Why Conduct Clinical Trials in Australia?

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Australia has a rapidly growing clinical trial sector thanks to the number of advantages that it offers as a clinical trial destination. Here we summarize a few reasons about why you should conduct clinical trials in Australia:

Robust Regulatory Framework 

Many industry sponsored clinical trials are undertaken in Australia under the “Clinical Trial Notification (CTN) Scheme.” According to this scheme, ethical and scientific aspects of a proposed clinical trial are evaluated by Australian Human Research Ethics (HRECs) committees, not by the Australian Therapeutic Goods Regulator (TGA). The TGA is only informed about the trial. This vastly reduces the administrative burden of applying and approving clinical trials. The center (site) where the clinical trial will be conducted must also approve the conduct of the trial on the site. The ethics review by an HREC can take place simultaneously with the site governance process. It is due to this that it takes only 1 to 2 months for a regulatory review cycle, meaning that clinical trials can start earlier than in other regions.

Generous R&D government awards / tax benefits

Companies conducting research and development in Australia may qualify for the research and development tax incentive offered by the Australian government. The incentive is offered as a tax benefit that greatly reduces the tax payable on income. The tax offset is refundable for firms with revenues of less than A$ 20 million as far as sufficient losses are available. By applying the corresponding offset rate to eligible R&D spending on eligible research and development activities, the amount of the offset is calculated. Because of their experimental nature, clinical development programs, mainly early (Phase 0/I, II and III), are often considered eligible R&D activities.

Due to the planned changes officially announced in the Federal Budget 2018-19, the non-refundable offset rate for businesses with group revenue of AUD 20 million or greater will be linked to the “R&D intensity” of the business as of 1 July 2018 (replacing the previous non-refundable offset rate of 38.5 %). As a percentage of the total yearly expenditure, R&D intensity is the yearly R&D spending of the company. As the R&D intensity goes up, the offset available increases as shown 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%
Above 10%12%

For firms with revenue of less than AUD 20 million, the refundable tax offset rate from 1 July 2018 is equal to the tax rate of the company plus 13.5 percent (having replaced the prior refundable offset rate of 43.5 percent). As of 1 July 2018, cash refunds under the refundable tax offset have also been capped at AUD 4 million per year -but the ceiling will not apply to clinical trial R&D tax offsets. Bear in mind that these changes have not yet enacted in legislation at the time of publication of this article.

Besides fulfilling general tax obligations in Australia, the company is not expected to pay any net Australian tax. In addition, it is possible for companies to get an advance finding outside Australia that allows them to claim spending on R&D activities conducted outside Australia that have a major scientific link to Australian R&D activities and where at least half of the overall project spending has been incurred in Australia.

The R&D tax benefit is broadly eligible for businesses that are tax resident in Australia and foreign firms resident in a country that has a tax treaty with Australia, operating through a permanent entity in Australia. Companies conducting R&D activities for a related foreign company in Australia may also be eligible if some specific requirements are met. In contrast to other regions globally, there is no prerequisite for companies to prove year-on-year increase in R&D spending to obtain the tax benefit, nor is there any condition for holding IP in Australia.

High quality standards

Australia conforms to the highest level of Good Clinical Practice (GCP) standards, implying that international regulatory bodies, including the U.S. Food and Drug Administration and the European Medicines Agency, accept Australian clinical data and results. For instance, Australia has embraced the CPMP / ICH/135/95 European Guideline (and hence the ICH E6 Guideline), with some aspects tweaked according to local regulatory requirements.

Other benefits of conducting clinical trials in Australia

Several other benefits include:

  • High-quality scientific research facilities
  • Skilled manpower 
  • Robust intellectual property system
  • A culturally diverse patient population for recruitment in clinical studies

Armstrong Clinical

At Armstrong Clinical we offer a number of consulting services that can help you navigate the regulatory framework and get your clinical trials going in the shortest possible timeframe. For more information on how our services can benefit your organization, please feel free to get in touch with us.