EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 62 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 July 2008, was made on 3 June 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 July 2008.
Paragraph 2: provides that Schedule 1 amends PB 91 of 2007.
Schedule 1: provides for the following amendments:
SCHEDULE 1
Alteration of Brand
Bleomycin [Powder for injection containing bleomycin sulfate 15,000 I.U. (with any determined brand of sodium chloride injection as the required solvent)]
From: Hospira Australia Pty Ltd
To: Hospira Pty Limited
Listed drug deleted
Phenoxymethylpenicillin
Overview
The National Health Act 1953, enacted by the Parliament of Australia, establishes the legislative framework for the Pharmaceutical Benefits Scheme (PBS), ensuring that all Australians have access to affordable and reliable medicines. This Act provides the basis for the Commonwealth to offer subsidies on a wide range of pharmaceutical products through the PBS. One significant aspect of the Act is its ability to manage the pricing of listed drugs by determining the maximum prices that can be charged to approved pharmacists. This is particularly relevant when the Minister and the responsible person for a brand of pharmaceutical item are unable to agree on an appropriate price, leading to the application of Section 85B. This section allows the Minister to determine the maximum price by reference to a quantity or number of units of the pharmaceutical item, ensuring that the prices remain affordable for consumers while also providing a fair return to the responsible person. The policy objective is to balance the need for cost-effective pharmaceuticals with the requirement to maintain the financial viability of pharmaceutical companies.
Scope and Application
The National Health Act 1953 Amendment Determination, as expressed in F2008L02052, specifically pertains to the Pharmaceutical Benefits Scheme (PBS) under which the Commonwealth ensures accessible, timely, and affordable medications for all Australians. The Act applies to listed drugs, which are declared by the Minister, excluding certain medicinal preparations with additives. It governs the form, administration, and brand of pharmaceutical items, thereby determining the pharmaceutical benefit provided. The Act also applies to responsible persons, which are designated for specific pharmaceutical brands, and involves the Minister in the event of disputes over pricing between the Minister and the responsible person. The instrument extends its jurisdiction nationally, as it is a Commonwealth Act. The Act's application can be extended or restricted through subordinate instruments, particularly in determining maximum prices and special patient contributions when pricing agreements cannot be reached. This legislative instrument, which commenced on 1 July 2008, amends previous determinations and is made in response to recommendations from the Pharmaceutical Benefits Advisory Committee.
Key Provisions
The primary sections of the legislation (F2008L02052) pertain to the amendments made to the National Health Act 1953 under section 85B, specifically concerning the Pharmaceutical Benefits Scheme (PBS) (subsection 85(1)). The Act establishes the legislative framework for the PBS, enabling the Commonwealth to ensure affordable access to a wide range of medicines for all Australians. The Minister has the authority to declare drugs and medicinal preparations as listed drugs under subsection 85(2), with specific forms and manners of administration determined under subsections 85(3) and 85(5), respectively. The Act also allows the Minister to determine the responsible person for a brand of pharmaceutical item under section 84AF. In cases where the Minister and the responsible person cannot agree on the appropriate maximum price for sales of a pharmaceutical item, the Minister may determine this price under subsection 85B(2) and the amount claimed by the responsible person under subsection 85B(3). The difference between these two amounts determines the special patient contribution under subsection 85B(4).
The legislation imposes several obligations on the parties involved. The Minister must consult with the responsible person when a price agreement cannot be reached (subsection 85B(1)). The Minister must also determine the appropriate maximum price for sales of the pharmaceutical item to pharmacists (subsection 85B(2)), and the amount claimed by the responsible person (subsection 85B(3)). The responsible person, on the other hand, must engage in consultation with the Minister to determine the price they claim is appropriate for their pharmaceutical item. The Act also requires the Minister to determine the special patient contribution (subsection 85B(4)) and the circumstances in which the Commonwealth will pay this contribution (subsection 85B(5)).
Failure to comply with the provisions of the Act can result in various consequences. While the legislation does not explicitly state the penalties for non-compliance, breaches of similar provisions under the National Health Act 1953 can result in criminal and civil penalties. For example, under section 112 of the Act, any person who contravenes the provisions of the Act may be liable to a fine of up to 120 penalty units ($22,200) for individuals and up to 600 penalty units ($111,000) for bodies corporate. Additionally, under section 113 of the Act, a person who is found guilty of an offence against the Act may be subject to imprisonment for up to two years. It is important to note that these penalties are examples and may not necessarily apply to the specific provisions of this legislation.