EXPLANATORY STATEMENT
INSTRUMENT NUMBER PB 55 OF 2013
NATIONAL HEALTH ACT 1953
National Health (Weighted average disclosed price – supplementary disclosure cycle B)
Determination 2013
Authority
This legislative instrument is made pursuant to subsection 99ADB(4) and paragraph 99ADH(1)(aa) of the National Health Act 1953 (the Act) and makes certain determinations relating to price disclosure for certain brands of pharmaceutical items in the supplementary disclosure cycle B with a data collection period ending 31 May 2013 (2013 supplementary cycle B).
Purpose
This legislative instrument determines a ‘weighted average disclosed price’ (WADP) for listed brands in the 2013 supplementary cycle B under subsection 99ADB(4) of the Act.
This legislative instrument also determines a reduction day of 1 December 2013 for listed brands in the 2013 supplementary cycle B with a data collection period ending at the end of 31 May 2013.
Part VII of the Act is the legislative basis for the Pharmaceutical Benefits Scheme (PBS) by which the Commonwealth provides reliable, timely, and affordable access to a wide range of medicines for all Australians.
Part VII, Division 3B of the Act deals with price disclosure. Price disclosure provides for the ‘approved ex-manufacturer price’ of a ‘brand of a pharmaceutical item’ to be reduced on a reduction day in certain specified circumstances. The reduction is based on sales revenue, incentives and volume data collected from responsible persons (drug companies) and occurs in accordance with the Act and the National Health (Pharmaceutical Benefits) Regulations 1960 (the Regulations).
A responsible person for a listed brand in Schedule 1 of this instrument, provided that the ‘approved ex-manufacturer price’ for the listed brand on 1 December 2013 would otherwise be more than the ‘adjusted approved ex-manufacturer price’, will receive a price reduction for the listed brand on and from 1 December 2013: subsections 99ADH(3) and (4).
Subsection 99ADB(4) – ‘weighted average disclosed price’
Subsection 99ADB(4) of the Act provides that the Minister may, by legislative instrument, determine the WADP of a listed brand in accordance with the Regulations.
Subsection 99ADB(6) of the Act provides that without limiting subsection 99ADB(4), the regulations may prescribe a method for determining the WADP for a listed brand. The method may take into account information (if any) that has been provided in compliance with the price disclosure requirements, and any other information, about the listed brand, other listed or delisted brands of the same pharmaceutical item, and all listed or delisted brands of all pharmaceutical items that have the same drug and manner of administration as the pharmaceutical item.
Regulation 37G provides that the WADP is to be determined for a listed brand, and every other listed brand having the same subsection 85(2) listed drug and subsection 85(5) manner of administration, for the ‘data collection period’ for the listed brands in a ‘disclosure cycle’. ‘Disclosure cycle’ and ‘data collection period’ are defined in regulations 37EB and 37EC.
A brand is in the 2013 supplementary cycle B if:
- the price disclosure requirements first applied between 2 February 2012 and 1 June 2012 (inclusive) to the brand and no prior requirement to comply with the price disclosure requirements applies for any brand of pharmaceutical item with the same drug and manner of administration: subregulation 37ED(5); or
- the price disclosure requirements first apply to a brand on a day, and another brand with the same drug and manner of administration is in the 2013 supplementary cycle B: subregulation 37F(2) and (3).
A brand of an exempt item (section 84AH) is excluded from price disclosure and is not allocated to a price disclosure cycle: section 99ADA of the Act.
The price for new brands of existing pharmaceutical items listed on the PBS after 31 May 2013 will be reduced as a flow-on reduction under section 99ADHA on 1 December 2013 if at least one existing brand of the same pharmaceutical item is in Schedule 1. No WADP or reduction day is determined for these listed brands.
Paragraph 99ADH(1)(c) – unadjusted price reduction for listed brand must be at least 10% or no price reduction for listed brand on reduction day
Paragraph 99ADH(1)(c) of the Act (read with paragraph 99ADH(3)) provides that a price reduction for a listed brand will not occur unless the ‘unadjusted price reduction’ for a listed brand is at least 10%. The ‘unadjusted price reduction’ for a listed brand is defined in subsection 99ADB(1).
Listed brands where the unadjusted price reduction is calculated to be at least 10% appear in Schedule 1 to this instrument. Listed brands where the unadjusted price reduction is calculated as less than 10% appear in Schedule 2 to this instrument. Listed brands in Schedule 2 will not have a price disclosure related reduction on 1 December 2013.
Subsection 99ADB(4) – determining an ‘adjusted approved ex-manufacturer price’ for a listed brand in Schedule 1
Subsection 99ADB(7) provides that a subsection 99ADB(4) determination for a listed brand may include the ‘adjusted approved ex-manufacturer price’ for the listed brand.
It is the ‘adjusted approved ex-manufacturer price’ that is compared to the current ‘approved ex-manufacturer price’ of a listed brand on reduction day: subsections 99ADH(3) and (4) of the Act. The Explanatory Memorandum for the 1 December 2010 amendments to the Act explain that it is included in the subsection 99ADB(4) determination ‘for the assistance of companies and in the interests of transparency’.
In this instrument, where a WADP is determined for listed brands in Schedule 1, the ‘adjusted approved ex-manufacturer price’ is equal to the amount of the WADP. Since listed brands in Schedule 2 will not have a reduction on 1 December 2013, the ‘adjusted approved ex-manufacturer price’ is not included in Schedule 2.
Paragraph 99ADH(1)(aa) – determining a reduction day
A price disclosure reduction day must be one of the three reduction days prescribed in the Regulations, that is, either 1 April, 1 August or 1 December: subsection 99ADH(2) and Regulation 37K.
In order for a price reduction to occur for a listed brand, any one of the prescribed reduction days must be determined for the listed brand under paragraph 99ADH(1)(aa), or, the reduction must flow-on to the listed brand to match the reduction on the same date for another listed brand with the same pharmaceutical item, due to section 99ADHA of the Act.
Consultation
This instrument affects certain pharmaceutical companies with medicines listed on the PBS. Pharmaceutical companies were consulted in relation to the introduction of price disclosure requirements during both the policy development and implementation phases, and also during the development and implementation of the further PBS reforms of 2010 and pricing changes in 2012. This occurred through meetings with both peak body organisations and individual companies. Information on this measure has been disseminated through peak industry bodies, during meetings with the Price Disclosure Working Group and direct to responsible persons through information sessions conducted in March 2011 and June 2012, and educational material. The relevant peak industry bodies include Medicines Australia, the Generic Medicines Industry Association, Consumers Health Forum, the Pharmacy Guild of Australia, the National Pharmaceutical Services Association and Australian Pharmaceutical Industries.
Pharmaceutical companies with a listed or delisted brand subject to the price disclosure requirements for 2013 supplementary cycle B were provided further information on the requirements and have disclosed information relevant to this determination directly to Australian Healthcare Associates Pty Ltd (AHA), known as the Price Disclosure Data Administrator (PDDA). AHA is prescribed in Regulation 37HA as the person to whom, in accordance with paragraph 99ADC(1)(a), a responsible person is to provide price disclosure information. The PDDA has provided responsible persons with an opportunity to check that the information disclosed to the PDDA has been translated correctly to PDDA data files. This was done prior to that data being used to apply the method set out in the Regulations required to arrive at the WADP for listed brands.
This instrument commences on the day after it is registered on the Federal Register of Legislative Instruments.
This instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003.