Therapeutic Products Bill

Members, we come now to Part 2, which is the debate on clauses 14 to 66, including Interpretation. The question is that Part 2 stand part.

Thank you, Madam Chair. I would like to speak to Part 2, particularly starting with clause 60, and would like to restart the conversation around “fit and proper” persons and the concern that we have with the legislation.

The Supplementary Order Paper (SOP) that we have in my name, SOP 373, looks to address this. We have no issue with character tests—we think that’s important—but ourselves and the industry think, again, that this is an overreach. The SOP seeks to improve the fit and proper person test to be more manageable and pragmatic. As currently drafted, the fit and proper person definition may impose a significant barrier to entry into the New Zealand market. The regulator has a good character reach back that is not time limited and is broader than in other similar New Zealand legislation. There appears to be no similar requirement in Australia, the EU, or the USA, and, given the relatively small size of New Zealand’s therapeutic products market, the assessment process will create a sufficiently significant regulatory burden so that some companies may choose to bypass the New Zealand market.

Compliance may also be problematic, with fit and proper person tests potentially affecting those who may “exercise significant influence” but may be quite removed in time in the role, function, and geography from the regulator. For example, for a New Zealand sponsor and a large, global company group, the fit and proper person assessment applies to an extensive list of senior managers in the group, despite many of them having no direct role in the management or administration of the New Zealand sponsor. Directors of the sponsor’s overseas holding companies, however—including the ultimate overseas parent company—may be classified as senior manager in the corporate structure of the group, which would technically place those directors in a position that allows them to exercise significant influence over the management or administration of the sponsor despite them being offshore and having no direct role in the business operation of the sponsor in practice.

It would be very difficult for a corporate applicant to obtain the relevant information required under the fit and proper person test from former senior managers who are no longer employed by or hold any role within the organisation, the sponsor, or a relevant member of the sponsor’s company group over the proposed seven-year reach back.

This SOP proposes an alternative. It places a 10-year time limit on assessment of fit and proper persons. It deletes broad grounds for “believing” that a person may contravene the Act. It removes the reach into senior managers over a previous seven year period and reaffirms the fit and proper person test only applies to direct management for bodies corporate incorporated in New Zealand, specifically the New Zealand sponsor, licensee, or permit holder.

We can see how this might be problematic. We may disagree that it’s too unbounded. We may disagree that there are parts of this that are reasonable, but I think it is challenging to contemplate a global corporate where managers might be deemed to have significant influence over the sponsor, and to be able to reach back into them when they have no direct geographical association or past history with New Zealand—that would be a challenge. That would seem unfair, particularly if the reach back is seven years and they’re no longer employed by the sponsor. And yet their influence could still be over the sponsor in New Zealand, and their fit and proper persons character test would still need to be taken into account. That would seem to be a burden that creates far too much on the applicant and is probably unmanageable, and we see it in no other similar legislation, either domestically or internationally.

So in our SOP we look to change that. We look to expound the time frame for fit and proper persons, we look to limit the seven-year reach, and we look to make direct associations of fit and proper persons to the sponsor or the licensee so that we can directly say we’re assessing correctly the correct person—and by the correct means—who has a direct influence on the authorisation and sponsor process that we’re talking about.

So we would commend the Minister of Health and her team to consider some of the points we’ve taken into account, which have been collaborated with industry, who are also deeply concerned. So this is no epiphany for us here tonight; this is of some period of time collaborating with the concerns that they brought to us, which we’ve digested and we agree with. So it would be interesting to have a response to that, and we place this SOP on the Table. Thank you.

Thank you, Madam Chair. I’d like to speak on behalf of Supplementary Order Paper (SOP) 382 in the name of Brooke van Velden, around clause 65. Now, this clause here is about a “special-case requirement”. We feel, talking with the industry, that there could be a bit of an overreach here around this.

When you read the explanatory note in the SOP, it says that “Clause 65(2)(b) currently adds an additional and imprecise requirement of ‘appropriateness’ that risks adversely interfering with the exercise of professional judgement and, accordingly, patient treatment and outcomes.” Now, this is a bit of concern in terms of these special cases—it’s a little bit of an overreach where it comes from the regulators, rather than necessarily from the practitioner or a veterinarian. And this is the other thing that most people who are sitting at home probably don’t know—that this Therapeutic Products Bill is not just for humans; it is also for our animals as well and all treatments. It’s quite wide-reaching.

So we would hope that the Minister of Health would consider this, because this is another thing that’s been brought to us by the industry and also by the professionals within the medical profession. We’re just a bit concerned about this overreach around these special cases, because we really need to make sure that the right people are actually administrating the right procedures that are required.

So I would hope that the Minister will consider SOP 382, in the name of Brooke van Velden, to change the clause and just bring it back into the authorised people and with the indication of off-use labels and patient needs. This is the biggest thing: that we have a lot of doctors who are prescribing things that aren’t necessarily able to be gotten here in New Zealand or are off-label because they are needed for something else, and we need those expertise people to be able to judge it, not necessarily these regulators. So I’d hope the Minister would consider this change to clause 65. Thank you.

Thank you, Madam Chair. Under Part 2, I would also like to address clause 16—I have a Supplementary Order Paper (SOP) in my name, SOP 374, that starts to operate at clause 16. The concern we have here is that sunscreens are caught up in the regulations associated with the Therapeutic Products Bill. Part of the concern here is that unanimously across the House we all approved the Sunscreen (Product Safety Standard) Act 2022—a nod to Todd Muller here. We all agreed on this last year, and we said there would be a transition period of one year, through to September 8, which is coming up really soon, actually, yep.

So what’s happened is that manufacturers have done what is necessary for labelling and everything they needed to do to be compliant with the Act, and yet this bill is going to repeal it no more than eight to 10 weeks away from it being fully enforceable—that would not seem to be right. What we do know is that there are other things that manufacturers have concerns about with sunscreens being removed from this bill. That includes the fact that it’s taken quite a while to get joint approval with Australia, and there are huge concerns that, as this bill overtakes sunscreens, if you like, that joint standard with Australia and New Zealand may not stand up and there may not be the same interests that the manufacturers have and that this House agreed to when this bill overtakes it.

So we have a proposal here on the Table, SOP 374 in my name, and what this does is it clearly amends the Therapeutic Products Bill. The Sunscreen (Product Safety Standard) Act 2022 came into force on 8 September 2022, with the transition period, as I said, through to 8 September 2023, and this was for the establishment of product safety standards created by the Act. Manufacturers have taken the steps necessary to be compliant with this legislation. The Therapeutic Products Bill would repeal the Sunscreen (Product Safety Standard) Act before the transition period is even expired, causing further uncertainty and potentially wasted effort. Sunscreens are well regulated under the Sunscreen (Product Safety Standard) Act—everyone was reasonably happy with it; this House was unanimous—and the applicable standards. This SOP, then, seeks to retain the current regulations which are considered suitable by the Commerce Commission as the monitoring entity for the sunscreen Act.

So you can see what’s happened here: manufacturers have gone with what this House directed them. They’ve gone through this year-long transition period. They’re only weeks away from it becoming fully enforceable—change labelling, adopted standards; everything that we asked them to do—and now we’re going to pull the rug out from under them no more than eight to 10 weeks away from it being fully enforceable, and say, “Nah, changed our minds actually. Therapeutic Products Bill is going to repeal the sunscreen Act”—which is what this will do; it will repeal the sunscreen Act—“and we’re now going to bring it all under the Therapeutic Products Bill”. The SOP in my name changes that; it removes that repeal, and it places sunscreens back under the same standards applicable under the sunscreen Act.

I would appreciate it if the Minister and her team could consider this with some seriousness; there was unanimous agreement across the House that this was good legislation. Manufacturers acted in good faith, they did everything that was asked of them, and now, eight to 10 weeks away, we’re saying, “Actually, we’re going to repeal that legislation and we’re going to have a different framework for you to operate under.” That would not seem to be the right thing to do when we were all in agreement on what our intention and our end-goal purpose was. So this SOP looks to reset that. It looks to give certainty back to manufacturers; back to the sector. It looks to give certainty that what this House agrees to in a unanimous way is something that we really intend and that we can deliver for New Zealanders. So I’d appreciate it if the Minister and her team could consider this.

Under Part 2, with operating clauses starting around about clause 59, I would like to talk to exports and concerns that have been raised with us around the impact on exporters of the Therapeutic Products Bill. The concern that exporters have is that they will require some sort of export authorisation before they can export offshore, even though there may never be an intention to actually supply that product to New Zealanders. They will become liable to legislation and regulations offshore: that is their customer market—why would we have any interest in that? We have no interest. We know there’ll be good manufacturing practice in all good quality standards. I get that—we want our products offshore to be well representative of good-quality manufacturing in New Zealand, absolutely. But it would seem somewhat ludicrous that for a product that is never going to be used in New Zealand—it will never be supplied here, but it is part of our multibillion-dollar export industry—we will impose New Zealand regulations through this bill and expensive authorisation, which manufacturers tell us could be in the hundreds of thousands—expensive authorisation for products that will never ever be in New Zealand. Why would we do that? That makes no sense whatsoever. It certainly makes no sense to manufacturers and exporters, and they’ve told us as much.

So what we’ve done here with the Supplementary Order Paper in my name, SOP 375, is we’ve looked to redress this. What this SOP does is provide some remedy to the multibillion-dollar export industry and to those medicines that are manufactured in New Zealand for the export market. It removes the requirement for medicines and medical devices to have export authorisation—because this also actually applies to medical devices. They may never be supplied here in New Zealand: why would we require them to go through expensive authorisation when that will happen? Any requirements they need to have will happen in their target market. We shouldn’t need to do that here. So this SOP allows a medicine or medical device to be exported, provided it meets all other applicable export standards outside of what this bill may require.

This doesn’t make any sense. This would hurt our exporters. They have told us it would hurt them, and so I think we should look to offer them some certainty, offer them some remedy for what seems like common sense. The medicine or the medical device will never be used here in New Zealand. Why would we impose our regulations and they would face offshore regulations in their target market? So I’d appreciate if the Minister and her team could consider this as well.

It’s a pleasure to respond to colleagues’ comments in turn: firstly Supplementary Order Paper (SOP) 373, relating to the “fit and proper” person test. It is important that the regulator has the opportunity to do due diligence on the individuals who are empowered under the Act to manufacture or undertake other controlled activities with drugs. The SOP undermines the ability of the regulator to undertake that due diligence. It is important that we note that those firms have the opportunity to disagree with a decision of the regulator and to seek an internal or external appeal. But I put it to members of this House that we would want to know if someone with influence over a person who was sponsor of a product, for example, had a criminal conviction for bad behaviour in this or another jurisdiction relating to medicines or drugs.

On the matter of the special-case requirement—the colleague from ACT speaking to SOP 382—it is important that there are opportunities to use medicines off-label. It is an important source of flexibility to make sure that people get the care that they need. However, there is an important role for being able to use clause 65 alongside other professional standards under the Health Practitioners Competence Assurance Act to make sure that prescribing is consistent with clinical guidelines for that disease or other criteria that might relate to informed consent. So, for that reason, we do not support that SOP.

I recall the discussion about sunscreen in the House earlier in this parliamentary term, and indeed that very good bill by colleague Todd Muller was supported by all parties. But the Government was always clear that the Therapeutic Products Bill would replace that sunscreen Act 2022. It’s important to note that the Therapeutic Products Bill would come into force in 2026, so it would not be a case of the sunscreen Act being repealed so quickly after it’s in force, and, most importantly, it is possible for the existing standards, such as those in the sunscreen Act, to be taken up and incorporated as standards under the Therapeutic Products Bill.

On the issue of export authorisations, the Government shares the objective of promoting the export of innovative therapeutic products by New Zealand overseas through this bill. Export authorisation has a different purpose than product authorisation in the domestic context. Here, it is for New Zealand to play its part in global traceability and post-market surveillance of therapeutic products. So it is serving a different purpose, and, in addition, all the provisions in the bill are intended to be proportionate to the risk, so this form of authorisation is likely to be very different from product authorisation for domestic use in New Zealand. The bill gives the Minister of Health the ability to recommend regulations relating to exports, and it appears there is concern on both sides of the House to make sure the opportunity for strong export growth from this industry is maintained.

Thank you, Madam Chair. We would like to raise another concern that we have, and that industry has, and that is around cosmetics, which we seek to address in Supplementary Order Paper 371, in my name. The concern we have is that our $1.25 billion cosmetic industry—that’s turnover in New Zealand; $400 million export dollars, so this is not an insignificant industry at all—is also caught up in the Therapeutic Products Bill.

There are concerns that things like products which I’ve mentioned before—an anti-dandruff shampoo and, potentially, fluoride in toothpaste; anti-wrinkle cream, if you like, with retinol, for example—could all get caught up in the Therapeutic Products Bill. Currently, cosmetics are excluded under the Medicines Act, because they are thought to be reasonably regulated under the Cosmetic Products Group Standard. We think that the industry and the 24 manufacturers in New Zealand who manufacture cosmetics think this bill is an overreach and opens up the possibility for reasonable cosmetic products that we all use to be captured and have to go through authorisation processes as well.

So, in collaboration with industry, we have sought to address this in a Supplementary Order Paper, which we commend to the House. The Supplementary Order Paper amends the Therapeutic Products Bill. The cosmetic industry is a $1.25 billion industry. The definition of a natural health product in the bill has a very wide and interpretive set of meanings and includes a specific list of ingredients that are widely used in cosmetic products. Such width of definition provides far too much scope to include cosmetic products which might have a health benefit but are not a health product—which might have a health benefit but are not a health product; that’s quite important. I’ve mentioned that anti-wrinkle creams, toothpaste, and shampoos have health benefits but are well accepted as being cosmetic products globally.

There is also a concern around the bill’s regulation of the $400 million cosmetic export market. If ingredients that are naturally sourced, such as lanolin or lavender, were used in a product deemed to be providing a health benefit or a “natural health product”, under the current definition, they could be captured under the bill’s scope. In such circumstances, the product would require an export licence as well as having to meet any good manufacturing practices the bill determines are required. This would be a barrier to trade. In this circumstance, the cost to industry of the bill’s regulation would raise pricing for exports and make New Zealand products less competitive or uncompetitive.

So we’re raising concerns that it is our view that cosmetic products that everyone accepts are reasonably cosmetic products globally—not just domestically as well—will be caught up in this legislation. We’re proposing, in SOP 371, that they be put aside and that they be regulated under their current regulations, which are the Cosmetic Products Group Standard, which has been more than adequate and suitable to date. The industry is telling us that if we move away from these, if we pass the Therapeutic Products Bill, through any stages of authorisation, this will make the industry uncompetitive, and we may not receive global cosmetic products in New Zealand because of those restrictions. We agree with them, and we think this needs to be addressed. This is what we’re looking to do in Supplementary Order Paper 371.

I thank the member Shane Reti for that contribution. There is, of course, an interface between cosmetics and therapeutics, and it’s important that we address that. The Supplementary Order Paper is a blunt tool, in that it prohibits regulation of all cosmetics under this bill, and that contains a high risk of unintended consequences. There are some cosmetics which it would be desirable to regulate under this Act. It would be a minority, but there would be some that it is appropriate given their intended purposes. One example is a sunscreen with a sun protection factor above a certain level where the intention is to prevent cancer. Another could be a lip balm with natural health product ingredients where the primary purpose is to relieve mild eczema. Some products could be cosmetic and therapeutic products, such as dermal fillers and breast implants. Therefore, I intend that most cosmetic products would be excluded from regulation under the bill—for example, non-sunscreen make-up, insect repellents, decorative non-corrective contact lenses.

The question is that the Minister’s amendments to Part 2 set out on Supplementary Order Paper 368 be agreed to.

The question is that Dr Shane Reti’s amendments to clause 14 and 59 set out on Supplementary Order Paper 375 be agreed to.

The question is that Dr Shane Reti’s amendments to clauses 14, 61, and 62 set out on Supplementary Order Paper 384 be agreed to.

The question is that Dr Shane Reti’s amendment to clause 16 set out on Supplementary Order Paper 371 be agreed to.

The question is that Dr Shane Reti’s amendment to clause 16 set out on Supplementary Order Paper 374 be agreed to.

The question is that Dr Shane Reti’s amendments to clause 60 set out on Supplementary Order Paper 373 be agreed to.

The question is that Brooke van Velden’s amendment to clause 65 set out on Supplementary Order Paper 382 be agreed to.