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Cost recovery impact statement: Good manufacturing practice, 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

The GMP related regulatory activities undertaken, are as follows.

2.1.1. Licencing

TGA usually undertakes on-site inspections of Australian manufacturers prior to the issue of a licence to ensure that the manufacturer can comply with the manufacturing principles set under the Act and has suitable premises to undertake the proposed manufacturing steps. The extent of the inspection depends on the size and complexity of the manufacturing processes.

The TGA communicates with overseas agencies to ensure that GMP requirements applied in Australia are world best practice.

2.1.2. Monitoring compliance

The TGA undertakes periodic planned and unplanned inspections of licensed manufacturers to assess the level of compliance with the GMP standards, both domestically and overseas. The level and frequency of inspections for a particular manufacturer is influenced by its size and complexity but also its previous compliance history. In particular, manufacturers with a history of lower levels of compliance are subject to a higher frequency of on-site inspections, compared with more compliant manufacturers, to ensure that those lower levels of compliance do not adversely affect the quality and safety of the products that they manufacture.

2.1.3. Investigation and enforcement

The TGA undertakes enforcement activities to promote compliance with the applicable GMP standards by manufacturers. Where a manufacturer breaches GMP, sanctions available range from (but are not limited to) revocation or suspension of the manufacturing licence to restriction of the type, kind or quantity of goods that can be manufactured for the Australian market at that site. Where required, sanctions are decided on a case-by-case basis after consideration of the circumstances involved and the best interests of the Australian consumer. Where the manufacturer is based outside Australia, limits are placed on the ability of sponsors to make the products available on the Australian market.

2.1.4. Information and education

The TGA promotes compliance with the GMP standards by producing guidelines and other informational materials primarily targeted at manufacturers whose products are supplied in Australia. These resources are made available through the TGA website. In addition, the TGA conducts seminars and information briefings to raise awareness of regulatory requirements, particularly when changes are proposed.

TGA contributes strongly to international programs to improve and harmonise manufacturing practices in developing regions through international meetings, seminars and training events.

2.1.5. Policy development and services to government

The TGA provides services to Government in relation to the regulation of manufacturers, including specific technical and policy advice that is considered to be integral to the regulation of manufacturers.

Broader policy advice is generally provided by the Department of Health as part of its tax payer funded activities and is not included in the fees and charges.

2.1.6. 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).

2.2. Reform of business processes

TGA has embarked on a series of reforms designed to improve its communication and engagement with the community. The reform program is detailed in the report TGA reforms: a blueprint for TGA's future which can be accessed from the TGA website.

Reform activities in the GMP sector aim to

  • Provide more information on the regulatory framework so that stakeholders understand the regulatory processes and requirements
  • Improve the usability, accuracy and consistency of supporting guidelines
  • Consolidate trans-Tasman inspection processes
  • Improve stakeholder understanding and confidence in the regulatory processes
  • Make reliable and relevant information easily accessible to stakeholders
  • Develop technology to support business processes
  • Reform the charging structures for the GMP compliance program
  • Develop closer relationships with international regulators
  • Pursue administrative efficiencies in relationships with industry

2.3. Design of cost recovery charges

The cost of regulating therapeutics manufacturers is recovered through inspection fees and annual licence charges.

2.3.1. Licence and Inspection fees

Fees are used to recover the cost of the premarket services performed. For licensed domestic manufacturers, the fee structure is based on the licence and inspection fees. Prior to being granted an Australian licence, a domestic manufacturer is subject to an on-site inspection to ensure it could comply with the GMP code and standards and has suitable premises to conduct the manufacturing steps it proposes. The cost of the site inspection is based on the number of on-site hours, which reflects the size and complexity of the manufacturer's facilities. The inspection fee reflects the full cost of undertaking the inspection, including travel and preparation time.

Overseas manufacturers are not able to hold an Australian licence, but they must demonstrate that they operate to an acceptable good manufacturing standard before being granted access to the Australian market. Evidence relating to manufacturing standards is accepted from other Government authorities or may be achieved through an on-site inspection and a GMP clearance issued.

Overseas manufacturers are not subject to an annual licence charge. Inspections to approve overseas manufacturers attract an hourly fee for time on site, together with ancillary costs. Approval of an overseas manufacturer through the compliance verification process attracts one or more fixed fees per clearance application.

2.3.2. Annual licence charges

All domestic manufacturers of medicines are required to hold a licence with the level of annual charge reflecting the risk and complexity of the products manufactured. The TG Regulations prescribe a higher and lower annual charge for operations of higher and lower complexity. An allowance for the cost of periodically inspecting the manufacturer’s facilities is included in the annual charge, based on an estimated typical inspection required to routinely ensure compliance with the GMP code and standards. Compliant manufacturers are inspected less frequently and thus an incentive for compliance is built into the charges.

2.3.3. 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.

2.3.4. 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.

2.4. Fees and charges

Good Manufacturing Practice fees
Good Manufacturing Practice fees 2013-14
Licence application fee (excluding Biologicals) 920 940
Australian Manufacturers - GMP Inspection Fee for all types of therapeutic goods Hourly rate per Inspector 600 Hourly rate per Inspector 615
Overseas Manufacturers - GMP Inspection Fee for all types of therapeutic goods Hourly rate per Inspector 1,220 Hourly rate per Inspector 1,250
Overseas manufacturers - Assessment of GMP evidence (per manufacturer, per site and per sponsor) 350 360
Overseas manufacturers - Obtaining evidence from overseas regulatory agency (per manufacturer, per site and per sponsor) 620 635
Overseas manufacturers - Reinstatement of expired GMP clearance approval (per manufacturer, per site and per sponsor) 1,050 1,075
Overseas manufacturers - Compliance verification (in-lieu of an overseas GMP inspection) 1,870 1,915
Certificate of GMP Compliance 150 155
Quality Systems Certificate 150 155
Good Manufacturing Practice annual licence charges
Good Manufacturing Practice annual licence charges 2013-14

Low level GMP licence

  • Single step / single medicine / single type of therapeutic device
  • In-vitro diagnostic products
  • Ingredients or components
  • Herbal / Homeopathic medicinal products
5,760 5,900

High level GMP licence

  • Other types of therapeutic goods, including containers in which therapeutic goods are to be packed
11,200 11,500

An allowance for inspection hours is incorporated in the annual licence charge. For manufacturers with low level licence charges, a total of 16 inspection hours over 3 financial years are included. For manufacturers with high level licence charges, a total of 48 inspection hours over 3 financial years are included. Standard GMP inspection fees are payable once the available hours have been exceeded.

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