National Health Act 1953 - Amendment determination under section 85B - price determinations and special patient contributions (No. PB 90 of 2009)

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Legislation au F2009L03537 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

INSTRUMENT NUMBER PB 90 OF 2009

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 118 of 2008 which came into effect on 1 December 2008.  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 2009, was made on 3 September 2009.

 

 

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 this instrument commences on 1 October 2009.

Paragraph 2: provides that Schedule 1 amends PB 118 of 2008.

Schedule 1: provides for the following amendments:

 

SCHEDULE 1

Deletion of Listed Drug

Gliclazide

 

Overview

The National Health Act 1953, amended by the National Health Amendment (Pharmaceutical Benefits Scheme) Determination 2009 (F2009L03537), aims to address pricing disputes between the Commonwealth and pharmaceutical companies under the Pharmaceutical Benefits Scheme (PBS). The Act, enacted by the Australian Parliament, provides the legislative basis for the PBS, ensuring reliable, timely, and affordable access to medicines for Australians. The 2009 amendment, made under section 85B of the Act, addresses a gap where the Minister and responsible persons for pharmaceutical brands could not reach a price agreement for certain medications. The policy objective of the amendment is to provide a legislative mechanism for the Minister to determine the price of pharmaceutical items in the event of a pricing dispute, thereby ensuring continued access to essential medications without undue financial burden on patients. This legislative instrument was introduced to implement the recommendations of the Pharmaceutical Benefits Advisory Committee and came into effect on 1 October 2009.

Scope and Application

This legislative instrument amends the Pharmaceutical Benefits Scheme (PBS) under the National Health Act 1953. It specifically targets the price determination processes for pharmaceutical items when the Minister and the responsible person for a brand of pharmaceutical item cannot reach a price agreement. The Act applies to the Commonwealth, the responsible persons for pharmaceutical brands, and the pharmaceutical industry involved in the PBS. It has a national jurisdictional reach as it pertains to the Commonwealth's role in providing reliable, timely, and affordable access to a wide range of medicines for all Australians. The instrument allows the Minister to determine the maximum price for sales of a pharmaceutical item and the price claimed by the responsible person, as well as the special patient contribution, through legislative instruments. The amendments, effective from 1 October 2009, address specific pharmaceutical items, such as Gliclazide, by deleting it from the list of drugs subject to the Act.

Key Provisions

The main operative sections of the National Health Act 1953 Amendment Determination under section 85B involve the Pharmaceutical Benefits Scheme (PBS) and the processes for determining prices of pharmaceutical items when the Minister and the responsible person for a brand of pharmaceutical item cannot agree on the appropriate maximum price (subsection 85B(1)). Specifically, section 85B(2) allows the Minister to determine the appropriated maximum price for sales of the brand of pharmaceutical item to pharmacists, while section 85B(3) allows the Minister to determine the price claimed by the responsible person for sales of the brand of pharmaceutical item to approved pharmacists. These determinations govern the price of pharmaceutical items listed under the PBS, ensuring that they remain affordable and accessible to Australians. The Act imposes several obligations on parties and entities it governs. For instance, under section 85, the Minister must declare drugs and medicinal preparations to be listed drugs and determine the form, manner of administration, and brand of pharmaceutical items. Furthermore, the Minister must ensure that the pharmaceutical benefit is provided in accordance with the Act. The responsible person for a brand of pharmaceutical item has the obligation to engage in price negotiations with the Minister under section 85AD and to adhere to any price determinations made by the Minister under section 85B. Breaches of the Act may result in various penalties and consequences. For instance, failure to comply with the provisions governing the PBS may result in the pharmaceutical item not being listed or being subject to certain pricing or reimbursement conditions. In cases where there is a failure to adhere to price determinations under section 85B, the Minister may impose fines or other penalties as prescribed by the regulations. Additionally, any person who engages in misleading or deceptive conduct in relation to the PBS may face civil or criminal penalties, including fines and imprisonment, under other provisions of the National Health Act 1953 or other relevant legislation. The specific penalties for such breaches are not detailed in the Act but are subject to the relevant laws and regulations.

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