EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 81 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 November 2007, was made on 2 October 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 November 2007.
Paragraph 2: provides that Schedule 1 amends PB 51 of 2007.
Schedule 1: provides for the following amendments:
SCHEDULE 1
Alteration of relevant quantity or number of units, determined price and claimed price
Clindamycin Capsule 150 mg (as hydrochloride)
Overview
The National Health Act 1953 was enacted to ensure that all Australians have reliable, timely, and affordable access to a wide range of medicines through the Pharmaceutical Benefits Scheme (PBS). The legislation was introduced to address the gap in providing equitable access to pharmaceuticals across the country. The National Health Act 1953 is administered by the Parliament of Australia, with the policy objective of ensuring that the PBS operates effectively to deliver affordable medicines. The Act was amended in 2007 to further refine the operation of the PBS, particularly concerning the resolution of price disagreements between the Minister and pharmaceutical companies. This amendment was introduced to address instances where the Minister and the responsible person for a brand of pharmaceutical item could not reach a price agreement, ensuring that a fair and reasonable price is determined for the benefit of the public.
Scope and Application
The National Health Act 1953 Amendment Determination under section 85B, numbered PB 81 of 2007, pertains to the Pharmaceutical Benefits Scheme (PBS) which is administered by the Commonwealth to ensure Australians have access to affordable and reliable medications. The Act applies to listed drugs and medicinal preparations as declared by the Minister, excluding some preparations with additives. The Minister has the authority to determine the form, administration, and brand of pharmaceutical items under the PBS. The determinations made by the Minister, including the maximum prices for sales to approved pharmacists, the claimed prices by responsible persons, and the special patient contribution, are governed by this legislative instrument. This Act applies nationally and extends to all entities involved in the PBS, including drug manufacturers and suppliers. It is important to note that the Act allows for the Minister to determine prices and contributions through legislative instruments, thereby extending its reach and application. There are no explicit exclusions noted in this particular determination, though general exclusions under the broader Act may apply. This instrument commenced on 1 November 2007, amending the previous determination PB 51 of 2007, and it specifically alters the relevant quantities, determined prices, and claimed prices for certain medications, such as Clindamycin Capsule 150 mg (as hydrochloride), as detailed in Schedule 1.
Key Provisions
The primary sections of the National Health Act 1953 Amendment Determination (F2007L03945) pertain to the regulation and determination of prices for pharmaceutical items listed under the Pharmaceutical Benefits Scheme (PBS). Under section 85B(1), the Minister can intervene if a price agreement cannot be reached between the Minister and the responsible person for a specific brand of pharmaceutical item. The Minister may then determine the appropriate maximum price for the pharmaceutical item by legislative instrument (subsection 85B(2)), and the price claimed by the responsible person (subsection 85B(3)). Additionally, subsection 85B(4) defines the special patient contribution as the difference between the Commonwealth price, based on the determined amount, and what would be the Commonwealth price based on the amount determined by the responsible person. Furthermore, the Minister can specify the circumstances under which the Commonwealth will pay the special patient contribution for the pharmaceutical item (subsection 85B(5)).
The obligations imposed by the Act on the relevant parties include ensuring that the Minister and responsible persons engage in good faith negotiations to reach a price agreement. If an agreement cannot be reached, the responsible person must provide necessary information to enable the Minister to make a determination. The Minister, in turn, must consider this information and make a determination in accordance with the legislative instrument. Additionally, the responsible person must comply with the determined prices and any subsequent obligations, such as contributing to the special patient contribution if applicable.
There are no explicit offences, penalties, or civil/criminal consequences stated within the text for breaches of the Act. However, failure to comply with the determinations made by the Minister could result in legal actions being taken to enforce the provisions. Additionally, the responsible person may face reputational damage and potential financial penalties if they do not adhere to the determined prices and obligations. The consequences of non-compliance would depend on the specific circumstances and could potentially lead to disputes or litigation between the parties involved.