TGA Fee rise to exclude cost of regulatory reforms
11th May 16
The Australian Government has approved the rate of increase for the fees and charges levied by the Therapeutic Goods Administration (TGA) at 2.25% for the coming financial year, an amount that will require the agency to meet the cost of regulatory reform without additional funding from industry or government.
Key Issues For The Dental Industry —
The Therapeutic Goods Administration (TGA) is required to recover its costs for all activities that fall within the scope of the Therapeutic Goods Act (Cth) 1989, including the TGA's public health responsibilities. This requires it to collect substantial finding from the dental industry for the costs of placing an entry on the Australian Register of Therapeutic Goods (ARTG), maintaining ARTG entries and associated activities undertaken by the TGA.
To this end, a fee is charged for a service, such as a product evaluation, and the level is based on the cost of providing that service using an activity-based costing methodology. Similarly, charge is a form of tax imposed on the therapeutic products sector and is applied annually based on a 1 July to 30 June financial year. A list of charges can be found in the Therapeutic Goods (Charges) Regulations (Cth) 1990 as ammended.
How fees are calculated —
The framework for calculating the TGA's fees is to take the composite value of the Consumer Price Index (CPI) and the Wage Price Index (WPI), as published by the Australian Bureau of Statistics (ABS), for September each year and this compsite figure is used to calculate the fees from 1 July the following year.
From time to time the relevant Minister may approve an additional charge to meet the costs associated with a particular administrative or regulatory issue before the TGA.
Using the above-mentioned formula, the TGA fees will increase by 2.25% for FY2016-17 as the CPI was 2.2% and the WPI was 2.3%. This change was approved by the Minister in early May 2016.
The current formula presents particular challenges for the TGA as wages are around 63% of its operating costs thus the fee increase doesn't necessarily provide the additional funding required for the TGA to operate without finding operational efficiencies.
An increase in TGA fees increases compliance costs for the dental industry are unwelcome at any time; however, the industry sentiment with respect to these changes may be ameliorated due to the fact that costs associated with implementing the recommendations of the Expert Review of Medicines and Medical Device Regulation. The cost to the TGA of designing and implementing the recommendations from this review is estimated at $20.4 million and the Minister has decided that this cost will be fully funded from TGA's reserves, rather than any additional increase to fees and charges.
The TGA has advised that, in accordance with the prevailing legislative framework, its ongoing costs will continue to be funded through the cost-recover model and that the TGA will consult with ADIA over the next two years prior to setting fees and charges, in particular for new regulatory services.
Currency of Information —
This update was issued on 11 May 2016 and please note that changes in circumstances after the publication of material or information may impact upon its accuracy and also change regulatory compliance obligations.
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