Technical Alert: Consultation: TGA Fees and Charges Proposal 2024-25

The TGA is conducting a public consultation on the TGA’s proposed indexation increase to fees and charges for the 2024-25 financial year by an indexation factor of 4.7%. However additional percentage increases are proposed on fees and charges for manufacturing licenses, digital transformation and business systems enhancements; and requests made under subsection 28(3A) (varying conditions of listing and registration of medicines conditions). The proposals are summarised below: 

 Indexation Based Increase (preferred option) Cost Recovery Digital Transformation and others UDI Cost Recovery Total Proposed Increase 
All TGA Fees 4.70%   4.70% 
Medicines and Biologicals annual charges  4.70% 2.01%  6.71% 
Medical Devices Class II and above, including implantables 4.70% 2.68% 1.75% 9.13% 
Medical Devices Class I, Im and Is and all classes of IVD devices 4.70% 2.68%  7.38% 
Others i.e., manufacturing licences and Other Therapeutic Goods 4.70% 1.60%  6.30% 

CMA and industry representative groups were initially advised on the proposed changes to fees and charges in December 2023, as part of bilateral meetings with the TGA. The TGA cited a various array of cost pressures resulting in their preferred scenario of annual increase to charges, including anticipated increase in salary, contractor, and related costs, depreciation of current digital transformation software projects, and inflation based increase to corporate costs. 

The TGA are seeking feedback on the potential impact/s of the proposed options, prior to seeking approval from the Government for any changes. 

The TGA have stated they prefer consolidated industry feedback through representative peak bodies such as CMA, so that the overall industry view can also be considered before finalising next financial year’s fees and charges.  

CMA is developing a position based on knowledge of TGA regulatory activities and performance related to complementary medicines, and Committee and member feedback. 

We welcome member comments particularly of any operational, regulatory, supply chain or financial challenges currently being faced by businesses. Members are asked to provide any feedback to the consultation to CMA by Mon 19 February 2024 via technical@cmaustralia.org.au 

The consultation paper can be viewed in full here and companies may also comment individually on the consultation by the closing date of Friday 23 February 2024. Subject to Ministerial approval, the changes to fees and charges would be effective from 1 July 2024. 

  1. Indexation of fees and charges  

The TGA propose to increase all fees and charges by an indexation factor of 4.7%. The indexation factor for 2024-25, based on the previously used formulae of the average (composite indexation) of the CPI and the WPI, will total 4.7% due to the following factors:  

  1. 50% of cost price index Sep 2022 to Sep 2023 of 5.4% – 2.7%; and 
  1. 50% of wage price index Sep 2022 to Sep 2023 of 4.0% – 2.0% 
  1. Digital transformation annual charges 

The October 2022 Budget provided approval to drawn down from TGA reserves, funding of $23.3 million over the two financial years, 2022-23 and 2023-24, to complete digital and business transformation and full implementation of the UDI system to expand its scope to include medium and high-risk devices. While this money has been drawn from the TGA Special Account cash reserves, the Budget decision requires this amount to be cost recovered from industry over five years commencing from 1 January 2024 (six financial years), except for the cost recovery of the UDI system which will commence from 1 July 2024. 

In the 2023-24 financial year the increase to annual charges (other than for the UDI system) was pro-rated for the 6-month period (50% of a full year attribution). A full year attribution of cost recovery, including for the UDI system, will commence in 2024-25.  

The TGA provide that increases required for cost recovery of digital transformation (and UDI) have been adjusted for indexation and other increases in 2023-24 which resulted in lower percentage increases than previously foreshadowed. 

  1. Fees for requests made under subsection 28(3A) 

There is currently no fee prescribed in the regulations for requests made under subsection 28(3A) of the Act for varying conditions of listing and registration of medicines conditions. Based on cost estimates, the TGA is proposing to implement the following application fees with effect from 1 July 2024:  

  • Prescription medicine $2,750 ($2,880 if the proposed indexation is approved); 
  • Other medicines $1,710 (($1,790 if the proposed indexation is approved); and 
  • Biologicals $1,920 (($2,010 if the proposed indexation is approved). 

CMA notes that variations to conditions of listing are extremely rare occurrences for listed complementary medicines. 

  1. Proposed changes to some medical device fees 

There will be an increase to Medical Devices Class II and above (including implantables) annual charges for the UDI system, and changes to certain medical device fees and charges. More detail on all of the above charges is available in the TGA’s full consultation paper.  

Cost Recovery Framework 

The TGA operates under the Australian Government Charging Framework – 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. The TGA Cost Recovery objective is to ‘Have a sustainable funding model that minimises industry burden but remains compliant with the Framework.’ 

Government funds essential public good activities through annual appropriation where the TGA is required by legislation or government policy decisions to provide fee-free service, services or undertake regulatory activities where cost recovery is not appropriate. These activities include management of consumer and healthcare professionals’ enquiries, public education, assistance program for small to medium enterprises (SMEs) and development of emerging therapeutics and devices, nicotine vaping products regulatory reform including compliance and enforcement, management of medicine and device shortages, compliance and enforcement for illegal products, registration of orphan drugs free of charge, Special Access and Authorised Prescriber Schemes Medicine and Chemical Scheduling. 

The 2023-24 federal Budget provided $61 million over four years for TGA’s public good activities representing that 85% of TGA budget is sourced from industry cost recovery (down from 93% in 21/22). Cost recovery of some of the comparable overseas regulators are: • European Medicines Agency 90% • UK Medicines and Healthcare products Regulatory Agency 86% • Swissmedic, Swiss Agency for Therapeutic Products 84% • Health Canada 43%. 

Impact analysis  

The proposed 4.7% increase to all TGA fees and charges are within the parameters of the agreed carve-out between the Department and the Office of Impact Analysis. 

The TGA state that increases to annual charges for digital transformation and UDI cost recovery are in accordance with the October 2022 Budget decision in which the Government asked the Department to raise $23.7 million over five years from industry through the TGA cost recovery. The regulatory impact of this decision was captured through the 2022-23 Budget process. 

The consultation discusses that other changes discussed in this paper are not likely to change the regulatory burden on stakeholders. Therefore, the TGA is not proposing to do any further impact analysis to inform the 2024-25 changes to fees and charges.  

Future major review 

A broader future review of the TGA cost recovery arrangements is being planned by the TGA, to meet government requirement, ensure cost recovery for each sector is at appropriate level, review of bundling for prescription medicine submissions, streamline and simplify fee structure following digital transformation such as notification rather than application fee for low-risk variation to ARTG entries, align inspection hourly charges for medicines and devices. 

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