EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 2 OF 2010
NATIONAL HEALTH ACT 1953
AMENDMENT DETERMINATION UNDER SUBSECTIONS 85AB(1) AND 85AC(1)
Summary
This instrument amends the principal instrument, PB 95 of 2007, which sets out drugs that are on F1 and F2 and are in Part A of F2 for the purposes of the Pharmaceutical Benefits Scheme (PBS). It adds two drugs to F2A, overriding the prescription of those drugs on F1 in the National Health (Pharmaceutical Benefits) Regulations 1960 (the Regulations).
Background
Part VII of the National Health Act 1953 (the Act) is the legislative basis of the 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)), for example a 70 milligram tablet;
- the manner of administration of the form of the listed drug so determined (subsection 85(5)) for example, oral; 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.
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 in a therapeutic group with other drugs with multiple brands. F2 is in turn divided into Part A and Part T – Part T is 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. Under subsection 84AC(2), if there is a determination that a drug is on F2, then it overrides any prescription in the Regulations that the drug is in F1. 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 prescribe the matters referred to for the day on which the section 84AC commenced.
Drugs on F1 and F2 (in Parts A and T) were prescribed with effect from 1 August 2007 in the 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 be determined to be on F2 if it does not satisfy one or more of the criteria for F1.
Subsection 85AC(1) empowers the Minister, where a drug has been determined to be on F2, to determine by legislative instrument that the drug is in Part A or Part T of F2. A drug can only be determined to be in Part A if it does not satisfy either of the criteria for Part T. The criteria for Part T, as set out in subsection 85AC(4), are that the drug is in the same therapeutic group as a drug in Part T, or was already in Part T before the new determination.
Under subsection 84AG(1), the Minister may determine one or more therapeutic groups and that 2 or more listed drugs are in the same therapeutic group. Single brand drugs that have been prescribed or determined to be on F1 will move to F2 if those single brand drugs become part of a therapeutic group that includes a drug that is on F2 (see subsection 85AB(4)(b)). The amendments to the Regulations that came into effect on 1 August 2007 prescribed risedronic acid and tiludronic acid to be on F1 and alendronic acid to be on F2A.
This instrument amends instrument number PB 95 of 2007 by determining under section 85AB(1) that the listed drugs risedronic acid and tiludronic acid are on F2. This instrument also determines, under subsection 85AC(1), that risedronic acid and tiludronic acid are in Part A of F2. These determinations are made to comply with:
- subsection 85AB(4)(b) - these drugs may no longer be on F1, as a determination has been made that risedronic acid and tiludronic acid are in a therapeutic group with an F2 drug (alendronic acid); and
- subsection 85AC(4) - these drugs do not fit the criteria for Part T of F2 because they are not in a therapeutic group with an F2T drug, and were not on F2T on the day before this instrument was made.
A provision-by-provision description of the instrument is contained in the Attachment.
The instrument is expressed to commence on the day after registration.
Consultations
This instrument affects pharmaceutical companies with medicines listed on the PBS. The Pharmaceutical Benefits Advisory Committee (PBAC) was consulted in relation to matters relevant to the inclusion of risedronic acid and tiludronic acid (single brand F1 drugs) in a therapeutic group with alendronic acid (multiple brand F2A drug). Two-thirds of the PBAC membership is from the following interests or professions: consumers, health economists, practising community pharmacists, general practitioners, clinical pharmacologists and medical specialists. The Department has also consulted with the companies that have brands containing risedronic acid and tiludronic acid concerning the move to the F2 formulary, including by letter and where requested, a meeting. Comments relevant to the decision about inclusion of the single brand drugs in a therapeutic group with the F2 drug were also received from other persons and bodies and considered.
Attachment
Paragraph 1: Provides that this instrument commences on the day after registration.
Paragraph 2: Determines that Schedule 1 amends PB 95 of 2007, which determines drugs on F1 and F2 and in Part A of F2.
Schedule 1: Adds the listed drugs risedonic acid and tiludronic acid to those determined to be on F2 and in Part A of F2.