Commonwealth Numbered Regulations - Explanatory Statements

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THERAPEUTIC GOODS (CHARGES) AMENDMENT REGULATIONS 2004 (NO. 1) 2004 NO. 160

The object of the Therapeutic Goods (Charges) Act 1989 (the Act) is to allow the imposition of an annual charge on the registration, listing and inclusion in the Australian Register of Therapeutic Goods, and on the licensing of manufacturers of therapeutic goods. The Therapeutic Goods Administration (the TGA) is responsible for administering the Act.

Section 4 of the Act provides that annual charges of such amounts as are prescribed are payable for maintaining entries of therapeutic goods in the Australian Register of Therapeutic Goods (the Register). Subsection 4(1A) of the Act provides that where one or more therapeutic goods are "grouped" and each of the "grouped" therapeutic goods is covered by a single registration or listing number, then an annual charge as prescribed will apply for maintaining all the registered or listed goods covered under the same grouping. A single charge has been prescribed for this purpose.

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) enables the Governor-General to prescribe different levels of charges for different classes of goods or, in the case of annual licensing charges, for different steps in the manufacture of therapeutic goods.

The purpose of the Regulations is to:

•       increase the annual charges that are payable in relation to therapeutic goods by 3.05 per cent, except for prescription medicines and annual licence charges relating to the manufacture of blood and blood products which are to increase by 30 per cent and up to 65 per cent respectively, to ensure full cost recovery of post market monitoring and surveillance activities;

•       introduce a separate annual charge for the registration or listing of devices that are not medical devices or those devices that cannot be transferred to the regulatory framework for medical devices under Chapter 4 of the Therapeutic Goods Act 1989 (the TG Act);

•       introduce new annual licensing charge for premises manufacturing human tissues;

•       exempt medical devices produced for export only from annual charges;

•       clarify the annual charges applicable to primary sites for the manufacture of blood and blood components; and

•       make other technical amendments.

The increase in charges will enable the TGA to continue to meet the Government's requirement that the TGA operate on a full cost-recovery basis.

The general 3.05 per cent increase in annual charges is made up of:

50 per cent of the annual Wage Cost Index (WCI)

for the year ended December 2003...................         1.85 per cent

50 per cent of the Consumer Price Index (CPI)

for the year ended December 2003......        1.20 per cent

This indexation formula was developed in consultation with key industry bodies including Medicines Australia, the Australian Self -Medication Industry, the Complementary Healthcare Council of Australia and the Medical Industry Association of Australia to offset increases in average wages and prices over the year. Industry associations have agreed to the 3.05 per cent increase to the annual charges.

In addition to the 3.05 per cent increase, the annual charges for the registration of prescription medicines will increase by a total of 30 per cent. This is in line with the agreement with industry in July 2003 to adjust cost recovery practices to better reflect the underlying cost of regulatory activities performed by the TGA. The agreement also involves a reduction in most prescription medicine evaluation fees from 1 July 2004. Proposed Regulations that reduce the evaluation fees for most prescription medicines, also to commence on 1 July 2004, will be the subject of a separate Executive Council Minute.

The Regulations increase the annual licence charges for manufacturers of blood and blood products by 36 per cent for a primary site and 65 per cent for a secondary site (which includes the 3.05 per cent increase). This increase is to address the continuing under-recovery of costs involved in monitoring the safety and quality of blood manufacture.

The Therapeutic Goods (Charges) Regulations 1990 (the Principal Regulations) provide for a two-tier licence structure for the cost recovery for blood products, with the intention that only the primary blood manufacturer in the capital cities be charged the higher annual licence charge. However, the current provisions impose higher licence charges for any manufacturing premises classified as "a metropolitan" site, even though those sites may not be the primary manufacturing sites. The Regulations amend paragraph 3(2)(j) of the Principal Regulations to give effect to that intention.

The Regulations exempt medical devices that are manufactured for export only from annual charges. This amendment is consistent with the exemption accorded to medicines produced for export only.

The Regulations prescribe lower annual charges for devices which are currently regulated under Chapter 3 of the Act but which are not within the scope of the new regulatory framework for medical devices under Chapter 4 of the TG Act, ie which are not medical devices. Chapter 3 of the Act regulates medicines and other therapeutic devices whereas Chapter 4 regulates medical devices. The current annual charges for medical devices (refer to subregulation 3(1B)) have been set lower than the annual charges for registered or listed devices in order to encourage sponsors to transfer devices to the new regulatory framework for medical devices under Chapter 4 of the TG Act which commenced in October 2002. However, there are a small number of registered and listed devices (eg tampons, disinfectants and other devices) currently regulated under Chapter 3 of the Act that do not fit the definition of a medical device under Chapter 4 of the Act. These devices remain outside the scope of the regulatory framework for medical devices and are currently being charged higher annual charges. This amendment introduces a lower annual charge to these types of devices.

The Regulations also introduce new licence charges for manufacturers of human tissues. However, no annual charge applies to a non-profit hospital supply unit.

Details of the Regulations are set out in the Attachment.

The Act specifies no conditions that need to be met before the power to make the Regulations may be exercised.

The Regulations commence on 1 July 2004.

ATTACHMENT

DETAILS OF THE THERAPEUTIC GOODS (CHARGES) AMENDMENT REGULATIONS 2004 (NO. 1)

Regulation 1 names these Regulations as the Therapeutic Goods (Charges) Amendment Regulations 2004 (No. 1)

Regulation 2 specifies that these Regulations commence on 1 July 2004.

Regulation 3 provides for Schedule 1 to amend the Therapeutic Goods (Charges) Regulations 1990.

Schedule 1       - Amendments

This Schedule contains the amendments to the Therapeutic Goods (Charges) Regulations 1990 for the purposes of regulation 3.

Item 1

This item amends subregulations 3(1) and (1A). It increases the charges under regulation 3 by 3.05 per cent, except for those relating to prescription medicines.

It also introduces a lower annual charge for devices which are not within the scope of the regulatory framework under Chapter 4 of the Therapeutic Goods Act 1989 (the Act), ie which are not medical devices. The current annual charges for listed and registered devices (refer to subregulation 3(1B)) were substantially increased on 1 July 2003 to encourage the transfer of devices to the new regulatory framework for medical devices which commenced in October 2002. However, there exists a small group of registered and listed devices (eg tampons, disinfectants, and other devices) that do not fit the definition of a medical device. These devices may also include devices which are declared not to be medical devices by the Secretary of the Department of Health and Ageing under subsection 41BD(3) of the Act. These devices will remains outside the scope of the regulatory framework for medical devices. These devices are currently charged the increased annual charge even though there is no need to encourage them to be transferred to the new regulatory framework. Item 1 introduces a lower annual charge to these types of devices from 1 July 2004.

This item also increases the annual charges for the registration of prescription medicines by a total of 30 per cent. This is in line with the agreement with stakeholders in July 2003 to reduce the overall cost recovery from pre-market fees and increase the proportion of cost recovery for post market activities through annual charges. In line with this agreement the cost of evaluation fees for prescription medicines have been reduced.

Item 1 also includes minor technical amendments including the omission of the term "grouped goods" in subparagraphs 3(1A)(a)(i-iii), (b)(i-iii), and (c)(i-iii), as this term is unnecessarily repeated in these subparagraphs.

Item 2

This item exempts medical devices produced for export only from annual charges.

Item 3

This item substitutes new subregulation 3(2). Item 3 increases most charges under subregulation 3(2) by 3.05 per cent, except in relation to charges for a licence for the manufacture of human blood and blood components which have been increased by 36 per cent for a primary site and 65 per cent for a secondary site. This increase will address the continuing under-recovery of costs in blood manufacture regulation by the TGA. In addition, this item introduces new annual charges for the manufacture of human tissues. A minor technical amendment includes the addition of the word "for" before the term "a licence" in all paragraphs under subregulation 3(2) for clarity.

Item 4

This item inserts a definition of "primary site" in regulation 3. Primary site means the principal manufacturing premises in the capital city of each State and Territory where human blood and blood components are manufactured. This amendment clarifies the imposition of the higher licence charge ($98,300) such that it will only apply to primary sites and not to all metropolitan manufacturing sites for blood and blood components.

Item 5

This item increases the annual charges applicable in subregulation 3(1B) and regulation 4E by 3.05 per cent. It also increases by 3.05 per cent the amount referred to in the Note to subregulation 3(3) as the threshold value for determining whether the annual charge applicable for a licence under Part 3.3 of the TG Act is half of the relevant amount specified under subregulation 3(2).