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Therapeutic Goods Administration PO Box 100 Woden ACT 2606 Australia
Email: [email protected] Phone: 1800 020 653 Fax: 02 6232 8605 www.tga.gov.au
Reference/Publication #
Cost recovery impact statement - Medical devices 1 July 2012 – 30 June 2013
Version 1.0, July 2012
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About the Therapeutic Goods Administration (TGA) · The TGA is a division of the Australian Government Department of Health and Ageing,
and is responsible for regulating medicines and medical devices.
· TGA administers the Therapeutic Goods Act 1989 (the Act), applying a risk management approach designed to ensure therapeutic goods supplied in Australia meet acceptable standards of quality, safety and efficacy (performance), when necessary.
· The work of the TGA is based on applying scientific and clinical expertise to decision-making, to ensure that the benefits to consumers outweigh any risks associated with the use of medicines and medical devices.
· The TGA relies on the public, healthcare professionals and industry to report problems with medicines or medical devices. TGA investigates reports received by it to determine any necessary regulatory action.
· To report a problem with a medicine or medical device, please see the information on the TGA website <www.tga.gov.au>.
Copyright © Commonwealth of Australia 2012 This work is copyright. You may reproduce the whole or part of this work in unaltered form for your own personal use or, if you are part of an organisation, for internal use within your organisation, but only if you or your organisation do not use the reproduction for any commercial purpose and retain this copyright notice and all disclaimer notices as part of that reproduction. Apart from rights to use as permitted by the Copyright Act 1968 or allowed by this copyright notice, all other rights are reserved and you are not allowed to reproduce the whole or any part of this work in any way (electronic or otherwise) without first being given specific written permission from the Commonwealth to do so. Requests and inquiries concerning reproduction and rights are to be sent to the TGA Copyright Officer, Therapeutic Goods Administration, PO Box 100, Woden ACT 2606 or emailed to <[email protected]>.
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Version history
Version Description of change Author Effective date
V1.0 Original Publication Management Accounting/ Office of Corporate Services
01/07/2012
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Contents Overview 5
1.1 Purpose ________________________________________________________________ 5
1.2 Background ____________________________________________________________ 5
1.3 Australian Government Cost Recovery Policy ___________________ 6
2. Policy review - analysis of activities 7
2.1 Policy Authority _______________________________________________________ 7
2.2 Legal Requirements for the Imposition of Charges _____________ 7
2.3 Description of Activities _____________________________________________ 7
3. Design 13
3.1 Design of Cost Recovery Arrangement ___________________________ 13
3.2 Basis of Charging – Fee or Levy ____________________________________ 13
4. Cost recovery model 15
4.1 Cost Recovery Activities ____________________________________________ 15
4.2 Cost Components ____________________________________________________ 16
4.3 Volume and/or Demand Assumptions ___________________________ 16
4.4 Charging Structure __________________________________________________ 17
5. Projected expenses and revenue for duration of CRIS 17
5.1 Projected Expenses and Revenue _________________________________ 17
6. Ongoing monitoring 19
6.1 Monitoring Mechanisms ____________________________________________ 19
6.2 Stakeholder Consultation __________________________________________ 19
6.3 Periodic Review ______________________________________________________ 20
7. Certification 20
8. Cost recovery links 21
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Overview 1.1 Purpose The purpose of this Cost Recovery Impact Statement (CRIS) is to document TGA’s cost recovery arrangements for the regulation of medical devices, including the activities involved in the inclusion of devices onto the Australian Register of Therapeutic Goods (ARTG) and the ongoing monitoring of their compliance for inclusion on that register.
Proposed regulatory changes require hip, knee and shoulder implants to be classified as Class III instead of the current classification of Class IIb. A related Regulation Impact Statement (RIS) has also been approved for these regulatory changes. (reference 12233).
This CRIS has a duration period of twelve months as the TGA is conducting a broader review of its cost recovery arrangements during 2012. An outcome of that review will inform preparation of a new CRIS for medical devices which will commence from 1 July 2013.
This CRIS does not intend to include In-Vitro Diagnostic Device (IVD) medical devices as they are the subject of a separate CRIS which was approved in October 2009. However, due to the figures in this CRIS being derived through cost allocation based on the 2005 costing model, it is not possible at present to separate costs and revenue of IVD medical devices from the rest of medical devices. This issue is also being included into the broader cost recovery review.
1.2 Background The Therapeutic Goods Administration
TGA is a division of the Australian Government Department of Health and Ageing, and is responsible for regulating medicines, medical devices, blood and blood products.
The TGA administers the Therapeutic Goods Act 1989 (the Act). This legislation, together with the Therapeutic Goods Regulations 1990, the Therapeutic Goods (Medical Devices) Regulations 2002, and the Therapeutic Goods (Charges) Act 1990, provides a framework for a risk-management approach designed to ensure medical devices supplied in Australia meet acceptable standards of quality, safety, and performance.
In order for the TGA to maintain public confidence in the safety, performance, benefits and risks associated with the use of medical devices on the Australian market, the TGA may assess medical devices:
· before a device is able to be supplied to the market in Australia, and/or
· while a medical device is available on the market.
Before a new medical device can be supplied to the market in Australia, the TGA needs to be involved. The TGA’s regulatory requirements vary depending on the risk presented by the device and the use to which the device will be put. The TGA is involved in most of the stages in the life cycle of a medical device. The potential risks to patients and users associated with using medical devices can range from little or low risk to significant risk. The level of assessment performed by the TGA before the device is able to be supplied in Australia directly relates to the level of potential risk.
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Once a medical device has been included in the ARTG the device must continue to meet all regulatory, safety and performance requirements and standards that were required for the approval. The post-market mandatory requirements by the TGA for all manufacturers and sponsors of medical devices are intended to monitor information about medical devices and their performance in use, so that appropriate regulatory action can be taken.
Cost recovery arrangements
The TGA operates on a close to 100% cost-recovery basis. Its operating costs for regulatory activities are funded through fees and charges collected from the therapeutic goods industry. Manufacturers or sponsors are required to pay fees for making applications to the TGA, and sponsors must pay annual charges, and variation fees, for the devices that they are responsible for. These are provided for in the Therapeutic Goods Act 1989 and the Therapeutic Goods (Charges) Act 1990.
The CRIS provides an estimate of the total expenses (including overhead costs) in administering and delivering the regulatory activity for medical devices. Fees and charges are set to recover these expenses for the 2012/13 financial year.
1.3 Australian Government Cost Recovery Policy In December 2002, the Australian Government adopted a formal cost recovery policy to improve the consistency, transparency and accountability of its cost recovery arrangements and promote the efficient allocation of resources. The underlying principle of the policy is that agencies set charges to recover all the costs of a product or service where it is efficient and effective to do so, where the beneficiaries are a narrow and identifiable group and where charging is consistent with Australian Government policy objectives. The Cost Recovery Policy is administered by the Department of Finance and Deregulation and is detailed in the Australian Government Cost Recovery Guidelines (Cost Recovery Guidelines).
The policy applies to all Financial Management and Accountability Act 1997 (FMA Act) agencies and to relevant Commonwealth Authorities and Companies Act 1997 (CAC Act) bodies that have been notified. In line with the policy, individual portfolio ministers are ultimately responsible for ensuring agencies’ implementation and compliance with the Cost Recovery Guidelines.
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2. Policy review - analysis of activities 2.1 Policy Authority In the 1997-98 Budget, the Government agreed that the TGA would move progressively to 100 per cent cost recovery of its activities by 1998-991
2.2 Legal Requirements for the Imposition of Charges
. Government has not changed this decision in subsequent years. This policy authority encompasses recovering expenses incurred by the TGA in regulating Medical Devices.
TGA’s legal authority to set fees for the regulation of Medical Devices is included in the Regulations forming part of the Therapeutic Goods Act 1989.
Legal authority for the annual charges is included in the Therapeutic Goods (Charges) Act 1989 (Section 43, Chapter 6).
2.3 Description of Activities Within medical device regulation there are a number of regulatory activities. Each of these is discussed below:
a) Pre-Market: Including medical devices in the Australian Register of Therapeutic Goods (ARTG)
The ARTG is a register of therapeutic goods accepted for importation into, supply for use in, or exportation from Australia. Medical devices cannot generally be legally imported, supplied in, or exported from Australia unless they are included in the ARTG.
Medical devices are classified into one of five risk classes (I, IIa, IIb, III and Active Implantable Medical Devices - AIMDs) based upon the manufacturer’s intended use, the level of risk and the degree of invasiveness in the human body. All classes must comply with minimum requirements for quality, safety and performance (the Essential Principles) and be "included" in the ARTG according to Class. Compliance with the Essential Principles may be demonstrated through meeting the requirements of appropriately gazetted non-mandatory internationally accepted standards, use of a certified quality system (Class IIa, IIb, III and AIMD) and, in the case of Class III and AIMD, also assessment of design dossiers.
Stakeholders
Medical device manufacturers and sponsors are required to include medical devices in the ARTG. Sponsors are required to pay application fees to the TGA for the cost of assessing applications for inclusion on the ARTG, and pay annual charges to TGA for as long as the
1 1997-98 Budget Paper 2, Revenue Measures, Other Measures p. 203.
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sponsor wishes to retain the entry allowing the continued importation to or supply of the medical devices in Australia.
For Class III and AIMD medical devices, sponsors are required to pay application fees for each unique product identifier (UPI) they wish to enter in the ARTG. These devices must undergo a mandatory application audit prior to being included in the ARTG, as required by Regulation 5.3 of the Therapeutic Goods (Medical Devices) Regulations 2002 (the Regulations). Regulation 5.3 also identifies mandatory audit requirements by the TGA for a specific set of products that are not Class III and AIMD medical devices, prior to inclusion in the ARTG. Where a mandatory audit is required a fee is applicable.
Other products may be selected for a non-mandatory audit and in those cases an additional fee is not charged for the audit as the benefit derived from non-mandatory audits is in maintaining the overall integrity of the medical device regulatory framework, making the charging of individual applicants not appropriate. The cost of non-mandatory audits is covered from the revenue collected from application fees payable by the medical devices industry as a whole and provides certainty of costs to industry for making an application. This approach will be reviewed as part of the broader review of TGA’s cost recovery arrangements in 2012.
TGA approval for each item that a sponsor or manufacturer wishes to sell in Australia ensures that they receive an exclusive marketing right and this approval cannot be used by other sponsors or manufacturers and does not allow any organisation to gain a free ride by waiting for someone else to make the application.
Conclusion
The current cost recovery arrangement requires products to be included on the ARTG by each sponsor and ensures the benefits of having products included flow only to the relevant sponsor. Therefore, it is appropriate to recover the costs of assessing applications from sponsors.
b) Pre-Market: Conformity assessment
Conformity assessment is the systematic and ongoing examination of evidence and procedures to ensure that a medical device complies with the Therapeutic Goods (Medical Devices) Regulations 2002. The Essential Principles to be met by the manufacturer are outlined in Schedule 1 of those regulations.
A conformity assessment procedure is used by a manufacturer of a medical device to demonstrate that a medical device conforms to Essential Principles for quality, safety and performance. A manufacturer must implement and maintain a post-market monitoring system for devices after supply, with reportable events tested and reported to the TGA as specified in the Regulations. A manufacturer’s quality system certification may be subject to periodic surveillance audits by the TGA.
Products cannot be included on the ARTG without a Conformity Assessment Certificate. A certificate is evidence issued by an authorised assessment body to demonstrate that a manufacturer has been assessed and has the appropriate systems in place to manufacture the devices. In accordance with the legislation, for devices manufactured outside Australia, the TGA is able to accept the assessment of conformity assessment bodies that are considered to have the appropriate authority and expertise. As the Australian and the European Union regulatory requirements are similar, certificates issued by EU conformity assessment bodies (also known as Notified Bodies) may be accepted as conformity assessment evidence for the supply of devices in Australia.
For some manufacturers, the TGA will only accept Conformity Assessment Certificates it has issued if they want to supply devices to the market in Australia, regardless of whether
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they have a certificate issued by an EU Notified Body. These include any manufacturer who manufactures medical devices containing materials derived from:
· animals that have been rendered non-viable—there are some exceptions to this requirement;
· materials of microbial or recombinant origin;
· stable human blood or plasma derivatives;
· medicinal substances (substances that if used separately would be considered medicines);
· all Australian manufacturers except for the following: – the manufacturer of a Class I medical device that is not supplied sterile or does not
have a measuring function; – non-sterile systems and procedure packs for which the special conformity
assessment procedures have been applied; – devices supplied to individuals:
§ as part of a clinical trial;
§ through the Special Access Scheme;
§ by Authorised Prescribers; and
§ by personal importation. In conducting assessments for these products, the TGA assessment will take into account any existing EU conformity assessment evidence.
Once a manufacturer obtains the necessary conformity assessment evidence, they need to ensure that their conformity assessment procedures are appropriately maintained and that the ongoing requirements are met (for example, reporting adverse events and conducting regular quality systems audits).
Stakeholders Manufacturers of medical devices are affected by the requirement to apply an appropriate conformity assessment procedure to a medical device and to obtain the conformity assessment evidence required for inclusion of a medical device in the ARTG.
The classification of a medical device determines the conformity assessment procedures a manufacturer can choose to ensure that the device is adequately assessed. Fees are required from manufacturers to complete this assessment and are structured according to the type and cost of assessment required. Devices classified at a higher level of risk must undergo more stringent conformity assessment procedures than devices at lower risk and therefore have higher conformity assessment costs than lower risk devices.
Conclusion The current cost recovery arrangement requires relevant manufacturers to meet the cost of TGA conformity assessments and ensures the benefits of conformity assessment flow only to the relevant manufacturer. Therefore, it is appropriate to recover costs of conformity assessments from manufacturers where applicable.
c) Pre-Market: Regulation of ‘other therapeutic goods’ Within the devices pre-market area the TGA also regulates other therapeutic goods (OTGs) that are not medical devices including:
· Hospital, household and commercial grade disinfectants; and
· Menstrual tampons.
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OTGs are therapeutic goods that are not regulated as Medicines, Medical Devices or Biologicals and are regulated under Chapter 3 of the Therapeutic Goods Act 1989 and the Therapeutic Goods Regulations 1990.
Under the previous system of device regulation most OTGs were regulated as and called therapeutic devices. For reasons of transparency, they have been included in this CRIS as they are not covered by any other TGA CRIS.
OTGs must be either Registered or Listed in the ARTG by the Australian sponsor before they can be supplied in Australia.
Hospital, household and commercial grade disinfectants are Listed or Registered in the ARTG depending on the claims made in the instructions for use, labelling and promotional material by the manufacturer. Products must be registered where they make claims in respect to virucidal, sporicidal, tuberculocidal, fungicidal or other biocidal activity. However, most OTGs are listable.
Stakeholders
Sponsors of OTGs are required to enter these products in the ARTG. Sponsors must pay application fees to the TGA for the cost of assessing applications for Listing or Registration on the ARTG, and pay annual charges to TGA for as long as they continue to import and supply OTGs in Australia.
Fees are structured according to the type and cost of evaluation required. OTGs that are required to be Registered in the ARTG undergo more stringent evaluation procedures than Listed OTGs and consequently sponsors of Registered OTGs pay higher application evaluation fees and annual charges.
OTGs which are required to be registered are specified in Schedule 3 of the Therapeutic Goods Regulations 1990. OTGs which are not required to be registered, or are not excluded or exempted, are required to be listed in the ARTG and are specified in Schedule 4 of the Therapeutic Goods Regulations 1990.
Conclusion
The current cost recovery arrangement requires OTGs to be registered or listed by each sponsor, ensuring the benefits of registering or listing on the ARTG flow only to the relevant sponsor. Therefore, it is appropriate to recover costs of registering or listing of OTGs on the ARTG from sponsors.
d) Post-market activities: Review of ARTG entries of medical devices and Incident Report Investigation Scheme (IRIS)
Once a medical device has been included in the ARTG the device must continue to meet all the regulatory requirements that were required for the approval, including the requirements for safety, quality and performance.
The TGA has mandatory requirements for all manufacturers and sponsors of medical devices. These requirements are intended to collect and monitor information about medical devices and their performance in use, so that appropriate regulatory action can be taken. The requirements facilitate the systematic investigation of failures and/or deviations in the way a device performs, in an attempt to reduce the potential for an adverse event occurring again.
The TGA has a comprehensive strategy for ongoing monitoring and vigilance for medical devices, which includes four major components:
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· the sponsor’s ongoing responsibilities;
· the manufacturer’s ongoing obligations;
· ongoing monitoring; and
· vigilance, including adverse-event management.
The TGA undertakes post-market reviews of ARTG entries of medical devices to verify compliance with the legislative requirements, and to investigate issues reported in relation to medical devices included on the ARTG. These reviews are conducted to determine if the device continues to meet the Essential Principles for quality, safety and performance and that the sponsor is complying with the conditions of inclusion following their supply in the Australian market.
Stakeholders
The key stakeholders for the post-market regulation of medical devices include:
· sponsors—who are responsible for the legal supply of the device in Australia;
· manufacturers as defined in section 41BG of the Therapeutic Goods Act 1989;
· users—consumers and healthcare professionals who, by voluntarily reporting concerns with devices, enable issues to be identified and corrective action to be taken;
· state and territory health departments; and
· industry bodies.
Conclusion
Reviews of ARTG entries of medical devices and IRIS activities are undertaken across classes of devices or impact the broader integrity of the therapeutic goods regulatory system. For this reason, it is appropriate to recover costs of reviews of ARTG entries and IRIS activities from sponsors of medical devices via an annual charge associated with the maintenance of a sponsor’s ARTG entry, spreading the costs of these post market activities across all medical devices.
e) Post-market activities: Medical device recalls
TGA coordinates the conduct of recalls of therapeutic goods in Australia. This involves liaison with the sponsor/supplier of the therapeutic good. A Recall is an action taken to resolve a problem with any supplied therapeutic goods for which deficiencies in quality, efficacy or safety have been identified.
Recalls vary in the risk particular medical devices with identified deficiencies pose to safety. A recall can occur because of simple problems, such as labelling or packaging errors, or more serious problems including an increase in expected side effects or the identification of unexpected side effects.
Stakeholders
Stakeholders for the medical device recalls include:
· sponsors—who are responsible for the legal supply of the device in Australia;
· manufacturers as defined in section 41BG of the Therapeutic Goods Act 1989;
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· users—consumers and healthcare professionals who by voluntarily reporting concerns with devices enable issues to be identified and corrective action to be taken;
· state and territory health departments; and
· industry bodies.
Conclusion
Recall activities occur across classes of devices or impact the broader integrity of the therapeutic goods regulatory system. In addition, recovering costs of recall activities from relevant sponsors directly is likely to reduce the effectiveness of the therapeutic goods regulation or the level of compliance. For this reason, it is appropriate to recover costs of recalling a medical device from sponsors via an annual charge associated with the maintenance of a sponsor’s ARTG entry, spreading the costs of these activities across all medical devices.
f) Post-market activities: Advertising Review Advertisements for therapeutic goods, including medical devices that are directed to consumers are required to comply with:
· Chapter 5 of the Therapeutic Goods Act 1989;
· Divisions 3 and 4, Part 2 of the Therapeutic Goods Regulations 1990; and
· Therapeutic Goods Advertising Code (TGAC).
The advertising of therapeutic goods, including medical devices, is regulated in Australia under a co-regulatory arrangement and involves:
· the TGA;
· the therapeutic goods industry;
· healthcare professionals;
· consumers;
· the advertising industry;
· the Australian Competition and Consumer Commission (ACCC);
· Medsafe in New Zealand; and
· the media.
Advertisements for medical devices do not have to be approved prior to publication or broadcast, however, the advertisements must comply with the conditions of inclusion on the ARTG detailed in section 41FN(5) of the Act, Division 3 and 4, Part 2 of the Therapeutic Goods Regulations 1990 and the Therapeutic Goods Advertising Code (TGAC).
The Complaints Resolution Panel considers complaints about advertisements for medical devices and OTGs appearing in broadcast and mainstream print media, billboards, cinema films, the Internet etc. As advertisements do not require pre-approval, the majority of activity in this area is related to assessing the validity of complaints about current advertisements that are claimed as not meeting the requirements.
Stakeholders
Stakeholders include:
· the therapeutic goods industry;
· health practitioners;
· consumers;
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· the advertising industry;
· the Australian Competition & Consumer Commission (ACCC);
· Medsafe in New Zealand;
· the media;
· The Therapeutic Goods Advertising Code Council; and
· Complaints Resolution Panel.
Conclusion
TGA does not charge for lodging a complaint with the Complaints Resolution Panel. To do so would be contrary to the intent of allowing all complaints about advertising to be appropriately examined. The costs of validating complaints are recovered from sponsors of medical devices via annual charges which are linked to the maintenance of the sponsor’s ARTG entry, spreading the cost of the function evenly across all products.
g) Post-market activities: Regulation of ‘other therapeutic goods’ (OTGs):
Post-market activities relating to OTGs, including IRIS activities, Reviews, Recalls and advertising activities are similar to the post market activities relating to Medical Devices, as discussed in items d) to f). The difference in regulation is that OTGs are administered under Chapter 3 of the Therapeutic Goods Act 1989 as opposed to Chapter 4 for medical devices. Consequently the regulatory rules applicable to each vary. However, the general approach is similar.
Conclusion
Post market activities in relation to OTGs occur across classes of devices or impact the broader integrity of the therapeutic goods regulatory system. Therefore it is appropriate to recover costs of post-market activities relating to OTGs from sponsors via annual charges linked to the maintenance of relevant ARTG entries. There is no delineation of the funding for postmarket activities between medical devices and OTGs, with OTGs making up a minor component of TGA activities.
3. Design 3.1 Design of Cost Recovery Arrangement 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 introducers (sponsors) and manufacturers. Fees and charges are prescribed in regulations made under the Therapeutic Goods Act 1989, Therapeutic Goods (Medical Devices) Regulations 2002 and the Therapeutic Goods (Charges) Act 1989.
3.2 Basis of Charging – Fee or Levy a) Fees
The TGA operates on a close to 100% cost-recovery basis and collects its revenue through annual charges, and application, evaluation, audit, and assessment fees. The fees and charges currently applicable to medical devices are available on the TGA website.
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Fees are used for pre-market services performed. These include the inclusion of devices onto the ARTG; conformity assessment; and the regulation of other therapeutic goods (OTGs). The fees are designed to reflect as closely as possible the underlying costs of the activities performed.
b) Levy
Annual charges are payable each financial year for medical devices that are on the ARTG for any part of the financial year in which it is included. The ARTG is the TGA’s record of the devices that are able to be supplied.
An annual charge is payable for maintaining a medical device on the ARTG. The annual charges vary depending on the classification of the device. Different rates apply for different classes of medical devices.
Annual charges are used to recover costs that cannot be reasonably assigned to individual sponsors. Examples include post-market monitoring activities, management of recalls and advertising complaints. Ongoing monitoring by the TGA is a series of activities carried out to ensure that regulatory compliance and safety of the medical devices continues after supply to the Australian market.
A new medical device approved at any time during a financial year will be liable for the full annual charge for that financial year, in addition to the application and/or assessment fees paid. There is no reduction in the annual charge if a medical device is only on the ARTG for part of a year.
Annual charges are levied as a tax for cost-recovery purposes through the Therapeutic Goods (Charges) Act 1989. Invoices for annual charges are generally issued to sponsors in July/August each year for all products on the ARTG as at 1 July of that year.
c) Review of charging
In 2012, TGA is undertaking a comprehensive review of its cost recovery arrangements, including an update of its Activity Based Costing (ABC) model methodology. The outcomes of the review will inform the development of the new CRIS for medical devices and other therapeutic goods regulated by TGA. The new CRIS is expected to commence in 2013-14.
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4. Cost recovery model 4.1 Cost Recovery Activities The following table summarises the cost recovery activities and their associated charges. Activities are split into pre market and post market activities.
Table 1: List of Cost Recovery Activities and associated Charges
Ref Activity Name Description Charge Title
1.1 Pre-market activities: Including medical devices on the Australian Register of Therapeutic Goods (ARTG)
Expenses associated with the processing of an application (See description at section 2.3 a)
Included devices – Application Fees
1.2 Pre-market activities: Conformity assessment
Expenses incurred with the issuing of conformity assessment certification. (See description at section 2.3 b)
Included devices – Conformity Assessment Fees
1.3 Pre-market activities: Regulation of ‘other therapeutic goods’ (OTGs)
Expenses associated with the processing of an application (See description at section 2.3 c)
Registered and Listed devices – Application Fees
2.1 Post-market activities: Review of ARTG entries of medical devices and Incident Report Investigation Scheme (IRIS)
Expenses associated with ongoing monitoring of ARTG entries and IRIS. (See description at section 2.3 d)
Included devices – Annual Charges
2.2 Post-market activities: Medical device recalls
Expenses associated with medical device recall activities. (See description at section 2.3 e)
Included devices – Annual Charges
2.3 Post-market activities: Advertising Review
Expenses associated with the complaint investigation activities. (See description at section 2.3 f)
Included devices – Annual Charges
2.4 Post-market activities: Regulation of ‘other therapeutic goods’ (OTGs)
Expenses associated with all post market activities for OTGs. (See description at section 2.3 g)
Registered and Listed devices – Annual Charges
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4.2 Cost Components Main components of TGA’s costs incurred in delivering regulatory activities in relation to medical devices include employee expenses, supplier expenses and overhead costs. Employee expenses relate to the costs of those staff directly engaged in pre and post-market activities. Supplier expenses cover the supply costs of the staff directly engaged, such as consultants, external evaluators, travel and stationery expenses. The overhead costs reflect the relative contribution from medical devices activities to the broader costs associated with TGA management, including provision of financial, legal, human resource and IT services, parliamentary process support and property operating expenses.
The current cost allocation across all therapeutic goods regulatory activities is based on the ABC model developed in 2005. Therefore, the costs of therapeutic goods regulatory activities do not take into account significant recent changes that have occurred to the TGA’s organisational structure, including setting up a separate office for the post market function, and a review of business processes within the TGA. For medical devices, additional activities also include implementation of recommendations from the Health Technology Assessment review, work on the recent Senate Inquiry, and the general increase in the level of scrutiny that is required for the approval and monitoring of the performance of medical devices. These additional activities have resulted in the increased level of executive effort attributable to medical devices as compared to the level built into the 2005 costing model.
The costs (and associated revenue) for medical devices regulatory activities include those associated with the new In-Vitro Diagnostic device (IVD) arrangements which commenced in March 2010 and are covered in a separate CRIS. The currently used (2005) costing model does not allow separating costs attributable to IVDs from the rest of medical devices. TGA estimates that IVDs account for approximately 7% of revenue across all medical devices. The feasibility of separating IVD costs and revenues is being investigated as part of the broader review of TGA’s cost recovery arrangements.
These developments have necessitated a broader review of TGA’s cost recovery activities (to be completed in 2012), including an update of the ABC model, which will result in a more accurate allocation of costs to specific therapeutic goods regulatory activities. In the interim period, fees and charges for medical devices will continue to be based on the 2005 costing model which will show up as an over-recovery in this CRIS. This issue will be addressed in the new CRIS based on the outcomes of the cost recovery review.
4.3 Volume and/or Demand Assumptions TGA expects that the demand for its regulatory services for the majority of medical devices will remain relatively unchanged as compared to previous years.
The main change in demand estimates (and associated revenue) to occur in 2012-13 reflects the proposed change in the risk classification of hip, knee and shoulder joint implants from Class IIb to Class III.
The Health Technology Assessment review conducted significant consultation on the appropriateness or otherwise of the current level of regulation. The regulation of these joint implants as Class IIb was generally agreed to be inadequate and it would be more appropriate to reclassify them as Class III. This change will increase the level of pre-market regulation of these high risk devices. As Europe has already undergone this transition, a large proportion of manufacturers will already hold the required evidence reducing additional regulatory burden on industry.
In estimating demand for medical devices activities, the TGA has:
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· estimated the number of existing Class IIb hip, shoulder and knee joint implant ARTG entries that will need to be reclassified to Class III ARTG entries;
· estimated that each such Class IIb ARTG entry will result in an average of five Class III ARTG entries;
· reduced the number of Class IIb ARTG entries accordingly; and
· estimated the number of new Class III ARTG applications for hip, shoulder and knee joint implants.
The estimated number of reclassifications is based on a review of the ARTG, which indicated that as at 30 June 2011 there were 436 entries using the relevant Global Medical Device Nomenclature (GMDN) codes to indicate they will need to be reclassified. The GMDN database is a collection of terms that use a unique 5-digit code to describe particular devices. GMDN codes are used by regional or national regulatory bodies to consistently describe medical devices and to assist in the consistent assessment of devices before they are approved for supply, and ongoing monitoring of devices once they are available for supply.
It is anticipated that annual applications lodged will continue at the rate of approximately 40 per year, the average from the last four years. A cancellation rate of 10% is estimated, consistent with recent levels of cancellation, and an annual increase in fees and charges to reflect increases in costs for 2012-13. An appropriate rate of indexation of TGA’s fees and charges, which is commensurate with an increase in costs, is also being included as part of TGA’s broader cost recovery review.
4.4 Charging Structure See attachment A for a list of 2012-13 fees and charges applicable to medical devices.
The 2012-13 fees and charges represent the 2011-12 fees and charges indexed by 3.6% being the indexation model agreed between TGA and industry. It is comprised of 50% of the ABS Labour Price Index and 50% of the Consumer Price index.
These fees and charges also include a factor of 2% to cover the costs of the delivery of recommendations included in the document TGA Reforms: a blueprint for TGA’s future which can be accessed from the TGA website. A CRIS addendum that covers the cost recovery arrangements for the increased costs is also available on the TGA website.
5. Projected expenses and revenue for duration of CRIS 5.1 Projected Expenses and Revenue The table below sets out the projected expenses and revenue for medical devices regulatory activities, including IVDs. Projections with and without the effect of
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reclassification of the hip, knee and shoulder joint implants are presented for comparison purposes.
Table 2: Estimated Expenses and Cost Recovery Revenue for Medical Devices in 2012-13
Medical Devices Projections
($,000) 2011-12
without classification
amendment 2012-13
with classification
amendment 2012-13
Revenue 25,640 27,075 28,005 Expenses Employee Expenses 9,196 9,711 10,745 Supplier Expenses 841 889 889 Overhead Expenses 11,533 12,178 12,178 Total Expenses 21,570 22,778 23,812 Surplus/(Deficit) 4,069 4,297 4,193
The above variation in projected revenue is the consequence of a number of factors.
For all new applications for relevant joint implants the application fees will be increased from the Class IIb rate to Class III rate. A Class III application is subject to a mandatory audit and the relevant audit fee will be applicable. Finally, under the Class III rules individual devices must be identified as opposed to a kind of device under the Class IIb rules. Therefore, there will be an approximately fivefold increase in the number of applications.
As a result, the revenue with the change in classification is higher than the revenue without the change in classification by approximately $930,000. As explained above, this is due to the increased number of applications at the higher Class III rate (estimated at $230,000); mandatory application audits (estimated at $523,000); and increased annual charges (estimated at $230,000). These increases are partially offset by the reduction in Class IIb application fee revenue (estimated at $36,000).
To make the transition for industry more efficient and cost effective, TGA will allow a number of fee exemptions. This will encourage lodgement of applications throughout the transition period (2012-13 to 2013-14), while not resulting in significant increase in costs for TGA.
For reclassification applications received in the first year of transition (2012-13), application fees will not be payable. However, application fees will be payable for reclassification applications received in the second year of transition (2013-14).
The requirement for a mandatory audit will be waived for devices which applied for reclassification during the two-year transition period.
Class III annual charges will also not be charged where relevant devices have been reclassified during the two-year transition period. Note that an application for
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reclassification to Class III does not automatically remove the relevant Class IIb entry from the ARTG. In this situation the Class IIb charges will continue to apply to relevant devices until sponsor decides to cancel those entries at which time Class III charges will commence.
The impact of the waivers and exemptions is a total reduction in forecast revenue estimated at $1.7 million in 2012-13. As explained above, these reductions relate to the waiving of application fees (estimated at $401,000); annual charges (estimated at $401,000); and mandatory audit fees (estimated at $910,000). The fee revenue in the table above excludes $1.7 million foregone due to exemptions and waivers.
The TGA will be in a position to absorb additional costs in relation to activities which would have been funded through foregone revenue.
Any other effects of reclassification changes on the costs of undertaking medical devices regulatory activities will be assessed as part of the ABC model update, with the outcomes expected to inform the setting fees (and development of a new CRIS) for 2013-14 onwards.
6. Ongoing monitoring 6.1 Monitoring Mechanisms The TGA will closely monitor and report on the transition of Class IIb joint implants to Class III during 2012-13. Where take-up is not as anticipated, the industry will be consulted on how best to manage the transition, with the outcomes informing the development of a new CRIS.
Cost recovery revenue will be reported in DoHA’s Annual Report in accordance with the Finance Minister’s Orders.
6.2 Stakeholder Consultation The primary mechanism used to consult with industry on TGA’s activities, performance and costs is the TGA-Industry Consultative Committee (TICC). The TICC meets twice a year to examine TGA’s budget and progress on the business plan, with industry associations consulted separately on regulatory matters and cost impacts relating to specific sectors. The TICC includes three major medical devices industry associations (the Medical Technology Association of Australia, Ausbiotech and the Australian Dental Industry Association). Generally the consultation on regulatory reforms also involves a public consultation process, which ensures that all interested stakeholders have an opportunity to participate in the consultative processes.
The proposed change to the regulations for the classification of hip, knee and shoulder joint implants has been the subject of a comprehensive consultation with stakeholders.
On 2 November 2010, the TGA released a discussion paper on proposed reforms to the medical devices regulatory framework <http://www.tga.gov.au/newsroom/consult-devices-reforms-101130.htm>.
The paper addressed Recommendation 8 of the Review of Health Technology Assessment (HTA) in Australia
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<http://www.health.gov.au/internet/hta/publishing.nsf/Content/review-1>, released in February 2010, and in particular, the recommendation that the TGA should:
· Increase the rigour of regulatory assessment of higher risk medical devices by 2011 to ensure an appropriate level of evidential review is undertaken to ensure safety, quality and efficacy of these devices prior to entry onto the Australian Register of Therapeutic Goods and to provide a sound evidence basis for Commonwealth HTA processes.
The TGA invited submissions, views and input from all interested parties by Friday 17 December 2010. A total of 77 submissions were received and are available at: <http://www.tga.gov.au/newsroom/consult-devices-reforms-101130.htm>.
An overview of these submissions is available at <http://www.tga.gov.au/newsroom/consult-devices-reforms-101130-overview.htm>.
A summary table of comments for each proposal is also available at: Reforms in the medical devices regulatory framework: Submissions received <http://www.tga.gov.au/newsroom/consult-devices-reforms-1011.htm#submissions>.
6.3 Periodic Review This interim CRIS has been developed to cover the 2012-13 financial year. A comprehensive re-examination of the cost base applicable across TGA will occur during 2012. An outcome of that process will inform the development of a revised CRIS for medical devices for the 2013-14 and subsequent financial years.
7. Certification I certify that this CRIS complies with the Australian Government Cost Recovery Guidelines.
.................................................................................................. Secretary Department of Health and Ageing
Date: ...................June 2012 Histor
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8. Cost recovery linksCost Recovery The Australian Government Cost Recovery Guidelines and the accompanying Finance Circular can be found at:
Regulatory Impact Statements
http://www.finance.gov.au/financial-framework/financial-management-policy-guidance/cost-recovery.html
For proposals that involve regulation or amendment to regulation that affects business, a Regulation Impact Statement may be required. Contact the Office of Best Practice Regulation for further information below:
http://www.finance.gov.au/obpr/index.html
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ATTACHMENT A
Table 3: Registered devices (Other Therapeutic Goods/therapeutic devices regulated under Chapter 3 of the Therapeutic Goods Act 1989)
Registered devices 2012-13
Fee $
Application fee - high level registration 3,820
Additional/concurrent - high level registration 1,910
Application fee - low level registration 1,280
Additional/concurrent - low level registration 640
Processing fee - high level registration (variation to an existing registration) 390
Processing fee - low level registration (variation to an existing registration) 390
Annual charge - therapeutic devices such as IVDs, tampons and disinfectants 1,440
Annual charge 2,520
Device clinical trials Fee $
Clinical Trial Notification 310
Clinical Trial – other 2,400
Clinical Trial - Schedule 3 Part 1 Item 3 15,900
Evaluation fees Initial application fee $
Concurrent application fee $
Abridged application fee $
High Level Registration - type of data
Design/materials/testing 28,100 4,790 9,580
Manufacture/quality control 19,100 4,790 7,970
Biocompatibility/pre-clinical
19,100 4,790 7,970
Human clinical 32,100 4,790 32,100
Software 19,100 4,790 7,970
Confirmatory review of clinical information
N/A N/A 7,970
Confirmatory review of overseas evaluation report
19,100 4,790 7,970
Low Level Registration - type of data
Design/materials/testing 4,790 N/A N/A
Manufacture/quality control 4,790 N/A N/A
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Biocompatibility/pre-clinical
4,790 N/A N/A
Human clinical 4,790 N/A N/A
Software 4,790 N/A N/A
Diagnostic Goods Control Reagent
4,790 N/A N/A
Disinfectants and diagnostic goods for in vitro use
15,900 N/A N/A
Variation - High Level Registration - type of data
Design/materials/testing 9,580 1,750 N/A
Manufacture/quality control 7,970 1,750 N/A
Biocompatibility/pre-clinical
7,970 1,750 N/A
Human clinical 32,100 1,750 N/A
Software 7,970 1,750 N/A
Confirmatory review of clinical information
7,970 N/A N/A
Confirmatory review of overseas evaluation report
7,970 1,750 N/A
Variation - Low Level Registration - type of data
Design/materials/testing 1,280 N/A N/A
Manufacture/quality control 1,280 N/A N/A
Biocompatibility/pre-clinical
1,280 N/A N/A
Human clinical 1,280 N/A N/A
Software 1,280 N/A N/A
Diagnostic Goods Control Reagent
1,280 N/A N/A
Disinfectants and diagnostic goods for in vitro use
3,210 N/A N/A
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Table 4: Listed devices (Other Therapeutic Goods/therapeutic devices regulated under chapter 3 of the Therapeutic Goods Act 1989)
Listed devices 2012-13 Fee $
Application fee 390
Processing fee (variation to an existing listing) 390
Application for exemption under Section 14 410
Annual charge 1,280
Annual charge - therapeutic devices such as IVDs, tampons and disinfectants 730
Evaluation fees Fee $
Evaluation for assessing whether a listable or listed device is safe for the purposes for which it is to be used
15,900
Listed devices - export only Fee $
Application fee 390
Processing fee (variation to an existing listing) 390
Listed devices - export certificates Fee $
Export Certificate for listed/listable device 140
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Table 5: Annual Charges and Conformity Assessment for Included devices (medical devices regulated under chapter 4 of the Therapeutic Goods Act 1989)
Medical Devices - Annual Charges 2012-13
Fee $
(a) Class AIMD medical device 1,150
(b) Class III medical device 1,150
(c) Class IIb medical device 890
(d) Class IIa medical device 890
(e) Class I medical device – sterile 580
(f) Class I medical device - measuring function 580
(g) Other Class I medical device 70
Conformity Assessment all procedures Fee $
Application for Conformity Assessment Certificate - All Procedures 870
Conformity Assessment - Initial Assessment Fee $
(a) Schedule 3, Part 1 - Full Quality Management System Audit; or 26,000
(b) Schedule 3, clause 1.6 - Design Examination; or 51,200
(c) Schedule 3, Part 2 - Type Examination (including management of testing, analysis, and reporting on examination of the type); or
35,700
(d) Schedule 3, Part 3 - Verification (including management of testing, analysis, and reporting on verification tests); or
24,900
(e) Schedule 3, Part 4 - Production Quality Management System Audit; or 22,700
(f) Schedule 3, Part 5 - Product Quality Management System Audit 19,400
Conformity Assessment – Changes Fee $
(a) Schedule 3, Part 1 - Full Quality Management System Audit; or 15,600
(b) Schedule 3, clause 1.6 - Design Examination; or 30,800
(c) Schedule 3, Part 2 - Type Examination (including management of testing, analysis, and reporting on examination of the type); or
21,500
(d) Schedule 3, Part 4 - Production Quality Management System Audit; or 13,600
(e) Schedule 3, Part 5 - Product Quality Management System Audit 11,800
Conformity Assessment Surveillance Audits Fee $
(a) Schedule 3, Part 1 - Full Quality Management System Surveillance Audit; or 7,560
(b) Schedule 3, Part 4 - Production Quality Management System Surveillance Audit 7,560
(c) Schedule 3, Part 5 - Product Quality Management System Surveillance Audit 7,560
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Conformity Assessment - Review of Certificate Fee $
(a) Schedule 3, clause 1.6 - Design Examination re-assessment 46,400
(b) Schedule 3, Part 2 - Type Examination re-assessment (including management of testing, analysis, and reporting on examination of the type)
35,700
Considering a submission to the Secretary in relation to a proposed suspension of a conformity assessment certificate
Fee $
Considering a submission to the Secretary in relation to a proposed suspension of a conformity assessment certificate
6,170
Conformity Assessment - Additional Fees Fee $
Assessment of a medicinal component of a device*
*(Refer to Items 4(bb), 5(b), and 5(d) of Part 2 of Schedule 9 of the Therapeutic Goods Regulations 1990)
As per TG Regs Items 4(bb), 5(b), and 5(d)
Supplementary assessments to Items 1.2, 1.3, 1.9 or 1.10 $360 per assessor hour
Reasonable travel, accommodation and allowance costs including travel both in and outside Australia
At Cost
Assessor preparation for assessments conducted outside Australia $360 per assessor hour
Cost of testing incurred in purchasing, establishing and setting up the equipment to be used to conduct the tests and the direct costs of conducting the tests (including the cost of any consumables used to conduct the tests)
At Cost
Conformity Assessment - Abridged Fee Fee $
Conformity assessment where assessment has already been undertaken by the TGA for the EU or EFTA Mutual Recognition Agreement and there is sufficient information to allow the assessment to be abridged
3,520
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Table 6: Application fees for Included devices (medical devices regulated under chapter 4 of the Therapeutic Goods Act 1989)
Inclusion in the ARTG - Application for an inclusion in the Register 2012-13
Fee $
(a) Class AIMD medical device 1,150
(b) Class III medical device 1,150
(c) Class IIb medical device 890
(d) Class IIa medical device 890
(e) Class I medical device - sterile 890
(f) Class I medical device - measuring function 890
(g) Other Class I medical device N/A
Inclusion in the ARTG - Application Audit Assessment Fee $
(a) Level 1 - verification of sponsor's application and evidence of conformity 3,360
(b) Level 2 - Level 1 activities plus review of evidence of conformity 6,170
Considering submissions to the Secretary in relation to a proposed suspension of a kind of medical device from the Register
6,170
Variation to an ARTG inclusion entry if the entry is incomplete or incorrect 390
Other fees Fee $
Application for consent of secretary to importation into Australia, supply for use in Australia, or exportation from Australia of a medical device that does not conform to the Essential Principles
390
Notification of intention to sponsor a clinical trial of a medical device to be used solely for experimental purposes in humans - Clinical Trial Notification Scheme (CTN)
310
Application for approval to use a specified kind of medical device solely for experimental purposes in humans - Clinical Trial eXemption Scheme (CTX)
15,900
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Therapeutic Goods Administration PO Box 100 Woden ACT 2606 Australia
Email: [email protected] Phone: 1800 020 653 Fax: 02 6232 8605
Reference/Publication R12/875355 www.tga.gov.au
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