EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 26 OF 2008
NATIONAL HEALTH ACT 1953
AMENDMENT DETERMINATION UNDER SECTION 85B
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 the 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 (with the exception of some medicinal preparations with additives) declared by the Minister by legislative instrument to be so under subsection 85(2). These are listed drugs as defined in subsection 84(1).
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 what constitutes the pharmaceutical benefit (defined in subsection 84(1)) under Part VII of the Act. Under section 84AF, the Minister may determine a responsible person for a brand of a pharmaceutical item.
Subsection 85B(1) provides that the section applies if the Minister and the responsible person for a brand of pharmaceutical item have been unable to make a price agreement under section 85AD on an amount that is to be taken to be the appropriate maximum price for sales of the brand of pharmaceutical item to approved pharmacists.
Under subsection 85B(2), the Minister may by legislative instrument determine, by reference to a quantity or number of units of a pharmaceutical item, the amount that is taken to be the appropriated maximum price for sales of the brand of the pharmaceutical item to pharmacists.
Under subsection 85B(3), the Minister may by legislative instrument determine, by reference to a quantity or number of units, the amount that is taken to be the price claimed by the responsible person as the responsible person’s price for sales of the brand of the pharmaceutical item to approved pharmacists.
Subsection 85B(4) provides the special patient contribution for the brand of the pharmaceutical item is the difference between the “responsible person’s Commonwealth price” and the “Commonwealth price” for the brand of the pharmaceutical item. Subsection 85(6) defines these terms to the effect that the Special Patient Contribution is the difference between the Commonwealth price (worked out in accordance with the determination of the Pharmaceutical Benefits Remuneration Tribunal under subsection 98B(1)) based on the amount determined under subsection 85B(2) and what would be the Commonwealth price based on the amount determined under subsection 85B(3).
Under subsection 85B(5), the Minister having made a determination under subsection 85B(3) may by legislative instrument determine the circumstances in which the Commonwealth is to pay the special patient contribution for the brand of the pharmaceutical item.
This legislative instrument in giving effect to recommendations of the Pharmaceutical Benefits Advisory Committee (PBAC) amends the determination under section 85B made by legislative instrument number PB 91 of 2007 which came into effect on 1 December 2007. The amendments are set out in the items of Schedule 1 to the instrument.
A provision-by-provision description of the instrument is contained in the Attachment.
This instrument, expressed to commence on 1 March 2008, was made on 1 February 2008.
Consultations
This instrument affects responsible persons with medicines listed on the PBS. If the Minister and responsible person cannot enter into a price agreement, consultation occurs between the responsible person and the Commonwealth to determine the price claimed by the responsible person as the responsible person's price for sales of the brand of pharmaceutical item to approved pharmacists.
ATTACHMENT
Paragraph 1: provides that this instrument commences on 1 March 2008.
Paragraph 2: provides that Schedule 1 amends PB 91 of 2007.
Schedule 1: provides for the following amendments:
SCHEDULE 1
Brand Deleted
Mirtazapine Tablet 30 mg (Remeron)
Overview
The National Health Act 1953, amended by the instrument F2008L00284, serves as the legislative foundation for the Pharmaceutical Benefits Scheme (PBS), which ensures Australians have reliable, timely, and affordable access to a broad range of medications. Enacted by the Australian Parliament, the Act addresses the gap in providing equitable access to necessary pharmaceuticals by establishing a scheme through which the Commonwealth can subsidise the cost of medications. The policy objective of the Act is to make essential medicines accessible and affordable to all Australians. In instances where the Minister and the responsible person for a pharmaceutical brand cannot reach a price agreement, the Act provides mechanisms for determining the maximum price and the special patient contribution, ensuring that patients still have access to necessary medications at a controlled cost. This amendment instrument, which came into effect on 1 March 2008, updates previous legislation to reflect new recommendations and ensures the continued effectiveness and fairness of the PBS.
Scope and Application
The National Health Act 1953, as amended, applies to the Pharmaceutical Benefits Scheme (PBS) to ensure that Australians have reliable, timely, and affordable access to a wide range of medicines. Specifically, the Act applies to pharmaceutical benefits provided by the Commonwealth through the PBS, with drugs and medicinal preparations listed under the Act being declared by the Minister via legislative instruments. These listed drugs are defined and their forms and administration methods are determined by the Minister. The Act also provides for the resolution of pricing disputes between the Minister and the responsible persons for pharmaceutical brands where an agreement cannot be reached. In such cases, the Minister may determine the appropriate maximum price and the special patient contribution through legislative instruments, ensuring the PBS operates effectively. The geographic reach of this legislation is national, applying across Australia, and it extends its application through subordinate instruments to cover specific brands and their pricing details as needed.
Key Provisions
The main operative sections of the National Health Act 1953 Amendment Determination (No. 26 of 2008) concern the establishment of prices for pharmaceutical items under the Pharmaceutical Benefits Scheme (PBS). Under section 85B(1), the Minister can make a determination about the appropriate maximum price for sales of a brand of pharmaceutical item to pharmacists if the Minister and the responsible person for the brand cannot agree on an appropriate price. This determination can be made by reference to a quantity or number of units of the pharmaceutical item (subsection 85B(2)). Additionally, the Minister can determine the amount that is to be taken as the price claimed by the responsible person as the responsible person’s price for sales of the brand (subsection 85B(3)). The Special Patient Contribution is defined as the difference between the "responsible person’s Commonwealth price" and the "Commonwealth price" for the brand (subsection 85B(4)). The Minister can also determine the circumstances in which the Commonwealth will pay the special patient contribution (subsection 85B(5)).
The obligations and requirements imposed by the Act on parties or entities it governs include the necessity for the Minister and the responsible person to attempt to reach an agreement on the appropriate maximum price for a brand of pharmaceutical item. If an agreement cannot be reached, the Minister must consult with the responsible person to determine the appropriate maximum price and the price claimed by the responsible person (subsection 85B(2) and (3)). The Minister must also determine the circumstances under which the Commonwealth will pay the special patient contribution (subsection 85B(5)). The responsible person must provide necessary information and data to facilitate the Minister’s determination process.
Any breaches of the provisions under this Act may lead to civil or criminal consequences, although the specific penalties are not detailed in the determination itself. However, the Act generally provides for substantial penalties for non-compliance, including fines and potential imprisonment. The Pharmaceutical Benefits Remuneration Tribunal can also impose financial penalties for breaches related to pricing and reimbursement under the PBS. The exact penalties would be determined based on the nature and severity of the breach, as outlined in the broader legislative framework of the National Health Act 1953.