EXPLANATORY STATEMENT
NATIONAL HEALTH ACT 1953
Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2012 (No. 2)
PB 82 of 2012
Authority
Paragraph 98B(1)(a) the National Health Act 1953 (the Act) provides that a function of the Pharmaceutical Benefits Remuneration Tribunal (the Tribunal) is to determine the manner in which the Commonwealth price for pharmaceutical benefits is to be worked out, for the purposes of payments to approved pharmacists for the supply of pharmaceutical benefits.
Subsection 98BAA(1) of the Act requires that, where the Commonwealth and the Pharmacy Guild of Australia (or another pharmacists’ organisation representing a majority of approved pharmacists) enter into an agreement relating to the manner in which the Commonwealth price for pharmaceutical benefits is to be calculated, the Tribunal, when making a determination pursuant to paragraph 98B(1)(a) of the Act, is to give effect to the terms of that agreement.
The Fifth Community Pharmacy Agreement (the Fifth Agreement) between the Commonwealth of Australia and the Pharmacy Guild of Australia, signed on 3 May 2010 and due to expire on 30 June 2015, is an agreement for the purposes of subsection 98BAA(1) of the Act.
On 17 June 2010, the Tribunal made a determination pursuant to paragraph 98B(1)(a) of the Act giving effect to the terms of the Fifth Agreement. The determination, the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2010 (the Principal Determination), commenced on 1 July 2010 and remains in effect, as amended, until revoked by the Tribunal.
A copy of the Fifth Agreement can be obtained from the Department of Health and Ageing website at: www.health.gov.au
Purpose
This Amendment Determination amends the Principal Determination to reflect amendments to the Act made by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2012 which commence on 1 October 2012. The amended determination will continue to give effect to the terms of the Fifth Agreement.
The main amendments to the Act which are reflected in this Determination are:
- the removal of the concept of an approved price to pharmacists and its replacement with approved ex-manufacturer price as the base price used for the Pharmaceutical Benefits Scheme (PBS). The approved ex-manufacturer price of a brand of a pharmaceutical item is the price agreed or determined under the Act as the appropriate maximum price for the purposes of Part VII of the Act. The price for each brand of a pharmaceutical item must be agreed or determined by reference to the lowest pack quantity of any brand of the pharmaceutical item. The Act provides for proportional ex-manufacturer prices for other pack quantities; and
- the removal of the approved price to pharmacists and its replacement with the approved ex-manufacturer price as the required basis of a paragraph 98B(1)(a) determination by the Tribunal.
This Amendment Determination changes the price used as the basis for calculating the Commonwealth price from the approved price to pharmacists to the approved ex-manufacturer price or the proportional ex-manufacturer price. The difference between an ex‑manufacturer price and a price to pharmacists is a wholesale mark-up. The Determination provides for the inclusion of the wholesale mark-up in the formula for calculating the Commonwealth price, thus ensuring that the overall level of remuneration to pharmacists is not affected by the change in the base price.
An explanation of each amendment made by this Determination is contained in the Attachment.
Background
Part VII of the Act is the legislative basis of the PBS by which the Commonwealth provides reliable, timely, and affordable access to a wide range of medicines for all Australians.
Subsection 85(1) provides that benefits are to be provided by the Commonwealth in accordance with Part VII in respect of pharmaceutical benefits.
The Principal Determination sets out the manner for working out payments for the supply of pharmaceutical benefits by approved pharmacists.
Consultation
This Amendment Determination has been made in consultation with the Pharmacy Guild of Australia, an organisation representing a majority of approved pharmacists. The Pharmacy Guild of Australia is a party to the Fifth Agreement and supports the amendments made by this Determination. The changes are machinery in nature, being consequential on amendments to the Act.
This Determination commences on 1 October 2012.
This Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
ATTACHMENT
Details of the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2012 (No. 2)
PB 82 of 2012
Section 1 Name of Determination
This section provides that the title of the Determination is the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2012 (No. 2), and that it may also be cited as PB 82 of 2012.
Section 2 Commencement
This section provides for the Determination to commence on 1 October 2012.
Section 3 Amendment of Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2010
This section provides that Schedule 1 amends the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2010.
SCHEDULE 1 – AMENDMENTS
Item [1] – Subsection 6(1) (definition of agreed purchase quantity)
This item inserts a new expanded definition of the term for the purpose of clarifying its meaning.
Item [2] – Subsection 6(1) (definition of approved price to pharmacists)
This item repeals the definition of approved price to pharmacists. The term will no longer be used in the Act from 1 October 2012, or in any legislative instruments. It is being replaced by the approved ex-manufacturer price.
Item [3] – Subsection 6(1)
This item inserts a definition of the new term approved ex-manufacturer price. From 1 October 2012 this will be the base price used in the Act and legislative instruments for the Pharmaceutical Benefits Scheme (PBS). The Minister will agree an approved ex‑manufacturer price for each brand of a pharmaceutical item with the responsible person for the brand, or will determine an approved ex‑manufacturer price if no agreement can be reached. Commonwealth payments in relation to the supply of pharmaceutical benefits will be based on the approved ex‑manufacturer price under the Principal Determination and other legislative instruments from 1 October 2012.
Item [4] – Subsection 6(1)
This item provides that the term determined quantity has the same meaning as in the Act. The determined quantity will be used, when there is no appropriate maximum quantity, in a number of legislative instruments, including the Principal Determination, as the basis for selecting the appropriate formula for wholesale and pharmacy mark-ups used in calculating Commonwealth payments for the supply of pharmaceutical benefits.
Item [5] – Subsection 6(1) (definition of manufacturers’ packs)
This item omits the definition of the term as it will no longer be used in the Principal Determination. It is being replaced with the new term pack quantity.
Item [6] – Subsection 6(1)
This item inserts two new definitions.
Maximum quantity means a quantity or number of units of a pharmaceutical item that the Minister has determined under paragraph 85A(2)(a) of the Act as the maximum that may be prescribed.
Pack quantity has the same meaning as in the Act. This is a new term in the Act from 1 October 2012. The Minister will determine pack quantities for each listed brand of a pharmaceutical item. Responsible persons will request the Minister to determine pack quantities for each of their PBS pack sizes. The approved ex‑manufacturer price for each brand of a pharmaceutical item will be agreed or determined by reference to the lowest pack quantity for any brand of that pharmaceutical item. All other pack quantities will have proportional ex‑manufacturer prices calculated under the Act.
Item [7] – Subsection 6(1)
This item inserts definitions of two new terms. The price to pharmacists is the ex‑manufacturer price (the approved ex-manufacturer price or the proportional ex-manufacturer price) plus the wholesale mark-up worked out under new section 11A of the Principal Determination. The price to pharmacists is no longer an approved price; the approved price will, from 1 October 2012, be set at the ex-manufacturer level.
Proportional ex-manufacturer price has the same meaning as in the Act.
Item [8] – Subsection 6(2)
This item omits the subsection which defined a manufacturers’ pack. That term will no longer being used in the Principal Determination. It is being replaced with the new term pack quantity.
Item [9] – Subsection 9(1)
This item clarifies that for a supply that includes a repeat supply, a maximum of one dangerous drug fee is payable.
Item [10] – Subsection 11(1)
This item substitutes a new subsection 11(1). The changes between the existing subsection and the new subsection reflect the changes to the Act coming into force on 1 October 2012 and are not intended to affect the Commonwealth price for ready-prepared pharmaceutical benefits. The key changes are the replacement of the approved price to pharmacists with the approved ex-manufacturer price or the proportional ex-manufacturer price, the inclusion of a wholesale mark-up, and the use of the new term pack quantity.
Item [11] – After Section 11
This item inserts a new section 11A. The section provides the method for working out the wholesale mark-up for ready-prepared pharmaceutical benefits. It is required because of the replacement of the approved price to pharmacists with the approved ex-manufacturer price as the base PBS price. The wholesale mark-up is added to the approved ex-manufacturer price or the proportional ex-manufacturer price to calculate the price to pharmacists.
Item [12] – Section 12
This item substitutes a new section 12. Both the existing section and the new section provide for the method for working out the pharmacy mark-up. The mark-ups set out in the table are the same as those in the table in the existing section. The new section sets out more fully how these mark-ups apply in the case of supplies not equal to a maximum quantity.
Item [13] – Section 14
This item substitutes new cross-references to subparagraphs of section 11 as a consequence of the amendments to section 11.
Item [14] – Section 14
This item substitutes the new term pack quantity in place of the existing reference to a standard or non-standard pack. Standard and non-standard packs were particular types of manufacturers’ packs and this term is no longer being used in the Principal Determination.
Item [15] – Section 14, Step 1
This item inserts a new Step 1. There has been no substantive change in the effect of the step. The changes reflect the change from the approved price to pharmacists to the approved ex-manufacturer price as the base PBS price, the need to include a wholesale mark-up and the use of the new term pack quantity.
Item [16] – Section 14, Step 2
This item substitutes the new term pack quantity in place of the existing reference to a standard or non-standard pack.
Item [17] – Section 15
This item amends the section to replace existing references to a price for a standard or non‑standard pack with references to a price for a pack quantity.
Item [18] – Section 16
This item substitutes a new heading and a new section 16. There has been no substantive change to the section. The changes reflect the current practice of identifying legislative instruments by reference to the relevant power exercised in the instrument rather than the title of the instrument.
Item [19] – Section 20
This item corrects an error in the section by substituting the word ingredient for the word benefit. The section provides for a mark-up for an agreed purchase quantity of an ingredient, not a benefit.
Item [20] – Section 20, table, column headed Mark-up
This item corrects an error in two places in the table in the section. The mark-up is a percent of the basic wholesale price, not the approved price to pharmacists.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2012 (No. 2)
PB 82 of 2012
This Amendment Determination is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Determination
The purpose of this Determination, made under paragraph 98B(1)(a) of the National Health Act 1953 (the Act), is to amend the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2010 (the Principal Determination) to reflect amendments to the Act made by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2012 which commence on 1 October 2012. The changes are technical in nature, being consequential on amendments to the Act.
Human rights implications
This Determination engages Article 2 and 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) by assisting with the progressive realisation by all appropriate means of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.
The Pharmaceutical Benefits Scheme (PBS) is a benefit scheme which assists with advancement of this human right by providing for subsidised access by patients to medicines. The Pharmaceutical Benefits Remuneration Tribunal (the Tribunal) is an independent statutory body established under section 98A of the Act. The main functions of the Tribunal are to make a determination to give effect to the terms of the agreement between the Australian Government and the Pharmacy Guild of Australia in relation to the remuneration that is to be paid to pharmacists for dispensing pharmaceutical benefits.
Conclusion
This Determination is compatible with human rights because it advances the protection of human rights.
Ian Robert Watson
Chairperson
Pharmaceutical Benefits Remuneration Tribunal