Industry bodies raise concerns over regulator’s double-digit fee increases

The Therapeutic Goods Administration’s (TGA) operations are mostly funded (~92%) through the fees and charges it collects from the industry for its regulatory activities, the highest when compared to the EMA in Europe (89%), MHRA in the UK (86%) FDA in the US (65%) and HC in Canada (50%).

The regulator has proposed double-digit increases to its annual charges to cover inflation and recoup investment in its digital transformation and move to purpose-built facilities.

In a public consultation, the TGA outlined plans to apply a 5.2% indexation factor to fees and charges to cover most of its rising costs while still incentivising the agency to find savings and efficiencies. However, this increase is not the only change.

The government provided funding of $23.3 million for the TGA to complete digital and business transformation and full implementation of the UDI system to expand its scope to include medium and high-risk medical devices. While this money will be drawn from the TGA Special Account cash reserves, the government requires this amount to be cost recovered from industry over five years commencing from 1 January 2024, except for the cost recovery of the UDI system which will commence from 1 July 2024.

TGA’s plan proved controversial when the regulator met with industry groups including Medicines Australia, Generic and Biosimilar Medicines Association (GBMA), Medical Technology Association of Australia (MTAA), AusBiotech, Pathology Technology Australia and MTP Connect.

The regulator said “While most peak bodies were supportive to annual indexation increase which is based on an established formula, concerns were raised in respect of additional annual charge increases to cost recover $23.7 million investment in TGA’s digital and business systems given that the money was drawn from the TGA Special Account cash reserve paid by industry in the past. However, it was explained that this decision was a decision of government that had already been made.”

Additionally, last year the TGA relocated to purpose-built facilities in Fairbairn, ACT. The new laboratory building has a flexible and modern design that allows for reconfiguration and efficiency in the laboratory spaces which facilitates more efficient workflows for testing. It also has enhanced security for test samples improving the handling and tracking of products that come to the TGA for analysis.

According to the TGA “There was also significant opposition to an increase in charges to cover a loan made to the Department to support the move of the TGA laboratory to the Fairbairn site. Industry emphasised that this impact on industry charges had not been raised with them prior to the Department’s decision to move to the new site.”

After factoring in the above, the TGA has calculated that the annual charges for medicines and medical devices will increase by 11.56% and 12.33%, respectively. The increase for other annual charges, such as manufacturing licenses is 11.1%.

The TGA now is seeking broader feedback from industry. The consultation, which will close on 20 March, will enable TGA to gather input before it seeks approval for the fees and charges from the Minister for Health and Aged Care. Subject to Ministerial approval, it is expected that the amendment regulation to give effect to the new fees and charges will be submitted for consideration by the Federal Executive Council in May/June 2023, with new changes to fees and charges to be implemented from 1 July 2023.

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