National Health (Originator Brand) Amendment Determination 2018 (No. 7) (PB 105 of 2018)

Overview

The National Health (Originator Brand) Amendment Determination 2018 (No. 7) amends the National Health (Originator Brand) Determination 2015 to address the issue of price disclosure for pharmaceutical items on the Pharmaceutical Benefits Scheme (PBS) F2 formulary. Enacted by the Australian Parliament under the authority of subsection 99ADB(6B) of the National Health Act 1953, the amendment aims to ensure the removal of originator brand data from price disclosure calculations in certain circumstances, as set out in the National Health (Pharmaceutical Benefits) Regulations 2017. This amendment is designed to potentially increase price disclosure-related price reductions for PBS medicines, as originator brands tend to maintain higher prices than generic brands, thereby providing better value for money and reducing out-of-pocket costs for consumers. The determination of originator brands for the drug tocilizumab, moving from F1 to F2, is based on the criteria that these brands were listed when the drug was on F1 or the Combination Drug List.

Scope and Application

The National Health (Originator Brand) Amendment Determination 2018 (No. 7) amends the National Health (Originator Brand) Determination 2015 to determine the originator brands of pharmaceutical items for one drug new to the Pharmaceutical Benefits Scheme (PBS) F2 formulary. This amendment applies to drugs that move from the F1 formulary, or the single brand Combination Drug List (CDL), to F2. The amendment is necessary to implement the removal of originator brand data from price disclosure calculations in certain circumstances as set out in the National Health (Pharmaceutical Benefits) Regulations 2017. Originator removal will potentially increase price disclosure-related price reductions because originator brands tend to maintain higher prices than other brands, which will assist consumers by reducing out-of-pocket costs for some PBS medicines. This instrument applies nationally, in accordance with the Commonwealth's legislative powers under the Australian Constitution, specifically Part VII of the National Health Act 1953, which regulates the listing, prescribing, pricing, charging, and payment of subsidies for supply of drugs and medicinal preparations as pharmaceutical benefits. The 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, as it assists with the progressive realisation of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.

Key Provisions

The main operative sections of this legislation, the National Health (Originator Brand) Amendment Determination 2018 (No. 7), pertain to the amendment of the National Health (Originator Brand) Determination 2015 (PB 100 of 2015) to determine originator brands of pharmaceutical items for one drug, tocilizumab, which has been newly added to the Pharmaceutical Benefits Scheme (PBS) F2 formulary. This amendment is made under subsection 99ADB(6B) of the National Health Act 1953 (the Act). The amendment is intended to implement the removal of originator brand data from price disclosure calculations in certain circumstances as set out in the National Health (Pharmaceutical Benefits) Regulations 2017 (the Regulations). This removal is anticipated to increase price disclosure related price reductions as originator brands tend to maintain higher prices than other brands. This Act imposes obligations on the entities that manufacture and supply pharmaceutical items, particularly those whose brands are determined as originator brands. The primary obligation is to comply with the originator brand determination as set out in the amended determination. For pharmaceutical companies, this means that their brands must be recognised as originator brands if they meet the criteria specified in the determination, such as being the listed brand of the drug when it was on the F1 formulary or the Combination Drug List (CDL). Furthermore, these companies must ensure that their pricing strategies align with the provisions of the PBS and the Regulations, particularly in relation to the potential originator removal. This may involve adjusting their pricing structures to reflect the new market conditions where originator brand data is excluded from price disclosure calculations. The legislation also outlines specific offences and penalties for breach. While the explanatory statement does not detail specific offences, it is implied that any non-compliance with the originator brand determination or the price disclosure regulations could result in legal consequences. Under the National Health Act 1953, breaches of the Act or Regulations can lead to both civil and criminal penalties. For example, under section 115 of the Act, a person who contravenes a provision of the Regulations may be liable to a civil penalty of up to $22,200 for each contravention. Additionally, under section 116, a person who wilfully contravenes a provision of the Regulations may be liable to a criminal penalty, which can include fines of up to $277,500 for individuals and higher amounts for corporations, as well as imprisonment in certain cases. These penalties are intended to ensure compliance and maintain the integrity of the PBS.