1. What is the regulatory framework for the authorisation, pricing and reimbursement of drugs, biologicals and devices (as they are termed in your jurisdiction)?
The Therapeutic Goods Act 1989 (Cth) (TG Act) provides:
- A national framework for the regulation of medicinal products.
- A national system to control the quality, safety, efficacy and timely availability of medicinal products (including pharmaceuticals, medical devices and biologicals) distributed in, or exported from, Australia.
- The TG Act regulates the advertising, labelling and supply of therapeutic goods (including biologicals and devices) in Australia, among other things.
Additionally, state and territory legislation regulates the sale and distribution of medicinal products at the wholesale level.
With some limited exceptions, (such as under special access schemes, by authorised prescribers, under a personal import or clinical trial exemption scheme) medicinal products (including prescription medicines) cannot be imported into, exported from, manufactured in, or supplied for use in Australia unless they are included in the Australian Register of Therapeutic Goods (ARTG).
The majority of necessary medicines listed on the ARTG are supplied under the Pharmaceutical Benefits Scheme (PBS) (see Questions 2 to 4). This scheme means that certain necessary drugs which are selected by an expert panel are supplied at a reduced cost to the Australian population. The prices of pharmaceuticals listed on the PBS are regulated by Part VII of the National Health Act 1953 (Cth) (NH Act).
The TG Act applies to pharmaceuticals, medical devices and biologicals.
The TG Act defines medicinal products broadly to include goods that are represented in any way to be, or are likely to be taken to be, for therapeutic use or for use as an ingredient or component in the manufacture of medicinal products. Therapeutic use is defined to include use in connection with the prevention, diagnosis, cure, alleviation, modification or inhibition of a physiological process, disease, ailment, injury, or defect in humans or animals (TG Act). The definition includes replacement or modification of the anatomy of humans or animals.
Medicinal products, known as therapeutic goods in Australia, are divided into two categories:
- Medicines (such as prescription drugs and vitamins, each of which is regulated separately).
- Medical devices (such as heart valves or syringes).
A medicine is in turn defined by the TG Act to include medicinal products that are represented to achieve, or are likely to achieve, their principal intended action by pharmacological, chemical, immunological or metabolic means, in or on the body of a human or animal.
A medical device is defined to include any instrument, apparatus, appliance, material or other article intended to be used for diagnosis, prevention, monitoring, treatment or alleviation of disease, injury or disability, the investigation, replacement or modification of the anatomy or of a physiological process or control of conception that does not achieve its principle intended action by pharmacological, immunological or metabolic means (but may be assisted by such).
This definition of a medical device is very wide and often captures products which may not be considered by the public as either 'medical' or a 'device'.
The TG Act is administered by a Commonwealth Federal agency called the Therapeutic Goods Administration (TGA) (see box, The regulatory authorities), which is part of the Australian Government's Department of Health and Ageing. The TGA administers compliance with the TG Act and regulates the import and supply of medicinal products in Australia. The TGA also regulates the registration and use of pharmaceutical products and medical devices, and has a comprehensive decision-making process that requires assessment of the quality, safety and efficacy of all therapeutic goods before they are approved for listing on the ARTG and use in Australia.
Biotechnology and combination products
Biotechnology and combination products are also regulated by the TG Act and TGA.
PRICING AND STATE FUNDING
2. What is the structure of the national healthcare system, and how is it funded?
A major part of Australia?s healthcare system is called Medicare. Medicare is financed largely from general tax revenue, which includes a Medicare levy that is charged based on an individual's taxable income.
Commonwealth national funding is mainly provided through:
- Subsidies for prescribed medicines (for drugs listed on the PBS).
- Free or subsidised treatment by medical practitioners (classified as 'bulk billing').
- Substantial grants to state and territory governments to contribute to the costs of providing free access to public hospitals.
- Specific purpose grants to state and territory governments and other bodies.
State and territory governments supplement Medicare funding with their own revenues, mainly funding public hospitals.
Medicinal products prescribed by doctors and dispensed in pharmacies are directly subsidised by the PBS. The PBS allows patients to obtain reasonably priced medicines for most medical conditions (see Question 3). The price of drugs supplied on the PBS is regulated by the NH Act.
Drugs used in public hospitals are primarily funded by Medicare agreements between the states and territories, as well as the Commonwealth Government. The states and territories are responsible for the allocation of these funds. Under special funding arrangements, the Commonwealth Government also pays for some expensive drugs which can only be supplied from hospitals to outpatients. Australians are also encouraged, through tax incentives, to have private health insurance which, depending on the level of cover an individual selects, often assists in funding drugs which are not listed on the PBS.
3. How are the prices of medicinal products regulated?
For 2012, the maximum cost of a subsidised pharmaceutical product (that is, a product listed on the PBS) is A$35.40 for general patients. That is, patients who are not otherwise entitled to a government concessional discount. For concessional patients, that is, patients who hold healthcare cards or are pensioners, the maximum cost of a PBS listed pharmaceutical product for 2012 is A$5.80 (as at 1 November 2011, US$1 was about A$0.94). These amounts are called co-payments, as part of the product is paid for by the patient (being A$35.40 or A$5.80 depending on the patient) and the remainder of the product is paid for by the Commonwealth Government.
The amount of the co-payment is adjusted on 1 January each year in line with the Consumer Price Index (CPI). The Commonwealth Government pays the remaining cost of the listed drug. The price of over-the-counter (OTC) medicines (that is, products for which a patient does not require a prescription and are not listed on the PBS) is not regulated.
4. When is the cost of a medicinal product funded by the state or reimbursed to the patient? How is the pharmacist compensated for his dispensing services?
The PBS subsidises the cost of medicines listed on the PBS that are obtained on prescription. Australians holding concessional cards receive a larger subsidy. In the financial year ending June 2011, the Commonwealth Government spent A$8.8 billion on the PBS (around 188 million prescriptions).
If a pharmaceutical supplier wants to have a new drug listed on the PBS, it must make an application to specific bodies in the Department of Health and Ageing. The Minister for Health and Ageing is empowered to list drugs on the Schedule of Pharmaceutical Benefits, on favourable recommendation by the Pharmaceutical Benefits Advisory Committee (PBAC) in accordance with the PBS listing process and the NH Act. In determining whether a new drug should be recommended for listing on the PBS, the PBAC considers, among other things, whether the drug is:
- Needed for the prevention or treatment of significant medical conditions not already covered by drugs already listed and is of acceptable cost-effectiveness.
- More effective and/or less toxic than a drug already listed on the PBS for the same indications and is of acceptable cost-effectiveness.
- At least as effective and safe as a drug already listed on the PBS for the same indications and is of similar or better cost-effectiveness.
Where the PBAC decides to make a positive recommendation, it will refer the matter to the Pharmaceutical Benefits Pricing Authority (PBPA) so that it may calculate the price the Commonwealth Government will pay the manufacturer for producing the drug. In deciding what price to recommend, the PBPA considers a range of factors, including prices of alternative brands, prescription volumes and submissions made by the manufacturer.
The PBPA undertakes price negotiations with the supplier based on PBAC recommendations and, if an agreement is reached, this is sent to the Minister for Health and Ageing for approval. The Minister may defer this decision to Cabinet where the impact of the cost of the drug on the PBS will be significant. If agreement cannot be reached, a price determination may be made by the Minister. In such circumstances, a special patient contribution may need to be paid by patients to make up the difference between the price determined by the Minister and the price claimed to be appropriate by the supplier. That is, the patient may need to pay more than the patient co-contribution of A$34.20.
Once a drug has been approved for listing under the PBS, it is included in the Schedule of Pharmaceutical Benefits.
The reimbursement is paid by the government to the pharmacist (as the pharmacist will have purchased the drug at its full price from the manufacturer or supplier).
5. What is the authorisation process for manufacturing medicinal products?
A manufacturer or sponsor must submit an application to the Office of Manufacturing Quality of the TGA for a licence to manufacture medicinal products, along with the relevant application fee.
In manufacturing products for supply and sale in Australia, manufacturers must comply with the TG Act and be able to demonstrate, during a factory audit, compliance with manufacturing principles, including the relevant codes of good manufacturing practice (GMP). As such, therapeutic goods must be manufactured in compliance with the Pharmaceutical Inspection Convention/Co-operation Scheme (PIC/S) Guide to Good Manufacturing Practice for Medicinal Products, with some specified exceptions (for example, certain veterinary products and products derived from human blood or plasma) (The Therapeutic Goods (Manufacturing Principles) Determination No 1 of 2009).
The PIC/S Guide also incorporates the ICH Harmonised Tripartite Guideline Good Manufacturing Practice for Active Pharmaceutical Ingredients, which previously represented the standard for active pharmaceutical ingredients. Making the PIC/S Guide the relevant standard for GMP in Australia brings this in line with current international practice.
Additionally, standards have now been developed requiring holders of manufacturing licences to be 'fit and proper' persons. The requirements can be found at www.tga.gov.au/industry/manuf-fpp.htm.
Restrictions on foreign applicants
Overseas manufacturers who wish to supply their products in Australia must provide evidence that their medicinal products are manufactured to a GMP equivalent standard, that is, to the standard that is expected of Australian manufacturers for the same products, at each manufacturing site. If no acceptable GMP evidence is produced, the TGA will inspect manufacturing sites in the country where the product is manufactured before considering it for listing on the ARTG.
The regulatory requirements for products manufactured overseas for supply in Australia are regularly updated and manufacturers must comply with each update.
Key stages and timing
When a licence is issued, it is specific to each manufacturer, and relates to specific goods and a specific site. The applicant is provided with a GMP certificate containing GMP codes for the authorised steps in the manufacture. The GMP codes certify that the manufacturing site has met acceptable criteria (quality management, documentation and standard operating procedures) for those steps.
Compliance with GMP codes is checked through regular on-site audits by the TGA. These can take from less than one day to up to four days.
A licence can apply to more than one site provided it complies with the relevant Guidelines.
A licence can also be transferred to a third party. If the licence is transferred the TGA may regard the transfer as if it were a new application for a manufacturing licence.
A summary of TGA fees can be found at www.tga.gov.au/about/ fees-110701.htm#prescr.
Period of authorisation and renewals
A licence remains in force until suspended or revoked.
6. What powers does the regulator have in relation to manufacturing authorisations?
The Manufacturers Assessment Branch of the TGA, under the Office of Manufacturing Quality, has the power to audit manufacturers' compliance with GMP codes. The frequency of audits depends on:
- The degree of risk to patients and consumers.
- The extent to which a manufacturer complied with GMP codes in the past.
- The type of products manufactured and how they are manufactured.
Generally, the audit frequency is every:
- 12 to 24 months for the high-risk category.
- 12 to 30 months for the medium-risk category.
- 12 to 36 months for the low-risk category.
New licence applicants are scheduled for an audit as soon as possible after receipt of that licence application. Additionally, to ensure compliance with the TG Act, the TGA has broad powers to:
- Enter and search premises.
- Inspect, examine and remove samples of the goods for testing.
- Inspect any book, record or document on the premises and take extracts from or make copies of these.
If the TGA has reasonable grounds to believe that there is an imminent risk of death, serious illness or injury, it can also seize items found on the premises for evidentiary purposes only. The TGA?s powers for entry, searches, seizures and warrants are found in Part 6-2 of the TG Act.
The TGA can revoke or suspend the granted manufacturing licence for a period of time (section 41, TG Act). However, the TGA must give the licence holder:
- Notice in writing of the proposed action.
- Reasons for the proposed action.
- An opportunity to make, within such reasonable time as is specified in the notice, a submission to the TGA in relation to the proposed action (except if the proposed action relates to a failure to pay the annual licensing charge or an applicable inspection fee).
An exception from these requirements can be made if the TGA considers that failure to revoke or suspend the licence immediately would create an imminent risk of death, serious illness or serious injury.
7. Outline the regulation of clinical trials.
Legislation and regulatory authorities
Clinical trials in Australia are conducted under either the:
- Clinical Trial Exemption Scheme (CTX Scheme).
- Clinical Trial Notification Scheme (CTN Scheme).
These schemes are used for clinical trials involving any product not entered on the ARTG, or use of a registered or listed product in a clinical trial beyond the conditions of its marketing approval.
The conduct of a clinical trial in Australia (under either scheme) must comply with:
- The TG Act.
- Therapeutic Goods Regulations 1990 (Cth) (TG Regulations).
- National Health and Medical Research Council (NHMRC) National Statement on Ethical Conduct in Research involving Humans 2007.
- Note for Guidance on Good Clinical Practice (CPMP/ICH/135/95), as adopted by the TGA.
Clinical trials in Australia are regulated by the TGA.
CTX Scheme. This is an approval process by which the sponsor of the clinical trial submits an application to conduct clinical trials to the TGA for evaluation and comment. A CTX trial may not be commenced until the approval process is favourably completed.
CTN Scheme. This is a notification scheme by which all materials relating to the proposed trial protocol are submitted directly to the Human Research Ethics Committee (HREC) by the researcher at the request of the sponsor. Under the CTN Scheme, the HREC is responsible for:
- Assessing the scientific validity of the trial design.
- Assessing the safety and efficacy of the medicine or device.
- Assessing the ethical acceptability of the trial process.
- Approving the trial protocol.
The institution or organisation at which the trial is conducted gives the final approval for the conduct of the trial at the site, having due regard to advice from the HREC.
In practice, the CTN Scheme is more common. The CTX Scheme is more expensive, reflecting the increased work by the TGA to evaluate the data provided. The CTX Scheme is the preferred scheme where a HREC does not have the relevant expertise to assess the safety of the product for which the trial is being suggested.
Clinical trial participants or subjects must give informed consent to participate in a clinical trial. This means that subjects must be provided with sufficient information to give them an adequate understanding of the research being conducted and the potential consequences for the individual of participating in the trial. Guidance on what amounts to informed consent can be found in:
- National Health and Medical Research Council (NHMRC) National Statement on Ethical Conduct in Research involving Humans 2007.
- Note for Guidance on Good Clinical Practice (CPMP/ICH/135/95), as adopted by the TGA.
All CTN and CTX trials must have an Australian sponsor, responsible for the conduct of the trial. Additionally, before commencing a clinical trial, there must be legal and financial agreements in place between all relevant parties. This should include, in particular, indemnities as well as the procedure for the compensation and treatment of trial participants. Relevant insurances must be obtained and all documents required by the Guideline for Good Clinical Practice must be filed. This includes, among other things:
- Signed protocol.
- Patient consent forms.
- Insurance statements.
- Documented ethics committee approval.
The Guideline for Good Clinical Practice also sets out the various procedural requirements for running a clinical trial. These are significant and include, for example, the maintenance of quality assurance and quality control systems with standard operating procedures for the conduct of the trial. Additionally, the trial must also be monitored and any adverse events reported. As is required before a trial is commenced, a number of documents must be filed both during and after the clinical trial. These include, for example:
- Investigator brochure updates.
- Dated approvals for revisions to the trial.
- Annual reports of the study progress.
Authorisation and abridged procedure
8. What is the authorisation process for marketing medicinal products?
Marketing applications for medicinal products must be made to and approved by the TGA, subject to some exceptions. A product cannot be marketed in Australia before it is listed on the ARTG.
Before approving the medicine, the TGA must be satisfied that it complies with all legislative requirements in force in Australia. Statutory standards under the TG Act include the Therapeutic Goods Orders (TGOs), the British Pharmacopoeia (BP), the European Pharmacopoeia (Ph Eur) and US Pharmacopoeia-National Formulary (USP). Since 1 July 2009, each of the BP, Ph Eur and USP are defined under the TG Act as default standards. Therefore, if no relevant standard is specified in a TGO, any of the Pharmacopoeia applies. An exemption may be sought from the requirements of the TG Act with consent of the Secretary of the Department of Health and Ageing (sections 14 or 14A, TG Act). Current TGOs are available from the TGA's website.
The TG Act sets out a number of detailed requirements which sponsors must continue to comply with in order to maintain a listing or registration on the ARTG. These include ensuring that:
- The medicine does not create an imminent risk of death, serious illness or serious injury by continuing to be registered or listed.
- The medicine continues to comply with the applicable standards and any conditions imposed on the registration or listing by the TGA.
- Any advertising complies with the Therapeutic Goods Advertising Code.
- Any request for information by the TGA is met within timelines as set out in the TGA Act.
- The annual registration or listing charge is paid.
A registration or listing on the ARTG may also be suspended where a medicine poses a potential risk of death, serious illness or injury if it continues to be included on the register and the risk could be eliminated during the period of suspension.
Failure to comply with the relevant standards or legislation may also result in a product recall.
Key stages and timing
Medicinal products that are included in the ARTG are entered as registered or listed goods, depending on their ingredients and intended purpose.
Registered goods are subject to greater scrutiny than listed goods. The registration process involves a detailed review by the TGA of the quality, safety and efficacy of the medicinal products in question. Most prescription products are subject to registration requirements. While many OTC medicines are listed, other OTC products are registered, such as products containing paracetamol, ibuprofen or naproxen sodium.
Prescription medicines must be registered on the ARTG. This process requires a sponsor to apply to the TGA, providing data supporting the quality, safety and efficacy of the product for its intended use. The Australian Regulatory Guidelines for Prescription Medicines (June 2004) (ARGPM) aim to assist sponsors to prepare applications to register new prescription or other high risk medicines for human use in Australia, or to vary existing medicine registrations.
The timeline for processing an application for registration is set down by the TG Regulations. To register new prescription medicines, the TGA must:
- Accept or reject an application for evaluation within 40 working days.
- If the application is accepted, evaluate it within a further 255 working days.
However, if the sponsor can provide two independent evaluation reports from specified countries with regulatory standards similar to Australia and in which an identical product has obtained authorisation, the time limits are reduced to 20 and 175 working days respectively.
Fees vary depending, among other things, on the type of application and whether it is for a registered or listed product (see www. tga.gov.au/about/fees-110701.htm#prescr).
Period of authorisation and renewals
Medicines remain listed or registered in the ARTG until their listing or registration is cancelled. Annual fees apply (see www.tga. gov.au/about/fees-110701.htm#prescr).
Post-marketing commitments and pharmacovigilance obligations
The TG Act imposes strict requirements on post approval drug safety. These requirements are set out in the TG Act and the Australian Guideline for Pharmacovigilance Responsibilities of Sponsors of Registered Medicines Regulated by Drug Safety and Evaluation Branch (May 2005) (Guideline), issued by the Department of Health and Ageing. A new version of this guide is expected to be released early 2012 though no date has as yet been announced.
Under the TG Act and Guideline, Sponsors are required to report suspected adverse drug reactions received from all sources including healthcare professionals and consumers. In addition, sponsors must also provide the TGA with:
- Any information that contradicts information already provided to the TGA.
- Information that suggests that the medicine may not be as effective as information also provided to the TGA suggests.
- Information that indicates that the quality, safety or efficacy of the medicine is unacceptable.
It is a criminal offence to fail to report adverse drug effects to the TGA. Failure to report as required may result in a term of imprisonment of 12 months or a fine of up to A$3,664,200. Civil penalties may also apply.
In most cases, the information must be provided to the TGA within 15 days of the sponsor becoming aware of the information (this includes sales representatives). However, in more serious cases, the required timing may be the next business day.
Sponsors are required to notify the TGA within 72 hours of any action taken by a foreign regulatory agency to suspend or withdraw a product, or any addition or modification to the Product Information.
9. Which medicinal products can benefit from the abridged procedure for marketing authorisation and what conditions and procedure apply? What information can the applicant rely on?
The amount and type of data required for applications other than those to register a new active ingredient varies depending on the nature and proposed use of the product. Summaries and overviews should confirm the status of previously submitted data.
Medicines that fall within the definition of essential similarity (such as generics) are exempt from the requirement to provide data from non-clinical studies and clinical trials. However, instead of safety and efficacy data, data from an appropriate bioavailability study (or studies) must normally be submitted. Provided that the essentially similar product has a sufficiently similar plasma concentration/time profile to a leading brand in Australia, the two products can be considered bioequivalent.
Shortened applications are also accepted for applications to register an additional brand of a product that is already registered.
In the case of cross-licensing, a sponsor authorises the TGA to use information on its already registered brand for the benefit of another sponsor. In this case, the new brand must be identical to the first brand or at least very similar.
10. Are foreign marketing authorisations recognised in your jurisdiction?
Foreign marketing authorisations (MAs) are recognised to the extent that the evaluation time of certain applications for registration of a medicinal product will be shortened if the sponsor can provide two independent evaluation reports from specified countries with regulatory standards similar to Australia, and in which an identical product has obtained authorisation.
Australia has also entered into a number of mutual recognition agreements (MRAs), (for example, Australia-European Community Mutual Recognition Agreement 1998). However, these only apply to GMP inspections of medicinal products. They do not apply to the mutual recognition of MAs.
11. What powers does the regulator have in relation to marketing authorisations?
The TGA monitors the continued compliance of manufacturers with the required standards and safety levels following authorisation. Post-marketing activities to ensure compliance with the legislation include:
- Investigating reports of problems.
- Laboratory testing of products on the market.
- General surveillance activities.
Under the TG Act, the TGA has considerable powers to require further information in relation to a product. These powers are exercisable both before and after a product achieves registration or listing. For example, the TGA can require a sponsor by notice in writing to provide it, within such reasonable time as is specified in the notice, with information or documents relating to formulation, composition, safety and/or the efficacy of the goods (section 31, TG Act).
The TGA's powers of enforcement under the TG Act include criminal prosecutions and fines.
It is an offence for a person to:
- Import, export, manufacture or supply medicinal products for use in humans if the goods are not registered or listed.
- Make a statement in connection with an application for registration for a medicinal product that is false or misleading in a material particular. These offences are punishable by imprisonment for 12 months and/or a maximum fine of 1,000 penalty units (A$122,140). The penalties may be higher in some circumstances.
In addition, other penalties can apply for a failure to comply with provisions of the TG Act. These include suspension or cancellation from the ARTG and recall of medicinal products.
12. Are parallel imports of medicinal products into your jurisdiction allowed?
Australia has a legislative framework that encourages the parallel importation of many products, including, at least in theory, pharmaceutical products. However, parallel imported pharmaceutical products must comply in all respects with relevant regulatory and labelling requirements and the parallel importer must obtain:
- Marketing approval from the TGA to sell the products in Australia.
- A PBS listing, if it wants its products to qualify for government reimbursement.
In practice, parallel imports of pharmaceuticals in Australia are not common. Nor is there any case law in Australia equivalent to the repackaging cases in the EU. Intellectual property rights can rarely assist in preventing parallel imports in Australia.
The Patents Act 1990 (Cth) (Patents Act) has no specific provision dealing with parallel imports. However, it is a defence to patent infringement if the alleged infringer?s exploitation of the patented invention is undertaken with the express or implied consent of the Australian patentee. The first legitimate sale of a patented product gives rise to an implied licence on the part of the buyer to use or re-sell the product. The patentee can restrict future use or resale of the patented article provided that sufficient notice of the restriction is given to buyers at the time of first sale. Notice of restriction must be prominent, clear and unambiguous, and must run with the product.
A copyright owner of an artistic or literary work appearing as part of the labelling or packaging of goods (and, arguably, as part of a product information leaflet) is prevented from using that copyright as a mechanism for restricting parallel importation of the underlying goods into Australia (section 44C, Copyright Act 1968 (Cth)).
Where a trade mark has been applied to goods by or with the consent of the registered owner of that trade mark in Australia, dealings with those goods in Australia will not infringe the registered trade mark in relation to those goods (section 123, Trade Marks Act 1995 (Cth) (TM Act)). However, where the registered owner consents to another person applying the registered mark to goods on condition, such as that they may only be supplied to a designated territory, it cannot be said that the registered owner has consented to the application of the mark to the goods manufactured for supply inconsistent with that restriction. In such circumstances a defence under section 123 will not succeed, and dealings with those goods may infringe the registered trade mark in relation to those goods. In some situations, the parallel importation of a pharmaceutical product and subsequent sale can amount to unlawful misleading or deceptive conduct (section 18, Schedule 2, Competition and Consumer Act (Cth) 2010 (CC Act, which enacts the Australian Consumer Law (ACL)).
- PLC Multi-Jurisdictional Guide 2012: Life Sciences - Part 2
- PLC Multi-Jurisdictional Guide 2012: Life Sciences - Part 3
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