EXPLANATORY STATEMENT
National Health Act 1953
National Health (Price and Special Patient Contribution)
Amendment Determination 2011 (No. 1)
PB 6 of 2011
Purpose
This legislative instrument amends the determination PB 109 of 2010 which provides for price determinations in relation to brands of pharmaceutical items for which the Minister and the responsible person have not been able to make a price agreement. The Determination is made under section 85B of the National Health Act 1953 (the Act). The amendment substitutes Schedule 1 of the National Health (Price and Special Patient Contribution) Determination 2010 (PB 109 of 2010). The effect of the new Schedule 1 is to alter the determined price and the claimed price of the majority of brands of pharmaceutical items listed in the schedule.
Background – the Pharmaceutical Benefits Scheme
Part VII of the Act is the legislative basis of the Pharmaceutical Benefits Scheme (PBS) under which the Commonwealth provides reliable, timely, and affordable access to a wide range of medicines for all Australians.
Subsection 85(1) provides that pharmaceutical benefits are to be provided by the Commonwealth in accordance with Part VII.
In the case of ready-prepared pharmaceutical benefits, the pharmaceutical benefit is a brand of a pharmaceutical item. That is, it is a brand of a listed drug, in a form and with a manner of administration, declared and determined under various provisions of Part VII.
Part VII also provides for numerous other matters, including pricing matters and matters relating to payments by the Commonwealth and charges to patients for pharmaceutical benefits. This Determination concerns such matters.
Background – the Determination
The Act provides for the Minister and the responsible person to agree a price that is taken to be the appropriate maximum price for sales of a brand of a pharmaceutical item to approved pharmacists (section 85AD). Section 85B of the Act applies if the Minister and the responsible person have been unable to reach an agreement.
Subsection 85B(2) provides that the Minister may determine an amount that is taken to be the appropriate maximum price for sales of a brand of a pharmaceutical item to approved pharmacists. This is termed the ‘Determined Price’.
Subsection 85B(3) provides that the Minister may determine an amount that is taken to be the price claimed by the responsible person as the appropriate maximum price for sales of the brand of the pharmaceutical item to approved pharmacists. This is termed the ‘Claimed Price’.
The Determined Price is the approved price to pharmacists and is used as the basis for working out the Commonwealth price for the brand of the pharmaceutical item (section 98B of the Act). Approved pharmacists are entitled to payment from the Commonwealth equal to the Commonwealth price less the applicable patient co-payment (section 99 of the Act).
The difference between the responsible person’s Commonwealth price (ie, the price that would be the Commonwealth price if the responsible person’s claimed price had become the approved price to pharmacists) and the Commonwealth price for the brand is defined in subsection 85B(4) of the Act as the special patient contribution. An approved pharmacist may charge a patient an amount equal to the special patient contribution, in addition to any other amount that may be charged (subsection 87(2A) of the Act).
This instrument contains determinations of:
- Determined Prices (under subsection 85B(2) of the Act); and
- Claimed Prices (under subsection 85B(3) of the Act,
Changes effected by this Determination
This instrument amends PB 109 of 2010 by substituting Schedule 1, Determined and Claimed Prices. Sections 1-7 in the Determination continue to operate, as does Schedule 2. The effect of the new Schedule 1 is to adjust the Determined Price and the Claimed Price for the majority of brands of pharmaceutical items as a consequence of statutory price reductions to pharmaceutical items listed in the F2A and F2T formularies. Reductions of two per cent for drugs in F2A and five per cent for drugs in F2T take effect from 1 February 2011. These price reductions apply under provisions set out in amendments to the National Health Act, 1953 provided for in the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2010. The statutory price reduction affects both the claimed price and determined price for the affected brand of pharmaceutical item.
A small number of listed drugs in Schedule 1 were not affected by this change as these pharmaceutical items met the criteria for exemption from statutory price reductions.
Consultation
This determination affects certain responsible persons with medicines listed on the PBS. Before a pharmaceutical benefit is listed on the PBS, and from time to time thereafter, price negotiations occur between the responsible person and the Minister for the purpose of reaching a price agreement for section 85AD of the Act. If the Minister and the responsible person cannot agree on a price, further consultation occurs with the responsible person, and thereafter the Minister determines the price that will be the approved price to pharmacists for the brand. The Minister also determines the corresponding price claimed by the responsible person which is used to calculate the special patient contribution that will apply to the brand.
The Determination
A provision by provision description of the Determination is contained in the Attachment.
The Determination commences on 1 February 2011.
The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
ATTACHMENT
PROVISION BY PROVISION DESCRIPTION OF THE NATIONAL HEALTH (PRICE AND SPECIAL PATIENT CONTRIBUTION) AMENDMENT DETERMINATION 2011 (NO. 1)
Section 1 Name of Determination
This section provides that the Determination is the National Health (Price and Special Patient Contribution) Amendment Determination 2011 (No. 1) and may also be cited as
PB 6 of 2011.
Section 2 Commencement
This section provides that the Determination commences on 1 February 2011.
Section 3 Amendment of PB 109 of 2010
This section provides that Schedule 1 to the Instrument amends the determination under section 85B of the Act (PB 109 of 2010).
Schedule 1 Amendments
Schedule 1 sets out the amendments to the Determination PB 109 of 2010. The amendment provides for the substitution of Schedule 1 of the Determination. Schedule 1 relates to sections 5 and 6 and sets out the Determined Price and the Claimed Price for each item referred to.