THERAPEUTIC GOODS (CHARGES) AMENDMENT (2023 MEASURES NO. 1) REGULATIONS 2023 (F2023L00758) EXPLANATORY STATEMENT 
Commonwealth Numbered Regulations - Explanatory Statements
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THERAPEUTIC GOODS (CHARGES) AMENDMENT (2023 MEASURES NO. 1) REGULATIONS 2023 (F2023L00758)
EXPLANATORY STATEMENT
Therapeutic Goods (Charges) Act 1989
Therapeutic Goods (Charges) Amendment (2023 Measures No. 1) Regulations 2023
The instrument increases annual charges for therapeutic goods on the Australian Register of Therapeutic Goods (the Register) and in relation to manufacturing licences to support cost recovery for business transformation initiatives that the Therapeutic Goods Administration (the TGA) is pursuing and property costs, and clarify that annual charges for biologicals do not apply to export-only biologicals.
The Therapeutic Goods (Charges) Act 1989 (the Act) imposes annual charges on the registration, listing and inclusion of therapeutic goods in the Register, and on the licensing of manufacturers of therapeutic goods (other than medical devices). The TGA, which is part of the Department of Health and Aged Care (the Department), is responsible for administering the Act.
Subsection 5(1) of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing the amounts of charges. Subsection 5(2) of the Act provides in part that the regulations may prescribe different charges in relation to different classes of goods (including medical devices) or, in the case of annual licensing charges, for different steps in the manufacture of therapeutic goods or for conformity assessment body determinations of different kinds.
Section 4 of the Act provides that annual charges of such amounts as are prescribed are payable in respect of therapeutic goods on the Register, as well as in respect of manufacturing licences and conformity assessment body determinations - a determination which authorises an entity to assess compliance with conformity assessment principles in Australia - that are in force at any time within a financial year. In addition, under subsection 4(1A) of the Act, where one or more therapeutic goods are "grouped" and each of the "grouped" therapeutic goods is covered by a single registration or listing number, a single annual charge as is prescribed will apply for maintaining all the registered or listed goods covered under the same group.
The main purpose of the Therapeutic Goods (Charges) Amendment (2023 Measures No. 1) Regulations 2023 (the Regulations) is to amend the Therapeutic Goods (Charges) Regulations 2018 (the Charges Regulations) to increase the annual charges that are set out in those regulations for the 2023-24 financial year. The Regulations also clarify that annual charges for biologicals do not apply to export-only biologicals (to align with the approach of not applying annual charges for export only medicines and medical devices).
The overall increase to annual charges for 2023-24 consists of multiple components, some of which apply uniformly to all annual charges and some of which apply only to certain annual charges. Two components apply to all annual charges:
* the 5.2 per cent indexation rate--this increase is based on an indexation formula used to calculate adjustments to TGA fees and charges in most previous years. The indexation is based on the Australian Bureau of Statistics' Wages Price Index (50 per cent), which was 3.1 per cent for the year to September 2022, and Consumer Price Index (50 per cent), which was 7.3 per cent for the year to September 2022; and
* a further 5.9 percent to reflect the recovery of costs associated with the TGA's digital and business systems transformation, and additional property costs associated with the move of the TGA from Symonston, ACT to Fairbairn, ACT, in 2022.
Other components only apply to certain annual charges, including:
* an increase of 0.46 per cent which applies to annual charges for medicines and biologicals, to reflect the recovery of costs associated with functional improvements to the TGA's Adverse Event Management System; and
* an increase of 1.23 per cent to annual charges relating to medical devices, to recover funds invested by the Department in device-specific digitisation reforms.
The Regulations complement the Therapeutic Goods Legislation Amendment (Fees and Other Measures) Regulations 2023 which, among other things, increases fees for most therapeutic goods for 2023-24 by the 5.2 per cent indexation rate.
Details of the Regulations are set out in the Attachment.
The Act specifies no conditions that need to be satisfied before the power to make the Regulations may be exercised. The Regulations are a legislative instrument for the purposes of the Legislation Act 2003.
The Regulations commence on 1 July 2023.
Consultation
In relation to consultation, the TGA held bilateral meetings with 13 key industry representative bodies in December 2022 to consult on the proposed changes to TGA fees and charges for 2023-24. The industry bodies included Medicines Australia, the Generic and Biosimilar Medicines Association, AusBiotech, the Medical Technology Association of Australia, Consumer Healthcare Products Australia, Complementary Medicines Australia, and Accord Australasia. Most of the bodies indicated their support for the proposed 5.2 per cent indexation increase, but did not support additional increases to TGA charges to facilitate cost recovery of the TGA's digital transformation and business systems or the TGA's relocation to a new site in Fairbairn, ACT.
The TGA also undertook public consultation to obtain broader stakeholder feedback, with a consultation paper released on the TGA website and submissions sought over a four-week period to 21 March 2023. Thirty-six submissions were received, including 11 from industry representative bodies, 22 from sponsors or manufacturers, and 3 from other respondents:
* twenty-eight submissions (including from peak industry bodies and major sponsors) supported the proposed 5.2 per cent indexation increase to TGA charges; and
* almost all submissions opposed (or did not comment on) proposed additional increases to the TGA charges to recover digital and business systems transformation and additional property costs.
Authority: Subsection 5(1) of the Therapeutic Goods (Charges) Act 1989
ATTACHMENT
Details of the Therapeutic Goods (Charges) Amendment (2023 Measures No. 1) Regulations 2023
Section 1 - Name
This section provides for the title of the Regulations to be referred to as the Therapeutic Goods (Charges) Amendment (2023 Measures No. 1) Regulations 2023.
Section 2 - Commencement
This section provides for the commencement of the Regulations on 1 July 2023.
Section 3 - Authority
This section provides that the Regulations are made under the Therapeutic Goods (Charges) Act 1989.
Section 4 - Schedules
This section provides that each instrument that is specified in a Schedule to the instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and that any other item in a Schedule to the instrument has effect according to its terms.
Schedule 1 - Amendments
Therapeutic Goods (Charges) Regulations 2018
The Regulations increase all annual charges relating to the inclusion of therapeutic goods in the Register, and licences to manufacture therapeutic goods, that are prescribed by the Therapeutic Goods (Charges) Regulations 2018 (the Charges Regulations) for the 2023-24 financial year. The total rate of increase that is applied to each annual charge depends on the kind of therapeutic good or licence to which the charge relates. This is because the overall increase to annual charges for the 2023-24 financial year consists of multiple components, not all of which apply uniformly to all annual charges.
The first component, which applies to all annual charges and reflects an increase of 5.2 per cent, is based on a composite indexation formula that has been used to calculate adjustments to TGA fees and charges in previous years. The formula combines the Australian Bureau of Statistics' Consumer Price Index ("CPI") (50 per cent) and Wage Price Index ("WPI") (50 per cent) for the year to September. This increase is in line with the TGA's cost recovery model and complements the Therapeutic Goods Legislation Amendment (Fees and Other Measures) Regulations 2023, which increases most therapeutic goods fees by 5.2 per cent for the 2023-24 financial year.
The second component, which also applies to all annual charges and reflects an increase of 4.12 per cent, is intended to facilitate partial cost recovery from industry for the laboratory modernisation fit-out at the TGA's new office building in Fairbairn, ACT, in 2022, for which the Department is required to make an annual payment (separate to the lease amount) to the landlord for the initial lease term of 15 years.
The remaining components of the overall increase to annual charges represent the various initiatives that the TGA is pursuing as part of its digital and business systems transformation program, which are to be cost recovered from Industry over five years (six financial years), commencing from 1 January 2024. These initiatives include:
* the development of a 'single product portal' to reduce costs and regulatory burden on industry product sponsors, and support faster access to products by patients -- cost recovery of which requires an annual increase of 3.57 per cent to all annual charges;
* improvements to the functionality of the Adverse Events Management System (the AEMS) to increase the efficiency with which adverse events data is shared with industry and regulatory stakeholders -- cost recovery of which requires an annual increase of 0.92 per cent to medicines and biologicals annual charges;
* investment in device-specific digitisation which will allow electronic access to patient information leaflets, streamlined notification and change request processing for industry, and identification of software devices -- cost recovery of which requires an annual increase of 2.46 per cent to all classes of medical devices annual charges.
As cost recovery for these three initiatives does not commence until 1 January 2024, the increases to annual charges to reflect these initiatives is pro-rated by 50 per cent for the 2023-24 financial year. This means that an increase of only 1.78 per cent applies to reflect recovery of costs associated with development of the TGA's 'single product portal'. Likewise, increases of only 0.46 per cent and 1.23 per cent apply to medicines and biologicals annual charges and medical device related annual charges, respectively, to reflect recovery of costs associated with improvements to the AEMS and device-specific digitisation.
Importantly, cost recovery of investment in the Unique Device Identification system, which is also part of the TGA's digital and business systems transformation and requires an annual increase of 1.97 per cent to annual charges for medical devices that are classified as Class II and above (over six financial years), does not commence until the 2024-25 financial year.
Items [1], [3]-[4], [6], [8]-[9], [12]-[13], [25]-[28]
These items amend each of the amounts of annual charges prescribed in the Charges Regulations in relation to medicines and biologicals by 11.56 per cent, from 1 July 2023.
Items [2], [5], [7], [10], [19]-[23]
These items amend each of the amounts of annual charges prescribed in the Charges Regulations in relation to manufacturing licences and other therapeutic goods by 11.1 per cent, from 1 July 2023.
Item [11]
This item amends subsection 7(3) in the Charges Regulations to exempt export-only biologicals included in the Register from annual charges, thereby aligning such products with other export-only therapeutic goods. An export only biological is a biological intended by the sponsor to only be supplied to international markets, and not in Australia (e.g. eye corneas labelled and packaged for sale in South Korea).
Items [14]-[18]
These items amend each of the amounts of annual charges prescribed in the Charges Regulations in relation to medical devices by 12.33 per cent, from 1 July 2023.
Item [24]
Note 1 to subsection 7(6) of the Charges Regulations reflects that, under regulation 43AAJ of the Therapeutic Goods Regulations 1990 ("the TG Regulations"), the annual charge for a licence under Part 3-3 of the Therapeutic Goods Act 1989, payable by a person whose wholesale turnover of therapeutic goods in a charge year is not more than $105,575, is half the amount mentioned in subsection 7(5) of the Charges Regulations.
This item omits the reference to $105,575 in Note 1 and substitutes it with a reference to $111,065. This amendment complements the amendment made by the Therapeutic Goods Legislation Amendment (Fees and Other Measures) Regulations 2023 to paragraph 43AAJ(1)(b) of the TG Regulations, the effect of which is to increase the threshold amount specified in that paragraph by 5.2 per cent.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Therapeutic Goods (Charges) Amendment (2023 Measures No. 1) Regulations 2023
The Therapeutic Goods (Charges) Amendment (2023 Measures No. 1) Regulations 2023 (the Regulations) are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The Regulations are made under subsection 5(1) of the Therapeutic Goods (Charges) Act 1989.
The main purpose of the Therapeutic Goods (Charges) Amendment (2023 Measures No. 1) Regulations 2023 (the Regulations) is to amend the Therapeutic Goods (Charges) Regulations 2018 (the Charges Regulations) to increase the annual charges that are set out in those regulations for the 2023-24 financial year. The Regulations also clarify that annual charges for biologicals do not apply to export-only biologicals (to align with the approach of not applying annual charges for export only medicines and medical devices).
The overall increase to annual charges for 2023-24 consists of multiple components, some of which apply uniformly to all annual charges and some of which apply only to certain annual charges. Two components apply to all annual charges:
* the 5.2 per cent indexation rate--this increase is based on an indexation formula used to calculate adjustments to TGA fees and charges in most previous years. The indexation is based on the Australian Bureau of Statistics' Wages Price Index (50 per cent), which was 3.1 per cent for the year to September 2022, and Consumer Price Index (50 per cent), which was 7.3 per cent for the year to September 2022; and
* a further 5.9 percent to reflect the recovery of costs associated with the TGA's digital and business systems transformation, and additional property costs associated with the move of the TGA from Symonston, ACT to Fairbairn, ACT, in 2022.
Other components only apply to certain annual charges, including:
* an increase of 0.46 per cent which applies to annual charges for medicines and biologicals, to reflect the recovery of costs associated with functional improvements to the TGA's Adverse Event Management System; and
* an increase of 1.23 per cent to annual charges relating to medical devices, to recover funds invested by the Department in device-specific digitisation reforms.
The Regulations complement the Therapeutic Goods Legislation Amendment (Fees and Other Measures) Regulations 2023 which, among other things, increases fees for most therapeutic goods for 2023-24 by the 5.2 per cent indexation rate.
Human rights implications
As the Regulations do not introduce any changes to the Charges Regulations other than to implement the changes outlined above, they do not engage any of the applicable rights or freedoms.
Conclusion
The Regulations are compatible with human rights as they do not raise any human rights issues.
Mark Butler, Minister for Health and Aged Care