EXPLANATORY STATEMENT
NATIONAL HEALTH ACT 1953
COMMONWEALTH PRICE (PHARMACEUTICAL BENEFITS SUPPLIED BY APPROVED PHARMACISTS) AMENDMENT DETERMINATION 2016
PB 50 of 2016
Authority
Paragraph 98B(1)(a) of 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 all or any pharmaceutical benefits is to be worked out for the purpose 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.
Purpose
The Sixth Community Pharmacy Agreement (the Sixth Agreement) between the Commonwealth and the Pharmacy Guild of Australia, signed on 24 May 2015 and due to expire on 30 June 2020, is an agreement for the purposes of subsection 98BAA(1) of the Act. The Sixth Agreement sets out the manner in which the Commonwealth price for pharmaceutical benefits is to be calculated.
As part of the Sixth Agreement the Commonwealth price structure retained the previous structure for wholesale mark-up, dispensing fees for Ready Prepared and Extemporaneously Prepared Pharmaceutical Benefits (RPPBs and EPPBs) and the Dangerous Drug fee consistent with previous Fifth Community Pharmacy Agreement (Fifth Agreement). These fees recognised the clinical input from pharmacy when dispensing PBS medicines.
The Sixth Agreement includes the three tiered Administration, Handling and Infrastructure fee (AHI) fee. The AHI fee de-links pharmacy remuneration from the price of medicines and aims to reduce the impact of current and future medicines pricing policies, such as price disclosure, on pharmacy remuneration, thereby providing pharmacists with pricing certainty during the term of the agreement.
The AHI, the dispensing fee for RPPBs (and subsequently the dispensing fee for EPPBs) and the Dangerous Drug fees are all indexed annually for the period of the Sixth Agreement, beginning 1 July 2016. Under the Sixth Agreement, this indexation is based on the Consumer Price Index (CPI).
These arrangements will continue for the period from 1 July 2015 to 30 June 2020.
The fees compiling the current Commonwealth price agreed under the Sixth Agreement are specified below:
PAYMENT TYPE | VALUE OF PAYMENT | |
Wholesale mark-up (for RPPBs) | Where the Ex-Manufacturer Price is up to and including $930.06 | 7.52% of the |
Where the Ex-Manufacturer Price is over $930.06 | $69.94 per dispense | |
Administration, handling and infrastructure fee | For a pack quantity of a listed brand with a price to pharmacists less than $180.00 | $3.49 per dispense |
For a pack quantity of a listed brand with a price to pharmacists from $180.00 to $2,089.71 | $3.49, plus 3.5% of the amount by which the price to pharmacists exceeds $180.00 per dispense | |
For a pack quantity of a listed brand with a price to pharmacists more than $2,089.71 | $70.00 per dispense | |
Dispensing fee (for RPPBs) | $6.93 per dispense | |
Dispensing fee (for EPPBs) | Dispensing fee for RPPBs, plus $2.04 per dispense | |
Dangerous Drug free (for (RPPBs) | $2.91 per dangerous drug dispensed | |
This Amending Determination amends the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2015 (PB 64 of 2015) (Principal Determination) dated 29 June 2015, to ensure that the Determination continues to give effect to the terms of the Sixth Agreement with respect to the annual indexation adjustment to the AHI, the Dispensing fees for RPPBs and EPPBs and the Dangerous Drug fee as determined by the Tribunal.
The Amending Determination revises AHI fee for tiers 1 and 2 from $3.49 to $3.54 and for tier 3 from $70.00 to $70.92, the Dispensing Fees for RPPBs from $6.93 to $7.02 and for EPPBs from $8.97 to $9.06 and the Dangerous Drug fee from $2.91 to $2.95.
The Principal Determination pursuant to paragraph 98B(1)(a) of the Act commenced on 1 July 2015 and will remain in effect until revoked by the Tribunal.
Consultation
This Amending 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 Sixth Agreement and supports this Amending Determination.
The Amending Determination commences 1 July 2016.
This Instrument is a legislative instrument for the purposes of the Legislation Act 2003.
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) DETERMINATION 2016
PB 50 of 2016
This Legislative Instrument 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 Legislative Instrument
The purpose of this legislative instrument, made under paragraph 98B(1)(a) of the National Health Act 1953 (the Act), is to amend the Administration, Handling and Infrastructure fee (AHI), the dispensing fees for Ready Prepared and Extemporaneously Prepared Pharmaceutical Benefits (RPPBs and EPPBs) and the Dangerous Drug fee for payments to approved pharmacists for the supply of these pharmaceutical benefits.
Payments are calculated in accordance with the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2015 (the Principal Determination). The manner in which these payments are calculated is in accordance with the Sixth Community Pharmacy Agreement (the Sixth Agreement) between the Commonwealth and the Pharmacy Guild of Australia. The Pharmaceutical Benefits Remuneration Tribunal (the Tribunal) makes a determination pursuant to paragraph 98B(1)(a) of the Act to give effect to the terms of the Agreement with respect to the application of an agreed annual indexation adjustment to these payments.
This instrument gives effect to the annual indexation adjustment to these remuneration payments. The legislative instrument increases tiers 1 and 2 of the AHI fee from $3.49 to $3.54 and tier 3 of the AHI fee from $70.00 to $70.92, Dispensing fees for RPPBs from $6.93 to $7.02 and EPPBs from $8.97 to $9.06 and the Dangerous Drug fee from $2.91 to $2.95.
Human rights implications
This legislative instrument engages Articles 2, 7 and 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) by assisting with the provision favourable conditions of work to ensure remuneration for workers with fair wages. In addition it also assists in 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 providing subsidised access for people to medicines. This is a positive step towards attaining the highest standard of health for all Australians. Efficient operational arrangements for the PBS support effective administration of the scheme.
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 agreement between the Commonwealth and the Pharmacy Guild of Australia in relation to the remuneration that is to be paid to pharmacists for dispensing pharmaceutical benefits and to perform other functions required by that agreement (currently the Sixth Community Pharmacy Agreement).
Conclusion
The Legislative Instrument is compatible with human rights because it advances the protection of human rights.
Jonathan Hamberger
Chairperson
Pharmaceutical Benefits Remuneration Tribunal