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Cost recovery impact statement: Blood, blood components and biologicals (human cell and tissue therapies), 1 July 2014 - 30 June 2015

Version 1.0, June 2014

26 June 2014

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4. Financial estimates

4.1. Revenue

Total revenues are a factor of the expected activity volume and the fee or charge2.

Table 4: Revenues from regulation of blood, blood components and human tissues
2013-14
Estimated outcome
$m
2014-15
Forecast
$m
Annual charges 1.8 1.4
Evaluation fees 0.3 0.3
Other3 0.1 0.1
Total 2.2 1.8
Table 5: Revenues from regulation of human cell and tissue therapy products
2013-14
Estimated outcome
$m
2014-15
Forecast
$m
Evaluation fees 0.9 0.8
Other3 - 0.1
Total 0.9 0.9

4.2. Costs of the activity

Fees and charges are established to cover the cost of all direct, corporate and support costs for the sector. The costing methodology allows costs to be allocated to activities based on their resource consumption at each stage of the process through to the final product or services.

Total costs are categorised into the following groups for cost allocation and transparency purposes.

  1. direct costs: are costs directly related to the regulatory activity, mainly labour. Labour costs are based on the current Enterprise Agreement applicable to all Department of Health employees. Direct costs are incurred in the regulatory offices. Direct supplier costs include the use of contract staff, travel (where not otherwise recovered) and consumables.
  2. corporate costs: include rent and information technology that regulatory offices can control consumption of but not the unit price. The allocation of corporate costs uses a range of cost drivers including floor space, full time equivalent staff (FTE) numbers, and budget size, chosen according to the nature of the costs to be allocated.
  3. support costs: include costs for providing support services such as human resource management, finance, legal and information technology support. Regulatory offices have limited or no control over these costs. In allocating support costs, a cost driver is chosen from a range that includes FTE staff numbers, budget size and floor space, based on how closely these approximate use of the support service.

Cost allocation is undertaken in a three stage process.

In the first stage, the regulatory offices with significant contribution to the sector, as the source of direct costs, are identified. For the blood, tissues and human cell and tissue therapies sector, these are the Office of Scientific Evaluation, Office of Manufacturing Quality, and the Office of Product Review.

In the second stage, corporate costs are allocated to all offices, both regulatory and support, based on the driver that best reflects the use of the corporate service. For example, rent and other property operating costs are allocated using floor space and information technology costs are allocated by FTE.

In the third stage, support costs are assigned to regulatory offices based on a driver that is related to the services provided by the support team.

Table 6: Costs included in the registration of blood, blood components and human tissues
2013-14
Estimated outcome
$m
2014-15
Forecast
$m
Direct costs 0.4 0.4
Corporate costs 0.1 0.1
Support costs 0.3 0.3
Total 0.8 0.8
Table 7: Costs included in the registration of human cell and tissue therapy products
2013-14
Estimated outcome
$m
2014-15
Forecast
$m
Direct costs 0.9 0.9
Corporate costs 0.2 0.2
Support costs 0.3 0.3
Total 1.4 1.4
Table 8: Costs included in monitoring and compliance of blood, blood components and human tissues
2013-14
Estimated outcome
$m
2014-15
Forecast
$m
Direct costs 0.8 0.8
Corporate costs 0.2 0.2
Support costs 0.8 0.9
Total 1.8 1.9
Table 9: Estimated revenue and expenses
2013-14
Estimated outcome
$m
2014-15
Forecast
$m
Expenses 4.0 4.1
Revenue 3.1 2.7
Balance (0.9) (1.4)

Footnotes

  1. The costs of the reform program are being recovered over a number of years from the whole therapeutic goods industry.
  2. Other revenue incorporates fee for service charges for review of advertising materials and appropriation in lieu of interest on cash holdings.

Book pagination