EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 19 OF 2009
NATIONAL HEALTH ACT 1953
AMENDMENT DETERMINATION UNDER PARAGRAPH 84AG(1)(b)
Part VII of the National Health Act 1953 (the Act) is the legislative basis of the Pharmaceutical Benefits Scheme (PBS) by which 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.
Drugs and medicinal preparations to which Part VII applies are declared by the Minister by legislative instrument to be so under subsection 85(2). These are listed drugs as defined in subsection 84(1). Part VII also applies to certain extemporaneously-prepared medicinal preparations as a result of declarations under paragraph 85(2)(b).
The Minister by legislative instrument can determine the form or forms of a listed drug by reference to strength, type of unit, size of unit or otherwise (subsection 85(3)); the manner of administration of the form of the listed drug so determined (subsection 85(5)); and a brand of the pharmaceutical item (defined in subsection 84(1)) that has the listed drug in that form with that manner of administration (subsection 85(6)). These determinations govern (except for certain extemporaneously-prepared pharmaceutical benefits) what constitutes the pharmaceutical benefit (defined in subsection 84(1)) under Part VII of the Act.
Provisions of the Act relating to brands of pharmaceutical items, including in relation to statutory price reductions, price disclosure, and guarantee of supply, are the result of amendments in relation to PBS reform by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007 (the amending Act), commenced on 1 August 2007. Included in these amendments is section 84AG relating to therapeutic groups, defined in subsection 84(1) to mean a therapeutic group determined by the Minister under subsection 84AG.
Therapeutic groups are groups of drugs which are interchangeable on an individual patient basis. They are grouped together for pricing purposes as having similar health outcomes. This price linkage is demonstrated in paragraph 99ACH(2)(c) whereby statutory price reductions on the listing of a new brand of a pharmaceutical item that has a drug in a therapeutic group flow on to a listed brand of another pharmaceutical item that has another drug in the same therapeutic group which has the same manner of administration.
Paragraph 84AG(1)(b) empowers the Minister to determine that 2 or more listed drugs are in the same therapeutic group. Subsection 84AG(6) provides that the regulations may prescribe one or more therapeutic groups to come into effect on the commencement of the section.
The National Health (Pharmaceutical Benefits) Amendment Regulations 2007 (No.2)
amended the National Health (Pharmaceutical Benefits) Regulations to prescribe 6 therapeutic groups.
This legislative instrument amends the determination under paragraph 84AG(1)(b) made by legislative instrument number PB 60 of 2007 which came into effect on 1 August 2007. The amendment is set out in Schedule 1.
A provision-by-provision description of the instrument is contained in the Attachment.
The instrument is expressed to commence on 1 March 2009.
Consultations
Consultations on the content of the determination have been on the basis of advice from the Pharmaceutical Benefits Advisory Committee that the drugs are interchangeable on an individual patient basis and dialogue with the pharmaceutical industry in respect of the PBS reforms.
Attachment
Paragraph 1: Provides that the instrument commences on 1 March 2009.
Paragraph 2: Determines that schedule 1 amends PB 60 of 2007.
Schedule 1: Provides the following amendment
SCHEDULE 1
Addition
Valsartan ATRA group
Overview
The National Health Act 1953, as amended by the National Health (Pharmaceutical Benefits) Amendment Regulations 2007 (No.2), governs the Pharmaceutical Benefits Scheme (PBS) through which the Commonwealth ensures Australians have reliable, timely, and affordable access to a broad range of medicines. This legislative framework, specifically Part VII, allows the Minister to declare drugs eligible for benefits, define the forms of listed drugs, and determine therapeutic groups for pricing purposes. The 2007 amendments introduced therapeutic groups, which are collections of drugs interchangeable on a patient basis, grouped together for similar health outcomes. This amendment determination under paragraph 84AG(1)(b) updates the list of drugs within therapeutic groups, facilitating more effective PBS reforms by ensuring statutory price reductions flow on to similar drugs within the same therapeutic group. This legislative instrument, effective from 1 March 2009, aims to refine the PBS by ensuring consistent and equitable pricing across interchangeable drugs, addressing gaps in the original framework and enhancing the efficiency of the PBS.
Scope and Application
The National Health (Pharmaceutical Benefits) Amendment Determination under paragraph 84AG(1)(b) is an instrument that amends the determination made by legislative instrument number PB 60 of 2007, which came into effect on 1 August 2007. The amendment, set out in Schedule 1, is effective from 1 March 2009. This determination applies to the Pharmaceutical Benefits Scheme (PBS), which provides access to a wide range of medicines for all Australians. Specifically, it involves the classification of drugs into therapeutic groups, which are groups of drugs that are interchangeable on an individual patient basis and are grouped together for pricing purposes due to having similar health outcomes. The instrument amends the previous determination by including the drug Valsartan into the ATRA group, reflecting the advice from the Pharmaceutical Benefits Advisory Committee and dialogue with the pharmaceutical industry in relation to PBS reforms. The instrument extends to the entire Commonwealth of Australia and applies to all entities and persons involved in the PBS, including pharmaceutical manufacturers, suppliers, and distributors, as well as patients who benefit from the scheme. There are no exclusions, exemptions, or thresholds specified in the instrument, and its application is not extended or restricted through subordinate instruments.
Key Provisions
The main operative sections of the legislation, F2009L00739, pertain to the determination of therapeutic groups for listed drugs under the National Health Act 1953. Specifically, subsection 84AG(1)(b) allows the Minister to determine that two or more listed drugs belong to the same therapeutic group (subsection 84AG(6)). This determination is crucial as it affects the pricing and interchangeability of these drugs, particularly in the context of the Pharmaceutical Benefits Scheme (PBS). The amendment determination under paragraph 84AG(1)(b) is set out in Schedule 1, which amends the previous determination made by legislative instrument number PB 60 of 2007. This amendment is effective from 1 March 2009, as specified in paragraph 1 of the instrument.
The Act imposes specific obligations on the parties involved. The Minister must determine therapeutic groups based on advice from the Pharmaceutical Benefits Advisory Committee and in dialogue with the pharmaceutical industry. This determination is pivotal for ensuring that drugs with similar health outcomes are grouped together for pricing purposes. The Act also mandates that the Minister's determinations must be made by legislative instrument and that any amendments to these determinations follow a similar process. The Pharmaceutical Benefits Advisory Committee's advice is integral to the decision-making process, ensuring that the determinations are based on sound clinical and economic evidence.
Failure to comply with the requirements of the Act can lead to various consequences. While the specific penalties are not detailed in the explanatory statement, breaches of the Act generally carry potential civil or criminal penalties, depending on the nature and severity of the breach. For instance, providing misleading information about a pharmaceutical benefit could lead to civil penalties, while more severe breaches might result in criminal charges. The maximum penalties are not specified in this particular explanatory statement but would typically be outlined in the primary legislation or associated regulations.
The legislation also establishes a framework for statutory price reductions, price disclosure, and guarantee of supply for pharmaceutical items. These provisions ensure that the PBS remains affordable and reliable for all Australians. The flow-on effect of statutory price reductions to drugs in the same therapeutic group, as outlined in paragraph 99ACH(2)(c), helps maintain equitable pricing across interchangeable drugs. This ensures that patients have access to affordable medications while incentivising competition and innovation within the pharmaceutical industry.
Overall, the Act, as amended by F2009L00739, plays a critical role in regulating the PBS, ensuring that it remains a viable and equitable system for providing access to essential medications. The determination of therapeutic groups is a key component of this regulation, influencing pricing and interchangeability, and thereby impacting the overall effectiveness and sustainability of the PBS.