EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 78 OF 2009
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 “Poly-l-lactic acid”, “Silver sulfadiazine” and “Sodium bicarbonate” to F1.
A provision-by-provision description of the instrument is contained in the Attachment.
The instrument is expressed to commence on 1 September 2009.
Consultations
This instrument affects pharmaceutical companies with medicines listed on the PBS. Consultation has occurred through a company submission to the Therapeutic Goods Administration and the Pharmaceutical Benefits Advisory Committee for a drug to be listed on the PBS. When drugs are listed on the PBS each drug is allocated into a formulary, F1, F2A or F2T from the recommendation of the PBAC.
Attachment
Paragraph 1: Provides that this instrument commences on 1 September 2009.
Paragraph 2: Determines that Schedule 1 amends PB 87 of 2007.
Schedule 1: Adds the listed drugs “Poly-l-lactic acid”, “Silver sulfadiazine” and “Sodium bicarbonate” to F1.
Overview
The National Health Act 1953, as amended, governs the Pharmaceutical Benefits Scheme (PBS) which ensures affordable access to medicines for all Australians. The Act addresses the need for regulating and providing access to a wide range of pharmaceutical benefits. This legislative instrument, issued under subsection 85AB(1) and commencing on 1 September 2009, was enacted by the relevant legislature to further refine the PBS. The policy objective is to enhance the affordability and accessibility of medications by categorising listed drugs into formularies F1 and F2, with specific provisions for statutory price reductions, price disclosure, and supply guarantees. This amendment specifically adds the listed drugs "Poly-l-lactic acid", "Silver sulfadiazine", and "Sodium bicarbonate" to formulary F1, thereby influencing the market dynamics and availability of these medications within the PBS framework.
Scope and Application
The National Health Act 1953, specifically Part VII, establishes the Pharmaceutical Benefits Scheme (PBS) to ensure Australians have access to affordable medicines. This Act applies to pharmaceutical benefits provided by the Commonwealth, including drugs declared by the Minister and listed drugs defined in subsection 84(1). The Act applies to both Commonwealth and state jurisdictions, governing the provision of pharmaceutical benefits to the entire nation. The Act also allows the Minister to determine the form and manner of administration of listed drugs, as well as their brands, through legislative instruments. These provisions, along with amendments related to PBS reform, govern the statutory price reductions, price disclosure, and supply guarantees for drugs assigned to formularies F1 and F2. Drugs on F1 must meet specific criteria, such as having no listed brands that are bioequivalent or biosimilar and not previously being on F2. F2 is further divided into Part A and Part T, which are subject to different provisions regarding price reductions and competition. This instrument amends a previous legislative instrument by adding three listed drugs—“Poly-l-lactic acid”, “Silver sulfadiazine”, and “Sodium bicarbonate”—to F1. The instrument is effective from 1 September 2009 and involves consultation with pharmaceutical companies through submissions to the Therapeutic Goods Administration and the Pharmaceutical Benefits Advisory Committee.
Key Provisions
The key operative sections of the legislation concern the addition of certain drugs to the formularies under the Pharmaceutical Benefits Scheme (PBS), as outlined in the National Health Act 1953. Specifically, section 85AB(1) allows the Minister to declare drugs and medicinal preparations as part of the PBS, while sections 85(2) and 85(3) detail how drugs are declared and the form they take. Section 85AB(4) sets the criteria for assigning drugs to formularies F1 or F2, with further subdivisions into F2A and F2T. The amendment determination under subsection 85AB(1) adds "Poly-l-lactic acid", "Silver sulfadiazine", and "Sodium bicarbonate" to F1. This legislative instrument, commencing on 1 September 2009, amends instrument number PB 87 of 2007 by including these drugs in the PBS formularies.
The obligations imposed by the Act on the parties it governs include the requirement for the Minister to determine the form and manner of administration of listed drugs, as well as their assignment to formularies. Pharmaceutical companies must comply with these determinations, ensuring that their drugs meet the criteria for inclusion in the PBS and are appropriately listed in the formularies. The Act also mandates that drugs on F1 and F2 be subject to statutory price reductions, price disclosure, and a guarantee of supply, as outlined in section 84AC and 84AD. These requirements ensure that the PBS provides reliable and affordable access to medicines for all Australians.
The legislation imposes specific consequences for breaches of its provisions. While the Act does not explicitly outline offences or penalties within the provided text, the general framework of the National Health Act 1953 suggests that non-compliance could result in administrative penalties or legal action. For instance, failure to adhere to the statutory price reductions or guarantee of supply could lead to civil consequences, including fines or other remedial actions. Additionally, if pharmaceutical companies do not comply with the Minister's determinations regarding drug forms and formularies, they may face regulatory scrutiny and potential enforcement actions. The exact penalties are not detailed in the provided text but would typically align with the broader regulatory and legal framework governing the National Health Act 1953.