Explanatory Statement
National Health Act 1953
Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment (Fees and Wholesale Mark-up) Determination 2026
PB 68 of 2026
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 (the Guild) 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 supplied by approved pharmacists 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.
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 (Fees and Wholesale Mark-up) Determination 2026 (Amendment Determination) amends the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2020 (the Principal Determination), in respect of:
(a) changes to the wholesale mark-up component of the Commonwealth price, from 1 July 2026;
(b) annual indexation of the Tier 1 Administration Handling and Infrastructure Fee (Tier 1 AHI fee), the dispensing fee for ready-prepared pharmaceutical benefits, the dispensing fee for extemporaneously-prepared pharmaceutical benefits, and the dangerous drug fee; and
(c) a $0.01 (one cent) non-indexed adjustment to the Tier 1 AHI fee from 1 July 2026.
The Eighth Community Pharmacy Agreement (Eighth Agreement) between the Commonwealth and the Pharmacy Guild of Australia, which commenced on 1 July 2024 and is due to expire on 30 June 2029, 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 supplied by approved pharmacists is to be calculated.
Subsequently, on 19 December 2024, the Commonwealth entered into the First Pharmaceutical Wholesaler Agreement with the National Pharmaceutical Services Association Limited (Wholesaler Agreement), as a five-year agreement expiring on 31 December 2029. The Wholesaler Agreement separately establishes the basis of payments to pharmaceutical wholesalers for holding and supplying pharmaceutical benefits and sets out changes to the wholesale mark-up component of the Commonwealth price, including the introduction of a four-tier payment structure to apply from 1 July 2026.
In recognition of the changes to the wholesale mark-up brought by the Wholesaler Agreement and the estimated effect of these changes on remuneration to approved pharmacists (as anticipated under clause 3.2.6 of the Eighth Agreement), the Commonwealth and the Guild have entered into an Addendum to the Eighth Agreement to formally agree, for the purposes of subsection 98BAA(1) of the Act, to amend the Eighth Agreement to:
(a) vary the method of calculating the wholesale mark-up component of the Commonwealth price paid to approved pharmacists, with effect from 1 July 2026, to follow the provisions set out in the Wholesaler Agreement; and
(b) adjust the remuneration paid to approved pharmacists, with effect from 1 July 2026, to offset the impact of wholesale mark-up changes by:
i. introducing a non-indexed $0.01 (one cent) increase to the Tier 1 AHI fee component of the Commonwealth price from 1 July 2026, for the remainder of the term of the Eighth Agreement; and
ii. adjusting the Additional Community Supply Support (ACSS) payment made to approved pharmacists. The ACSS payment adjustments are dealt with separately under the National Health (Additional Community Supply Support Payment) Determination 2024.
Copies of the Eighth Agreement and the Addendum to the Eighth Agreement can be found on the Department of Health, Disability and Ageing’s website at: www.health.gov.au/topics/primary-care/what-we-do/8cpa.
The Tier 1 AHI fee, the dispensing fee for ready-prepared pharmaceutical benefits, the dispensing fee for extemporaneously-prepared pharmaceutical benefits, and the dangerous drug fee are all indexed annually on 1 July in each year of the Eighth Agreement. As per clause 3.3 of the Eighth Agreement, indexation on 1 July 2026 is based on the following formula:
New Amount means the amount, rounded to the nearest cent, on and from the relevant indexation date.
Last Amount means the value of the amount payable immediately before the relevant indexation date (in this case it means the value payable from 1 July 2025).
MRIN means Most Recent Index Number, the most recently published quarterly index number as at the relevant indexation date (meaning the Australian Bureau of Statistics Consumer Price Index, being the weighted average of eight capital cities, and the index number published by the Australian Bureau of Statistics in respect of the March quarter of 2026).
LIN means Last Index Number, the quarterly index number, as published for the same quarter as the MRIN in the year immediately preceding the year of the MRIN (meaning the Australian Bureau of Statistics Consumer Price Index, being the weighted average of eight capital cities, and the index number published by the Australian Bureau of Statistics in respect of the March quarter of 2025).
On 29 April 2026 the MRIN equals 101.70 and the LIN equals 97.70.
As per the Addendum to the Eighth Agreement, from 1 July 2026 a non-indexed adjustment of $0.01 (one cent) is also made to the Tier 1 AHI fee after usual indexation.
This Amendment Determination therefore amends, with effect from 1 July 2026, the wholesale mark-up component of the Commonwealth Price from a three-tier to a four-tier structure, calculated by reference to the approved ex-manufacturer price (AEMP) or the proportional ex-manufacturer price (PEMP) (if relevant) for the relevant pack quantity. It also increases the Tier 1 AHI fee from $4.91 to $5.12, the dispensing fee for ready-prepared pharmaceutical benefits from $8.88 to $9.24, the dispensing fee for extemporaneously-prepared pharmaceutical benefits fee from $10.92 to $11.28, and the dangerous drug fee from $5.50 to $5.73.
Consultation
The Eighth Agreement includes an agreement between the Commonwealth and the Guild for the purposes of subsection 98BAA(1) of the Act. The Guild has been consulted in relation to the changes made by this Amendment Determination as they relate to that agreement (including the amendments made by the Addendum to the agreement). Services Australia has also been consulted in relation to implementation of the Pharmaceutical Benefits Scheme payment systems changes managed by Services Australia, to support the changes made by this Amendment Determination.
Commencement
This Amendment Determination commences on 1 July 2026.
General
This Amendment Determination is a legislative instrument for the purposes of the Legislation Act 2003.
Details of this Amendment Determination are set out in Attachment A.
This Amendment Determination is compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A full statement of compatibility is set out in Attachment B.
Attachment A
Details of the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment (Fees and Wholesale Mark-up) Determination 2026
Section 1 Name
This section provides that the name of the instrument is the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Amendment (Fees and Wholesale Mark-up) Determination 2026, which may also be cited as PB 68 of 2026.
Section 2 Commencement
This section provides that the instrument commences on 1 July 2026.
Section 3 Authority
This section provides that the instrument is made under paragraph 98B(1)(a) of the National Health Act 1953.
Section 4 Schedules
This section provides that each instrument that is specified in a Schedule to the instrument 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 1 Amendments
Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2020
Items 1 to 3 – Section 6 (Definitions of dangerous drug fee, extemporaneously-prepared dispensing fee, ready-prepared dispensing fee)
Items 1 to 3 amend the definitions of ‘dangerous drug fee’, ‘extemporaneously-prepared dispensing fee’ and ‘ready-prepared dispensing fee’ in section 6 of the Commonwealth price (Pharmaceutical benefits supplied by approved pharmacists) Determination 2020 (Principal Determination) to increase the dangerous drug fee from $5.50 to $5.73, extemporaneously-prepared dispensing fee from $10.92 to $11.28 and ready-prepared dispensing fee from $8.88 to $9.24 in order to give effect to the indexation arrangements stipulated in the Eighth Agreement.
Item 4 – Section 11
This item replaces the entire text of the existing section 11 of the Principal Determination and inserts in its place a table with preceding explanatory text, setting out the value of the wholesale mark-up for a pack quantity of a ready-prepared pharmaceutical benefit on the basis of the approved ex-manufacturer price (AEMP) or proportional ex-manufacturer price (PEMP) for each pack quantity dispensed:
(a) where the AEMP or PEMP is up to and including $5.50, the wholesale mark-up is $0.24
(b) where the AEMP or PEMP is more than $5.50 and up to and including $1,000, the wholesale mark-up is 4.3 per cent of the AEMP or PEMP.
(c) where the AEMP or PEMP is more than $1,000 and up to and including $10,000, the wholesale mark-up is $43.00 plus 2 per cent of the amount by which the AEMP or PEMP exceeds $1,000.
(d) where the AEMP or PEMP is more than $10,000, the wholesale mark-up is $223.00.
Item 5 – Paragraph 12(1)(a) (table)
This item replaces the table in paragraph 12(1)(a) of the Principal Determination to increase the Tier 1 AHI fee for ready-prepared pharmaceutical benefits from $4.91 to $5.12. This also affects the value of the Tiers 2 and 3 AHI fees, as both Tiers 2 and 3 AHI fees refer to the Tier 1 AHI fee.
Item 6 – Subparagraph 12(1)(b)(i)
This item removes redundant text that presently refers to calculations in section 11. Section 11 now provides the table that sets the wholesale mark-up for a pack quantity. The price to pharmacists is defined in section 6 of the Principal Determination as meaning the approved ex-manufacturer price or proportional ex-manufacturer price for the particular quantity, plus the wholesale mark-up worked out in the table in section 11.
Item 7 – Section 20 (table)
This item replaces the table in section 20 of the Principal Determination to increase the Tier 1 AHI fee for extemporaneously prepared pharmaceutical benefits from $4.91 to $5.12.
ATTACHMENT B
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 (Fees and Wholesale Mark-up) Determination 2026
PB 68 of 2026
This Disallowable 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 Disallowable 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) Determination 2020. This Disallowable Legislative instrument gives effect from 1 July 2026 to:
- change the wholesale mark-up component of the Commonwealth price paid to approved pharmacists for the supply of pharmaceutical benefits;
- increase the Tier 1 Administration, Handling and Infrastructure fee (Tier 1 AHI fee), the dispensing fee for ready-prepared pharmaceutical benefits, the dispensing fee for extemporaneously-prepared pharmaceutical benefits, and the dangerous drug fee as components of the Commonwealth price; and
- adjust the Tier 1 AHI fee by $0.01 (one cent).
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 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 Eighth Community Pharmacy Agreement as amended by the Addendum to the Eighth Community Pharmacy Agreement.
This Disallowable Legislative Instrument amends, with effect from 1 July 2026, the wholesale mark-up component of the Commonwealth price from a three-tier to a four-tier structure, calculated by reference to the AEMP or PEMP for the relevant pack quantity. It also increases the Tier 1 AHI fee from $4.91 to $5.12, the dispensing fee for ready-prepared pharmaceutical benefits from $8.88 to $9.24, the dispensing fee for extemporaneously-prepared pharmaceutical benefits from $10.92 to $11.28 and the dangerous drug fee from $5.50 to $5.73.
Human rights implications
This Disallowable Legislative Instrument engages Articles 2, 7, 9 and 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR). The legislative instrument assists with the provision of 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 social security, and 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 amendments are limited to the additional amounts described above. They do not reduce the protection of human rights to health and social security by all Australians under the PBS implemented under the Principal Determination.
Conclusion
This Disallowable Legislative Instrument is compatible with human rights because it promotes the protection of human rights to health and social security.
Judith Wright
Chairperson
Pharmaceutical Benefits Remuneration Tribunal