Efficient Regulatory Regime
Many commercially sponsored clinical trials in Australia are conducted under the “Clinical Trial Notification (CTN) Scheme”. Under this scheme, ethical and scientific matters relating to a proposed clinical trial are assessed by Australian human research ethics committees (HRECs), not by the Australian therapeutic goods regulator (TGA). The TGA is simply notified of the trial. This significantly reduces regulatory burdens associated with clinical trial application and approval. The institution at which the trial will be conducted also must give approval for the conduct of the trial at the site. The ethics review by a HREC and the site governance process can occur in parallel. For these reasons, the usual review cycle takes only 4 to 8 weeks meaning research can start sooner than in other jurisdictions.
Generous R&D government award/tax credit
Companies undertaking R&D activities in Australia may be eligible for the Australian Government’s R&D tax incentive. The incentive is structured as a tax offset which reduces income tax payable. For companies with group turnover of less than A$20 million, the tax offset is refundable to the extent sufficient losses are available. The amount of the offset is calculated by applying the relevant offset rate to eligible R&D expenditure on eligible R&D activities. Clinical trials, particularly early stage (Phase 0/I, II and III), are generally considered eligible R&D activities due to their experimental nature.
As a result of proposed changes announced in the 2018-19 Federal Budget, the non-refundable offset rate for companies with group turnover of AUD 20 million or more will be tied to the company’s “R&D intensity” from 1 July 2018 (replacing the previous non-refundable offset rate of 38.5%). R&D intensity is the company’s annual R&D expenditure as a proportion of total annual expenditure. The offset available increases as R&D intensity increases, as set out in the table below:
|Amount of R&D expenditure falling within an R&D intensity range of:||Is eligible for a non-refundable tax offset of the company’s tax rate, plus:|
|Between 0% and 2%||4%|
|Above 2% to 5%||6.5%|
|Above 5% to 10%||9%|
For companies with group turnover of less than AUD 20 million, from 1 July 2018 the refundable tax offset rate will be equal to the company’s tax rate plus 13.5% (replacing the previous refundable offset rate of 43.5%). Cash refunds under the refundable tax offset will also be capped at AUD 4 million annually from 1 July 2018 - however, the cap will not apply to R&D tax offsets for clinical trials.
Please note that, at the time of writing, these changes have not yet been enacted in legislation.
Aside from complying with general tax obligations in Australia, there is no requirement for the company to pay any net Australian tax to be eligible. Additionally, companies may be able to obtain an advance overseas finding that allows them to claim expenditure on R&D activities undertaken overseas which have a significant scientific link to Australian R&D activities and where at least 50% of the overall project expenditure is incurred in Australia.
The R&D tax incentive is a self- assessment program which is jointly administered by the Australian Taxation Office and AusIndustry, a separate government body. Companies must register activities that they consider eligible with AusIndustry as a pre-requisite for claiming the tax offset. It is critical that contemporaneous documentation evidencing the project and each step in the scientific process carried out is prepared and maintained. The Australian Trade & Investment Commission has recently reported that in early phase clinical trials Australia is 28% cheaper than the United States before tax incentives and 60% cheaper after tax incentives.
Broadly, companies which are tax resident in Australia and foreign companies resident in a country that has a tax treaty with Australia carrying on business through a permanent establishment in Australia are eligible for the R&D tax incentive. Companies carrying out R&D activities in Australia for a related foreign corporation may also qualify where certain requirements are met.
Unlike in other jurisdictions, to claim the tax benefit there is no requirement for companies to demonstrate year on year growth in R&D expenditure, nor is there any requirement for IP to be held in Australia.
High quality standards
Australia adheres to the highest level of Good Clinical Practice (GCP) standards, meaning that Australian clinical data and results are accepted by international regulatory agencies, including the US Food and Drug Administration and European Medicines Agency. For example, Australia has adopted the European Guideline CPMP/ICH/135/95 (and therefore the ICH E6 guidance), with some elements modified according to local regulatory requirements.
- Quality medical research infrastructure and a skilled work force
- An ethnically diverse population for trial recruitment
- A strong intellectual property system
Getting started: some important things to know
- Clinical trials conducted in Australia are subject to various regulatory controls at Federal and State levels. Of particular importance are TGA acts and regulations, GCP documents (ICH GCP Guidance annotated for Australia, referred to above, and the National Statement on Ethical Conduct in Research Involving Humans), the Australian Code for the Responsible Conduct of Human Research and Australian privacy laws.
- Clinical trials usually take place in hospitals or other health sector organisations that are run by State and Territory Governments or by private institutions.
- International healthcare companies and research groups can conduct clinical trials in Australia. The trials must be sponsored by an Australian entity. It can be an individual, hospital, institution or other organisation or company. The sponsor takes overall responsibility for the conduct of the trial. For example, the sponsor is responsible for trial design and analysis, data handling and on-going safety evaluation and adverse event reporting.
- Reaching agreement on insurance and indemnity arrangements is a key step in the clinical trial approval pathway. Indemnity and insurance requirements differ depending on whether the clinical trial is in the public or private sector and what State or Territory of Australia the trial is conducted in. Generally, where a commercial company is the sponsor, trial authorisation depends on the company providing an indemnity and evidence it is covered by appropriate insurance arrangements.
- Many “unapproved” therapeutic goods supplied for clinical trials are approved under the CTN Scheme (assessed by a HREC and notified to TGA, as described above). However the HREC (or a sponsor) may require review under a different scheme, the CTX Scheme, which requires assessment by TGA. The determining factor is whether the HREC has access to appropriate scientific and technical information and expertise to assess the safety of the product.
- It is important to have adequate privacy arrangements in place when conducting clinical trials, particularly when health information will be sent across borders.