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Cost recovery impact statement: Over the counter medicines, 1 July 2014 - 30 June 2015

Version 1.0, June 2014

26 June 2014

Book pagination

2. Cost recovery model

2.1. Outputs and business processes of the activity

Over-the-counter (OTC) medicines are defined in the Regulations. OTC medicines can be supplied as:

  • Pharmacy medicines;
  • Pharmacist only medicines; and
  • General sales medicines

Medicines are grouped into schedules according to the appropriate level of regulatory control over their availability to consumers. OTC medicines can be purchased for self-treatment from pharmacies, with selected products also available in supermarkets, health food stores and other retailers. Examples include cough and cold remedies, anti-fungal treatments, sunscreens, non-prescription analgesics such as aspirin and paracetamol.

OTC medicines can be registered or listed on the ARTG depending on the level of risk associated with making the product available and accessible to consumers.

Registered OTC medicines are considered to be of lower risk than prescription medicines, but they require an appropriate level of scrutiny.

Once a product has been registered, the sponsor can make further applications to change the details of registration. Examples of changes that may be sought include details related to:

  • Labels
  • Shelf life
  • Formulation
  • Indications
  • Directions for use

2.2 Registration or listing on the ARTG

2.2.1. Listing an OTC medicine on the ARTG

Listed medicines are low risk medicines that are included on the ARTG via a streamlined electronic listing facility. This process for listing products allows for early market access for low risk medicines. At the time of submitting a listed medicine application, the sponsor must certify that the goods that are the subject of the application meet all of the regulatory requirements.

Unlike registered medicines, there is no evaluation prior to the medicine being listed on the ARTG. The TGA therefore uses a variety of other mechanisms to assure the safety and quality of complementary medicines, such as:

  • they may only contain substances that have been previously evaluated and approved as being of low risk, and
  • they can only make indications (for therapeutic use) for health maintenance and health enhancement or certain indications for non-serious, self-limiting conditions.

A proportion of listed medicines are reviewed following their listing for compliance with the regulatory requirements.

Additional substances or ingredients to be used in listed medicines may be evaluated and approved by the TGA on application from the industry.

2.2.2. Registering an OTC medicine on the ARTG

Registered medicines are considered to be of relatively higher risk than listed medicines, based on their substances or the indications made for the medicine. Registered medicines are evaluated for quality, safety and efficacy prior to being accepted on the ARTG and able to be marketed.

The pre-market regulatory process for OTC medicines includes:

  • Lodgement of application for product registration or listing on the ARTG;
  • Administrative and technical screening
  • scientific evaluation;
  • Label assessment;
  • Ensure appropriate GMP is in place;
  • request advice from the Advisory Committee on Non-prescription Medicines; Advise the sponsor of the outcome of the application process; and
  • Update the ARTG.

2.2.3. Risk management

TGA works with consumers, health professionals, industry, and its international counterparts in order to effectively regulate therapeutic products, many of which are increasingly complex as a result of rapid scientific developments.

The TGA applies a risk management approach to regulating therapeutic goods by:

  • identifying, assessing, and evaluating the risks posed by therapeutic goods before they can be approved for use in Australia (pre-market assessment or evaluation);
  • identifying, assessing, and evaluating the risks posed by manufacturing processes before a manufacturer is issued with a licence to manufacture therapeutic goods (licensing of manufacturers); and
  • identifying, assessing, and evaluating the risks that may arise following approval of the product and licensing of the manufacturer (post market surveillance).

2.3. Compliance monitoring and enforcement

The OTC post market regulatory processes include detection, compliance and enforcement.

2.3.1. Detection

  • Undertaking laboratory testing of products (i.e. chemistry and microbiology)
  • Investigating reported adverse events
  • Reviewing the safety of products or classes of products

2.3.2. Compliance

  • Monitoring compliance with regulations
  • Maintaining product registers
  • Ensuring compliance with advertising regulations
  • Educating stakeholders
  • Recalling products
  • Issuing alerts to consumers
  • Updating product information

2.3.3. Enforcement

  • Investigating potential breaches
  • Enforcing the regulations

2.4. Reform of business processes

The TGA is implementing reforms to the regulation of OTC medicines. These reforms provide a risk based approach to the categorisation of OTC medicine applications with the aim of providing more timely and predictable timelines for decisions on the basis of receiving and accepting higher quality applications though an electronic submission portal that facilitates efficient use by industry. Depending on the risk classification of a registered OTC medicine, evaluation effort is ranging from minimal for products with a long history of safe use, to full assessment of quality, safety and efficacy for new active combinations.

The reforms aim to:

  • Achieve operational efficiencies
  • Improve transparency and predictability of the regulatory process for sponsors
  • Improve the quality of OTC applications
  • Review cost recovery for OTC regulation
  • Enable online monitoring of application status by industry that is more transparent to the applicant
  • Increase the predictability of the regulatory decisions
  • Shorten evaluation timeframes

2.5. Activity level assumptions

The TGA estimates demand for its services based on prior years' volumes which are adjusted for forecast changes in the industry operations and changes in the regulatory framework and/or service delivery models.

Estimates for the number of products on the register incorporate expected cancellations and new additions.

A sponsor can seek exemption from the liability to pay an annual charge for an entry on the ARTG if the therapeutic good qualifies for low value turnover (LVT), which is a turnover of not more than 15 times the applicable annual charge for that therapeutic good.

Table 1: Volume estimates for OTC medicines on the ARTG
2013-14 2014-15
Registered over the counter medicines 3,185 3,212

2.6. Design of cost recovery charges

TGA recovers the full cost of its regulatory activities through fees and charges for services provided to product manufacturers and sponsors.

2.6.1. Fees and charges

Fees are used to recover the cost of the premarket services performed. The current fee structure in the Regulations is based on an application fee and evaluation fee. The evaluation fee differs for new registered medicines, variations and new substances. The total page numbers in the application document is the current basis for setting the evaluation fees.

Annual charges are payable for OTCs that are registered or listed on the ARTG. Registered OTCs, that have a higher assessed risk, have a higher annual charge than listed OTCs. Annual charges are used to recover cost of activities, usually post market, where they cannot reasonably be assigned to individual sponsors, where they maintain the integrity of the regulated industry to the benefit of all sponsors or where assigning costs to individual sponsors would deter sponsors from disclosing important public health information, such as reporting adverse events.

2.6.2. Reform program

The implementation of the reform program is scheduled to continue through to mid 2015-16. As changes in regulatory activities are implemented, fees and charges will be adjusted to ensure that they continue to accurately reflect the costs of underlying activities.

2.6.4. Indexation

For the 2014-15 financial year, fees and charges were indexed by 2.4% which is a 50:50 composite of the Australian Bureau of Statistics Consumer Price Index and the Wage Price Index.

2.7. Fees and charges

Registration of OTC medicines
Registration of OTC medicines 2013-14
$
2014-15
$
Application fee 1,410 1,445
Additional /concurrent application fee 620 635
Processing fee (variation to an existing registration) 1,410 1,445
Annual charge 1,320 1,350
Listing of OTC medicines - including sunscreens
Listing of OTC medicines - including sunscreens 2013-14
$
2014-15
$
Application fee 740 760
Processing fee (variation to an existing listing) 370 380
Annual charge 940 965
Evaluation fees if the documentation does not contain Clinical or Toxicological data - per submission
Evaluation fees if the documentation does not contain Clinical or Toxicological data - per submission 2013-14
$
2014-15
$
New registered medicine 9,440 9,665
Variation 3,410 3,490
New substance: such as sunscreen excipients and complementary medicine substances 9,440 9,665
Evaluation fees based on total page count(s) of Clinical or Toxicological data per submission
Evaluation fees based on total page count(s) of Clinical or Toxicological data per submission Pages 2013-14
$
2014-15
$
New product 1 - 50 9,440 9,665
51 - 250 12,100 12,400
251 - 500 16,600 17,000
501 - 1000 22,000 22,500
1001 - 2000 33,000 33,800
2001 - 3000 44,000 45,100
> 3000 66,000 67,600
Variations 1 - 50 3,410 3,490
51 - 250 12,100 12,400
251 - 500 16,600 17,000
501 - 1000 22,000 22,500
1001 - 2000 33,000 33,800
2001 - 3000 44,000 45,100
> 3000 66,000 67,600
New substance 1 - 50 9,440 9,665
51 - 250 12,100 12,400
251 - 500 16,600 17,000
501 - 1000 22,000 22,500
1001 - 2000 33,000 33,800
2001 - 3000 44,000 45,100
> 3000 66,000 67,600
Multiple new excipients in listed or registered good for dermal use 1 - 50 9,440 9,665
51 - 250 12,100 12,400
251 - 500 16,600 17,000
501 - 1000 22,000 22,500
1001 - 2000 33,000 33,800
2001 - 3000 44,000 45,100
> 3000 66,000 67,600
Assessment of safety and efficacy 1 - 50 9,440 9,665
51 - 250 12,100 12,400
251 - 500 16,600 17,000
501 - 1000 22,000 22,500
1001 - 2000 33,000 33,800
2001 - 3000 44,000 45,100
> 3000 66,000 67,600
New Listable medicine substance 1 - 50 9,440 9,665
51 - 250 12,100 12,400
251 - 500 16,600 17,000
501 - 1000 22,000 22,500
1001 - 2000 33,000 33,800
2001 - 3000 44,000 45,100
> 3000 66,000 67,600
Assessment of safety information or documents submitted pursuant to Section 31 of the Therapeutic Goods Act 1989 7,180 7,350
Listed medicines - Export only
Listed medicines - Export only 2013-14
$
2014-15
$
Application fee 740 760
Processing fee (variation to an existing listing) 370 380
Listed medicines - Export certificates
Listed medicines - Export certificates 2013-14
$
2014-15
$
Certificate of Pharmaceutical Product 150 155
Certificate of Listed Product 150 155
Certificate of Exempt Product 150 155

Book pagination