TGA's Red-Tape Reduction Effort Increases Compliance Costs

A Deloitte Access Economics report has determined that an attempt at reducing the red-tape burden on businesses in the dental industry has failed and resulted in an average increase in regulatory compliance costs by 34%. The report reviewed changes to the way the Therapeutic Goods Administration (TGA) levies fees and was commissioned by the Australian Dental Industry Association (ADIA), the peak business organisation representing manufacturers and suppliers of dental products.

"At a time when the Australian Government's focus is on supporting manufacturers in the healthcare sector this report is sadly ironic. Small businesses looking to manufacture and export dental products face enough challenges without this increase in compliance costs," said Troy Williams, ADIA Chief Executive Officer.

The increase in regulatory compliance costs stem from the way the TGA levies fees to place products on the Australian Register of Therapeutic Goods (ARTG), the list of therapeutic products that can be lawfully supplied in Australia. The TGA charges businesses an annual fee to maintain products on the ARTG. Until 1 July 2015, a Low Value Turnover (LVT) scheme was in place, whereby products with turnover less than or equal to fifteen times the relevant annual charge for that product were exempt from the charge. From 1 July 2015, this exemption scheme was replaced by the Annual Charge Exemption (ACE) scheme. Under this scheme only products with no turnover are exempt from annual charges.

"From the outset ADIA had concerns that this change would fail to reduce compliance costs for businesses in the dental industry and the report from Deloitte Access Economics has confirmed this is indeed the case. The new scheme resulted in an average net increase of $12,128 for each business across the sample group analysed in the report, that's an increase of 34% in TGA compliance costs," Mr Williams said.

ADIA has sent the report to both the Minister for Health and the TGA in order to secure further change that supports small businesses in the dental industry.

"The TGA's regulatory reform was intended to deliver reduced compliance costs for businesses in the dental industry. The Deloitte Access Economics report clearly demonstrates that this is not the case thus urgent further work is required," Mr Williams concluded.

The Deloitte Access Economics report is available online at: www.adia.org.au/advocacy/tga-reviews/ace-analysis.