National Health Act 1953 - Determination under subsection 85AB(1) (No. PB 66 of 2007)

Administered by Department of Health, Disability and Ageing

Legislation au F2007L02636 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

 

INSTRUMENT NUMBER PB 66 OF 2007

 

 

NATIONAL HEALTH ACT 1953

 

 

DETERMINATION UNDER SUBSECTIONS 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 (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.    F2 Part T contains multiple brand medicines subject to high levels of price competition on 1 October 2006, plus single brand medicines which belong to a therapeutic group which contains at least one multiple brand medicine subject to high levels of competition.  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 and not determined to be in F2 under section 85AB.  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 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 immediately 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 determines under subsection 85AB(1) that the listed drugs “Amino acid synthetic formula supplemented with long chain polyunsaturated fatty acids” and “Cetuximab”, which satisfy the criteria in subsection 85AB(4),  are on F1.

 

A provision-by-provision description of the instrument is contained in the Attachment.

 

The instrument is expressed to commence on 1 September 2007, was made on
14 August 2007.

 

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 the instrument commences on 1 September 2001.

 

Paragraph 2:  Determines that “Amino acid synthetic formula supplemented with long chain                                   polyunsaturated fatty acids” is on F1.

       

        Determines that “Cetuximab” is on F1.

 

 

 

 

 

 

 

 

 

Overview

The National Health Act 1953, enacted by the Australian Parliament, serves as the legislative foundation for the Pharmaceutical Benefits Scheme (PBS), ensuring that all Australians have reliable, timely, and affordable access to a broad range of medicines. The Act facilitates the provision of pharmaceutical benefits through the Commonwealth by outlining the criteria and mechanisms for including drugs in the PBS, as well as the conditions governing their administration and pricing. In particular, the Act allows the Minister to determine the specific forms and brands of listed drugs, thereby governing what constitutes a pharmaceutical benefit under the PBS. The National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007 introduced significant reforms to the PBS, including the creation of formularies (F1 and F2) to manage the pricing and supply of drugs. The policy objective of these reforms was to enhance the efficiency and affordability of the PBS, ensuring equitable access to essential medications.

Scope and Application

The National Health Act 1953, specifically under Part VII, governs the Pharmaceutical Benefits Scheme (PBS) which ensures all Australians have reliable, timely, and affordable access to a wide range of medicines. This legislation applies to drugs and medicinal preparations declared by the Minister as listed drugs under subsection 85(2), including certain extemporaneously-prepared medicinal preparations. The Minister, by legislative instrument, determines the form of these listed drugs, their manner of administration, and specific brands, which are governed by the Act except for certain extemporaneously-prepared pharmaceutical benefits. The Act also assigns listed drugs to formularies, specifically F1 for single brand drugs and F2 for drugs with multiple brands or those interchangeable with other multi-brand drugs, further divided into Part A and Part T based on price competition levels. Drugs on F2 are subject to statutory price reductions, price disclosure, and a guarantee of supply. This determination under subsection 85AB(1) classifies the listed drugs "Amino acid synthetic formula supplemented with long chain polyunsaturated fatty acids" and "Cetuximab" into F1, effective from 1 September 2007.

Key Provisions

The primary sections of this legislation (subsections 85AB(1), 85AB(4), 84AC, 84AD and 85AB) pertain to the classification of listed drugs under the Pharmaceutical Benefits Scheme (PBS) by assigning them to formularies F1 or F2. Under this Act, the Minister is empowered to determine by legislative instrument which listed drugs are to be assigned to F1 or F2. A drug can be placed on F1 if it meets the criteria in subsection 85AB(4), meaning 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 immediately before on F2. A drug may only be assigned to F2 if it does not satisfy the criteria for F1. This legislative instrument specifically determines that "Amino acid synthetic formula supplemented with long chain polyunsaturated fatty acids" and "Cetuximab" are on F1, as they meet the criteria in subsection 85AB(4). The obligations and requirements imposed by this Act on the parties or entities it governs include the need for pharmaceutical companies to comply with the classification of their listed drugs as either F1 or F2. Pharmaceutical companies must ensure that their drugs meet the criteria for the assigned formulary and provide necessary information to the Minister for determination. The Act also imposes obligations on the Minister to make determinations in accordance with the criteria set out in the Act and to ensure that the PBS operates effectively by providing reliable, timely, and affordable access to medicines for all Australians. The Act outlines various offences, penalties, or civil/criminal consequences for breaches. While the specific penalties are not stated in the text, breaches of the Act could potentially lead to civil or criminal penalties. The severity of the penalties would depend on the nature and extent of the breach, and could include fines or other sanctions. It is important for pharmaceutical companies and other parties governed by the Act to comply with its provisions to avoid any potential penalties or consequences. In summary, this legislation establishes the framework for the classification of listed drugs under the PBS, assigns specific drugs to formularies F1 or F2, and outlines the obligations and potential consequences for non-compliance. The Act aims to ensure that the PBS operates effectively and provides affordable access to medicines for all Australians.

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