A key step in the formation of international consortia under the ICCA HPV Initiative will be agreement on sharing the costs associated with the project. The companies in consortia should choose their own method of cost-sharing. No standard formula for such sharing can be applied. The following guidance is to help in cases of inability to agree.

Key factors likely to have an affect on the arrangement chosen include:

• The extent to which information already exists or needs to be developed by new testing.
• Whether the consortium consists of a small number of large firms, a large number of small firms, or some other mix.
• The market characteristics of the sector represented, e.g. competitiveness or whether confidentiality is a major consideration.
• Whether members of the consortium have worked on other projects together (and thus have previous cost-sharing experience).

Options likely to have an effect on the arrangements chosen include:

(a) Based on each company’s share of global (or OECD area) production;

(b) Based on each company’s nameplate capacity, globally or in the OECD region;

(c) Divided by specific percentages (can be equal, negotiated specific percentages, set amounts for "medium and/or small" producers plus fixed percentages for remaining "large" participants, or another formula, provided that 100% of the costs are covered);

(d) Other legally acceptable methods for cost-sharing based on consensus among members of the consortium.

Generally, three types of costs will need to be considered when examining questions of sharing:

1. Direct costs paid to an outside party for services such as information gathering or testing.
2. Contributions in kind by members of the consortia.
3. Costs for existing information, gathered in the past.

The easiest to deal with are those costs that are contracted by the group and paid to an outside party. These are easily identifiable.

Some members of the consortium may undertake to do work on its behalf, such as testing or preparation of assessment reports. Unless such work is trivial or shared fairly among all members, compensation is likely to be expected. In this case members of the consortium will need to agree on the valuation of such contributions.

Finally, a consortium will need to address whether there should be compensation for existing information, particularly privately-held test results. On the one hand companies which hold such information feel they have made an investment of value to the group. On the other hand, other participants may feel these costs were undertaken for completely independent reasons, and that the costs have been written off. They may thus consider that little or no compensation is warranted.

Under the ICCA Initiative, compensation should normally be sought only for testing or other work conducted since October 1998, the date when the Initiative was launched. Information generated before this date should be treated as if publicly available. This approach will minimize the difficulties associated with valuing and dividing costs for post work, while providing an incentive to sing up to consortia as soon as possible in order to participate in expenditure decisions.

The principles of cost-sharing continue to apply to categories as well as to individual chemicals. When dividing costs on the basis of production or sales, a company's share should reflect its economic interest in the sum of all of the chemicals included in the category. Total costs for the category will be lower than the costs of assessing all of the members of the category individually, since the main purpose of the category approach is to apply the same information to more than one chemical. In other words, the costs to be borne by each company in a consortium should be lower than if the chemicals in the category were being assessed individually.

The problem is made slightly more complicated if chemicals not originally appearing on the ICCA Working List are included in categories. All global producers should share in the costs of generating information for all the chemicals in the category, since they will derive a benefit from all of the information generated. Moreover, this approach is consistent with the principle of global burdensharing on all HPV chemicals, which was the original objective of the Initiative. Again, because categories are used overall information costs will be lower than with individual chemicals. Moreover, company's relative, if not absolute, share of costs will fall as chemicals in which it has a lower interest are added to the category.

1. An example for a hypothetical product A:

After review by the appropriate authorities it is decided that further testing costing 200,000 units is required. The total cost of toxicity testing for both companies is therefore 50,000 + 100,000 + 200,000 = 350,000.

Company X further test cost = 210,000 - 50,000 already spent = 160,000
Company Y further test cost = 140,000 - 100,000 already spent = 40,000

This appears to be a fair and equitable way of apportioning the cost. The "Realistic Standard" (RS) is a cost of test to ensure that companies are not penalised financially by using the above method for carrying out valid tests some time ago while the cost has since escalated under inflationary pressures. These costs would reflect reasonable current laboratory costs. An example of this would be that a particular OECD Teratogenicity study would have an RS value of say 50,000 units and would be counted as such whether the test was carried out 10 years ago or next week.

2. An example for a group of hypothetical products, A, B and C, being assessed as a category (production volumes of A, B and C are equal):