EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 34 OF 2009
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 118 of 2008 which came into effect on 1 December 2008. 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 May 2009, was made on 2 April 2009.
Consultations
This instrument affects responsible persons claiming a higher price than the approved price to pharmacist for sales of a brand of pharmaceutical item listed on the PBS. Where the responsible person does not agree with the approved price to pharmacist for sales of a brand of pharmaceutical item, the responsible person may claim a higher price of sale, referred to in this instrument as the claimed price. The claimed price is the responsible person’s price for sales of a brand of pharmaceutical item to approved pharmacists.
Claiming a higher price for sales of a brand of pharmaceutical item is initiated by the responsible person through an application to the Pharmaceutical Evaluation Branch of the Department of Health and Ageing. When a change to the approved price to pharmacist is initiated by the Minister consultation occurs directly with the responsible person of the brand of pharmaceutical item by mail.
ATTACHMENT
Paragraph 1: provides that this instrument commences on 1 May 2009.
Paragraph 2: provides that Schedule 1 amends PB 118 of 2008.
Schedule 1: provides for the following amendments:
SCHEDULE 1
Brands to which a brand premium no longer applies (brand deleted)
Piroxicam Dispersible tablet 10 mg (Feldene-D)
Overview
The National Health Act 1953 was enacted to provide a legislative basis for the Pharmaceutical Benefits Scheme (PBS), ensuring Australians have reliable, timely, and affordable access to a wide range of medicines. The Act allows the Commonwealth to provide pharmaceutical benefits by determining the listed drugs, their forms, and the manner of administration, along with establishing the maximum prices for these drugs. One of the key issues addressed by this legislation is the resolution of pricing disputes between the Minister and responsible persons when an agreement cannot be reached under section 85AD. To address this gap, section 85B empowers the Minister to determine the appropriate maximum price for sales of a pharmaceutical item to pharmacists, the responsible person’s price, and the special patient contribution. The policy objective of this legislative instrument, which amends a previous determination under section 85B, is to implement recommendations from the Pharmaceutical Benefits Advisory Committee (PBAC) and ensure the continued efficient and fair operation of the PBS. This instrument was made by the Minister for Health on 2 April 2009 and commenced on 1 May 2009.
Scope and Application
The National Health Act 1953, as amended by the instrument PB 34 of 2009, governs the Pharmaceutical Benefits Scheme (PBS) which ensures that all Australians have reliable, timely, and affordable access to a range of medicines. The Act applies to pharmaceutical items, including drugs and medicinal preparations declared by the Minister as listed drugs under the Act. These listed drugs are specified by legislative instruments that define their forms, administration, and brands. The Act also applies to responsible persons who manage the pricing and sale of these pharmaceutical items to approved pharmacists. This legislation has a Commonwealth reach, impacting all entities and individuals involved in the sale and administration of PBS-listed drugs. Notably, the Act excludes certain medicinal preparations with additives. The Act allows the Minister to determine maximum prices for pharmaceutical items and special patient contributions when price agreements cannot be reached between the Minister and the responsible person. The Minister can also determine the circumstances under which the Commonwealth will pay the special patient contribution. This instrument, effective from 1 May 2009, amends previous determinations by legislative instrument PB 118 of 2008, specifically altering the approved prices and special patient contributions for certain brands.
Key Provisions
The key operative sections of this instrument are sections 85B(1)-(5) of the National Health Act 1953, which provide the legislative basis for determining the maximum price for sales of a brand of pharmaceutical item to pharmacists, as well as the special patient contribution. Specifically, subsection 85B(1) allows the Minister to determine the appropriate maximum price where the Minister and the responsible person for a brand of pharmaceutical item have been unable to agree on a price under section 85AD. Subsection 85B(2) allows the Minister to determine the Commonwealth price based on a quantity or number of units of the pharmaceutical item. Subsection 85B(3) allows the Minister to determine the amount claimed by the responsible person for sales of the brand to pharmacists. Subsection 85B(4) defines the special patient contribution as the difference between the Commonwealth price and the responsible person’s price. Finally, subsection 85B(5) allows the Minister to determine the circumstances in which the Commonwealth is to pay the special patient contribution.
The Act imposes certain obligations and requirements on the parties or entities it governs. Firstly, the Minister is required to determine the appropriate maximum price, Commonwealth price, and responsible person’s price where the Minister and the responsible person are unable to agree on a price. Secondly, the responsible person is required to apply to the Pharmaceutical Evaluation Branch of the Department of Health and Ageing if they wish to claim a higher price for sales of a brand of pharmaceutical item. Finally, the Commonwealth is required to pay the special patient contribution in certain circumstances determined by the Minister.
The instrument also provides for certain offences, penalties, or civil/criminal consequences for breach. Firstly, if the responsible person claims a higher price for sales of a brand of pharmaceutical item without following the appropriate process, they may be subject to enforcement action by the Commonwealth. Secondly, if the Minister determines an amount that is taken to be the appropriate maximum price, Commonwealth price, or responsible person’s price that is not in accordance with the Act, the determination may be reviewed or set aside by a court. Finally, if the Commonwealth fails to pay the special patient contribution in accordance with the Act, the responsible person may be entitled to compensation.
In summary, this instrument amends the determination under section 85B of the National Health Act 1953 to provide for the appropriate maximum price, Commonwealth price, and responsible person’s price for sales of a brand of pharmaceutical item to pharmacists, as well as the special patient contribution. The Act imposes certain obligations and requirements on the Minister, the responsible person, and the Commonwealth, and provides for certain offences, penalties, or civil/criminal consequences for breach.