EXPLANATORY STATEMENT

NATIONAL HEALTH ACT 1953

NATIONAL HEALTH (PRICE AND SPECIAL PATIENT CONTRIBUTION) AMENDMENT DETERMINATION 2022 (No. 6)

PB 74 of 2022

Authority

This legislative instrument, made under section 85B of the National Health Act 1953 (the Act), amends the National Health (Price and Special Patient Contribution) Determination 2021 (PB 35 of 2021) (the Principal Determination).

Subsections 85B(2), (3) and (4) of the Act provide for the Minister to determine, respectively, determined prices, claimed prices and the circumstances in which the Commonwealth will pay a special patient contribution. The Principal Determination contains determinations of these matters.

Variation and revocation

Unless there is an express power to revoke or vary PB 35 of 2021 cited in this instrument and explanatory statement, subsection 33(3) of the Acts Interpretation Act 1901 is relied upon to revoke or vary PB 35 of 2021.

Purpose

The Act provides for the Minister and the responsible person to agree a price that is taken to be the appropriate maximum price of a brand of a pharmaceutical item for the purposes of Part VII of the Act (section 85AD). Section 85B of the Act applies if the Minister and the responsible person have been unable to reach an agreement on a price for the pricing quantity. Whether or not an agreement is made for the pricing quantity, section 85B also applies if the responsible person is dissatisfied with the proportional ex-manufacturer prices that will apply to other pack quantities.   

Subsection 85B(2) provides that the Minister may determine, by reference to the pricing quantity of a brand of a pharmaceutical item, an amount that is taken to be the appropriate maximum price of the brand for the purposes of Part VII of the Act. This is termed the ‘Determined Price’ in this Determination.

Subsection 85B(3) provides that the Minister may determine, by reference to a pack quantity of a brand of the pharmaceutical item, an amount that is taken to be the price claimed by the responsible person for the pack quantity of the brand, for the purposes of Part VII of the Act. This is termed the ‘Claimed Price’ in this Determination.

The Determined Price is the approved ex-manufacturer price and is used as the basis for working out the Commonwealth price for the brand of the pharmaceutical item (section 98B of the Act); for pack quantities other than the pricing quantity, the proportional ex-manufacturer price is used as the basis. 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 for a pack quantity (i.e, the price that would be the Commonwealth price if the responsible person’s claimed price had become the approved ex-manufacturer price or the proportional ex-manufacturer price for that pack quantity) and the Commonwealth price for the pack quantity is defined in subsection 85B(5) 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).

Subsection 85B(4) of the Act provides that the Minister may determine the circumstances in which the Commonwealth is to pay the special patient contribution for a brand. In such cases, the Commonwealth payment to the pharmacist is increased by the amount of the special patient contribution (subsection 99(2AA) of the Act) and the pharmacist may not charge the patient this amount (subsection 87(2A) of the Act). 

The purpose of making subsection 85B(4) determinations is to enable patients for whom the base-priced brands (the ones without a special patient contribution) are not suitable, to obtain the higher priced brand (the one with the special patient contribution) without the need to pay the higher price. In such cases the Commonwealth pays the special patient contribution.

This instrument (the Amendment Determination) amends the Principal Determination by reflecting the increases to existing brand premiums in addition to imposing new brand premiums for multiple pharmaceutical items as requested by responsible persons. The amendments provided by this instrument take effect on 1 August 2022. 

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 do not agree on a price, further consultation occurs with the responsible person, and thereafter the Minister determines the price that will be the approved ex-manufacturer price 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 responsible persons affected by this Determination for increases to existing brand premiums for ezetimibe, metformin, ezetimibe and rosuvastatin, telmisartan, telmisartan with hydrochlorothiazide and telmisartan with amlodipine each made a submission about the claimed price the Minister should determine in relation to their brands. The responsible persons were advised of the delegate’s intention to determine in accordance with their request. No further response from the affected responsible persons were received in response to this notification.

The responsible persons for all pharmaceutical benefits affected by this Determination made a submission about the claimed price the Minister should determine in relation to their brand. The responsible person was advised of the delegate’s intention to determine in accordance with their requests. No further response from the affected responsible person was received in response to this notification.

No additional consultation with experts was undertaken regarding this Determination because consultation with affected responsible persons, which informed the making of this Determination, drew on the knowledge of persons with relevant expertise.

A provision by provision description of the Determination is contained in the Attachment.

This Determination commences on 1 August 2022.

This Determination is a legislative instrument for the purposes of the Legislation Act 2003.

ATTACHMENT 

PROVISION BY PROVISION DESCRIPTION OF THE NATIONAL HEALTH (PRICE AND SPECIAL PATIENT CONTRIBUTION) AMENDMENT DETERMINATION 2022 (No.6)

(PB 74 of 2022)

Section 1   Name of Determination

This section provides that the Determination is the National Health (Price and Special Patient Contribution) Amendment Determination 2022 (No. 6) and may also be cited as PB 74 of 2022.

Section 2   Commencement

This section provides that the Determination commences on 1 August 2022.

Section 3   Amendment of the National Health (Price and Special Patient Contribution) Determination 2021 (PB 35 of 2021).

This section provides that Schedule 1 amends the National Health (Price and Special Patient Contribution) Determination 2021 (PB 35 of 2021).

Schedule 1 Amendments commencing 1 August 2022

Schedule 1 sets out the amendments to the Principal Determination which commence on
1 August 2022.

Brands with new brand premiums

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

National Health (Price and Special Patient Contribution) Amendment Determination 2022 (No. 6) (PB 74 of 2022)

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, made under section 85B of the National Health Act 1953 (the Act), amends the National Health (Price and Special Patient Contribution) Determination 2021 (the Principal Determination), which provides for price determinations in relation to brands of pharmaceutical items listed on the Pharmaceutical Benefits Scheme (PBS) for which the Minister and the responsible person have not been able to make a price agreement. It also provides for the circumstances in which the Commonwealth will pay the special patient contribution resulting from these price determinations. This instrument amends the Principal Determination by increasing brand premiums for nineteen brands of nineteen pharmaceutical items and imposing brand premiums for four brands of four pharmaceutical items. These change takes effect on 1 August 2022. 

Human rights implications

This legislative instrument engages 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 is a benefit scheme which assists with advancement of this human right by providing for subsidised access by patients to medicines. It is longstanding Government policy that pharmaceutical companies are only able to charge brand price premiums where there is at least one premium free brand of that medicine available through the PBS. All brands subsidised by the PBS are evaluated by the Therapeutic Goods Administration for quality and safety and determined to be bioequivalent, which means they are clinically equivalent and work in the same way. Increasing or imposing brand price premiums are therefore unlikely to result in negative financial impact for patients, therefore ensuring their rights to social security are maintained. The recommendatory role of the Pharmaceutical Benefits Advisory Committee ensures that decisions about subsidised access to medicines on the PBS are evidence-based. 

Conclusion

This legislative instrument is compatible with human rights because it advances the protection of human rights.

Nikolai Tsyganov

 Acting Assistant Secretary

Pricing and PBS Policy Branch

Technology Assessment and Access Division

Department of Health and Aged Care