Healthy Skepticism Library item: 1511

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Journal Article

Allen L.
Fee rise will hit vitamins, medicines
The Financial Review 2005 May 10;

Full text:

The drug industry regulator will lift its fees by 3.1 per cent to build reserves in case there is a similar crisis to the Pan Pharmaceuticals recall.

Drug and vitamin makers angered by the fees, expected to be revealed in today’s budget, said vitamin and non-prescription medicines prices would rise as a result.

Vitamin makers are also angered by the discovery of a $12 million cash reserve held by the Therapeutic Goods Administration. The drug regulator plans to increase the reserve to about $16 million representing about 25 per cent of its annual turnover, projected to be about $71 million, next financial year.

When the new fees come into affect from July 1, it will cost vitamin makers more than $500 to list their products plus additional annual fees. They will also cop fees of thousands of dollars each time they change a pill’s ingredients.

Industry veteran Marcus Blackmore said the TGA’s decision “seriously needs to be questioned”.

“They don’t need to build up a significant cash reserve,” Tony Lewis, the executive director of the Complementary Healthcare Council, which represents vitamin and mineral makers, said yesterday.

“All of these things will increase the cost of vitamins,” Dr Lewis said.

He said the TGA, which operates on a full-cost recovery basis, should aim to achieve break even each year and not be running a cash reserve.

“It’s been stated at our meetings [the fund is being built up] in case something like another Pan came up,” he said.

The reserve should be used to fund research or help out with increased compliance costs in the wake of scandals such as the Pan Pharmaceutical collapse, he said. It is understood the TGA borrowed significantly from the government to fund the costs in 2003 of the Pan collapse, Australia’s largest drug recall.

A TGA spokeswoman yesterday acknowledged the fund’s existence but declined to divulge how much money was involved. The fund had nothing to do with Pan, she said.

One vitamin maker, speaking on condition of anonymity, said: “Why would we pay an extra 3 per cent if the regulator has $12 million sitting in the bank. The TGA has a lack of commercial understanding.”

Drug makers, represented by Medicines Australia, said they would keep a close eye on the TGA’s cash reserves to ensure it was not money being taken out of, instead of invested in, the industry.

“You would assume if a company’s costs go up it would be passed onto consumers, but the TGA’s costs are just one component of many costs going into a medicine,” Medicines Australia’s scientific director, Deborah Monk, said.

She said Pharmaceutical Benefits Scheme drugs would not be affected by the price rise because the government sets the prices.

KEY POINTS

• The drug regulator has a $12m cash reserve for contingencies.

• If its fees jump 3.1pc it will cost vitamin makers $500 to list products.