Biotechs fear OGTR cost recovery could quash R&D

Plant biotechnologists in Australia are concerned that implementation of a full cost recovery scheme for the Office of the Gene Technology Regulator will make the cost of developing new GM crop varieties too expensive for small biotechnology companies and public research institutions to consider.

The Gene Technology Act 2000 made provision for the OGTR to seek 100 per cent cost recovery for its activities from users of the regulatory system. The Federal government is paying for the first two years of the OGTR's operations, but that benefit will cease in mid-2003.

The OGTR has recently announced that it will be beginning a review of cost recovery schemes, through an independent consultant. Users of the OGTR can register interest to take part in the consultative process.

Proposed cost recovery schemes would have the users pay for the activities of the OGTR, from costs associated with reviewing applications to paying for all monitoring and compliance costs.

"It's certainly expected that there would be a cost recovery system brought in," said Naomi Stevens, public affairs manager at Aventis CropScience. But she added that the industry would want to make sure that any cost recovery schemes were fully accountable and transparent.

According to a KPMG report released in September 2000 during the development of the Gene Technology Act 2000, the cost of OGTR monitoring fees for a GMO field trial would be more than $100,000. Smaller contained trials and experiments would cost the user around $10,000.

These costs would be in addition to the costs related to applying for licenses to conduct the trials.

Lower risk experiments involving GMOs performed in universities and research institutions would be subject to an accreditation process and would also attract fees.

The KPMG report analysed several versions of full and partial cost recovery schemes and noted the impact that a full cost recovery scheme would have on public sector research organisations and companies.

About 94 per cent of OGTR users are publicly funded organisations, with little or no capacity to absorb additional costs without reassigning funds earmarked for research, it said.

The report estimated that the CSIRO would spend almost $2 million on accreditation and notifiable low risk dealings alone, while the Queensland Institute of Medical Research would spend upwards of $135,000.

Phased in

Small biotechnology companies would also have a hard time with full cost recovery schemes. One of the suggestions made by KPMG was that full cost recovery be slowly phased in to minimise the impact on the fledgling GM industry.

"It is a big issue," said Donald Coles, Managing Director of Valley Seeds and Access Genetics, both involved in plant biotechnology in Victoria. "The compliance costs alone significantly limit the ability of anyone other than large multinationals to consider biotechnology releases."

Coles noted that a promising project conducted by researchers from the University of Melbourne and supported by Valley Seeds to isolate and switch off allergy causing genes in ryegrass has been put on hold due to the cost of commercialisation.

"There is simply no economic model that I can come up with to commercialise that project, despite the benefit to the public," he said. The CSIRO is one of the biggest users of gene technology, accounting for about 25 per cent of the OGTR's business, according to Dr Mikael Hirsch, coordinator of the CSIRO biotechnology strategy group.

"We have no objections to cost recovery. As a large institution, we already pay a lot of regulatory costs," he said.

But Hirsch warned that the introduction of cost recovery could impact the ability to do research, and affect the capacity to bring products into the marketplace.

"Some products might not get to the market due to regulatory costs," he said. "There are a lot of public benefits that can be gained from gene technology. A lot of research is not for commercial purposes, but just to understand what is going on."

Prof Peter Langridge, research director of the CRC for Molecular Plant Breeding and interim director of the National Centre for Plant Functional Genomics and a member of the OGTR's Gene Technology Technical Advisory Committee, said that the implementation of full cost recovery would significantly affect the development of new GM crops by the CRC and other research groups.

"In all probability, it would mean that we would have to form commercial relationships or do testing offshore," he said.

He said that the high development and regulatory costs would make it increasingly hard to justify developing GM crops for Australia, although he could see a market for GM crops for developing countries.

The OGTR was unavailable for comment at the time of writing.