EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 67 OF 2007
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), which to commenced 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 instrument number PB 58 of 2007 to add the pharmaceutical items, Baclofen, Injection 10 mg in 5 mL, Injection and Baclofen, Injection 10 mg in 20 mL, Injection, to the list of exempt items.
A provision-by provision description of the instrument is contained in the Attachment.
The instrument, which is expressed to commence on 1 September 2007, was made on
14 August 2007.
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.
The Pharmaceutical Benefits Advisory Committee (PBAC) has recommended to the Minister that the specified items be added to the list of exempt items.
ATTACHMENT
Paragraph 1: Provides that the instrument commences on 1 September 2001.
Paragraph 2: Determines that Schedule 1 amends PB 58 of 2007.
Schedule 1: Sets out the two additional pharmaceutical items to be added to the list of exempt items.
Overview
The National Health Act 1953, enacted by the Parliament of Australia, serves as the legislative foundation for the Pharmaceutical Benefits Scheme (PBS), which ensures Australians have timely and affordable access to a wide range of medicines. To enhance the PBS's effectiveness, the Act was amended by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007, which introduced the concept of "exempt items" under section 84AH. This amendment aims to address the gap in the availability of specific drug formulations that are suitable for particular patient populations, such as children or geriatric patients, where other formulations are unsuitable. The Minister, guided by advice from the Pharmaceutical Benefits Advisory Committee (PBAC), can designate certain pharmaceutical items as exempt if specific conditions are met, including the suitability of the drug for the patient population and the lack of alternative suitable formulations. This legislative change seeks to encourage the availability of these particular drug formulations by exempting them from statutory price reductions and price disclosure requirements.
Scope and Application
The National Health Act 1953, specifically under Part VII, is the legislative foundation for the Pharmaceutical Benefits Scheme (PBS), which ensures Australians have reliable, timely, and affordable access to a wide range of medicines. This Act applies to the Commonwealth and is implemented across the nation, encompassing all entities and individuals involved in the supply, prescription, and administration of pharmaceutical benefits listed under the PBS. The Act extends its application to drugs and medicinal preparations declared by the Minister as listed drugs, as well as certain extemporaneously-prepared medicinal preparations. Pharmaceutical companies and other entities supplying medicines listed on the PBS are particularly affected by this legislation. The recent amendment, made under section 84AH, empowers the Minister to determine that specific pharmaceutical items can be classified as "exempt items" based on criteria such as the uniqueness of the listed drug, bioequivalence, and suitability for particular patient populations. Exempt items are excluded from statutory price reductions and price disclosure requirements, aiming to encourage the availability of suitable formulations for specific demographic subgroups. The geographic reach of this Act is national, applying uniformly across all states and territories of Australia. The instrument, which amends a previous instrument to include Baclofen Injection 10 mg in 5 mL and Baclofen Injection 10 mg in 20 mL as exempt items, commenced on 1 September 2007, following consultation with relevant stakeholders, including the Pharmaceutical Benefits Advisory Committee.
Key Provisions
The key provisions of this legislation concern the National Health Act 1953 and its amendment under section 84AH to introduce the concept of "exempt items" within the Pharmaceutical Benefits Scheme (PBS). The Act provides that the Commonwealth offers reliable, timely, and affordable access to a range of medicines through the PBS (subsection 85(1)). Drugs and medicinal preparations covered by the Act are declared by the Minister by legislative instrument (subsection 85(2)). The Minister can determine the form and manner of administration of a listed drug, and the brand of a pharmaceutical item (subsections 85(3)–85(6)). The recent amendments inserted section 84AH into the Act, empowering the Minister to designate a pharmaceutical item as an "exempt item" if specific conditions are met, such as the presence of only one listed brand and suitability for a particular patient subgroup (subsection 84AH). These exempt items are excluded from statutory price reductions and price disclosure requirements, aiming to encourage availability for specific patient populations.
The obligations imposed by this Act primarily concern pharmaceutical companies with medicines listed on the PBS. These companies must comply with the Minister's declarations and determinations regarding the form, administration, and brand of pharmaceutical items. In addition, they must ensure that any newly designated "exempt items" meet the criteria set out in section 84AH, such as being the sole listed brand and providing suitable therapy for a specific patient subgroup. Pharmaceutical companies must also adhere to any advice from the Pharmaceutical Benefits Advisory Committee (PBAC) and ensure that their products comply with the statutory requirements for exempt items.
Breaches of the provisions under this Act may result in various civil and criminal consequences. While specific penalties are not detailed in the explanatory statement, it is reasonable to infer that non-compliance with the Minister's declarations and determinations could lead to enforcement actions by the Commonwealth. Such actions may include fines, legal proceedings, or other penalties as prescribed by the Act or relevant legislation. For example, failure to comply with the statutory price reductions or price disclosure requirements for exempt items could result in financial penalties or legal action against the pharmaceutical companies involved. Additionally, any misrepresentation or fraudulent activity in the listing or administration of pharmaceutical items could result in more severe criminal penalties.