This week’s Federal Budget revealed a welcome response to the Review of Medicines and Medical Devices Regulation, that will provide industry with savings of around $75 million per annum, by reducing red tape and regulation on the pharmaceutical and medical device industries.
The Government advised at the Health Budget Briefing on Tuesday night that life-saving medicines and medical devices will come onto the Australian market faster, some by more than two years, through removing or streamlining unnecessary or inefficient processes identified through the Review of Medicines and Medical Devices Regulation.
Professor John Skerritt advised at the Briefing that further details would be announced by the Minister shortly.
AusBiotech CEO, Dr Anna Lavelle said: “This announcement provides evidence that AusBiotech’s extensive advocacy in this regard has been valued and puts the medicines and medical devices sectors front and centre, benefiting the industry with less confusion and red tape, speed, education, and efficiency.”
The details provided to date said “costs and administrative burden for industry will be reduced, while maintaining the safety and quality of medicines and medical devices. Assessing some products will be shorter and simpler. Some low risk products will be considered for removal from the regulatory scheme altogether. Information about complementary medicines will be made simpler to navigate for consumers and industry through a new catalogue of approved ingredients, and new approval pathways. Advertising for therapeutics goods will be simplified. The number of committees that advise the Therapeutic Goods Administration (TGA) will be reduced.”
The Review, conducted by an independent Expert Panel and led by Professor Lloyd Sansom, made 32 recommendations in its first report covering six main areas. AusBiotech’s initial submission to the Review was followed by representation of industry in Regulatory Review forums and AusBiotech’s online response.
Other measures in the Budget
The Budget also featured a corporate tax rate reduction, starting with small business entities, phased over ten years. AusBiotech welcomed the Budget measure that will see the tax rate for all companies decrease to 25 per cent over the next decade.
From 1 July this year, the Government will lower the small business tax rate to 27.5 per cent and the turnover threshold for small businesses able to access it will be increased from $2 million to $10 million.
It is important to note that for companies in this category that also receive the R&D Tax Incentive, this will provide an increased R&D tax benefit of 17.5 per cent.
Each year the turnover threshold for access to the lower company tax rate of 27.5 per cent will increase, from $10 million to $25 million in 2017-18, to $50 million in 2018-19 and $100 million in 2019-20. The Government said: “This will mean by 2020 more than half of all employees of companies in Australia will be in companies paying a lower tax rate of 27.5 per cent. That's around 4.9 million employees, whose jobs will be supported by a lower tax rate in just four years.”
Phase two of the ten-year enterprise tax plan will extend the lower tax rate of 27.5 per cent to all businesses, by continuing to step up the threshold each year until 2023-24, before reducing the 27.5 per cent rate for all businesses to 25 per cent at the end of ten years in 2026-27. The Government is planning to decrease the tax rate for all companies to 25 per cent by 2026-27.
The Government confirmed its commitment to the $1.1 billion NISA, announced late last year. AusBiotech reported on the NISA when it was released in December 2015. The Biomedical Translation Fund, reforms to employee share schemes, relaxation of the same business test and tax concessions for early stage investors and venture capital to encourage investment in innovative start-up firms, all remain on the agenda and budgeted funding remains.
The Budget was silent on the R&D Tax Incentive Review outcomes, which was due to report in April 2016.
Dr Lavelle said: “Over 90 per cent of respondents to AusBiotech’s annual industry survey (2016) said policy stability on the R&D Tax Incentive was ‘very important’ (72 per cent) or ‘important’ (18 per cent) and 81 per cent said they’re concerned about the Review.”
“With concern in the industry rife, it is incumbent upon the Review panel to be clear about the outcomes they seek and the potential for any negative impact of the industry.”
“The introduction of the patent-box style incentive remains an important, but so far overlooked opportunity, to keep home-grown intellectual property in Australia once it nears and reaches commercialisation and AusBiotech will continue to advocate for the Australian Innovation and Manufacturing (AIM) Incentive,” said Dr Lavelle.
Coinciding with the Budget, the Australian Parliament's Trade and Investment Growth Committee has released its report entitled Inquiry into Australia's Future in Research and Innovation, which examined Australia's innovation system and provides support for the AIM Incentive (p64, Chapter 3) of the Report as outlined by AusBiotech and others.
Dr Lavelle said: “This is significant as it is the first clear signal that the AIM Incentive as proposed by AusBiotech and others is seen as a viable option to build and retain domestic manufacturing and value.”