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Annual Charge Exemption Scheme

Regulation Impact Statement – Department of Health

On 1 July 2015, the Therapeutic Goods Administration (TGA) announced changes to the way the exemptions from regulatory charges for therapeutic goods are given. Sponsors of products on the Australian Register of Therapeutic Goods (ARTG) are required to pay annual charges to the TGA to allow recovery of the costs of regulating the sector. Under the low value turnover (LVT) exemption scheme, products with low value turnover (defined as equal to or less than 15 times the annual charge that would be otherwise payable for that product) were exempt from annual charges in order to help small businesses to enter the market. A review undertaken by the TGA found that the main beneficiaries of the LVT scheme were not small businesses. The 20 highest invoiced sponsors accounted for more than 50 per cent of all LVT benefit in 2014‑15. In addition, the administrative costs of complying with the LVT requirements for each product were considerable. The LVT scheme has now been replaced by an annual charge exemption (ACE) scheme. Products automatically qualify for the exemption once they are entered on to the ARTG, and sponsors will not be invoiced for an annual charge for that product until it generates turnover. The total quantum of costs recovered from the sector will remain the same under the ACE scheme as the LVT. In addition, the ACE scheme is likely to have lower compliance costs than the LVT. A Regulation Impact Statement (RIS) was prepared and certified by the TGA under the Australian Government’s best practice regulation requirements, and has been assessed as compliant and consistent with best practice by the Office of Best Practice Regulation (OBPR). The RIS estimates the average annual regulatory cost saving at $3.0 million. The OBPR has agreed to the regulatory cost saving.