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Cost recovery implementation statement
Version 2.1 December 2019
Stakeholder engagement strategy
The TGA has a long standing practice of undertaking targeted consultation with peak industry bodies regarding fees and charges. Bilateral meetings are conducted each year with a focus on the forthcoming financial year. The TGA asks the peak bodies to bring any proposals for fees and charges to the attention of their members. Around the same time, the TGA publishes a public consultation paper on fees and charges to provide an opportunity for wider industry and other stakeholders to comment on the proposed fees and charges.
Industry associations are also regularly consulted in the process of regulatory development and reform, and feedback is taken into account in developing regulatory impact statements, and any relevant cost recovery arrangements. The TGA uses a number of forums to consult and disseminate information regarding the TGA cost recovery, including:
- the TGA Consultative Committee consultation forum with industry and non-industry bodies involved in the manufacture, use and consumption of therapeutic goods
- the TGA Industry Forum is a sub-committee of the TGA Consultative Committee, providing consultation and feedback on industry specific issues
- industry working groups for prescription and non-prescription medicines
- the TGA-Industry Working Group on Good Manufacturing Practice which facilitates consultation between TGA and the industry on matters relating to good manufacturing practice, and
- the Regulatory and Technical Consultative Forums for medical devices and for complementary medicines.
The TGA uses additional means of consultation to ensure that stakeholders have been provided sufficient opportunity to comment on more significant changes in cost recovery policy or where more complex changes to fees is being considered or where there are multiple options for setting fees and charges.
By way of example, for Good Manufacturing Practice (GMP) there had been a significant under recovery (averaging $2.1 million over the financial years from 2015/16 to 2017/18) and cross-subsidisation between licenses, application fees and inspection fees. The under recovery equated to 19% of the average annual revenue base from GMP. The TGA undertook a comprehensive review of the fee structure in 2018 and options for new fees were derived from comprehensive activity based costing data on TGA's regulatory activities. Given the magnitude of under recovery and the potential multiple options to address this, the TGA consulted with its stakeholders through multiple avenues.
A consultation paper focused on GMP fee restructure was published on the TGA's website in February 2018 asking impacted stakeholders and other interested parties to submit feedback within a month. The TGA also wrote to the nine peak industry bodies inviting them to make submissions and bring this to the attention of their member companies. Additionally, a number of consultation meetings were held in Sydney, Brisbane and Melbourne in February 2018. The issue of under recovery was also foreshadowed in preliminary meetings held with peak industry bodies in December 2017. The proposed options for the GMP fees and charges were then discussed in more detail at bilateral meetings with peak therapeutic industry bodies in February/March 2018. Several follow-up discussions were subsequently arranged with a number of peak bodies. In addition, these proposals were discussed at the TGA Industry Working Group on GMP meeting in March 2018.
The implementation of new GMP fees and charges benefited from these consultations, as the original proposals were adjusted to take into account the feedback from industry sponsors and other stakeholders.
Under the Australian Government's guide to regulation, direct financial costs such as fees and charges attached to a regulation are excluded from the Regulatory Burden Measurement Framework. Accordingly, the TGA does not prepare a Regulation Impact Statement for amendments to fees and charges for therapeutic goods and manufacturing licenses. This is consistent with advice from the Office of Best Practice Regulation. Activity-based costing is the well-established mechanism for setting fees and charges and a comprehensive targeted communication strategy is TGA's established consultation approach.
The TGA also reports to stakeholders against a set of agreed Key Performance Indicators.
Based on stakeholder feedback, the TGA has enhanced the consultation process for the 2019-20 fees and charges. In addition to inviting three additional medical industry bodies, the TGA also brought forward the bilateral meetings to December 2018 to provide more notice of changes to sponsors.
Consultation on 2019-20 fees and charges
The following industry representative groups were consulted on the proposed changes to fees and charges in December 2018:
- Medicines Australia
- Generic and Biosimilar Medicines Association
- Medical Technology Association of Australia
- Pathology Technology Australia
- Australian Dental Industry Association
- Australian Self Medication Industry
- Complementary Medicines Australia
- Accord Australasia.
- Optical Distributors & Manufacturers Association of Australia
- Assistive Technology Suppliers Australasia
- Australian Medical Device Distribution Association
- MTP Connect (although not a peak body) were also involved in the consultation.
Consistent with their feedback over the past few years, industry peak bodies were generally supportive of the TGA's preferred option of an increase to annual fees and charges by the indexation factor. No additional issues were raised in respect of the proposed changes. As per regular practice the TGA requested the peak industry bodies to bring the proposals to the attention of their members. In order to obtain broader feedback from industry and other stakeholders, the TGA undertook a public consultation of its fees and charges through its website. The feedback from the submissions was put forward to Government for consideration along with the proposed fees and charges for 2019-20.