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Cost recovery implementation statement, V1.3

Version 1.3 March 2018

8 April 2018

Book pagination

Design of cost recovery charges

Costs of TGA activities

In line with the Australian Government Charging Framework costs are categorised into the following groups for cost allocation:

Direct costs: can be easily traced to a cost object with a high degree of accuracy. The allocation of direct costs to a cost object is relatively straightforward. The most common direct costs are staff salaries (including on-costs such as training, superannuation and leave) and supplier costs (e.g. office supplies).

Indirect costs: are the costs that cannot be easily linked to a cost object or for which the costs of tracking this outweigh the benefits. Indirect costs are apportioned to a cost object using the internal costing methodology. Common indirect costs include overhead costs such as corporate costs (e.g. finance, human resources, IT, office accommodation) and salaries of staff in support areas (e.g. regulatory practice and support functions).

The TGA uses a software solution for activity based costing (ABC). The staff work effort captured through a work effort survey attributes the time of regulatory staff to regulatory activities to determine direct cost. Indirect costs are allocated to regulatory activities on the basis of standard costing. More details on the cost of TGA activities can be found in Appendix 1 - Financial performance by industry sector group.

Fees and charges

The characteristics of a government activity determine the type of cost recovery charge used. There are two types of cost recovery charges:

Cost recovery fees: Fees are charged when a good, service or regulation (in certain circumstances) is provided directly to a specific individual or organisation.

Fees are used to recover the cost of the pre-market services performed. Fees are designed to reflect as closely as possible the underlying cost of service. TGA has limited authority under the Act to waive or reduce fees.

Cost recovery levies: Charges are imposed when a good, service or regulation is provided to a group of individuals or organisations (e.g. an industry sector) rather than to a specific individual or organisation. A cost recovery levy is a tax and is imposed via a separate taxation Act. It differs from general taxation as it is 'earmarked' to fund activities provided to the group that pays the levy.

All therapeutic products registered, listed or included on the ARTG are subject to annual charges except for export only products. Annual charges are used to recover the costs of pharmacovigilance and other post market monitoring and compliance activities where:

  • they cannot reasonably be assigned to individual sponsors;
  • they maintain the integrity of the regulated industry to the benefit of all sponsors; and
  • assigning costs to individual sponsors would deter sponsors from disclosing important public health information, such as reporting adverse events.

Different levels of pharmacovigilance are required for different classes of therapeutic goods depending on the level of risk the good could pose. Annual charges have been set to reflect the level of pharmacovigilance and post-market work required for the regulated good rather than the size of the individual business. For example, the annual charge for a class I medical device (other than a class I medical device that has a measuring function or is supplied in a sterile state or Class 1IVD) is $80 whereas for a high risk prescription medicine (biologic) the annual charge is $6,990.

Fee-free regulatory activities

a) Patient access to unproved therapeutic goods via the SAS and AP schemes

While patient access to certain unapproved therapeutic goods is critical for the health of the Australian public, the TGA does not charge a fee directly to the users of these services. These services are provided free of charge to enable timely access to unapproved medicines or medical devices essential for treating or curing a terminally ill patient in highly time sensitive situations. These schemes are incentivised because it is in the public interest to save a life through timely access to critical therapeutic goods, where possible.

The fee waiver is consistent with the Regulations as they do not provide for charging of applications under these two schemes.

In 2016-17there were 51,639 SAS notifications (category A), 26,905 SAS applications (category B) and 1,042 authorised prescriber applications. The annual cost of the two fee free services is estimated to be $3 million or around $35 per application/notification. Recovering this cost through a small application fee levied on patients and or the medical practitioner is unlikely to be cost efficient. Moreover, this would also impact on the access of an unapproved product to the seriously ill patient in a time critical manner.

The costs of these functions are recovered indirectly through the annual charges levied on therapeutic goods approved for supply in Australia which is in line with the Government decision that the TGA recovers the full cost of regulatory activity.

b) The orphan drug programme

A medicine, may be eligible for orphan drug designation if all orphan criteria prescribed in regulations 16J(3) or 16J(4) are satisfied. A medicine with a designation in force for the active, indication, dosage form and sponsor can have subsequent submissions reviewed as part of the programme.

The orphan drug programme is an activity undertaken for the public good, with the objective of assisting sponsors bring medicines for rare diseases or new dose forms for special patient populations to market that may otherwise not be available. The incentive provided is in the form of a fee waiver. Application and evaluation fees (under regulation 45 (12) of the Regulations) for the assessment of orphan drugs are not charged by the TGA but the quality, efficacy and safety of orphan drugs are assessed at the same standard as for other registered medicines.

The TGA orphan program can be seen as part of a global movement to address treatment of approximately 7,000 rare diseases worldwide. Orphan drug programs were launched in the US in 1983, in Japan in 1993, and by the European Union in 2000 and offer a wide range of incentives including fee waiver, scientific advice and market exclusivity.

The cost of assessment is met from the evaluation fees for certain types of prescription medicine applications (extensions of indications and new chemical entities). As the sponsors of orphan drugs are also mostly the sponsors of fee paying applications, cross-subsidisation is confined to a small group of sponsors and does not extend to broader industry.

In 2016-17, the TGA assessed 20 orphan drug applications, compared to the total fee paying applications of 122 for prescription medicines (new chemical entity, major variation and extension of indications). In addition, there were 2 orphan drug designations for registration of new generic products, compared to the total fee paying applications of 95 in 2016-17. The total cost attributed to the orphan drug program in 2016-17 is $4.2 million.

Once an orphan drug is entered on the ARTG, the annual charge is payable subject to the annual charge exemption (ACE) scheme.

2017-18 Fees and Annual Charges - effective 1 July 2017

a) Introduction of an annual charge for in-vitro diagnostic medical devices

A new framework for the regulation of in-vitro diagnostic medical devices (IVDs) was introduced in 2010. Annual charges for IVDs were not levied until the end of the transition period on 30 June 2017. The annual cost of post market monitoring and compliance of IVDs is estimated to be around $1.6 million. In order to recover these costs an annual charge of $660 will apply to all classes of IVDs, except for class 4 in-house IVDs. Class 4 in-house IVDs are included in the ARTG only for in-house use by laboratories and not for sale, therefore they will always be exempt from the annual charge under the ACE scheme. Levying an annual charge and then exempting them under the ACE scheme would create unnecessary administrative burden for both sponsors and the TGA.

There are currently 230 sponsors of 2,497 IVDs on the ARTG who will be required to pay the new annual charge, except where exempted under the ACE scheme. The TGA has advised the sponsors of IVDs of the applicable annual charge for 2017-18 ahead of the implementation date.

b) Introduction of a reinstatement fee

The Act provides the Secretary the power to reinstate an entry on the ARTG which was cancelled upon the sponsor's request or due to non-payment of the annual charge. The Act also prescribes that the Secretary may revoke the cancellation and reinstate the entry if the sponsor makes an application to revoke the cancellation and pays the prescribed application fee within 90 days of cancellation.

In order to recover administrative cost of the reinstatement process a two-tier fee structure will apply from 1 July 2017 to applications to reinstate an entry on the ARTG. The reinstatement application fee is set based on the cost of staff effort required in the processing of a typical reinstatement application which involves receipt of the application, payment processing, delegate decision and correction of the ARTG record. The new fees are:

  • $150 for a reinstatement application containing only one entry; and
  • if the application contains more than one entry, the fee is $150 for the first entry plus $50 for each additional entry.

c) Reduction in annual charges for some medical devices

Before the ACE scheme was implemented on 1 July 2015, replacing the previous LVT exemption scheme, it was recognised that the new scheme would reduce the number of entries that are eligible for an exemption to the annual charge (therefore increasing the number of entries for which an annual charge is payable). In light of this, when the ACE scheme was implemented, annual charge reductions were applied to several types of entries as follows:

  1. Prescription medicines (non-biologicals) - other than generic medicines: 5%
  2. Prescription medicines (non-biologicals) - generic medicines: 23%
  3. Medical devices - class IIa and above: 5%

On introduction, the TGA committed to monitor the impact of the new scheme on the therapeutic goods industry and adjust annual charges, if required, to ensure appropriate cost recovery for each industry sector.

After a year of operation an impact assessment of the new scheme was undertaken which suggested that annual charges revenue from medical devices was higher than forecast, due to a lower than anticipated cancellation of entries. Therefore a further reduction in annual charges for medical devices (other than class I medical devices which incur an annual charge of $80) by 6.5% has been implemented, subject to the general indexation increase of 1.65% to all TGA fees and charges- resulting in an overall reduction in annual charges for most medical devices of 4.96%.

d) Other fees and charges changes for 2017-18

A general increase of 1.65% has been applied to fees and charges from 1 July 2017 to meet estimated cost increases, mainly in employee expenses as a result of salary increases under the Department of Health Enterprise Agreement.

A well-established formula for price indexation has been used in most years, based on the Australian Bureau of Statistics' Consumer Price Index (50%) and Wage Price Index (50%) (both for the year to September). This year the formula resulted in 1.65%. The Office of Best Practice Regulation has advised that a Regulatory Impact Statement is not required for this change.

The amendment regulations were approved by the Executive Council at their meeting of 18 May 2017 to effect the above changes.

A link to the fees and charges applicable from 1 July 2017 is provided in Appendix 2.

Regulatory reforms: Review of medicines and medical devices regulation

An independent review of medicines and medical devices regulation (the Review) was undertaken to identify:

  • areas of unnecessary, duplicative, or ineffective regulation that could be removed or streamlined without undermining the safety or quality of therapeutic goods available in Australia; and
  • opportunities to enhance the regulatory framework so that Australia continues to be well positioned to respond effectively to global trends in the development, manufacture, marketing and regulation of therapeutic goods.

The review panel provided the Government with 58 recommendations of which the Government has accepted 56. In summary, those recommendations are:

  • expanding the pathways by which sponsors can seek marketing approval for a medicine or medical device, including making provision for utilisation of assessments conducted by comparable overseas regulators, and for expedited assessments in defined circumstances;
  • identifying comparable overseas regulators using transparent criteria;
  • enhancing post-market monitoring of medicines and medical devices and streamlining post-market requirements for products in the ARTG;
  • improving transparency and predictability of processes and decisions, to ensure Australians have timely access to high quality, safe and efficacious products;
  • expanding the pathways by which sponsors can approve an ingredient for use in a listed medicine, and for marketing approval of a listed complementary medicine;
  • enhancing the transparency and predictability of processes and evidence requirements associated with ingredient approvals and complementary medicine marketing approvals;
  • improving and clarifying the interface and synergies between the market approval of therapeutic goods and advertising requirements that ensure consumer protections are balanced with the availability of information for consumers and health professionals to make informed spending and health decisions; and
  • enhancing and streamlining the advertising framework to facilitate and maximise compliance and the management of complaints.

The 2016-17 Budget measure "Improving the Regulation of Therapeutic Goods in Australia" has provided $20.4 million (to be met from TGA reserves) to meet the costs of implementation of the above reforms for completion within a period of 24 months. Any increase in ongoing costs will be met via cost recovery arrangements through new, and changes to existing, fees and charges.

The reforms, requiring new fees, that took effect from 1 July 2017 are discussed below.

Priority registration of certain medicines

The Review recommended that the TGA implement expedited pathways for the registration of new medicines in certain circumstances. One of the expedited pathways, the priority review pathway, to enable faster approval of certain medicines, was implemented from 1 July 2017. The Pathway prioritises the evaluation of novel prescription medicines that meet the eligibility criteria and have a complete data dossier, with a target timeframe of 150 working days for a decision regarding registration of the medicine in the ARTG.

In order to recover the additional costs of the new processes the following new fees will apply for making applications under the priority review pathway.

Determination fee

The priority review pathway will not be available for all registration applications but only to those which meet certain criteria. A sponsor of a new medicine will need to make a determination application to the TGA which will be assessed against the relevant eligibility criteria to determine whether the medicine should be granted access to the pathway. Determination is a formal process that precedes the registration application and an application for this will require payment of a determination fee of $12,300 per application. The fee is non-refundable regardless of the decision to accept or reject the application.

The fee has been set after taking into account estimated staff time/cost involved in having a pre-submission meeting with the applicant, assessing a designation application against the criteria, seeking expert advice, where needed, and decision making. As some of the designation applications may also accompany an application for designation for orphan drug status (for which a fee is not payable) the new fee has been appropriately loaded to ensure adequate cost recovery. This is consistent with the current practice for recovering the costs of orphan drug applications.

It is anticipated that on average the TGA will receive 18 determination applications every year.

Application and evaluation fee

Once an applicant has received priority review determination the applicant may choose to make an application for registration of a New Chemical Entity (NCE) or an extension of indication (EOI) under the priority review pathway rather than the standard pathway. Higher than standard application and evaluation fees apply for registration applications under the new pathway.

The new application and evaluation fees will be slightly higher because of the additional effort required to complete the priority review registration process within a reduced target timeframe of 150 working days.

The application and evaluation fees are based on the staff effort involved in the prescription medicines registration process capturing the estimated average time taken to complete the tasks involved and the classifications of staff that typically carry out these tasks. While there will be some variation in the workload involved between different applications of the same type, as with many assessment processes, costings have been calculated taking into account the likelihood that certain steps will occur, and the minimum and maximum time taken in order to obtain an average fee which will facilitate cost recovery across a broad range of complexity in designation and registration applications. To estimate the fees for the priority review pathway, specific tasks within this process have been identified where more time and/or resources will be required to meet the priority timeframe. Estimates of the resource requirements for any new tasks have also been captured.

The fees for the standard pathway and priority review pathway are included in table below:

Application type Pathway Application Fee Evaluation Fee Total
New Chemical Entity Standard pathway $46,900 $188,200 $235,100
Priority review pathway $49,800 $199,000 $248,800
Difference in fees $2,900 $10,800 $13,700
Extension of Indication Standard pathway $28,000 $111,700 $139,700
Priority review pathway $29,600 $118,400 $148,000
Difference in fees $1,600 $6,700 $8,300

Because the priority pathway will be a new process, it is difficult to provide a definitive estimate of the total costs as there are many unknown factors such as:

  • how many applications for determination will be received;
  • how many of these applications will be eligible for the priority review pathway;
  • how many will also be eligible for orphan designation; and
  • how many applications will ultimately be registered using the fee waiver under the orphan drug programme.

The new fees and the impact of introduction of the new pathway will be monitored and reassessed within 2 years.

Risk based approach for certain minor variations to registered medicines

The Review recommended that the TGA should apply a more risk-based approach to managing variations to registered medicines. This approach should provide for notification of variations in circumstances where the variation does not impact the quality, safety or efficacy of the medicine. The sponsor will be required to notify the TGA of the variation within a given timeframe.

In order to implement this recommendation the TGA has implemented a new notification system for minor variations to registered medicines. Under the new notification process, the sponsor will be able to notify the TGA of certain changes to their goods. This notification will need to occur before the change is made.

In submitting the notification, the sponsor will need to make a declaration that certain conditions are met and, in some circumstances, provide evidence, as outlined in the relevant guidance. Once the relevant fees have been processed, the sponsor would receive an automatic acknowledgment and can then proceed to implement the change. There will be no assessment of the notification or 'wait' time before acknowledgment.

While this process will reduce manual staff effort, the new notification fee is set to recover the costs of associated activities in:

  • building and maintaining the IT system;
  • providing sponsor support;
  • ensuring currency of records; and
  • auditing notifications to ensure variations are being notified appropriately.

Based on the estimated costs of the above activities, a notification fee of $780 per notification has been set. This represents a reduction of more than 50% on the current minor variation fees for prescription medicines ($1,625) and OTC medicines ($1,565) respectively.

It is estimated that around 2/3rd of current 'Safety Related Notifications' variation applications for prescription medicines, or around 850 annually, will come in as notifications under the new system. For over the counter medicines it is expected that 1/3rd of the current C1 variation applications could be made under the new system. The estimated volume is around 175 notifications each year. As a result of this change, a reduction of around $0.85 million in revenue is estimated in a financial year.

Consultations

Extensive consultation was undertaken in 2014-15 with consumers, industry and health professionals as part of the Review. Further public and targeted consultation, including in relation to the above regulatory requirements, has been conducted since late 2016. In relation to priority approval for medicines, public consultation in November and December 2016 sought feedback on the main elements of the arrangements, including the proposed criteria for qualifying for the new pathway.

On notifiable variations, consultation was conducted with stakeholders including peak bodies and industry sponsors in November 2016 on the proposed variations and processes for notifying the TGA of these changes.

Submissions from peak bodies (e.g. Medicines Australia) and industry sponsors, patient advocacy groups and healthcare professional bodies overall indicated support for the above reforms.

Consultation on the new fees was conducted with peak therapeutic bodies in February 2017 along with the other changes to fees and charges proposed for 2017-18. Peak bodies welcomed the reduced fee for notifications and raised no concerns in relation to designation fees and application and evaluation fees under the Priority Review pathway.

The amendment regulations to prescribe the above fees were approved by the Executive Council at their meeting of 27 June 2017.

Reforms that took effect from 1 Jan 2018

Accelerated assessments pathway for novel medical devices

The Review recommended that the TGA implement accelerated pathways for the registration of medical devices in certain circumstances. In response to the recommendation, the TGA developed an accelerated pathway for the conformity assessment and/or inclusion of novel medical devices.

An earlier amendment to the TG Act through the Therapeutic Goods Amendment (2016 Measures No.1) Act 2017, among other changes, included provisions for an accelerated pathway for inclusion of certain medical devices on the ARTG. The Executive Council at its meeting of 30 November 2017 approved the Therapeutic Goods Legislation Amendment (2017 Measures No. 2) Regulations 2017 to introduce the new pathway and associated fees which will commence from 1 January 2018. This facilitates increased timeliness and access for Australian consumers and health professionals to new medical devices; and assists industry through reducing regulatory delays.

The new fees are as follows:

  • Application fee for accelerated conformity assessment of a medical device $9,660
  • Application fee for accelerated inclusion of a medical device $9,660

Sponsors that can demonstrate that their medical device:

  • will treat a serious condition, and
  • addresses an unmet clinical need in Australian patients, and
  • represents a breakthrough in technology, or a clinical advantage, or (in the case of in vitro diagnostic devices) provides a major public health benefit

Sponsors can apply for a priority assessment designation. If approved, the designation places the application to the front-of-queue during the assessment procedures for conformity and ARTG inclusion.

The Priority Review (accelerated assessments) pathway for novel medical devices commences in January 2018. The new fee for the Priority Review pathway for medical devices was developed based on the staff effort required to complete pre-submission, assessment of application and associated administrative activities.

It is estimated that the TGA will receive 5 applications annually under the new pathway which will bring additional revenue of $48,300 to recover the additional TGA costs. This approach is consistent with CRGs.

Consultations

A public consultation paper was published in November 2016 to seek comments from interested parties on the implementation of the Priority Review pathway for medical devices. Submissions received in response to the public consultation showed broad stakeholder support for the proposed approach. However, some modifications were proposed, particularly in relation to timeframes and publication for designation decisions and stakeholders sought further guidance on the proposed criteria. Stakeholder feedback has informed the policy position going forward and changes to the TG Act and the Therapeutic Goods (Medical Devices) Regulations 2002. Policy changes resulting from the feedback are summarised in the Outcome Summary published on the TGA's website.

The draft application fees for the Priority Review pathway for medical devices were presented to the TGA Consultative Committee in September 2017. Members were generally supportive of the new fees.

A link to the fees and charges (including the above fees) applicable in 2017-18 is provided in Appendix 2.

Further reforms which are expected to take effect from 19 Mar 2018

Prescription medicine provisional approval pathway

The Review recommended that the TGA implement expedited pathways for the registration of new medicines in certain circumstances. The provisional approval pathway will provide earlier access to certain promising new medicines that do not yet have a full dossier of clinical data, but where there is the potential for a substantial benefit to Australian patients through the earlier availability of these medicines. Under the provisional approval pathway, medicines could come to the market up to two years sooner than under the current framework.

Determination fee

The new registration pathway will not be available for all registration applications but only to those which meet certain criteria. A sponsor of a new medicine will need to make a determination application to the TGA which will be assessed against the relevant eligibility criteria to determine whether the medicine should be granted access to the provisional approval pathway. Determination is a formal process that precedes the registration application and an application for this will require payment of a determination fee of $12,300 per application. The fee is non-refundable regardless of the decision to accept or reject the application.

The fee has been set after taking into account estimated staff time/cost involved in having a pre-submission meeting with the applicant, assessing a designation application against the criteria, seeking expert advice, where needed, and decision making. As some of the determination applications may also accompany an application for designation for the orphan drug programme (for which a fee is not payable) the new fee has been appropriately loaded to ensure adequate cost recovery. This is consistent with the current practice for recovering the costs of orphan drug applications.

Extension of provisional determination

Sponsors may only apply for one six month extension of an approved provisional determination. The fee is $4,440 per application, it is set based on the extension effort including:

  • time for the clinical evaluators to assess the extension application, including assessment of the sponsor's justifications for requesting an extension and checking that no other medicines have been included on the register that meet the unmet need in the time since the original designation was granted; and
  • administration activities such as application receipt and processing, system updates, coordination of questions and outcomes to the sponsor, and updates to the designation web page.
Provisional registration application and evaluation fee

If the applicant makes an application for registration of a New Chemical Entity (NCE) or an extension of indication (EOI)and an applicable provisional determination is in force in relation to the applicant, the medicine and the indication, then the application is for provisional registration of the medicine.

Application type Pathway Application fee Evaluation fee Total
New Chemical Entity Standard pathway $46,900 $188,200 $235,100
Provisional pathway $47,000 $245,500 $292,500
Difference in fees $100 $57,300 $57,400
Extension of Indication Standard pathway $28,000 $111,700 $139,700
Provisional pathway $28,100 $161,900 $190,000
Difference in fees $100 $50,200 $50,300

A higher than standard application and evaluation fees apply for registration applications under the provisional pathway to reflect additional activities for example:

  • additional checking as part of the dossier acceptance process that the information supplied as part of the dossier supports the provisional designation that was previously granted;
  • assessment of rolling clinical data;
  • additional collaboration between evaluation sections;
  • additional expert advice during evaluation (actual advice plus procurement effort);
  • submissions may also be considered by ACM/ACV during first or second round assessment; and
  • additional time for RMP evaluation.
Extension of provisional registration

Sponsors may request up to two extensions of up to two years each during the provisional registration period (maximum of 6 years). Assessment of applications for extension of provisional registration may include:

  • Checking progress against commitments;
  • Re-assessment of conditions of registration; and
  • Product Information change (only if required)
Transition from provisional registration to full registration

An application fee of $28,000 and evaluation fee of $118,100 will apply to transition provisionally registered goods to be included in the ARTG as registered goods. The fee is set based on associated processes and activities being similar to a standard extension of indication application, taking in to account additional activities undertaken by the evaluators and the clinical delegate to assess and make decisions about the application under section 29(9) of the Act. This section outlines how TGA will consider whether all or part of the provisionally registered indication should continue to be provisionally registered, at the time of deciding on the application for full registration. Additional effort has also been included to obtain expert advice (if required) and for communication activities including updates to the website and the update of the ARTG.

Complementary medicines pre-market assessment pathways

The Review made 19 recommendations to improve the regulation of complementary medicines. The following recommendations from the Review are relevant to the development and revision of fees:

  • Introduction of a new assessment pathway for listed complementary medicines that sits between the existing low risk listed medicine pathway and the higher risk registered medicine pathway (Recommendation 39). The introduction of a new 'assessed listed medicines' pathway requires the introduction of new application and evaluation fees to recover the administrative and evaluation costs associated with its use.
  • Use of reports from comparable overseas regulators for the assessment of new ingredients, new registered medicines and products assessed through the new listing pathway (Recommendation 36, 39 and 40). The evaluation of complementary medicines using comparable overseas regulator reports requires less assessment than for de novo evaluations and consequently requires the introduction of additional categories of evaluation. The level of work effort associated with evaluating medicines via these new categories needs to be reflected in the application and evaluation fees.
  • Review and appeal rights for evaluation of new complementary medicine ingredients (Recommendation 47). The introduction of an application fee for ingredient assessments will contribute to higher quality applications which support the introduction of appeal rights for ingredient assessments.
  • The establishment of a list of permitted indications for listed complementary medicines (Recommendation 38) requires a process to add new indications. It is proposed that these applications will incur an application fee only as these assessments will not involve evaluation of data. To support a smooth transition and minimise regulatory burden for industry, it is proposed that sponsors of existing listed products who apply to update their ARTG entry to select permitted indications will not be charged an application fee during the first 18 months from commencement of the new legislative package.
  • The introduction of legislated timeframes for assessment of complementary medicines and their ingredients (Recommendation 41) will create the need for a mechanism to make a refund if the TGA fails to meet legislated timeframes. The removal of page count based fee structure may also improve application quality, with consequent improvements to assessment timeframes.
  • The use of a risk-based approach to the management of variations. We are proposing to develop risk-based application categories for variations to medicines assessed via the assessed listed medicines and registered complementary medicines pathways (Recommendation 42).

The application and evaluation fees for complementary medicines have been revised and new fees are being introduced to allow for the implementation of recommendations arising from the Review. The fees are designed to reflect the amount of work effort and associated costs required to complete the relevant applications and evaluations, based on the complexity of documentation associated with them.

Assessed listed medicines pathway (L(A)1, L(A)2 and L(A)3)

Fees for the assessed listed medicines pathway (new pathway)

L(A)1: Evaluation of a 'clone' of an existing product, where the only difference is the name and/or flavour, fragrance, printing ink or colour

L(A)2: Evaluation of a generic medicine or evaluation of efficacy based on reports from a comparable overseas regulator (COR)

L(A)3: Full de novo evaluation of efficacy for new products not covered by L(A)1 or L(A)2 or evaluation of an existing assessed listed medicine that is for a different active ingredient, indication, dosage form, strength or excipient.

New assessed listed medicines pathway Application fee Evaluation Fee Total fees
L(A)1 $430 $1,640 $2,070
L(A)2 $1,760 $13,400 $15,160
L(A)3 $1,760 $13,400 $15,160
New complementary medicine ingredients

The new fee structure introduces an application fee for making an application for a new ingredient and replaces the inefficient and complex page-count structure for evaluation fees.

IN1: Evaluation of safety and quality based on evaluation reports from comparable international regulators which meet the minimum data requirements

IN2: Evaluation of safety based on evaluation reports from comparable international regulators which meet the minimum data requirements AND de novo evaluation of quality

IN3: Evaluation of quality based on evaluation reports from comparable international regulators which meet the minimum data requirements or an accepted monograph AND de novo evaluation of safety

IN4: Full de novo evaluation of safety and quality

New ingredients Application fee Evaluation Fee Total fees
IN1 $1,050 $14,000 $15,050
IN2 $1,050 $14,000 $15,050
IN3 $2,770 $22,900 $25,670
IN4 $2,770 $22,900 $25,670
Registered complementary medicines

The new fee structure replaces the previous page-count fee structure for registered complementary medicines.

RCM1: Evaluation of a 'clone' of an existing product, where the only difference is the name and/or flavour, fragrance, printing ink or colour

RCM2: Evaluation of safety, quality and efficacy based on evaluation reports from comparable international regulators

RCM3: Evaluation of a generic medicine for which bioequivalence data is not needed; or de novo evaluation of one of quality, safety or efficacy, with the remaining parameters evaluated based on evaluation reports from comparable international regulators

RCM4: Evaluation of a generic medicine for which bioequivalence data is needed; or de novo evaluation of one of two of safety, quality or efficacy, with the remaining parameter evaluated based on international evaluation reports from comparable international regulators; or evaluation of an existing registered medicine that is for an extension of indications, new directions for use or an increase in the target population of the medicine

RCM5: Full de novo evaluation of safety, quality and efficacy; or evaluation of an existing registered medicine that is for a new dosage form of the medicine, a new active ingredient in the medicine, an increase in strength of an active ingredient or addition of a new excipient in the medicine.

Registered complementary medicines Application fee Evaluation Fee Total fees
RCM1 $530 $3,060 $3,590
RCM2 $1,910 $20,500 $22,410
RCM3 $1,910 $20,500 $22,410
RCM4 $2,530 $27,800 $30,330
RCM5 $2,770 $35,500 $38,270
Variations to registered complementary medicines

RCMC1 (section 9D) request: variations specified in the changes table as an RCMC1 (section 9D) level change. These are changes classified as negligible risk that do not need safety, efficacy and/or quality data.

RCMC2 (section 9D) request: variations specified in the changes table as an RCMC2 (section 9D) level change. These are low risk changes that require evaluation of quality data and do not need safety and/or efficacy data.

RCMC3 (section 9D) request: variations specified in the changes table as an RCMC3 (section 9D) level change. These are low risk changes to the quality and non-quality aspects of a medicine and requires evaluation of supporting safety and/or efficacy data.

RCMC4 (section 9D) request: variations specified in the changes table as an RCMC2 (section 9D) level change. These are non-quality changes classified as 'moderate risk'. Applications require evaluation of safety and/or efficacy data (clinical and/or toxicological) to support the proposed changes.

RCMC1 (section 23) application: variations specified in the changes table as an RCMC4 (section 23) level change. These are changes classified as negligible risk that do not need safety, efficacy and/or quality data.

RCMC2 (section 23) application: variations specified in the changes table as an RCMC2 (section 23) level change. These are low risk changes that require evaluation of quality data and do not need safety and/or efficacy data.

RCMC3 (section 23) application: variations specified in the changes table as an RCMC3 (section 23) level change. These are low risk changes to the quality and non-quality aspects of a medicine and requires evaluation of supporting safety and/or efficacy data.

RCMC4 (section 23) application: variations specified in the changes table as an RCMC4 (section 23) level change. These are non-quality changes classified as 'moderate risk'. Applications require evaluation of safety and/or efficacy data (clinical and/or toxicological) to support the proposed changes.

Pathway 3 -Registered complementary medicines (Variations) Application fee Evaluation Fee Total fees
RCMC1 (section 9D) request $1,380 $- $1,380
RCMC2 (section 9D) request $4,690 $- $4,690
RCMC3 (section 9D) request $6,970 $- $6,970
RCMC4 (section 9D) request $9,950 $- $9,950
RCMC1 (section 23) application $1,380 $- $1,380
RCMC2 (section 23) application $730 $3,960 $4,690
RCMC3 (section 23) application $780 $6,190 $6,970
RCMC4 (section 23) application $790 $9,160 $9,950
Permitted indications for listed medicines

From 6 March 2018, indications available for use for listed medicines are now contained in a 'list of permitted indications' which is contained in the Therapeutic Goods (Permissible Indications) Determination. The list of permitted indications is maintained by the TGA and provides a comprehensive list of indications currently accepted for listed medicines, provided appropriate evidence is held by the medicine sponsor. Sponsors who apply to list a new medicine will be required to select the indications for their medicine from the list of permitted indications.

Sponsors will be able to apply to make additions to the list. Any applications for additions to the list will incur a fee of $1,020. These proposed fees are inclusive of the costs associated with maintaining the legislative instrument.

Medical devices - conformity assessment bodies

In response to the Review the Government agreed to develop a model where multiple bodies, designated by the TGA, are able to undertake conformity assessment certification in Australia (pre-market assessment) (MMDR Recommendation 15 (Pathway 2), 17 and 18).

Potential improvements are faster approval times and flexibility for the sponsors of medical devices.

The development of the Conformity Assessment Body (CAB) pathway requires establishment of technical, clinical competence and governance standards (including management of conflict of interest) which such bodies would need to meet in order to be designated. Designated Conformity Assessment Bodies will be subject to a complete re-assessment every five years.

The TGA will continue to make the final regulatory decisions to ensure that the Australian quality and safety standards are adhered to.

Fee name Full Designation Partial Designation
(full QMS)
Partial Designation
(partial QMS or partial devices)
Application for conformity assessment body determination $4,400 $2,410 $2,410
Assessment of application for conformity assessment body determination $71,700 $51,500 $51,500

The application fee is an up-front, non-refundable fee to recover administrative costs associated with the reviewing the initial application, including preparing a plan for assessment and a quote for the assessment fee. The assessment fee covers three phases of assessment - the document review (Stage 1), initial assessment (Stage 2), and witnessed audit (Stage 3), resulting in the designation of successful applicants as an Australian conformity assessment bodies. This fee may be abridged where appropriate, such as where the scope of designation sought is limited, or where assessment work of the conformity assessment body by other regulators is available and may be used by TGA (such as reports on designation as an MDSAP Auditing Organisation, etc).

Full designation

This involves designation for CABs performing full QMS audits and conformity assessments (including design examination) for a range of medical devices.

Partial designation

This entails designation for limited scope, which could be either only QMS or a combination of QMS and certain devices.

Partial designation fees have been set based on two different assumptions:

  • Partial designation, Assumption 1: 100% QMS and 0% design to represent a CAB seeking designation to perform QMS certification only.

    Undertaking conformity assessment of QMS only, and not offering design examination services required for conformity assessment of high risk devices (Class II and AIMD).

  • Partial designation, Assumption 2: 66.67% QMS and 50% design to represent a CAB seeking designation for a particular stream of devices only. This requires them to have 'product' type QMS as well as limited scope product certification.

    Undertaking conformity assessment of QMS and design examination services required for conformity assessment of high risk devices (Class II and AIMD), but for a limited range of products (such as specialising in IVDs, or orthopaedic devices).

Competitive neutrality

In implementing these reforms the TGA considered whether the competitive neutrality policy applies to TGA's conformity assessment function. The applicability of competitive neutrality policy is assessed on three criteria:

  • there must be user-charging for goods or services;
  • there must be an actual or potential competitor ie users are not restricted by law or policy from choosing alternative sources of supply; AND
  • managers of the activity have a degree of independence in relation to the production or supply of the good or service and the price at which it is provided.

TGA's conformity assessment function meets the first criterion, as all TGA activities are fully cost recovered through fees and charges from industry. With the introduction of a provision for Australian conformity assessment bodies to be designated by the TGA, the second 'competition' criterion is also potentially met.

However the third criterion does not appear to apply, particularly in relation to the independence of 'supply' of conformity assessment services. Under s.41EC of the Therapeutic Goods Act 1989 the TGA must assess any valid application it receives, whereas commercial conformity assessment bodies are free to accept or reject clients as a business decision.

As the TGA's conformity assessment function does not meet all the criteria competitive neutrality does not apply to it.

The TGA has consulted with the Productivity Commission, which administers the competitive neutrality complaints mechanism, who endorsed the interpretation that TGA does not meet all three test criteria for competitive neutrality. The Department of the Treasury also agreed to this view, on the additional ground that the current TGA conformity assessment activity results in user charges of around $7 million per year, which is below the indicative threshold of $10 million per year used by the Treasury to denote the size of a market above which competitive neutrality policy could be considered.

It is important to note should competitive neutrality apply to TGA's conformity assessment function, Conformity assessments fees would need to be increased by around 25%.

Consultations

Extensive consultation was undertaken in 2014-15 with consumers, industry and health professionals as part of the Review. Further public and targeted consultation, including in relation to the above regulatory requirements, has been conducted since late 2016.

A public consultation paper was published in September 2017 to seek comments from interested parties on the implementation of business process improvements supporting the complementary medicines assessment pathways. The consultation paper included draft application and evaluation fees for applications for new ingredients, assessed listed medicines and registered complementary medicines. Submissions received in response to the public consultation showed a majority of stakeholders support the proposed approach to implement these reforms.

Submissions from peak bodies (e.g. Medicines Australia) and industry sponsors, patient advocacy groups and healthcare professional bodies overall indicated support for the above reforms.

Consultation on the new fees was conducted with peak therapeutic bodies at the TGA Industry Forum in September 2017 as well as bilateral meetings in December 2017 and February/March 2018.

The amendment regulations to prescribe the above fees were approved by the Executive Council at their meeting of 15 March 2018.

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