You are here

TGA Internet site archive

The content on this page and other TGA archive pages is provided to assist research and may contain references to activities or policies that have no current application. See the full archive disclaimer.

Addendum to cost recovery impact statements, 1 July 2012 - 30 June 2013

Prescription medicines, Non-prescription medicines, Complementary medicines, Blood, Biologicals, Medical devices, Good manufacturing practice

29 June 2012

Version 1.0, July 2012

Version history

Version Description of change Author Effective date
V1.0 Original Publication Management Accounting/
Office of Corporate Services
01/07/12

Purpose

The purpose of this Cost Recovery Impact Statement (CRIS) Addendum is to document the increase in fees and charges attributed to the cost of implementing the TGA's Blueprint Reforms. This CRIS Addendum should be read in conjunction with the following CRISs:

Sector CRIS Preparation Date
Prescription Medicines June 2009
Non-Prescription Medicines June 2009
Complementary Medicines June 2009
Blood June 2009
Biologicals June 2011
Good Manufacturing Practice July 2012
Medical Devices July 2012

Top of page

Background

In order to ensure that the TGA continues to fulfil its public health role and is able to meet community expectations within a complex therapeutics regulatory environment, several major reviews have been undertaken across various therapeutic regulatory areas. These have included:

  • the review to improve transparency of the Therapeutic Goods Administration;
  • the Working Group on Promotion of Therapeutic Products;
  • public consultations on the regulatory framework for advertising therapeutic goods;
  • the Auditor-General's report on Therapeutic Goods Regulation: Complementary Medicines;
  • an informal working group examining the regulation of complementary medicines and reasons for low compliance rates;
  • public consultations on the medical devices regulatory framework; and
  • the Health Technology Assessment Review.

The reviews were undertaken as part of the commitment to open governance. In response to the various reviews, the Government has drawn this work together into a comprehensive package of reforms to be progressed in stages. Further information can be found in the report TGA reforms: a blueprint for TGA's future which can be accessed from the TGA website.

The Government has agreed that the full cost of regulating therapeutic goods (including the costs of implementing reforms) will continue to be met by cost recovery from the regulated industry. This will require a modest increase in TGA's fees and charges to fund the reform related activity.

The Blueprint Reforms related changes in TGA's fees and charges are implemented by amendments to the Therapeutic Goods Regulations 1990, the Therapeutic Goods (Medical Devices) Regulations 2002 and the Therapeutic Goods (Charges) Regulations 1990.

A comprehensive project plan is being developed by the TGA to deliver the Blueprint Reforms and is to be published on the TGA website in mid 2012. Implementation of the Blueprint Reforms will improve understanding of the TGA's regulatory processes by its stakeholders, significantly enhance TGA's post market and surveillance capability and enhance public trust in the safety and quality of therapeutic goods. These reforms are fundamental to the appropriate operation of the regulatory frameworks that allow therapeutic goods to be supplied in the Australian marketplace and directly relate to the TGA's regulatory activities.

Blueprint reform activities

To ensure an effective monitoring of the progress in reform implementation and achievements, the TGA has grouped Blueprint Reforms into the following activities:

  • reform pre-and post market processes for the regulation of medical devices;
  • refine processes for regulation and allow better targeting of resources for regulation of complementary medicines;
  • align and improve post market processes for over the counter medicines;
  • refine alignment of business processes and legislation for variations to registration of prescription medicines;
  • provide more information on the regulatory framework so that stakeholders understand TGA's regulatory processes and industry requirements;
  • improve the usability, accuracy and consistency of guidelines;
  • revise labelling and packaging requirements to improve consumer safety and quality use of medicines;
  • align ingredient names used in Australia to international standards;
  • improve the management of adverse event reporting in support of consumer safety;
  • promote the distribution of therapeutic goods safety information so that consumers are alert to warning signals;
  • align recall procedures including communication of alerts to the public and health professionals;
  • consolidate trans-Tasman manufacture auditing processes;
  • reform processes for the evaluation of registration applications;
  • improve effectiveness of advertising and increase consumer confidence;
  • improve stakeholder understanding and confidence in TGA's regulatory processes;
  • make reliable and relevant information easily accessible to stakeholders;
  • promote internal engagement of TGA staff in the reform process;
  • develop technology to support business processes; and
  • assess and report on the feasibility of an on line tracking system for submissions or applications.

Top of page

Cost recovery of Blueprint reforms

Implementation of the Blueprint Reforms over the next four years (2012-13 to 2015-16) is expected to cost around $11.7 million, including around $2.3 million in 2012-13. In order to fund these costs, an increase of 2% across TGA's fees and charges will be required in 2012-13 in addition to the 3.6% increase based on an indexation formula that comprises 50% of the ABS Labour Price Index and 50% of the Consumer Price Index.

Increases in fees and charges due to the implementation of the Blueprint Reforms for the financial years beyond 2012-13 are expected to be documented in the revised CRISs for the relevant industry sectors scheduled for commencement on 1 July 2013. Fees and charges for the years following the implementation of reforms will be set at a level to ensure full cost recovery of the TGA's regulatory activities.

Estimated costs for Blueprint Reforms are:

Sector share of Blueprint Costs 2012-13
$m
2013-14
$m
2014-15
$m
2015-16
$m
4 Year Total
$m
Prescription 1.171 2.003 2.020 0.656 5.850
Non-Prescription 0.150 0.257 0.260 0.084 0.751
Complementary Medicines 0.178 0.306 0.307 0.100 0.891
Devices (including IVDs) 0.536 0.918 0.925 0.301 2.680
Good Manufacturing Practice 0.266 0.454 0.457 0.148 1.325
Blood 0.042 0.072 0.073 0.023 0.210
Biologicals 0.011 0.020 0.020 0.006 0.057
Total Blueprint Reforms 2.343 4.010 4.042 1.312 11.707

Blueprint costs for 2013-14 to 2015-16 and the 4 year total are provided for information only and do not form a part of this CRIS Addendum.

There have been no other changes to the TGA's fees and charges structure in 2012-13. All fees and charges for all industry sectors will increase by 5.6% in 2012-13.

TGA estimated revenues and expenses for 2012-13 (including Blueprint reforms)

2012-13
Forecast
$'000
Revenues 126,743
Employee Expenses 84,679
Committees 1,666
Consultants 2,088
Travel 2,281
External Evaluators 4,962
Advertising Regulation 1,562
Other Suppliers 2,237
Total Supplier Expenses 14,796
Corporate Overheads 27,268
Total Expenses 126,743
Operating Surplus/(Loss) 0

Top of page

Consultation

The need to increase fees and charges in order to fund TGA's Blueprint Reforms was discussed with key industry representatives at the bilateral consultative meetings in February 2012. Following the meetings, written submissions were obtained from the following organisations:

  • Medicines Australia
  • Generic Medicines industry Association (GMiA)
  • ACCORD Australasia – Advocate for the Consumer, Cosmetic, Hygiene and Speciality Products Industry
  • Complementary HealthCare Council (CHC)
  • Australian Self Medication Industry Association (ASMI)
  • Medical Technology Association of Australia
  • IVD Australia
  • AusBiotech
  • Australian Dental Industry Association

In general, these industry groups were supportive of the blueprint program of work, but not supportive of an increase in fees and charges to fund the reforms.

Monitoring and review

The ongoing monitoring of the level of TGA cost recovery will continue to be met through the mechanism of annual meetings with industry stakeholders. The cost recovery revenue will be reported in the Department of Health and Ageing Annual Report in accordance with the Minister for Finance and Deregulation Orders.

TGA plans to review the effectiveness of cost recovering the Blueprint Reforms and achieved outcomes closer to the end of 2015, at which time it is expected that the Blueprint Reforms will be in place and ongoing costing of the improved business processes will be incorporated into the business as usual operations of TGA. Fees and charges will then be set for each TGA sector to appropriately recover the cost of regulatory activities.

TGA is currently undertaking a comprehensive re-examination of the cost base applicable across all of its regulatory activities, which is expected to be completed in 2012. Should an outcome of that process result in changes to the current method of recovering the costs of the Blueprint Reforms, these changes will be documented in the CRISs for relevant sectors as required under the Australian Government Cost Recovery Guidelines.

Certification

I certify that this CRIS Addendum complies with the Australian Government Cost Recovery Guidelines.

Secretary
Department of Health and Ageing
Date: 19 June 2012

Top of page

About the Therapeutic Goods Administration (TGA)

  • The TGA is part of the Australian Government Department of Health and Ageing, and is responsible for regulating medicines and medical devices.
  • TGA administers the Therapeutic Goods Act 1989 (the Act), applying a risk management approach designed to ensure therapeutic goods supplied in Australia meet acceptable standards of quality, safety and efficacy (performance), when necessary.
  • The work of the TGA is based on applying scientific and clinical expertise to decision-making, to ensure that the benefits to consumers outweigh any risks associated with the use of medicines and medical devices.
  • The TGA relies on the public, healthcare professionals and industry to report problems with medicines or medical devices. TGA investigates reports received by it to determine any necessary regulatory action.
  • To report a problem with a medicine or medical device, please see the information on the TGA website.

Copyright

© Commonwealth of Australia 2012

This work is copyright. You may reproduce the whole or part of this work in unaltered form for your own personal use or, if you are part of an organisation, for internal use within your organisation, but only if you or your organisation do not use the reproduction for any commercial purpose and retain this copyright notice and all disclaimer notices as part of that reproduction. Apart from rights to use as permitted by the Copyright Act 1968 or allowed by this copyright notice, all other rights are reserved and you are not allowed to reproduce the whole or any part of this work in any way (electronic or otherwise) without first being given specific written permission from the Commonwealth to do so. Requests and inquiries concerning reproduction and rights are to be sent to the TGA Copyright Officer, Therapeutic Goods Administration, PO Box 100, Woden ACT 2606 or emailed to <tga.copyright@tga.gov.au>.

Top of page