Understanding The Proposed New Medical Devices tax

Summary —

The nation’s regulatory of medical devices has proposed to place a new cost on businesses wanting to supply dental products – what does this mean for industry?

Key Issues For The Dental Industry —

Suppliers and manufacturers of dental products must pay a range of fees, charges and taxes to the Therapeutic Goods Administration (TGA) be able to lawfully supply products into the Australian market.  These include application fees – a kind of one-off medical devices tax – that vary depending on the risk classification of the device. Class 3 (high-risk) medical devices are the highest risk devices an application fee of $1,290 is payable whereas Class 1 devices (low-risk medical devices) currently incur no application fee.

The TGA has proposed that, for the first time, an application fee of $530 be paid to place low-risk medical devices on the ARTG.

In dentistry, most Class 1 (low-risk) surgical instruments are made from high-quality surgical-grade metals that allow them to be sterilised then reused. Such products are therefore sold in relatively small volumes and, owing to their relatively straightforward design and construction, do not have a high selling price.

It’s important to understand that manufacturers and suppliers of innovative dental product may not need to make separate applications for different products.  Businesses can group several types of products under the same entry if:  They have the same manufacturer; are of the same type (evidenced by the same device nomenclature system code) and are of the same classification (e.g. Class 1).  Under this provision it is possible that several kinds of instruments, for example forceps, may be grouped under the one entry.

The impact of the TGA’s proposal has been assessed using ARTG registration data for the past three financial years to provide an indication as to what would have been paid if the fee was in place.  The impact on ADIA member businesses would be as follows:

	TGA Fee Proposal Impact On The Dental Industry —
	Year . Fee Revenue	FY2014-15 ——————– $354,040	FY2015-16 ——————- $320,120	FY2016-17 ——————- $221,010

ADIA members have advised that the TGA’s proposed new application fee new fee will also create a significant barrier to market entry for entrepreneurs investing in new dental supply businesses which will be forced to pay $530 for every low-risk product entry. In order to compete in the dental product supplier sector, it is typically necessary for businesses to offer a wide range of products. A new business may need to apply for between twenty and fifty low-risk medical device entries from the outset. This means that new businesses face an additional upfront cost of $10,600 to $26,500.

It is important to note that the proposed $530 application fee will be in addition to the annual charge of $80 (increasing to $90 from 1 July 2018) that business must pay the TGA.

With the support of ADIA member businesses, ADIA has been actively advocating for the TGA’s proposed changes to be properly assessed.

Member Engagement —

ADIA provides leadership, strategy, advocacy and support. Our members set our agenda, fund our activities and directly benefit from the results. With respect to policy advocacy efforts to reduce the red-tape associated with the manufacture and supply of innovactive dental products, the team in the ADIA national office receive advice and guidance from members serving on the ADIA-PRPC Product Regulation Policy Committee.

Further Information —

To keep up to date with the latest market statistics subscribe to the Twitter feed @AusDental or follow us on Facebook at www.facebook.com/dental.industry. Alternatively, you can contact the Association via email at statistics@adia.org.au or by telephone on 1300 943 094.

Currency Of Information & Disclaimer —

This update was issued on 23 May 2018 and please note that changes in circumstances after the publication of material or information may impact upon its accuracy and also change regulatory compliance obligations. The statements, regulatory and technical information contained herein are believed to be accurate and are provided for information purposes only. Readers are responsible for assessing its relevance and verifying the accuracy of the content. To the fullest extent permitted by law, ADIA will not be liable for any loss, damage, cost or expense incurred in relation to or arising as a result of relying on the information presented here.

Article Credit: ADIA – https://www.adia.org.au/