EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 84 OF 2008
NATIONAL HEALTH ACT 1953
AMENDMENT DETERMINATION UNDER SECTION 84AH
Purpose and operation
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 by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007 (the amending Act), expressed to commence on 1 August 2007. Included in these amendments is the insertion of section 84AH into the Act.
Section 84AH empowers the Minister by legislative instrument to determine that a pharmaceutical item is an “exempt item”. This is permitted if there is only one listed brand of the pharmaceutical item; there are no listed brands of other pharmaceutical items that are bioequivalent or biosimilar; and the listed drug in the pharmaceutical item is common to at least one brand of another pharmaceutical item. The Minister has also to be satisfied, having regard to any advice from the Pharmaceutical Benefits Advisory Committee (PBAC), that the listed drug in the relevant pharmaceutical item represents suitable therapy for a particular patient population; that the relevant item is suitable for use by a particular subgroup of that patient population because of either or both of the form and manner of administration of the drug in the item; and that no other pharmaceutical item that has that drug is suitable for use by that subgroup due to either or both of the form or manner of administration of the drug in the item.
Exempt items are excluded from the statutory price reductions and from price disclosure requirements under the Act. The intention is to encourage availability by providing exemptions for particular formulations of drugs (eg oral solution) used by a demographic subgroup (eg children or geriatric patients) for whom other formulations of the drug are not suitable.
This instrument amends PB 58 of 2007 by determining under section 84AH that the
“Cream containing terbinafine hydrochloride 10 mg per g, 15 g” form of the
listed drug Terbinafine is an exempt item. The amendment is set out in the items
of Schedule 1 to the instrument.
A provision-by provision description of the instrument is contained in the Attachment.
The instrument is expressed to commence on 1 August 2008.
Consultations
This instrument affects pharmaceutical companies with medicines listed on the PBS. In relation to the introduction of the exempt items measure, pharmaceutical companies have been consulted during both the policy development and implementation phases.
ATTACHMENT
Paragraph 1: Provides that the instrument commences on 1 August 2008.
Paragraph 2: Determines that Schedule 1 amends PB 58 of 2007.
Schedule 1: Determines, under section 84AH that the “Cream containing terbinafine hydrochloride 10 mg per g, 15 g” form of the listed drug Terbinafine is an exempt item.
Overview
The National Health Act 1953 was enacted to provide a legislative basis for the Pharmaceutical Benefits Scheme (PBS) under which the Commonwealth ensures that all Australians have reliable, timely, and affordable access to a wide range of medicines. This Act was introduced to address the need for a structured framework governing the provision and regulation of pharmaceutical benefits in Australia. The policy objective of the Act, particularly as amended by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007, is to balance the availability of essential medications with cost control and equitable access. One of the key amendments introduced is the ability to designate certain pharmaceutical items as "exempt items," which are excluded from statutory price reductions and price disclosure requirements, thereby encouraging the availability of particular formulations suited to specific patient populations. The Commonwealth Parliament is the enacting body responsible for the amendments, aiming to refine the PBS to better cater to the therapeutic needs of various demographic subgroups.
Scope and Application
The National Health Act 1953, as amended by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007, governs the Pharmaceutical Benefits Scheme (PBS), providing Australians with reliable, timely, and affordable access to a range of medicines. The Act applies to drugs and medicinal preparations declared by the Minister, which are listed as pharmaceutical benefits. The Act's scope extends to the form, type, and administration of these drugs as well as their brands, which are determined by legislative instruments. The Act also empowers the Minister to exempt certain pharmaceutical items under specific conditions, as set out in section 84AH, allowing for tailored therapeutic solutions for particular patient populations where other formulations are unsuitable. This exemption excludes these items from statutory price reductions and price disclosure requirements, intended to encourage the availability of necessary medications. The instrument in question, which amends a previous legislative instrument, specifically designates the "Cream containing terbinafine hydrochloride 10 mg per g, 15 g" form of the listed drug Terbinafine as an exempt item, effective from 1 August 2008. This change impacts pharmaceutical companies with medicines listed on the PBS, with consultations undertaken during both the policy development and implementation phases.
Key Provisions
The main sections of this legislation, specifically the Amendment Determination under Section 84AH of the National Health Act 1953, are concerned with the Pharmaceutical Benefits Scheme (PBS) and the process by which the Minister determines the form or brand of a listed drug, as well as whether a particular pharmaceutical item is an “exempt item” (subsection 84AH). The legislation details the criteria that must be met for a pharmaceutical item to be considered exempt, including the number of listed brands, bioequivalence or biosimilarity to other items, and suitability for a particular patient population based on the form and manner of administration (subsection 84AH). The determination of the “Cream containing terbinafine hydrochloride 10 mg per g, 15 g” form of the listed drug Terbinafine as an exempt item is an example of this process in action.
The obligations and requirements imposed by the Act on the parties it governs primarily concern the Minister's role in determining pharmaceutical items and their forms, brands, and exemptions. The Minister must consider advice from the Pharmaceutical Benefits Advisory Committee (PBAC) and ensure that any determinations align with the therapeutic needs of patient populations (subsection 84AH). Pharmaceutical companies must comply with the statutory price reductions, price disclosure requirements, and guarantee of supply provisions unless their items are determined to be exempt under the Act. They must also ensure that their listed drugs meet the criteria for forms and brands as determined by the Minister.
The Act imposes specific offences, penalties, or civil and criminal consequences for breaches of its provisions. While the Explanatory Statement does not detail maximum penalties, it is likely that breaches of the Act could result in civil or criminal penalties, depending on the nature and severity of the breach. For example, failure to comply with price disclosure requirements or guarantee of supply obligations could result in fines or other penalties. Additionally, any misuse of exempt status by pharmaceutical companies could also lead to penalties. The precise penalties would be determined in accordance with the broader legislative framework governing the National Health Act 1953.