National Health (Originator Brand) Amendment Determination 2020 (No. 2) (PB 27 of 2020)

Administered by Department of Health, Disability and Ageing

Legislation au F2020L00362 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

 

National Health Act 1953

 

National Health (Originator Brand) Amendment Determination 2020 (No. 2)

 

PB 27 of 2020

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 two drugs new to the Pharmaceutical Benefits Scheme (PBS) F2 formulary on 1 April 2020.

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 two drugs that are moving from F1 and CDL to F2 (mercaptopurine and olmesartan with amlodipine and hydrochlorothiazide) on 1 April 2020.  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 consulted on the potential originator brand determination.  No comments were received.  No additional consultations with experts was undertaken regarding this determination because consultation with the affected companies drew on the knowledge of persons with relevant expertise.

This instrument commences on 1 April 2020.

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 2020 (No. 2) (PB 27 of 2020)

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 the originator brand of a pharmaceutical item for two drugs new to the Pharmaceutical Benefits Scheme (PBS) F2 formulary on 1 April 2020.

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 2020 (No. 2) amends the National Health (Originator Brand) Determination 2015 to address the problem of high originator brand prices in the Pharmaceutical Benefits Scheme (PBS). This legislative instrument is necessary to implement the removal of originator brand data from price disclosure calculations under the National Health (Pharmaceutical Benefits) Regulations 2017, aiming to increase price reductions and provide better value for money. By determining the originator brands of two new drugs added to the PBS F2 formulary on 1 April 2020, this amendment supports the progressive realisation of the right to the highest attainable standard of physical and mental health as outlined in the International Covenant on Economic, Social and Cultural Rights. The determination is made under the authority of the National Health Act 1953 and is compatible with human rights, as it assists in reducing out-of-pocket costs for consumers by promoting lower-priced generic alternatives.

Scope and Application

The National Health (Originator Brand) Amendment Determination 2020 (No. 2) amends the National Health (Originator Brand) Determination 2015 to determine the originator brands of two new drugs added to the Pharmaceutical Benefits Scheme (PBS) F2 formulary on 1 April 2020. This amendment is necessary to implement the originator removal policy, which removes originator brand data from price disclosure calculations in certain circumstances, as outlined in the National Health (Pharmaceutical Benefits) Regulations 2017. Originator removal aims to potentially increase price disclosure-related price reductions since originator brands often maintain higher prices than other brands. The originator brands for the new drugs mercaptopurine and olmesartan with amlodipine and hydrochlorothiazide have been determined based on them being the listed brands when the drugs were first on the F1 formulary or the Combination Drug List. This instrument applies to the pharmaceutical industry, specifically to the entities that manufacture and supply these drugs under the PBS. It operates nationally, as the PBS is a Commonwealth scheme, and it complements the National Health Act 1953, which governs the operation of the PBS. There are no specific exclusions or thresholds mentioned in the determination; however, the applicability and enforcement of the originator removal policy may be further detailed in subordinate instruments or regulations.

Key Provisions

The National Health (Originator Brand) Amendment Determination 2020 (No. 2) (PB 27 of 2020) amends the National Health (Originator Brand) Determination 2015 to determine the originator brands for two drugs, mercaptopurine and olmesartan with amlodipine and hydrochlorothiazide, which have been added to the Pharmaceutical Benefits Scheme (PBS) F2 formulary on 1 April 2020 (s 1). This amendment is necessary to implement the removal of originator brand data from price disclosure calculations as stipulated in the National Health (Pharmaceutical Benefits) Regulations 2017. By removing originator brand data, the scheme aims to potentially increase price reductions as originator brands typically maintain higher prices than generic brands. This amendment will ensure that government prices more accurately reflect the prices at which generic brands are sold in the market, thereby providing better value for money and reducing out-of-pocket costs for consumers. Entities and parties governed by this Act, specifically pharmaceutical companies with brands listed on the PBS, are required to adhere to the determination of originator brands as set out in the amendment. The criteria for determining the originator brands include whether the brand was listed when the drug was first determined as a pharmaceutical item under the National Health Act 1953. Companies must ensure that their brands meet these criteria, especially in light of the transition of drugs from F1 or the Combination Drug List (CDL) to F2, which subjects all drugs on F2 to price disclosure requirements. The Act does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach of the provisions in this determination. However, any non-compliance with the PBS regulations or failure to meet the criteria for originator brand determination could potentially result in administrative penalties or legal action under the broader framework of the National Health Act 1953 and associated regulations. While the determination itself does not impose explicit penalties, any resultant non-compliance with PBS regulations may lead to consequences as stipulated under the Act and its subsidiary regulations.

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