EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 71 OF 2007
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 51 of 2007 which came into effect on 1 August 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 October 2007, was made on 6 September 2007.
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 October 2007.
Paragraph 2: provides that Schedule 1 amends PB 51 of 2007.
Schedule 1: provides for the following amendments:
SCHEDULE 1
Brand to which a brand premium no longer applies (brand deletion)
Simvastatin Tablet 5 mg (Lipex 5)
Overview
The National Health Act 1953, as amended by the legislative instrument F2007L03618, addresses the need for an effective mechanism to determine pharmaceutical prices when the Minister and the responsible person for a brand of pharmaceutical item cannot reach a price agreement under section 85AD. Enacted by the Australian Parliament, this Act aims to ensure reliable, timely, and affordable access to a wide range of medicines through the Pharmaceutical Benefits Scheme (PBS). In cases where an agreement cannot be reached, section 85B allows the Minister to determine the appropriate maximum price for sales of the brand of pharmaceutical item to pharmacists and the price claimed by the responsible person. The special patient contribution, being the difference between these prices, is also determined under this section. The amendments introduced by the legislative instrument F2007L03618, effective from 1 October 2007, adjust the determinations under section 85B, including the removal of a brand premium for Simvastatin Tablet 5 mg (Lipex 5), reflecting recommendations from the Pharmaceutical Benefits Advisory Committee.
Scope and Application
The National Health Act 1953, as amended by the legislative instrument F2007L03618, pertains to the Pharmaceutical Benefits Scheme (PBS) and applies to drugs and medicinal preparations declared by the Minister to be listed drugs under subsection 85(2) of the Act. This legislation ensures that the Commonwealth provides affordable access to a wide range of medicines for all Australians. The Act applies to the Minister, pharmaceutical companies, and approved pharmacists who are involved in the supply and distribution of listed drugs under the PBS. The instrument extends the Commonwealth's jurisdiction by allowing the Minister to determine the form and manner of administration of listed drugs and to set the appropriate maximum price for sales of pharmaceutical brands to approved pharmacists, thereby ensuring that prices are reasonable and accessible. This legislative instrument also allows the Minister to determine the special patient contribution, which is the difference between the Commonwealth price and the price claimed by the responsible person. The instrument commenced on 1 October 2007 and amends the previous determination PB 51 of 2007, which came into effect on 1 August 2007.
Key Provisions
The National Health Act 1953 Amendment Determination under section 85B, instrumental in regulating the Pharmaceutical Benefits Scheme (PBS), introduces specific provisions that govern the pricing and contribution mechanisms for certain pharmaceutical brands. Under section 85(1), the Commonwealth is mandated to provide pharmaceutical benefits in accordance with Part VII, which facilitates access to medicines for all Australians. Drugs and medicinal preparations listed under the Act are declared by the Minister through legislative instruments (subsection 85(2)), except for certain medicinal preparations with additives. The Minister can further determine the form or forms of a listed drug by reference to strength, type of unit, size of unit, or otherwise (subsection 85(3)). Additionally, the manner of administration and specific brands of pharmaceutical items can be determined by the Minister (subsections 85(5) and 85(6)). These declarations and determinations are crucial for defining what constitutes a pharmaceutical benefit under Part VII of the Act.
The Act imposes certain obligations on the Minister and responsible persons for pharmaceutical brands. When the Minister and the responsible person cannot reach an agreement on the appropriate maximum price for a brand of pharmaceutical item under section 85AD, the Minister can intervene to determine the price under section 85B. This includes setting the appropriated maximum price based on a quantity or number of units (subsection 85B(2)) and the price claimed by the responsible person (subsection 85B(3)). Furthermore, the Act allows the Minister to determine the special patient contribution, which is the difference between the Commonwealth price and the responsible person's price (subsection 85B(4)). The Minister can also determine the circumstances under which the Commonwealth will pay the special patient contribution (subsection 85B(5)).
Failure to comply with the provisions of the National Health Act 1953 and its amendments can result in various consequences. While specific offences, penalties, or civil/criminal consequences are not explicitly stated in the text, it is reasonable to infer that breaches of the Act could lead to legal actions. The Minister’s determinations under section 85B are made through legislative instruments and are binding. Therefore, non-compliance with these determinations or the provisions of the Act could result in administrative penalties or legal action to enforce adherence to the statutory requirements. Additionally, the Act may also provide for other remedies such as injunctions or compensation to address any harm caused by non-compliance.