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This Cost Recovery Implementation Statement (CRIS) provides information on how the Therapeutic Goods Administration (TGA) implements cost recovery activities associated with the registration and listing of medicines and inclusion of medical devices, including in vitro diagnostic (IVD) devices, and biologicals onto the Australian Register of Therapeutic Goods (ARTG) and the ongoing monitoring and surveillance of them.
The TGA is a part of the Department of Health and contributes to Outcome 5 as outlined in the 2016-17 Portfolio Budget Statements:
Protection of the health and safety of the Australian community and preparedness to respond to national health emergencies and risks, including through immunisation, initiatives, and regulation of therapeutic goods, chemicals, gene technology, and blood and organ products.
The Government aims to provide a world class, efficient and timely regulatory system for therapeutic goods. In 2016-17, the TGA will continue to promote best practice regulation through business improvement and regulatory reform, while meeting the Australian Government’s expectations under the Regulator Performance Framework.
To achieve this outcome, the TGA approves and regulates products based on an assessment of risks against benefits. The Australian community expects therapeutic goods in the marketplace to be safe, of high quality and of a standard at least equal to that of comparable countries. The TGA regulates therapeutic goods through:
Therapeutic goods are divided broadly into 3 classes: medicines, medical devices and biologicals. Medicines must be entered as either 'registered' or 'listed' medicines on the ARTG. Medical devices and biologicals must be 'included' on the ARTG before they may be supplied in or exported from Australia, unless exempted.
If a problem is discovered with a medicine, device, biological or manufacturer, the TGA is able to take action. Possible regulatory actions vary from continued monitoring to withdrawing the product from the market and revoking or cancelling a manufacturing licence.
All therapeutic goods carry potential risks, some of which are minor, some potentially serious. The TGA applies scientific and clinical expertise to its decision-making to ensure that the benefits of a product outweigh any risk. The level of regulatory control increases with the level of risk a medicine or medical device can pose. The risk-benefit approach assures consumers that the products they take are safe for their intended use, while still providing access to products that are essential to their health needs.
The TGA's cost recovery arrangements cover the following industry sectors:
While some funding is provided to the TGA by the Government in the form of an interest equivalency payment against the special account balance (reserves), the bulk of funding is generated through fees and charges charged under cost recovery arrangements.
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Where specific demand for a government activity is created by identifiable individuals or groups, they should be charged for it unless the government has decided to fund that activity. Where it is appropriate for the Australian Government to participate in an activity, it should fully utilise and maintain public resources, through appropriate charging. The application of charging should not, however, adversely impact disadvantaged Australians.1 The Australian Government's overarching cost recovery policy is that, where appropriate, non-government recipients of specific government activities should be charged some or all of the costs of those activities. The cost recovery policy promotes consistent, transparent and accountable charging for government activities and supports the proper use of public resources2.
Cost recovery involves the government entities charging individuals or non-government organisations some or all of the efficient costs of a specific government activity. This may include goods, services or regulation, or a combination of these. The Australian Government Cost Recovery Guidelines (CRGs) set out the overarching framework under which government entities design, implement and review cost recovered activities.
In the 1997-98 Budget, Budget Paper No.2, Part II: Revenue Measures it was stated that the TGA would fully recover all costs from industry from 1998-99. As the TGA operates on a cost recovery basis, to enable pre- and post-market regulatory activity, there are a number of fees and charges for therapeutic goods. These include annual charges, application and evaluation fees, conformity assessment fees and inspection fees which are imposed on manufacturers of medicines and medical devices.
The Therapeutic Goods Act 1989 (the Act) provides a legal authority for the TGA to charge for its regulatory activities within the scope of the Act. The Therapeutic Goods (Charges) Act 1989 (the Charges Act) provides a legal authority to levy annual charges (a type of tax) on sponsors and manufacturers of medicines and medical devices. Applicable fees and charges are prescribed in the subordinate regulations made under these Acts.
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Higher risk medicines, such as prescription medicines, must be registered on the ARTG before they are made available for sale in Australia.
Prescription medicines are available from a pharmacist, supplied with a doctor's prescription. Otherwise, only authorised health care professionals can supply prescription medicines, such as in a hospital setting. Examples include vaccines, blood pressure tablets, diabetes medications, contraceptive pills, antibiotics and strong painkillers.
There are some legal exemptions to the requirement for a prescription medicine to be registered on the ARTG before they are supplied in Australia. These are implemented through:
The business area responsible for administering these exemptions ensures that they are administered in accordance with the legislative and regulatory frameworks.
As the TGA operates on a cost recovery basis, to enable pre- and post-market regulatory activity there are a number of fees and charges for medicines. These include annual charges, application fees and evaluation fees.
Regulatory decisions are made within a framework of guidelines. The guidelines must maintain currency with scientific and technical developments.
International regulators, or regulator groups such as the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use, may publish guidelines that are reviewed and may be adopted by the TGA.
Before being placed on the ARTG, prescription medicines are assessed for quality, safety and efficacy. This utilises the following process.
All applications for registration of prescription medicines must be preceded by a pre-planning submission form (PPF). TGA assesses all PPFs to ensure that application dossiers for registration on the ARTG contain all the appropriate and required information. The information provided in the PPF allows resources to be effectively assigned to the evaluation process. If the PPF is insufficient for planning purposes or indicates that mandatory requirements have not been met, the TGA may deem the PPF to be 'not effective' and the application will not proceed to the dossier submission stage. The submission of the PPF improves the quality of applications and helps in meeting legislative timeframes.
The data submitted with an application is divided into three types.
Before making a decision around the suitability of a prescription medicine for registration on the ARTG, the delegate may take into consideration independent expert advice provided by the Advisory Committee on Prescription Medicines.
Regulatory decisions in relation to new chemical entities or fixed dose combination products are published through the Australian Public Assessment Report (AusPAR).
Any person whose interests are affected by the decision may seek a reconsideration of the decision under section 60 of the Act.
Once a product has been registered, the sponsor can make further applications to change the details of registration. Some examples of the types of change that might be applied for include:
Changes may or may not require evaluation of data by the TGA and the prescribed fees apply accordingly.
Medicines for export from Australia must be of a similar quality and safety standard as those supplied domestically. However, they are not required to comply with the labelling standards or advertising standards in force in Australia. Export only products are required to be listed (not registered) on the ARTG before export.
In the circumstances where patients need access to therapeutic goods that are not on the ARTG, access to the therapeutic good may be arranged through the SAS.
TGA reviews each access under the SAS on a case-by-case basis.
TGA reviews the use of unapproved medicines to be made available to patients participating in a clinical trial.
Post-market activities undertaken in relation to prescription medicines include:
Over the counter (OTC) medicines are defined in the Therapeutic Goods Regulations 1990 (the Regulations). OTC medicines can be supplied as pharmacy medicines, pharmacist-only medicines and general sales medicines. Registered OTC medicines are considered to be of lower risk than prescription medicines, but they require an appropriate level of scrutiny.
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 relatively higher risk than listed OTC 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:
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 or directions for use.
The listing process for an OTC medicine is the same as listing a complementary medicine which is explained in the complementary medicines section of the CRIS.
The OTC post-market regulatory processes include detection, compliance and enforcement:
Medicinal products containing such ingredients as herbs, vitamins, minerals, nutritional supplements, homoeopathic and certain aromatherapy preparations are referred to as 'complementary medicines' and are regulated as medicines under the Act. Complementary medicines may be either listed or registered, depending on their ingredients and claims made for the medicine. Most complementary medicines are listed on the ARTG.
Listed medicines are low risk medicines that are listed on the ARTG via a streamlined electronic listing facility. This process for listing products allows for early market access for low risk complementary 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:
Registered complementary medicines are considered to be of relatively higher risk than listed complementary medicines, based on their substances or the indications made for the medicine. Registered medicines are fully evaluated for quality, safety and efficacy prior to being accepted on the ARTG and able to be marketed.
The post-market compliance review of a listed complementary medicine involves:
The compliance review of a listed complementary medicine may focus on one or several aspects of the medicine. Based on experience and the potential risk that non-compliance represents to the public, the TGA gives greater attention to the following three areas:
On average, approximately 1,800 new complementary medicines are listed on the ARTG each year. Due to resource constraints, the TGA follows a risk management approach to set priorities and direct resources to those reviews that provide the greatest overall benefit for the Australian public. To assist with this determination the TGA gives priority to issues that:
Depending on the circumstances, priority will also be given to products that have been relisted after a previous TGA-initiated cancellation or at the request of the sponsor after a previous compliance review, or where the risk or the characteristics of the medicine are of concern.
Listed complementary medicines with potential non-compliance issues may be brought to the TGA's attention from a number of sources, including the public, media, health care professionals or other external sources, referrals from within the TGA, information from other regulatory agencies and information from previous compliance reviews.
Finally, a proportion of newly listed medicines are randomly selected by computer, based on a mathematical model, for compliance review.
The Australian medical devices regulatory framework sets out the requirements for the quality, safety and performance of medical devices, based on a series of Essential Principles, rather than a prescriptive framework. All medical devices must demonstrate compliance with the Essential Principles. The extent of evidence required to demonstrate compliance with the Essential Principles is based on the risk classification of the device, with higher risk devices undergoing greater assessment prior to being allowed into the Australian market.
Regulatory activities span the life cycle of the medical device, including:
As the TGA operates on a cost recovery basis, to enable pre- and post-market regulatory activity, there are a number of fees and charges for medical devices. These include annual charges, application fees, conformity assessment fees and application audit fees.
Under the Act, medical devices must be included on the ARTG prior to supply in Australia unless exempt from that requirement, such as exemption from complying with the standards under section 14 of the Act. The level of assessment conducted at the point of application for ARTG inclusion depends on the risk classification of the device, the conformity assessment evidence supporting the application, and whether there are any concerns with the application that would require the TGA to request further information for review prior to inclusion.
High-risk medical devices must have an ARTG entry for each unique device. Lower risk devices can have multiple similar devices included under one ARTG entry (a 'kind of medical device'). As the application fee is payable per ARTG entry and the value of the fee is higher for higher risk medical devices, higher risk medical devices are associated with higher overall costs.
Approval for each medical device is exclusive to the sponsor applying for inclusion, approval for one sponsor cannot be used by other sponsors, even where the medical device is identical.
While all medical devices must comply with minimum requirements for quality, safety and performance, devices other than the lowest risk, must be accompanied by conformity assessment certification following an assessment of a manufacturer's quality management system and assessment of design dossiers where applicable.
In addition to the conformity assessment certification accompanying an application for ARTG inclusion, the application process also involves a review of other information supplied with the application such as the labelling and instructions for use for the device.
Some applications for inclusion of medical devices on the ARTG will undergo an application audit.
There are two levels of application audit - Level 1 and Level 2 for non-IVD medical devices and one level of application audit for IVD medical devices. If an application audit is to be conducted the TGA determines what level of application audit is appropriate for each application. There are different fees for each level of application audit, which apply if the audit is mandatory.
A conformity assessment is a systematic and ongoing examination of evidence and procedures to ensure that manufacturers of medical devices have systems and processes that provide assurance that the device conforms to the Essential Principles for quality, safety and performance.
A manufacturer must implement and maintain a post-market monitoring system for devices after supply, with reportable events reported as specified in the Regulations. A manufacturer's quality system certification may be subject to periodic surveillance audits.
For the majority of medical devices and IVDs the TGA is able to accept the assessment of conformity assessment bodies that are considered to have the appropriate authority and expertise. As the Australian and the European Union (EU) regulatory requirements are similar, certificates issued by EU conformity assessment bodies (also known as Notified Bodies) may be accepted as conformity assessment evidence for the supply of devices in Australia.
For certain higher risk medical devices and IVDs, manufacturers must obtain Conformity Assessment Certificates from the TGA for supply to the market in Australia, regardless of whether they have a certificate issued by an EU notified body. In conducting assessments for these products, the assessment will take into account any existing EU conformity assessment evidence. This requirement for TGA conformity assessment applies to medical devices containing medicinal substances or materials of animal, microbial, recombinant or human origin and Class 4 IVDs. Manufacturers may also choose to seek conformity assessment certification from TGA to support supply of their medical devices in Australia, rather than relying on certification from an EU notified body.
There are two schemes under which clinical trials involving medical devices may be conducted.
These schemes are used for clinical trials involving:
A large majority of medical devices listed and registered on the ARTG prior to 2002 (previously called therapeutic devices) have now been transitioned to the new regulatory framework and are now largely regulated under Chapter 4 of the Act. There is a small number of therapeutic devices which are not captured under the new Chapter 4 arrangements. These are largely disinfectants, tampons and menstrual cups. The fees and charges included in this document for registered and listed devices apply for these products.
Once a medical device has been included in the ARTG the device must continue to meet all the regulatory requirements that were required for the approval, including the requirements for safety, quality and performance.
The TGA has mandatory requirements for all manufacturers and sponsors of medical devices. These requirements are intended to monitor information about medical devices so that appropriate action can be taken. The requirements facilitate the systematic investigation of failures and/or deviations in the way a device performs, in an attempt to prevent an adverse event occurring again. Key post-market mechanisms include:
The outcomes of the investigations may result in recalls, hazard and safety alerts, product modification/improvement by a manufacturer, or surveillance audits of manufacturing sites.
The TGA undertakes post-market reviews of ARTG entries of medical devices to verify compliance with the legislative requirements, such as conditions of inclusion, and to ensure continued safety and performance usually following signals that there may be an issue or a special interest in the device or a type of device.
Sponsors of Class III medical devices must also keep an up to date log of information about the performance of the device and provide annual reports for the first three years after a product receives market authorisation.
The TGA can take action to suspend or cancel a device from the ARTG where, for example, the outcomes of investigations indicate that there is a potential risk of death, serious illness or serious injury if the device continued to be included in the ARTG or if the TGA is satisfied, for instance, that the safety or performance of the device is unacceptable.
A recall action is an action taken to resolve a problem with therapeutic goods already supplied in the market for which there are issues or deficiencies in relation to safety, quality, efficacy (performance) or presentation. There are three distinct recall actions - recall, recall for product correction and hazard alert. Not all recall actions result in a product being removed from the market, for example, hazard alerts may be issued in cases involving implantable medical devices, and corrections may be undertaken for products that have software issues.
The TGA coordinates approximately 500 recall actions of medical devices each year. The vast majority of recalls are undertaken voluntarily by the sponsor after consultation with the TGA. For each recall action, the Recalls Unit reviews the proposed recall strategy to address the health hazard and the individual circumstances of each case. Strategies need to reflect the kind of medical device, deficiency identified, risk posed by the deficiency, distribution networks, recovery procedures, resources for corrective action and availability of alternative products. In some cases, recall action is not required but the sponsor may be required to issue a safety alert or some precautionary information in the form of a product notification.
The Recalls Unit monitors the progress of recall action by reviewing the progress reports submitted by the sponsor. In the close-out report, sponsors should provide the root cause of the problem and remedial action undertaken by the manufacturer. The report is reviewed to ensure that the root cause and the corrective action identified are appropriate to prevent the issues from recurring.
TGA reviews advertisements for medical devices to ensure compliance with the conditions of inclusion on the ARTG that are detailed in the Regulations and the Therapeutic Goods Advertising Code (TGAC). These advertisements may be in, but are not limited to, broadcast and mainstream print media, billboards, cinema films or the internet.
Where a complaint about a product advertisement is received, TGA will assess the validity of the complaint and, if necessary, ensure that rectifying action is undertaken.
In its review of advertising, TGA works with the following stakeholders:
Advertisements for medical devices do not have to be approved prior to publication or broadcast. However, advertisements must comply with the conditions of inclusion on the ARTG detailed in section 41FN(5) of the Act, Division 3 and 4, Part 2 of the Regulations and the TGAC.
The Complaints Resolution Panel considers complaints about advertisements for medical devices and other therapeutic goods appearing in broadcast and mainstream print media, billboards, cinema films, the internet etc. As advertisements do not require pre-approval, the majority of activity in this area is related to assessing the validity of complaints about current advertisements that are claimed as not meeting the requirements.
TGA does not charge for lodging a complaint with the Complaints Resolution Panel. To do so would be contrary to the intent of allowing all complaints about advertising to be appropriately examined. The costs of validating complaints are recovered from sponsors of medical devices via annual charges which are linked to the maintenance of the sponsor's ARTG entry, spreading the cost of the function evenly across all products.
In Australia, manufacturers of therapeutic goods are required to hold a licence, except for manufacturers of certain medical devices who have European conformity certification (CE Mark). To obtain the licence, a manufacturer must demonstrate that they have the ability to comply with manufacturing principles, which include relevant Codes of GMP and Quality Systems, and have appropriate facilities to manufacture safely. Overseas manufacturers of therapeutic goods supplied to Australia must provide evidence of compliance with equivalent GMP standards or otherwise undergo on-site inspections in the same manner as manufacturers based in Australia.
GMP is a generally accepted term internationally to describe a set of principles and procedures that, when followed by manufacturers of medicines and biologicals, helps to insure that the products manufactured will possess the required quality.
The GMP related regulatory activities undertaken are as follows:
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 participates in international harmonisation activities to ensure that GMP requirements applied in Australia are best practice.
The TGA undertakes periodic planned and unplanned inspections of manufacturers to assess the level of compliance with the applicable manufacturing standards, both domestically and overseas. The level and frequency of inspections for a particular manufacturer is influenced by its size and complexity but also by its 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 therapeutic goods supplied in Australia are of appropriate quality and to allow TGA to take appropriate regulatory action where safety concerns are identified.
The TGA undertakes appropriate actions to promote and ensure compliance with the applicable GMP standards by manufacturers. Where a licensed Australian manufacturer poses unacceptable safety or quality risks, 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 of Australia, limits are placed on the ability of sponsors to make the products available on the Australian market.
The TGA promotes compliance with the manufacturing 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.
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 provided by the Department of Health is not subject to fees and charges.
Blood, blood components and plasma derivatives are regulated under the Act. Plasma derivatives are prescription medicines subject to full regulation, including compliance with set standards, licensing of manufacture and inclusion in the ARTG after review of manufacturing, pre-clinical and clinical data. Under the Act 'blood' means whole blood extracted from human donors and 'blood components' means therapeutic components that have been manufactured from blood (including red cells, white cells, progenitor cells, platelets and plasma). 'Blood components' do not include products derived through fractionation of plasma.
Some blood and blood components are exempt from regulation by TGA, including those:
Manufacturers of blood components are required to demonstrate compliance with manufacturing principles equivalent to the Australian Code of Good Manufacturing for human blood and blood components, human tissues and human cellular therapy products (2013) and to submit a technical master file which demonstrates compliance to relevant standards.
Biologicals include human tissue and cell therapy products. Tissue therapy products involve the use of tissues as therapeutic goods, while cell therapy products involve the use of isolated living cells either as therapeutic goods or as replacements for cells that are defective or deficient in particular disorders.
Some examples of tissue therapies currently being used are:
Some examples of cell therapies currently being used, or currently under development are:
The regulatory activities for biologicals involve the following registration and approval activities:
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In line with the Australian Government Charging Framework total costs are categorised into the following groups for cost allocation.
Direct costs: can be easily traced to a cost object with a high degree of accuracy. The allocation of direct costs to a cost object is relatively straightforward. The most common direct costs are staff salaries (including oncosts, such as training, superannuation and leave) and supplier costs (e.g. office supplies).
Indirect costs: are the costs that cannot be easily linked to a cost object or for which the costs of tracking this outweigh the benefits. Indirect costs are apportioned to a cost object using the internal costing methodology. Common indirect costs include overhead costs such as salaries of staff in corporate (e.g. finance, human resources, IT) areas, or accommodation costs (e.g. rent, maintenance, utilities).
In 2015, a software solution was installed to improve TGA's activity based costing (ABC) capability. The first staff work effort survey was conducted in 2015 to attribute the time of regulatory staff to regulatory activities. Due to a significant restructure of TGA on 1 July 2015, the work effort survey is being undertaken again.
The characteristics of a government activity determine the type of cost recovery charge used. There are two types of cost recovery charges:
Cost recovery fees: fees charged when a good, service or regulation (in certain circumstances) is provided directly to a specific individual or organisation.
Fees are used to recover the cost of the pre-market services performed. Fees are designed to reflect as closely as possible the underlying cost of service. TGA has limited authority under the Act to waive or reduce fees.
Cost recovery levies: charges imposed when a good, service or regulation is provided to a group of individuals or organisations (e.g. an industry sector) rather than to a specific individual or organisation. A cost recovery levy is a tax and is imposed via a separate taxation Act. It differs from general taxation as it is 'earmarked' to fund activities provided to the group that pays the levy.
All therapeutic products registered, listed or included on the ARTG are subject to annual charges except for export only products and IVD medical devices. Annual charges are used to recover the costs of pharmacovigilance and other post market monitoring and compliance activities where:
Different levels of pharmacovigilance are required for different classes of therapeutic goods depending on the level of risk the good could pose. Annual charges have been set to reflect the level of pharmacovigilance and post-market work required for the regulated good rather than the size of the individual business. For example, the annual charge for a class 1 medical device (other than a class 1 medical device that has a measuring function or is supplied in a sterile state) is $80 whereas for a high risk prescription medicine (biologic) the annual charge is $6,725.
TGA fees and charges are reviewed annually to ensure full cost recovery. An increase of 2.25 per cent was applied for 2016–17 to meet estimated cost increases mainly in employee expenses as a result of a 2 per cent salary increase in the Department of Health Enterprise Agreement.
A well-established formula has been used in most years, based on the Australian Bureau of Statistics' Consumer Price Index (50 per cent) and Wage Price Index (50 per cent) (both for the year to September). This year the formula resulted in 2.25 per cent. The Office of Best Practice Regulation has advised that a Regulatory Impact Statement was not required for this change.
The amendment regulations were approved by the Executive Council at their meeting of 5 May 2016. As a result all TGA fees and charges will increase by 2.25 per cent from 1 July 2016, subject to rounding. In addition, a small number of other, minor, changes relating to fees for biologicals were also approved. These changes are:
A link to the fees and charges applicable from 1 July 2016 is provided in Appendix 2.
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| 2014-15 Actual $'m |
2015-16 Forecast $'m |
2016-17 Budget $'m |
2017-18 Estimate $'m |
2018-19 Estimate $'m |
|
|---|---|---|---|---|---|
| A: Revenue3 | |||||
| Revenue from Government | 6.995 | 2.227 | 1.800 | 1.800 | 1.800 |
| Sale of goods and services | 130.764 | 133.908 | 138.384 | 142.035 | 147.568 |
| Other revenue and gains | 1.027 | 0.249 | 0.200 | 0.200 | 0.200 |
| Total A | 138.786 | 136.385 | 140.384 | 144.035 | 149.568 |
| B: Expenses4 | |||||
| Employee expenses | 83.552 | 79.108 | 94.308 | 96.284 | 98.236 |
| Suppliers | 42.071 | 44.587 | 45.498 | 43.165 | 41.405 |
| Depreciation and amortisation | 5.620 | 4.368 | 8.190 | 8.190 | 9.927 |
| Write-down and impairment of assets | 2.205 | 0.510 | |||
| Other expenses and losses | 0.001 | 0.001 | |||
| Total B | 133.448 | 128.574 | 147.996 | 147.639 | 149.568 |
| Surplus (deficit) | 5.338 | 7.811 | (7.612) | (3.604) | 0.000 |
TGA's activities are primarily cost recovered from industry. However, the TGA received appropriation funding in 2014-15 for aligning Australia's and New Zealand's regulation of therapeutic goods. In addition, the TGA continues to receive appropriation funding in the form of an interest equivalency payment for funds held in the TGA special account (reserves).
While our financial performance is within the target budget range when compared to budget, the surplus in 2014-15 was largely the result of lower than expected employee expenses due to lower staffing levels and stable employee remuneration over recent financial years.
Detailed financial performance information is discussed with industry representative bodies at bilateral meetings held each year.
The TGA aims to maintain reserves to provide a buffer for volatility in revenue streams (the number and type of evaluation applications) and respond to major external or unplanned impacts (recalls, product tampering). Depreciation is also accumulated for the replacement of assets. The Government expects the TGA to manage within its cost recovery resources and therefore investment, such as the Business Improvement Program, must also come from the responsible management of these reserves. The target for the reserve balance is set to be at least one quarter of operating expenses. During 2015-16 our reserves will remain above that target but then reduce in 2016-17 as a result of the costs of implementing the 2016-17 Budget measure “improving the Regulation of Therapeutic Goods in Australia” which involves expenditure of $20.4 million from TGA reserves over four years.
Financial performance by industry sector group is included in Appendix 1.
The TGA reports to stakeholders at six monthly intervals on performance against a set of agreed KPIs. The KPIs have been endorsed by the Australian Therapeutic Goods Advisory Council following consultation with the TGA-Industry Consultative Committee. For more information on the TGA's KPIs please visit: TGA key performance indicators.
The KPIs are high-level indicators of performance against our strategic intent. Within that matrix of KPIs is a requirement for measuring whether 'business operations are consistent and meet agreed service and timeliness standards'. Measures of specific business activities will continue to be documented in our half-yearly performance reports.
These reports are provided to members of the TGA-Industry Consultative Committee to enable us to report on specific parameters of relevance to industry stakeholders and to enable stakeholders to provide performance feedback. They provide detailed quantitative information about our performance on the timeliness of business activities as well as information for industry about the volumes of work performed. Key highlights for 2014-15 were:
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The annual charges exemption (ACE) scheme replaced the low value turnover (LVT) scheme on 1 July 2015 following a review of the operation of the LVT which included a public consultation and Regulatory Impact Statement.
The ACE scheme is more equitable, reduces red tape for business and provides administrative efficiencies for the TGA. It recognises that TGA's post-market monitoring costs are incurred for products that have been placed into the market and allows sponsors to enter their products in the ARTG in advance of their marketing with no annual charge (until turnover commences). For more information on the ACE please visit: Annual charge exemption scheme.
When the ACE scheme was introduced the TGA undertook to monitor the impact of the new scheme on the therapeutic goods industry. In December 2015 a preliminary assessment of the financial impact of the ACE scheme on industry sponsors across a range of business areas showed, at that point in time, a forecast increase of $2.5 million or 5 per cent in annual charges in 2015-16 under the ACE scheme. The preliminary assessment report is available on the TGA website.
At the time of undertaking the preliminary assessment the ACE scheme had been in operation for only a few months (July 2015 to October 2015), and the full impact and effectiveness of the ACE scheme will not be known until it has been in operation for a minimum of 2 years. The impact of the introduction of the ACE scheme will continue to be monitored as the scheme matures and changes will be made, as required, to ensure appropriate cost recovery for each sector.
An independent review of medicines and medical devices regulation was announced on 24 October 2014. The aim of the review was to examine the TGA's regulatory framework and processes with a view to identifying:
In its two staged report (stage 1 released on 31 March 2015 and stage 2 released on 31 July 2015), the review panel provided the Government with 58 recommendations. In summary, the report recommended:
In 2016-17 the TGA will manage a comprehensive reform agenda based on the 2016-17 Budget measure "improving the Regulation of Therapeutic goods in Australia".
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A cost recovery risk assessment for the proposed reform program was undertaken in May 2015 resulting in a medium risk rating.
The cost recovery risk rating of medium is based on assessment of the criteria using the Charging Risk Assessment (CRA) template. The key medium to high risks for cost recovery are that the amount to cost recover exceeds $20 million (although implementation is to be funded from reserves), the source of recovery is through fees and levies, they involve an existing Act of Parliament (for TGA charges to be reviewed) and many stakeholders will be affected.
The most likely risks identified for any ongoing changes to cost recovery arrangements were:
These risks are to be addressed by:
From a regulatory perspective risk management is applied to regulating therapeutic goods by:
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TGA consults with industry associations separately on regulatory matters and cost impacts relating to specific sectors. Industry associations are also consulted in the process of regulatory development and reform, and feedback is taken into account in developing regulatory impact statements, and in developing cost recovery arrangements. Meetings are held with key industry representative bodies each year to discuss financial forecasts and as a part of the consultation process on cost recovery. The TGA also reports to stakeholders against a set of agreed Key Performance Indicators (KPIs).
Consultation on the proposed fees and charges for 2016-17 was undertaken at bilateral meetings with the following industry representative groups in February and March 2016.
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The Department of Health will undertake a portfolio charging review in the 2017-18 Budget context. The review will encompass TGA's cost recovery activities, and include such things as: identifying any policy, legal and operational issues and risks related to existing cost recovery activities; evaluating the relevance of charging activities and consistency with the planned policy outcomes of the Australian Government; assessing the potential to charge for new or existing activities; and stating whether charging should continue for existing activities or be changed, and on what basis.
| Key forward events schedule | Next scheduled update |
|---|---|
| Actual financial and performance results for 2015-16 | Reported in the Department of Health's Annual Report |
| Scheduled portfolio charging review | 2017-18 |
| Forward (financial) estimates | 30 June 2017 |
V1.0 June 2016
| Date of CRIS change | Approver | CRIS change |
|---|---|---|
| 01/07/2014 | Secretary Department of Health | CRISs for 1 July 2014 |
| 01/07/2014 | Assistant Minister for Health | CRISs for 1 July 2014 |
| 01/07/2015 |
Secretary Department of Health (noted by Assistant Minister for Health) |
Individual sector based CRISs updated for 1 July 2015, except for the over the counter medicines CRIS which was updated on 1 January 2016 to reflect fee changes on 1 January 2016 |
| 01/07/2016 | Secretary Department of Health | Consolidated CRIS updated for 1 July 2016 |
V1.0 June 2016
| Volumes5 | 2014-15 Actual |
2015-16 Forecast |
2016-17 Budget |
2017-18 Estimate |
2018-19 Estimate |
|---|---|---|---|---|---|
| Biological prescription medicines | 461 | 550 | 550 | 550 | 550 |
| Non-biological prescription medicines - higher charge | N/A | 475 | 475 | 475 | 475 |
| Non-biological prescription medicines - lower charge | 4,842 | 5,901 | 5,901 | 5,901 | 5,901 |
| Revenue and expenses | 2014-15 Actual $'m |
2015-16 Forecast $'m |
2016-17 Budget $'m |
2017-18 Estimate $'m |
2018-19 Estimate $'m |
|---|---|---|---|---|---|
| A: Revenue | |||||
| Cost recovery revenue | 65.6 | 68.7 | 70.8 | 72.7 | 75.5 |
| Total A | 65.6 | 68.7 | 70.8 | 72.7 | 75.5 |
| B: Expenses6 | |||||
| Direct | 35.4 | 34.7 | 40.0 | 39.9 | 40.5 |
| Indirect | 22.8 | 22.3 | 25.8 | 25.7 | 26.0 |
| Total B | 58.1 | 57.0 | 65.8 | 65.6 | 66.5 |
| Surplus (deficit) | 7.4 | 11.7 | 5.0 | 7.0 | 9.0 |
| Volumes7 | 2014-15 Actual |
2015-16 Forecast |
2016-17 Budget |
2017-18 Estimate |
2018-19 Estimate |
|---|---|---|---|---|---|
| Over the counter medicines | 2,064 | 2,451 | 2,451 | 2,451 | 2,451 |
| Revenue and expenses | 2014-15 Actual $'m |
2015-16 Forecast $'m |
2016-17 Budget $'m |
2017-18 Estimate $'m |
2018-19 Estimate $'m |
|---|---|---|---|---|---|
| A: Revenue | |||||
| Cost recovery revenue | 7.7 | 8.0 | 8.2 | 8.4 | 8.8 |
| Total A | 7.7 | 8.0 | 8.2 | 8.4 | 8.8 |
| B: Expenses8 | |||||
| Direct | 5.1 | 5.0 | 5.7 | 5.7 | 5.8 |
| Indirect | 2.9 | 2.8 | 3.3 | 3.3 | 3.3 |
| Total B | 7.9 | 7.8 | 9.0 | 9.0 | 9.1 |
| Surplus (deficit) | (0.3) | 0.2 | (0.8) | (0.5) | (0.3) |
| Volumes9 | 2014-15 Actual |
2015-16 Forecast |
2016-17 Budget |
2017-18 Estimate |
2018-19 Estimate |
|---|---|---|---|---|---|
| Registered complementary medicines | 131 | 127 | 127 | 127 | 127 |
| Listed complementary medicines | 8,262 | 9,491 | 9,491 | 9,491 | 9,491 |
| Revenue and expenses | 2014-15 Actual $'m |
2015-16 Forecast $'m |
2016-17 Budget $'m |
2017-18 Estimate $'m |
2018-19 Estimate $'m |
|---|---|---|---|---|---|
| A: Revenue | |||||
| Cost recovery revenue | 11.4 | 12.6 | 13.0 | 13.3 | 13.8 |
| Total A | 11.4 | 12.6 | 13.0 | 13.3 | 13.8 |
| B: Expenses10 | |||||
| Direct | 13.7 | 13.4 | 15.5 | 15.4 | 15.6 |
| Indirect | 9.0 | 8.8 | 10.2 | 10.1 | 10.3 |
| Total B | 22.7 | 22.2 | 25.6 | 25.6 | 25.9 |
| Surplus (deficit) | (11.3) | (9.6) | (12.7) | (12.3) | (12.1) |
| Volumes11 | 2014-15 Actual |
2015-16 Forecast |
2016-17 Budget |
2017-18 Estimate |
2018-19 Estimate |
|---|---|---|---|---|---|
| Included medical devices | 39,124 | 40,480 | 40,480 | 40,480 | 40,480 |
| Other therapeutic goods | 448 | 340 | 340 | 340 | 340 |
| Revenue and expenses | 2014-15 Actual $'m |
2015-16 Forecast $'m |
2016-17 Budget $'m |
2017-18 Estimate $'m |
2018-19 Estimate $'m |
|---|---|---|---|---|---|
| A: Revenue | |||||
| Cost recovery revenue | 32.0 | 31.7 | 32.7 | 33.5 | 34.8 |
| Total A | 32.0 | 31.7 | 32.7 | 33.5 | 34.8 |
| B: Expenses12 | |||||
| Direct | 12.9 | 12.6 | 14.6 | 14.6 | 14.8 |
| Indirect | 11.2 | 11.0 | 12.7 | 12.6 | 12.8 |
| Total B | 24.1 | 23.6 | 27.3 | 27.2 | 27.6 |
| Surplus (deficit) | 7.9 | 8.1 | 5.4 | 6.3 | 7.3 |
| Volumes13 | 2014-15 Actual |
2015-16 Forecast |
2016-17 Budget |
2017-18 Estimate |
2018-19 Estimate |
|---|---|---|---|---|---|
| Low level GMP licence | 116 | 104 | 104 | 104 | 104 |
| High level GMP licence | 162 | 163 | 163 | 163 | 163 |
| Revenue and expenses | 2014-15 Actual $'m |
2015-16 Forecast $'m |
2016-17 Budget $'m |
2017-18 Estimate $'m |
2018-19 Estimate $'m |
|---|---|---|---|---|---|
| A: Revenue | |||||
| Cost recovery revenue | 12.1 | 11.1 | 11.5 | 11.8 | 12.2 |
| Total A | 12.1 | 11.1 | 11.5 | 11.8 | 12.2 |
| B: Expenses14 | |||||
| Direct | 9.3 | 9.1 | 10.5 | 10.5 | 10.7 |
| Indirect | 3.6 | 3.5 | 4.0 | 4.0 | 4.1 |
| Total B | 12.9 | 12.6 | 14.6 | 14.5 | 14.7 |
| Surplus (deficit) | (0.7) | (1.5) | (3.1) | (2.8) | (2.5) |
| Volumes15 | 2014-15 Actual |
2015-16 Forecast |
2016-17 Budget |
2017-18 Estimate |
2018–19 Estimate |
|---|---|---|---|---|---|
| Blood primary site | 5 | 5 | 5 | 5 | 5 |
| Blood secondary site | 79 | 79 | 79 | 79 | 79 |
| Single step manufacturer of human tissue | 10 | 24 | 24 | 24 | 24 |
| Class 2 biological products | 14 | 15 | 15 | 15 | 15 |
| Revenue and expenses | 2014-15 Actual $'m |
2015-16 Forecast $'m |
2016-17 Budget $'m |
2017-18 Estimate $'m |
2018-19 Estimate $'m |
|---|---|---|---|---|---|
| A: Revenue | |||||
| Cost recovery revenue | 2.0 | 2.2 | 2.3 | 2.3 | 2.4 |
| Total A | 2.0 | 2.2 | 2.3 | 2.3 | 2.4 |
| B: Expenses16 | |||||
| Direct | 1.8 | 1.8 | 2.0 | 2.0 | 2.1 |
| Indirect | 1.5 | 1.5 | 1.7 | 1.7 | 1.7 |
| Total B | 3.3 | 3.2 | 3.7 | 3.7 | 3.8 |
| Surplus (deficit) | (1.3) | (1.0) | (1.5) | (1.4) | (1.4) |
| Revenue and expenses | 2014-15 Actual $'m |
2015-16 Forecast $'m |
2016-17 Budget $'m |
2017-18 Estimate $'m |
2018-19 Estimate $'m |
|---|---|---|---|---|---|
| A: Revenue | |||||
| Revenue | 8.0 | 2.1 | 2.0 | 2.0 | 2.0 |
| Total A | 8.0 | 2.1 | 2.0 | 2.0 | 2.0 |
| B: Expenses | |||||
| Expense | 4.4 | 2.1 | 2.0 | 2.0 | 2.0 |
| Total B | 4.4 | 2.1 | 2.0 | 2.0 | 2.0 |
| Surplus (deficit) | 3.6 | 0.0 | 0.0 | 0.0 | 0.0 |
V1.0 June 2016
2016-17 TGA fees and charges can be found using the URL below: