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Community Affairs Legislation Committee - 04/06/98 - DEPARTMENT OF HEALTH AND FAMILY SERVICES - Program 1—Public health - Subprogram 1.2—Health regulation

Senator FORSHAW —I have a couple of questions with regard to the figures in the appropriations. I take you to pages 64 and 65 of the portfolio statements under `Therapeutic goods'. Firstly, page 64 shows that the estimated outcome for 1997-98 is the budgeted figure of $9,844,000. For this year it is zero. Presumably there is an explanation for that. I think I might know what it is, but I would like to hear what it is.

Mr Slater —The reason that figure dropped to zero is that the government has moved to 100 per cent cost recovery of activities under the Therapeutic Goods Act.

Senator FORSHAW —Could you just explain to me what you mean by cost recovery.

Mr Slater —Cost recovery means that the activities of the Therapeutic Goods Administration in the area of therapeutic goods will now be recovered under a series of fees and charges and annual charges to recover the full 100 per cent. The government has moved from the existing regime of 50 per cent cost recovery, which was in place three years ago, to a position of 100 per cent recovery of the costs.

Senator FORSHAW —These are the costs that are associated with administration and giving approval and so on to various drugs to be marketed. Is that right?

Mr Slater —Yes. It is to give marketing approval to assess the safety, efficacy and quality of therapeutic goods for marketing in Australia.

Senator FORSHAW —Were you talking about, over a period of 12 months, recovering effectively around $9.8 million to $10 million or something like that? Are you anticipating that the level of usage of the administration will remain the same? In other words, was what you were previously paying out or funding on $9.8 million now be money you will recover?

Mr Slater —At this time last year the Therapeutic Goods Administration was recovering 75 per cent of its costs. This $9.844 million that is represented on page 64 represents the last 25 per cent.

Senator FORSHAW —I thought it was 50 per cent, but it is 25 per cent.

Mr Slater —Over the last three years it has moved from 50 per cent to 100 per cent. The final tranche of that is on 1 July 1998.

Senator FORSHAW —You are confident that that can be achieved over the course of the next 12 months?

Mr Slater —Yes.


Senator FORSHAW —Simply by saying that they have to pay it. Basically, that is what happens, isn't it?

Mr Slater —No. We have a longstanding mechanism of sitting down in a consultative process with industry to understand the workload that they see coming forward and to set fees and charges to appropriately recover the quantum that has been set by the government.

Senator FORSHAW —The companies really have no alternative though, do they?

Mr Slater —If a company wishes to make an application for a new product to enter the market in Australia and they wish to make claims about that product, which is captured by the Therapeutic Goods Act, then no, they do not have any choice. If they are a sole proprietor, then they are not captured by the Therapeutic Goods Act; they are captured by state law.

Senator FORSHAW —At the top of page 65, the figures show a substantial increase in the appropriation from $8.4 million to $17.5 million.

Mr Slater —That is with $9.844 million being added in as fees and charges to be recovered from industry.

Senator FORSHAW —That is what I thought was probably the case, but I thought I had better clarify it. I do not have any further questions on subprogram 1.2. Senator West did, but she is out of the room for a short time. Perhaps we can move to subprogram 1.3 and then return to subprogram 1.2 when Senator West returns.

[12.03 p.m.]