Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
THERAPEUTIC GOODS LEGISLATION AMENDMENT (ANNUAL CHARGES)
BILL 2008
EXPLANATORY MEMORANDUM
(Circulated by authority of the Parliamentary Secretary to the Minister for Health and
Ageing, Senator the Hon Jan McLucas)
THERAPEUTIC GOODS LEGISLATION AMENDMENT (ANNUAL CHARGES)
BILL 2008
OUTLINE
The Therapeutic Goods Act 1989 (TG Act) requires that a therapeutic good must be
registered, listed or included in the Australian Register of Therapeutic Goods (the ARTG)
before it can be lawfully imported into, manufactured in, supplied in, or exported from
Australia. In addition, the TG Act generally requires a person to obtain a manufacturing
licence to manufacture goods in Australia. An annual charge is payable in respect of the
registration, listing or inclusion of therapeutic goods in the ARTG, and in respect of
manufacturing licences issued under the TG 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 (TG Charges Act). The provisions relating to the assessment, recovery and collection
of the annual charges are contained in the TG Act.
The Therapeutic Goods Legislation Amendment (Annual Charges) Bill 2008 (the Bill)
amends the TG Act and the TG Charges Act to make 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
due to low turnover of therapeutic goods, and to make other technical and consequential
amendments.
Amendments to the Therapeutic Goods Act 1989
Payment of annual charges
Section 44 of the TG Act prescribes the time for payment of annual charges. It does not set a
uniform date for the payment of annual charges, and the date that a charge is payable can
differ depending on a number of factors. The date that the annual charge is payable can be
varied, but in most cases this can only be done with the agreement of the person liable to pay
the charge.
It is administratively inefficient for both the Therapeutic Goods Administration (the TGA)
and industry for annual charges for different goods to be payable on the date of the regulatory
approval. To improve efficiency, the Bill proposes a system under which most annual
charges are payable on the same date. Under this system:
-- annual charges for goods first entered on the ARTG become payable on the day worked
out under the regulations;
-- annual charges for manufacturing licenses first issued during the financial year is payable
at the date of commencement of the licence; and
annual charges for subsequent years become payable on a uniform date (this has been set at 1
October).
Setting a uniform date for the payment of most annual charges will result in administrative
efficiencies for both the TGA and industry stakeholders, as it allows most annual charges to
be levied and paid at the same time.
1
Reduction and Waiver of annual charges and the exemption relating to low value turnover
At present, both the TG Charges Act and the TG Act contain provisions relating to the
reduction or waiver of annual charges. For consistency and readability the Bill moves the
provisions relating to the reduction and waiver of annual charges to be co-located in the TG
Act. Therefore, the Bill repeals the current provisions for low value low volume exemption
from the TG Charges Act and the provisions are inserted into the TG Act.
In addition, the Bill introduces transparency, accountability and clarity in the application of
the exemption from liability to pay annual charges because of low turnover value of
therapeutic goods. The changes will ensure that persons who apply for or are granted the
exemption from paying annual charges have the requisite supporting evidence that is certified
by a third party. This will address the concern raised by the Australian National Audit Office
in their Financial Statement Audit Report for 2006-2007 for the Department of Health and
Ageing in relation to the lack of third party confirmation that the applicant does meet the
eligibility criteria for the low value exemption.
In addition, the regulations for the low value exemption will cover the making of an
application for that exemption, the ability to request additional information from applicants
for that exemption or from those already granted exemption, cancelling the exemption and
requiring payment of the annual charge and merits review of decisions by the Secretary
refusing or cancelling.
Amendments to the Therapeutic Goods (Charges) Act 1989
The Bill inserts into the TG Charges Act a provision that annual charges under the TG
Charges Act can be set at a nil amount for a particular class of goods. This amendment
allows for flexibility to modify the way that certain costs are recovered by allowing for costs
to be recovered by fees for services relating to particular therapeutic goods, instead of by the
imposition of annual charges.
The TG Charges Act contains provisions that are intended to ensure that annual charges are
payable where goods are entered on the ARTG or licensed under a State law. However, the
TG Charges Act refers to provisions of the TG Act that were repealed when amendments
were made to the TG Act to shore up the constitutional validity of the cooperative scheme
because of the High Court's decision in R v Hughes (2000) 202 CLR 535. The Bill therefore
updates the relevant sections accordingly.
FINANCIAL IMPACT STATEMENT
These amendments to the TG Act and TG Charges Act will have very low impact on
business, individuals and economy as some of the measures proposed to be implemented,
such as the uniform period for the payment of annual charges after the commencement of
registration, listing or inclusion of goods in the ARTG, have already been implemented
administratively.
2
THERAPEUTIC GOODS LEGISLATION AMENDMENT (ANNUAL CHARGES)
BILL 2008
NOTES ON CLAUSES
Clause 1: states that the short title of the legislation is the Therapeutic Goods Legislation
Amendment (Annual Charges) Act 2008 (the Act).
Clause 2: sets the commencement date of sections 1 to 3 of the Act as the day on which it
receives the Royal Assent. The amendments to the Therapeutic Goods Act 1989 and the
Therapeutic Goods (Charges) Act 1989 set out in Schedule 1 commence on a single day to be
fixed by Proclamation. If Schedule 1 is not proclaimed within 6 months of Royal Assent, it
will automatically commence on the first day after that period.
Clause 3: has the effect of amending the Therapeutic Goods Act 1989 (the TG Act) and the
Therapeutic Goods (Charges) Act 1989 (the TG Charges Act) in the manner set out in
Schedule 1 to the Act.
Schedule 1--Amendments
Therapeutic Goods Act 1989
Item 1. Item 1 repeals the current section 44 and inserts a new section 44 into the TG Act.
New section 44 amends the current regime that sets out the specific dates when annual
charges are payable.
New section 44 - Time for payment of charges
Under the existing provisions, annual charges are generally payable:
-- if it is the year that the entry in the Australian Register of Therapeutic Goods (the
ARTG) or manufacturing licence commenced, on the date of entry in the ARTG or the
date the manufacturing licence was granted;
-- in subsequent years, on the anniversary of that day (current subsections 44(1) and 44(2)).
The date that the annual charge is payable can be varied but in most cases this can only be
done with the agreement of the person liable to pay the charge (current subsection 44(3)).
New section 44 sets out a new payment date which in most cases prescribes a uniform date of
payment of annual charges, but at the same permits some flexibility in prescribing the dates
in which the annual charges are payable by allowing the Regulations to work out a different
date when those charges are payable.
New subsection 44(1)
This subsection sets out when the annual registration charge, annual listing charge or annual
charge for inclusion in the ARTG for a particular financial year becomes payable.
New paragraph 44(1)(a) provides that for goods that have been registered, listed or included
in the ARTG in a financial year, the annual charge becomes payable on a day worked out
under the Regulations. This regime would allow the dates for the payment of annual charges
payable the first time the goods were registered, listed or included in the ARTG to be set out
in the Regulations on a date after the commencement of the registration, listing or inclusion
3
of the goods in the ARTG. It would allow, for example, a date to be set that is one or three
months after the commencement of the registration, listing or inclusion of the goods in the
ARTG.
New paragraph 44(1)(b) provides that in subsequent years, that is after the first financial year
that the goods were registered, listed or included in the ARTG, the annual charge is payable
on a uniform date of 1 October every year, or on another day specified by the Regulations.
New subsection 44(2)
This subsection sets out when the annual licensing charge for a particular financial year
becomes payable. It provides that an annual licensing charge becomes payable on the day of
the commencement of the manufacturing licence and in subsequent financial years the annual
charge becomes payable on 1 October of that financial year, or on another day specified in
the Regulations.
New subsection 44(3)
This subsection provides that, despite any dates set or permitted to be prescribed under new
subsections 44(1) and 44(2), the Secretary can specify a later day other than the date set or to
be prescribed on which the annual charge becomes payable by a person for a financial year.
This later date is notified to that person in writing and the notice has effect accordingly.
New subsection 44(4)
This subsection makes it clear that the operation of this section is subject to new section 44A.
This means that the annual charges payable will not be payable for a particular financial year
if a person is found to qualify for an exemption from the liability to pay annual charges under
new section 44A. New section 44A will, for example, enable the Secretary to defer the date
for paying annual charges to allow for a determination of an application for an exemption
from paying annual charges for therapeutic goods included, registered or listed in the ARTG.
Therefore, subject to any other dates prescribed or subject to the Secretary exercising her
discretion under new subsection 44(3), from the financial year commencing 1 July 2009
annual charges will become payable on a common date for all existing, as well as new,
registrations, listings and inclusions in the ARTG, as well as manufacturing licences. These
amendments also apply to grouped therapeutic goods. Grouped therapeutic goods are
therapeutic goods included in a gazetted therapeutic goods group, a gazetted therapeutic
devices group or a gazetted kits group. Goods within a gazetted therapeutic goods group or
gazetted therapeutic devices group have common characteristics and/or are produced by the
same manufacturer. A single annual charge is payable in respect of all goods included in
each group of goods. New paragraph 44(1)(a) will only apply to newly registered or listed
grouped goods. New paragraph 44(1)(b) will apply to existing grouped goods, even if new
goods are added to the grouped goods.
Item 2. Item 2 inserts a new section 44A into the TG Act. Subsection 5(3) of the TG
Charges Act currently provides for the low volume low value turnover exemption from the
liability to pay annual charges. The requirements made for the purpose of this exemption are
set out in regulations 4B, 4C, 4D, 4E, 4F and 5 of the TG Regulations. These provide for the
making of an application for the exemption, the requirement for an application fee, the
making of decision to grant the exemption, review of decisions by the Administrative
Appeals Tribunal and the immediate payment of the annual charges where the applicant or
the person granted an exemption based on an estimate of turnover is found to be ineligible.
4
This amendment moves the provisions relating to the low volume exemption from the TG
Charges Act to the TG Act. For consistency and readability it is desirable for all provisions
relating to the reduction and waiver of annual charges to be co-located in the TG Act.
New section 44A - Exemptions from liability to pay charges
This section provides more transparency and clarity to the application of the exemption from
liability to pay annual registration charge, annual listing charge or annual charge for inclusion
in the ARTG where a person's turnover of the therapeutic goods concerned is of low value.
New section 44A also simplifies the criterion of the exemption to now only refer to the value
of the turnover instead of the volume and value of the turnover. The current arrangement
only takes into consideration the value of the turnover, and therefore the amendments reflect
this current arrangement.
New subsection 44A(1)
The subsection provides that the details of the low value turnover exemption from the
liability to pay annual charges are to be set out in the Regulations. The Regulations will
make provisions for and in relation to the following:
(a) exempting a person from liability to pay annual registration charge, annual listing
charge or annual charge for the inclusion in the ARTG for a financial year if the
person's turnover of the therapeutic goods concerned for a financial year specified in
the Regulations is of low value;
(b) the making of an application for an exemption and requiring payment of that charge
for the current year if the application is refused; and
(c) cancelling an exemption and requiring payment of that charge for the current year.
The Regulations will also prescribe deadlines for the making of an application for exemption,
when the payment for the annual charges should be made if the decision is not to grant an
exemption, the cancellation of the exemption where additional information provided by the
person who was granted an exemption does not support that exemption, and the lapsing of an
application for the exemption if the evidence is not provided by the applicant within the
allocated time.
New subsection 44A(2)
As the TGA is a cost recovery organisation it needs to recover its costs appropriately through
fees and charges. New subsection 44(A)(2) allows for charging a specified fee where an
application for exemption has been made. The Regulations would set out such a requirement.
The application fee is a fee charged for processing the application and must not be such as to
amount to taxation.
New subsection 44A(3)
This subsection provides that the Regulations may require a person, who is applying for an
exemption or has been granted an exemption, to provide a statement prepared by an approved
person. That statement will need to specify whether the person's turnover of the therapeutic
goods concerned for the financial year concerned is of low value. The Regulations will
prescribe who the approved persons are for this purpose. The approved person could include
certified accountants and auditors. The approved person is intended to provide third party
certification of a person's turnover of the therapeutic goods concerned.
5
New subsection 44A(4)
This subsection allows for the Regulations to provide that additional information or
documents may be obtained from applicants seeking exemptions or from persons granted
exemptions.
New subsection 44A(5)
This subsection allows for the Regulations to provide for review by the Administrative
Appeal Tribunal of decisions by the Secretary to refuse applications for exemption or to
cancel exemptions.
New subsection 44A(6)
This subsection provides that subsections 44A(2) to (5) do not limit the operation of
subsection 44(1). This means that the regulations to be made for the purposes of subsection
44A(1) will not be limited to the prescribing of application fees, requirements to provide
statements by approved persons, the obtaining of additional information and merits review
process.
New subsection 44A(7)
This subsection allows for the Regulations to specify the criteria for establishing whether a
person's turnover of the therapeutic goods concerned for a particular financial year will be
considered of low value. This section also provides that different rules can be set out in the
Regulations for different therapeutic goods.
New subsection 44A(8)
The purpose of this subsection is to make clear that new section 44A does not limit paragraph
63(3)(b) of the TG Act that enables Regulations to be made for the refund, reduction or
waiving of fees or charges. That is, new section 44A will not be the only circumstance where
annual charges can be waived. Waiver of annual charges can apply for example to non-profit
hospital supply unit as currently set out in regulation 4A of the TG Regulations.
New subsection 44A(9)
This subsection defines the terms "approved person" and "turnover" to have the same
meaning as specified in Regulations made for the purposes of this section. The meaning and
scope of these terms will be set out in the Regulations.
Item 3. Item 3 provides for the application and effect of amendments made to the TG Act by
Items 1 and 2.
Subitem 3(1) provides that the amendment made by Item 1 applies in relation to the financial
year beginning on 1 July 2009 and all subsequent financial years. This is regardless of
whether the registration, listing or inclusion in the ARTG of the therapeutic goods, or
whether the manufacturing licence, commenced before, on or after 1 July 2009. For example,
from 1 July 2009, new paragraph 44(1)(b) would apply to all therapeutic goods registered,
listed, or included in the ARTG on or before the financial year 2008-2009. In addition,
subitem 3(1) would apply, even if the commencement date of Item 1 as fixed by
Proclamation is before 1 July 2009.
Subitem 3(2) provides that the amendment made by Item 2 applies for the purposes of
working out whether a person is exempt from liability to pay annual registration charge,
annual listing charge or annual charge for inclusion in the ARTG from the financial year
6
beginning 1 July 2009 and all later financial years. New section 44A will apply to existing
registered, listed or included goods in the ARTG from 1 July 2009 and subsequent financial
years.
Therapeutic Goods (Charges) Act 1989
Item 4. Item 4 repeals the current subsections 4(3) to (6) and inserts new subsections 4(3) to
7 into the TG Charges Act.
The TG Act contains provisions that permit corresponding State laws that mirror the TG Act
to be administered by Commonwealth officers (sections 6AAA-6AAE). At present, Victoria
New South Wales, and Tasmania have enacted corresponding State laws that are intended to
mirror the TG Act so that the corresponding State laws will apply the same regulatory
framework relating to therapeutic goods on individuals. The TG Charges Act contains
provisions that are intended to ensure that annual charges are payable where goods are
entered on the ARTG under a State law or where a manufacturing license is issued under a
State law (current subsections 4(3), (4), (4A) and (5)). However, the TG Charges Act refers
to provisions of the TG Act that have been repealed.
New subsections 4(3) to (6) now refer to the current provisions of the TG Act (sections
6AAA-6AAE) to ensure that annual charges may be collected where goods are entered in the
ARTG or manufacturers are licensed under a State law, as was intended when the cooperative
scheme was introduced.
New subsection 4(3)
This subsection provides that if registered goods are included in the ARTG due to the
operation of section 6AAE of the TG Act, this section has effect as if the goods had been
registered under Part 3-2 of the TG Act. In general, Part 3-2 requires that therapeutic goods
must be registered or listed in the ARTG before the goods can be lawfully imported,
exported, supplied or manufactured for human use in Australia.
New subsection 4(4)
This subsection provides that if goods known as listed goods are included in the ARTG due
to the operation of section 6AAE of the TG Act, this section has effect as if the goods had
been listed under Part 3-2 of the TG Act. In general, Part 3-2 requires that therapeutic goods
must be registered or listed in the ARTG before the goods can be lawfully imported,
exported, supplied or manufactured for human use in Australia.
New subsection 4(5)
The purpose of this subsection is to provide that if medical devices are included in the ARTG
under Chapter 4, due to the operation of section 6AAE of the TG Act, this section has effect
as if the goods had been included in the ARTG under Chapter 4 of the TG Act. Chapter 4 of
the TG Act sets out the regulatory requirements applying to medical devices, including
requirements relating to the inclusion of medical devices in the ARTG before they may be
lawfully supplied to the general public.
New subsection 4(6)
New paragraphs 4(6)(a) and 4(6)(b) provide that if the Secretary issues a licence for the
purposes of a corresponding State law that correspond to Part 3-3 of the TG Act, because of
the operation of sections 6AAA, 6AAB or 6AAC of the TG Act, this section has effect as if
7
the licence had been issued under Part 3-3 of that that Act. Part 3-3 of the TG Act sets out
the regulatory requirements applying to the manufacture of therapeutic goods for human use
in Australia.
Subsection 4(7)
This subsection defines the terms "amount" and "Therapeutic Goods Act". The current
subsections 4(1) to 4(2) provide that annual charges of such amounts as are prescribed in the
Regulations are payable in respect of the registration or listing of the therapeutic goods
(including grouped therapeutic goods), inclusion of medical device in the ARTG and in
respect of a manufacturing licence. New subsection 4(7) provides authority to set those
amounts to a nil amount.
Item 5. Item 5 repeals subsection 5(3) of the TG Charges Act because the same provisions
are now included in new section 44A of the TG Act (Item 2 refers).
Item 6. Item 6 is a saving clause which provides that, despite the repeal of subsection 5(3) of
the TG Charges Act, that subsection continues to apply after the commencement of this item
in relation to working out whether the annual charges mentioned in that subsection are
payable by persons for the financial year beginning on 1 July 2008 and all earlier financial
years.
8