Industries hail Australian Federal Budget announcements
The life sciences industry bodies in Australia have welcomed the measures announced by the Turnbull Government in the Federal Budget by the recognising of the critical role that R&D expenditure plays in clinical trials for developing lifechanging and saving medicines and medical devices. This they said will help Australia to keep its hard-won momentum in clinical trials and continue its growth in commercialising medical research.
In its Federal Budget announcement on May 8, the Australian government has come up with comprehensive plan for “better targeting the research and development tax incentive” (R&DTI), including: clinical trials exempted from a $4 million cap for the refundable component; no lifetime cap for the refunds; a coupling of the incentive to each company’s tax rate; and for larger companies, a graduating reward premium for higher intensity and an increased cap.
Besides, the Federal Budget is guaranteeing the essential health services that Australians rely on, with a $12.4 billion increase in the Health Budget and a $414.5 billion investment in health, aged care and sport.
The government also announced that it will increase: Medicare funding by $4.8 billion; public hospital funding by more than $30 billion; investment in new medicines by $2.4 billion; and
funding for aged care by $5.0 billion. It will be investing in a National Health and Medical Industry Growth Plan of $1.3 billion, including a groundbreaking $500 million Australian Genomics Health Futures Mission. The government is also delivering the More Choices for a Longer Life Package to help Australians maximise the opportunities that a longer life brings.
Responding to the budget AusBiotech –
Australia’s life sciences industry organisation – said it is relieved by Federal Government’s careful approach to imposing a much-feared annual cap, with the exemption of clinical trials from the $4 million cap on the annual refundable amount a welcome development.
AusBiotech CEO, Glenn Cross, said, “AusBiotech welcomes the recognition of the critical role that R&D expenditure plays in clinical trials for developing lifechanging and saving medicines and medical devices. By exempting clinical trials from a $4 million cap and encouraging higher intensity in R&D, Australia will keep its hard-won momentum in clinical trials and continue its growth in commercialising medical research.”
Since the R&DTI programme began, Australia has experienced a 5 per cent annual growth in clinical trials. “We are pleased that the government understands the role the R&DTI plays in the development of medical technology, biotechnology and pharmaceuticals (MBTP), with the sector one of Australia’s strongest and most competitive opportunities for growth,” said Cross. “AusBiotech notes that the anticipated lifetime cap for companies claiming the refundable component did not eventuate and this too is a welcome development.”
For companies claiming the non-refundable offset, a graduating premium will be introduced to incentivise higher R&D intensity, and the
$100 million cap will be elevated to $150 million. Claimants will be able to add a premium to their corporate tax rate of 4 – 12.5 per cent (currently 8.5 per cent), depending on R&D intensity (proportion of R&D expenditure over total annual expenditure), thus giving companies with higher intensity a higher offset.
A move to link the R&DTI benefit to each company’s tax rate means that new legislation is not needed each time the corporate tax rate changes and allows for a fixed premium above other tax deductions as the Enterprise Tax Plan takes effect.
The government said it is “committed to driving cutting edge research and development in Australia by both supporting small innovative firms and rewarding larger businesses that do more to invest in developing new products, processes and services that help make Australia more competitive and create more jobs … the Government will reform the program, sharpening its focus on additional eligible business R&D while ensuring its ongoing fiscal affordability.”
The government also outlined plans for “integrity and affordability” through increased resourcing for administrators and “greater transparency around who is claiming the R&DTI will promote public accountability for those benefitting from taxpayer support”, as well as improved guidance material on eligible R&D activities. A three-month limit will be imposed on extensions.
The R&DTI has been successful in helping attract more investment in and fostering a strong Australian medical technology, pharmaceutical and life sciences R&D sector, which encourages long-term investment in Australia that creates highly-skilled jobs, attracts clinical research and grows the economy.
MTPConnect – the Australian Government Industry Growth Centre for the medical technology, biotechnology and pharmaceutical (MTP) sector – too has welcomed the Australian Government’s 2018 Budget, with a targeted focus on economic growth to drive ongoing innovation, research translation, industry research collaboration and commercialisation in the Australian MTP sector. In addition, the announcement of significant health initiatives will benefit Australian patients through access to medical innovations.
MTPConnect CEO Sue MacLeman believes that the Budget has provided welcome reforms and support for the MTP sector. Sue MacLeman said “We also welcome the significant health initiatives including the $1.3 billion National Health and Medical Industry Growth
international clinical trials collaborations, a genomics mission, a chronic condition accelerator program, and industry-research collaboration programs. In addition to jobs creation, this plan will be pivotal in driving growth for SMEs, and accelerating discoveries towards proof-of-concept and commercialisation in the MTP sector.”
“We are excited about the positive impact for patients and the Australian public into the future. We will work closely with both the Australian Government and MTP sector to support the rollout of all of these positive programs that are sure to help us cement our worldleading place on the international stage,” she added.
Dr Bronwyn Evans, Chair of MTPConnect, said, “The Australian Government has recognised the guidance, support and real impact that the Industry Growth Centres have provided in their respective sectors. MTPConnect has established itself as an important part of the
MTP innovation ecosystem in Australia, working closely with industry associations, research institutes, companies and government. The delivery of two years of additional funding for the Growth Centre
Initiative will help to develop a sustainable future for both the sector and the organisation.”
Similarly Medicines Australia, which drives the creation and development of an environment for the continued sustainable growth of the innovative research based prescription medicines industry has welcomed the announcement of $1.4 billion for the listing of innovative medicines on the Pharmaceutical Benefits Scheme (PBS). This will help ensure all Australians have access to new and innovative medicines they need when they need them.
Medicines Australia also said “It is encouraged by the $1 billion future listing provision and the Government’s commitment to list all new medicines recommended by the PBAC. It will look forward to further discussion on this, and on the revised payment administration systems for high cost medicines.”
In a release Medicines Australia noted that with new highly targeted medicines coming in through the pipeline, continued investment in the PBS is needed. The Government has acknowledged the budget is in good shape, now it’s time to see some investment in high value areas such as the PBS and the innovative medicines industry.
A strong PBS not only helps patients, it also supports thousands of medical researchers and jobs and the research-based medicines and health sectors, and encourages investment in medical research in Australia.
Medicines Australia is pleased with the government’s commitment to research and development within the innovative pharmaceutical sector with the exemption of clinical trials under changes to the R&D Tax Incentive and no intensity threshold.
Medicines Australia notes the new PBS listings announced in the Budget that will provide further important health benefits for patients. This includes Refractory multiple myeloma, relapsing remitting MS, PreP, relapsed of refractory Hodgkin’s lymphoma; $42.5 million over five years 2017-18 for Maternal Pertussis, High dose 65 years plus flu, 12 Month meningococcal ACWY.
There are still unanswered questions arising from the Budget, which Medicines Australia will be working through over the coming days. Medicines Australia remains committed to working constructively with the government to deliver a solution that will enable the government to invest in the PBS so that new innovative medicines can continue to be listed for Australians.