LTO Fees by Establishment Type: Manufacturer, Distributor and Retailer Rates

1. Key takeaways

LTO fees are tiered by the type of activity and by size. During the suspension the applicable schedule is AO No. 50 s. 2001, under which a medical device manufacturer pays PHP 5,000, PHP 7,000 or PHP 10,000 according to asset band, each with 1 percent LRF added. The draft amendment to AO No. 2024-0016 proposes a different structure: manufacturer at low risk PHP 30,900 per year, manufacturer at medium to high risk PHP 50,800 per year, distributor and trader PHP 8,500 per year, device retailer PHP 3,000 per year, and medical waste treatment facility PHP 5,800 per year, all with 1 percent LRF added.

• Two different logics: the current schedule tiers by assets, the draft tiers by activity and then by risk.
• Annual billing: the draft expresses the rates per year, which interacts with licences that now run for 3, 6 or 12 years.
• Retail tilt: the retailer rate is deliberately far below the distributor and manufacturer rates.
• Variation exposure: minor and major change fees differ by an order of magnitude and are a recurring cost, not a one-off.

2. Legal basis

The figures below reproduce the current schedule and the public draft as published. The draft has not taken effect, and it should be read as an indication of direction rather than as a basis for pricing a project.

3. Expert insights

First insight: the current schedule tiers by assets, while the draft tiers by activity type and risk. These are two entirely different classification systems. Under the current schedule, a device manufacturer is placed in one of three bands according to asset size, and nothing else is considered. Under the draft, the establishment is first classified by activity, as manufacturer, distributor, retailer or treatment facility, and the manufacturer class is then subdivided by risk level. The consequence is that the same company can sit in a completely different position under the two systems, and a company that is large in assets but low in product risk may find the draft cheaper than expected, while a small company manufacturing higher risk devices may find it considerably more expensive.

Second insight: annual billing is the key change embedded in the draft. The current schedule expresses the LTO fee as a single payment. The draft rates are expressly labelled fees per year. Combined with the rule that LTO validity is tiered by enterprise size at 3, 6 or 12 years, an annual rate applied across a long validity period changes the total cost of holding a licence far more than the headline rate suggests. A medium or large manufacturer on a 12 year renewal cycle is exposed to twelve annual charges, not one, and the arithmetic should be done on that basis rather than on the annual figure alone. This formulation is worth tracking closely in the final text.

Third insight: the retailer rate is deliberately low, reflecting a policy preference. The draft sets the device retailer fee at PHP 3,000 per year, well below the distributor rate of 8,500 and the manufacturer rates of 30,900 to 50,800. This is consistent with the MSME support orientation of the Magna Carta for Micro, Small and Medium Enterprises, RA No. 9501. For companies operating purely at the retail end, the cost increase under the new schedule is therefore relatively contained even if the draft is adopted without change. For companies that both distribute and retail, the classification question becomes commercially significant, because the activity type recorded on the LTO determines the fee.

Fourth insight: variation fees are tiered steeply, and frequent changers feel it most. The draft sets a minor variation at PHP 1,600 and a major variation at PHP 13,200 for manufacturers, distributors and treatment facilities, with the retailer tier at 620 and 3,000. For companies that refresh product lines often and routinely change labels and packaging, the rise in major variation fees is comparable in scale to the rise in registration fees. This is the economic reason behind the advice in article 18 to finalise labelling at the filing stage: a label settled during registration is a cost avoided on every subsequent change, and the saving compounds across a portfolio.

4. Practical recommendations

• Calculate LTO fees separately by activity type. Manufacturer, distributor and retailer rates differ, so a blended estimate will mislead.
• Include the 1 percent LRF in every line item. Apply it to each fee rather than to the total.
• Watch the annual billing formulation in the new schedule. Model total holding cost across the full validity period, not a single year.
• Reduce the frequency of major variations. Finalise labels and packaging at filing stage to contain long-term change costs.
• Use the eServices Order of Payment as the final authority. Draft amounts are not a basis for budgeting.

5. Verification checklist

• □ Current applicable schedule confirmed against the latest DOH suspension circular
• □ Activity type confirmed as recorded on the LTO
• □ Current fee band confirmed against the AO No. 50 s. 2001 tiers
• □ Draft rates reviewed for trend only, on the basis of the AO No. 2024-0016 draft amendment
• □ 1 percent LRF added to all fee items
• □ eServices Order of Payment obtained as the final evidence of amount payable

How GRZAN can help. GRZAN provides medical device and IVD registration, quality system, authorised representative and local testing support across Southeast Asia, including the Philippines. Our team prepares CMDN/CMDR dossiers to ASEAN CSDT structure, manages submissions and deficiency responses with the FDA Philippines, and supports post-market vigilance obligations. Business enquiries: info@grzanglobal.com