Historical document
COST RECOVERY IMPACT STATEMENT
REGULATION OF BIOLOGICALS (HUMAN CELL AND TISSUE
THERAPY PRODUCTS)
February 2011
Table of Contents
1.
Overview .......................................................................................................................... 5
1.1
Background .................................................................................................................. 5
1.2
What are human cell and tissues therapies (HCTs)? ................................................... 6
1.3
The HCT industry in Australia .................................................................................... 6
1.4
The current regulatory requirements for HCTs ........................................................... 7
1.5
How are HCTs currently regulated by other countries ................................................ 8
1.6
What is current world supply of HCTs? ...................................................................... 9
1.7
Problem with the current system................................................................................ 10
1.8
The New Biologicals Regulatory System .................................................................. 10
1.9
The New Biologicals Regulatory System – Under ANZTPA ................................... 11
1.10 The New Biologicals Regulatory System – Australia only post ANZTPA ............... 13
1.10.1 Class 1 biological................................................................................................ 13
1.10.2 Class 2 biological................................................................................................ 13
1.10.3 Class 3 biological................................................................................................ 14
1.10.4 Class 4 biological................................................................................................ 14
2.
3.
Australian Government Cost Recovery Policy and Guidelines underpinning
biological cost recovery arrangements ........................................................................ 15
2.1
What is a significant cost recovery arrangement? ..................................................... 16
2.2
What is cost recovery ................................................................................................. 16
2.3
Why is cost recovery important? ............................................................................... 17
2.4
Registration and approval activities ........................................................................... 17
2.5
Adherence to Cost Recovery Guidelines ................................................................... 19
2.6
Economic efficiency .................................................................................................. 21
2.7
Design principles ....................................................................................................... 22
2.8
Operational principles ................................................................................................ 24
Design and Implementation ......................................................................................... 25
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
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3.1
Basis for charging ...................................................................................................... 25
3.2
What are the legal requirements for the imposition of charges? ............................... 26
4.
Costs to be included in charges .................................................................................... 27
4.1
Costs for Biological Framework ................................................................................ 29
4.2
Salary Costs (including support and corporate costs) ................................................ 29
4.3
Industry Information and Education .......................................................................... 30
4.4
Recommended fee for 2011-12 .................................................................................. 31
4.4.1
Notifications for Class I/II/III/IV biological products ........................................ 31
4.4.2
Variations to Class II biological products .......................................................... 32
4.4.3
Minor Variations to Class III & IV biological products ..................................... 32
4.4.4
Major Variations to Class III & IV biological products ..................................... 32
4.5
Transition arrangements............................................................................................. 32
4.6
5 Year Summary of Revenue and Costs .................................................................... 33
4.7
Summary of Revenue and Costs by Class ................................................................. 33
4.7.1
Class I ................................................................................................................. 33
4.7.2
Class II ................................................................................................................ 34
4.7.3
Class III............................................................................................................... 35
4.7.4
Class IV .............................................................................................................. 36
4.7.5
CTN and CTX Trials .......................................................................................... 37
4.7.6
Overall Summary ................................................................................................ 37
4.8
Year over year review of costs and cost recovery ..................................................... 38
4.9
Non-Profit Hospital Supply Unit Exemption ............................................................. 38
5.
Ongoing monitoring ...................................................................................................... 39
5.1
Monitoring mechanisms............................................................................................. 39
5.2
Consultation with stakeholders .................................................................................. 39
5.2.1
Initial consultations during the development of ANZTPA (2002 and 2003) ..... 39
5.2.2
Expert Advisory Group ...................................................................................... 40
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
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5.2.3
Further stakeholder consultations (2004 - 2006) ................................................ 40
5.2.4
Post-ANZTPA consultations .............................................................................. 41
6.
Periodic Review ............................................................................................................. 42
7.
Certification ................................................................................................................... 42
Attachment A – HCT Facilities in Australia as at December 2008 ...................................... 43
Attachment B – Glossary of Terms ...................................................................................... 44
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
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1. Overview
1.1
Background
The Australian community has an expectation that therapeutic products in the marketplace are safe
and of high quality, to a level equal to that of countries with comparable standards. The TGA is
one of the world’s front line regulators undertaking rigorous scientific and risk assessments of
therapeutic products to ensure safety, quality and efficacy, without undue impact on the timely
supply of essential products to consumers and patients.
In July 2002, the Australian Health Ministers Conference (AHMC) recommended that the
Therapeutic Goods Administration (TGA) introduce a national regulatory framework for human
tissues and emerging biological therapies.
Consistent with this recommendation, the TGA began developing a national regulatory framework
for human cell and tissue therapies (HCTs) in consultation with stakeholders and within the
context of the development of the Australia New Zealand Therapeutic Products Authority
(ANZTPA). During the development of the joint agency a number of options for HCTs were
considered and reflected in discussion papers and a draft Regulation Impact Statement (RIS).
Comments on that draft RIS received from stakeholders were incorporated and the RIS was then
approved by the then Office of Regulation Review in 2004 (ORR reference 5066).
However, in July 2007 the development of the joint agency was suspended due to lack of support
for the enabling bill in the New Zealand Parliament.
In August 2008, the Parliamentary Secretary for Health, Senator Jan McLucas, announced that the
new government would proceed with a package of regulatory reforms, including several which
were held over from the ANZTPA proposal. One of these is the new regulatory framework for
HCTs (now renamed the Biologicals framework).
In 2008 the original RIS was updated to include the current regulatory and HCT environment and
further consultations with stakeholders undertaken. The need to improve regulation of the
growing therapeutics area of HCTs remains and the updated RIS considers options to achieve this
in an Australia-only context. The amended RIS was approved by the OBPR in February 2009
(OBPR reference 5066).
The Therapeutic Goods Amendment (2009 Measures No. 3) Bill 2009 (the Bill), to amend the
Therapeutic Goods Act 1989 (the TG Act), received Royal Assent on 31 May 2010. Note 3 of the
TG Act reflects amendments in the Bill to create a new regulatory framework for the regulation of
biologicals as a separate therapeutic goods group. The TGA now has until 31 May 2011 to
implement the framework.
As the TGA recovers the full cost of its regulatory activities there will be regulatory costs for
sponsors and manufacturers of HCTs with the implementation of this new system. While the
TGA currently regulates some HCTs (see below) the introduction of a comprehensive model for
the regulation for all HCTs gives rise to a significant change to existing cost recovery
arrangements undertaken by the TGA. Accordingly, a Cost Recovery Impact Statement is required
to be prepared in accordance with Australian Government Cost Recovery Guidelines (updated in
July 2005).
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1.2
What are human cell and tissues therapies (HCTs)?
Tissue therapy involves the use of tissues as therapeutic goods, while cell therapy involves the use
of isolated living cells either as therapeutic goods or as replacements for cells that are defective or
deficient in particular disorders.
The distinction between cell therapy and tissue therapy may sometimes be blurred. A therapy may
make use of living cells organised as tissues to grow or differentiate to treat a condition, or tissues
may be purified to extract certain cells that may be used for therapeutic benefit.
Some examples of tissue therapies currently being used are:
 skin replacement after severe burns;
 transplantation of heart, kidney, liver, lung or pancreas;
 bone, tendons and ligaments to repair injuries;
 heart valves to replace defective heart valves; and
 corneas to restore eyesight.
Some examples of cell therapies currently being used, or currently under development, are:



1.3
chondrocytes used for cartilage regeneration;
isolated pancreatic islet cells for the treatment of diabetes; and
mesenchymal progenitor cells for the treatment of musculoskeletal defects and in a range of
other clinical applications such as cardiovascular repair.
The HCT industry in Australia
HCTs have primarily been “manufactured” by not-for-profit tissue banks (who have traditionally
processed and stored tissues for future use) and by hospitals (who develop tissue therapies in
house for use in particular patients). However, with recent advances in cell and tissue technology,
there appears to be increasing involvement of the private sector in the manufacture of HCTs and
the creation of small start-up companies and clinics within larger hospitals. During consultations,
on the draft RIS during the development of ANZTPA, it was also noted that medical devices
manufacturers may, in the future, incorporate HCTs into the manufacture of medical devices.
As the TGA does not currently regulate all HCTs (refer discussion below), it is not possible to
identify all organisations involved in the manufacture of HCTs. However, the TGA is aware of a
number of companies (including small start-up companies) and organisations undertaking such
work.
The table at Attachment A was prepared to inform the amended RIS that was approved by OBPR
in February 2009. The table has been based on information available as at December 2008
regarding the organisations within each jurisdiction that are believed to be undertaking work
involving HCTs (or who are currently subject to TGA regulation). The information does not
include any HCTs manufactured overseas that are currently regulated (as therapeutic devices) or
may seek inclusion on the ARTG.
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1.4
The current regulatory requirements for HCTs
The TG Act currently provides that all devices of human, animal, bacterial or recombinant origin
for use in, or on, the body of a person, must be included on the Australian Register of Therapeutic
Goods (ARTG). This means that they must have pre-market approval from the TGA and that the
manufacturer of such devices must be licensed by the TGA.
However, there are a number of exemptions to this requirement:

whole organs for transplant are excluded from regulation;

human tissue for implantation in the human body that is obtained, stored and supplied without
any deliberate alteration to its biological or mechanical properties is exempt from the
requirements for entry on the ARTG provided that the Australian institution complies with the
current Code of Good Manufacturing Practice – Human Blood and Tissues (cGMP for Human
Blood and Tissues). This effectively means that banked tissue (such as heart valves, skin,
corneas and bone) is exempt from inclusion on the ARTG provided that the Australian tissue
bank complies with cGMP for Human Blood and Tissues;

medicines (other than medicines for gene therapy) that are dispensed, or extemporaneously
compounded, for a particular person for therapeutic application to that person are exempt from
the requirements for entry on the ARTG. Similarly those people that have traditionally
developed such medicines are also exempt from the TGA’s requirements for licensing of
manufacturers – for example:
-
medical practitioners and health care workers are exempt from licensing requirements (and
therefore compliance with the cGMP) provided that the “manufacture” of the HCT is for a
patient under his or her care (and the medical practitioner himself/herself is developing the
HCT); and
-
biomedical engineers, radiochemists and pharmacists in public hospitals are also exempt
from licensing requirements provided that the goods produced are for supply in hospitals
or public institutions in the same state or territory.
The TGA has, to date, interpreted the legislation to require that:

tissue banks are licensed by the TGA and demonstrate compliance with cGMP for Human
Blood and Tissues; and

all people who are “manufacturing and supplying” human tissue or cellular therapies are
required to be licensed as manufacturers and the HCT entered on the ARTG. There are,
however, a number of exemptions or exceptions to this requirement:
-
if the tissue is an organ – excluded from the legislation;
-
if the tissue is reproductive tissue – excluded from the legislation;
-
if the HCT is custom made (or extemporaneously compounded) for a particular person –
no requirement for entering on ARTG;
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1.5
-
if the “manufacturer” is a medical practitioner, health care worker, pharmacist etc – no
requirement to be licensed;
-
if the HCT is for use in the treatment of a particular patient with special needs – patient
must be notified to the TGA and supply for the particular case approved (Special Access
Scheme - SAS) but no requirement for licensing or registration; and
-
if the HCT is for use in a clinical trial – schemes relating to clinical trials apply (either
CTX or CTN).
How are HCTs currently regulated by other countries
United States –The US Food and Drug Administration (FDA) regulates human cells and tissues
and cellular and tissue-based products (HCT/Ps) as biologics under Code of Federal Regulations
Title 21 Parts 1270 and 1271. Three Final Rules were published to broaden the scope of products
subject to regulation and to include more comprehensive requirements to prevent the introduction,
transmission and spread of communicable disease. The Rules require:

cell and tissue facilities to register and list their HCT/Ps with the FDA;

evaluation of donor eligibility through screening and testing to reduce the transmission of
infectious disease through tissue transplantation; and

Good Tissue Practice to be implemented.
The Final Rules apply to tissues recovered after 25 May 2005. The new regulatory approach was
implemented in a staged process.
Highly manipulated cell and tissue products, for example somatic cell and gene therapy, are
regulated more comprehensively, akin to a medicinal or Class III medical device product.
In the US, whole organ transplantation is regulated nationally through the National Organ
Transplant Act of 1984 and related Rules. The Act/Rules require, among other things, testing of
donors, keeping of records (that must be available for inspection) and training of surgeons and
physicians.
Europe – the European Commission and Parliament established a Directive (2004/23/EC) for
"setting standards of quality and safety for the donation, procurement, testing, processing, storage
and distribution of human tissues and cells". The Directive includes requirements that all tissue
establishments are accredited or licensed by a competent authority and that such tissue
establishments have quality systems in place. A Directive (2006/17/EC) sets out the technical
requirements for the implementation of Directive 2004/23/EC.
The Official Journal of the European Union published Regulation (EC) No 1394/2007 of the
European Parliament and of the Council (13 November 2007) on advanced therapy medicinal
products, amending previous Directives, and putting into effect measures to be taken to ensure the
safety, quality and efficacy of these often complex and innovative treatments.
Canada – Health Canada regulates HCTs via several routes depending on the nature/use of the
product. For example:
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
some cells and tissues, such as gene and somatic cell therapies are regulated as medicines
under Schedule D of the Food and Drugs Act;

semen is regulated under the Food and Drugs Act;

reproductive tissue is regulated under the Assisted Reproduction Act; and

other HCTs are regulated as Class IV medical devices.
A revised Directive issued in 2005 provides basic requirements for safety of cells and tissues
through prescribed National Standards. The Directive applies only to human organs and minimally
manipulated cells and tissues intended for use as homologous allografts, and that are not Class IV
medical devices, blood or blood derivatives or reproductive cells and tissues.
Health Canada has developed a new regulatory framework under the Food and Drugs Act, “The
safety of human cells, tissues and organs for transplantation regulations” (CTO Regulations 2007)
which specifies requirements for the establishment of licensing and processing quality standards
for cells, tissues and organs within the scope of the Directive.
1.6
What is current world supply of HCTs?
Overall world production and supply in HCTs is difficult to estimate. This is because either many
regulatory agencies (except the FDA) have not released their records to the public or the
regulation of HCTs is in the process of being implemented and comprehensive records do not yet
exist.
Therefore, reliable information is not currently available about the number of companies that
manufacture HCTs or the quantity of HCTs being supplied worldwide.
The limited information available from the US FDA records provides some indication of the
increase in use of HCTs in recent years. The data indicates that:

there were 1,325 establishments registered for HCTs (as at 04 May 2004); increasing to 1974
registered establishments by 27 October 2005 and more than 2,000 by June 2007;

for musculoskeletal tissues alone, the number of tissue transplants performed annually grew
from 350,000 in 1990 to greater than 1,000,000 in 2004, and 1.5 million by 2007;

the FDA conducted inspections on 111 tissue facilities in the period 1994-1997 (noting that
some 36 tissue banks had never been inspected by the FDA). The number of inspections of
HCT facilities per year doubled between 2001 (132) and 2005 (270), with a further increase
evident with inspection of 408 major human tissue recovery facilities in the fiscal year 2007.
Given recent advances in technologies enabling the production of an increased range of HCTs,
anecdotal information suggests that there has recently been an exponential increase in the HCTs
becoming available for use. This is reinforced by the actions of a number of governments who
have moved quickly to introduce specific regulation for this sector (rather than continuing to rely
on regulation of general application to medicines and devices).
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
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In particular, the March 2004 Directive of the European Parliament (on setting standards for
quality and safety in relation to human tissues and cells), expressly notes in Article 5 that “As
tissue and cell therapy is a field in which an intensive worldwide exchange is taking place, it is
desirable to have worldwide standards”. As agencies are proposing and publishing frameworks
and technical requirements, international fora are being convened to draw comment and inform
the implementation of the new requirements.
1.7
Problem with the current system
In Australia, the therapeutic goods framework is not currently well adapted to HCTs for a number
of reasons.

Lack of clarity. There is currently a complex web of provisions (including exemptions)
relating to HCTs. Stakeholders have expressed concern that this lack of clarity may lead to
unintentional non-compliance with regulatory obligations.

Absence of a comprehensive risk based classification system for HCTs. Currently some HCTs
are not regulated, some are regulated as medicines and some are regulated as therapeutic
devices. Further, the level of regulation applied does not adequately reflect the risks posed by
the various types of HCTs.

Lack of international harmonisation. The TGA strongly supports harmonisation of regulatory
requirements with other countries and is involved in a number of international initiatives
directed towards achieving greater harmonisation in the regulation of therapeutic goods. Over
the past few years, the U.S., U.K., Europe and Canada have all implemented (or are in the
process of developing and implementing) new systems for the regulation of HCTs that are risk
based, do not rely on the traditional model of regulation for medicines and devices and enable
the regulatory authorities to respond to changes in technology. The TGA’s current regulation
of HCTs is not consistent with the revised approaches being adopted by these other countries.

Problems regarding application of the cGMP for Medicinal Products to certain HCTs.
Currently HCTs that are regulated as medicines must comply with the cGMP for Medicinal
Products. However, the cGMP for Medicinal Products is not well adapted for dealing with the
unique circumstances surrounding HCTs (including for example, the lack of control over
starting materials and the fact that many HCTs are not batch produced but produced for a
particular patient using that patient’s cells).
1.8
The New Biologicals Regulatory System
The objectives of the proposed Biologicals Regulatory framework are:

to increase regulatory certainty for the use of biologicals as therapeutic goods;

to ensure a risk based approach to regulation and to ensure that the level of regulation applied
is commensurate with the level of risk posed by the particular product;

to ensure that there is flexibility in any new regulatory framework in order to respond to
changes in technology;

to increase the degree of international harmonisation; and
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
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
to ensure that any regulatory requirements, including any possible future harmonisation with
other countries, are appropriately adapted to the unique conditions surrounding the supply of
biologicals and do not impose an unnecessary burden on industry.
The New Biologicals Regulatory System – Under ANZTPA
1.9
In order to achieve the above objectives, the previous RIS approved during the development of the
Biologicals framework under ANZTPA outlined the framework detailed below as the preferred
option. HCTs will be regulated as a discrete class of therapeutic goods within a new “Biologicals”
framework.

there would be four classes of HCTs with varying levels of regulation applying, based on the
risk of the HCT;

the four classes would be as follows:

-
Class 1 - Organs that are for direct transfer from donor to recipient (other than part of a
single surgical procedure) and reproductive tissue (other than reproductive tissue that has
been manipulated such that it would fall in a higher class).
-
Class 2 - A tissue or cell that is stored maintained or preserved for future use and: is not
a Class 3 or 4 HCT; is not for direct transfer from donor to recipient; and is not
reproductive tissue.
-
Class 3 A cell or tissue processed in a manner that may alter the structure and
properties of the cell or tissue but does not purposefully alter the biological activity.
-
Class 4 A cell or tissue that is processed so that the biological properties are
deliberately manipulated or used for a purpose that is not the usual biological function of
the cell or tissue.
the level of regulation applied to each class would be as follows:
-
Class 1 - Applicants would attest to compliance with relevant Standards (based on
industry standards), through the submission to the TGA of a Declaration supporting
TGA issuance of a Class 1 HCT Licence.
-
Class 2 - Applicants would be required to demonstrate compliance with Manufacturing
Principles (which include the requirement to comply with the Australian cGMP for
Human Blood and Tissues) and compliance with relevant Standards for each tissue type
(resulting in the issuing of a Class 2 HCT licence).
-
Class 3 - Applicants will be required to demonstrate compliance with Manufacturing
Principles and demonstrate that the particular HCT is safe, efficacious and of high
quality through the submission of a Dossier (resulting in the issuing of a Class 3 HCT
licence).
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
Class 4 – As for Class 3 except that the Dossier would also need to contain relevant
clinical data and analysis.
Exemptions would apply to:
-
single surgical procedures performed on one patient (autologous transplant) and single
surgical procedures involving two patients (non-autologous or allotransplant) such as
organ donation from a live donor within the same facility as the transplant recipient; and
-
exceptional release/acceptance. The TGA would set standards that must be complied
with by organisations. Exceptional release/acceptance of an organ or cells is a
mechanism by which organisations can release/accept organs/cells when there are
justified non compliant organs and cells (for example, an organ or cells infected with
HCV).
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1.10 The New Biologicals Regulatory System – Australia only post ANZTPA
As noted, the above option was developed during the establishment of the now postponed
ANZTPA and is now to be taken forward in an Australia-only context. In light of this, minor
modifications are to be made to the option.
The Australian Government has identified that a new organ donation and transplantation authority
has been established and, therefore, regulation of organs is no longer required under the new
Biologicals framework. Similarly, a decision has been taken by the Government that, at this time,
un-manipulated reproductive tissues should not be subject to additional regulation as the ART
sector has been assessed as being managed coherently and consistently.
Therefore, organs and ART would be excluded from the framework, at least initially, as identified
in the “Report to the Australian Parliament As Prescribed under Section 47C of the Research
Involving Human Embryos Act 2002”
As the framework would now be developed within the existing Australian Therapeutic Goods Act
1989, the licensing arrangements would no longer apply and approved biologicals would instead
be included on the ARTG in the relevant class to which they were approved.
Since moving forward with consideration of the framework in an Australia-only context, minor
amendments have been made to reflect decisions taken by Government. Slight modification to the
classes of biologicals has also been proposed under this option in an Australian-only context, in
part reflecting also the exclusion of organs and ART. The revised classifications therefore, would
be:
1.10.1
Class 1 biological
Class 1 biological means a biological that is mentioned in Schedule 16 as a Class 1 biological.
It is not expected that there will be any Class 1 biologicals at the time of implementation of the
Biologicals Framework.
1.10.2
Class 2 biological
Class 2 biological means a biological that is:
a) processed using only one or more of the actions of minimal manipulation; and
b) for homologous use; or
c) mentioned in Schedule 16 as a Class 2 biological.
Class 2 biologicals include, for example, frozen and freeze dried bone, human heart valves,
cornea.
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1.10.3
Class 3 biological
Class 3 biological means a biological that is:
a) processed using a method in addition to any of the actions of minimal manipulation; and
b) processed in a way that does not change an inherent biochemical, physiological or
immunological property; or
c) mentioned in Schedule 16 as a Class 3 biological.
Class 3 biologicals include, for example, demineralised dried bone, cultured fibroblasts for skin
repair, chondrocytes for cartilage repair.
1.10.4
Class 4 biological
Class 4 biological means a biological that is:
a) processed using a method in addition to any of the actions of minimal manipulation; and
b) processed in a way that changes an inherent biochemical, physiological or immunological
property; or
c) mentioned in Schedule 16 as a Class 4 biological.
Class 4 biologicals include, for example, genetically modified cells.
The level of regulation applied to each of the above would be the same as previously detailed,
noting that successful applications would result in inclusion on the ARTG rather than a licence.
The exemption category for single surgical procedures would remain the same and noting the
framework would not apply to organ donation/transplant. The exceptional release/acceptance
exemption would be modified slightly to reflect that it would provide for ‘tissues or cells’ rather
than ‘organs or cells’ to reflect the decision not to include organs in the framework.
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2. Australian Government Cost Recovery Policy and
Guidelines underpinning biological cost recovery
arrangements
In December 2002 the Australian Government adopted a formal cost recovery policy to improve
the consistency, transparency and accountability of Commonwealth cost recovery arrangements
and to promote the efficient allocation of resources.
These guidelines apply to all Financial Management and Accountability Act 1997 (FMA Act)
agencies and those Commonwealth Authorities and Companies Act 1997 (CAC Act) bodies—
collectively referred to as ‘agencies’ for the purposes of these guidelines—that have been notified
of the cost recovery policy under sections 28 or 43 of the CAC Act.
While all cost recovery arrangements must comply with the cost recovery policy and these
guidelines, only significant arrangements need to document compliance with the policy through a
Cost Recovery Impact Statement (CRIS).
The TGA recovers the full cost of its regulatory activities within the scope of the Act through fees
and charges for services provided to product sponsors and manufacturers. Fees and charges are
prescribed in regulations made under the Therapeutic Goods Act 1989 and the Therapeutic Goods
(Charges) Act 1990.
100% of the TGA costs from industry were provided in the 1997-98 Budget under Phased
Increase in Industry Contribution for the Regulation of Therapeutic Goods.
In 2005 the TGA engaged consultants to work with TGA officers to develop a fees & charges
model for the new regulatory system for biologicals. The biological fees and charges model was
developed in close consultation with industry in line with the Australian Government’s cost
recovery policy. The regulatory model was designed to reflect the risks of biologicals to
individual and public health and build on the infrastructure and processes already developed by
the TGA for the regulation of other groups of therapeutic goods.
The costing model provides an estimate of the total cost, including overheads, based on levels of
regulatory activity and the fees required to recover these costs from the regulation of biologicals
on an annual basis over a five year period. The initial model was developed for introduction of the
proposed biological regulatory framework from 1 July 2007, as part of the Trans Tasman joint
legislative framework, but was delayed due to delays in development of ANZTPA.
The model was updated in October 2010 to take into account anticipated volumes, revised costs
and other changes necessary to ensure adequate cost recovery.
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2.1
What is a significant cost recovery arrangement?
To determine whether a cost recovery arrangement is considered ‘significant’, both the revenue
generated, and the impact of cost recovery on stakeholders, needs to be taken into account.
A significant cost recovery arrangement is one where:

an agency’s total cost recovery receipts equal $5 million or more per annum—in this case every
cost recovery arrangement within the agency is considered, in the first instance, to be
significant, regardless of individual activity totals, or

an agency’s cost recovery receipts are below $5 million per annum but stakeholders are likely
to be materially affected by the cost recovery initiative, or

Ministers determine the cost recovery arrangement to be significant on a case-by-case basis.
A CRIS should be prepared for all significant cost recovery arrangements.
The cost recovery guidelines must be applied to review cost recovery activities:

under an agreed schedule of reviews announced by the Australian Government, or

whenever there is a change to the cost recovery arrangements, or

where new cost recovery arrangements are to be introduced.
2.2
What is cost recovery
Cost recovery is the recovery of some or all of the costs of a particular activity. Australian
Government cost recovery charges fall into two broad categories:

Fees for goods and services, and

Cost recovery taxes (primarily levies, but also excises and customs duties).
Cost recovery is different to general taxation. Some levies or taxes are used to raise cost recovery
revenues. The direct link or ‘earmarking’ between the revenue and the funding of a specific
activity distinguishes such cost recovery taxes from general taxation.
General taxation, on the other hand, is a compulsory extraction of money by a public authority for
public purposes, enforceable by law, and which is not a payment for services rendered.
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2.3
Why is cost recovery important?
Used appropriately, cost recovery can provide an important means of improving the efficiency
with which Australian Government products and services are produced and consumed.
Charges for goods and services can give an important message to users or their customers about
the cost of resources involved. It may also improve equity by ensuring that those who use
Australian Government products and services, or who create the need for regulation, bear the
costs.
2.4
Registration and approval activities
The regulatory activities for biologicals that will be undertaken by the TGA involve the following
registration and approval activities:
 Application for inclusion of biological in the Australian Register of Therapeutic Goods
(ARTG);
 Sponsors of Class 1 biologicals will attest compliance with relevant mandatory standards.
However, there will not be any Class 1 biologicals upon implementation of the biologicals
framework. The new Australian Organ and Tissue Authority (AOTA) will continue to
oversight solid organs, while the government has decided that un-manipulated reproductive
tissue (ART) should not be subject to additional regulation as the ART sector is managed
coherently and consistently;
 Class 2, 3 and 4 biologicals will undergo pre-market evaluation by the TGA prior to ARTG
inclusion;
 Highly manipulated Class 3 and 4 biologicals till be subject to the highest levels or pre-market
evaluation by the TGA;
 Manufacturers of Class 2, 3 and 4 biologicals will be required to demonstrate compliance with
manufacturing principles equivalent to the cGMP;
 Post-market controls will include ongoing manufacturing surveillance, adverse event
reporting, investigations and recalls.
The cost recovery model for biologicals has been developed based on the following general
assumptions:

there will be four classes of regulation;

there will be a 3 year transition period (Years 4-5 are base year);

additional resources will be required for systems modifications;

additional resources will be required for education in Year 1;

there will be normal overhead attributions; and

there will be cost adjustments made to account for the annual inflation.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 17 of 44
The following assumptions have also been made in relation to activity volumes, per class, over the
first 5 years:
Manufacturer audits
Initial audit (year 1)
Initial audit (year 2-5)
Surveillance audits
Post market audits
Biological evaluations
Transfer medicines/devices
Initial evaluations (year 1)
Initial evaluations (year 25)Variations to standards file or
product dossier
Other assumptions
Regulatory support
Growth
Class 1
Class 2
Class 3
Class 4
Not required
Not required
Not required
If required
1 in 2 yrs
-
4
2 in 3 yrs
-
4
2 in 3 yrs
-
Not required
8
17
Approx 20%
6
0
4
Approx 20%
1
4
Approx 20%
As required
Nil
As required
Nil
As required
Yes
As required
Yes
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 18 of 44
2.5
Adherence to Cost Recovery Guidelines
The Cost Recovery Guidelines recommend that an assessment of activities be made against a set
of questions that will assist in determining whether cost recovery would be appropriate.
Principle
Discussion
Would cost recovery unduly
stifle competition and
industry innovation (for
example, through ‘free
rider’ effects)?
Pre-market approval of a biological will permit the
manufacturer/sponsor to supply products in Australia. The
benefits of TGA approval are limited to the applicant – none
of the assessment work will benefit other sponsors. As costs
can be identified for the activities undertaken, fees are
considered to be an appropriate cost recovery mechanism.
The calculation of the fee ensures all applicants are treated
equitably and does not confer advantage on one applicant
over another. That is, by imposing the fee on the biological
industry, this should not stifle competition in the industry’s
delivery of its end product.
Would cost recovery be
inconsistent with
government policy
objectives?
Cost recovery arrangements for biologicals are consistent
with Government policy and are not inconsistent with other
policies.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 19 of 44
Principle
Discussion
Is cost recovery costeffective and cost-efficient?
The administrative rules for cost recovery for biologicals
will be the same as other therapeutic goods.
Sponsors will be required to submit fees at the time of
application. Applications will be lodged via the TGA’s
online electronic lodgment system which permits an invoice
to be created at the time of processing. Companies may pay
fees by cheque, credit card or via online payment systems;
and
annual charges for each product on the ARTG will be
invoiced each year in July. Companies may pay the amount
by cheque, credit card (up to $10k) or via online payment
systems.
The cost recovery arrangements are considered to be cost
effective – they are simple, well understood by current
sponsors, require payment at the time a service is to be
performed, and have low administrative and debt recovery
costs.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 20 of 44
2.6
Economic efficiency
Principle
Discussion
Sends important pricing
messages to users or
customers about the costs of
resources involved.
The imposition of a fee sends an important pricing signal to
applicants, ensuring that only companies seeking approval of
a biological to genuinely enter Australia market will apply
for one. This discourages frivolous or vexatious demand
without a genuine need.
Reduces the call on general
taxation revenue and avoids
the high efficiency losses
from higher taxation
revenue.
Costs incurred by the TGA are recovered through an
appropriate, targeted, usage charge. As such, all costs of
providing the service is fully recovered so there is no need
for government funding. However, the Australian
government has agreed to meet the direct costs to publicly
funded facilities, such as, not-for-profit hospital supply units
for the first three years of operation.
Improves horizontal equity
by ensuring that consumers
or beneficiaries of products
pay for the costs.
The cost recovery arrangements improve horizontal equity
by ensuring the beneficiaries (biological industry), of the
TGA’s activities, pay for the costs of those activities.
Improves agency
performance through
transparency of costs and
increased costconsciousness in both the
agency and users.
Consultations on the regulation of biologicals were
undertaken during the development of ANZTPA. Following
the postponement of ANZTPA in July 2007, further
consultations were undertaken in the context of an Australiaonly regulatory framework.
TGA’s Fees and Charges are reviewed every year in
consultation with TICC members. A further costing review
of the Biologicals fees and charges will be completed within
three years of the commencement of the scheme when more
reliable data about private biological facilities is acquired.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 21 of 44
2.7
Design principles
Principle
Discussion
Do not cross-subsidise
across user groups.
Pre-market approvals involve different regulatory processes
based on the risk of the biological to individuals and to public
health. Therefore, separate fees have been prescribed for class
1, 2, 3 and 4 biologicals.
Post market, scheme support and regulatory administration
costs are driven by the regulated industry. The beneficiaries of
the industry are the organisations that promote biologicals. As
costs cannot be specifically tied to individual companies, a
levy on the regulated industry would be an appropriate form of
cost recovery.
Be subject to the same
public administration
principles that apply to all
government activities.
The regulation of biologicals mirrors the arrangements for the
regulation of other therapeutic goods. Accordingly, the design
of the cost recovery model is similarly based on these
arrangements. The TGA’s cost recovery model is detailed in
the Cost Recovery Impact Statement that was completed in
2004-05.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 22 of 44
Principle
Discussion
Involve a degree of
industry consultation to
help drive agency
efficiency.
Consultations with stakeholder were undertaken as below:

Initial consultations with key stakeholders to inform the
preparation of a Discussion Paper on the Regulation of
Human Tissues and Emerging Biological Therapies.

Publishing of a Discussion Paper (sent to over 135
stakeholders and posted on the TGA website).

Workshops were held in each capital city, with the
exception of Darwin (cancelled due to a lack of response) over 135 attendees. Written submissions received from 27
individuals and organisations.

A Facility Registration Survey circulated to all
organisations involved in the manufacture of biologicals
(for voluntary completion). The purpose of this was to
enable the TGA to more accurately assess the number (and
nature) of organisations likely to be affected by the
proposed scheme for biologicals.

Since 2008 the TGA has provided the sector with updates
on the Biologicals Framework at conferences organised by
groups within the sector such as the Australasian Tissue
and Biotherapeutics Forum; the International Society for
Cellular Therapy and the NSW Stem Cell Network. In
December 2009 the TGA consulted on five draft product
standards and a revised Code of Good Manufacturing
Practice (cGMP) applicable to products to be regulated
under the Biologicals Framework.

The draft CRIS will be released for consultation over 4
weeks. Stakeholders comments received on the draft CRIS
will be suitably considered in finalising this CRIS.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 23 of 44
2.8
Operational principles
Principle
Discussion
All cost recovery
arrangements should have
clear legal authority.
The Therapeutic Goods Amendment (2009 Measures No. 3)
Bill 2009 (the Bill) received Royal Assent on 31 May 2010.
Note 3 of the Therapeutic Goods Act 1989 reflects
amendments in the Bill to create a new regulatory framework
for the regulation of biologicals as a separate therapeutic goods
group. The TGA now has until 31 May 2011 to implement the
framework.
TGA’s authority to set fees is included in the Regulations
forming part of the TG Act. Legal authority for the annual
charges is included in the Therapeutics Goods (Charges) Act
1989.
The legislation establishes clear legal authority to collect fees
and charges.
Cost recovery charges
Cost recovery charges are directly linked to the actual cost of
should be linked as closely undertaking the regulatory activities. Refer to section 5.1 for
as possible to the actual
detailed costs.
cost of activities or
products.
Costs recovered should
Proposed charges have been calculated with reference to the
relate to specific activities, actual activities that need to be performed to process
not the agency that
applications.
provides them.
Over-recovery is
inappropriate.
Fees have been set to recover estimated costs.
Costs recovered may
exclude activities
undertaken for
government where they
are not integral or directly
related to the provision of
regulatory activities.
The proposed charges do not include the costs for any activity
or any services to government that are not integral or directly
related to the regulatory activity.
Partial cost recovery is
generally not appropriate.
The TGA costs of regulating biologicals will be fully costrecovered.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 24 of 44
3.
Design and Implementation
Charges can be collected in a variety of ways and based on different measures of costs. The
design of the cost recovery arrangement should aim to:
-
identify who should pay regulatory charges;
-
link charges as closely as possible to the costs of activities performed;
-
have clear legal authority;
-
be cost-effective to calculate, collect and enforce;
-
ensure compliance costs of paying the charges are not excessive; and
-
there is a balance between fee certainty and flexibility (monitoring charge levels).
As noted previously, the regulation of biologicals mirrors the arrangements for the regulation of
other therapeutic goods, mainly medicines except there are four classes of biologicals instead of
two. Accordingly, the design of the cost recovery model is similarly based on these arrangements.
The cost recovery model is detailed in the Cost Recovery Impact Statement for Therapeutic
Products that was completed in 2004-05.
3.1
Basis for charging
Individuals or groups that give rise to the need for regulation should pay cost recovery charges.
As charging individual consumers of biologicals is impractical, the charges are proposed to be
recovered from the sponsors and manufacturers of biological products. Nonetheless, the cost of
regulation is expected to be incorporated into the pricing decisions made in relation to biological
products.
Cost recovery charges can be introduced using:
-
a fee that charges Sponsors directly for the costs of providing the activity; or
-
a levy on a group of Sponsors (legally a form of taxation). Levies need to be established
using a Tax Act.
Fees are proposed in the cost recovery arrangement for biologicals where the activities are
undertaken for a single organisation. These include application for inclusion on the Australian
Register of Therapeutic Goods (ARTG) and issue of manufacturing licence, evaluations of
Standards Files and Product Dossiers, initial and subsequent manufacturing audit/inspections. The
costs are driven by the applicant and the benefits that arise from these activities (the right to
continue to manufacture and/or market an biological) are limited to the applicant.
Some costs will be recovered on an ‘as-incurred’ basis. This includes travel costs associated with
audits and regulatory support. Travel costs are advised to the Sponsor in writing prior to the
performance of an audit setting out the relevant charges. Reimbursement of costs is simple to
administer and is transparent (no hidden costs).
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 25 of 44
The cost recovery arrangements include an annual levy to be applied to all sponsors of biologicals
that are included in the ARTG. This annual charge will cover post-market monitoring, product
problem reporting and analysis, recalls, random testing of biologicals, and the costs of maintaining
the regulatory framework and supporting industry compliance with the scheme. These costs are
driven by the regulation of the market and may not relate to activities performed for one or other
sponsor/manufacture.
3.2
What are the legal requirements for the imposition of charges?
TGA’s authority to set fees is included in the Regulations forming part of the Therapeutic Goods
Act 1989. Legal authority for the annual charges, which is considered a tax, is included in the
Therapeutics Goods (Charges) Act 1989 (Section 43, Chapter 6).
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 26 of 44
4. Costs to be included in charges
For regulatory products or services, cost recovery charges ideally should reflect as closely as
possible the costs of undertaking individual activities.
The TGA uses an activity based costing (“ABC”) methodology for the assignment and allocation
of all direct, indirect and overhead costs to activities undertaken. The methodology allows costs
to be allocated to activities based on their consumption at each stage of the process through to the
final product or service. Activity based costing facilitates product costing and pricing, cost
analysis and management, resource planning and industry reporting.
The TGA’s ABC model is maintained using an Excel workbook that encompasses all costs,
activities, and cost driver allocations. A two-stage process is used to firstly attribute costs for
corporate services, such as rent and information technology, to each business unit, including
support services. Then a second step is used to assign these costs to regulatory activities.
The TGA’s total costs are broadly categorised in to the following three categories to ensure costs
are ‘materially’ allocated correctly and to provide transparency.
a) Direct Costs
b) Corporate Costs
c) Support costs
Direct Costs: These are costs that are directly related in performing the regulatory activity and
mainly include labour costs. Labour costs are based on the current Health and Ageing’s Certified
Agreement, plus appropriate allowances for on-costs.
Corporate Costs: Corporate costs, such as rent and information technology, are that Business
Units can control the ‘consumption’ of, but not the unit price. For example, a Business Unit
controls the total floor space occupied, but not the unit cost. The allocation of corporate costs
(including amortisation and depreciation costs related to capital assets) use a range of drivers,
including the number of transactions processed, staff numbers, workstations, or floor-space.
Support Costs: Support costs include costs for providing support services such as Laboratory, HR
and Finance. Business Units have very limited or no control over these costs. Eg, Accounts
payable costs are allocated based on the number of invoices processed for the Business Unit as a
% of the TGA total.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 27 of 44
Salary Costs
Superannuation
Annual Leave
Staff training
LSL
Other direct costs
Property
Operating
Rent
Computing
Dep'n and Amort
Other Corporate
Cost Driver Allocation
FTE, Effort hours, Floor space, Direct Expenses, Revenue,
other relevant cost driver
Prescription
Medicines
Sectors
Corporate Costs
Direct Costs
The TGA cost allocation is depicted in the diagram below.
Devices
Non-Prescription
Medicines
Manufacturing
Quality
Complementary
Medicines
Exports
Blood
IVD
New Regulatory
Framework
Support Costs
Cost Driver Allocation
FTE, Effort hours, Floor space, Direct Expenses, Revenue,
other relevant cost driver
Executive / ORIC
OCS
OLS
OPSS
OIM
The above diagram is a graphical interpretation of the ABC framework that is utilised to allocate
costs to various activities.
Cost drivers were chosen based on the nature of the activities. The cost drivers were used to
allocate costs through this framework by assigning relevant costs based on the activities. The total
support and corporate costs have been assigned to activities using this methodology.
A consulting firm was recently engaged to conduct a whole of TGA cost model for all its services.
The above approach of allocation of overhead costs is consistent with the consultant’s cost
allocation methodology.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 28 of 44
4.1
Costs for Biological Framework
In developing the cost of services performed for biological regulation, the TGA developed a cost
model based on the regulatory effort required for each activity. The 5-year forecasts in the model
were developed based on the information as per Attachment A available as at December 2008
regarding the organisations within each jurisdiction that are believed to be undertaking work
involving biologicals (or who are currently subject to TGA regulation). The information does not
include any biologicals manufactured overseas that are currently regulated (as therapeutic devices)
or may seek inclusion on the ARTG.
The estimated total costs in the first 5 years of biological regulation is summarised in the table
below.
Summary
Salary Costs (including support and corporate costs)
Industry Information and Education
Total Costs
FY 11/12
FY 12/13
FY 13/14
FY 14/15
FY 15/16
5 year total
$1,037,686
$1,362,388
$1,528,133
$1,140,725
$1,276,067
$6,344,999
$174,094
$0
$0
$0
$0
$174,094
$1,211,780
$1,362,388
$1,528,133
$1,140,725
$1,276,067
$6,519,093
As the framework is expected to be implemented on 31 May 2011 the year 1 figures above will
cover 13 months, rather than 12 (31 May 2011 to 30 June 2012). This is considered acceptable as
it is expected that it will take sponsors several months to prepare new applications for biologicals
to be included in the ARTG and this will not have any significant impact on the overall predicted
numbers for FY 11/12.
4.2
Salary Costs (including support and corporate costs)
A consulting firm has recently completed a Whole of TGA cost model. In this cost model each
operating area of TGA has been carefully considered and costs are appropriately allocated using
cost drivers.
As a result of this exercise, each Office has derived a “fully loaded” labour hourly rate by relevant
staff remuneration level. This rate has been applied in the biologicals cost model along with the
demand volumes and work effort hours attributed to each activity. Using this methodology
provides the total cost of each activity, which includes direct labour cost and associated support
and corporate costs.
For each service, the cost model tallies the staff time usually incurred to perform tasks associated
with each service, which is then costed for the direct salary, including on-cost to provide a cost per
activity. The support and corporate costs are also included in the hourly rate to derive the “fully
loaded” cost. The total cost is then derived by multiplying the total number of regulatory activities
performed by the cost of each activity.
Other support costs include costs associated with application entry, monitoring compliance,
surveillance, branch and regulatory management.
Corporate costs include rent, POE, information technology, and amortisation and depreciation
costs related to capital assets.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 29 of 44
In addition to the above, committee and systems development costs associated with the biological
regulatory framework are driven by the requirement to regulate biologicals and are considered
integral to regulation and appropriate for inclusion in cost recovery arrangements.
4.3
Industry Information and Education
As with all regulatory arrangements, the TGA will provide information and support to the
regulated industry and consumers and will be responsible for the maintenance of the regulatory
framework (including regulatory development and advice concerning the operation of the
scheme). The biological cost model includes $0.17m in the first year for such costs.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 30 of 44
4.4
Recommended fee for 2011-12
The proposed fees and charges applicable to biologicals are summarised in the following table.
#
A
B
C
D
D
4.4.1
Fee Type
Method of
Recovery
Basis of Charge
Fee ($)
Application Fees
Application Fees - ARTG Entry (Class 1)
Fee for service
Per kind of
Biological
$900
Application Fees - ARTG Entry (Class 2 - 4)
Fee for service
Per kind of
Biological
$900
Application Fees - Manufacturing Licence
Fee for service
Per Licence
$900
Evaluation Fees
Evaluation of Product Dossier (Class 2)
Evaluation of Product Dossier (Class 3)
Evaluation of Product Dossier (Class 4)
Notification of variation to ARTG entry
Variations to Product Dossier (Class 2)
Minor Variations to Product Dossier (Class 3 and 4)
Major Variations to Product Dossier (Class 3 and 4)
Fee for service
Fee for service
Fee for service
Fee for service
Fee for service
Fee for service
Fee for service
Per Evaluation
Per Evaluation
Per Evaluation
Per Notification
Per Evaluation
Per Evaluation
Per Evaluation
$60,000
$120,000
$195,000
$900
$5,500
$14,500
$28,500
Fee for assessing an ingredient or component of a
biological at sponsor's request
Fee for service
Per Evaluation
$19,400
Levy
Levy
Per kind of HCT
Per kind of HCT
$550
$5,500
Inspection Fees - Initial Manufacturing Audit (Class 2, 3
and 4) - Australia and overseas
Fee for service
Per Audit
$17,900
Inspection Fees - Subsequent manufacturing Audits
(Class 2, 3 and 4) - Australia and overseas
Fee for service
Per Audit
$13,500
Additional Assessment Fees for overseas assessments hourly rate of preparation for each assessor involved
Fee for service
Per Hour
$550
Additional Assessment Fees for overseas assessments reasonable costs for travel and accomodation by each
assessor involved.
Actual cost
Annual Charge
Class 1
Class 2, 3 and 4
Audit
Clinical Trials
Clinical Trial Notification
Clinical Trial Exemption - Assessment of data
Fee for service
Fee for service
At cost
Per Application
Per Application
$280
$21,600
Notifications for Class 1, 2, 3 and 4 biological products
Certain changes to products can be made by a sponsor under a self-assessment procedure.
However, some of these changes need to be notified to the TGA. These include: changes to
reagents within an established assay; addition of new tests and limits to existing specifications;
changes consistent with amendments made to standards; deletion of manufacturing site;
administrative changes (such as sponsor details); and some minor changes to labels. These
changes may or may not result in a change to the entry on the Register.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 31 of 44
4.4.2
Variations to Class 2 biological products
Certain variations to Class 2 products will require a TGA evaluation of the change. These
include variations to the quality and manufacturing information, extension of intended clinical
use, new dose/strength/route of administration, changes in formulation. These changes may or
may not result in a change to the entry on the Register.
4.4.3
Minor Variations to Class 3 & 4 biological products
Changes to Class 3 & 4 products have been split between major and minor variations largely
on the basis of the level of TGA oversight required. By default all variations to Class 3 & 4
products will be considered minor, unless specifically listed as a major variation or a notifiable
change. Minor variations include: changes involving only evaluation of quality and
manufacturing information; new manufacturing site; changes in
formulation/composition/specifications or container size.
4.4.4
Major Variations to Class 3I & 4 biological products
The following changes are categorised as Major Variations to Class 3 & 4 products: any
changes requiring submission of clinical data (except changes to PI involving evaluation of
data), extension of indications, new strength, new route of administration, change in patient
group, change in dosage.
4.5
Transition arrangements
As the framework is scheduled to commence on 31 May 2011 it is proposed that the fees and
charges detailed above will apply from 31 May 2011 until 30 June 2012. After this time fees and
charges will be reviewed/updated annually to ensure adequate cost recovery.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 32 of 44
4.6
5 Year Summary of Revenue and Costs
The below table summarises revenue, costs and net balance over a five year period. Underrecovery in the first year is largely due to the inclusion of the $174,094 cost for ‘Industry
Information and Training’.
Summary
FY 11/12
FY 12/13
FY 13/14
FY 14/15
FY 15/16
5 year total
Revenue
$1,044,260
$1,385,490
$1,557,260
$1,192,520
$1,330,020
$6,509,550
Costs
$1,211,780
$1,362,388
$1,528,133
$1,140,725
$1,276,067
$6,519,093
Net Balance
($167,520)
$23,102
$29,127
$51,795
$53,953
($9,543)
The above cost in FY 11/12 reflects Industry Information and Education one off cost of $174,094.
As it is a one off cost that will be incurred in the first year only, it will be recovered over
subsequent years. This cost has not been assigned at a class level as detailed below, due to the
nature of the cost.
4.7
Summary of Revenue and Costs by Class
The below tables summarise the revenue and costs for each class of biologicals.
4.7.1
Class 1
Class I
Application ( ARTG Entry)
Revenue
Costs
Regulatory Support
Revenue
Costs
Notification of variation to ARTG entry
Annual Charges
Costs
Annual Charges
Annual Charges
Costs
Net Balance
Initial Price
FY 11/12
FY 12/13
FY 13/14
FY 14/15
FY 15/16
5 year total
$900
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$550
$900
$550
The Australian government has established the Australian Organ and Tissue Donation and
Transplantation Authority (AOTDTA) to oversight solid organs, and a decision has been taken by
the government that un-manipulated reproductive tissue (ART) should not be subject to additional
regulation as the ART sector is managed coherently and consistently. Haematopoietic progenitor
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 33 of 44
cells for haematopoietic reconstitution will also initially be excluded from the Biologicals
Framework.
Therefore, while the model includes the option of having Class 1 biologicals in effect there will
not be any Class 1 biologicals upon implementation. The model therefore does not show any
costs incurred or revenue earned for Class 1 products.
4.7.2
Class 2
Class II
Application ( ARTG Entry)
Revenue
Costs
Evaluation (Standards File)
Revenue
Costs
Initial Manufacturing Audit
Revenue
Costs
Surveillance Audit
Revenue
Costs
Variations to Standards File
Revenue
Costs
Notification of variation to ARTG entry
Revenue
Costs
Annual Charges
Revenue
Costs
Net Balance
Initial Price
FY 11/12
FY 12/13
FY 13/14
FY 14/15
FY 15/16
5 year total
$900
$7,200
($2,132)
$7,440
($2,196)
$7,680
($2,262)
$0
$0
$2,040
($600)
$24,360
($7,190)
$5,068
$5,244
$5,418
$0
$1,440
$17,170
$480,000
($502,468)
$494,400
($517,542)
$509,200
($533,068)
$0
$0
$67,530
($70,692)
$1,551,130
($1,623,770)
($22,468)
($23,142)
($23,868)
$0
($3,162)
($72,640)
$0
$0
$0
$0
$0
$0
$0
$0
$20,150
($19,084)
$20,150
($19,084)
$0
$0
$0
$0
$1,066
$1,066
$162,000
($148,883)
$166,920
($153,350)
$171,960
($157,950)
$177,120
($162,689)
$182,400
($167,570)
$860,400
($790,442)
$13,117
$13,570
$14,010
$14,431
$14,830
$69,958
$5,500
($7,296)
$11,340
($15,031)
$23,360
($30,963)
$24,080
($31,892)
$24,800
($32,849)
$89,080
($118,032)
($1,796)
($3,691)
($7,603)
($7,812)
($8,049)
($28,952)
$0
$0
$4,650
($4,345)
$4,800
($4,475)
$4,950
($4,609)
$5,100
($4,748)
$19,500
($18,177)
$0
$305
$325
$341
$352
$1,323
$44,000
($38,080)
$90,720
($78,444)
$140,160
($121,196)
$144,480
($124,832)
$148,800
($128,577)
$568,160
($491,129)
$5,920
$12,276
$18,964
$19,648
$20,223
$77,031
($160)
$4,562
$7,245
$26,607
$26,701
$64,956
$60,000
$17,900
$13,500
$5,500
$900
$5,500
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 34 of 44
4.7.3
Class 3
Class III
Application ( ARTG Entry)
Revenue
Costs
Application (Manufacturing Licences)
Revenue
Costs
Evaluation of Product Dossier
Revenue
Costs
Initial Manufacturing Audit
Revenue
Costs
Surveillance Audit
Revenue
Costs
Minor Variations to Product Dossier
Revenue
Costs
Major Variations to Product Dossier
Revenue
Costs
Notification of variation to ARTG entry
Revenue
Costs
Annual Charges
Revenue
Costs
Net Balance
Initial Price
FY 11/12
FY 12/13
FY 13/14
FY 14/15
FY 15/16
5 year total
$900
$5,400
($1,917)
$930
($329)
$960
($339)
$990
($349)
$1,020
($360)
$9,300
($3,294)
$3,483
$601
$621
$641
$660
$6,006
$0
$0
$930
($329)
$960
($339)
$990
($349)
$1,020
($360)
$3,900
($1,377)
$0
$601
$621
$641
$660
$2,523
$0
$0
$123,600
($116,674)
$127,300
($120,174)
$131,100
($123,780)
$135,000
($127,493)
$517,000
($488,122)
$0
$6,926
$7,126
$7,320
$7,507
$28,878
$0
$0
$18,400
($17,465)
$19,000
($17,989)
$19,600
($18,528)
$20,200
($19,084)
$77,200
($73,066)
$0
$935
$1,011
$1,072
$1,116
$4,134
$0
$0
$55,600
($51,117)
$57,200
($52,650)
$58,800
($54,230)
$60,400
($55,857)
$232,000
($213,853)
$0
$4,483
$4,550
$4,570
$4,543
$18,147
$0
$0
$0
$0
$15,390
($15,454)
$31,700
($31,835)
$32,660
($32,791)
$79,750
($80,080)
$0
$0
($64)
($135)
($131)
($330)
$0
$0
$0
$0
$30,240
($30,250)
$62,300
($62,314)
$64,160
($64,184)
$156,700
($156,747)
$0
$0
($10)
($14)
($24)
($47)
$0
$0
$3,720
($3,476)
$3,840
($3,580)
$3,960
($3,688)
$4,080
($3,798)
$15,600
($14,542)
$0
$244
$260
$272
$282
$1,058
$33,000
($28,560)
$39,690
($34,319)
$46,720
($40,399)
$54,180
($46,812)
$62,000
($53,574)
$235,590
($203,663)
$4,440
$5,371
$6,321
$7,368
$8,426
$31,927
$7,923
$19,161
$20,436
$21,735
$23,041
$92,296
$900
$120,000
$17,900
$13,500
$14,500
$28,500
$900
$5,500
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
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4.7.4
Class 4
Class IV
Application ( ARTG Entry)
Revenue
Costs
Application (Manufacturing Licences)
Revenue
Costs
Evaluation of Product Dossier
Revenue
Costs
Initial Manufacturing Audit
Revenue
Costs
Surveillance Audit
Revenue
Costs
Minor Variations to Product Dossier
Revenue
Costs
Major Variations to Product Dossier
Revenue
Costs
Notification of variation to ARTG entry
Revenue
Costs
Annual Charges
Revenue
Costs
Net Balance
Initial Price
FY 11/12
FY 12/13
FY 13/14
FY 14/15
FY 15/16
5 year total
$900
$900
($320)
$930
($329)
$960
($339)
$990
($349)
$1,020
($360)
$4,800
($1,696)
$580
$601
$621
$641
$660
$3,104
$900
($320)
$930
($329)
$960
($339)
$990
($349)
$1,020
($360)
$4,800
($1,696)
$580
$601
$621
$641
$660
$3,104
$195,000
($198,895)
$200,900
($204,862)
$206,900
($211,008)
$213,100
($217,338)
$219,500
($223,859)
$1,035,400
($1,055,963)
($3,895)
($3,962)
($4,108)
($4,238)
($4,359)
($20,563)
$17,900
($16,956)
$18,400
($17,465)
$19,000
($17,989)
$19,600
($18,528)
$20,200
($19,084)
$95,100
($90,023)
$944
$935
$1,011
$1,072
$1,116
$5,077
$0
$0
$0
$0
$14,300
($13,163)
$29,400
($27,115)
$30,200
($27,928)
$73,900
($68,206)
$0
$0
$1,137
$2,285
$2,272
$5,694
$0
$0
$14,940
($15,004)
$15,390
($15,454)
$31,700
($31,835)
$32,660
($32,791)
$94,690
($95,084)
$0
($64)
($64)
($135)
($131)
($394)
$0
$0
$29,400
($29,369)
$30,300
($30,250)
$62,400
($62,314)
$64,200
($64,184)
$186,300
($186,116)
$0
$31
$50
$86
$16
$184
$0
$0
$930
($869)
$960
($895)
$990
($922)
$1,020
($950)
$3,900
($3,635)
$0
$61
$65
$68
$70
$265
$5,500
($4,786)
$11,340
($9,859)
$17,520
($15,232)
$24,080
($20,919)
$31,000
($26,933)
$89,440
($77,729)
$714
$1,481
$2,288
$3,161
$4,067
$11,711
($1,077)
($316)
$1,622
$3,580
$4,373
$8,182
$900
$195,000
$17,900
$13,500
$14,500
$28,500
$900
$5,500
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 36 of 44
4.7.5
CTN and CTX Trials
Clinical Trial
CTN
Revenue
Costs
CTX
Revenue
Costs
Initial Price
FY 11/12
FY 12/13
FY 13/14
FY 14/15
FY 15/16
5 year total
$280
$560
($502)
$580
($517)
$600
($532)
$620
($548)
$640
($565)
$3,000
($2,664)
$58
$63
$68
$72
$75
$336
$86,400
($86,571)
$88,800
($89,168)
$91,600
($91,843)
$94,400
($94,599)
$97,200
($97,437)
$458,400
($459,619)
($171)
($368)
($243)
($199)
($237)
($1,219)
($113)
($305)
($176)
($127)
($162)
($883)
$21,600
Net Balance
4.7.6
Overall Summary
Class
FY 11/12
FY 12/13
FY 13/14
FY 14/15
FY 15/16
5 year total
Class I
$0
$0
$0
$0
$0
$0
Class II
($160)
$4,562
$7,245
$26,607
$26,701
$64,956
Class III
$7,923
$19,161
$20,436
$21,735
$23,041
$92,296
Class IV
($1,077)
($316)
$1,622
$3,580
$4,373
$8,182
CTN
$58
$63
$68
$72
$75
$336
CTX
($171)
($368)
($243)
($199)
($237)
($1,219)
Net Balance from classes
$6,574
$23,102
$29,127
$51,795
$53,953
$164,551
Industry Information & Education costs
($174,094)
$0
$0
$0
$0
($174,094)
Net Balance
($167,520)
$23,102
$29,127
$51,795
$53,953
($9,543)
The TGA has committed to review cost recovery for biologicals on a regular basis through the
TGA-Industry Consultative Committee and to consult further with industry on charge levels after
three years to take account of the actual number of applications received, products entered on the
ARTG and private organisations entering this sector.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
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4.8
Year over year review of costs and cost recovery
As indicated earlier in this report, costs are adjusted for the annual inflation. This reflects an
indicative compounded CPI increase for costs that will be incurred from their respective base year.
The estimated revenue also reflects the indexation to complement the treatment of costs.
Actual costs incurred will be monitored on an annual basis to ensure that the fees reflect the costs.
As the framework is scheduled to be implemented on 31 May 2011 it is proposed that the fees and
charges detailed for FY 11/12 will apply from 31 May 2011 until 30 June 2012. After this time
fees and charges will be reviewed/updated annually to ensure adequate cost recovery.
4.9
Non-Profit Hospital Supply Unit Exemption
Currently, Non-Profit Hospital Supply Units, which are mostly publicly funded entities, are
exempt under subsection 59(3) of the Therapeutic Goods Act 1989 from the payment of licence
and inspection fees. These costs are being subsidised by other therapeutic industry. In order to
address the issue of cross subsidisation, the exemption under the new biological framework is
proposed to be abolished.
To minimise the impact of the new regulation of biologicals on Non-Profit Hospital Supply Units,
the Commonwealth Government has agreed to meet their direct regulatory costs for the first three
years of operations of the new framework.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 38 of 44
5. Ongoing monitoring
The cost recovery arrangements should be balanced to provide predictability to the regulated
industry for budget and product planning purposes, yet remain responsive to changes in either
cost-model forecasts (over/under-estimation), or structural changes in the regulated industry itself.
5.1
Monitoring mechanisms
The primary mechanism used to monitor TGA activities, performance and costs is the TGAIndustry Consultative Committee (TICC). The TICC meets twice each year to examine the budget
and progress on the business plan, with industry associations consulted separately on regulatory
matters and cost impacts relating to specific sectors. Industry associations are also consulted in
the process of regulatory development and reform, which are taken into account in regulatory
impact statements, and in developing cost recovery arrangements.
To constrain budget growth and promote efficiency, the TICC agreed to the establishment of an
indexation model to adjust fees and charges each year. Should the TGA seek to increase fees
above this level, specific proposals would be brought to TICC for discussion to justify required
increases. Material changes to specific cost recovery arrangements or significant changes to the
level of cost recovery will be assessed and documented in accordance with the cost recovery
policy and guidelines.
The TICC meets twice each year and undertakes separate industry meetings each year ahead of
finalising the TGA’s business plan, budget and fees and charges proposals.
5.2
Consultation with stakeholders
Consultations on the regulation of biologicals were undertaken during the development of
ANZTPA. Following the postponement of the joint agency in July 2007, further consultations
were undertaken in the context of an Australia-only regulatory framework. The following outlines
both phases of consultation.
5.2.1
Initial consultations during the development of ANZTPA (2002 and 2003)

Initial consultations with key stakeholders to inform the preparation of a Discussion Paper on
the Regulation of Human Tissues and Emerging Biological Therapies.

Publishing of a Discussion Paper (sent to over 135 stakeholders and posted on the TGA
website).

Workshops were held in each capital city, with the exception of Darwin (cancelled due to a
lack of response) - over 135 attendees. Written submissions received from 27 individuals and
organisations.

A Facility Registration Survey circulated to all organisations involved in the manufacture of
biologicals (for voluntary completion). The purpose of this was to enable the TGA to more
accurately assess the number (and nature) of organisations likely to be affected by the
proposed scheme for biologicals.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 39 of 44
5.2.2

Expert Advisory Group
Formation of an Expert Advisory Group, chaired by the Commonwealth’s Chief Medical
Officer, in early 2004 to advise on issues relating to the development of an appropriate
regulatory framework for biological therapies including biologicals.
5.2.3
Further stakeholder consultations (2004 - 2006)

Further consultations with peak bodies and experts including the IVF industry, Eye Banks of
Australia and New Zealand, the Transplantation Society of Australia and New Zealand,
Australians Donate and the Australasian Tissue Banking Forum.

A further round of public fora in 2004 (over 250 stakeholders attended Australia wide). Two
fora were held in Sydney and one forum was held in each of the other capital cities excluding
Hobart and Darwin.

A joint symposium between TGA and NATA in June 2004 in response to stakeholder
concerns about the possible overlap between the roles of NATA and the TGA in the regulation
of HCTs.

Publication of a consultation draft of this RIS (posted on the TGA website and emailed to 250
stakeholders). Approximately 20 written submissions received.

Consultation with all jurisdictions including through a number of workshops held throughout
the latter part of 2005 and 2006.
A couple of the key issues raised were:

the desirability of international harmonisation. It was recognised that the proposed approach
is consistent with the US approach whereby all biological must meet certain standards but
only the higher risk biological require greater regulatory oversight; and

the costs of compliance and the TGA’s cost recovery policy. The majority of stakeholders
considered the Commonwealth, State and Territory governments should provide the necessary
funds for public and not-for-profit organisations to comply with the regulatory system and
meet the costs imposed by the TGA. In recognition of these concerns the Australian
Government agreed to meet the direct regulatory costs to Australian publicly funded facilities
and not-for-profit hospital supply units for the first three years of operation.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 40 of 44
5.2.4
Post-ANZTPA consultations
In late July and early August 2008 the TGA completed stakeholder consultations on a number of
regulatory reforms proposed for each therapeutic product sector including biologicals. The
consultations were not intended to re-open discussion on issues already considered and agreed as
part of the reforms to be adopted when establishing the joint regulatory scheme but to provide an
opportunity for discussion of how these reforms were to be implemented in the Australian context.
In regard to biologicals participants were advised that the regulatory proposal is that agreed by
AHMC and AHMAC in 2006: a risk-based approach dependent on the extent of manipulation
applied to the tissues or cells and whether the end-use is homologous. Inclusion on the ARTG for
all four classes of biologicals and requirements for quality managements systems would apply to
medium and high risk (class 2, 3 and 4) products.
It was noted that assisted reproductive technologies and solid organs are subject to further
discussions and will be excluded from consideration within the biologicals framework at this time.
In December 2009 the TGA undertook stakeholder consultation on a new cGMP for biologicals
and 5 new product standards. Extensive stakeholder comments on these very technical
requirements has led to a significant redraft of the 5 new products standards and these will be
going out for a further round of stakeholder consultation in November/ December 2010.
The TGA has also provided the sector with updates on the Biologicals Framework at the following
conferences:

International Society for Cellular Therapy, Inaugural Australian Regional meeting, Adelaide, 17
October 2009

NSW Stem Cell Network 13th Stem Cell Workshop 'Stem Cell Therapies to the Clinic', University
of Sydney, 9 April 2010

The Fourth Margaret River Forum - Pathways toward Molecular and Cellular Therapy,
International Society for Cellular Therapy, Margaret River, WA, 30 April 2010
The Australasian Tissue and Biotherapeutics Forum Scientific and Business Meeting, Melbourne,
4-7 May 2010.

A further round of stakeholder consultation on some of the detail that will be introduced through
amendments to the Therapeutic Goods Regulations 1990 occurred in November/December 2010.
The draft CRIS was also released for stakeholder consultation during November/December 2010.
A total of 16 submissions were received from private and public organisations. Key issues arising
from this consultation were:
a. the impact of the proposed fees and charges on the biologicals market and cell and tissue
banks;
b. concerns from publicly funded and non-profit facilities about Government funding for
their direct regulatory costs only being guaranteed for three years;
c. the impact on the sector of indirect costs, such as dossier preparation, laboratory costs
and salary costs; and
d. the impact of clinical trial fees and charges on research and the introduction of innovative
biologicals.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 41 of 44
As the issues raised in the submissions relate to policy issues rather than to errors in the modelling
used to derive the costs to the TGA, the individual fees and charges detailed in the CRIS were not
altered in response to the stakeholder consultation.
6. Periodic Review
A further assessment of the efficiency and effectiveness of cost recovery arrangements will be
undertaken in preparing the TGA’s Cost Recovery Impact Statement which is expected to be
completed over the next twelve months. A further costing review will be completed within three
years of the commencement of the scheme.
7. Certification
As Portfolio Ministers are ultimately responsible for entities’ compliance with the Cost Recovery
Guidelines, when the CRIS is finalised it must be certified by the Chief Executive Officer (FMA
Act Agencies) or Board (CAC Act bodies).
I certify that this CRIS complies with the Australian Government Cost Recovery Guidelines.
This Cost Recovery Impact Statement was certified by the
Secretary of the Department of Health and Ageing on
14 February 2011.
..................................................................................................
Chief Executive Officer
Department of Health and Ageing
Date: .................................................
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 42 of 44
Attachment A – HCT Facilities in Australia as at December 2008
State
Tissue / Cell Type
Number of
HCTs
identified
2
1
1
0
Estimated number
anticipated for inclusion on
ARTG under option 3
0
0
1
0
ACT
IVF
Organs
Tissue banks
Cellular and Tissue therapies
NSW
IVF
Organs
Tissue banks
Cellular and Tissue therapies (clinical
trial)
24
1
5
1
0
0
5
1
NT
IVF
Organs
Tissue banks
Cellular and Tissue therapies
1
1
0
0
0
0
0
0
QLD
IVF
Organs
Tissue banks
Cellular and Tissue therapies
16
1
3
1
0
0
3
1
SA
IVF
Organs
Tissue banks
Cellular and Tissue therapies
2
1
2
1
0
0
2
1
TAS
IVF
Organs
Tissue banks
2
0
1
0
0
1
VIC
IVF
Organs / Donation coordination
Tissue banks
Cellular and Tissue therapies
10
1
5
4
0
0
5
4
WA
IVF
Organs / Donation coordination
Tissue banks
Cellular and Tissue therapies
4
1
3
1
0
0
3
1
Note – the above table does not reflect HCTs, manufactured overseas, that are already on the
ARTG as devices or that may seek inclusion on the ARTG under the options presented in this RIS.
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 43 of 44
Attachment B – Glossary of Terms
(the) Act
Therapeutic Goods Act 1989
AHMC
Australian Health Ministers Conference
ANZTPA
Australian and New Zealand Therapeutic Products Authority
CRIS
Cost recovery impact statement
CTN
Clinical trial notification scheme
CTX
Clinical trial exemption scheme
cGMP
Code of Good Manufacturing Practice
HCTs
Human cell and tissue therapies
OBPR
Office of Best Practice Regulation
RIS
Regulation impact statement
SAS
Special Access Scheme
TGA
Therapeutic Goods Administration
TICC
TGA Industry Consultative Committee
TGA consultation paper – CRIS for biologicals (updated 1 February 2011)
Page 44 of 44