EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 39 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 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 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 (the amending Act), 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 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.
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 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 the criteria in subsection 85AB(4). This requires that there are no 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 instrument amends instrument number PB 87 of 2007 by adding the listed drugs “Benzathine benzylpenicillin”, “Paliperidone” and “Sitaxentan” to F1.
A provision-by-provision description of the instrument is contained in the Attachment.
The instrument is expressed to commence on 1 April 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 implementation phases.
Attachment
Paragraph 1: Provides that this instrument commences on 1 April 2008.
Paragraph 2: Determines that Schedule 1 amends PB 87 of 2007.
Schedule 1: Adds the listed drugs “Benzathine benzylpenicillin”, “Paliperidone”
and “Sitaxentan” to F1.
Overview
The National Health Act 1953 was enacted to provide for the administration of the Pharmaceutical Benefits Scheme (PBS), ensuring Australians have reliable, timely, and affordable access to a wide range of medicines. The Act, overseen by the Commonwealth, allows the Minister to determine which drugs and medicinal preparations are included in the PBS and the specific forms and brands of those drugs through legislative instruments. The Pharmaceutical Benefits Scheme was reformed by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007, which introduced formularies F1 and F2, with F1 designated for single-brand drugs and F2 for those with multiple brands or interchangeable drugs, further divided into Parts A and T based on price competition. This amendment determination under subsection 85AB(1) adds the listed drugs "Benzathine benzylpenicillin", "Paliperidone", and "Sitaxentan" to F1, effective from 1 April 2008, following consultations with the pharmaceutical industry during the policy development and implementation phases.
Scope and Application
The National Health Act 1953, specifically Part VII, is the legislative foundation for the Pharmaceutical Benefits Scheme (PBS) under which the Commonwealth provides access to a wide range of medicines. This Act applies to drugs and medicinal preparations declared by the Minister as listed drugs, which are defined under subsection 84(1) and can include extemporaneously-prepared preparations. The Act governs the form and manner of administration of these drugs, and determines the brands of pharmaceutical items that have listed drugs. Pharmaceutical benefits are provided for these drugs in accordance with the Act, and the Act also specifies provisions for statutory price reductions, price disclosure, and guarantee of supply, particularly for drugs assigned to formularies F1 and F2, which are divided further into Parts A and T. This Act applies nationwide and affects pharmaceutical companies with medicines listed on the PBS. The instrument in question, which adds specific drugs to formulary F1, commenced on 1 April 2008 and was developed with consultation from the pharmaceutical industry.
Key Provisions
The main operative sections of this legislation involve the amendment of instrument number PB 87 of 2007 by adding three listed drugs—Benzathine benzylpenicillin, Paliperidone, and Sitaxentan—to F1, a formulary under the Pharmaceutical Benefits Scheme (PBS) as defined in subsection 85AB(4) of the National Health Act 1953 (the Act). This amendment is executed by legislative instrument under the authority provided by subsection 85(1) of the Act, which mandates that pharmaceutical benefits are to be provided by the Commonwealth in accordance with Part VII of the Act. Drugs that are listed under the Act are declared by the Minister through legislative instruments as specified in subsection 85(2). This amendment, which adds the three drugs to F1, is set to commence on 1 April 2008.
The obligations and requirements imposed by the Act on the parties it governs, particularly pharmaceutical companies, include ensuring that drugs listed on the PBS meet the criteria for their placement on the relevant formularies. Specifically, for a drug to be on F1, it must satisfy the criteria outlined in subsection 85AB(4), which necessitates that there are no listed brands of pharmaceutical items that have the drug, or another drug in the same therapeutic group, that are bioequivalent or biosimilar. Additionally, the drug must not have been on F2 on the day before this amendment. For drugs to be on F2, they must not satisfy the criteria for F1. The Act also requires that the Minister determines the form or manner of administration of listed drugs by legislative instrument, as outlined in subsections 85(3) and 85(5) of the Act. These provisions ensure that the PBS operates efficiently and effectively, providing reliable, timely, and affordable access to medicines for all Australians.
Breaches of the Act or its regulations may result in various civil and criminal consequences. While the specific penalties are not detailed in the provided text, under the general provisions of the National Health Act 1953, penalties for non-compliance can include fines and, in serious cases, imprisonment. For example, under section 127 of the Act, a person who contravenes a provision of the Act or its regulations may be liable to a penalty of up to $132,000 for individuals and $660,000 for bodies corporate, depending on the severity of the offence. Additionally, individuals can be sentenced to imprisonment for up to five years. These penalties serve as a deterrent to non-compliance and ensure adherence to the legislative framework governing the PBS.
The legislative instrument also highlights the importance of consultation with the pharmaceutical industry during both the policy development and implementation phases. This ensures that any changes to the PBS are well-considered and that the industry can adapt to new requirements. The instrument's commencement on 1 April 2008 aligns with the broader reforms introduced by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007, which aimed to enhance the efficiency and affordability of the PBS by introducing formularies and criteria for drug placement. This amendment, by adding three new drugs to F1, is a continuation of those reforms, ensuring that the PBS remains responsive to the needs of Australians.