Annex D - Regulatory costing section of the Regulation Impact Statement

On this page: Option 1 - Status Quo | Option 2 - Reduce pack size of S2 products and add warning label | Option 3 - Reschedule S2 to S3, reduce pack size, and add warning label | Option 4 - Reschedule S2 to prescription only (S4) | Option 5 - Reduce pack size of S3 and add warning label | Option 6 - Reschedule S3 to prescription only (S4) | Regulatory options combined into scenarios

Option 1 - Status Quo

Option 1 – No Change. The current scheduling of codeine remains appropriate.

Poisons are classified according to the schedules in which they are included in the Standard for the Uniform Scheduling of Medicines and Poisons (SUSMP), which is also known as the Poisons Standard, an extract of which is provided below. 

Source: Poisons Standard July 2015

The status quo represents the business as usual scenario and therefore has no change in regulatory impact. Nonetheless, it is useful to summarise the current regulatory requirements as set out in the Poisons Standard. A key assumption is that the formulation of the existing codeine-based products will not change as a result of any up-scheduling (that is, if S2 and S3 are up-scheduled to S4 then S4 will be amended to incorporate low dose and high dose codeine products).

Baseline assumptions

Number of codeine products entered on the ARTG (as at August 2016)

• Table D3 (following page) details the distribution of codeine products across the S2, S3, S4 and S8 schedules.
• 73 ARTG entries for codeine phosphate products are currently at Annual Charge Exemption (ACE) status, which means they have $0 turnover and are not being actively marketed in Australia. These entries have been excluded from those shown in Table D3.

• As some ARTG entries cover more than one medicine unit (e.g. different pack sizes), a multiplier has been applied to ARTG entries for each of the following types of medicines:

  • Prescription (S4) – 2.3 medicines per ARTG entry; and
  • OTC (S2 and S3) – 2.5 medicines per ARTG entry.

  The result of applying this multiplier are detailed in the respective 'adjusted' columns in Table D3.

• The ARTG data indicates the majority of products with codeine as an active ingredient are in the S3 category. Furthermore, an analysis of sponsors with a product presence in multiple categories finds that:
  • all 15 sponsors with S2 products also have products in the S3 category;
  • of the 15 sponsors with S2 products, three also have products in the S4 and/or S8 categories;
  • of the 22 sponsors with S3 products, five also have products in the S4 and/or S8 categories; and
  • no sponsors have products across all four categories.
• For many medicines, there is more than one label associated with a product. For example, a medicine in a blister pack is assumed to be associated with two labels (the backing of the blister pack and the outside carton). Based on an analysis of ARTG entries, a multiplier is applied to the number of medicine products to estimate the number of associated labels:
  • Prescription – 1.89 labels per medicine product; and
  • OTC – 1.85 labels per medicine product.

Source: ARTG extract 1 August 2016

Business-as-usual (BAU) variations to existing medicines

• There is high variability between how often sponsors change an aspect of their product (e.g. update label, PI etc.). Some sponsors vary their ARTG entry regularly (even more than once a year), whereas other sponsors will not vary their products for several years. The majority of ARTG variation applications are for prescription products.
• A 2014 survey of industry revealed that companies will update their labels as part of BAU, on average, every 3 years. Therefore, with an assumed 18 month implementation timeframe which also aligns with the RASML implementation cycle, it is assumed that should there be a change to the scheduling of codeine resulting in changes packaging at least half of the affected sponsors will have the opportunity to roll the labelling changes into already scheduled updates.
• Consultations with sponsors and manufacturers have identified the cost of implementing a minor labelling change ranges between $2,000 and $6,500 per product. This incorporates the costs of artwork and internal processes to quality assure and implement the change on the production line. For the purposes of the costing, drawing from the TGA RIS on General Requirements for Labels for Medicines, the average cost to implement a labelling change (per OTC product) is estimated at $4,171.^[30] We have assumed that this incorporates the aspects of multiple labels per product.
• These minor label change costs include pre-production costs (such as label redesign and approval, artwork and proofing) and production costs (new printing plates for conventional printing processes, changes to the digital printing process). The costs also cover any potential changes to the PI/CMI.
• A minor label change is defined as a small change to the phrasing of text on a label that does not necessitate a change to, or rearrangement of, other label graphics.

Costs associated with transition

General costs

• The compliance costs for stock recalls has not been estimated as the assumed implementation timeframe should provide adequate time for turn-over of stock across the supply chain.
• A default FTE wage rate of $37.40 per hour and an on-cost multiplier of 1.75 has been adopted to account for non-wage labour on-costs as per OBPR guidance.^[31] This results in a scaled up rate of $65.45 per hour.
• An individual's time has been costed at $29.00 per hour as per OBPR guidance. A pharmacists wage has been estimated at $35.90 per hour^[32] (therefore $62.83 per hour when the on-cost multiplier of 1.75 is applied). A doctor's wage has been estimated at $97 per hour^[33] (therefore $169.75 per hour when the on-cost multiplier of 1.75 is applied).
• The amendment of current Schedule 4 and 8 entries in the Poisons Standard will have internal to Government impact only (legislative change) but will not have any impact from a regulatory cost perspective on businesses, community organisations or individuals.

Implementation considerations

• The implementation timeframe for any decision that impacts on labelling, pack size or up-scheduling has the potential to increase regulatory costs. The cost estimates outlined in the reminder of this section assume an implementation timeframe of 18 months. However, it is important to note that a change in timeframe would impact the estimated costs. For example, a short implementation timeframe may mean that sponsors cannot make the necessary changes in time (or obtain the necessary approvals), which, in an extreme case, could require products to be removed from the shelves, or may mean that revised products cannot come to market by the time existing products are withdrawn. A longer implementation timeframe may enable a greater proportion of compliance activities (such as a labelling update) to be rolled into other scheduled changes thereby reducing the compliance burden, while also enabling sponsors who are adversely impacted to reposition themselves to adjacent markets.
• There are several categories of changes which are impacted by implementation timeframes:
  • time to implement labelling changes (compliance);
  • time to reduce pack sizes (compliance);
  • TGA approval timeframes (approvals);
  • stock recall (compliance); and
  • product strategy and portfolio diversification (business).
• The figure below illustrates indicative implementation timeframes for each of these categories.

Figure D1. Implementation timeframe (months)

• Labelling changes. Consultation has identified that the implementation of labelling changes will take between 6-8 months. The component steps involve the development of artwork, internal approvals, regulatory approvals and implementation. This falls within the 18 month transition window provided by the TGA for recent RASML updates.^[34]
• Stock turnover. Consultation with manufacturers has identified stock turnover timeframes of between 6 weeks and 4 months. Different parts of the supply chain will hold different levels of stock. Codeine based products have a shelf life of 24 months, although this is not anticipated to be a constraint, given the level of turnover.
• Product strategy and diversification. In response to a decision, manufacturers and retailers who currently have a market share of codeine-based products will have a planning and investment timeline to reposition their product portfolio. Some sponsors may require registration of new ARTG listings that have a 12-month lead time. Following this, manufacturers may require up to an additional 6-12 months to assemble the production line and source materials. This will vary depending on whether production is local (increased flexibility) or overseas (less flexibility). An 18 month timeframe would be ideal to allow impacted manufacturers (and to a lesser degree sponsors) to reposition, and therefore maintain, their market share.
• Reduce pack size. Manufacturers who do not have existing production lines that can accommodate a reduced outer pack, or inner blister pack, will need to make changes to their production line. Discussions with manufacturers have indicated this would take 9 months from procurement to implementation. In the event that this is not commercially viable, sponsors could seek an alternative manufacturing site. Although in the event that the alternative site does not have GMP certification this may be a lengthier process.
• OTC C1/C2 level applications. The anticipated timeframes for approval of C1/C2 change applications are approximately three months.
• Applications to register a prescription medicine (S4). TGA has advised that the up-scheduling of S2 and S3 medicines to S4 would not require the registration of new prescription medicine as codeine is not a new ('novel') chemical entity. In the case of S3 medicines up-scheduled to S4, the processes for minor variations to registered prescription medicines would be followed. This would entail the submission of a Category 3 application (with an associated processing timeframe of 45 working days). Specifically a '9D(3) Category application to vary an ARTG entry' would be used' with the existing PI and CMI submitted with the application. For S2 medicines up-scheduled to S4 a new PI and CMI would need to be produced (though these could leverage existing PIs and CMIs for medicines with codeine as an active ingredient). This would be considered a Category J variation ('Changes to Product Information requiring the evaluation of data'), with a maximum processing timeframe of 255 working days (Category 1 application). TGA has advised, however, that as this application does not relate to a new chemical entity or a new indication(s) that the actual processing time (and associated data requirements) is likely to be considerable less than this.

Option 2 - Reduce pack size of S2 products and add warning label

Option 2 – The current Schedule 2 entry for codeine in cough and cold medicine preparations be amended to reduce the pack size to not more than 3 days' supply and include a label warning that codeine can cause addition.

This option would affect 46 ARTG medicine entries (entirely OTC) across 15 sponsors. The same baseline assumption has been used as outlined under Option 1.

Regulatory cost assumptions

• Several sponsors have recently implemented advisory warnings against codeine addiction as part of industry initiatives, however some additional labelling changes would likely be required as a result of the reduced pack size. Based on the baseline assumptions, 115 OTC medicine products^[35] currently marketed in Australia are likely to be affected.
• As noted in the BAU costs, it is estimated that half of the product label updates can be rolled into already planned updates reducing the per product cost by 50% for that segment, therefore the carry forward figure is 58 labels will need to be updated in addition to BAU labelling activities.
• Based on BAU costs outlined in Option 1, the label pre-production and production costs are estimated to be $0.24m.
• Consultations have identified that approximately 50% of codeine sponsors already produce 3 day packs or have a production line that could accommodate this change across their impacted product portfolio, provided the implementation timeframe is sufficient. These sponsors will not need to implement new manufacturing arrangements for either the outer carton (apart from the printing) or inner blister pack. It is estimated that approximately 8 sponsors will incur costs to change their pack size.
• For the impacted sponsors, it is estimated from industry consultations that up-front costs to implement the required packaging changes is $30,000 per sponsor. This could include retooling to modify blister pack lengths or reduce packaging depth. It should be noted, however, that these costs can vary depending on the location of the manufacturing facility being used. For example, changes can be implemented more quickly in domestic facilities but are more expensive, whereas changes in overseas facilities can be implemented at lower cost, but are subject to longer delays due to competing priorities.
• Based on BAU costs outlined in Option 1, and the factors listed above, packaging transition costs are estimated to be $0.24m.
• The required changes fall under a C1 application level, based on a review of the applicable forms, and consultation with sponsors, it is estimated that 4 hours will be required to prepare and submit the relevant form. The cost of completing the required form is estimated to be $0.012m.
• Note that the estimated regulatory compliance costs do not account for the application fees sponsors would have to pay (roughly $1,500 per listing update) as direct financial costs are outside the scope of the Regulatory Burden Measurement (RBM) framework.^[36] Similar exclusions also apply to the other 4 options.

When averaged over ten years the total regulatory cost for Option 2 is $0.05m per annum. The tables below summarise the regulatory costing.

Note that the following cell colour coding is used for the tables showing regulatory cost calculations.

Benefits

• As detailed in the economic model, no health benefits will be realized by the implementation of this option. As noted earlier in the report, the only projected health benefits factored into the economic model arose from improved therapeutic pathways taken by patients who would otherwise be chronic users of low dose codeine medicines. For this improved therapeutic pathway to be realized the key enabler was a visit to a GP, which will not occur under this option.^[37]

Option 3 - Reschedule S2 to S3, reduce pack size, and add warning label

Option 3 – The current Schedule 2 entries for codeine in cough and cold medicine preparations be up-scheduled to Schedule 3, and that the pack size be reduced to not more than 3 days' supply, and include a label warning that codeine can cause addiction.

This option would affect 46 ARTG medicine entries (entirely OTC) across 15 sponsors. The same baseline assumption has been used as outlined under Option 1.

Regulatory cost assumptions

• As part of industry initiatives, several sponsors have recently implemented advisory warnings against codeine addiction. However, some additional labelling changes would likely be required as a result of the reduced pack size. Based on the baseline assumptions, 115 OTC medicine products currently marketed in Australia will be affected.
• It is estimated all S2 sponsors will migrate their products to S3, but with a rationalisation of their product portfolio by 50% to reflect the reduced range which would be expected as products move behind the pharmacists' counter which faces stronger competition for space. Therefore, the carry forward total into the model is 58 medicine products. As noted in the BAU costs it is estimated that half of the product label updates can be rolled into already planned updates reducing the per product cost by 50% for that segment, therefore the carry forward figure is 29 labels will need to be updated in addition to BAU labelling activities.
• Based on BAU costs outlined in Option 1, the label pre-production and production costs are estimated to be $0.12m.
• Consultations have identified that roughly 50% of codeine sponsors already produce 3 day packs or have a production line that could accommodate this change across their impacted product portfolio (provided the implementation timeframe is sufficient). These sponsors will not need to implement new manufacturing arrangements for either the outer carton (apart from the printing) nor inner blister pack. It is estimated that approximately 8 sponsors will incur costs to change their pack size.
• It is estimated from industry consultations that up-front costs for the impacted sponsors to implement the required packaging changes is $30,000 per sponsor. This may include retooling to modify blister pack lengths or reduce packaging depth. It should be noted, however, that these costs can vary depending on the location of the manufacturing facility being used. For example, changes can be implemented more quickly in domestic facilities but are more expensive, whereas changes in overseas facilities can be implemented at lower cost, but are subject to longer delays due to competing priorities.
• Based on BAU costs outlined in Option 1, and the factors listed above, packaging transition costs are estimated to be $0.24m.
• The required changes fall under a C2 application level, based on a review of the applicable forms, and consultation with sponsors, it is estimated that 12 hours will be required to prepare and submit the relevant forms (including the creation of PI and CMI documentation). This estimate assumes that current S2 sponsors will adopt the efficient practice of replicating the PI documentation of a generic product already in the market. It is also possible that a core PI would be created to assist industry with an efficient migration of these products which would further reduce costs. The cost of completing the required form and provision of supporting materials is estimated to be $0.036m.
• The rescheduling of S2 products to S3 will now require individuals to speak with a pharmacist prior to making a purchase of codeine-based cough and cold products. In the absence of data it has been estimated this will consume an additional two minutes of time for both the individual and the pharmacist.
• Current sales data indicates roughly 4.4 million packets of codeine-based S2 cough and cold products are sold every year in Australia. In the absence of data to forecast the market responses to Option 3, it is estimated aggregate demand for S2 products would drop by 25% if rescheduled to S3. It is therefore estimated there will be an additional 3.3 million S3 transactions/conversations per year in response to the S2 to S3 rescheduling.

When averaged over ten years the total regulatory cost for Option 3 is $10.14m per annum. The tables below summarise the regulatory costing.

Benefits

• As detailed in the economic model, no health benefits will be realized by the implementation of this option. As noted earlier in the report, the only projected health benefits factored into the economic model arose from improved therapeutic pathways taken by patients who would otherwise be chronic users of low dose codeine medicines. For this improved therapeutic pathway to be realized the key enabler was a visit to a GP, which will not occur under this option.

Option 4 - Reschedule S2 to prescription only (S4)

Option 4 – Up-schedule the current Schedule 2 entries for codeine to Schedule 4 and amend the current Schedule 4 and 8 entries.

This option would affect 46 ARTG medicine entries (entirely OTC) across 15 sponsors. The same baseline assumptions have been used as outlined under Option 1.

Regulatory cost assumptions

• There are no packaging or supply restrictions prescribed for S4 products.
• Up-scheduling S2 products to S4 will require sponsors to apply to register a prescription medicine. Consultations have identified significant commercial and practical barriers to migrating low dose codeine products to a prescription-only market. Further, is not clear whether there is a market for former S2 products in this scenario. For this reason, it is estimated only 15% of current S2 sponsors would seek to migrate their products to S4. It is estimated S2 sponsors will rationalise their portfolio to two products per sponsor given the challenging commercial realities of the prescription only market. As there are currently 15 sponsors of S2 products, the total number of products to be carried forward into the model is therefore 4 medicine products (15% of 15 sponsors (2 sponsors) and 2 products per sponsor) which will incur costs to update labels. It has been assumed that each product to be up-scheduled relates to a separate ARTG listing.^[38]
• Based on BAU costs outlined in Option 1, the label pre-production and production costs are estimated to be $0.017m.
• The required changes fall under a major variation (Category 1 application – maximum processing time of 255 days) level but TGA have advised that as these applications do not relate to a new chemical entity or a new indication(s) then the actual processing time (and associated data requirements) is likely to be considerable less than that required for a standard Category 1 application. Based on a review of the applicable forms, it is estimated that 12 hours will be required to prepare and submit the relevant forms (including the creation of PI and CMI documentation). This estimate assumes that current S2 sponsors will adopt the efficient practice of replicating the PI documentation of a generic product already in the market. It is also possible that a core PI would be created to assist industry with an efficient migration of these products which would further reduce costs. The cost of completing the required form and provision of supporting materials is estimated to be $0.003m.
• This analysis has not accounted for reformulation in response to Option 4 as consultation has indicated, due to costs and potential regulatory barriers to the redeployment of branding, there should be no reformulation.
• Registered prescription (S4) medicines have the site of manufacture of the active pharmaceutical ingredient(s) (API) recorded in the ARTG. Moving to S4 will require more detailed ARTG records for the products, with the addition of the site of manufacture of the active pharmaceutical ingredient(s). This is a minor administrative process which can be combined with any other application type (e.g. an application to amend the labels).
• For new prescription medicine, evidence of Good Manufacturing Practice (GMP) at API manufacturing site is assessed by the TGA. S2 sponsors currently self-certify they are compliant with GMP principles; subsidiary GMP requirements encompass supplier (e.g. API) qualification. The TGA can seek evidence of GMP compliance from sponsors of medicines at any time. Sponsors who already have a related S4 medicine containing codeine made at the same medicine manufacturing site are assumed to be compliant with API GMP requirements and possess all the necessary GMP evidence (it is noted that this applies to 3 of the current 15 S2 sponsors). For other products, where S2 medicines are converted to S4 medicines on the ARTG due to the up-scheduling of codeine, the TGA may seek GMP evidence. It is estimated the engagement of GMP professionals, development of documentation, and implementation of staff and managerial processes would cost $34,500 per impacted sponsor.
• Similarly for new prescription medicines, the manufacturing process and controls for the API(s) are reviewed. Any up-scheduling is a change to a currently supplied medicine: the extent of review at the time of up-scheduling is a matter of judgment. The TGA might require assurances from the sponsor that no changes have been made to the existing S2 products that would move to S4, including the drug substance manufacturing site(s). If a sponsor changes API details for these products in the future, the required documentation to demonstrate compliance will be required. As detailed previously, it is estimated that 2 sponsors will need to undertake this process. The upfront cost of demonstrating GMP compliance is estimated to be $0.069m.
• The reclassification of S2 products to S4 will require patients to visit a doctor to obtain a prescription for any product containing codeine. This will increase the compliance burden on individuals. The costs to the healthcare system, in the form of GP payments via MBS, are outside the scope of RBM as they are considered a direct financial cost and not a compliance cost. These are instead considered in the economic modelling. It is estimated that consumers will require 15 minutes (each way) to drive to their local doctor (therefore a total of 30 minutes). It is also estimated, based on consumer behaviour survey data,^[39] that individuals will spend an average of 30 minutes in a waiting room before being able to see their doctor and that they will have a standard 15 minute consult. It is assumed that the patient would proceed immediately to the pharmacy to process the script and that the pharmacy is located close-by to the GP's office. It is estimated that the consumer will spend 5 minutes in the pharmacy (including wait time for the script to be processed and discussing the medicine with the pharmacist).^[40] Therefore the total time to visit the GP and get the resulting script for codeine processed is 80 minutes (1.33 hours)). It is also assumed doctors spend an additional 30 seconds to process the prescription for these new visits. The time taken for the pharmacist to process the script and talk to the consumer regarding the prescription medicine is estimated to be 2 minutes (please note that no adjustment was made in relation to the estimated pharmacist wage rate for whether the processing of the script is undertaken by a pharmacist's assistant rather than the pharmacist as not all pharmacies will have this business model).
• Based on the economic modelling undertaken for this RIS it is estimated this option would generate an additional average of 200,000 GP appointments per annum over the next ten years. This estimate accounts for the modelled behaviour of consumers in these scenarios (demand side), factors in supply side assumptions, and assumes no repeats due to S2 codeine medication being for cough and colds. In addition, the economic modelling shows that there are 599,000 per annum existing visits to GPs (that is, would have occurred in the absence of any regulatory change) where a script for codeine would be requested. For the latter category it is assessed that this does not increase the time taken to visit the GP by consumers (as they were undertaking a GP visit anyway) but does result in a slight incremental increase in the duration of the consultation because the GP now needs to prepare a script for codeine (it is assessed that no additional time is required by GPs compared to the average consultation for the writing of script for codeine for the additional GP appointments). The increase in the time taken by pharmacists to respond to the regulatory change is the net of the two populations (additional GP appointments plus existing GP appointments with a codeine script requested).

When averaged over ten years the total regulatory cost for Option 4 is $10.24m per annum. The tables below summarise the regulatory costing.

Benefits

• As detailed in the economic model, some health benefits will be realized by the implementation of this option. The requirement to see a doctor would likely generate health gains compared to the existing situation by driving changes in treatment and therapy.

Option 5 - Reduce pack size of S3 and add warning label

Option 5 – The current Schedule 3 entries for codeine (including, but not limited to codeine containing analgesics) be amended to reduce the pack size to not more than 3 days' supply and include a label warning that codeine can cause addiction.

This option would affect 168 ARTG medicine entries (entirely OTC) across 22 sponsors. The same baseline assumptions have been used as outlined under Option 1.

Regulatory cost assumptions

• As part of industry initiatives, several sponsors have recently implemented advisory warnings against codeine addiction. However, some additional labelling changes would likely be required as a result of the reduced pack size. Based on the baseline assumptions, 420 OTC medicine products currently marketed in Australia will be affected.
• As noted in Option 2, it is estimated that half of the product label updates can be rolled into already planned updates reducing the per product cost by 50% for that segment. Therefore the carry forward figure is 210 labels will need to be updated in addition to BAU labelling activities.
• Based on BAU costs outlined in Option 1, the label pre-production and production costs are estimated to be $0.88m.
• Consultations have identified that roughly 50% of codeine sponsors already produce 3 day packs or have a production line that could accommodate this change across their product portfolio (provided the implementation timeframe is sufficient). These sponsors will not need to implement new manufacturing arrangements for either the outer carton (apart from the printing) nor inner blister pack. It is estimated that approximately 11 sponsors will incur costs to change their pack size.
• It is estimated from industry consultations that up-front costs for the impacted sponsors to implement the required packaging changes is $30,000 per sponsor. This may include retooling to modify blister pack lengths or reduce packaging depth. It should be noted, however, that these costs can vary depending on the location of the manufacturing facility being used. For example, changes can be implemented more quickly in domestic facilities but are more expensive, whereas changes in overseas facilities can be implemented at lower cost, but are subject to longer delays due to competing priorities.
• Based on BAU costs outlined in Option 1, and the factors listed above, packaging transition costs are estimated to be $0.33m.
• The required changes fall under a C1 application level, based on a review of the applicable forms, and consultation with sponsors, it is estimated that 6 hours will be required to prepare and submit the relevant form (including updates to the PI and the CMI). The cost of completing the required form is estimated to be $0.066m.

When averaged over ten years the total regulatory cost for Option 5 is $0.13m per annum. The tables below summarise the regulatory costing.

Benefits

• As detailed in the economic model, no health benefits will be realized by the implementation of this option. As noted earlier in the report, the only projected health benefits factored into the economic model arose from improved therapeutic pathways taken by patients who would otherwise be chronic users of low dose codeine medicines. For this improved therapeutic pathway to be realized the key enabler was a visit to a GP, which will not occur under this option.

Option 6 - Reschedule S3 to prescription only (S4)

Option 6 – Up-schedule the current Schedule 3 entries for codeine to Schedule 4 and amend the current Schedule 4 and 8 entries.

This option would affect 168 ARTG medicine entries (entirely OTC) across 22 sponsors. The same baseline assumptions have been used as outlined under Option 1.

Regulatory cost assumptions

• There are no packaging or supply restrictions prescribed for S4 products.
• Up-scheduling S3 products to S4 will require sponsors to apply to register a prescription medicine. It is estimated 50% of current S3 sponsors would seek to migrate their products to S4. Further, it is estimated S3 sponsors will rationalise their portfolio to two products per sponsor given the challenging commercial realities of the prescription only market. As there are currently 22 sponsors of S3 products, the total number of products to be carry forward into the model is therefore 22 medicine products (50% of 22 sponsors (therefore 11 sponsors) and 2 products per sponsor) which will incur costs to update labels. It has been assumed that each product to be up-scheduled relates to a separate ARTG listing.^[41]
• Based on BAU costs outlined in Option 1, the label pre-production and production costs are estimated to be $0.092m.
• The required changes fall under a minor variation (Category 3 application) level. Based on a review of the applicable forms it is estimated that 4 hours will be required to prepare and submit the relevant form. The cost of completing the required form is estimated to be $0.005m.
• This analysis has not accounted for reformulation as consultation has indicated there will be no reformulation in response to Option 6 due to costs and potential regulatory barriers to the redeployment of branding.
• As outlined in Option 4, a prerequisite to submitting an application to register a prescription medicine is for the sponsor to have GMP certification for the manufacturing facility. S3 sponsors currently self-certify they are compliant with GMP principles. Moving to S4 will require those sponsors to produce documentation to demonstrate compliance and also be subject to inspections. Sponsors who already have an S4 product are assumed to be compliant with GMP requirements and possess all necessary certification (it is noted that this applies to 3 of the current 22 S3 sponsors). In addition, 14 of the remaining 22 S3 sponsors also have a product in S2. To avoid double counting with Option 4, it is assumed that only 3 sponsors^[42] will incur costs to obtain GMP certification from the TGA.
• It is estimated the engagement of GMP professionals, development of documentation, and implementation of staff and managerial processes would cost $34,500 per impacted sponsor. As detailed above, 3 sponsors are estimated to undertake this process. The upfront cost of demonstrating GMP compliance is estimated to be $0.104m.
• The reclassification of S3 products as S4 will require patients to visit a doctor to obtain a prescription for any analgesic product containing codeine. This will increase the compliance burden on individuals. As noted in Option 4 this will require 1.33 hours to travel to and from a doctor's, attend an appointment, and then visit a pharmacy to obtain the medicine. As per Option 4, it is also assumed doctors spend an additional 30 seconds to process the prescription for these new visits and that pharmacists will take an additional 1 minute to process the script and talk to the consumer when providing them the medicine.
• Based on the economic and social impact modelling undertaken for this RIS it is estimated this option would generate an additional average of 51,000 GP appointments per annum over the next ten years. This estimate accounts for the modelled behaviour of consumers in these scenarios (demand side), factors in supply side assumptions, and assumes a maximum of five repeats (therefore up to 6 packs per script). In addition, the economic modelling shows that there are 152,000 existing visits to GPs (that is, would have occurred in the absence of any regulatory change) where a script for codeine would be requested. For the latter category it is assessed that this does not increase the time taken to visit the GP by consumers (as they were undertaking a GP visit anyway) but does result in a slight incremental increase in the duration of the consultation because the GP now needs to prepare a script for codeine (it is assessed that no additional time is required by GPs compared to the average consultation for the writing of script for codeine for the additional GP appointments). As this option relates to up-scheduling S3 to S4 there is assessed to be no additional time required by pharmacists (assuming a 2 minute time interaction for the processing of S3 transactions).^[43]

When averaged over ten years the total regulatory cost for Option 6 is $2.21m per annum. The tables below summarise the regulatory costing.

Benefits

• As detailed in the economic model, substantial health benefits will be realized by the implementation of this option. The requirement to see a doctor would likely generate health gains compared to the existing situation by driving changes in treatment and therapy.

Regulatory options combined into scenarios

This annex has presented the calculation of the regulatory cost structured along the specified six options. However, there is a logical grouping of these options. Essentially, modification of the regulatory control mechanisms for both S2 and S3 codeine medicines is required simultaneously, otherwise the desired outcomes would largely be negated by consumers shifting from either S2 to S3 (or vice versa) if a single regulatory option was enacted. The table below details the regulatory cost per scenario.