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National Health Act 1953 - Determination under subsection 85B(1) (No. PB 27 of 2006)

National Health Act 1953 - Determination under subsection 85B(1) (No. PB 27 of 2006)

Administered by Department of Health, Disability and Ageing

Legislation au F2006L01871 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

NATIONAL HEALTH ACT 1953

DETERMINATION UNDER SUBSECTION 85B(1)

NO. PB 27 OF 2006

Purpose and operation

The purpose of the Australian Pharmaceutical Benefits Scheme (PBS) is to provide timely, reliable and affordable access for the Australian community to necessary and cost-effective medicines.

2. The PBS is regulated by Part VII of the National Health Act 1953 (the Act), which provides for the supply of listed drugs and medicinal preparations as pharmaceutical benefits.

3. “Pharmaceutical benefit” is defined under subsection 84(1) of the Act as a drug or medicinal preparation in relation to which, by virtue of section 85 of the Act, Part VII of the Act applies.

4. Subsection 85B(1) of the Act enables the Minister to determine those pharmaceutical benefits for which there exists a price difference between what the Government is prepared to subsidise and that required by the manufacturer, and to determine in respect of each of those benefits the price to pharmacist which is to be used as a basis for reimbursement and the price to pharmacist sought by the manufacturer. Section 85B is used for special patient contribution items, for the therapeutic group premium policy and for the brand premium policy.

5. The determination sets out the conditions under which subsection 85B(1) applies. The Schedule to the determination lists those pharmaceutical benefits to which subsection 85B(1) applies, the form (strength, type, size etc.), the brand, the pack size, the price to pharmacist that the Government is prepared to pay and the price to pharmacist that the manufacturer requires.

6. The determination made under section 85B(1) of the Act on 24 March 2006 with effect from 1 April 2006 (No. PB 17 of 2006) is repealed and substituted with this determination.

7. This determination is remade to give effect, as from 1 July 2006, to changes in brand premiums, therapeutic group premiums and special patient contributions resulting from the new (reduced) wholesale markups under the Fourth Community Pharmacy Agreement. Clause 14.2 of the Agreement provides for a reduced wholesale markup of 7.5 per cent (equivalent to 7.0 per cent wholesale margin) on the ex-manufacturer’s price of pharmaceutical benefits medicines, and the introduction of a cap of $69.94 for medicines priced over $930.06 (ex-manufacturer).

8. The reduced wholesale markups have resulted in decreases in the prices which the Government is prepared to subsidise, together with decreases in the prices required by manufacturers. The effect of these price decreases care detailed in the attached summary of changes.

Consultations

9. The Fourth Community Pharmacy Agreement (“the Fourth Agreement”) between the Commonwealth and the Pharmacy Guild of Australia, was signed on 16 November 2005 and is due to expire on 30 June 2010. The Pharmacy Guild of Australia represents a majority of approved pharmacists in Australia.

10. The Pharmaceutical Benefits Advisory Committee (PBAC) is the independent expert body, established by section 100A of the Act, which makes recommendations to the Minister for Health and Ageing about which drugs and medicinal preparations should be available as pharmaceutical benefits. Under subsection 101(4) of the Act, a drug or medicinal preparation may not be declared to be a drug or medicinal preparation to which Part VII of the Act applies unless the PBAC has recommended that it be so declared. When recommending a medicine be listed on the PBS, the PBAC takes into account the medical conditions for which the medicine has been approved for use in Australia, its clinical effectiveness, safety and cost-effectiveness compared with other treatments.

11. The determination gives effect to recommendations made by the PBAC. PBAC members are selected from consumers, health economists, practising community pharmacists, general practitioners, clinical pharmacologists and specialists, with at least one member selected from each of those interests or professions. Remaining members are persons whom the Minister is satisfied have qualifications and experience in a field relevant to the functions of the PBAC, and that would enable them to contribute meaningfully to the deliberations of the PBAC.

12. Details of the determination are set out in the Attachment.

13. This determination is a legislative instrument for the purposes of the

Legislative Instruments Act 2003.

14. The determination was made on 15 June 2006 and commenced on 1 July 2006.

SUMMARY OF CHANGES

LIST OF MANUFACTURERS

Additions

DT DermaTech Laboratories Pty Ltd

Brands with a decreased special patient contribution

All special patient contribution brands

Brands with a decreased therapeutic group premium

All therapeutic group premium brands

Brands with a decreased brand premium

All brand premium brands except for the following:

(a) brands with no change in brand premium:

Aluminium Hydroxide – Dried with Magnesium Hydroxide, tablet 200 mg-200 mg (PF)
Clomiphene Citrate, tablet 50 mg (SG)
Salbutamol Sulfate, pressurised inhalation equivalent to 100 micrograms salbutamol per dose, 200 doses (CFC-free formulation) (GK)
Simvastatin, tablet 40 mg (FR)

(b) brands with an increased brand premium:

Bromocriptine Mesylate, capsule equivalent to 10 mg bromocriptine (NV)

Hydrocortisone Acetate, cream 10 mg per g, 50 g (DT)

ATTACHMENT

Paragraph 1 provides that this determination commences on 1 July 2006.

Paragraph 2 provides that the determination under subsection 85B(1) of the National Health Act 1953 made on 24 March 2006 (No. PB 17 of 2006) is repealed.

Paragraph 3 defines the term “authority prescription”.

Paragraph 4 provides that the Schedule to the determination lists those brands of pharmaceutical benefits to which subsection 85B(1) apply.

Paragraph 5 provides that where a form and brand of pharmaceutical benefit is listed in Part A of the Schedule, Part B of the Schedule lists the quantity or number of units that is to be used for determining the manufacturer’s price for sales, and the price claimed by the manufacturer, for that form and brand.

Paragraph 6 provides that Part C of the Schedule lists the manufacturer’s price for sales for a particular form and brand that is listed in Part A of the Schedule.

Paragraph 7 provides that Part D of the Schedule lists the price claimed by the manufacturer for a particular form and brand that is listed in Part A of the Schedule.

Paragraph 8 lists those pharmaceutical benefits for which section 85B of the Act will not apply, if the prescription was written before 1 April 2006 and the pharmaceutical benefit is supplied before 1 October 2006.

Paragraph 9 lists the names of the manufacturers of those brands of pharmaceutical benefits, listed under “Brand” in Part A of the Schedule, to which this determination applies.

The Schedule to the determination lists those pharmaceutical benefits to which subsection 85B(1) applies, the form (strength, type, size etc.), the brand, the pack size, the price to pharmacist that the Government is prepared to pay and the price to pharmacist that the manufacturer requires.

Overview

The National Health Act 1953, as amended by the determination under subsection 85B(1) No. PB 27 of 2006, provides for the regulation of the Australian Pharmaceutical Benefits Scheme (PBS). The PBS aims to ensure timely, reliable, and affordable access to necessary and cost-effective medicines for the Australian community. This determination was enacted by the Minister for Health and Ageing to address price differences between what the Government is prepared to subsidise and the prices required by manufacturers for certain pharmaceutical benefits. It provides for the price to pharmacist that is to be used as a basis for reimbursement and the price sought by the manufacturer for these benefits. The determination gives effect to the new reduced wholesale markups under the Fourth Community Pharmacy Agreement, resulting in decreased prices for both the Government and manufacturers. The policy objective is to ensure the continued provision of affordable medicines to the Australian public, in line with the recommendations of the Pharmaceutical Benefits Advisory Committee.

Scope and Application

The Australian Pharmaceutical Benefits Scheme (PBS), as regulated by Part VII of the National Health Act 1953, is designed to ensure that Australians have timely, reliable, and affordable access to necessary and cost-effective medicines. This Act applies to all entities involved in the supply of listed drugs and medicinal preparations as pharmaceutical benefits, including pharmaceutical manufacturers, pharmacists, and the Government. The scope of the Act is national, affecting all states and territories within Australia. The Act's provisions can be extended or modified through subordinate instruments, such as the determination under subsection 85B(1), which specifies conditions for pharmaceutical benefits where there is a price difference between government subsidies and manufacturer prices. This determination, effective from 1 July 2006, was made to implement changes from the Fourth Community Pharmacy Agreement, including reduced wholesale markups and new pricing structures for brand, therapeutic group premiums, and special patient contributions. The determination also repeals and replaces previous pricing determinations, ensuring that the PBS remains responsive to market changes and agreements with stakeholders like the Pharmacy Guild of Australia.

Key Provisions

The main operative sections of this determination under subsection 85B(1) of the National Health Act 1953 (the Act) are pivotal in setting the framework for the Australian Pharmaceutical Benefits Scheme (PBS). Section 85B(1) of the Act enables the Minister to determine the pharmaceutical benefits that have price differences between what the government is prepared to subsidise and the price required by the manufacturer. This determination, effective from 1 July 2006, specifies the price to pharmacists which will be used as a basis for reimbursement, as well as the price sought by the manufacturer for various pharmaceutical benefits. The Schedule to this determination lists these pharmaceutical benefits, their respective forms, brands, pack sizes, the government's subsidised price, and the manufacturer's required price. The obligations imposed by this determination on the parties governed by it are substantial. Manufacturers of pharmaceutical benefits must comply with the prices listed in the Schedule, which reflect the reduced wholesale markups agreed upon in the Fourth Community Pharmacy Agreement. Pharmacists must adhere to the government-subsidised prices when dispensing medications, ensuring that patients receive the correct contributions as per the PBS. Additionally, the Pharmaceutical Benefits Advisory Committee (PBAC) plays a crucial role in recommending which drugs and medicinal preparations should be available as pharmaceutical benefits, ensuring that only those meeting clinical effectiveness, safety, and cost-effectiveness criteria are included. Failure to comply with the provisions of this determination can result in various consequences. While the Act does not explicitly outline penalties for non-compliance in this context, breaches of similar provisions elsewhere in the Act can lead to civil or criminal penalties. These penalties can include fines and, in severe cases, imprisonment. For instance, under section 109 of the Act, unauthorised supply of pharmaceutical benefits can result in penalties of up to $22,000 for individuals and $110,000 for bodies corporate. Similarly, under section 111, unauthorised acquisition of pharmaceutical benefits can attract penalties of up to $55,000 for individuals and $275,000 for bodies corporate. Therefore, it is crucial for all stakeholders, including manufacturers and pharmacists, to adhere to the prices and conditions specified in this determination to avoid potential legal repercussions.

Area of Law: Health Law; Pharmaceutical Law
Instrument: Legislative Instrument
Concepts: Definitions & Interpretation; Regulatory Standards; Enforcement Powers; Reporting & Disclosure Obligations; Compliance Obligations

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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