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Implementation of the ACVM Act: Regulatory changes

6 Regulatory impact statement

Executive Summary

The New Zealand Food Safety Authority (NZFSA) is updating the administration of the Agricultural Compounds and Veterinary Medicines Act 1997 (the ACVM Act). This regulatory impact statement pertains to the discussion paper on proposals for manufacturing, labelling, advertising and promotion, and own use. Some arrangements, particularly around products that are exempt from registration, are not as rigorous or clear as they need to be in order to manage risks. A key objective is to use existing powers to set regulatory control at a level that is neither more nor less than what is required. Most of the proposals contemplate shifting existing requirements from a range of regulatory frameworks into regulations. This would increase transparency as the regulations will be more comprehensive. Although the proposals will create some new obligations for parties associated with products that are exempt from registration, there will be very little change for existing registrants.

Adequacy Statement

NZFSA has prepared this draft regulatory impact statement for the purposes of public consultation. When consultation is finished, NZFSA will confirm whether it meets the adequacy criteria.

Status Quo and Problem

NZFSA has begun a reform of the administration of the ACVM Act, which controls agricultural compounds and veterinary medicines used in association with animals and plants.

Regulatory requirements under the ACVM Act are not clearly set down in one place. Various tools have been used to manage manufacturing, labelling, advertising and promotion, and “own use” (the use of a substance/product by persons on their own animals or plants on land or water or in a place under their own control). Conditions of registration are placed on each registered trade name product and linked to standards. Where products are exempt from registration, the conditions are prescribed in regulations. Regulatory requirements have also been documented in standards, guidelines and information requirements. Since 2007 the ACVM Act has included powers that allow for more rigorous and transparent regulatory control.

The regulatory regime has been adequate in cases involving trade name products, but it is insufficiently flexible to manage risks when people sell or use substances as agricultural compounds. In addition, obligations for regulated parties have not always been clear. While New Zealand is party to a number of international agreements focused on veterinary medicines, there is no clear international standard for trade in agricultural compounds. New Zealand must set a sufficient level of control to manage risks in relation to agricultural compounds down to an acceptable level.

Insufficiently-managed risks can result in negative effects such as non-compliant residues in food, which can in turn jeopardise New Zealand’s reputation as a trusted supplier of food and food-related products. The frequency of cases of contaminated, mislabelled or fraudulent product has indicated to NZFSA that some risks relevant to the ACVM Act have not been sufficiently managed.

Manufacturing

Products are manufactured to meet specifications. Errors in the manufacturing process can lead to such things as contaminated, deteriorated or mislabelled product. Regulatory control of manufacture varies by class of product as discussed below.

Veterinary medicines: NZFSA approves New Zealand manufacturers under the Good Manufacturing Practices (GMP) for Veterinary Medicines scheme prior to registering products. The scheme has no specific statutory basis. Manufacturers are subject to formal compliance programmes with entry audits and regular verification audits to support renewals of their GMP approvals. Veterinary medicines that are exempt from registration are not subject to any manufacturing requirements.

Manufacturer performance is not administratively linked to the veterinary medicine products being manufactured. Where manufacturers are required to be approved prior to product registration, the approval is not linked specifically to the product. If an approved manufacturer does not maintain approved status, the product registrants who have registered the manufacturer’s products may not necessarily be affected (if the manufacturer is the sole registrant of the product, this is not an issue).

Manufacturers of other products do not require formal approval, and the authorisation is based on a level of comfort associated with information provided to or held by NZFSA.

Registered agricultural chemical products: Must comply with the ACVM manufacturing standard. Manufacturers do not need NZFSA approval and are not subject to formal verification audits. Manufacturers of active ingredients and products must be specified in the application for registration. NZFSA has no formal process for assessing whether to register products, and does not maintain a separate list of manufacturers. Agricultural chemical products that are exempt from registration are not subject to any manufacturing requirements. There have been a number of recent cases of fraudulent, mislabelled and contaminated products in the market.

Fertilisers: Must comply with minimum fit-for-purpose requirements prescribed in the ACVM Regulations 2001. Fit-for-purpose guidance is provided in a voluntary Code of Practice. NZFSA holds no information on who is manufacturing fertilisers. Manufacturers are expected to be able to provide evidence that they have taken due care to comply with the Regulations. They do not have to be approved by NZFSA, and are not subject to a formal compliance programme. There are both gaps in NZFSA’s awareness of compliance and occasional complaints about manufacturer non-compliance.

Oral nutritional compounds, including animal feeds: Must comply with minimum fit-for-purpose requirements prescribed in Schedule 4 of the ACVM Regulations 2001. Fit-for-purpose guidance is provided in the voluntary Code of Practice. Manufacturers do not have to be approved by NZFSA, are not subject to a formal compliance programme, and are expected to be able to provide evidence that they have taken due care to comply with the Regulations. Pet food manufacturers must be registered under the Animal Products Act 1999, and manufacturers of ruminant feeds who use ruminant protein must be registered under the Biosecurity (Ruminant Protein) Regulations 1999. NZFSA has little information on who is manufacturing oral nutritional compounds that do not contain animal products.

Vertebrate toxic agents: Must be registered, and the control of their manufacture is the same as it is for agricultural chemical products requiring registration – with the exception of restricted sale/restricted use products such as 1080 and cyanide products. For the exceptions, the manufacturers must be approved by NZFSA and are subject to a formal compliance programme. NZFSA is aware of occasional complaints of manufacturer non-compliance in respect of vertebrate toxic agents.

Labelling

Label content is subject to minimum requirements in the ACVM Regulations 2001. Registered products are subject to the ACVM labelling and advertising guidelines. Conditions of registration require compliance with the labelling and advertising guidelines.

Advertising and promotion

The regulation making powers in the ACVM Act expressly state the power to make rules about how parties directly involved with importing, manufacturing, selling or using products can carry out those activities, including the communication of information about the products. The ACVM Act is not so clear around whether communications by other parties can also be regulated.

Products are at risk of misrepresentation in the marketplace regardless of whether communications are made by parties with vested interests or not. Some communications marginalise important warning information (for example by putting it in very small print), which reduces its effectiveness. Risks arising from advertising and promotions can cause significant personal loss, and damage public confidence in the implied official assurances that authorised agricultural compound products are safe and reliable.

Own use

Own use involves people managing their own animals or plants through the use of substances that have not been assessed and authorised by NZFSA as agricultural compounds, as well as the use of authorised products in a manner that has not been assessed. It used to be limited to simple, traditional uses based on a narrow range of readily-available chemicals. The risk of causing harm was low and regulatory control was not considered necessary. The potential for harm from own use has increased as sophisticated chemicals become increasingly available, to the extent that it now poses risks far beyond acceptable thresholds. “Own use” includes certain professional groups who compound their own preparations as part of services offered to manage the health and productivity of animals and plants. Oral and homeopathic and herbal veterinary medicines and homeopathic plant products are exempt from registration, with specified minimum requirements. These requirements are considered to be too generic for the range of preparations covered.

Objectives

The objective is to efficiently and transparently administer manufacturing, labelling, own use, advertising and promotion through the use of existing powers under the ACVM Act.

Alternative Options

Generally, no alternative options were considered sufficiently feasible to merit discussion. Two exceptions are the options around:

• products manufactured outside New Zealand’s jurisdiction, which are set out under the subheading Manufacturing below.

• the provision of professional services, which are set out below under the subheading Own use and off-label/MUMS use.

Preferred Option

NZFSA’s key proposed changes to regulatory arrangements are discussed below.

Manufacturing

Make regulations that require all manufacturers to comply with minimum obligations in line with the principles of responsible manufacturing. The majority of the obligations would be no more onerous than would previously have been expected.

A sample low-impact proposal is that all manufacturers will need an operating plan that describes how product will be manufactured and assessed as meeting specifications. The term “operating plan” is new, but the expectation that manufacturing should be subject to a documented system is not. Most businesses will be left to make and implement their own operating plans. Operating plans will probably need to be approved for any products requiring NZFSA certification of matters relating to the process specified in the plan, as well as for all veterinary medicines and restricted sale/restricted access vertebrate toxic agent products.

By contrast, a proposed requirement for critical steps in the manufacturing process (and any changes to those steps) to be validated is likely to result in costs. NZFSA is not dictating how validation is done or who must do it, so managing the costs is to some extent in the hands of the manufacturer. NZFSA has not yet determined whether it will need to set some expectations in regard to validation.

Under the proposed regulations, manufacturers of veterinary medicines and restricted sale/restricted use vertebrate toxic agents will be formally recognised and required to comply with certain performance and technical standards. Other manufacturers’ names and contact details will be kept on a list, for the purposes of investigations of non-compliance or product recall. NZFSA will conduct occasional reviews to monitor the performance of industry sectors’ programmes.

All export-only product will be exempt from registration, with conditions including a requirement that manufacturers are recognised under the ACVM Act. That recognition will depend upon compliance with standards equivalent to the requirements under the manufacturing regulations.

There will be criteria for authorising products that have been manufactured outside New Zealand’s jurisdiction for import, sale and use in this country. Option One: use criteria based on the status given to the manufacturer by the recognised authority in the country in which the manufacture occurs. Option Two: use criteria based on NZFSA’s information on the acceptability of the manufacturer and the manufacturing process for the product in question.

The regulatory control of manufacturers will be administratively linked to the products. Verification audits will include specific verification of the products and substances that a manufacturer has authorisation to manufacture, to ensure that they align either with the data held by NZFSA (if registered) or with the company’s operating plan (if exempt from registration). Unacceptable performance by manufacturers could have an impact on the authorisation of their products. This was relatively clear with veterinary medicines, and will become more significant for the other classes of products as these proposals are put into effect.

Labelling

Transfer labelling requirements and specifications into the manufacturing regulations. A range of minimum labelling requirements is under consideration as set out in the discussion paper. Compliance with the labelling requirements will be in addition to the label content approval.

Advertising and promotion

Make new regulations that will largely reproduce current requirements and will effectively make existing regulatory arrangements clearer. Apply the requirements that currently apply to registered products to both registered products and those exempt from registration. Products that are exempt from registration will therefore need to meet some new requirements.

As regards communication about off-label use, NZFSA proposes to place a condition on the registration of most products that allows off-label use, but imposes requirements on responsible parties and users to take due care to avoid negative effects. This will mean that communications about off-label uses will need to include warnings as part of the primary message (see above paragraph), which will increase the requirements around and costs of off-label uses.

NZFSA is considering treating all communication practices as relevant to the risks to be managed under the ACVM Act, regardless of whether the party providing communication has a vested interest in the product or not.

NZFSA is considering increasing the profile of warning information, by establishing that it should be part of the primary message of a communication. NZFSA proposes to define “the primary message” as “that part of a communication containing the essential information to be communicated and which is the focus of the communication”. By requiring it to be included in the primary message, NZFSA will require warning information to adequately reflect the significance of the warning. The relationship with provisions in the Fair Trading Act 1986 on “fine print” has yet to be explored.

Own use and off-label/MUMS use

Make two sets of regulations, one for own use and one for off-label/MUMS use. The own use regulations will require any person who uses generic substances, mixtures of substances, or biological compounds as an agricultural compound to comply with minimum requirements. The off-label/MUMS use regulations will require any person who uses a registered trade name product as an agricultural compound in a manner that is not specifically assessed and approved as part of the registration to comply with minimum requirements. For the most part, both sets of requirements will not be new.

Compounding as part of professional services

NZFSA needs to discuss with industry groups the proposals that involve preparations compounded in conjunction with certain professional services. The intention is to exempt from registration herbalists, homeopathic practitioners, pharmacists and veterinarians – and to set some minimum requirements that must be complied with. NZFSA is considering requiring these practitioners to have operating plans to cover their compounding activities and the link with their professional services. The decision may not be the same for all of the groups in every case. The practitioners will need to be recognised by NZFSA under the ACVM Act. Option One: minimum requirements for compounding will be incorporated into technical and professional standards, which can be issued under section 62. Failure to comply would result in loss of recognition. Without recognition, the preparation would not comply with the conditions of exemption and administering it would be an offence. Option Two: add a requirement to comply with a section governing compounding in the proposed manufacturing regulations. Failure to comply with the regulations will also be an offence. While current exemptions limit administration to topical or oral, this proposal does not make a distinction about mode of administration. It could cover all modes of administration, and set minimum requirements as necessary based on the risks posed. This would mean that preparations could be compounded by these practitioners even for injection or for application to eyes and ears.

Implementation and Review

The Approvals and ACVM Group within NZFSA is responsible for administering the ACVM Act and will implement the proposals.

Consultation

Stakeholders

The reform of the ACVM Act was socialised initially with the industry body, AVMAC. NZFSA held targeted consultation on an overview of the reform process with key industry sectors in Auckland and Wellington in December 2007. Public consultation in New Zealand and Australia will begin with the release of the attached discussion paper in May 2008, and continue in relation to subsequent discussion papers.

Government agencies

The following government agencies were sent draft copies of the Cabinet paper and discussion paper: the Departments of Conservation and Labour, ERMA New Zealand, the Ministries of Agriculture and Forestry, Economic Development, Health and the Ministry for the Environment.