Commonwealth Price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2020 (PB 122 of 2020)

Administered by Department of Health, Disability and Ageing

Legislation au F2020L01550 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 2020

PB 122 of 2020

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 that represents a majority of approved pharmacists have entered 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.

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.

Purpose

The Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2020 (Amendment Determination) amends the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2020, in respect of changes to the wholesale mark-up component of the Commonwealth price from 1 January 2021, as agreed under the Seventh Community Pharmacy Agreement (Seventh Agreement).

The Seventh Agreement between the Commonwealth, the Pharmacy Guild of Australia and the Pharmaceutical Society of Australia Limited, which commenced on 1 July 2020 and is due to expire on 30 June 2025, includes an agreement between the Commonwealth and the Pharmacy Guild of Australia for the purposes of subsection 98BAA(1) of the Act, setting out the manner in which the Commonwealth price for pharmaceutical benefits is to be calculated.

This agreement included an agreement that the wholesale mark-up component of the Commonwealth price applying for the period 1 July 2020 to 31 December 2020 would be as applied under the (previous) Sixth Community Pharmacy Agreement made between the Commonwealth and the Pharmacy Guild of Australia, and which expired on 30 June 2020. Under that same agreement new wholesale mark-up arrangements will commence from 1 January 2021.

This Amendment Determination thus introduces, from 1 January 2021, the following changes to the wholesale mark-up component of the Commonwealth price:

(a)    introduction of a fixed $0.41 wholesale mark-up for pharmaceutical items for which the ex‑manufacturer price is up to and including $5.50, in place of the current mark-up of 7.52 per cent of the ex-manufacturer price; and

(b)    replacement of the current fixed $69.94 wholesale mark-up, for pharmaceutical items for which the ex-manufacturer price is more than $930.06, by a fixed amount of $54.14, for pharmaceutical items for which the ex-manufacturer price is more than $720.00.

This Amendment Determination also includes a minor administrative amendment to another component of the Commonwealth price, in respect of the Administration Handling and Infrastructure fee. This change relates only to the way in which calculation of the third tier of this fee is expressed, in keeping with the Seventh Agreement, and does not change the value of this fee as currently applies.

Consultation

The Seventh Agreement includes an agreement between the Commonwealth and the Pharmacy Guild of Australia for the purposes of subsection 98BAA(1) of the Act. The Pharmacy Guild of Australia has been consulted in relation to the changes made by this Amendment Determination as they relate to that agreement. Services Australia has also been consulted in relation to implementation of payment systems changes supporting the changes made by this Amendment Determination.

This Amendment Determination 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) Amendment Determination 2020

PB 122 of 2020

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 Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2020, made by the Pharmaceutical Benefits Remuneration Tribunal (the Tribunal) on 25 June 2020. This legislative instrument gives effect to the changes to the wholesale mark-up component of the Commonwealth price paid to approved pharmacists for the supply of pharmaceutical benefits.

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 an agreement between the Commonwealth and the Pharmacy Guild of Australia for the purposes of subsection 98BAA(1) of the Act, as currently applies under the Seventh Community Pharmacy Agreement.

This legislative instrument amends, with effect from 1 January 2021, the wholesale mark-up component of the Commonwealth price to introduce a fixed wholesale mark-up of $0.41 for pharmaceutical items for which the ex-manufacturer price is up to and including $5.50; and to introduce a fixed amount of $54.14, for pharmaceutical items for which the ex-manufacturer price is more than $720.00. These amounts are as agreed with the Pharmacy Guild of Australia for the purposes of subsection 98BAA(1) of the Act under the Seventh Community Pharmacy Agreement.

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms. This legislative instrument assists with the provision of favourable conditions of work to ensure remuneration for workers with fair wages. In addition, it 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 statutory benefit scheme which assists with providing subsidised access for people to medicines. This is a positive and supportive step towards attaining the highest standard of health for all Australians. Efficient operational arrangements for the PBS support effective administration of the scheme.

The amendment made by this legislative instrument does not change the protection of human rights to health for all Australians in relation to implementation of the PBS.

Conclusion

This legislative instrument is compatible with human rights because it maintains the protection of human rights to health.

Abbeygail Beaumont

Chairperson

Pharmaceutical Benefits Remuneration Tribunal

Overview

The Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2020, enacted under the National Health Act 1953, addresses the need to update the Commonwealth price for pharmaceutical benefits supplied by approved pharmacists. This amendment responds to changes agreed upon in the Seventh Community Pharmacy Agreement between the Commonwealth, the Pharmacy Guild of Australia, and the Pharmaceutical Society of Australia Limited, which came into effect on 1 July 2020. The Pharmaceutical Benefits Remuneration Tribunal, established under the Act, has the function of determining the manner in which the Commonwealth price is calculated, and this legislative instrument ensures that the Tribunal gives effect to the terms of the new agreement, particularly concerning the wholesale mark-up component. This adjustment ensures that the PBS continues to operate efficiently, supporting fair remuneration for pharmacists and maintaining access to affordable medicines for Australians.

Scope and Application

The Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2020 amends the Commonwealth price for pharmaceutical benefits supplied by approved pharmacists as agreed under the Seventh Community Pharmacy Agreement. This determination applies to approved pharmacists and pharmaceutical entities involved in the supply of pharmaceutical benefits under the Pharmaceutical Benefits Scheme (PBS), which is administered by the Commonwealth. The changes introduced by this determination are applicable from 1 January 2021, and include modifications to the wholesale mark-up component of the Commonwealth price, as well as a minor administrative amendment to another component of the Commonwealth price. These amendments were agreed upon between the Commonwealth and the Pharmacy Guild of Australia, which represents the majority of approved pharmacists. The determination is made under the authority of the National Health Act 1953 and is a legislative instrument for the purposes of the Legislation Act 2003. The Pharmaceutical Benefits Remuneration Tribunal, which is responsible for determining the Commonwealth price, gave effect to the terms of the Seventh Community Pharmacy Agreement in making this determination. The amendment is compatible with human rights as it ensures the provision of favourable conditions of work and supports the progressive realisation of the right to the highest attainable standard of physical and mental health for all Australians through the efficient administration of the PBS.

Key Provisions

The main operative sections of the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment Determination 2020 (Amendment Determination) pertain to the adjustments in the wholesale mark-up component of the Commonwealth price for the supply of pharmaceutical benefits by approved pharmacists, effective from 1 January 2021. The determination introduces a fixed $0.41 wholesale mark-up for pharmaceutical items with an ex-manufacturer price up to and including $5.50, replacing the previous 7.52 per cent mark-up. For pharmaceutical items with an ex-manufacturer price over $720.00, the fixed mark-up is adjusted to $54.14, replacing the previous $69.94 mark-up. Additionally, the Amendment Determination includes a minor administrative change to the Administration Handling and Infrastructure fee calculation, aligning with the Seventh Community Pharmacy Agreement. The Amendment Determination imposes obligations on various parties, including the Pharmaceutical Benefits Remuneration Tribunal (Tribunal) and approved pharmacists. The Tribunal is mandated to make a determination in accordance with the terms of the agreement between the Commonwealth and the Pharmacy Guild of Australia, which is reflected in this Amendment Determination. Approved pharmacists must adhere to the new mark-up rates for their pharmaceutical supplies starting from 1 January 2021. These changes ensure that the new mark-up rates are correctly applied in the supply of pharmaceutical benefits, thereby facilitating the efficient operation of the Pharmaceutical Benefits Scheme (PBS). The Amendment Determination does not explicitly outline specific offences, penalties, or civil/criminal consequences for breaches. However, given that the Pharmaceutical Benefits Scheme is a statutory benefit scheme, non-compliance with the new mark-up rates could potentially lead to disputes or claims regarding the correct remuneration for the supply of pharmaceutical benefits. It is likely that such disputes would be addressed under the existing framework of the National Health Act 1953 and related administrative processes, rather than through specific penalties outlined in the Amendment Determination itself. In summary, the Amendment Determination introduces significant changes to the wholesale mark-up component of the Commonwealth price for approved pharmacists, effective from 1 January 2021, as agreed under the Seventh Community Pharmacy Agreement. These changes are aimed at ensuring efficient operational arrangements for the PBS, thereby supporting effective administration of the scheme and the provision of subsidised access to medicines. The determination imposes specific obligations on the Tribunal and approved pharmacists to comply with the new mark-up rates, while the potential consequences of non-compliance would likely be addressed through the existing legal framework governing the PBS.

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