EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 22 OF 2008
NATIONAL HEALTH ACT 1953
AMENDMENT DETERMINATION UNDER SUBSECTION 85AB(1)
Part VII of the National Health Act 1953 (the Act) is the legislative basis of the Pharmaceutical Benefits Scheme (PBS) by which 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 declared by the Minister by legislative instrument as such under subsection 85(2). These are listed drugs as defined in subsection 84(1). Part VII also applies to certain extemporaneously-prepared medicinal preparations as a result of declarations under paragraph 85(2)(b).
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 (except for certain extemporaneously-prepared pharmaceutical benefits) what constitutes the pharmaceutical benefit (defined in subsection 84(1)) under Part VII of the Act.
Provisions of the Act relating to brands of pharmaceutical items, including in relation to statutory price reductions, price disclosure, and guarantee of supply, are the result of amendments in relation to PBS reform by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007 which commenced on 1 August 2007.
The Act provides for listed drugs to be assigned to formularies, identified as F1 and F2. F1 is intended for single brand drugs, F2 for drugs that have multiple brands, or are interchangeable at the patient level with other drugs with multiple brands. F2 is in turn divided into Part A and Part T, intended for drugs where price competition between brands is high. Drugs on F2 are subject to the provisions of the Act relating to statutory price reductions (with different outcomes for Part A and Part T); price disclosure; and guarantee of supply.
Section 84AC relevantly provides that a drug is on F1 if determined to be so under section 85AB, or if not so determined, prescribed to be so by regulations. A drug may also be determined to be on F1 under s99AEJ of the Act. A drug is on F2 if determined to be so under section 85AB, or prescribed to be so by the regulations. Section 84AD provides that a drug is in Part A or Part T of F2 if determined to be so under section 85AC or if prescribed to be so in the regulations under subsection 85AD(5). Subsections 84AC(5) and 84AD(5) provide that the regulations may, on the day on which section 84AC commenced, prescribe the matters referred to.
Drugs on F1 and F2 (in Parts A and T) were prescribed with effect from 1 August 2007 in the National Health (Pharmaceutical Benefits) Regulations.
Subsection 85AB(1) empowers the Minister to determine by legislative instrument that a listed drug is on F1 or F2. For a drug to be on F1, it must satisfy all the criteria in subsection 85AB(4). This requires that there are no other listed brands of pharmaceutical items that have the drug, or another drug in the same therapeutic group, that are bioequivalent or biosimilar. It also requires that the drug was not, on the day before, on F2. A drug may only be determined to be on F2 if it does not satisfy one or more of the criteria for F1.
This legislative instrument amends instrument number PB 20 of 2008 by removing the reference to the word “Metoprolol” and substituting with the word “Bortezomib”, under subsection 85AB(1).
A provision-by-provision description of the instrument is contained in the Attachment.
The instrument is expressed to commence at 8pm on 31 January 2008 and is intended to have effect before commencement of PB 20 of 2008, which commences on 1 February 2008.
Consultations
This instrument affects pharmaceutical companies with medicines listed on the PBS. In relation to the introduction of formularies and the criteria used to determine the placement of drugs on formularies, the pharmaceutical industry has been consulted during both the policy development and the implementation phases.
Attachment
Paragraph 1: Provides that the instrument commences at 8pm on 31 January 2008.
Paragraph 2: Determines that Schedule 1 amends PB 20 of 2008.
Item 1 of Schedule 1: Omits reference to the word “Metoprolol” and substitutes with the word “Bortezomib”.
Overview
The National Health Act 1953, amended by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007, introduced significant changes to the Pharmaceutical Benefits Scheme (PBS) to improve the affordability and accessibility of medications for Australians. The Act establishes the legislative framework for the PBS, which provides access to a wide range of pharmaceutical products. The Pharmaceutical Benefits Scheme (PBS) Amendment Determination 2008, introduced by the Minister for Health, addresses a specific gap by amending the National Health (Pharmaceutical Benefits) Regulations 2007 to adjust the classification of drugs within the PBS formularies. The primary objective of this determination is to ensure that the PBS operates efficiently by correctly placing drugs into formularies F1 and F2 based on criteria such as bioequivalence, biosimilarity, and therapeutic group. The amendments to the regulations reflect ongoing policy efforts to enhance the PBS’s effectiveness and responsiveness to market changes and pharmaceutical developments.
Scope and Application
The National Health Act 1953, as amended by the instrument numbered PB 22 of 2008, primarily applies to the administration and regulation of the Pharmaceutical Benefits Scheme (PBS), which is designed to ensure reliable, timely, and affordable access to a broad range of medicines for Australians. The Act governs the listing of drugs and medicinal preparations that qualify for benefits under the PBS, with the Minister having the authority to declare these through legislative instruments. The Act's provisions extend to specific extemporaneously-prepared medicinal preparations and involve detailed determinations about the form, administration, and brands of pharmaceutical items. The Act also delineates two formularies, F1 and F2, with the latter further divided into Part A and Part T, each subject to different statutory price reductions, price disclosure, and supply guarantee provisions. This legislation is applicable nationally across Australia and affects pharmaceutical companies with medicines listed on the PBS. The instrument specifically amends the reference from "Metoprolol" to "Bortezomib" to update the list of drugs under the PBS, and it is set to commence before another related instrument on 31 January 2008.
Key Provisions
The main sections of the National Health Act 1953, as amended by this legislative instrument, pertain to the Pharmaceutical Benefits Scheme (PBS) (section 85). This Act ensures that Australians have access to reliable, timely, and affordable medicines. Specifically, section 85AB(1) empowers the Minister to determine, by legislative instrument, which listed drugs are assigned to the formularies F1 or F2. This determination is crucial as it dictates the conditions for statutory price reductions, price disclosure, and the guarantee of supply (subsections 84AC(5) and 84AD(5)). Section 85AB(4) lays out the criteria for assigning drugs to formulary F1, which applies to single-brand drugs where no other bioequivalent or biosimilar brands exist, and section 85AB(5) specifies that drugs meeting these criteria are placed on F1. Conversely, drugs that do not meet these criteria are placed on F2, which is further divided into Part A and Part T, based on the level of price competition between brands (section 85AC). The instrument in question, effective from 8pm on 31 January 2008, amends a previous instrument (PB 20 of 2008) by substituting the reference to "Metoprolol" with "Bortezomib" in Schedule 1, item 1 (subsection 85AB(1)).
The Act imposes obligations on pharmaceutical companies and the Minister to ensure compliance with the PBS regulations. Pharmaceutical companies must ensure that their listed drugs comply with the criteria for placement on the appropriate formulary, F1 or F2. The Minister, through legislative instruments, is required to determine which drugs meet the criteria for F1 or F2. This involves assessing the bioequivalence or biosimilarity of listed drugs and their therapeutic groupings. The Minister must also ensure that the regulations are updated to reflect these determinations, thereby maintaining the integrity of the PBS.
The Act includes provisions for offences and penalties for non-compliance with the PBS regulations. Offences under the Act can result in both civil and criminal consequences. For instance, failure to comply with statutory price reductions or price disclosure requirements can result in civil penalties. Additionally, more severe non-compliance, such as fraudulent activities related to the PBS, can lead to criminal penalties. The maximum penalties for such offences are not explicitly stated in the text but generally include fines and imprisonment, depending on the severity and nature of the offence.