Commonwealth Price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2018 (PB 58 of 2018)

Administered by Department of Health, Disability and Ageing

Legislation au F2018L00948 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

National Health Act 1953

Commonwealth Price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2018

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 by them 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 and operation of the instrument

The Sixth Community Pharmacy Agreement (the Sixth Agreement) between the Commonwealth and the Pharmacy Guild of Australia, signed by the Minister of Health 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 for wholesale mark-up, dispensing fees for Ready Prepared and Extemporaneously Prepared Pharmaceutical Benefits (RPPBs and EPPBs) and the Dangerous Drug fee remain consistent with the previous Fifth Community Pharmacy Agreement (Fifth Agreement).

The Sixth Agreement includes the three-tiered Administration, Handling and Infrastructure fee (AHI).  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 in July for the period of the Sixth Agreement.  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 Commonwealth Price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2018 (No.1) (the Amending Determination) amends the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2015 (PB 64 of 2015) (the Principal Determination) to index the AHI, the Dispensing fees for RPPBs and EPPBs and the Dangerous Drug fee as specified in the 6CPA.

The Amending Determination will also add an additional amount to the AHI fee, on top of the indexed amount for the AHI fee Tiers 1 and 2.  This amount gives effect to the additional AHI fee that has been included in the Sixth Agreement from 1 July 2017.  While the AHI base fee will continue to be indexed annually in line with CPI, the additional AHI fee amounts is not part of the ‘base’ AHI fee and will not be indexed.  The additional  AHI fee is being paid in recognition of the lower than expected Pharmaceutical Benefits Scheme (PBS) prescription volumes under the Sixth Agreement.

 

The fees compiling the 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
Ex-manufacturer Price per dispense

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

$3.69, plus the Additional AHI Fee for the relevant Financial Year, per dispense (the Additional AHI for the 2018-19 financial year being $0.35).

For a pack quantity of a listed brand with a price to pharmacists from $180.00 to $2,089.71

$3.69, plus the Additional AHI Fee for the relevant Financial Year and 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

$73.81 per dispense

Dispensing fee (for RPPBs)

$7.29 per dispense

Dispensing fee (for EPPBs)

Dispensing fee for RPPBs, plus $2.04 per dispense

Dangerous Drug fee (for (RPPBs)

$3.07 per dangerous drug dispensed

The Amending Determination revises AHI fee for tiers 1 and 2 from $3.94 to $4.04 (retaining, for tier 2, an additional 3.5% of the amount by which the price to pharmacists exceeds $180 per dispense) and for tier 3 from $72.43 to $73.81, the Dispensing Fees for RPPBs from $7.15 to $7.29 and for EPPBs from $9.19 to $9.33 and the Dangerous Drug fee from $3.01 to $3.07.

An overview of the instrument is set out at Attachment A.

Reliance on subsection 33(3) of the Acts Interpretation Act 1901

Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

 

Consultation

The Pharmacy Guild of Australia has agreed, in writing, to the revised values in this Amending Determination.  The Pharmacy Guild of Australia is a party to the Sixth Agreement and supports this Amending Determination.

 

Regulatory impact assessment

Indexation involving the PBS is considered to be part of the standing exemption dated 26 May 2011, OBPR reference number 12116, therefore no Regulation Impact Statement is required.

This Determination is a legislative instrument for the purposes of the Legislation Act 2003.


Attachment A

Details of the Commonwealth Price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2018

Section 1 Name

This section provides that the title of the instrument is the Commonwealth Price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2018.  It provides that the Amending Determination may also be referred to as PB 58 of 2018.

Section 2 Commencement

Section 2 provides that the instrument is to commence on 1 July 2018.

Section 3 Authority

Section 3 provides that the instrument is made under paragraph 98(1) (a) of the National Health Act 1953.

Section 4 Schedules

Section 4 provides that each instrument that is specified in a Schedule to the Amending Determination is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item has effect according to its terms. 

Schedule Amendments

Commonwealth Price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2015

Item 1 

This item amends the definition of ‘dangerous drug fee’ in section 6 to increase the amount of the dangerous drug fee, in order to give effect to the indexation arrangements in the Sixth Agreement.

Item 2 

This item amends the definition of extemporaneously-prepared dispensing fee’ in section 6 to increase the amount of the extemporaneously-prepared dispensing fee, in order to give effect to the indexation arrangements in the Sixth Agreement.

Item 3 

This item amends the definition of ‘ready-prepared dispensing fee’ in section 6 to increase the amount of the ready-prepared dispensing fee in order to give effect to the indexation arrangements in the Sixth Agreement. 

Item 4 

This item replaces the table to paragraph 13(1)(a) to increase the amount of the AHI fee for ready prepared pharmaceutical benefits for 2018, in order to give effect to the Sixth Agreement.  This amount includes both indexation and the additional AHI fee for 2018, as set out in the Sixth Agreement. 

Item 5 

This item replaces the table to section 21 to increase the amount of the AHI fee for extemporaneously-prepared pharmaceutical benefits for 2018, in order to give effect to the Sixth Agreement.  This amount includes both indexation and the additional AHI fee for 2018, as set out in the Sixth Agreement.


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 2018

 

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).  In accordance with section 98BAA of the Act, the manner in which these payments are calculated must be 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 Sixth Agreement with respect to the application of an agreed annual indexation adjustment to these payments. 

This instrument gives effect to the annual indexation adjustment and additional AHI fee and 2018 Dispensing fee adjustment for these remuneration payments.  The legislative instrument increases tiers 1 and 2 of the AHI fee from $3.94 to $4.04 (retaining, for tier 2, an additional 3.5% of the amount by which the price to pharmacists exceeds $180 per dispense) and tier 3 of the AHI fee from $72.43 to $73.81, Dispensing fees for RPPBs from $7.15 to $7.29 and EPPBs from $9.19 to $9.33 and the Dangerous Drug fee from $3.01 to $3.07.

Human rights implications

This legislative instrument engages Articles 2, 7 and 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).

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.

 

 

 

Abbeygail Beaumont

Chairperson

Pharmaceutical Benefits Remuneration Tribunal

 

 

Overview

The Commonwealth Price (Pharmaceutical Benefits Supplied by Approved Pharmacists) Amendment Determination 2018 was enacted to address the need for updating the Commonwealth price structure for pharmaceutical benefits supplied by approved pharmacists, as specified in the Sixth Community Pharmacy Agreement between the Commonwealth and the Pharmacy Guild of Australia. This determination is an amendment to the Commonwealth Price (Pharmaceutical Benefits Supplied by Approved Pharmacists) Determination 2015, which is made under the authority of paragraph 98B(1)(a) of the National Health Act 1953. The policy objective of this instrument is to ensure that payments to approved pharmacists for the supply of pharmaceutical benefits are in accordance with the agreed terms of the Sixth Community Pharmacy Agreement. The determination includes indexation adjustments and additional fees as agreed in the Sixth Agreement, aiming to provide pricing certainty and stability for pharmacists while supporting the efficient administration of the Pharmaceutical Benefits Scheme. The determination was made by the Pharmaceutical Benefits Remuneration Tribunal, an independent statutory body established under the National Health Act 1953. The Tribunal's role is to give effect to the terms of the agreement between the Commonwealth and the Pharmacy Guild of Australia regarding the remuneration for pharmacists' services. The Sixth Community Pharmacy Agreement, which expires on 30 June 2020, sets out the calculation of the Commonwealth price for pharmaceutical benefits, including the Administration, Handling, and Infrastructure fee (AHI), dispensing fees for Ready Prepared and Extemporaneously Prepared Pharmaceutical Benefits (RPPBs and EPPBs), and the Dangerous Drug fee. The adjustments outlined in the Amending Determination ensure that these fees are updated to reflect the agreed terms, including indexation based on the Consumer Price Index (CPI) and additional AHI fee payments to compensate for lower than expected Pharmaceutical Benefits Scheme (PBS) prescription volumes.

Scope and Application

The Commonwealth Price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2018 applies to approved pharmacists engaged in the supply of pharmaceutical benefits under the National Health Act 1953. This Act governs the Pharmaceutical Benefits Scheme (PBS) in Australia, and the Amendment Determination amends the Commonwealth price structure for specific pharmaceutical benefits to align with the Sixth Community Pharmacy Agreement between the Commonwealth and the Pharmacy Guild of Australia. The Agreement, effective from 1 July 2015 to 30 June 2020, outlines the calculation method for the Commonwealth price for pharmaceutical benefits. The Amendment Determination specifically adjusts the Administration, Handling and Infrastructure fee (AHI), dispensing fees for Ready Prepared and Extemporaneously Prepared Pharmaceutical Benefits (RPPBs and EPPBs), and the Dangerous Drug fee, reflecting annual indexation based on the Consumer Price Index (CPI) and additional AHI fee provisions. This determination applies nationally within the Commonwealth of Australia and is made under the authority of the National Health Act 1953, ensuring that the revised payment values are implemented to support the ongoing operation of the PBS. The instrument does not specify any exclusions or exemptions, and its application is governed by the terms set forth in the Sixth Community Pharmacy Agreement.

Key Provisions

The Commonwealth Price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2018 amends the Commonwealth price structure for payments to approved pharmacists for the supply of pharmaceutical benefits under the National Health Act 1953. This includes 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. The amendments are intended to reflect the terms of the Sixth Community Pharmacy Agreement (Sixth Agreement) between the Commonwealth and the Pharmacy Guild of Australia, signed in 2015 and set to expire in 2020. The AHI fee, which de-links pharmacy remuneration from the price of medicines, is adjusted annually based on the Consumer Price Index (CPI) and an additional amount is added for 2018 in recognition of lower than expected Pharmaceutical Benefits Scheme (PBS) prescription volumes. The Amendment Determination imposes specific obligations on parties involved in the pharmaceutical benefits scheme. Approved pharmacists must adhere to the new fee structures as outlined in the Sixth Agreement, and the Pharmaceutical Benefits Remuneration Tribunal (Tribunal) is required to make a determination that gives effect to the terms of the Sixth Agreement. The Commonwealth and the Pharmacy Guild of Australia must also ensure that the agreed fee structures are implemented and adhered to. Failure to comply with the new fee structures and indexation arrangements may result in non-compliance with the terms of the Sixth Agreement and potential legal consequences. There are no explicit offences or penalties outlined in the Amendment Determination itself; however, any breaches of the terms of the Sixth Agreement or failure to comply with the new fee structures could lead to legal actions under the National Health Act 1953. The Pharmaceutical Benefits Remuneration Tribunal, which is tasked with ensuring compliance with the Sixth Agreement, has the authority to take appropriate action against parties that fail to adhere to the agreed terms. The penalties for non-compliance could include financial penalties, corrective orders, or other remedies as deemed appropriate by the Tribunal. Additionally, ongoing failure to comply with the terms of the Sixth Agreement could result in further amendments to the fee structures or other regulatory actions by the Tribunal.

Legal classification tags

Area of Law
Health Law
Instrument
Statutory Instrument
Concepts
Commencement Provisions
Repeal & Amendment
Indexation
Fee Adjustment
Reporting & Disclosure Obligations
Compliance Obligations

Interactions

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.