EXPLANATORY STATEMENT

Select Legislative Instrument 2005 No. 194

Issued by the Authority of the Parliamentary Secretary to the Minister for

Health and Ageing

Therapeutic Goods (Charges) Act 1989

Therapeutic Goods (Charges) Amendment Regulations 2005 (No. 1)

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 of therapeutic goods in the Australian Register of Therapeutic Goods (the Register), 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 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 the registration or listing of therapeutic goods or medical devices and manufacturing licences by 1.6 per cent, unless otherwise provided in the Regulations;
• increase annual charges in relation to prescription medicines by 19 per cent and the annual licence charges relating to secondary sites for the manufacture of human blood and blood components by 30 per cent, to ensure full cost recovery of post market monitoring and surveillance activities;
• exclude manufacturers of haematopoietic progenitor cells, which are regenerative blood forming cells which can be obtained from peripheral blood, cord blood and bone marrow, from existing annual charges for blood sites and introduce a separate annual licensing charge for premises manufacturing haematopoietic progenitor cells; and
• make other technical amendments.

The charges prescribed in the Therapeutic Goods (Charges) Regulations 1990 (the Principal Regulations) are increased annually, and the increases enable the TGA to continue to meet the Government’s requirement that the TGA operate on a full cost‑recovery basis.

The increase in fees is usually calculated by adding together 50 per cent of the annual Wage Cost Index (WCI) for the preceding year ended December and 50 per cent of the Consumer Price Index (CPI) for the preceding year ended December, which would work out to be a 3.1 per cent increase on this occasion.  However, given the level of operating reserves of the TGA and the demands on industry in preparing for the new Trans Tasman Joint Agency, the increase in charges is limited to 1.6 per cent.

The level of fees and charges was reviewed in consultation with industry associations, including Medicines Australia, the Generic Medicines Industry of Australia, the Australian Self-Medication Industry, the Complementary Healthcare Council of Australia and the Medical Industry Association of Australia.  Industry associations had agreed to the WCI/CPI formula being applied to fees and charges as the basis for a 3.1 per cent increase.  Industry associations would not oppose limiting the overall increase to 1.6 per cent.

In addition to the 1.6 per cent increase, the Regulations increase the annual charges for the registration of prescription medicines by a total of 19 per cent.  This is in line with a plan to restructure the schedule of fees and charges agreed with industry in July 2003 to adjust cost recovery practices to better reflect the underlying cost of regulatory activities performed by the TGA.  Regulations that reduce the evaluation fees for most prescription medicines by up to 5 per cent as part of the fees restructuring plan, and also commence on the same day as these Regulations have also been made. The overall change in total cost recovery for prescription medicines is approximately 1.6 per cent.

The Regulations also increase the annual licence charges relating to secondary sites for the manufacture of human blood and blood components by 30 per cent.  This increase is to ensure full recovery of the cost of monitoring the safety and quality of blood manufacture following a significant rationalisation of blood collection facilities.

The Regulations exclude manufacturers of haematopoietic progenitor cells from existing annual charges for blood sites and introduce a separate annual licensing charge for premises manufacturing haematopoietic progenitor cells.  The change overcomes an unintended application of the annual charges for blood sites to haematopoietic progenitor cells facilities such as those for cord blood.  The Regulations instead impose a separate, smaller annual licence charge of $4,300 for such facilities.

The new charges have been rounded to ten dollar increments (for amounts up to ten thousand dollars) or one hundred dollar increments (for amounts of ten thousand dollars or more).   

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 proposed Regulations may be exercised.

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003. 

The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.

ATTACHMENT

Details of the Therapeutic Goods (Charges) Amendment Regulations

2005 (No. 1)

Regulation 1 – Name of Regulations

This regulation provides that the title of the Regulations is the Therapeutic Goods (Charges) Amendment Regulations 2005 (No. 1)

Regulation 2 – Commencement

This regulation provides for the Regulations to commence on the day after they are registered on the Federal Register of Legislative Instruments.

Regulation 3 – Amendment of the Therapeutic Goods (Charges) Regulations 1990  

This regulation provides that the Therapeutic Goods (Charges) Regulations 1990 (the Principal Regulations) are amended as set out in the Schedule.                                                                                                                                                                                                   

Schedule 1 - Amendments

Item [1] – Paragraph 3 (2) (j)

This item exempts haematopoietic progenitor cells from the annual licence charge payable by manufacturers of human blood and blood components.  The amendment overcomes an unintended application of the annual charges for sites licensed to manufacture human blood and blood components to hematopoietic progenitor cells facilities such as those for cord blood.

Item [2] – New paragraph 3 (2) (ja)

This item inserts an annual licence charge for the manufacture of haematopoietic progenitor cells at manufacturing premises in subregulation 3(2).  The amendment overcomes an unintended application of the annual charges for blood sites to hematopoietic progenitor cells facilities such as those for cord blood by imposing a separate, smaller annual licence charge of $4,300 for manufacturers of hematopoietic progenitor cells.

Item [3] – Subregulation 3 (4)

This item amends subregulation 3(4), by inserting a description of “haematopoietic progenitor cells” in addition to the existing description of “primary site” for the purposes of subregulation 3(2).  Haematopoietic progenitor cells are defined to mean primitive pluripotent haematopoietic cells capable of self-renewal as well as maturation into any of the haematopoietic lineages, including committed and lineage-restricted progenitor cells. This amendment provides clarity in relation to the application of a separate licence charge for haematopoietic progenitor cells manufacturing sites.

Item [4] – Further amendments – amounts of charge

This item increases the annual charges applicable in subregulations 3(1), 3(1A), 3(1B) and 3(2) and regulation 4E by 1.6 per cent, except in relation to charges for prescription medicines and for a licence for secondary sites used in the manufacture of human blood and blood components.

This item also increases the annual charges for the registration of prescription medicines by a total of 19 per cent in line with a plan to restructure the schedule of fees and charges for prescription medicines agreed with stakeholders in July 2003.  The plan will reduce overall cost recovery from pre-market fees and increase the proportion of cost recovery for post market activities through annual charges.  Regulations that reduce the evaluation fees for most prescription medicines by up to 5 per cent as part of the restructuring plan have also been made.

This item also increases the annual licence charge for secondary sites used in the manufacture of human blood and blood components by 30 per cent. This increase ensures the full recovery of the cost of monitoring the safety and quality of blood manufacture following a significant rationalisation of blood collection facilities

Subregulation 45A(1) of the Therapeutic Goods Regulations 1990 currently provides that the annual charges payable for a licence payable by a person are reduced if wholesale turnover of therapeutic goods is less than $65,000.  Regulations that increase the low turnover threshold by 1.6 per cent, to $66,000, have also been made.  The note to subregulation 3(3) of the Principal Regulations currently refers to the $65,000 threshold.  This item amends the note to subregulation 3(3) so that it refers to the new $66,000 threshold.