EXPLANATORY STATEMENT
National Health Act 1953
National Health (Listed drugs on F1 or F2) Amendment Determination 2020 (No. 3)
PB 26 of 2020
Authority
This Instrument, made under subsection 85AB(1) of the National Health Act 1953 (the Act), amends the National Health (Listed drugs on F1 or F2) Determination 2010 (PB 93 of 2010) (the Principal Determination).
The Principal Determination provides for the allocation of drugs to the F1 and F2 formularies of the Pharmaceutical Benefits Scheme (PBS).
Purpose
The Act provides that listed drugs may be assigned to formularies identified as F1 and F2.
F1 is intended for single brand drugs and F2 for drugs that have multiple brands, or are in a therapeutic group with other drugs with multiple brands. Drugs on F2 are subject to the provisions of the Act relating to first new brand statutory price reductions, price disclosure, and guarantee of supply.
Section 84AC of the Act provides that a drug is on F1 or F2 if there is a determination in force under section 85AB that the drug is on F1 or F2.
Subsection 85AB(1) of the Act empowers the Minister (or delegate) 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 that are bioequivalent or biosimilar, and no listed brands of pharmaceutical items that have another drug in the same therapeutic group as the first drug that are bioequivalent or biosimilar. It also requires that the drug was not on F2 the day before the determination comes into effect. A drug may only be determined to be on F2 if it does not satisfy one or more of the criteria for F1 (subsection 85AB(3)).
When subsection 85AB(5) of the Act applies, which relates to listed drugs with a single brand combination item on the PBS, the listed drug is not placed on F1 or F2, but on the administrative combination drug list.
This Instrument (the Amending Determination) amends the Principal Determination by adding to F1 two new drugs binimetinib and encorafenib. It also moves one currently listed drug, mercaptopurine from F1 to F2 in addition to moving one currently listed drug, olmesartan with amlodipine and hydrochlorothiazide from the single brand Combination Drug List (CDL) to F2. In addition, it also removes two drugs from F1, coal tar and milk powder lactose intolerance formula and one drug from F2, tinidazole as these three drugs are no longer PBS listed.
Variation and revocation
Unless there is an express power to revoke or vary PB 93 of 2010 cited in this Instrument and explanatory statement, subsection 33(3) of the Acts Interpretation Act 1901 is relied upon to revoke or vary PB 93 of 2010.
Consultation
The Amending Determination affects pharmaceutical companies with new medicines listing on the PBS. Binimetinib and encorafenib both meet the criteria for F1 set out in section 85AB(4) of the Act. Mercaptopurine and olmesartan with amlodipine and hydrochlorothiazide no longer meet the criteria for F1 and CDL so are required to be moved to F2. Coal tar, milk powder lactose intolerance formula and tinidazole are being removed from the PBS at the request of the pharmaceutical companies. Before the drugs were listed and allocated to formularies, there were detailed consultations about the drugs with the responsible persons, and a recommendation was received from the Pharmaceutical Benefits Advisory Committee (PBAC). Any PBAC recommendation is made following receipt of submissions by affected pharmaceutical companies. 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 Amending Determination Instrument commences on 1 April 2020.
This Instrument constitutes a legislative instrument for the purpose of the
Legislation Act 2003.
Overview
The National Health (Listed drugs on F1 or F2) Amendment Determination 2020 (No. 3), enacted under subsection 85AB(1) of the National Health Act 1953, amends the National Health (Listed drugs on F1 or F2) Determination 2010 to adjust the allocation of drugs to the F1 and F2 formularies of the Pharmaceutical Benefits Scheme (PBS). This Act was introduced to address the need to regularly update the formulary allocations to ensure that drugs are appropriately categorised according to their brand status and therapeutic groupings. The purpose of the Act is to enable the Minister for Health to assign drugs to F1 (for single brand drugs) or F2 (for drugs with multiple brands or in a therapeutic group with other multiple brand drugs) under the PBS, thereby facilitating better management and pricing of pharmaceutical products. The policy objective is to ensure that drugs are placed in the correct formulary to support equitable access to medications while managing costs effectively. The determination process involves consultation with the Pharmaceutical Benefits Advisory Committee and relevant stakeholders to ensure that decisions are evidence-based and consider the interests of all parties involved.
Scope and Application
The National Health (Listed drugs on F1 or F2) Amendment Determination 2020 (No. 3) amends the National Health (Listed drugs on F1 or F2) Determination 2010 under the National Health Act 1953. This Act governs the Pharmaceutical Benefits Scheme (PBS) and the allocation of drugs to the F1 and F2 formularies, with F1 being for single brand drugs and F2 for drugs with multiple brands or in therapeutic groups with other multiple brand drugs. The Amending Determination affects pharmaceutical companies with new medicines listing on the PBS by adding binimetinib and encorafenib to F1, moving mercaptopurine from F1 to F2, and moving olmesartan with amlodipine and hydrochlorothiazide from the Combination Drug List (CDL) to F2, while also removing coal tar, milk powder lactose intolerance formula, and tinidazole from F1 and F2 due to their removal from the PBS. The geographic and jurisdictional reach of this Act is national, applying to all entities and persons involved in the PBS across Australia. The Act extends its application through subordinate instruments, specifically the Amending Determination, which constitutes a legislative instrument under the Legislation Act 2003.
Key Provisions
The main operative sections of the National Health (Listed drugs on F1 or F2) Amendment Determination 2020 (No. 3) are contained in subsections 85AB(1), (3), (4) and (5) of the National Health Act 1953 (the Act). Section 85AB(1) provides the authority for the Minister to amend the National Health (Listed drugs on F1 or F2) Determination 2010 (Principal Determination) by legislative instrument, thereby altering the allocation of listed drugs to the F1 and F2 formularies of the Pharmaceutical Benefits Scheme (PBS). Under subsection 85AB(3), a drug can only be placed on F2 if it does not meet the criteria for F1, which are specified in subsection 85AB(4). Subsection 85AB(5) provides for the placement of listed drugs with a single brand combination item on the PBS on the administrative combination drug list, rather than on F1 or F2.
The obligations and requirements imposed by the Act on the parties or entities it governs include the necessity for listed drugs to be assigned to the appropriate formulary based on the criteria set out in the Act. The Act also mandates that pharmaceutical companies and other relevant parties consult with the Pharmaceutical Benefits Advisory Committee (PBAC) and follow the PBAC's recommendations when listing new drugs on the PBS. The PBAC is composed of members with expertise in various areas such as consumers, health economists, practising community pharmacists, general practitioners, clinical pharmacologists and medical specialists. This ensures that the recommendations made by the PBAC are well-informed and consider the interests of all relevant parties. The Act also requires that any changes to the allocation of drugs to the F1 and F2 formularies be made by legislative instrument, as provided for in section 85AB(1) of the Act.
The Amending Determination carries potential consequences for those who fail to comply with the provisions of the Act. Offences, penalties, or civil and criminal consequences may be imposed for breach of the Act, depending on the nature and severity of the breach. However, the specific penalties for non-compliance with the Act are not outlined in the explanatory statement provided for the Amending Determination. It is advisable for parties and entities governed by the Act to ensure strict compliance with its provisions to avoid any potential legal consequences.