EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 40 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.
Determinations under s85B(2), 85B(3) and 85B(5) are currently made in legislative instrument number PB 91 of 2007, which has been amended from time to time by amending instruments.
Legislative instrument number PB 33 of 2008, which is to commence on 1 April 2008, amends legislative instrument number PB 91 of 2007.
This legislative instrument amends instrument number PB 33 of 2008 by omitting amendment 1(a) and amendment 8(b) from Schedule 1 of PB 33 of 2008.
A provision-by-provision description of the instrument is contained in the Attachment.
The instrument is expressed to commence at 8pm on 31 March 2008 and is intended to have effect before commencement of PB 33 of 2008, which commences on 1 April 2008.
Consultations
This instrument affects certain 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 and thereafter the Minister determines the price in relation to the relevant brand of pharmaceutical item and determines 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 the instrument commences at 8pm on 31 March 2008.
Paragraph 2: provides that Schedule 1 amends PB 33 of 2008.
Schedule 1: omits amendment 1(a) and 8(b) of Schedule 1 from instrument number PB 33 of 2008, thereby providing that the parts of PB 91 of 2007 affected by amendments 1(a) and 8(b) of Schedule 1 of PB 33 of 2008 remain unchanged.
Overview
The National Health Act 1953, as amended by instrument F2008L00958, addresses the issue of determining the prices for pharmaceutical items under the Pharmaceutical Benefits Scheme (PBS) when a price agreement cannot be reached between the Minister and the responsible person for the pharmaceutical brand. Enacted by the Parliament of Australia, this legislation aims to ensure affordable access to a wide range of medicines for Australians. When the Minister and the responsible person cannot reach an agreement on the maximum price for a pharmaceutical brand, the Minister can determine the price by legislative instrument, referencing a quantity or number of units. This determination process is designed to balance the interests of both the Commonwealth and the responsible person, ensuring that patients have access to necessary medications at affordable prices. The policy objective of this amendment is to maintain the integrity and accessibility of the PBS while providing a mechanism for resolving pricing disputes effectively.
Scope and Application
The National Health Act 1953, as amended by the legislative instrument F2008L00958, applies to pharmaceutical benefits within the Pharmaceutical Benefits Scheme (PBS) in Australia. This Act facilitates the Commonwealth's role in providing accessible and affordable medications to all Australians. The legislation is applicable to drugs and medicinal preparations declared by the Minister under subsection 85(2) of the Act, excluding certain preparations with additives. The Act also pertains to the determination of the form, administration, and brand of pharmaceutical items, which are outlined through legislative instruments by the Minister. Furthermore, the Act addresses scenarios where the Minister and the responsible person for a brand of pharmaceutical item cannot reach a price agreement, empowering the Minister to determine the appropriate maximum price and the circumstances under which the Commonwealth pays the special patient contribution. The jurisdiction of this Act is national, affecting all entities and individuals involved in the PBS across Australia. The instrument is intended to have effect before the commencement of PB 33 of 2008, with the current amendments to PB 91 of 2007 ensuring specific provisions remain unchanged.
Key Provisions
The National Health Act 1953 Amendment Determination under section 85B (F2008L00958) primarily operates within the Pharmaceutical Benefits Scheme (PBS) framework, focusing on the procedures and requirements for determining pharmaceutical prices when agreements between the Minister and the responsible person cannot be reached. The Act specifically allows the Minister to determine the appropriate maximum price for sales of a pharmaceutical brand to approved pharmacists, as outlined in subsection 85B(2). Furthermore, the Minister can determine the amount claimed by the responsible person for sales of the brand, referred to as the "responsible person’s price," under subsection 85B(3). The Special Patient Contribution, which is the difference between the Commonwealth price and the responsible person’s price, is defined in subsection 85B(4). The Minister may also determine the circumstances under which the Commonwealth will pay the special patient contribution under subsection 85B(5). These provisions ensure that there is a structured approach to managing pharmaceutical pricing when negotiations fail.
The obligations imposed by this legislation on the parties involved are primarily on the Minister and the responsible person for a pharmaceutical brand. When negotiations for the price of a pharmaceutical brand under section 85AD fail, the Minister must follow the procedural requirements set out in the Act to determine the appropriate maximum price and the responsible person’s price. These determinations must be made by legislative instrument, ensuring transparency and adherence to the legislative framework. The responsible person, on the other hand, must engage in negotiations with the Commonwealth and provide necessary information to facilitate these determinations. Additionally, the responsible person must comply with the pricing structures set by the Minister if a price agreement cannot be reached.
The Act provides for specific consequences and penalties for breaches of its provisions. While the explanatory statement does not explicitly detail penalties, breaches of the Act's requirements could potentially lead to legal challenges or administrative actions. The Minister's determinations under the Act are made in accordance with the legislative process, which includes scrutiny and potential review by the relevant authorities. Non-compliance with these determinations could result in disputes that may be resolved through legal proceedings, with potential implications for the responsible person's ability to sell their pharmaceutical brand under the PBS. The emphasis is on ensuring that the PBS operates efficiently and that pharmaceutical prices are managed in a manner that benefits all stakeholders, including patients and the Commonwealth.