11 March, 2018
The clinical trials sector is a successful and growing area of Australian healthcare, strongly supported by the Australian Government. It is attracting much attention from both domestic and foreign participants.
The following outlines legal issues when considering whether to conduct a clinical trial in Australia.
Why Conduct Clinical Trials in Australia
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
The Australian Government’s R&D tax incentive gives companies undertaking certain “core” R&D activities in Australia a 43.5% refundable tax credit on eligible R&D expenditure (for companies with an aggregated turnover of less than A$20 million) or a 38.5% non-refundable tax credit on eligible R&D expenditure (for companies with an aggregated turnover of A$20 million or more). This incentive is structured as a tax offset via which eligible R&D expenditure is applied against a company’s tax liability. Clinical trials, particularly early stage (Phase 0/I, II and III), are generally eligible to be considered as qualifying “core” R&D activities for the purpose of the R&D tax incentive.
The Refundable tax credit effectively functions as a government award. 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 for either credit. 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.
The R&D tax incentive is a self-assessment program which is jointly administered by the Australian Taxation Office (ATO) and AusIndustry, a separate government body. Companies must register activities that they consider eligible with AusIndustry as a pre-requisite for applying the tax credit. 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 (Austrade) 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.
Companies incorporated 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 for the R&D tax credit. Companies carrying out R&D activities for a related foreign corporation may also qualify.
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.
Other benefits
- 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. The entity can be an individual, hospital, institution, 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.
For further information, please contact:
Elisabeth White, Partner, Baker & McKenzie
elisabeth.white@bakermckenzie.com
