No exemptions without proof: TGA pushes for enhanced powers to challenge use of the Annual Charge Exemption Scheme

The Therapeutic Goods Administration (TGA) has announced a public consultation about its proposed changes to the Annual Charge Exemption (ACE) scheme compliance program, spurred by TGA reports that issues with the scheme could have cost the TGA $20 million between 2019 and 2024.

These proposed changes are indicative of the TGA's increased focus on new and alternative approaches to regulation and enforcement, and may have consequences for Sponsors of entries on the Australian Register of Therapeutic Goods (ARTG) that are currently exempt from annual fees and charges under the ACE scheme.

Submissions regarding the ACE scheme compliance program close on 20 March 2026.

The Annual Charge Exemption Scheme

Therapeutic goods must be listed, registered or included on the ARTG before they may be imported into, manufactured or supplied in, or exported from Australia (unless a relevant exemption or authorisation applies). The ACE scheme provides an exemption from paying annual charges and fees on therapeutic goods entered in the ARTG until the good begins generating turnover. Any entry in the ARTG reporting $0 turnover is eligible for the exemption. The purpose of the ACE scheme is to permit sponsors to enter goods in the ARTG in advance of the good going to market without incurring an annual charge. Once the goods are taken to market, and turnover exceeds $0, the exemption no longer applies.

In 2025-26, an estimated $56.5 million in annual charges have been exempted.

The Compliance Program

Sponsors of goods subject to the ACE scheme currently confirm and renew exemptions for goods through annual self-declaration. The Therapeutic Goods Regulations 1990 (Cth) set out the conditions in which an exemption might cease, which include when a sponsor reports turnover on an entry exceeding $0, when a sponsor fails to declare a turnover of $0, or when a sponsor fails to report turnover within the required period.

The Secretary, or his delegates, may issue statutory notices requesting that sponsors provide all documentation relied upon when making an self-declaration of $0 turnover. Reviews of these documents may then be undertaken to ensure that the declarations of $0 turnover are accurate.

The TGA's Consultation Paper states that the compliance program is encountering increasing numbers of ARTG entries reporting $0 in turnover that cannot be verified, either because sponsors do not possess historical records or do not respond to the Secretary's requests for documentation.

The TGA asserts that claims made by what the Consultation Paper describes as the "top ten financial beneficiaries of the scheme" represent approximately $77.3 million in annual charges over a five-year period (from 2019-20 to 2023-24) that would have been due absent the exemption. Further, if 25% of these claimed exemptions remain unverified and were not, in fact, eligible for the exemptions claims, this represents up to $20 million. That is a fairly significant contention – particularly since products subject to the ACE scheme are published.

The TGA is seeking to strengthen enforcement options

Enforcement options are currently limited. The Secretary may cancel ARTG entries for failure to respond to notices, but doing so does not affect any charge exemptions historically claimed for those entries. It is clear from the Consultation Paper that the TGA is seeking changes to the legislation to provide it with an enforcement method that will encourage compliance while also empowering it to pursue the charges that would be payable where an ARTG entry is found to be ineligible for the ACE scheme.

Proposed changes to the Compliance Program: revoking exemptions

The TGA proposes to amend the Regulations to empower the Secretary or his delegates to revoke exemptions where sponsors fail to comply with statutory Notices seeking documentation relating to turnover or where sponsors do not, or cannot, demonstrate that an entry has had $0 turnover.

Three options for change are being considered by the TGA to address instances of undisclosed non-compliance:

• Option 1: maintain the status quo;

• Option 2: amend the Regulations so that an exemption only applies where a declaration of $0 turnover includes supporting evidence; and

• Option 3: introduce eligibility requirements in the Regulations stipulating that sponsors must respond to statutory notices related to the scheme to remain eligible for annual charge exemptions.

Option 3 is the TGA's preferred approach. This option involves amending the Regulations to include the requirement that sponsors respond to notices requesting documentation and other material with respect to exempt ARTG entries to remain eligible for the exemption. Failure to respond to a notice would empower the Secretary or his delegate to revoke the exemption and apply annual charges to the entry. The Secretary or delegate would be required to notify sponsors of revoked exemptions and provide a statement of reasons for the revocation.

Enhancements to the ACE Scheme are consistent with its broader market activity

The TGA's proposal to strengthen its powers to enforce compliance in relation to the ACE Scheme is entirely consistent with its recent publication of compliance principles for 2026 and 2027 – specifically, strengthening enforcement. The TGA there highlighted the need to take swift, proportionate action and to respond to emerging trends, as well as to increase visibility of compliance actions.

This Consultation should also be considered against the separate public consultation which proposes around 4-6% increase across TGA fees and charges, which closed on 27 February. That consultation paper provides further detail about the TGA's budget and cost pressures, which is also relevant to properly understanding the renewed focus on proper compliance with the ACE Scheme.

Sponsors should be aware that the TGA intends to increase record-keeping and other compliance obligations. Sponsors of ARTG entries currently exempt from annual charges under the ACE scheme will, if proposed option 3 is actioned, need to maintain records demonstrating the turnover status of the entry. They will be required to respond to any notices from the Secretary or a delegate seeking evidence of $0 turnover. Failure to respond will result in revocation of the exemption, and annual charges on the entry will be payable.