients will help patients who are taking specific supplements, such as iron, and combination products to avoid these interactions and seek appropriate medical advice. Similarly this will assist medical personnel in identifying the possibility of these interactions.

It may be considered that the proposed changes to medicine label requirements are not sufficient to address all the consumer and healthcare professionals' concerns raised during the extensive consultation. To achieve practical outcomes, the proposals attempt to balance these needs against factors such as the costs to industry that would be associated with re-packaging to create increased current label space.

Regulatory burden estimates

Regular changes to medicine labels are part of normal business practice. As discussed above, it is estimated that more than half of medicine labels for products marketed in Australia are changed every three years. When proposing options for the length of the transition time to the proposed amendments, the TGA considered the need to ensure that the burden placed on industry is minimised. By doing so, the TGA proposes that label changes could occur as part of business as usual activities as opposed to being triggered by the need to meet new regulatory requirements.

Furthermore, it is noted that a small percentage of labels are already compliant with the proposed draft requirements of TGOs 91 and 92.

A number of activities associated with compliance with the new Orders have been costed, with the majority having a one-off impact on the affected sector. The following assumptions have been made when quantifying the regulatory burden for this option:

• The average cost of staff is estimated at $80.20 per hour. This is consistent with the costing undertaken for the adoption of Required Advisory Statements for Medicine Labels (RASML).^[93] The cost also aligns with those identified by some sponsors in the labelling public consultation submissions;
• It is estimated that there are 25,585 affected products - this is based on the number of medicines on the ARTG (33,000 or 30,000 excluding exports) and accounting for a multiplier effect on number of products per ARTG entry, and discounting it by a low value turnover and product range (this accounts for products that will be discontinued or varied). The application of the multiplier and the discounts takes into account the number of products that will be affected.
• The numbers of medicines on the ARTG often converts to more than one product. For example, in the case of OTCs, the number of products count includes different packaging sizes and stock keeping units even if the medicine is the same, while it will be counted as ONE medicine on the ARTG. While situation is the same for listed medicines, the multiplier is lower than that applied to registered OTCs.
• The discount is applied as products are often removed/discontinued as part of normal business practices. The discounts were developed during the costing associated with the RASML changes. It recognises that while some products are currently available, they may not be affected by the labelling changes as they would have been discontinued or varied.
• Table 1 provides the multiplier and discount values for each class of medicine on the ARTG.