National Health (Originator Brand) Amendment Determination 2017 (No. 4) (PB 42 of 2017)

Administered by Department of Health, Disability and Ageing

Legislation au F2017L00632 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

 

National Health Act 1953

 

National Health (Originator Brand) Amendment Determination 2017 (No. 4)

 

PB 42 of 2017

Authority

This legislative instrument is made pursuant to subsection 99ADB(6B) of the National Health Act 1953 (the Act).

Purpose

This legislative instrument amends the National Health (Originator Brand) Determination 2015 (PB 100 of 2015) (the Principal Instrument) to determine the originator brand of a pharmaceutical item for three drugs new to the Pharmaceutical Benefits Scheme (PBS) F2 formulary on 1 June 2017.   

The Principal Instrument determined originator brands of pharmaceutical items that have a drug on the F2 formulary.  On meeting certain criteria, drugs move from the F1 formulary (see s 85AB of the Act), or the single brand Combination Drug List (CDL), to F2.  All drugs on F2 are subject to price disclosure.  The instrument is necessary to implement removal of originator brand data from price disclosure calculations (originator removal) in certain circumstances as set out in the National Health (Pharmaceutical Benefits) Regulations 2017 (the Regulations).  Originator removal will potentially increase price disclosure related price reductions because originator brands tend to maintain higher prices than other brands.

Amendments

An originator brand determination is set out in Schedule 1 of this amending instrument for three drugs that are moving from F1 and CDL to F2 (fluticasone, fluticasone with salmeterol and zonisamide).  Subsection 99ADB(6C) of the Act provides that when deciding whether to determine originator brands the Minister (or delegate) must have regard to whether the brand was on F1 or CDL when it was first determined as a brand of pharmaceutical item under subsection 85(6) of the Act. 

The main criteria used to decide to determine these brands as originators were that they were the listed brands of the drug when it was on F1 or CDL.

Basis for amendments

Subsection 33(3) of the Acts Interpretation Act 1901 is relied upon to vary or revoke the determination made under subsection 99ADB(6B) for the medicines affected by this amending instrument.

Consultation

The companies with a PBS listed brand of the drugs for which an originator brand has been determined were asked for comments in relation to the potential originator brand determination.  No comments were received.

This instrument commences on 1 June 2017. This instrument is a legislative instrument for the purposes of the Legislation Act 2003.


Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

National Health (Originator Brand) Amendment Determination 2017 (No. 4)

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

This legislative instrument amends the National Health (Originator Brand) Determination 2015 (PB 100 of 2015) (the Principal Instrument) to determine an originator brand of a pharmaceutical item for three drugs new to the Pharmaceutical Benefits Scheme (PBS) F2 formulary.

The instrument is necessary to implement removal of originator brand data for price disclosure calculations (originator removal) in certain circumstances as set out in the National Health (Pharmaceutical Benefits) Regulations 2017 (the Regulations).  Originator removal will potentially increase PBS price reductions as originator brands tend to maintain higher prices than other brands.  Originator removal means that the Government price would more closely reflect the prices at which generic brands of the medicine are being sold in the market, not the prices of all brands.

The PBS provides Australians with timely, reliable and affordable access to necessary and
cost-effective medicines.  The PBS operates under Part VII of the National Health Act 1953 (the Act) which regulates the listing, prescribing, pricing, charging and payment of subsidies for supply of drugs and medicinal preparations as pharmaceutical benefits.  The Regulations prescribe matters and set out details in relation to the operation of the PBS.

Human rights implications

This legislative instrument is compatible with Articles 2 and 12 of the International Covenant on Economic, Social and Cultural Rights by assisting with the progressive realisation by all appropriate means of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.

The PBS assists with advancement of this human right by providing subsidised access to medicines for Australians.

Originator removal will improve the operation of the PBS by delivering better value for money for PBS medicines through price reductions.  This will assist consumers by reducing out-of-pocket costs for some PBS medicines.

Conclusion

This Legislative Instrument is compatible with human rights as it advances the protection of human rights.

 

Louise Clarke

Assistant Secretary, Pharmaceutical Evaluation Branch,

Pharmaceutical Benefits Division

Department of Health

 

Overview

The National Health (Originator Brand) Amendment Determination 2017 (No. 4) was enacted to address the need for determining the originator brands of pharmaceutical items that are new to the Pharmaceutical Benefits Scheme (PBS) F2 formulary. This instrument is a legislative amendment to the National Health (Originator Brand) Determination 2015, made under subsection 99ADB(6B) of the National Health Act 1953. The determination is necessary to facilitate the removal of originator brand data from price disclosure calculations as outlined in the National Health (Pharmaceutical Benefits) Regulations 2017. The policy objective is to potentially increase price reductions on the PBS by ensuring that government prices more closely reflect the prices of generic brands, thereby reducing out-of-pocket costs for consumers. This amendment was introduced in response to criteria set out in the Act, ensuring that the brand determination aligns with the conditions under which drugs move from the F1 formulary or the Combination Drug List to F2. The instrument commenced on 1 June 2017 and is compatible with human rights, particularly advancing the right to the highest attainable standard of physical and mental health as recognised in international covenants.

Scope and Application

The National Health (Originator Brand) Amendment Determination 2017 (No. 4) amends the National Health (Originator Brand) Determination 2015 to determine the originator brand of pharmaceutical items for three drugs that are new to the Pharmaceutical Benefits Scheme (PBS) F2 formulary. This amendment applies to the originator brands of specific drugs—fluticasone, fluticasone with salmeterol, and zonisamide—that are transitioning from the F1 formulary or the Combination Drug List to the F2 formulary. The primary purpose of this amendment is to facilitate the removal of originator brand data from price disclosure calculations under certain circumstances outlined in the National Health (Pharmaceutical Benefits) Regulations 2017. This removal aims to potentially increase price disclosure-related price reductions, as originator brands often maintain higher prices compared to other brands. The amendment is made under the authority of the National Health Act 1953 and is necessary to implement these changes, which will ultimately benefit consumers by reducing out-of-pocket costs for some PBS medicines. This legislative instrument is compatible with human rights by assisting in the progressive realisation of the right to the highest attainable standard of physical and mental health.

Key Provisions

The National Health (Originator Brand) Amendment Determination 2017 (No. 4) (the "Amendment") amends the National Health (Originator Brand) Determination 2015 (the "Principal Instrument") to determine the originator brand of three new drugs added to the Pharmaceutical Benefits Scheme (PBS) F2 formulary: fluticasone, fluticasone with salmeterol, and zonisamide (sections 1 and 2). This amendment is necessary to implement the removal of originator brand data from price disclosure calculations (referred to as "originator removal") in certain circumstances as outlined in the National Health (Pharmaceutical Benefits) Regulations 2017 (the "Regulations") (section 4). Originator removal is intended to potentially increase price disclosure-related price reductions, as originator brands generally maintain higher prices than other brands, thus aligning government prices more closely with the market prices of generic brands. The Amendment imposes specific obligations on the entities and parties it governs. Primarily, it mandates the identification of originator brands for the three specified drugs moving to the F2 formulary. The criteria for determining these originator brands are based on whether these brands were listed when the drugs were first added to the F1 formulary or the Combination Drug List (CDL) (subsection 99ADB(6C) of the Act). This process ensures that the originator brands identified are those that were originally listed when the drugs were first included in the PBS. Breaches of the provisions set out in this Amendment may result in civil or criminal consequences. While the Amendment itself does not explicitly detail specific penalties, the broader framework of the National Health Act 1953 (the "Act") and the Regulations may apply. Under the Act, breaches can lead to substantial penalties. For instance, section 116 of the Act provides for penalties up to $22,200 for individuals and $111,000 for bodies corporate, depending on the nature and severity of the breach. Additionally, criminal penalties may apply for more severe breaches, potentially resulting in fines or imprisonment as stipulated in other relevant sections of the Act. Furthermore, non-compliance with the Regulations could also attract penalties as prescribed within the Regulations themselves.

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