Mark Coulton (Parkes, National Party, Shadow Parliamentary Secretary for Ageing and the Voluntary Sector) Share this | Link to this | Hansard source

It is widely accepted in the international pharmaceutical industry that Australia has one of the best systems for the delivery of drugs to the community at a high level of safety and efficacy and also at a realistic price. Australians, quite rightly, have an expectation that therapeutic products available to them are safe and of high quality. This, in fact, is enshrined in legislation. The Therapeutics Goods Act 1989, which came into effect in 1991, provides a national framework for the regulation of therapeutic products supplied, sold in or exported from Australia. Up until 1938, drugs abounded in this country and, as there was no regulation, the community had to wade their way through some fairly outrageous claims. All this was set to change with the introduction of two bills: the Therapeutic Substances Act 1937 and the Therapeutic Substances Act 1938. However, due to the disruption of the war years, they were not proclaimed until the end of November 1938. These acts stated that from that time therapeutic goods should comply with the following basic requirements:

(a)

they shall be true to a determined standard, that standard having an official and legal status;

(b)

they shall be free from contaminations, more especially from bacterial contamination;

(c)

they must be properly and safely packed;

(d)

they must be accurately labelled as to dosage.

The issue of safety and efficacy of therapeutic goods was then handed over to the NHMRC to discuss. The implementation of its subsequent recommendations was then passed to the states. Not unexpectedly, the implementation left much to be desired. On 25 November 1953 the Senate heard a report on a recent examination of drugs supplied under the medical benefits scheme. Of 10 drugs subjected to 100 separate tests, seven contained substandard products. Of the 110 individual products tested, 41 per cent failed to meet official requirements. The regulation of therapeutic goods started to be taken seriously with the introduction of the Therapeutic Goods Act 1966, which basically sought to establish standards for therapeutic goods.

In 1974 a restructure of the Department of Health created a therapeutics division consisting of the pharmaceutical benefits branch and the therapeutic goods branch. This division went through a gradual metamorphosis into today’s Therapeutic Goods Administration—or TGA—which came into being in 1986. Today the TGA is a regulatory authority which oversees medicines and medical devices in this country. Most products for which therapeutic claims are made must be assessed by the TGA. The TGA then enters these products onto the Australian Register of Therapeutic Goods, or ARTG, before they can be marketed in this country. The ARTG records all products approved for marketing, the ingredients contained in each product and the therapeutic claims being made about them.

The TGA is generally considered a good regulator. You could say that a good regulator strikes a good balance between the adequate protection of consumers and not placing undue restriction on the industry. In fact, good regulation enhances customer confidence and encourages innovation and trade and therefore can be a great benefit to the industry. I believe the TGA in this country strikes such a balance. Australia has a high-risk system where the level of regulatory control of a therapeutic product is based on the relative safety of the product and the seriousness of the condition for which it is used. Therefore, entries made by the TGA onto the ARTG are classified as either ‘registered’ or ‘listed’ or, in the case of medical devices, ‘included’.

For all medicines which require registration, the TGA conducts a comprehensive evaluation of the data submitted in support of an application. They can ensure that the quality, safety and efficacy of the product is of an acceptable standard. For each product submitted to the TGA for approval, extensive toxicology, pharmaceutical chemistry and clinical data are required. On the other hand, non-prescription complementary medicines are subject to less rigorous evaluation and have lesser data requirements. That is because these products are only meant to be used to treat minor self-limiting conditions. So the TGA focuses more on quality and safety than on effectiveness. The TGA also takes into account the fact that comprehensive scientific data may not be available for herbal and alternative medicines but that lower level evidence may be available to demonstrate a long history of safe use. These products are ‘listed’ rather than ‘registered’ on the ARTG.

Medical devices are classified into one of five risk classes based upon the manufacturers’ intended use, the level of risk and their degree of invasiveness. All are set minimum requirements for safety, quality and performance and are then ‘included’ in the ARTG. Compliance with these minimum requirements may be demonstrated through meeting internationally accepted standards or assessment of design dossiers.

The TGA conducts a post-market monitoring and compliance program. All of these processes are costly. The TGA’s chief source of revenue is through the collection of annual charges, evaluation and assessment fees and licence fees. With the implementation of the act in April 1991, the then government announced that the TGA would recover 50 per cent of its operating costs through fees and charges collected from the therapeutic goods industry. Following the 1996 election, and as part of the budget deficit reduction strategy, the coalition government announced it would increase the level of cost recovery for TGA activities to 75 per cent, to be phased in over the following three financial years, commencing 1996-97, and subsequently to full cost recovery in 1998-99. Since that time there has been a marked improvement in efficiency by the TGA, including shorter evaluation times, the pursuit of a mutual recognition agreement with the European Union on medical devices and medicines, and a system through which Australia could receive automatic approval where goods have been assessed by recognised bodies. The TGA now has a mutual recognition agreement on medicines with Singapore. There have also been substantial reductions in approval times for listed medicines through the introduction of the electronic lodgement facility and the medical devices electronic application lodgement system.

In December 2002 the government released guidelines for cost recovery by government agencies in response to Productivity Commission report No. 15, Cost recovery by government agencies. The guidelines require significant cost recovery agencies such as the TGA to comply with broad cost recovery principles and to undertake a review of existing cost recovery arrangements at least every five years. The TGA’s cost recovery arrangements were reviewed in May 2005 and they were found to be consistent with the guidelines. The TGA meets annually with peak industry representatives to discuss the TGA’s schedule of fees and charges for the forthcoming financial year. The TGA industry consultative committee met on 12 June this year and, as usual, there were few hiccups.

The Therapeutic Goods Legislation Amendment (Annual Charges) Bill 2008 makes a number of principal amendments to the Therapeutic Goods Act 1989 and the Therapeutic Goods (Charges) Act 1989, which are set out in schedule 1. The bill deals with charges and fees paid by companies registering a therapeutic good, mainly a drug, to the Therapeutic Goods Administration. The bill states that annual charges paid by manufacturers of therapeutic drugs—for example, drug companies—will be payable on the same day. At the moment that date is set as the date of entry of the product in the ARTG or the date the manufacturing licence was granted and then the anniversary of that date annually. Under the amendment, there will be a uniform date across the board. Nominally that will be 1 October. This reflects more accurately how the process is done in practice.

Key industry groups in this area are generally accepting of the cost recovery system when applied to the TGA. However, in return they do expect ongoing improvements in efficiency and effectiveness. According to the Department of Health and Ageing’s annual report 2006-07, the TGA had net assets of $13,975,000. Given that this bill is a cost recovery bill only, we urge the TGA to use some of its ample resources wisely to process reform. With the introduction of this bill, the TGA charges can now be set at nil, so that allows some flexibility within the system. Both the Therapeutic Goods (Charges) Act and the Therapeutic Goods Act contain provisions for the reduction or waiver of annual charges. This bill repeals the provisions from the Therapeutic Goods (Charges) Act and inserts them into the Therapeutic Goods Act instead.

Another subsection deals with therapeutic goods with low value and low turnover. These therapeutic goods must have such a low value or turnover that the fees are greater than 6.8 per cent of the wholesale turnover of the good for the 2006-07 financial year or have no turnover in 2006-07. Until now an application for low value, low turnover did not need to be supported by any evidence. The amendment states that the regulations require a group that has applied for or that has been given an annual charge exemption on the basis of low turnover must now provide a supporting statement. That statement must be by an approved third party such as a certified accountant or an auditor. The statement has to specify whether the person’s turnover of the therapeutic goods for the financial year concerned is actually of low value. The TGA is an important institution in this country. This bill does not impair the proceedings of the TGA and we will support this bill.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

As the previous speaker stated, the Therapeutic Goods Legislation Amendment (Annual Charges) Bill 2008 is a noncontroversial piece of legislation, and we would expect the opposition to support it because it makes for better operation of the Therapeutic Goods Act. This bill amends the Therapeutic Goods Act 1989 to make a number of changes to the existing regime for the imposition and collection of annual charges. It also provides transparency and clarity in the granting of exemptions from liability to pay annual charges due to low turnover of therapeutic goods and it makes other technical and consequential changes.

I think it is really important to mention the need for transparency and clarity. The previous government did not always have that as one of its goals, but one of our goals has always been to ensure that transparency exists. The Therapeutic Goods Act requires that a therapeutic good must be registered, listed or included on the Australian Register of Therapeutic Goods before it can be lawfully imported into, manufactured in, supplied in or exported from Australia. The Therapeutic Goods Act generally requires a person to obtain a manufacturing licence to manufacture goods in Australia. An annual charge is payable in respect of the registration, listing or inclusion of therapeutic goods on the register and in respect of manufacturing licences under the Therapeutic Goods Act. Annual charges are considered to be taxes and, as such, are imposed by a separate taxing act.

The new requirements provided in this legislation will come into effect on 1 July next year. As you can see, the government is giving adequate time for the legislation to pass through the House and go through all stages before it comes into effect. It is not a last minute approach to the introduction of the legislation. The government takes all legislation very seriously.

It is important to note that there are currently around 50,000 registrations, listings and inclusions in the register that are liable for annual charges every year. In addition, a significant number of new entries are made each and every year. The TGA is unable to predict the dates when entries are to be made in the register for a particular therapeutic good and consequently issue the invoice for the annual charges prior to the entry. Therefore, it is a difficult task for the TGA to issue a separate invoice for each entry and seek payment for the annual charge on the date of regulatory approval in the first financial year and on the anniversary in subsequent years. Some sponsors have a significant number of registered, listed or included goods on the register, and payment of the annual charges for these sponsors would also be a difficult task if they had to pay for individual goods on the basis of commencement dates and subsequent anniversaries. Therefore, the bill includes amendments for the fixing of a uniform date for the payment of annual charges. This makes for the smooth running of the register.

Sponsors with low turnovers of therapeutic goods are currently entitled to an exemption from the liability to pay annual charges in relation to those goods. Under the current provisions, the TGA does not have the power to seek evidence verifying the eligibility of a person applying for, or who has been granted, the exemption from paying the annual fee. The Australian National Audit Office has raised some concerns about the lack of the TGA’s ability to review the eligibility of sponsors applying for or who have been granted exemptions.

Amendments are also required to ensure that the Therapeutic Goods Act 1989 supports regulations prescribing all the necessary requirements relating to the lodgement. The amendments in this bill address those concerns and will provide greater clarity, transparency and accountability in the processing and granting of this exemption. That is the issue that I think is very important—that this transparency, clarity and accountability will exist. It will get rid of the grey areas and ensure that the TG Act and the register operate in the way that they are meant to.

Kate Ellis (Adelaide, Australian Labor Party, Minister for Youth and Sport) Share this | Link to this | Hansard source

I would like to thank the members who have taken part in the debate on the Therapeutic Goods Legislation Amendment (Annual Charges) Bill 2008. As the second reading explained, this bill amends the Therapeutic Goods Act 1989 and the Therapeutic Goods (Charges) Act 1989, relating to the collection and imposition of annual charges and to provide more transparency and accountability in the granting of exemptions from liability to pay annual charges because of low-value turnover of therapeutic goods.

The amendments allowing for the setting of a uniform date for payment of annual charges will provide administrative efficiencies for the Therapeutic Goods Administration and stakeholders. These amendments will, for example, allow sponsors of therapeutic goods that are entered in the Australian Register of Therapeutic Goods to pay all annual charges on one particular date instead of on different dates within the financial year that are based on the anniversary dates of the entry of those goods.

The bill also introduces amendments to the current exemption from liability to pay annual charges because of low-value turnover of therapeutic goods. The amendments will require persons applying for or who have already been granted an exemption to provide evidence certified by an approved person to support their eligibility for the exemption. The bill also provides for the making of regulations that will set out additional details on the processing, granting and cancellation of the exemption. These amendments, therefore, will provide greater clarity, transparency and accountability in that processing and granting of an exemption. In addition to other technical and consequential amendments, the bill also makes it clear that an annual charge can be set at nil amounts. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.