EXPLANATORY STATEMENT

 

Select Legislative Instrument 2009 No. 141

 

Therapeutic Goods Act 1989

 

Therapeutic Goods Amendment Regulations 2009 (No. 3)

 

The Therapeutic Goods Act 1989 (the Act) establishes and maintains a national system of controls for the quality, safety, efficacy and timely availability of therapeutic goods that are used in Australia or exported from Australia. The Therapeutic Goods Administration (the TGA) is responsible for administering the Act.

 

The Act requires that a therapeutic good must be registered, listed or included in the Australian Register of Therapeutic Goods (the Register) before it can be lawfully imported into, manufactured in, supplied in, or exported from Australia. In addition, the Act generally requires a person to obtain a manufacturing licence to manufacture goods in Australia. An annual charge is payable in respect of the registration and listing of therapeutic goods, inclusion of a kind of medical device in the Register, and in respect of a manufacturing licence issued under the Act.

 

Annual charges are considered to be taxes and, in accordance with section 55 of the Constitution, are imposed by a separate taxing Act: the Therapeutic Goods (Charges) Act 1989. The provisions relating to the assessment, recovery and collection of the annual charges are, however, contained in the Act.

Subsection 63(1) of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters required or permitted to be prescribed by the Act, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. Paragraph 63(2)(h) of the Act provides that the regulations may prescribe fees in respect of matters under the Act or the regulations.

 

The purpose of the Regulations is to make amendments to the Therapeutic Goods Regulations 1990 to prescribe the relevant matters required under provisions of the Act that were added or amended by the Therapeutic Goods Legislation Amendment (Annual Charges) Act 2008. That Act made a number of changes to the existing regime for the imposition and collection of annual charges, to provide more transparency, accountability and clarity in the granting of exemptions from liability to pay annual charges.

 

The Regulations prescribe when the annual charge is payable for a new registration, listing or the inclusion of a kind of medical device in the Register. The Regulations also implement the criteria and requirements applying to the granting of an exemption from the liability to pay annual charges by a person whose turnover of the relevant goods entered in the Register is low value.

 

Details of the Regulations are set out in the Attachment.

 

Interested parties were consulted on a number of proposed changes to the current regulatory framework held in Parliament House during late July and early August 2008. These amendments were discussed during these consultations. These amendments have a nil to low impact on business, individuals and the economy and therefore do not require a regulatory impact statement.

 

The Act specifies no conditions that need to be met before the power to make the Regulations may be exercised.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations commence on 1 July 2009.

 

 

 

Authority: Subsection 63(1) of the Therapeutic Goods Act 1989.

 

ATTACHMENT

 

DETAILS OF THE THERAPEUTIC GOODS AMENDMENT REGULATIONS 2009
(NO. 3)

 

Regulation 1 provides for the Regulations to be referred to as the Therapeutic Goods Amendment Regulations 2009 (No. 3).

 

Regulation 2 provides for the Regulations to commence on 1 July 2009.

 

Regulation 3 provides for Schedule 1 to amend the Therapeutic Goods Regulations 1990 (the Principal Regulations).

 

 

SCHEDULE 1 – Amendments

 

Item [1]

This item omits the heading to Part 7 of the Regulations and substitute the new heading ‘Charges for registration, listing and inclusion, licences, exemption, costs and fees’.

 

The heading to Part 7 reflects the broader scope of Part 7 which now includes the administration and implementation of exemption from payment of annual charges for registration, listing and inclusion of therapeutic goods in the Register.

 

Item [2]

This item inserts new regulations as a consequence of amended section 44 and new section 44A of the Act and divide Part 7 into two Divisions. (The Therapeutic Goods Legislation Amendment (Annual Charges) Bill 2008 repealed section 44 and inserted a new section 44 that provides more flexibility in relation to the prescribing of dates for payment).

 

Subdivision 1 deals with annual charges for registration and listing of therapeutic goods and the inclusion of a kind of medical device in the Register.

 

Subdivision 2 deals with the administration and implementation of the exemption from liability by a person to pay annual charges for the current financial year on the ground that the turnover of a particular therapeutic good is a low value turnover. The criteria to be used in assessing “low value turnover” resulting in an exemption from the liability to pay annual charges are set out in Subdivision 2 of Part 7.

 

Subdivision 1 – Charges for registration, listing and inclusion of medical devices

 

Regulation 43AAA

Paragraph 44(1)(a) of the Act allows for the setting out of the dates when annual charges in relation to registered goods, listed goods, or medical devices included under Chapter 4 of the Act that commenced in a particular financial year (“new entries in the Register”) are payable. Regulation 43AAA prescribes that for the purposes of paragraph 44(1)(a) of the Act, an annual registration charge, annual listing charge or annual charge for inclusion in the Register for a financial year must be paid by no later than the last day of the month immediately following the month when the goods were entered in the Register. For example, if the goods are registered any time in July, the annual charge is payable by 31 August.

 

Subdivision 2 – Low value turnover

Subdivision 2 deals with the administration and implementation of the exemption from liability to pay an annual charge in relation to registered or listed goods, or goods included in the Register under Chapter 4 of the Act on the basis that the turnover of the therapeutic goods concerned are of a low value turnover. The authority for these regulations is provided for by section 44A of the Act.

 

Regulation 43AAB

Regulation 43AAB provides for the definitions of approved person, existing entry, low value turnover, new entry and turnover for the purposes of new Subdivision 2.

 

Paragraph 44A(1)(a) of the Act provides that the regulations may make provision for and in relation to exempting a person from liability to pay an annual registration, annual listing charge or annual charge for inclusion in the Register for the current financial year if the person’s turnover of the therapeutic goods concerned for the financial year specified in the regulations is of a low value turnover. Subsection 44A(7) of the Act provides that the regulations may specify when a person’s turnover of therapeutic goods for a particular financial year is of low value and that the regulations can specify different rules for different therapeutic goods.

 

Regulation 43AAB provides that low value turnover means turnover that is not more than 15 times the applicable annual charge payable for a particular therapeutic good for a particular financial year. For example, if the payable annual charge for a therapeutic good is $1,000, the turnover of that therapeutic good is a low value turnover if the turnover is $15,000 or less. The criterion for low value turnover is not significantly different from the criterion specified in current regulation 4C of the Therapeutic Goods (Charges) Regulations 1990 for the purposes of making a declaration that the turnover is of low volume and low value (also being repealed). Regulation 4C specifies that if the applicable annual charge is more than 6.8% of the wholesale turnover, the turnover is of low value of and low value. For example, if the annual charge payable for a particular therapeutic good is $1,000, the exemption applies if this is equivalent to more than 6.8% of the actual wholesale turnover, that is, if the actual gross receipts in relation to those goods are below $14,706.

 

Subsection 44A(9) of the Act provides that the definitions of approved person and turnover is specified in the regulations.

 

The Australian National Audit Office (ANAO) in their Financial Statement Audit Report for 2006-2007 for the Department of Health and Ageing raised a concern in relation to the lack of third party confirmation that the applicant does meet the eligibility criteria for the low value exemption. Subparagraph 43AAC(2)(b)(i) and paragraph 43AAE(1)(b) require the person to submit a statement of actual turnover signed by an approved person. It is expected that a person who is required to sign the statement should have an accounting knowledge. Therefore, an approved person is defined to be a qualified accountant as prescribed under section 88B of the Corporations Act 2001. To address the ANAO’s concern in relation to third party certification, the person applying for the exemption or an employee of that person is excluded from the definition of an approved person.

 

Regulation 43AAB also provides for the definition of turnover in relation to a therapeutic good to mean gross dollar receipts (excluding GST) from sales of the therapeutic goods in Australia for a financial year, including retail and wholesale sales. This definition of turnover is more specific as this includes dollar receipts excluding GST.

 

The definitions of the terms existing entry and new entry are included to provide guidance on the application of these regulations. New entry for therapeutic goods, means an entry for registration, listing or inclusion of those therapeutic goods in the Register that commenced in the financial year to which the annual charge is payable. This also indicates that the goods have been entered in the Register for the first time and it is the first financial year that the annual charge in relation to the goods is payable.

 

Regulation 43AAC

Regulation 43AAC sets out the procedure for submitting an application for an exemption from liability to pay the annual charge for a particular therapeutic good for the current financial year on the basis that the turnover of the therapeutic good concerned for the applicable financial year is a low value turnover.

 

Subregulation 43AAC(1)

Subregulation 43AAC(1) provides that a person who is liable to pay the annual registration charge, annual listing charge or annual charge for inclusion in the Register in relation to a particular therapeutic good can apply to the Secretary of the Department of Health and Ageing (the Secretary) for an exemption from liability to pay the relevant annual charge on the ground that the turnover of the therapeutic good concerned for the applicable financial year is a low value turnover.

 

Subregulation 43AAC(2)

Subregulation 43AAC(2) sets out the procedure and requirements in relation to an application for an exemption. The application must be submitted in a form approved by the Secretary, be accompanied by the relevant statement described in paragraph 43AAC(2)(b), and be accompanied by the applicable fee and must be received by the Secretary before the date prescribed in paragraph 43AAC(2)(c).

 

Paragraph 43AAC(2)(b) prescribes different requirements for an existing entry and a new entry.

 

For an existing entry subparagraph 43AAC(2)(b)(i) requires that the application must be accompanied by a statement setting out the actual turnover of the particular therapeutic good for the previous financial year and must be signed by an approved person. For example, an application by a person under subregulation 43AAC(2)(b) in relation to an existing entry for the 2009-10 financial year must be accompanied by a statement setting the actual turnover in dollar amounts of the therapeutic good concerned for the 2008-09 financial year.

 

For a new entry, subparagraph 43AAC(2)(b)(ii) requires the submission of a statement of the estimated turnover of the therapeutic goods concerned for the current financial year because a new entry, by definition, does not have any turnover in the previous financial year. It also requires the statement of the estimated turnover to be signed by the person liable to pay the charge, and not by an approved person.

 

As the TGA is a cost recovery agency it needs to recover its costs appropriately through fees and charges. Subsection 44A(2) of the Act allows for the charging of a specified fee where an application for exemption has been made. Subparagraph 43AAC(2)(b)(iii) provides for the payment of the prescribed fees subject to regulation 45A which prescribes the maximum fee payable in a financial year by a particular person applying for exemption under this subparagraph.

 

Paragraph 43AAC(2)(c) of the Act sets the deadlines for the submission of applications under regulation 43AAC. Subparagraph 43AAC(2)(c)(i) specifies a uniform date of 2 September of the financial year to which the annual charge relates to be the deadline for the submission of a valid exemption application for an existing entry. For a new entry, subparagraph 43AAC(2)(c)(ii) specifies that a valid exemption application must be received by the Secretary at least 21 days before the date of payment of the applicable annual charge in relation to a particular good for the financial year concerned. Subregulation 43AAC(2) makes it clear that in all circumstances an application for exemption from payment of an annual charge must be submitted before the due date for the payment of the applicable annual charge in relation to the particular therapeutic good for the relevant financial year. There will be no extension provided in these regulations that allows for the consideration of applications for exemption from liability to pay annual charges received by the TGA after the dates mentioned in paragraph 43AAC(2)(c). Applications for exemption from the payment of annual charges that do not conform with the requirements set out in regulation 43AAC will be treated as invalid applications.

 

Subregulation 43AAC(3)

This subregulation makes it clear that the statement of actual turnover specified in subparagraph 43AAC(2)(b)(i) and the statement of estimated turnover specified in subparagraph 43AAC(2)(b)(ii) must be in a form approved by the Secretary.

 

Regulation 43AAD

Regulation 43AAD set out the decision making process by the Secretary in relation to an exemption application received under subregulation 43AAC(1).

 

Subregulation 43AAD(1)

This subregulation prescribes that within 21 days after receiving an application under subregulation 43AAC(1), the Secretary must decide whether or not to grant the exemption. This subregulation also stipulates that if the decision is a refusal to grant the exemption, the Secretary must give written notice to the person of the decision and the reasons for that decision. In case of refusal by the Secretary to grant the exemption, the person may apply to the Administrative Appeals Tribunal for review of the decision as prescribed by new regulation 43AAI.

 

Subregulation 43AAD(2)

Subregulation 43AAD(2) includes the consequences of a decision by the Secretary not to grant the exemption. Paragraphs 43AAD(2)(a) and (b) prescribe the consequences where an application for exemption has been refused by the Secretary. If the Secretary refuses to grant the exemption in relation to an existing entry, the applicant must pay the applicable annual charge for which the exemption was sought within the later of 14 days after the notice is given under paragraph 43AAD(1)(b) or the date mentioned in paragraph 44(1)(b) of the Act. If the Secretary refuses to grant the exemption in relation to a new entry, the applicant must pay the applicable annual charge within the later of 14 days after notice is given under 43AAD(1)(b) or the date mentioned in regulation 43AAA.

Regulation 43AAE

Regulation 43AAE applies where an exemption has been previously granted for a new entry based on the estimated turnover of the therapeutic good for the current financial year. This regulation puts an onus on the person who was given exemption from the liability to pay an annual charge for a new entry based on an estimated turnover to subsequently provide a statement of actual turnover of the therapeutic good signed by the approved person. This will be similar to the requirement in relation to a statement applying to an application for exemption from the liability to pay an annual charge in relation to an existing entry. This regulation requires an additional statement relating to actual turnover of the therapeutic good concerned for the current financial year (the financial year that the exemption relates) to be provided to the Secretary by a particular date in the following financial year.

 

Subregulation 43AAE(1)

Subregulation 43AAE(1) sets 1 September of the financial year immediately following the financial year to which the exemption relates as the date on which the person granted an exemption under paragraph 43AAD(1) for a new entry in the Register must provide the relevant information set out in paragraphs 43AAE(1)(a) and (b). The person who was granted an exemption must provide the details, in writing and in a form approved by the Secretary, of the actual turnover of the therapeutic good for the financial year to which the exemption relates (referred to as the current year) and a signed statement by an approved person, in a form approved by the Secretary, of the actual turnover of the therapeutic good for the current year.

 

Subregulation 43AAE(2)

Subregulation 43AAE(2) authorises the Secretary to extend the date for giving information required under subregulation 43AAE(1) by 28 days if an application (required to be in writing) for an extension is received by the Secretary before 1 September of the following financial year to which the exemption relates. No further extension will be allowed under any circumstances.

 

Subregulation 43AAE(3)

Subregulation 43AAE(3) prescribes that if the person fails to provide the information required under subregulation 43AAE(1), the exemption is taken to be cancelled on the date specified in paragraph 43AAE(3)(a) (which is 30 September of the following financial year to which the charge relates) and the person must pay the annual charge for which the exemption was granted by 31 October the following year. For example, if the person was granted an exemption to pay an annual charge in relation to a therapeutic good that was registered on

1 August 2009 (a new entry) based on an estimate of turnover of that therapeutic good for the 2009-10 financial year, that person is required to provide the information required under subregulation 43AAE(1) in relation to that financial year by 1 September 2010, or if granted an extension, before the end of the extended period. If that same person does not provide the information by the prescribed date, the exemption applying for the 2009-2010 financial year in relation to the therapeutic goods concerned is taken to be cancelled and the person must pay the applicable annual charge by 31 October 2010. Paragraph 43AAE(3)(b) allows one month for paying the annual charge as this requires payment by 31 October of that financial year. For removal of doubt, if a person fails to pay an annual charge by the due date mentioned in paragraph 43AAE(3)(b), paragraph 30(2)(f) or 41GL(f) of the Act will apply which renders the therapeutic good concerned liable for cancellation.

 

 

 

Regulation 43AAF

Regulation 43AAF relates to the decision by the Secretary to confirm the validity of an exemption previously granted under subregulation 43AAD(1), based on the information provided by a person under regulation 43AAE. The information to be provided under subregulation 43AAE(1) must confirm that the actual turnover for the financial year that the exemption was granted was a low value turnover. Note that under subregulation 43AAD(1) the exemption granted for the relevant financial year is based on an estimate of the turnover of the therapeutic good concerned.

 

Subregulation 43AAF(1)

This subregulation prescribes that within 21 days after receiving the information mentioned in subregulation 43AAE(1), the Secretary must decide whether or not the actual turnover of the therapeutic good was a low value turnover. The person who provides the information must be given a written notice of the decision. Subregulation 43AAF(1) also stipulates that if the Secretary determined that the actual turnover of the therapeutic good concerned was not a low value turnover the Secretary must give to the person a written notice of the decision and the reasons for the decision. This is a reviewable decision and in case of refusal by the Secretary, the person may apply to the Administrative Appeals Tribunal for a review of the decision as prescribed by new regulation 43AAI.

 

Subregulation 43AAF(2)

Subregulation 43AAF(2) provides that if the Secretary decided under subregulation 43AAF(1) that the actual turnover of the therapeutic good concerned was not a low value turnover, the exemption will be cancelled and the person who received the notice under paragraph 43AAF(1)(b) must pay the charge for which the exemption had been granted, by

31 October of the financial year immediately following the financial year to which the charge relates. For example, if the person was granted an exemption to pay an annual charge in relation to a particular therapeutic good for the financial 2009-10 and the decision by the Secretary was that the turnover in relation to the particular therapeutic good concerned was not a low value turnover, then that person will be required to pay the annual charge owing by 31 October 2010. In case of failure to pay an annual charge by the due date mentioned above, paragraph 30(2)(f) or 41GL(f) of the Act applies which renders the therapeutic good concerned liable for cancellation.

 

Regulation 43AAG

Regulation 43AAG authorises the Secretary to seek any additional information or documents from the person to whom an exemption from the liability to pay an annual charge has been granted.

 

Subregulation 43AAG(1)

Subregulation 43AAG(1) apply to a person who has been granted exemption from payment of an annual charge under regulation 43AAD on the basis that the turnover of the therapeutic goods concerned for the financial year concerned was a low value turnover. As regulation 43AAD applies to both a new entry and an existing entry, subregulation 43AAG(1) authorises the Secretary to seek additional information or documents from a person in relation to the granting of the exemption from liability to pay an annual charge. For removal of doubt, subregulation 43AAG(1) authorises the Secretary to seek any additional information or documents even in those cases where the person has already submitted a statement of actual turnover under regulation 43AAE in respect of a new entry.

 

Subregulation 43AAG(2)

Subregulation 43AAG(2) allows the Secretary to request additional information up to 2 years after the end of the financial year to which the exemption relates. This means where an exemption, for example, has been granted from the payment of the annual charge for the 2009-10 financial year, the additional information or documents can be sought by the Secretary any time before the end of the 2011-12 financial year, namely 30 June 2012. In addition, the information or documents that can be sought under this regulation will not be limited to those relating to the turnover of therapeutic goods but include those in relation to the granting of the exemption.

 

Subregulation 43AAG(3)

Subregulation 43AAG(3) requires the person to submit information within 28 days after the date of the notice.

 

Subregulation 43AAG(4)

This subregulation allows the Secretary to extend the date for giving information or documents required under subregulation 43AAG(2) for up to 28 days if an application has been made by the person in writing. The Secretary’s power to grant an extension will be limited to one extension of up to 28 days and the person will not be able to seek any further extension under any circumstances.

 

Subregulation 43AAG(5)

Subregulation 43AAG(5) provides that if the person fails to provide the required information or documents within 28 days after the date of the notice under subregulation 43AAG(2) or such period as extended by the Secretary under subregulation 43AAG(4), the exemption is taken to be cancelled.

 

Subregulation 43AAG(6)

Subregulation 43AAG(6) provide that if an exemption is cancelled under subregulation 43AAG(5), the relevant annual charge become payable within 14 days of the cancellation.

 

Regulation 43AAH

Regulation 43AAH applies to the making of a decision by the Secretary resulting from the review of information or documents provided under regulation 43AAG.

 

Subregulation 43AAH(1)

This subregulation prescribes that within 21 days after receiving the information or documents under subregulation 43AAG(2) the Secretary must decide whether or not the actual turnover of the therapeutic good for the applicable financial year was a low value turnover. The relevant person is required to be given written notice of the decision.

 

Subregulation 43AAH(2)

Subregulation 43AAH(2) sets the consequences where the decision by the Secretary was that the actual turnover of the therapeutic good for the applicable financial year was not a low value turnover. Paragraph 43AAH(2)(a) provides for the cancellation of the exemption and paragraph 43AAH(2)(b) provides that the relevant annual charge must be paid within 14 days after the date of the notice mentioned in regulation 43AAH(1)(b). Subregulation 43AAH(2) also stipulates that if the Secretary’s decision is that the actual turnover of the therapeutic good for the applicable financial year was not a low value turnover, the Secretary must give a written notice to the person of the decision and the reasons for the decision. In case of refusal by the Secretary, the person may apply to the Administrative Appeals Tribunal for review of the decision as prescribed by new regulation 43AAI.

 

 

Regulation 43AAI

Regulation 43AAI gives the right to the person to apply to the Administrative Appeals Tribunal for a review of Secretary’s decision under paragraphs 43AAD(1)(a), 43AAF(1)(a) or 43AAH(1)(a).

 

Subdivision 3

Subdivision 3 deals with annual charges in relation to a manufacturing licence.

 

Regulation 43AAJ

Regulation 43AAJ, in effect, replaces the current regulation 45A which deals with the reduction of annual licence charge in some circumstances. Regulation 43AAJ reflects the content of regulation 45A. The purpose of regulation 45A was to provide relief to manufacturers with low turnover of therapeutic goods. The current regulation 45A provides for a 50% reduction in annual licence charge if manufacturer’s turnover of the therapeutic goods is not more than $73,600. Regulation 43AAJ contains provision similar to regulation 45A except that the turnover threshold will be increased to $78,600 because of an annual indexation increase of 4.3 per cent to most TGA fees and charges, combined with its rounding policy.

 

Subregulation 43AAJ(1)

Subregulation 43AAJ(1) makes it clear that this regulation applies to a person who is required to hold a licence under Part 3-3 of the Act and sets the criterion for the reduction of the payable annual charge for a manufacturing licence (annual licence charge). Paragraph 43AAJ(1)(b) specifies that this regulation is applied if person’s turnover of the therapeutic goods in a financial year is not more than $76,800. The $76,800 threshold applies to the turnover of the therapeutic goods concerned in a financial year to which the annual licence charge relates.

 

Subregulation 43AAJ(2)

Subregulation 43AAJ(2) allows for a 50% reduction in the annual licence charge payable under subregulation 3(2) of the Therapeutic Goods (Charges) Regulations 1990 (the Charges Regulations) where the person meets the criteria specified in subregulation 43AAJ(1). It also makes it clear that the reduction in the annual licence charge does not apply where the annual licence charge relates to a licence for the manufacture of human blood and blood components.

 

Item [3]

This item substitutes a new regulation 45A.

 

Regulation 45A

Regulation 45A prescribes a maximum amount that is payable by a person in a financial year for application for exemption under subparagraph 43AAC(2)(b)(iii). This maximum amount is set at $13,000 for the 2009-10 financial year. This means that the maximum amount payable for applications for exemption from the liability to pay annual charges in relation to particular therapeutic goods is reached where a person submits exemption applications for 100 or more therapeutic goods in a financial year. Regulation 45A makes it clear that the maximum fee is not subject to annual indexation but will be calculated with reference to a multiple of 100 of the fee prescribed in the new item 3AB in Part 2 of Schedule 9 to the Principal Regulations.

 

Item [4]

This item inserts a new item 3AB in Schedule 9, Part 2 after item 3A and prescribe a fee of $130 for an application for exemption under subparagraph 43AAC(2)(b(iii).

 

As the TGA is a cost recovery organisation it needs to recover its costs appropriately through fees and charges. The current regulation 4E of the Charges Regulations prescribes a fee of $120 for making an exemption application. It is proposed to repeal this regulation and bring this fee under the Principal Regulations. The authority to prescribe this fee is contained in subsection 44A(2) of the Act. Subsection 44A(2) also provides that the application fee is a fee charged for processing the application and must not be such as to amount to taxation. Therefore this fee is now specified in Schedule 9, Part 2 of the Principal Regulations 1990.

 

The application fee for exemption is increased from $120 in the 2008-09 financial year to $130 in the 2009-10 financial year due to an annual indexation increase of 4.3 per cent to most TGA fees and charges, combined with its rounding policy.

 

For removal of any doubt, an application fee of $130 is payable for each therapeutic good registered, listed or included in the Register for which an application for exemption from payment of the annual charge is submitted by the person, subject to a maximum of $13,000 as set out in regulation 45A.