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Fees increase for the evaluation, approval of meds

Media Release

21 July 2006

Fees increase for the evaluation and approval of medicines

The Ministry of Health's medicines regulatory arm, Medsafe has announced fees for the evaluation and registration of medicines will go up next month - many for the first time in 15 years or more - because of increased operating costs and changes in the nature and complexity of applications.

Under the Medicines Act fees are charged for applications to licence medicine manufacturers and to approve new medicines and clinical trials.

Fees are also charged under the Misuse of Drugs Act for applications for licences, such as licences to import and export controlled drugs.

Medsafe's manager, David Nicholson, says this is the first time since 1977 that fees under the Misuse of Drugs Act have been revised. Fees under the Medicines Act have not been increased since they were first introduced 15 years ago. The fees will go up from 21 August 2006.

"The fee increase reflects the costs of regulation and increased demands on Medsafe to evaluate, audit and monitor the safety of medicines and their manufacture.

"It is important Medsafe continues to meet international best practice standards for the regulation of medicines and maintains its specialist technical expertise in this area," Mr Nicholson says.

The growing gap between the cost of evaluating medicine safety and the amount recovered in fees has meant that approvals for some medicines have been taking as long as three years to process.
In the longer term it is envisaged that the fee increases are likely to lead to shorter times for approving medicines.

"It is important to note that while the fees for high risk complex evaluations are going to increase significantly, the fees still sit well under those of other countries, including Britain and the United States of America," Mr Nicholson says.

The decision to increase the fees follows consultation with industry which began in December 2005. Eighty five submissions were received and analysed as part of the consultation process.

Following commencement of the planned Australia New Zealand Therapeutic Products Authority (ANZTPA) and joint regulatory scheme, activities under the Medicines Act that transfer to the ANZTPA will be fully funded from industry fees.

Questions and Answers

1) Will the fees increase for new medicines act as a disincentive for companies to register new medicines in New Zealand?

The number of applications for consent to distribute new prescription medicines (including new generic medicines) is likely to decrease significantly. But this is not expected to have a major impact on the range of medicines approved for use in New Zealand because applications received after 1 July 2006 are unlikely to be evaluated and approved before the start of the joint regulatory scheme. Under the joint scheme a single application and single fee (which would be less than the sum of the current Australian fee and increased New Zealand fee) will be required to obtain access to the larger Australia New Zealand market.

In addition, the Director General has the power under the Medicines Regulations 1984 to waive or refund a fee in whole or in part. In granting a waiver or refund the Director General must take into account the complexity of the application and the interests of public health.

2) How will the fees increase impact on small traders in isolated, rural areas?

Under the Medicines Act and the Misuse of Drugs Act waivers could be applied to applications made by small traders. It is anticipated that the fee for a licence to sell medicines by retail in more remote areas would be waived, at least in part, in the interests of public health.

3) What impact will the fees increase have on clinical health research and trials?

Medsafe does not consider that an increase of $6262 for a clinical trial and $830 for a licence to deal in a controlled drug is material in the context of a clinical trial budget - it costs about US$800 million to research and develop a pharmaceutical product - and it does not accept the increase will have significant impact on the number of studies performed in New Zealand. Medsafe received 106 applications to approve a clinical trial in 2005 and of those, two were for New Zealand product development, nine were clinician-instigated trials and the remainder were conducted by, or on behalf of, multi-national companies.

A fee waiver mechansim is available if the level of fee would be a barrier to running a study and it was in the interests of public health that the study proceed.

4) How can the fee increases be justified?

A costing model, which took into account annual application volumes, personnel requirements, salaries, accommodation, operating costs and direct costs for enforcement and prosecution activities was used to determine the new fees. Medsafe has introduced efficiences such as grouping and scheduling audits in a way that reduces travel costs.

For more detailed information:
The revised fees and an analysis of the submissions has been published and is available on the _Medsafe website at


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