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Regulation impact statement: Changes to premarket assessment requirements for medical devices

26 June 2013

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Attachment E: Methodology comparison - MTAA and TGA cost estimates

The following tables notes the differences between TGA and MTAA assumptions, and provides a rationale for the assumptions used in costings and also provides a analsysis of whether costing is sensitive to the different assumptions (i.e. changing the assumption has a material impact on the costing).

As a comparison, the number of affected applications identified by the MTAA has been input into the TGA calculation spreadsheet to provide a comparator that only differs in volume data.

Option 2

Proposal A – Level 3 Audit

The TGA's estimated cost for Level 3 audits is $4,734,296 per annum, compared with MTAA's estimate of $6,925,278 per annum, a net difference of $2,190,982. This is explained by the following differences:

TGA assumptions MTAA assumptions Comment
Volume data - use of 2012 ARTG entries
The TGA has used operational data of all applications received in 2012 (extrapolating where only part year samples were available to provide full yearly data).63 The MTAA have used the ARTG inclusion data available to them, which only reflects the devices that were included in the ARTG and does not include withdrawn or rejected applications.64

The net difference is that MTAA are estimating 219 Level 3 audits, while the TGA is estimating 289 Level 3 audits.

Difference: -$1,146,740.

Notified body design exam reports

Cost not included

Medical device sponsors are already required to either hold information such as the design examination report, or be able to obtain the information in 20 working days.

Some notified bodies charge up to $10,000 to provide a design examination report, the actual cost varies greatly between notified bodies with some providing these reports at no additional cost.

The MTAA has estimated that Level 3 audits will cost an additional $2,190,000 on the basis that there is a $10,000 additional cost to obtain a notified body design examination report (based on an estimated 219 Level 3 audits).

Sponsors should already hold this information and/or consider this cost before submitting any medical device applications to the TGA.

The TGA has not included the cost of obtaining a design examination report when considering costs in this RIS.

Difference: $2,190,000

Level 2 audit for Class III devices not captured by Level 3 audits

Cost not included

As these devices are already subject to audit under existing requirements, the Level 2 audit of these devices represents the status quo.

The MTAA submission has calculated the cost of subjecting Class III devices not captured by the Level 3 audit to a Level 2 audit, and have included this figure in their Class III audit cost (186 Level 2 audits at $6,170 per audit).

These costs are already being incurred, and are not changing under this reform.

Difference: $1,147,620

Audits of joint replacement implants
The TGA audit number of 261 has been increased by 28, to include the joint replacement implants. MTAA identified 28 joint implants which would be subject to Level 3 audit (included in the MTAA costing on Class IIb mandatory audits).

TGA costing amended.

Difference: $458,696

Rounding difference
The TGA figures were calculated on a cost of slightly less than $16,381.65 per audit (for 289 audits totalling $4,734,295.55). The rounded figure of $16,382 per audit (quoted in the RIS exposure draft text) has been used in MTAA calculations. Difference approximately $100

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Proposal A – Class IIb mandatory audits

The TGA's estimated cost for expanding Class IIb mandatory audits $668,158 per annum, compared with MTAA's estimate of $1,252,496 per annum, a net difference of $584,338. There are numerous variations in assumptions for this item:

TGA assumptions MTAA assumptions Comment
Mandatory audit of Class IIb devices – volume and audit mix

Volume: 139 Class IIb medical devices selected for mandatory audit (20% of all Class IIb devices received in 2012 (697).65

Audit Mix: TGA original costing assumed 70% subjected to Level 1 audit and 30% subjected to Level 2 audit, based on a sample analysis of current audits. This has been amended to use the MTAA's 49/51 split.

Volume: 166 Class IIb medical devices selected for mandatory audit (27% of all Class IIb devices included in 2012 (617).66

Audit Mix: MTAA assumes with 49% subjected to Level 1 audit and 51% subjected to Level 2 audit, based on GMDN analysis of ARTG inclusions.

The MTAA assumes a cost for these audits of $1,252,496, compared with the TGA estimate of $668,158 (a difference of $584,338).

The TGA costing has been amended to use the MTAA suggested audit mix data. However the TGA costing continues to use the TGA volume data, which is based on operational data of all applications, rather than only those included in the ARTG.

Class IIb hip, knee and shoulder joint

No costs calculated.

Current Class IIb transitioning hip, knee and shoulder joint implants are not subjected to mandatory audit, and the transition process will be completed prior to implementation of these reforms.

The MTAA have assumed 28 Class IIb hip, knee and shoulder joints would undergo Level 3 audit, at a cost of $458,696.

This assumption has not been accepted by the TGA as new hip, knee and shoulder joint implants need to be submitted as Class III medical devices.

NB: The TGA has amended the Level 3 audit costing (above) to include audits of these joint replacement implants.

Devices already subject to mandatory audit
All Class IIb audits are additional, as these medical devices are currently not subject to mandatory audit. Calculated costs incurred from subjecting additional Class IIb medical devices to audit as well as calculating costs associated with auditing devices already subject to mandatory audit under regulation 5.3. MTAA has recalculated the costs already incurred to industry by considering medical devices captured for mandatory audit under Regulation 5.3.

There were also some similarities between the MTAA and TGA methodology for Proposal A:

  • Calculated using existing 2012-13 Level 1 and Level 2 audit fees
  • Systems and procedure packs have not been considered unless captured through text filters for Class IIb audits
  • 100% of AIMD and Class III medical device applications require design examination report
  • No fee abridgement based on application grouping
  • Costs do not include application fees

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Proposal B

TGA assumptions MTAA assumptions Comment
Volume assumptions

Assumed 1,068 complex decisions (including all mandatory and non mandatory audits as well as conformity assessment decisions) and 2,271 simple decisions (decisions where no audit was conducted). This data is based on 2012 applications (conformity assessment and ARTG inclusion) devices classified higher than Class I (which are auto-included on the ARTG).

Total cost estimated at $1,767,798

Assumed 538 complex decisions (including full conformity assessment, level 3 and Level 2 audit decisions) and 82 simple decisions (Level 1 audit decisions).

Total cost estimated at $661,616

TGA does not accept the MTAA costing for this proposal as publication of decisions will occur for all medical device decisions.67

All decisions involving a conformity assessment or an application audit have been included as complex decisions for publication purposes, as these decisions all involved reviews of evidence, while inclusions without audit are much simpler to document.

Proposal C

  • Two thirds of Australian manufacturers do not use TGA conformity assessment
  • Assumed Australian manufactured devices would not undergo full TGA conformity assessment
  • MTAA agreed that TGA could expect to lose an estimated $1,040,936 in conformity assessment fees, on the assumption that two thirds of Australian manufacturers will chose to seek conformity assessment certification from EU notified bodies.

  1. TGA analysed a January to September 2012 snapshot of applications received, identifying that 50% of Class III applications would be subjected to a Level 3 audit, in additional to all AIMD applications. This percentage was applied to the actual number of Class III medical devices received in 2012 to determine the number of 54 AIMD,207 Class III implantable and long term surgically invasive and 28 joint reclassification applications subjected to Level 3 audit. TGA did not account for the small number of applications containing material of biological, animal, drug or microbial substances.
  2. MTAA used GMDN text filters to identify 60 AIMD and 159 Class III implantable and long term surgically invasive medical devices subjected to Level 3 audit and to remove entries containing biological, animal, drug or microbial contents.
  3. GMDN text filter used from GMDN agency database to identify affected entries and then compared against 697 Class IIb applications received in 2012. This identified approximately 20% of Class IIb medical devices are to be subjected to mandatory audit.
  4. Used text filter on GMDN description to identify Class IIb would be subject to mandatory audit, against 2012 ARTG inclusion data. This identified 166 out of 617 (27%) Class IIb devices are affected by mandatory audit (excluding at addition 28, or 4.5%, of Class IIb hip, knee and shoulder joint implants from this calculation).
  5. Note: This costing has not been amended to reflect that only those negative decisions based on safety and/or efficacy will be published. This will reduce the number (and cost) of negative decisions published however no data is available on the number of decisions likely to be affected. This will need to be refined for the Cost Recovery Impact Statement (CRIS).

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