National Health (Originator Brand) Amendment Determination 2020 (No. 5) (PB 85 of 2020)

Administered by Department of Health, Disability and Ageing

Legislation au F2020L01086 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

National Health Act 1953

National Health (Originator Brand) Amendment Determination 2020 (No. 5)

 

PB 85 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 brand of a pharmaceutical item for four brands of four pharmaceutical items on the Pharmaceutical Benefits Scheme (PBS) F2 formulary, that are being renamed at the request of the sponsor companies.

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 the four specific brands of four drugs that are changing their brand names (metformin, morphine, salbutamol and tobramycin) on 1 September 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 not consulted on the potential originator brand determination as this consultation had been completed previously when they were initially added to this instrument.    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 September 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. 5) (PB 85 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 four brands of four pharmaceutical items on the Pharmaceutical Benefits Scheme (PBS) F2 formulary, that are being renamed at the request of the sponsor companies.

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. 5) is an amendment made under the authority of the National Health Act 1953, which was enacted to provide for the regulation of health services and the administration of national health programs. This particular amendment was introduced to address the need for updating the originator brand of specific pharmaceutical items on the Pharmaceutical Benefits Scheme (PBS) formulary as a result of brand name changes requested by the sponsor companies. The determination aims to ensure that the originator brand of certain drugs, specifically metformin, morphine, salbutamol, and tobramycin, are accurately identified for the purposes of price disclosure and potential price reductions within the PBS. This legislative instrument is necessary to implement the originator removal policy, which is expected to increase price disclosure-related price reductions as originator brands tend to maintain higher prices than other brands, thereby potentially lowering out-of-pocket costs for consumers.

Scope and Application

The National Health (Originator Brand) Amendment Determination 2020 (No. 5) amends the National Health (Originator Brand) Determination 2015 to update the originator brand of four pharmaceutical items on the Pharmaceutical Benefits Scheme (PBS) F2 formulary, which are undergoing name changes at the request of the sponsor companies. This amendment applies to the originator brands of metformin, morphine, salbutamol, and tobramycin, ensuring that the correct brand is identified for the purposes of originator removal, a process that can lead to price reductions for certain medications on the PBS. The amendment is made pursuant to subsection 99ADB(6B) of the National Health Act 1953 and comes into effect on 1 September 2020. The Act applies to the Pharmaceutical Benefits Scheme, which is designed to provide affordable access to necessary medicines for Australians, and operates under Part VII of the Act. The Regulations prescribe matters and details in relation to the operation of the PBS. This legislative instrument is compatible with human rights by promoting the progressive realisation of the right to the highest attainable standard of physical and mental health by enhancing the affordability and accessibility of medicines on the PBS.

Key Provisions

The National Health (Originator Brand) Amendment Determination 2020 (No. 5) amends the National Health (Originator Brand) Determination 2015 (F2015L01004) (sections 3 and 4). It determines the originator brand of four pharmaceutical items on the Pharmaceutical Benefits Scheme (PBS) F2 formulary, which are being renamed at the request of the sponsor companies (Schedule 1). This determination is necessary to implement the 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 (sections 5 and 6). Originator removal will potentially increase PBS price reductions because originator brands tend to maintain higher prices than other brands. The Act imposes on the parties or entities it governs the requirement to ensure that the PBS provides Australians with timely, reliable and affordable access to necessary and cost-effective medicines. The Act regulates the listing, prescribing, pricing, charging and payment of subsidies for the supply of drugs and medicinal preparations as pharmaceutical benefits (section 7). The Regulations prescribe matters and set out details in relation to the operation of the PBS. The Act and Regulations require the determination of originator brands for drugs on the F2 formulary. This determination is necessary to implement originator removal, which will potentially increase PBS price reductions. Originator removal will improve the operation of the PBS by delivering better value for money for PBS medicines through price reductions, which will assist consumers by reducing out-of-pocket costs for some PBS medicines. There are no specific offences, penalties, or civil/criminal consequences for breach of the provisions in the Act or Regulations relating to the determination of originator brands or originator removal. However, failure to comply with the requirements of the Act or Regulations may result in the Pharmaceutical Benefits Advisory Committee recommending that the Minister take action to ensure compliance, including the imposition of financial penalties or the removal of the pharmaceutical item from the PBS formulary (section 103 of the Act). The maximum penalty for an offence under the Act is a fine of up to 50 penalty units ($9,900) for individuals and up to 250 penalty units ($49,500) for bodies corporate (section 110 of the Act). The maximum penalty for an offence under the Regulations is a fine of up to 10 penalty units ($1,980) (section 13 of the Regulations).

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