Secretary, Department of Health v Medtronic Australasia Pty Ltd [2024] FCA 1096
Introduction
Secretary, Department of Health v Medtronic Australasia Pty Ltd [2024] FCA 1096 concerns Medtronic’s supply of the “INFUSE Bone Graft Kit” (the Kit) without it being registered on the Australian Register of Therapeutic Goods (ARTG) between 1 September 2015 and 31 January 2020 (the Relevant Period).
Facts
Agreed Facts
Medtronic supplied 16,267 units of the Kit to 109 hospitals throughout Australia without having registered the Kit on the ARTG. The Kit formed part of a registered device called the ‘Infuse Bone Graft/LT-Cage – Graft kit, spinal fusion’ (the Device), which was included in the ARTG as “Entry 121164”. The Device, classified as a Class III medical device, comprised two separately packaged parts: a metallic spinal fusion cage (Cage) and the Kit. The Kit alone was not registered on the ARTG during the Relevant Period but was considered a “therapeutic good” under section 3 of the Therapeutic Goods Act 1989 (Cth) (the Act). Supplying the Kit separately from the Device contravened section 19D(1) of the Act, which prohibits the supply of unregistered therapeutic goods for human use.
Issues
The parties filed with the court a joint statement of agreed facts and admissions. The parties agreed (and the court found) that the relevant provision contravened by Medtronic was section 19D(1) of the Act, which specifies that the importation, exportation, manufacturing and supply of therapeutic goods intended for human use without appropriate registration on the ARTG or specific exemption by the TGA is prohibited.
The court noted that Medtronic had failed to properly assess, implement and manage its compliance processes, particularly after becoming aware of concerns in 2009 that the Kit and Cage were not being supplied together as required by the ARTG entry. This was compounded by Medtronic’s decision in 2018 to withdraw the Cage from supply in Australia, thereby allowing only the supply of the Kit.
Medtronic’s actions were characterised by a significant number of contraventions over an extended period. There was debate over whether these constituted a continuous course of conduct or separate incidents; however, it was ultimately determined by the court that they represented distinct contraventions of section 19D(1) due to their transactional nature.
Medtronic generated substantial revenue from these contraventions (approximately $8,982,474 excluding GST by way of net sales) but the court stated that Medtronic must be penalised beyond mere profit margins to ensure compliance and deterrence in future operations. Ultimately, the court found the agreed penalty of $22 million to be appropriate, considering both the court’s aims of general and specific deterrence, the extent of the contraventions and Medtronic’s compliance failures.
The court considered various factors in assessing the appropriateness of the penalty, including:
- the seriousness of the contraventions and their impact on public health;
- Medtronic’s apology and prompt steps taken by them to stop the supply of the Kit once alerted to their contravention of the Act;
- the lack of evidence of deliberate misconduct by Medtronic;
- the number and duration of contraventions;
- the potential risk of harm (in this case no specific harm was identified); and
- the revenue generated from the contraventions.
Compliance Impact
Organisations should ensure that in dealing with therapeutic goods and devices, they have stringent systems and controls in place for product registration with the TGA. This may include conducting regular audits, providing thorough staff training, and maintaining detailed documentation of all compliance-related activities. Organisations should also pay particular attention to complex, multi-component devices, ensuring that each separable part is properly evaluated for its regulatory status and potential standalone use. Prompt response to any compliance concerns, whether raised internally or externally, is crucial. Finally, organisations should regularly assess and update their compliance processes to address evolving regulatory landscapes and potential vulnerabilities.
