Therapeutic Goods Legislation Amendment (Charges Exemptions and Other Measures) Regulation 2016 [F2016L00109]-Concluded matters [2016] AUSStaCSDLM 158 (3 May 2016)

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Instrument	Therapeutic Goods Legislation Amendment (Charges Exemptions and Other Measures) Regulation 2016 [F2016L00109]
Purpose	Amends the annual charges exemption (ACE) scheme to pre-qualify sponsors of these products for ACE and amends the ACE scheme in the Therapeutic Goods Regulations 1990 to accommodate in vitro diagnostic medical devices
Last day to disallow	15 sitting days after tabling (22 February 2016)
Authorising legislation	Therapeutic Goods Act 1989
Department	Health
Scrutiny principle	Standing Order 23(3)(a)
Previously reported in	Delegated legislation monitor No. 3 of 2016

Unclear basis for determining fees

The committee commented as follows:

This regulation amends the annual charges exemption (ACE) scheme in the Therapeutic Goods Regulations 1990 (the regulations) to pre-qualify sponsors of certain products for ACE; amends the ACE scheme to accommodate in vitro diagnostic medical devices; and makes amendments intended to update and improve consistency in the regulations.

Item 33 of Schedule 4 to the regulation substitutes an updated table of fees for notifications of trial sights for a clinical trial for a medicine or other type of therapeutic good (not being a biological). The fee is $335. The ES to the regulation states:

Item 33 repeals table items 14 and 14A of Part 2 of Schedule 9 of...[the regulations] and instead creates new items 14 and 14A that make clear that the fee is payable for each notification of an additional trial site or additional trial sites (when notified together) for a clinical trial for a medicine or other type of therapeutic goods (not being a biological).

Item 34 of Schedule 4 to the regulation substitutes an updated fee for providing advice in relation to prescription medicine at the request of the sponsor of the medicine for the purpose of listing the medicine as a pharmaceutical benefit. The fee is $2085. The ES to the regulation states:

Item 34 repeals table item 18 of Part 2 of Schedule 9 of [the regulations] and replaces it with a new item 18 to clarify when a fee is payable in relation to the provision of advice about prescription medicines proposed to be listed on the Pharmaceutical Benefits Schedule. Item 18 makes clear that a fee is payable when advice is provided in relation to a prescription medicine at the request of the sponsor of the medicine for the purpose of listing the medicine as a pharmaceutical benefit...

Item 35 of Schedule 4 to the regulation substitutes an updated table of fees for notification of a trial sight for a clinical trial for a biological. The fee is $320. The ES to the regulation states:

Item 35 repeals table item 17 of Part 2 of Schedule 9A of...[the regulations] and replaces it with new item 17 that clarifies that the fee is required to be paid for each notification of an additional trial site or additional trial sites (when notified together) for a clinical trial for a biological.

The committee's usual expectation in cases where an instrument of delegated legislation carries financial implications via the imposition of or change to a charge, fee, levy, scale or rate of costs or payment is that the relevant ES makes clear the specific basis on which an individual imposition or change has been calculated. While the committee notes that the fees described above reflect existing fees and seek to clarify the instances and circumstances in which they are required to be paid, the ES does not state the basis on which the fees have been calculated.

The committee requests the advice of the minister in relation to this matter.

Minister's response

The Minister for Rural Health advised:

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.
In the 1997-98 Budget, Budget Paper No. 2 Part II: Revenue Measures, it was stated that the Therapeutic Goods Administration (TGA) would fully recover all costs from industry from 1998-99. The TGA recovers the costs of its regulatory activities through fees and charges imposed on sponsors and manufacturers of therapeutic products.
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. Applicable fees and charges are prescribed in regulations made under the Act and the Therapeutic Goods (Charges) Act 1989 (the Charges Act).
The characteristics of the activity determine the type of cost recovery charge used:
• Cost recovery fees: fees charged when a good, service or regulation is provided directly to a specific individual or organisation,
‒ TGA fees are used to recover the cost of, usually pre-market, services performed and are scaled (using activity based costing models) to account for the level of effort required and undertaken to provide each service.
• 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,
‒ TGA annual charges are used to recover the cost of activities, usually post-market pharmacovigilance, monitoring and compliance activity, where they cannot reasonably be assigned to individual sponsors. These activities maintain the integrity of the regulated industry to the benefit of all sponsors and importantly, avoid the situation where assigning costs to individual sponsors would deter them from disclosing important public health information or adverse events.
TGA fees and charges were set on an activity basis, including the allocation of corporate and overhead costs, and are reviewed annually. Consultation is undertaken with industry representative bodies and, as required, adjustments applied. These usually comprise increases based on an indexation factor of the Wage Price Index (50 per cent) and Consumer Price Index (50 per cent). However in 2015-16 a lesser rate was applied based on known cost increases only.
In relation to the amendments at items 33 to 35 of F2016L00109, I have attached a table of amendments and a brief description of what they entail.

Committee's response

The committee thanks the minister for her response and has concluded its examination of the instrument.