EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 44 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 May 2008, was made on 2 April 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 May 2008.
Paragraph 2: provides that Schedule 1 amends PB 91 of 2007.
Schedule 1: provides for the following amendments:
SCHEDULE 1
Items deleted
Flucloxacillin Capsule 250 mg (as sodium) (Floxapen)
Capsule 500 mg (as sodium) Floxapen)
Isosorbide Dinitrate Tablet 10 mg (Isordil)
Brands deleted
Amoxycillin Tablet 1 g (as trihydrate) (Amoxil Duo)
Overview
The National Health Act 1953, amended by legislative instrument F2008L01032, was enacted to provide reliable, timely, and affordable access to a wide range of medicines for all Australians through the Pharmaceutical Benefits Scheme (PBS). This legislation allows the Commonwealth to declare drugs and medicinal preparations listed under Part VII and determine their form, administration, and brand. The amendments made by the legislative instrument address the issue where the Minister and the responsible person for a brand of a pharmaceutical item cannot agree on the appropriate maximum price for sales to approved pharmacists. In such cases, the Minister can determine the maximum price by reference to the quantity or number of units of the pharmaceutical item, and also the price claimed by the responsible person. The instrument, which commenced on 1 May 2008, amends the previous determination made in 2007 to reflect recommendations from the Pharmaceutical Benefits Advisory Committee. The objective of these amendments is to ensure the affordability and accessibility of medicines under the PBS, thereby supporting public health objectives.
Scope and Application
The National Health Act 1953, as amended by the legislation F2008L01032, governs the Pharmaceutical Benefits Scheme (PBS) which ensures that all Australians have reliable, timely, and affordable access to a wide range of medicines. This Act applies to pharmaceutical benefits provided by the Commonwealth to approved pharmacists, and includes the declaration of listed drugs and medicinal preparations by the Minister. The Minister also determines the form of listed drugs, the manner of administration, and brands of pharmaceutical items. The Act allows the Minister to make determinations regarding the maximum price for sales of pharmaceutical brands to pharmacists when a price agreement cannot be reached with the responsible person. Additionally, the Minister may determine the special patient contribution based on the difference between the Commonwealth price and the responsible person's price. This legislative instrument, which commenced on 1 May 2008, amends the determination under section 85B made by legislative instrument number PB 91 of 2007, affecting responsible persons with medicines listed on the PBS.
Key Provisions
The main operative sections of the legislation amend the National Health Act 1953 under the Pharmaceutical Benefits Scheme (PBS) to allow for the determination of maximum prices for certain pharmaceutical items. Section 85B(2) empowers the Minister to determine the appropriate maximum price for sales of a brand of pharmaceutical item to approved pharmacists by reference to a quantity or number of units. Section 85B(3) similarly allows the Minister to determine the amount that is to be taken as the price claimed by the responsible person for sales of the brand of the pharmaceutical item to approved pharmacists, also by reference to a quantity or number of units. The Special Patient Contribution, as defined under subsection 85(6), is the difference between the Commonwealth price and the responsible person’s price. Subsection 85B(5) allows the Minister to determine the circumstances under which the Commonwealth is to pay this special patient contribution.
The Act imposes several obligations on the parties it governs, primarily the Minister and the responsible persons for pharmaceutical brands. The Minister is required to engage in consultation with the responsible person when a price agreement cannot be reached under section 85AD. This is a critical step to determine the appropriate maximum price and the responsible person’s price for the pharmaceutical item. Responsible persons must cooperate in these consultations to ensure that the prices are set fairly and in a manner that reflects the market conditions. Furthermore, the responsible person must adhere to the determined prices when selling their pharmaceutical brands to approved pharmacists, ensuring that the PBS remains affordable and accessible to all Australians.
Breaches of the Act's provisions can lead to civil and criminal consequences. The exact nature and extent of these consequences depend on the specific provisions breached. For instance, failure to adhere to the determined prices could result in fines or other penalties as stipulated in the relevant sections of the Act. Additionally, any actions that mislead or deceive regarding the pricing of pharmaceutical items could lead to further penalties under other provisions of the National Health Act 1953 or related legislation. The maximum penalties for such offences can vary but are designed to ensure compliance and maintain the integrity of the PBS.