EXPLANATORY STATEMENT
National Health Act 1953
National Health (Originator Brand) Amendment Determination 2019 (No. 5)
PB 64 of 2019
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 brands of pharmaceutical items for three drugs new to the Pharmaceutical Benefits Scheme (PBS) F2 formulary on 1 August 2019.
The Principal Instrument determines 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. This 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 (hydromorphone; tenofovir with emtricitabine and efavirenz; and trastuzumab). 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 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 August 2019.
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 2019 (No. 5) (PB 64 of 2019)
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 on 1 August 2019.
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.
Thea Daniel
Assistant Secretary
Pricing and PBS Policy Branch
Technology Assessment and Access Division
Department of Health
Overview
The National Health (Originator Brand) Amendment Determination 2019 (No. 5) was enacted to amend the National Health (Originator Brand) Determination 2015, addressing a gap in the originator brand determination for new pharmaceutical items added to the Pharmaceutical Benefits Scheme (PBS) F2 formulary. This determination was necessary to implement the originator removal for price disclosure calculations, a policy aimed at potentially increasing price reductions for PBS medicines by reflecting the prices of generic brands rather than originator brands, which typically maintain higher prices. The instrument was made under subsection 99ADB(6B) of the National Health Act 1953, with the objective of ensuring the PBS continues to provide cost-effective and accessible medications to Australians. The amendment specifies the originator brands for three drugs that transitioned to the F2 formulary on 1 August 2019, ensuring these drugs are subject to the PBS's price disclosure requirements. The instrument was developed in consultation with relevant pharmaceutical companies, although no comments were received, and it is compatible with human rights, particularly the right to the highest attainable standard of physical and mental health, by facilitating better access to affordable medications.
Scope and Application
The National Health (Originator Brand) Amendment Determination 2019 (No. 5) amends the National Health (Originator Brand) Determination 2015 to determine the originator brands of three pharmaceutical drugs that have been newly listed on the Pharmaceutical Benefits Scheme (PBS) F2 formulary as of 1 August 2019. This instrument applies to the pharmaceutical industry, specifically to companies with a brand of one of the three drugs listed in Schedule 1 of the amending instrument. The amendment allows for the removal of originator brand data from price disclosure calculations in certain circumstances, which is set out in the National Health (Pharmaceutical Benefits) Regulations 2017. The removal of originator brand data will potentially increase price disclosure related price reductions because originator brands tend to maintain higher prices than other brands. The legislation operates on a national level as it is made under 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. There are no stated exclusions, exemptions, or thresholds in this amending instrument, and its application is not extended or restricted through subordinate instruments.
Key Provisions
The National Health (Originator Brand) Amendment Determination 2019 (No. 5) (PB 64 of 2019) amends the National Health (Originator Brand) Determination 2015 (PB 100 of 2015) to identify the originator brands of three pharmaceutical items new to the Pharmaceutical Benefits Scheme (PBS) F2 formulary as of 1 August 2019. These drugs are hydromorphone, tenofovir with emtricitabine and efavirenz, and trastuzumab. Originator brands are those brands of a drug that were listed when the drug was first included in the F1 formulary or on the Combination Drug List (CDL) (subsection 99ADB(6C) of the National Health Act 1953). This determination is necessary to implement the removal of originator brand data from price disclosure calculations (originator removal) under the National Health (Pharmaceutical Benefits) Regulations 2017, which may result in price reductions for these drugs on the PBS.
The National Health Act 1953 governs the listing, prescribing, pricing, and payment of subsidies for drugs and medicinal preparations provided through the PBS. The Act requires that originator brands of pharmaceutical items on the F2 formulary be determined. The Regulations further specify the details regarding the operation of the PBS, including the removal of originator brand data under certain conditions. The Amendment Determination provides a legal basis for these determinations by setting out the criteria for identifying originator brands and applies to drugs moving from F1 or CDL to F2.
The Act imposes obligations on the relevant parties to ensure compliance with the determination of originator brands. Specifically, the Minister or delegate must determine originator brands based on whether the brand was listed when the drug was first included in the F1 formulary or on the CDL. The Amendment Determination specifies the originator brands for the drugs in question and requires that these brands be used in any price disclosure calculations. This is essential for implementing originator removal, which is intended to reflect more accurately the prices at which generic brands are sold in the market.
There are no explicit offences, penalties, or consequences for breach of the provisions in this Amendment Determination. However, the National Health Act 1953 and the National Health (Pharmaceutical Benefits) Regulations 2017 provide for general penalties and enforcement mechanisms that could apply if there are non-compliances. The Act allows for financial penalties for breaches of its provisions, with the exact penalties varying depending on the nature and severity of the breach. The Regulations may also include provisions for administrative penalties for non-compliance with requirements related to the PBS.