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National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2010

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2010

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS SCHEME) BILL 2010

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health and Ageing the Hon. Nicola Roxon)



 



NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS SCHEME) BILL 2010

 

OUTLINE

 

The Pharmaceutical Benefits Scheme is a world class system that aims to provide timely access to a comprehensive range of medicines for the Australian community. 

 

The main purpose of the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2010 is to amend the National Health Act 1953 (the Act) to achieve a more economically sustainable Pharmaceutical Benefits Scheme (PBS).  This Bill aligns with the Government’s directions to improve the health of all Australians and the long term effectiveness, efficiency and functioning of the health system.  The Bill implements some of the Australian Government’s 2010-11 Budget measures.

 

The proposed amendments in the Bill will achieve better value for taxpayers through reforming the PBS pricing arrangements for medicines that are subject to competition in the market place.  The savings resulting from the pricing reforms will ensure that the PBS continues to have capacity to make available existing and new and innovative medicines to all Australians, now and into the future.

 

There will be no additional costs to patients arising out of these reforms.  Medicare practitioners will continue to be able to prescribe clinically appropriate PBS medicines.

 

Further PBS Pricing Reforms

 

This Bill contains the following proposed pricing reforms.

 

Statutory price reductions

The Bill enhances the statutory price reductions already provided for in the Act by providing for:

  • On 1 February 2011, a two percent statutory price reduction to be applied to all drugs listed on F2A as at 11 October 2010;
  • On 1 February 2011, a five percent reduction to be applied to all drugs listed on F2T as at 11 October 2010.  D rugs that were allowed staged 25 percent reductions, and any related brands , will have this five percent reduction applied as if the full 25 percent price reduction had already been applied; and
  • On 1 February 2011, an increase from 12.5 percent to 16 percent for the price reductions under the Act which apply when the first bioequivalent brand of a pharmaceutical item becomes available on the PBS (or the 12.5% reduction has not been taken previously).

 

Price disclosure

The Act currently provides for price disclosure related reductions which are designed to achieve a PBS price that more closely matches the price at which multiple brand medicines are actually being sold as a result of competition in the market place.  The Bill expands and accelerates the price disclosure arrangements already provided for in the Act by providing for:

  • mandatory price disclosure from 1 December 2010 for all non exempt medicines listed on F2.  This will mean that all F2 medicines will be treated in the same way and that a new brand will no longer be needed to trigger price disclosure.  The first reduction day for the drugs that become subject to price disclosure on 1 December 2010 will be 1 April 2012; and
  • the achievement of a minimum average 23 percent price reduction on 1 April 2012 across the non exempt medicines in F2 that become subject to price disclosure on 1 December 2010, and the single brand combination items containing any of those F2 drugs.

 

Enhancing the application of the 2007 PBS pricing reforms

The Act incorporates the PBS Pricing Reform introduced by the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007 , which included staging the 25 percent price reductions for certain single brand drugs This Bill makes explicit the arrangements for application of outstanding 25 percent staged price reductions .  Some of those reductions currently require amendment to Regulations and administrative application.

 

Section 100 Issues

The Bill:

  • provides a clearer method for listing drugs for supply under section 100 of the Act.  This will make clear the application of general PBS provisions such as price disclosure to medicines supplied under those section 100 arrangements; and
  • clarifies and widens the power to make section 100 special arrangements, which will support the introduction of arrangements for the Revised Arrangements for Efficient Funding of Chemotherapy Drugs Budget initiative, and other section 100 programs .

 

Collection of under co-payment data

 

The Bill proposes amendments to provide for the collection under the Act of ‘under co-payment data’ from approved suppliers (certain pharmacists, hospitals, and medical practitioners).  ‘Under co-payment data’ refers to information collected on dispensing a PBS script to a patient where no Commonwealth payment is made to the approved supplier.  No payment is made because the price for the medicine does not exceed the applicable patient co-payment amount.  Delegated legislation will specify the information to be supplied.

 

The proposed amendments allow collection of ‘under co-payment data’ in a similar way to data already collected under the Act when a claim for payment is submitted by an approved supplier to the Commonwealth.  This includes ensuring the data is collected and disclosed in accordance with the Privacy Act 1988 and the secrecy provisions of the Act.

 

Consequential Amendments

The Bill also contains amendments to the Health Insurance Act 1973 and the Medicare Australia Act 1973 which are consequential to the changes made in relation to section 100 listing arrangements.

 

Commencement

 

The formal part of the amending Act would commence on Royal Assent.  The Schedules to the amending Act dealing with the two percent, five percent and staged 25 percent price reductions, the price disclosure and section 100 provisions, and miscellaneous amendments, would commence on 1 December 2010.  The Schedule dealing with the increase in the 12.5 percent price reduction to 16 percent would commence on 1 February 2011.

 

The Schedule dealing with under co-payment data would commence on 1 April 2012.

This commencement date is to allow sufficient time for the necessary information technology modifications to occur at each dispensing point and at Medicare Australia to facilitate the under co-payment data transmission and collection process.  It will also allow for the necessary system testing and data validation to occur and for the Department of Health and Ageing to integrate its systems and processes to receive, store and analyse this data together with the existing over co-payment PBS data.

 

FINANCIAL IMPACT STATEMENT

The  measures set out above are key components of the packages negotiated for Further PBS Pricing Reform and the Fifth Community Pharmacy Agreement, and miscellaneous amendments related to 2007 PBS Reform.  The financial impact of the packages is shown in the tables below.

Further PBS reform

 

 

2010-2011 ($m)

2011-2012

($m)

2012-2013

($m)

2013-2014

($m)

4 year total

($m)

2014-2015

($m)

5 year total

($m)

Health

-28.7

-180.2

-499.4

-517.2

-1,225.6

-541.8

-1,767.3

DVA

-2.0

-10.9

-29.0

-29.2

-71.1

-29.2

-100.3

Total

-30.7

-191.2

-528.4

-546.4

-1,296.7

-570.9

-1867.6

 

Under Co-payment Data Collection

 

 

2010-2011 ($m)

2011-2012

($m)

2012-2013

($m)

2013-2014

($m)

4 year total

($m)

2014-2015

($m)

5 year total

($m)

Health

0.2

3.2

0.1

0.1

3.6

0.1

3.8

MA

1.5

0.8

0.3

0.4

3.0

0.4

3.4

Total

1.7

4.0

0.4

0.5

6.6

0.5

7.2

 

Revised Arrangements for Efficient Funding of Chemotherapy Drugs

This measure was announced in the 2008-2009 Budget.  Commencement was deferred from 1 September 2009 to allow consideration in the context of negotiations for the Fifth Community Pharmacy Agreement.  This Bill does not implement the measure, but makes amendments to section 100 of the Act, and listing arrangements for section 100 medicines, that will support the making of the arrangements for this Program.  The measure will now save $75.4 million over the forward estimates period. 



NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS SCHEME) BILL 2010

 

NOTES ON CLAUSES

 

Clause 1 - Short title

This clause provides that the Act may be cited as the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2010 .

 

Clause 2 - Commencement

This clause provides that the Act commences on Royal Assent and the Schedules to the Act commence on the dates specified.  Schedule 1 commences on 1 February 2011 and Schedule 5 commences on 1 April 2012.  The other Schedules commence on 1 December 2010.  The delayed commencement date for Schedule 5 is due to the need to develop, and to have in place, appropriate software reporting systems for approved suppliers and the Commonwealth, before the obligation to provide the under co-payment data commences.

 

Clause 3 - Schedules

This clause provides that each Act that is specified in a Schedule to the Act is amended or repealed as set out in the applicable Schedule.  Any other items in the Schedules have effect according to their terms.

 

Schedule 1 - Increasing the 12.5% price reduction to 16%

 

National Health Act 1953

 

Item 1

This item inserts a cross reference in the Interpretation provision of Part VII (subsection 84(1)) to the existing subsection (subsection 99ACA(2)) in which the existing term subject to a 12.5% price reduction is defined.

 

Item 2

This item inserts a cross reference in the Interpretation provision of Part VII (subsection 84(1)) to the subsection (subsection 99ACA(2A)) in which the proposed new term subject to a 16% price reduction will be defined.

 

Item 3

This item substitutes 16% for 12.5% throughout section 99AC, reflecting the proposed change in the 12.5% price reduction to a 16% reduction under the amendments proposed in this Schedule.

 

Item 4

This item amends paragraph 99ACA(2)(a) which defines when a listed component drug contained in a drug in a combination item has been subject to a 12.5% price reduction .  Under current and amended paragraph (a) of the definition, the definition will be satisfied if any of the sections or subsections of the Act mentioned in the paragraph has applied.   These sections and subsections currently provide in relation to the 12.5% price reduction and are being amended to apply to the new 16% reduction.  The amendment will ensure that the definition of subject to a 12.5% price reduction will only be satisfied if these sections or subsections have applied before

1 February 2011, the date these sections and subsections are being amended to increase the 12.5% to 16%.

 

Item 5

This item inserts a new subsection (2A) into section 99ACA.  The subsection defines when a listed component drug contained in a combination item has been subject to a 16% price reduction .  It mirrors existing subsection 99ACA(2) which provides in relation to a 12.5% reduction.  The new term is necessary because of the proposed increase in the 12.5% price reduction to a 16% reduction provided for in other amendments in this Schedule.  It is necessary to retain subsection (2), as well as insert this new subsection (2A), as some price reduction provisions of the Act will not apply if the drug has been subject to a previous 12.5% or a previous 16% price reduction.

 

Item 6

This item substitutes a new heading to Subdivision B of Division 3A of Part VII.   The proposed new heading differs from the current one only in that it refers to a 16% price reduction, whereas the current one refers to a 12.5% price reduction.

 

Item 7

This item inserts ‘or 16%’ after ‘12.5%’ in paragraphs 99ACB(2)(a) to (c).  Currently the 12.5% price reduction for new brands of pharmaceutical items that are not combination items does not apply under subsection (2) if a 12.5% price reduction has previously applied in the circumstances set out.  The amendments will ensure that the increased 16% price reduction will not apply if either a 12.5% or a 16% reduction has applied in those circumstances.

 

The item also notes that 16% will be substituted for 12.5% in the headings to section 99ACB and subsection 99ACB(4).  This reflects the proposed increase in the 12.5% price reduction to 16%.

 

Item 8

This item substitutes 16% for 12.5% in subsection 99ACB(5).  The effect of this is to increase the current 12.5% price reduction for new brands of pharmaceutical items that are not combination items to a 16% reduction.

 

Item 9

This item inserts ‘or 16%’ after ’12.5%’ in paragraphs 99ACD(1A)(a) to (c).  These changes mirror, for new brands of combination items, the changes set out in item 7 for new brands of pharmaceutical items that are not combination items.

 

Currently, subsection (1A) provides that the 12.5% price reduction for new brands of combination items does not apply if a 12.5% price reduction has previously applied in the circumstances set out.  The amendments will ensure that the increased 16% price reduction will not apply if either a 12.5% or a 16% reduction has applied in those circumstances.

 

The item also notes that the headings to section 99ACD and subsection 99ACD(4) are being altered by substituting 16% for 12.5%.

 

Item 10

This item makes subsection 99ACD(5) subject to proposed new subsections (6A) and (6B), in addition to the subsections it is currently subject to, namely subsections (6) and (7).   Item 12 below substitutes a new subsection 99ACD(6) and inserts new subsections (6A) and (6B).  The operation of all of these subsections is explained under item 12.

 

Item 11

This item substitutes 16% for 12.5% in subsection 99ACD(5).  The effect is that the current 12.5% price reduction for new brands of combination items will increase to 16%.

 

Item 12

This item substitutes a new subsection (6) into section 99ACD and inserts new subsections (6A) and (6B). 

 

Section 99ACD provides for a 12.5% (to be increased to 16% under an amendment proposed in item 11 above) price reduction for new brands of combination items.  However, the reduction is modified to take account of the fact that one or more of the combination item’s component drugs may previously have had a 12.5% or a 16% price reduction and this reduction may have flowed on to the combination item.  Such flow-ons occur under section 99ACC.   Subsection 99ACC(4) provides that if the Pharmaceutical Benefits Advisory Committee (PBAC) has given advice to the Minister under subsection 101(4AC) in relation to the combination item, the Minister has a discretion to flow on all, some, or none, of the component drug’s price reduction to the combination item.  Thus, the reductions to component drugs that may previously have been flowed on to the combination item may have been 12.5% reductions or 16% reductions, and those reductions may have been fully flowed on, or partially flowed on.  New subsections (6), (6A) and (6B) adjust the reduction provided for in subsection (5) to take account of all of these possible prior reductions.

 

When a new brand of a combination item lists, the new brand will be subject to a 16% reduction under amended subsection (5), but this reduction is adjusted under new subsection (6) to reflect the flow-ons that have occurred in relation to either a 12.5% or 16% price reduction for a component drug. 

 

Subsections (6A) and (6B) deal with the special circumstance that the new brand is subject to a 16% price reduction under subsection (5) but there have been previous flow-ons from a 12.5% reduction to a component drug.

 

Subsection (6A) makes it clear that where a component drug was subject to a 12.5% reduction and this was fully flowed on to the combination item, there is to be no further reduction to the combination item in relation to that component, ie, the 16% reduction will be reduced under subsection (5) to zero in relation to that component. 

 

Subsection (6B) deals with the situation where a 12.5% reduction to a component was partially flowed on to the combination item.  In this case, the 16% reduction to the combination item is reduced so that the reduction in respect of that component is worked out as set out in subsection (6B).  For example, if half a previous 12.5% reduction was previously flowed on in relation to a component, the reduction now in respect of the component is 12.5% - ( 50% x 12.5%) = 12.5% - 6.25% = 6.25%.  Notwithstanding that the combination item will be subject to a 16% reduction under subsection (5), the effect of subsections (6), (6A) and (6B) is that the 16% reduction is reduced, so that the reduction in respect of that component is the remainder of the 12.5% not previously flowed on. 

 

Items 13 - 16

Items 13, 14, 15 and 16 substitute new subparagraphs 99ACE(3)(a)(ii), (3)(b)(ii), (4)(a)(ii) and (4)(b)(ii), respectively.  Two changes have been made to each of the current paragraphs.   The reference to 12.5 % has been changed to 16% to reflect the proposed increase in the 12.5% new brand price reduction to 16%.  Secondly, whereas the current subparagraphs are each subject to subsection (5), the new subparagraphs are proposed to be made subject to subsections (5), (5A) and (5B).   Item 17 below substitutes a proposed new subsection (5), and inserts proposed new subsections (5A) and (5B) into section 99ACE.  The operation of all of these subsections is explained under item 17.

 

Item 13 also notes that the headings to section 99ACE and subsection 99ACE(2) are being altered by substituting ‘16%’ for ‘12.5%’.

 

Item 17

This item repeals subsection (5) of section 99ACE and substitutes new subsections (5), (5A) and (5B).  These new subsections mirror new subsections (6), (6A) and (6B) in section 99ACD, the effect of which was explained under item 12 above. 

 

Section 99ACE provides for the current 12.5% (proposed 16%) price reduction for new brands of combination items to flow on to related brands of combination items.  Subsections 99ACE(3) and (4), as amended by items 13 - 16 of this Schedule, will provide for the 16% price reduction to flow on, subject to subsections (5), (5A) and (5B).  Substituted subsection (5) provides for the 16% reduction to be adjusted to reflect the extent to which prior 12.5% or 16% price reductions to component drugs have been flowed on.  New subsections (5A) and (5B) set out how these adjustments are to be made when a 12.5% reduction to a component has previously been fully or partially flowed on.  If a 12.5% reduction to a component was fully flowed on, the 16% reduction is to be adjusted so there is no further reduction in respect of that component (subsection (5A)).  If the reduction was partially flowed on, the reduction in respect of that component is the remainder of the 12.5% (subsection (5B)).

 

Item 18

This item substitutes 16% for 12.5% in item 1 of the table in subsection 99ACF(1) with the effect that there will be a 16% flow-on reduction under section 99ACH to related brands of pharmaceutical items when a new brand is subject to a 16% price  reduction.  This replaces the current 12.5% flow-on from the current 12.5% price reduction for new brands.

 

The item also notes that the headings to sections 99ACG and 99ACH are being changed to reflect the 12.5% price reduction changing to a 16% reduction. 

 



Schedule 2 - One-off 2%, 5% and 25% price reductions

 

National Health Act 1953

 

Item 1

This item inserts a cross-reference in the Interpretation provision of Part VII (subsection 84(1)) to the subsection of the Act (subsection 99ACF(5)) in which the new term relevant price is defined.

 

Item 2

This item inserts a cross-reference in the Interpretation provision of Part VII (subsection 84(1)) to the subsection of the Act (subsection 99ACA(1)) in which the new term subject to an outstanding staged reduction is defined.

 

Item 3

This item substitutes a proposed new section 99AC which explains what Division 3A is about.  The changes from the current section reflect the amendments in the remaining items of this Schedule.

 

Item 4

This item inserts a cross-reference in the Definition provision of the Division (subsection 99ACA(1)) to the subsection of the Act (subsection 99ACF(5)) in which the new term relevant price is defined.

 

Item 5

This item inserts a definition of a proposed new term subject to an outstanding staged reduction in subsection 99ACA(1).  Existing section 99ACK of the Act provides for a 25% price reduction to apply to the brands prescribed, in the stages prescribed.  A brand is subject to an outstanding staged reduction on a day, if the full 25% reduction has not occurred by the day before that day.

 

Item 6

This item inserts a new Subdivision CA into Division 3A of Part VII.

 

Subdivision CA - New brands of pharmaceutical items having drugs with outstanding staged reductions

 

This new Subdivision contains two new sections, sections 99ACEA and 99ACEB, which provide for price reductions for new brands of pharmaceutical items having the same drug as a brand of a pharmaceutical item with outstanding staged reductions.

 

Section 99ACEA     Price reduction for new brand of pharmaceutical item having drug with outstanding staged reductions - new brand bioequivalent or biosimilar to existing listed brand

 

Proposed new section 99ACEA applies to a new brand of a pharmaceutical item (‘trigger item’) that is bioequivalent or biosimilar to an existing brand of an existing item that has the same drug and manner of administration, where the existing brand and/or another brand (‘related brand’) of a pharmaceutical item that has the same drug and manner of administration as the existing and trigger items, is subject to an outstanding staged reduction.

 

The listing of the new brand triggers the bringing forward of all outstanding staged reductions for the brand with the outstanding staged reductions (under proposed new section 99ACM and amended section 99ACF) and equivalent price reductions in all other brands of pharmaceutical items having the same drug (under proposed new section 99ACN and amended section 99ACF).

 

Subsection (4) of new section 99ACEA provides that the new brand must list at a price that does not exceed the reduced price of the existing brand to which it is bioequivalent or biosimilar.

 

Subsection (2) ensures that the section cannot apply twice in relation to the same drug.

 

Section 99ACEB      New brands of pharmaceutical items having drug with outstanding staged reductions - new brands not bioequivalent or biosimilar to existing listed brand

 

Proposed new section 99ACEB applies when two or more new brands list which are bioequivalent or biosimilar to each other and have the same drug and manner of administration, but there are no existing brands which are bioequivalent or biosimilar to the new brands and have the same drug and manner of administration.  There must also be an existing brand of an existing item which has the same drug and manner of administration as the new brands and is subject to an outstanding staged reduction for the section to apply.

 

The distinction in application between section 99ACEA and section 99ACEB is in the existence or not of an existing brand of an existing pharmaceutical item which is bioequivalent or biosimilar to the new brand or brands and has the same drug and manner of administration.  Section 99ACEA applies when there is such an existing bioequivalent or biosimilar brand, and section 99ACEB applies when there is not.

 

Just as the listing of the new section 99ACEA brand (or brands) triggered the bringing forward of the outstanding staged reductions, so too does the listing of the new section 99ACEB brands.  The listing of the new section 99ACEB brands triggers the bringing forward of the outstanding staged reductions for the existing brand with the outstanding staged reductions that has the same drug and manner of administration (under proposed new section 99ACM and amended section 99ACF) and equivalent price reductions in all other brands of pharmaceutical items having the same drug (under proposed new section 99ACN and amended section 99ACF).

 

However, whereas a new section 99ACEA brand is required to list at a price that does not exceed the reduced price of the existing brand, for new section 99ACEB brands there are no existing brands to which they are bioequivalent or biosimilar and have the same drug and manner of administration.  This means there is no existing brand whose reduced price it is appropriate for them to meet.  Thus, the Minister’s power to make a price agreement in subsection 99ACEB(3) is not constrained in the way that the Minister’s power is constrained in subsection 99ACEA(4).  However, in making an agreement, the Minister will, in practice, only agree a price that has regard to the price reductions to other brands of pharmaceutical items having that drug caused by the bringing forward of the outstanding staged reductions.

 

Items 7 and 8

These items simplify the wording of subsection 99ACF(1) without changing its meaning.

 

Item 9

This item inserts into the table in subsection 99ACF(1), a new item 2A relating to proposed new section 99ACIA, which has the result that the new 2% reduction provided for in that item applies to the brands, and on the date, specified in section 99ACIA.

 

Item 10

This item replaces item 4 in the table in subsection 99ACF(1) and inserts new items 5 to 10 in the table.  Item 4 has been reworded to incorporate new terms introduced in this Bill and to give it greater clarity, without changing its intended meaning.  Items 5 to 10 specify the price reductions that are to apply in the circumstances specified in the sections of the Act referred to in the relevant item of the table.  These are proposed new price reductions and are explained under the relevant sections in item 17 below.

 

Item 11

This item substitutes a new subsection 99ACF(5), which is the definitional subsection for that section.  The definition of staged percentage has been clarified but there is no change in its intended meaning.  Two new definitions are inserted.

 

The new term outstanding staged percentage relates to brands of pharmaceutical items that are, or have been, subject to a 25% staged reduction under section 99ACK.  The outstanding staged percentage on a day is 25% less the sum of the staged percentages that have already been applied on a day before that day.  This definition is relevant to the bringing forward of outstanding staged reductions in proposed new section 99ACM.

 

The second new term relevant price of a brand of a pharmaceutical item means, for the agreed or determined price, that price on 31 July 2008, and for the claimed price, that price on the day before the reduction day.  This term is used in relation to section 99ACK to clarify its operation and is also used in relation to proposed new section 99ACM.  It identifies the price to which the staged percentage, or the outstanding staged percentage, reduction applies.

 

Item 12

This item inserts a proposed new subsection (1A) into section 99ACG.  New subsection (1A) provides that if a 12.5% new brand price reduction applies to a listed brand of a pharmaceutical item (directly or through a flow-on) on 1 December 2010, the new 2% statutory price reduction on 1 February 2011, provided for in proposed new section 99ACIA, does not apply to the brand.  The new subsection is similar to existing subsection (1) which provides that the 2% statutory price reductions on

1 August 2008, 2009 and 2010 do not apply to a brand if the brand was subject to a 12.5% reduction on 1 April or 1 August of that year. 

 

The item also notes that a new heading to subsection 99ACG(1) is being substituted.   The new heading refers to the 2% reductions on 1 August 2008, 2009 and 2010.   The heading to subsection (1A) refers to the 2% reduction on 1 February 2011. 

 

Item 13

Item 13 amends subparagraph 99ACG(2)(b)(iii).  Subsection 99ACG(2) provides that once a brand of a pharmaceutical item has been subject to a price disclosure price reduction, no statutory price reductions apply to the brand.  The subsection is being amended to exclude price reductions related to the staged 25% reductions.  Some brands of pharmaceutical items having a drug on F2T were subject to a 25% price reduction on 1 August 2008, under section 99ACJ.  The 25% reduction was applied to the remaining brands in stages, under section 99ACK and the Regulations.  With the merging of Part A and Part T of F2 on 1 December 2010, these brands will become subject to price disclosure for the first time. They are still to be subject to remaining staged reductions under section 99ACK or reductions equal to the outstanding staged percentage under section 99ACM, and related brands are still to be subject to the reductions provided for in sections 99ACL and 99ACN, despite any of the brands having been subject to a prior price disclosure price reduction.

 

The item also notes changes to two headings.  The heading to subsection 99ACG(2) is being changed to reflect the amendment to the subsection proposed in this item.  The heading to section 99ACI is being changed to distinguish the existing 2% statutory price reductions in section 99ACI from the proposed new 2% reduction in proposed new section 99ACIA in item 14 below.

 

Item 14

This item inserts proposed new section 99ACIA. 

 

Section 99ACIA    2% statutory price reduction on 1 February 2011

 

The section, in conjunction with section 99ACF, provides for a further 2% price reduction on 1 February 2011 for brands of pharmaceutical items that have drugs that were on Part A of F2 on 11 October 2010.  Part A and Part T of F2 are to merge on

1 December 2010 under amendments proposed in Schedule 3 to this Bill.  It is therefore necessary for section 99ACIA to refer to the drug having been on F2A on a date prior to 1 December 2010.  The date of 11 October 2010 has been chosen to allow sufficient time to carry out the necessary steps to implement the price reductions , including allowing for as much time as possible to notify industry of the changes.

 

New brands of pharmaceutical items which list after 11 October 2010 and before

1 February 2011, will be subject to the 2% reduction on 1 February 2011 if the pharmaceutical item has a drug which was in Part A of F2 on 11 October 2010.   The brand will be subject to the 2% reduction even though it was not listed on 11 October 2010. 

 

However, if a new brand of a pharmaceutical item lists after 11 October 2010 and the item has a new drug which was not on a formulary on 11 October 2010, the brand will not be subject to the 2% reduction.  Similarly, if a drug moves from F1 to F2 after

11 October 2010, the brands of pharmaceutical items having that drug will not be subject to the 2% reduction on 1 February 2011.  In both these cases the brands will also not be subject to the 5% reduction applying on 1 February 2011 to brands having a drug that was on Part T of F2 on 11 October 2010 under new section 99ACO (see item 17 below).  Notwithstanding that these brands will have drugs that are on F2 on 1 February 2011, they will have no reductions on that date.

 

Items 15 and 16

These items insert a proposed new subsection (1A) into section 99ACK and make the application of the section provided for in subsection (1) subject to the new subsection (1A).  The effect of this is that staged percentage reductions prescribed for the purposes of section 99ACK will not apply if all outstanding reductions have previously been brought forward, or are being brought forward on that day, under section 99ACM.  It ensures that these prescribed reductions cannot be applied twice.

 

Item 17

This item inserts 6 proposed new sections at the end of Subdivision D of Division 3A of Part VII.  Subdivision D concerns Other statutory price reductions .  The proposed new sections are sections 99ACL, 99ACM, 99ACN, 99ACO, 99ACP and 99ACQ.

 

Section 99ACL   Staged price reduction: staged reductions under section 99ACK causing statutory price reductions for other brands of pharmaceutical items having the drug

 

Proposed new section 99ACL provides for flow-ons of staged 25% reductions that apply to brands of pharmaceutical items under existing section 99ACK, to other brands of pharmaceutical items having the same drug.  Where a brand (a staged brand) of a pharmaceutical item is subject to an outstanding staged reduction, the reduction will flow on to all brands of all pharmaceutical items that have the same drug as the staged brand. 

 

The staged percentage reduction for the staged brand is, under section 99ACK, a percentage of its agreed or determined price at 31 July 2008.  Although the staged percentage reductions occur at various times, the reduction amount for the agreed or determined price is calculated each time as the prescribed percentage of the staged brand’s 31 July 2008 price.  This price was specified in existing section 99ACK to give some parity between those brands that were subject to a 25% reduction on

1 August 2008 under section 99ACJ (the reduction being 25% of their prices on the previous day) and those for which the reduction was staged under section 99ACK.

 

The percentage reduction applying to the flow-on brands is worked out under subsection (2).  The flow-on brands do not have a 31 July 2008 price, so their price reduction cannot be the staged percentage of their 31 July 2008 price, as it is for the staged brand.  A special method for calculating the reductions to apply to the flow-on brands is necessary to give parity between the staged brands and the flow-on brands.

 

The method statement in subsection (2) specifies the following steps for determining the reduction percentage that is to be applied to the flow-on brands:

 

·          The reduction amount for a reduction day for the staged brand is worked out by applying the staged percentage to its 31 July 2008 agreed or determined price;

 

·          The reduction amount worked out above is then expressed as a percentage of the agreed or determined price for the staged brand on the day before the reduction day.

 

·          This is the ‘reduction percentage’.

 

The agreed, or the determined and claimed, prices of the flow-on brands on the day before the reduction day, are reduced, on the reduction day, by the reduction percentage, under section 99ACF.

 

Section 99ACM   Staged price reduction: new brand listing bringing forward outstanding staged reductions

 

This proposed new section relates to the amendments in item 6 of this Schedule.  Item 6 contains proposed new sections 99ACEA and 99ACEB.  The circumstances in which these sections apply to a brand are set out under that item.  Relevantly, the new sections apply when a new brand (or brands) is (or are) listed, which has (or have) the same drug as a brand (the staged brand) which is subject to an outstanding staged reduction.  A brand is subject to an outstanding staged reduction on a day if the 25% price reduction was prescribed to apply to it in stages in regulations made for the purposes of section 99ACK, and the full 25% reduction has not occurred by the day before that day.

 

Proposed new section 99ACM, combined with section 99ACF, has the effect that the listing of the new section 99ACEA or 99ACEB brand, or brands, triggers the bringing forward of the outstanding staged reductions for the staged brand.

 

Section 99ACN    Staged price reduction: bringing forward outstanding staged reductions causing statutory price reduction on other brands of pharmaceutical items having the drug

 

This proposed new section flows on the reductions from proposed new section 99ACM to other brands of pharmaceutical items having the same drug.  Subsection (2) of proposed section 99ACN sets out the method for calculating the reduction for the flow-on brands.  This is necessary because the outstanding staged reductions brought forward under section 99ACM are percentages of the staged brand’s 31 July 2008 agreed or determined prices, and the flow-on brands do not have 31 July 2008 prices. 

 

Subsection (2) provides the following method for working out the reduction percentage to be applied to the current prices of the flow-on brands:

 

·          The amount by which the staged brand’s agreed or determined price is reduced (under section 99ACM and 99ACF) is calculated;

 

·          This amount is expressed as a percentage of the staged brand’s agreed or determined price on the day before the reduction day;

 

·          This is the ‘reduction percentage’.

 

The agreed, or the determined and claimed, prices of the flow-on brands (the brands to which section 99ACN applies) are reduced, under amended section 99ACF, by the reduction percentage.

 

Sections 99ACO   5% statutory price reduction for brands of pharmaceutical items having a drug that is not subject to outstanding staged reductions

 

Section 99ACP    5% statutory price reduction for brands of pharmaceutical items subject to outstanding staged reductions

 

Section 99ACQ    5% statutory price reduction for brands of pharmaceutical items having a drug that is subject to outstanding staged reductions

 

These proposed new sections, in conjunction with section 99ACF, provide for a 5% price reduction to occur on 1 February 2011 for brands of pharmaceutical items that have drugs that were in Part T of F2 on 11 October 2010.  Part A and Part T of F2 are to merge on 1 December 2010 under amendments proposed in Schedule 3 to this Bill. It is therefore necessary for section 99ACIA to refer to the drug having been on F2T on a date prior to 1 December 2010.  The date of 11 October 2010 has been chosen to allow sufficient time to carry out the necessary steps to implement the price reductions , including allowing for as much time as possible to notify industry of the changes.

 

Proposed new section 99ACO applies to brands of pharmaceutical items having a drug that is not subject to outstanding staged reductions on 1 February 2011.  The 5% reduction is applied in this case under section 99ACF in the same way as other statutory price reductions are applied - the agreed price, or the determined and claimed prices, of the brand on the day before the reduction day (31 January 2011) is, or are, reduced by the reduction percentage (5%) on the reduction day (1 February 2011).

 

Proposed new section 99ACP sets out a different method of calculating the 5% reduction for brands that have outstanding staged reductions on the reduction day.  The reason for the different method is to ensure, so far as possible, a similar impact of the 5% reduction on:

 

  • brands that took a 25% price reduction on 1 August 2008 under section 99ACJ;

 

  • brands that have taken the full 25% reduction in stages prescribed under section 99ACK; and

 

  • brands that are taking the 25% reduction in the stages prescribed, but have not yet taken the full 25% reduction (ie, they have outstanding staged reductions).

 

The first two categories of brands will be subject to section 99ACO.  The third category is subject to section 99ACP.  Under the method set out in subsection (2) of section 99ACP, the agreed or determined price of the brand on the day before the reduction day is reduced by the amount that equals 5% of  (the 31 July 2008 agreed or determined price for the brand, reduced by 25%).  The claimed price on the day before the reduction day is reduced by the amount that equals 5% of (the claimed price for the brand on the day before the reduction day, reduced by 25%).  Section 99ACF gives effect to these reductions.

 

Proposed new section 99ACQ sets out a different method of calculating the 5% reduction for brands of pharmaceutical items that have a drug that is subject to an outstanding staged reduction.   These brands themselves are not subject to an outstanding staged reduction, but as they have the same drug as those brands, their prices are adjusted in line with reductions to the prices of the staged brands.  Subsection (2) provides the following method for working out the reduction percentage to be applied to the current prices of the flow-on brands:

 

·          The amount by which the staged brand’s agreed or determined price is reduced (under section 99ACP and 99ACF) is calculated;

 

·          This amount is expressed as a percentage of the staged brand’s agreed or determined price on the day before the reduction day;

 

·          This is the ‘reduction percentage’.

 

The agreed, or the determined and claimed, prices of the flow-on brands (the brands to which section 99ACQ applies) are reduced, under amended section 99ACF, by the reduction percentage.   This special method of calculating the reductions for the flow-on brands is necessary because the reductions for the staged brand are a percentage of their 31 July 2008 prices, and the flow-on brands do not have 31 July 2008 prices.  It is similar to the method provided for in proposed new subsections 99ACL(2) and 99ACN(2), and aims to provide parity in the reductions for the brands.

 

New brands of pharmaceutical items which list after 11 October 2010 and before

1 February 2011 will be subject to the 5% reduction on 1 February 2011 if that pharmaceutical item has a drug which was in Part T of F2 on 11 October 2010.   The brand will be subject to the 5% reduction even though it was not listed on 11 October 2010.

 

However, if a new brand of a pharmaceutical item lists after 11 October 2010 and the item has a new drug which was not on a formulary on 11 October 2010, the brand will not be subject to the 5% reduction.  Similarly, if a drug moves from F1 to F2 after

11 October 2010, the brands of pharmaceutical items having that drug will not be subject to the 5% reduction on 1 February 2011.  In both these cases, the brands will also not be subject to the 2% reduction applying on 1 February 2011 to brands having a drug that was on Part A of F2 on 11 October 2010 under new section 99ACIA (see item 14 above).  Notwithstanding that these brands will have drugs that are on F2 on

1 February 2011, they will have no reductions on that date.

 

Item 18 and 19

These items amend section 99AEI.  That section applies if the Minister has, under section 99AEH, revoked or varied a determination under subsection 85(6) in relation to a brand, effectively delisting the brand, for the reason that the responsible person for the brand has failed to supply, or is unable to supply, that guaranteed brand.  Subsection 99AEI(2) enables the Minister to reverse certain price reductions to other brands which were triggered by the listing of the delisted guaranteed brand.  The addition of proposed new paragraphs (da) and (db) to subsection 99AEI(2) will enable the Minister to exercise this power if the new brand of the trigger item in section 99ACEA, or one of the new brands of the trigger items in section 99ACEB, is delisted.

 

If the Minister decides to exercise the power to reverse the price reductions under subsection 99AEI(2), the Minister may then, under subsection 99AEI(3), make a determination that the subsection that applied to the delisted brand that triggered the price reductions, is taken not to have applied to the delisted brand.  The reason for this is that the relevant sections of the Act contain provisions to the effect that the sections do not apply if they have applied before.  By, in effect, deeming the price reductions not to have occurred if they have been reversed, this allows the price reductions to occur the next time they are triggered. Unless this determination is done, the reductions could not be triggered at a later time, notwithstanding that they had been reversed on this occasion.

 

Item 19 adds paragraphs (c) and (d) to subsection 99AEI(3), which will enable the Minister to make the appropriate determinations should the brand, or brands, that was, or were, the triggers in sections 99ACEA and ACEB, be delisted.

 



Schedule 3 - Merging of Part A and Part T of F2

 

National Health Act 1953

 

Items 1 and 2

These items bring forward the date for the merging of Parts A and T of F2 into a single F2 from 1 January 2011 to 1 December 2010.  The division of F2 into two parts was always intended to be a temporary measure when the concept of formularies was introduced into the Act in 2007.  The placement of medicines in each Part was based on market factors relevant at that time.

 

Item 1 provides that regulations which placed a drug in Part A or Part T of F2 cease to be in force on 1 December 2010.  Item 2 provides the same in respect of Ministerial determinations.

 

 

 

 

 



Schedule 4  - Price Disclosure

 

National Health Act 1953

 

Item 1

This item amends section 99AD, the section which explains what Division 3B of Part VII is about.  Division 3B is about price disclosure.  The changes relate to the new situations in which price disclosure is to apply.  Under the proposed amendments, it is to apply generally in relation to brands of pharmaceutical items that have drugs on F2.   Currently, price disclosure is triggered by the listing of a new brand, and applies on a mandatory/voluntary basis.

 

Item 2

This item substitutes a new section 99ADA.  New section 99ADA provides that the Division does not apply to brands of exempt items, as does the current section that it replaces.  Exempt items are items determined by the Minister to be exempt items under section 84AH.  The provisions of the Act relating to exempt items are not being changed by this Bill.  The situations in which price disclosure now applies are included in proposed new section 99ADD.

 

Item 3

This item substitutes a new definition of adjusted approved ex-manufacturer price in subsection 99ADB(1), the definitions provision of the Division.  The definition remains the same, except for on 1 April 2012.  On that date, the adjusted approved ex-manufacturer price is the amount worked out in accordance with proposed new section 99ADJ, if that section so provides.  This special definition relates to the provision for one-off minimum average 23% price reductions on that date in the circumstances to which the section applies.  Proposed new section 99ADJ is explained in item 18 below.

 

Item 4

This item inserts a definition of the new term agreed quantity in subsection 99ADB(1), the definitions provision of the Division.  The definition is relevant to the calculation of the average unadjusted price reduction in proposed new subsection 99ADJ(3) and is explained under item 18 below.

 

Item 5

This item inserts a new definition in subsection 99ADB(1), the definitions provision of the Division.  The applicable approved ex-manufacturer price of a brand of a pharmaceutical item is the approved ex-manufacturer price of the brand on the last day of the period in respect of which the weighted average disclosed price of the brand is determined.  This price is relevant to the calculation of the minimum average 23% price reductions in proposed new section 99ADJ and to the minimum 10% reduction provided for in proposed new paragraph 99ADH(1)(c).

 

Item 6

This item inserts a new definition in subsection 99ADB(1), the definitions provision of the Division.  The unadjusted price reduction for a brand of a pharmaceutical item is, in effect, the percentage by which the weighted average disclosed price for the brand is less than the approved ex-manufacturer price on the last day of the period in respect of which the weighted average disclosed price of the brand is determined, ie, it is the percentage by which the weighted average disclosed price for the brand is less than the applicable approved ex-manufacturer price for the brand.

 

Item 7

This item amends the definition of weighted average disclosed price in subsection 99ADB(1).  The amendment omits the reference to subsection 99ADB(5), as that subsection is proposed to be repealed in item 8.

 

Item 8

This item repeals subsection 99ADB(5).  Subsection (5) was necessary for the system of mandatory/voluntary price disclosure that has operated under the current Act.  Subsection (5) ensured that if a price disclosure price reduction were to occur to a brand of a pharmaceutical item, price reductions would also occur for all brands having the same drug and manner of administration as that brand, irrespective of whether they participated in disclosure.  With the widening of the price disclosure requirements to all brands having an F2 drug, there is no longer a need for subsection (5).  For each of these brands, a weighted average disclosed price will be determined under subsection (4).

 

Item 9

This item amends subsection 99ADB(6) by omitting the reference to subsection (5), as that subsection is proposed to be repealed in item 8.

 

Item 10

Item 10 inserts a proposed new subsection (7) in section 99ADB.  The subsection relates to the Minister’s power in subsection 99ADB(4) to determine, by legislative instrument, the weighted average disclosed price for a brand of a pharmaceutical item. 

 

New subsection (7) provides that the subsection (4) legislative instrument may also include the adjusted approved ex-manufacturer price and the adjusted approved price to pharmacists for each brand.  These adjusted prices relate to the price reductions that will apply to the brands on the reduction day.  Although it would be possible for companies to calculate these adjusted prices from the weighted average disclosed price for the brand, it is proposed that they be included in the subsection (4) legislative instrument for the assistance of companies and in the interests of transparency. 

 

Proposed new paragraph 99ADH(1)(aa) provides for the Minister to determine, by legislative instrument, the reduction day on which the price reductions will occur (see item 13 below).  It is intended that the one legislative instrument will contain the weighted average disclosed price, the adjusted approved ex-manufacturer price, the adjusted approved price to pharmacists, and the reduction day, for each of the brands specified in the instrument.

 

Item 11

This item repeals the heading to Subdivision C of Division 3B of Part VII.  The subdivision currently comprises two sections, sections 99ADD and 99ADE, both of which are being repealed in the next item.

 



Item 12

This item repeals current sections 99ADD and 99ADE and inserts a new section 99ADD.  The repealed sections provide for the current system of mandatory and voluntary compliance with the price disclosure requirements, which is no longer to apply.  

 

Section 99ADD When the price disclosure requirements apply

 

Under this proposed new section, price disclosure will apply to all brands of pharmaceutical items that have a drug on F2.  The Division (and thus the price disclosure requirements) do not apply to exempt items, under section 99ADA.

 

Items 13 - 15

These items amend subsection 99ADH(1).  Subsection (1) sets out the circumstances in which the section applies.  Each of the paragraphs in subsection (1) must be satisfied for the price reductions provided for in subsections (3) and (4) to apply to a brand of a pharmaceutical item.

 

Item 13 inserts a proposed new paragraph (aa) in subsection 99ADH(1). New paragraph (aa) requires the reduction day for the brand to have been determined by the Minister in a legislative instrument.  Currently, the Minister gives notice of the reduction day under subparagraph 99ADH(1)(d)(iii).

 

Item 14 amends paragraph (b) of subsection 99ADH(1) by adding the words ‘on the reduction day’.  The paragraph now requires that there be a price agreement or determination in force for the brand on the reduction day for section 99ADH to apply.  The price reductions provided for in existing subsection (3) cannot take place on the reduction day unless there is a price agreement or determination in force on that day.

 

Item 15 substitutes a proposed new paragraph (c) in subsection 99ADH(1) and repeals current paragraph (d).  New paragraph (c) provides for the same requirement as was in current paragraph (c), except that it specifies the day on which the comparison is to be made.  Both paragraphs require the weighted average disclosed price for the brand to be at least 10% less than the approved ex-manufacturer price.  However, the current provision does not specify on which day this comparison is to be made.  The proposed new paragraph provides that the comparison is to be made in relation to the approved ex-manufacturer price on the last day of the period in respect of which the weighted average disclosed price of the brand is determined, ie, the comparison is to be made with the applicable approved ex-manufacturer price. 

 

Current paragraph (d) is being repealed as it is no longer required.  The Minister will now determine the reduction day, by legislative instrument, under paragraph 99ADH(1)(aa).   Provision has been made for the inclusion of the prices mentioned in current paragraph (d) in a legislative instrument (proposed new subsection 99ADB(7) - see item 17 below).

 

Item 16

This item substitutes a new subsection 99ADH(2).  It provides that the reduction day determined under paragraph 99ADH(1)(aa) must be a prescribed day.  This is a requirement under current paragraph 99ADH(2)(a).  The Regulations currently prescribe 1 April and 1 August in any year as reduction days.  It is proposed that an additional day, 1 December, will be prescribed from 1 December 2010.

 

Item 17

This item repeals subsection 99ADH(6).  Subsection (6) is no longer required as the Minister will in future determine the reduction day in a legislative instrument (proposed new paragraph 99ADH(1)(aa)), and may also include those prices in a legislative instrument  (proposed new subsection 99ADB(7)).

 

Item 18

This item inserts proposed new section 99ADJ.

 

Section 99ADJ             Minimum average 23% price reduction for some brands of pharmaceutical items

 

·          Overview of proposed new section 99ADJ

 

This section provides for there to be a minimum average 23% price reduction for some brands of pharmaceutical items on 1 April 2012.

 

Price disclosure is being widened to cover all F2 drugs from 1 December 2010 under amendments proposed in item 12 of this Schedule.  Section 99ADJ applies to brands of pharmaceutical items which have not previously been affected by price disclosure (either directly or indirectly), and which become subject to price disclosure on

1 December 2010. 

 

The first disclosure period for these brands will be a period of ten months from

1 December 2010 to 30 September 2011.  The information disclosed in respect of supplies of the brand during this disclosure period will be used to calculate the weighted average disclosed price (WADP) of each brand of a pharmaceutical item in the same way as all WADP calculations are done, in accordance with the regulations.  This will result in an unadjusted price reduction for each brand.  The unadjusted price reduction for a brand of a pharmaceutical item is, in effect, the percentage by which the weighted average disclosed price of the brand is less than the approved ex-manufacturer price on the last day of the period in respect of which the weighted average disclosed price of the brand is determined (ie, the applicable approved ex-manufacturer price). 

 

The average unadjusted price reduction for all brands is then calculated as set out in subsection 99ADJ(3).  If the average is 23% or greater, the normal price disclosure price reductions provided for in section 99ADH apply.  If this is the case, section 99ADJ will have had no practical effect on the brands.

 

However, if the average unadjusted price reduction is less than 23%, the unadjusted price reductions (which were based on the WADPs) are adjusted according to the method set out in subsection (6) (the GAP algorithm), until the average unadjusted price reduction is at least 23%.  The GAP-adjusted reductions are then used, in place of the unadjusted price reductions, to reduce the applicable approved ex-manufacturer price of each brand.  The result is the adjusted approved ex-manufacturer price.  The adjusted approved price to pharmacists is then calculated from this adjusted approved ex-manufacturer price in the normal manner (in accordance with the formula in the Regulations) and the approved price to pharmacists of each brand is then reduced to the adjusted approved price to pharmacists by the normal process in section 99ADH on the reduction day, 1 April 2012.

 

Special provision is made in section 99ADJ for combination items and brands with unadjusted price reductions of less than 10%.

 

·          Explanation of each subsection

 

Subsection (1)    Effect of subsection applying

 

Subsection (1) provides that if the average unadjusted price reduction for all the brands to which the section applies is less than 23%, then the adjusted approved ex-manufacturer price on 1 April 2012 for each of those brands is to be worked out under subsection (6).  No provision is made in the section for the consequences of the average unadjusted price reduction being 23% or greater.  In such a case, the normal pricing provisions of the Act will apply, meaning that the weighted average disclosed price will become the adjusted approved ex-manufacturer price.

 

 

Subsection (2)    Brands of pharmaceutical items to which section 99ADJ applies

 

Subsection (2) specifies the brands of pharmaceutical items to which section 99ADJ applies.  The first requirement is that the brand has a drug on F2 on 1 December 2010.   Secondly, the brand must not previously have been subject to price disclosure, and neither must any other brand of any pharmaceutical item having that drug and having the same manner of administration as the relevant brand.  The section thus applies to brands having drugs on F2 on 1 December 2010, being drugs that are:

 

·          F2 drugs not previously subject to price disclosure; or

 

·          F2 drugs in relation to particular manners of administration only, where those F2 drugs have previously been subject to price disclosure but only in respect of other manners of administration.

 

 

Subsection (3)   Working out the average unadjusted price reduction

 

Subsection (3) sets out the method for working out the average unadjusted price reduction for all brands of pharmaceutical items to which the section applies.

 



Method Statement

 

This method statement and the method statement in subsection (6) will be illustrated by a simple example.  For the purposes of the example:

 

  • There are only 4 brands subject to section 99ADJ (in fact there will be many thousands of brands);

 

  • The applicable approved ex-manufacturer price for each brand is:

$40,  $100,  $50  and  $50, respectively;

 

  • The total number of supplies of the agreed quantity for each brand were:

5m,  1m,  3m  and  1m, respectively; and

 

  • The unadjusted price reduction for each brand is:

25%,  30%,  10%  and  10%, respectively.

 

 

Step 1:     For each brand, multiply:

 

(a)          The applicable approved ex-manufacturer price of the brand; by

 

(b)           The total number of supplies of the agreed quantity for that brand that were supplies in respect of which the Commonwealth provided benefits (ie, made payments) during the 10 months from

1 December 2010.

 

 

Explanation of paragraph (b):

 

The agreed quantity for a brand is proposed to be defined in subsection 84(1) of the Act (see item 4 of this Schedule) as follows:

 

agreed quantity , for a brand of a pharmaceutical item, is the quantity or number of units of the pharmaceutical item by reference to which the appropriate maximum price for sales of the brand of the pharmaceutical item to approved pharmacists has been:

                                    (a)        agreed under subsection 85AD(1); or

                                     (b)        determined under subsection 85B(2).

 

When a price agreement or price determination is made for a brand of pharmaceutical item under those subsections, a price is agreed or determined for a specified quantity or number of units of the pharmaceutical item.  For instance, if the pharmaceutical item is drug A - 250mg tablets, a price may be agreed for 30 tablets.  The ‘total number of supplies’ in paragraph (b) is the total number of times 30 tablets were supplied. 

 

The data to be used in paragraph (b) are the number of such supplies in respect of which the Commonwealth paid a benefit during the 10 month period.  It is not the number of supplies that were made during the 10 month period.  There will be a lag between when a supply is made and when a payment is made by the Commonwealth in respect of that supply.  Because the data is required to be available soon after the conclusion of the 10 month period, this step uses the number of supplies in respect of which payments have been made during the 10 month period; this will be known soon after the end of the period.  The payments made (benefits provided) by the Commonwealth may be as a result of supply under the general provisions of Part VII or under special arrangements made under section 100 of the Act.

 

Example:    If,

 

                      the applicable approved ex-manufacturer price (APPAEMP) for a brand is $40;

                     

                   and

 

                           the total number of supplies for the brand was 5m;

 

                   then,

 

                               APPAEMP  x  supplies 

 

                               $  40   x   5m    =    $ 200m

 

 

                   This calculation needs to be repeated for each brand.

 

 

 

Step 2:     Multiply the amount worked out under step 1 for each brand by the unadjusted price reduction for the brand.

 

Example:    If:

                                           the unadjusted price reduction (UPR) for the brand is 25%,

 

                   and

 

                           the amount worked out under step 1 for the brand was $200m;

 

                   then,

 

                                         amount under step 1 x   UPR

 

                                        

                                          $200m  x  25%   =   $50m

 

                   This calculation needs to be repeated for each brand.

Step 3:     Divide:

 

(a)      the sum of the amounts worked out under step 2 for all the brands;  

 

by:

 

(b)     the sum of the amounts worked out under step 1 for all the brands.

 

 

Example:   Say, the amounts worked out under step 2 for the 4 brands were:     

                               $50m,  $30m,  $15m and  $5m, respectively;

                  

                   and

 

                         the amounts worked out under step 1 for the 4 brands were:

$200m,  $100m, $150m and  $50m, respectively.

                                     

                                   Then,

 

                                      Sum of amounts under step 2     =    $100m     =   0.2

                          Sum of amounts under step 1          $500m

 

 

Step 4:     The amount in step 3 is multiplied by 100, and expressed as a percentage, and is the average unadjusted price reduction for all the brands.

 

Example:                0.2 x 100  =  20

            

          The average unadjusted price reduction for all brands in our example is 20%.

 

 

 

Subsection (4)    Single brand combination items

 

Subsection (4) makes provision for single brand combination items.  A combination item is a pharmaceutical item that has a drug that contains two or more other drugs, at least one of which is a listed drug.  Single brands of combination items (single brands) are not subject to price disclosure - their drug is not on any formulary, under subsection 85AB(5).  However price disclosure price reductions to their listed component drug, or drugs, may flow on to these single brands of combination items under section 99ACC of the Act.

 

Where a brand (a related brand) of a pharmaceutical item to which section 99ADJ applies, has a drug (a component drug), which is also a drug which the drug in the combination item contains, and has the same manner of administration as the single brand, subsection (3) applies to the single brand in the same way as it applies to all brands to which section 99ADJ applies.  This means the single brand of the combination item is included in the calculation of the average unadjusted price reduction for all brands.



Example:       If:

·             A single brand of a combination item has a drug AB;

·             The drug AB contains two drugs - drug A and drug B;

·             Drug A is a listed drug;

·             A brand (related brand) of a pharmaceutical item has drug A;

·             The related brand is subject to section 99ADJ; and

·             The related brand has the same manner of administration as the single brand;

   Then,

the single brand is to be included in the brands in respect of which the average unadjusted price reduction is calculated under subsection (3).

 

However, the single brand is not a brand to which section 99ADJ applies for any purposes other than subsection (3).  This means that it is not a brand to which section 99ADJ applies for the purposes of subsection (6) and is thus not subject to the GAP algorithm in that subsection.  However, step 6 of the GAP algorithm requires the average unadjusted price reduction to be worked out under subsection (3).  As single brands of combination items are brands to which section 99ADJ applies for the purposes of subsection (3), these single brands are included in the calculation of the average unadjusted price reduction in step 6.

 

The unadjusted price reduction for the single brand is calculated on the basis of the price reduction that would occur to it under section 99ACC, if the unadjusted price reduction for the related brand were to be applied to the component drug.  At this stage, the price of the related brand having the component drug is not being reduced; however, since flow-ons to the single brand only occur if the price of the component drug is reduced, the flow-ons are calculated as if the price of the related brand were to be reduced by the unadjusted price reduction for that brand.  

 

The unadjusted price reduction for the related brand is a percentage reduction of its applicable approved ex-manufacturer price.  This will need to be converted to a reduction of its approved price to pharmacists, since the flow-on under section 99ACC to the single brand reduces its approved price to pharmacists. As an unadjusted price reduction is a reduction of the approved ex-manufacturer price, the percentage reduction to the single brand’s approved ex-manufacturer price then needs to be calculated.

 

The unadjusted price reduction for the single brand (which is included in the calculation of the average under subsection (3)), is thus the percentage by which the approved ex-manufacturer price of the single brand would be reduced if the approved price to pharmacists of the brand were to be reduced under section 99ACC to take account of the unadjusted price reduction for the related brand being applied to the component drug.

 

This process is repeated if there is more than one listed component drug involved.  The total flowed-on reductions are then used to calculate the unadjusted price reduction for the single brand.

 

 



Subsection (5) Combination items the subject of PBAC advice

 

Subsection (5) provides that if the Pharmaceutical Benefits Advisory Committee (PBAC) has given advice to the Minister under subsection 101(4AC) in relation to a combination item, and the single brand is a brand of that combination item, then the price reduction for the single brand is taken to be 0% for the purposes of subsection (3). 

 

When PBAC has given such advice (which concerns specific advantages of therapies involving the combination item over alternative therapies), the Minister has a discretion to flow on all, some, or none, of the price reductions which would otherwise flow on to brands of the combination item under section 99ACC.  Because these flow-ons are hypothetical at this stage, we do not know how the Minister would exercise this discretion.  Thus, for the purposes of calculating the average unadjusted price reduction, the flow-on is taken to be zero.  This does not affect the Minister’s discretion when the price of the related brand is actually being reduced. 

 

If subsection (5) applies, the single brand is still included in the calculation of the average under subsection (3).  The supplies of the brand are included and its price reduction (0%) is included.

 

 

Subsection (6)  Working out the adjusted approved ex-manufacturer price

                           - the GAP algorithm

 

This subsection sets out the method for working out the adjusted approved ex-manufacturer price of a brand of pharmaceutical item if the average unadjusted price reduction for all brands, worked out under subsection (3), is less than 23%. The adjusted approved ex-manufacturer price is the price that determines the price reductions that apply on the reduction day.  The adjusted approved ex-manufacturer price is converted to an adjusted approved price to pharmacists and that price becomes the new approved price to pharmacists on the reduction day, under existing subsection 99ADH(3).

 

In the usual case, and in the case of brands to which this section applies where the average unadjusted price reduction for all brands is 23% or greater, the weighted average disclosed price of the brand becomes the adjusted approved ex-manufacturer price.  However, where the average unadjusted price reduction for all brands is less than 23%, this section provides a mechanism for increasing the unadjusted price reductions of brands until that average is at least 23%. 

 

Existing section 84AI of the Act provides that if an amount worked out under Part VII is not a number of whole cents, the amount is to be rounded to the nearest cent (rounding 0.5 cents upwards).  While the aim of applying the GAP algorithm is to reach an average unadjusted price reduction of 23%, the relevant step in the GAP algorithm refers to the average being at least 23%.  This is to cover the situation where the rounding of amounts during the calculation process results in the average being marginally over 23%.

 

 



Method Statement

 

Step 1:     23% is divided by the average unadjusted price reduction for all the brands.  The result is the guaranteed adjustment proportion (GAP) .

 

Example:    Take the average unadjusted price reduction (AUPR) calculated under subsection (3), which was 20%.

 

                   Then,       

 

                                    GAP  =   23%     =    23%    =  1.15

                                                  AUPR        20%

 

 

                                    The GAP is 1.15

 

 

Step 2:     For each brand, multiply the unadjusted price reduction for the brand by the GAP.

 

Example:    Take the unadjusted price reduction (UPR) for our first brand in subsection (3), which was 25%.

 

                   Then,

 

                               UPR  x  GAP   =  25%  x 1.15

 

                                                        =  28.75%

 

                   This calculation needs to be repeated for each brand.   

 

 

Step 3:     For each brand, reduce the applicable approved ex-manufacturer price (APPAEMP) of the brand by the percentage worked out under Step 2.

 

Example:    Say, the APPAEMP of the brand is $40.                      

                              

                   Then,

 

                   APPAEMP  -  (% from step 2   x   AAEMP)

 

                   $40   -   (28.75%   x   $40)

 

                   =  $40  -   $11.50

 

                   =  $ 28.50

 

                   This calculation needs to be repeated for each brand.

 



Step 4:      This step ensures that no pharmaceutical item is priced below its lowest disclosed price .  It is necessary to make the calculation set out in this step only if the lowest disclosed price for a supply of the pharmaceutical item during the 10 month disclosure period, is higher than the amount worked out under step 3 for the brand of that pharmaceutical item.

 

                 The calculation below is to be made for each brand to which the step applies, and the result is to be expressed as a percentage.  

 

The calculation to be made under step 4, where APPAEMP is the applicable approved ex-manufacturer price of the brand, is:

 

APPAEMP - Lowest disclosed price    x  100

                                                         APPAEMP

 

                

Example:   Say, the APPAEMP of the brand is $40; and

                    say, the lowest disclosed price of the pharmaceutical item is $30.

                  

                   Then,

 

                               APPAEMP - Lowest disclosed price    x  100

                               APPAEMP

 

                   =   $40  -  $30      x   100

                               $40

 

                   =         $10     x    100

                               $40

 

                   =         25%

 

 

Step 5:     The GAP-adjusted reduction (GAR) for the brand is:

 

(a)    Unless Step 4 applies - the percentage worked out under Step 2; or

 

(b)    If Step 4 Applies - the percentage worked out under Step 4.

 

Example:   

 

(a)          If Step 4 hadn’t applied, the GAP-adjusted reduction for the brand would be 28.75%.

 

(b)         If step 4 had applied, the GAP-adjusted reduction for the brand would be 25%.

 



Step 6:     Work out under subsection (3), the average unadjusted price reduction for all the brands of pharmaceutical items to which the section applies, but in place of the unadjusted price reduction for each brand, use the GAP-adjusted reduction for the brand.

 

Example:    Take the example given in the explanation of subsection (3) above, to be the initial calculation of the average unadjusted price reduction.

 

                   The average unadjusted price reduction calculated in that example was 20%.

 

                   From step 1 above, we know that average unadjusted price reduction of 20% will give a GAP of 1.15.

 

The unadjusted price reductions for the 4 brands in subsection (3) were:

                25%,  30%,  10%  and 10%, respectively.

 

Then, the GAP-adjusted reductions will be:

                28.75%,  34.5%,  11.5%  and  11.5%.

 

Calculating the new average unadjusted price reduction , under subsection (3):

 

Step 1 for Brand A:  $ 40  x  5m    =   $ 200m

 

Step 1 for Brand B:  $100  x  1m   =   $ 100m

 

Step 1 for Brand C:  $ 50  x  3m    =   $ 150m

 

Step 1 for Brand D:  $ 50  x  1m    =   $ 50m

 

Total for step 1:  $ 500m

 

Step 2 for Brand A:  $ 200m  x  28.75%  =   $ 57.5m

 

Step 2 for Brand B:  $ 100m  x  34.5%    =   $ 34.5m

 

Step 2 for Brand C:  $ 150m  x  11.5%    =   $ 17.25m

 

Step 2 for Brand D:  $ 50m  x  11.5%      =   $ 5.75m

 

Total for step 2:  $ 115m

 

Step 3:            $115m    =    0.23

                       $500m

 

Step 4:            0.23 x 100   =    23%

 

                                   The average unadjusted price reduction is now 23 %.

 

 

Step 7:     If the average is at least 23%, reduce the applicable approved ex-manufacturer price by the GAP-adjusted reduction percentage to get the GAP-adjusted approved ex-manufacturer price (GAP-AEMP).   

 

Example:   Say,  the applicable approved ex-manufacturer price of a brand (APPAEMP) is $40;

                   and

                         the GAP-adjusted reduction (GAR) is 28.75%.

 

                Then,

 

 GAP-AEMP       =    APPAEMP  -  (GAR  x APPAEMP)

 

                             =    $40   -   (28.75%  x  $40)

                                     

                             =    $40   -   $11.50

               

                             =    $28.50

 

 

Step 8:     The adjusted approved ex-manufacturer price of the brand is the GAP-adjusted approved ex-manufacturer price.

 

                Example:    Continuing with the brand from step 7:

 

                            The adjusted approved ex-manufacturer price of the brand is $ 28.50.

 

 

Step 9:     If the average unadjusted reduction worked out under step 6 is less than 23%, repeat steps 1-6 as many times as necessary until step 7 is satisfied, as if:

 

(a)          the average unadjusted price reduction referred to in step 1 were the average unadjusted price reduction last worked out under step 6; and

 

(b)         the unadjusted price reduction referred to in step 2 were the GAP-adjusted reduction last worked out under step 5.

 

 

In the above example, the initial average unadjusted price reduction of all the brands based on the WADP calculation was 20%.  The GAP was 1.15.  The GAP-adjusted reductions for each brand resulted in a new average unadjusted price reduction of 23%. 

 

This result will be achieved through one application of the GAP algorithm if step 4 does not apply to any brand.  However, if step 4 applies to one or more brands, another iteration of the GAP algorithm will likely be necessary.  The need for an extra iteration will be more likely the greater the difference between the GAP-adjusted reduction worked out under step 4 and the reduction worked out under step 2, the higher the number of brands to which step 4 applies, and the larger the supplies of these brands.

 

Subsection (7)     Effect of step 4 applying to all brands

 

Subsection 7 provides for the possibility of step 4 in the GAP algorithm applying to all brands to which section 99ADJ applies, ie, each brand reaching the lowest disclosed price for that pharmaceutical item.  If that happens, then steps 6 to 9 cease to apply and the adjusted approved ex-manufacturer price for the brand is worked out by reducing the applicable approved ex-manufacturer price by the GAP-adjusted reduction percentage.  An example of such a calculation is given in step 7 of the GAP algorithm above. 

 

 

Subsection (8)     Effect of the unadjusted price reduction for a brand being

                             less than 10%

 

Subsection (8) provides for brands that have an unadjusted price reduction of less than 10%.  Under the amendment proposed in item 15, a brand must have an unadjusted price reduction of at least 10% for a price disclosure price reduction to occur.  To reflect the fact that no price reductions would flow from an unadjusted price reduction of less than 10%, these unadjusted price reductions are taken to be 0% for the purposes of calculating the average unadjusted price reduction in subsection (3).  The supply data for these brands will still be included in the calculation. 

 

The unadjusted price reduction for these brands is also taken to be 0% for the purposes of the GAP algorithm in subsection (6).  A brand having a 0% unadjusted price reduction, will have a 0% GAP-adjusted price reduction, and the adjusted approved ex-manufacturer price of the brand, worked out under step 7, will be the same as its applicable approved ex-manufacturer price.  This means that there will be no price reduction for the brand, which is the intended result.

 

Subsection (9)    The weighted average disclosed price of a brand

 

Subsection 9 provides that the weighted average disclosed price of a brand is taken to be the amount calculated in accordance with the regulations for the purposes of any reference to applicable approved ex-manufacturer price and unadjusted price reduction in section 99ADJ, if there has not been an amount determined by the Minister by legislative instrument.   This provision puts beyond doubt the ability of those administering section 99ADJ to make calculations as provided for in the section using the weighted average disclosed price that has been calculated in accordance with the regulations, prior to the making of the legislative instrument determining the weighted average disclosed price.

 

Item 19

This item repeals section 99AEL which enables the Minister to determine that a price disclosure election is revoked if a guaranteed brand is delisted.  Elections to participate in price disclosure are part of the mandatory/voluntary system in the current Act, and will no longer be relevant once price disclosure applies generally to F2 drugs.

 

Item 20

This is an application provision.

 

Subitem (1) provides that the amendments made by items 2, 12 and 19 of this Schedule apply in relation to supplies of brands of pharmaceutical items occurring on or after the commencement of this item (which is proposed to be 1 December 2010).  These items repeal sections of the Act that relate to the current mandatory/voluntary system of price disclosure.  The application provision reflects the fact that at the commencement, brands of pharmaceutical items will be in price disclosure cycles that commenced under the mandatory/voluntary scheme and that scheme is relevant to supplies of those brands made up to the commencement.   Those price disclosure cycles will continue after the commencement.  By providing in this subitem that the amendments made by the specific items of this Schedule apply in relation to supplies of brands of pharmaceutical items occurring on or after the commencement of this item, it is not intended to imply that the amendments made by other items in the Schedule do not apply in that way.

 

Subitem (2) provides that the amendments made by items 7 - 9 and 13 - 17 of this Schedule apply in respect of price disclosure cycles whose disclosure periods end on or after the commencement.  On 1 October 2010 (when this item is proposed to commence), there will be 3 price disclosure cycles whose disclosure periods have ended, but which have not yet had consequent price reductions.  This subitem has the effect that these 3 cycles will continue under the current provisions of the Act, rather than the provisions as amended by the specified items.   The intention of this subitem is to make this provision in relation to those three cycles.  Thus, current provisions relating to the determination of the weighted average disclosed price and the giving of notices to responsible persons will continue for these cycles.   

 

 

 

 

 

 

 



Schedule 5 - Under co-payment data

 

National Health Act 1953

 

Item 1

This item adds a proposed new section 98AC at the end of Division 2 of Part VII.  This section requires approved suppliers to provide information to the Secretary in relation to the under co-payment pharmaceutical benefits that they supply.

 

Approved suppliers making a claim for payment from the Commonwealth must provide information to the Secretary under subsection 99AAA(3).  However, at present the Commonwealth obtains no information about supplies of pharmaceutical benefits in respect of which the approved supplier is not entitled to a payment from the Commonwealth (other than some limited information in relation to safety net eligibility).  

 

Patient co-payments are provided for in subsection 87(2) of the Act.  The general co-payment is currently $33.30 and the concessional co-payment is $5.40.   Where the Commonwealth price is greater than the co-payment, the Commonwealth pays the difference to the approved pharmacist or approved medical practitioner under paragraph 99(2)(b) of the Act.  Where the Commonwealth price is less than, or equal to, the co-payment, the Commonwealth makes no payment.  It is these under co-payment pharmaceutical benefits in respect of which the approved suppliers will now be required to provide information.  Although payments to approved hospital authorities are made on a different basis, the same principle applies, ie, they currently are not required to provide information about their supply of pharmaceutical benefits in respect of which they are not entitled to payment from the Commonwealth.  They will be covered by the new provisions, however.

 

Any use or disclosure by the Commonwealth of under co-payment data will be in accordance with the Privacy Act 1988 and the secrecy provisions of the National Health Act 1953 .   It is proposed that the Information Commissioner’s guidelines under section 135AA be widened to include this new under co-payment information.

 

Existing offence provisions will apply in relation to the new provisions proposed in this Schedule.  For instance, it is an offence under existing paragraph 103(5)(h) of the Act for a person to fail to comply with a provision of Part VII of the Act which is applicable to the person.

 

 

Section 98AC    Information about supplies

Subsection (1) requires an approved supplier that supplies a pharmaceutical benefit to give information to the Secretary in relation to that supply.  The approved supplier must give the information specified in rules made by the Minister under paragraph (4)(a) and must give it in accordance with the rules made by the Minister under paragraph (4)(b). 

 

Subsection (2) confines the operation of subsection (1) to situations where the approved supplier does not make, or propose to make, a claim for payment in relation to the supply (ie, under co-payment supplies).  Information in relation to supplies in respect of which the supplier makes, or proposes to make, a claim for payment must already be provided under existing subsection 99AAA(3).

 

Subsection (3) provides that subject to the rules made by the Minister under paragraph (4)(b), subsections 99AAA(4) and (5) and section 99AAB (about the procedures for the giving of information) apply to the giving of information under this section in the same way as they apply in relation to the giving of information under section 99AAA.  The intention is that the same procedures should apply to the giving of information about all pharmaceutical benefits, whether under co-payment supplies or not.

 

Subsection (4) empowers the Minister, by legislative instrument, to make rules specifying the information to be given (paragraph (a)) and the procedures for giving it (paragraph (b)).

 

Subsection (5) makes it clear that different procedures may be specified for the giving of information by electronic means and by other means in the rules made under paragraph (4)(b).  A similar provision applies to the making of rules under paragraph 99AAA(8)(a); subsection 99AAA(10) allows for different procedures to be defined for the making of claims supported by information provided by electronic means and by other means.

 

Subsection (6) provides that the rules made under this section and the rules made under subsection 99AAA(8) may be made in the same legislative instrument.  That is, the rules applying to the supply of information concerning under co-payment supplies made be made in the same instrument as the rules concerning over co-payment supplies.

 

Items 2 and 3

Item 2 amends subsection 99AAA(8) by changing the requirement for the Minister to make rules under that subsection in writing, to a requirement that they be made by legislative instrument.  The provisions of the Legislative Instruments Act 2003 will thus apply, including the provisions for Parliamentary scrutiny.  Subsection 99AAA(9) which provided for disallowance of the subsection (8) instrument is thus no longer required and is repealed by item 3.

 

Item 4

Item 4 amends paragraph 135AA(1)(c) so that subsection 135AA(1) also applies to a supply of a pharmaceutical benefit to which subsection 98AC(1) applies.  The Information Commissioner must issue privacy guidelines relating to information to which section 135AA(1) applies.  The Information Commissioner may also issue further guidelines to vary the existing guidelines.  The purpose of this amendment is to expand the scope of subsection 135AA(1) so that it also applies to information relating to an individual, held by an agency, and obtained by an agency in connection with a supply of a pharmaceutical benefit to which subsection 98AC(1) applies (ie, under co-payment data).  Section 135AA required amendment in order to apply to under co-payment data because a claim for payment of benefit under the Pharmaceutical Benefits Program is not submitted to Medicare Australia by approved suppliers.

 



Items 5 and 6

Item 5 and 6 amend paragraph135AA(2)(a), by inserting the phrase 'or who provided the pharmaceutical benefit' into subparagraph 135AA(2)(a)(i), and the phrase 'or the pharmaceutical benefit' into subparagraph 135AA(2)(a)(ii).  Paragraph 135AA(2)(a) provides for certain situations where subsection 135AA does not apply, relating to the providers of goods or services in connection with a claim for benefit under the Medicare Benefits Program or the Pharmaceutical Benefits Program.  The application of paragraph 135AA(2)(a) is unaffected, except to apply paragraph 135AA(2)(a) in the same way in relation to a supply of a pharmaceutical benefit to which subsection 98AC(1) relates.  Paragraph 135AA(2)(a) required amendment, in light of the amendment to subsection 135AA(1) in item 4, because a claim for payment under the Pharmaceutical Benefits Program is not submitted to Medicare Australia by approved suppliers.

 

Item 7

Item 7 inserts a new subsection (5B) into section 135AA.  The purpose of new subsection 135AA(5B) is to apply the same provision as contained in subsection 135AA(5A) to a supply of pharmaceutical benefit to which subsection 98AC(1) applies.  New subsection 135AA(5B) provides that nothing in section 135AA, or the guidelines issued by the Information Commissioner, precludes the inclusion, in a database of information held by the Medicare Australia CEO, and relating to supplies of pharmaceutical benefits to which subsection 98AC(1) applies, of the pharmaceutical entitlements number applicable to the person to whom each supply relates, as a person covered by a benefits entitlement card, or as a person included within a class identified by the Minister in a determination under subsection 86E(1).

 

 



Schedule 6  -  Special  Arrangements 

 

Part 1 - Main amendments

 

National Health Act 1953

 

Item 1

This item inserts, in the Interpretation provision of Part VII (subsection 84(1)), a cross-reference to the proposed new subsection (subsection 84ABA(3)) in which the new term pharmaceutical benefit has a drug is to be defined.

 

Item 2

This item repeals the definition of special pharmaceutical product in subsection 84(1).  This term is no longer needed under the amendments proposed in this Schedule.  However, the products that were special pharmaceutical products will continue to be available under special arrangements under section 100 of the Act in the same way as they are currently available.  The listing process for section 100 medicines is being simplified and streamlined by the amendments proposed in this Schedule, with the result that section 100 medicines will come within the concepts of a pharmaceutical benefit , a pharmaceutical item and a listed drug .  The provisions of the Act will then apply to section 100 medicines in the same way that they apply to all other PBS medicines (although a section 100 arrangement may modify the application of those provisions).

 

Item 3

This item inserts proposed new subsection 84ABA(3).  The subsection explains that a reference to a pharmaceutical benefit having a drug is a reference to the pharmaceutical benefit having a drug declared under subsection 85(2).  Specifically, it is the drug declared under subsection 85(2) which is referred to in paragraph (a) of the definition of pharmaceutical benefit in subsection 84(1) of the Act, in relation to that pharmaceutical benefit.   This concept of pharmaceutical benefit having a drug mirrors the concepts of pharmaceutical item having a drug, and combination item having a drug, in the other subsections of section 84ABA.

 

The item also notes that the heading to section 84ABA is being altered by adding a reference to pharmaceutical benefits.

 

Item 4

This item substitutes two new notes at the end of subsection 85(1) of the Act.  The subsection provides that benefits shall be provided by the Commonwealth in accordance with Part VII in respect of pharmaceutical benefits.  The benefits provided by the Commonwealth are the payments it makes in respect of those pharmaceutical benefits.  The pharmaceutical benefits supplied under Part VII may be:

·          pharmaceutical benefits made generally available; or

·          pharmaceutical benefits made available only under special arrangements made under section 100; or

·          pharmaceutical benefits made available both generally and under special arrangements made under section 100. 

 

The new notes alert readers of the Act to the following matters, and to the associated provisions of the Act:

 

·          While most pharmaceutical benefits are generally available for supply under Part VII, some can only be supplied under Part VII under special arrangements made under section 100 (section 85AA); and

 

·          A special arrangement under section 100 may modify the effect of Part VII in relation to the supply of the pharmaceutical benefits covered by the arrangement (subsection 100(3)).

 

The notes reflect the fact that all of the section 100 only pharmaceutical benefits are pharmaceutical benefits that are supplied under Part VII, and that all of the provisions of Part VII apply to them, except as provided for in the section 100 arrangement.

 

The item also notes that a new heading, Pharmaceutical benefits , is being inserted for subsection 85(1).

 

Item 5

This item inserts two new notes under subsection 85(2).  These new notes alert readers of the Act to the following matters, and to the associated provisions of the Act:

 

·          A drug may not be declared under subsection 85(2) unless the Pharmaceutical Benefits Advisory Committee (PBAC) has recommended that it be so declared, ie, the Minister may only list a new drug on the Pharmaceutical Benefits Scheme (PBS) if PBAC has recommended that it be listed (subsections 101(4) and (4A)); and

 

·          The Minister may not revoke or vary a subsection 85(2) declaration so as to delist a drug unless the Minister has first obtained advice from PBAC (subsection 101 (4AAB)).

 

The item also notes a new heading to subsection 85(2), Drugs etc , is being inserted.

 

Item 6

This item substitutes a new subsection 85(2A).  The current subsection (2A) is being moved to the end of section 85 to become new subsection 85(7) under item 8 of this Schedule.

 

New subsection (2A) provides the mechanism for declaring drugs that can be supplied only under special arrangements under section 100.  Under the current Act, drugs which are to be available only under section 100 arrangements are declared under subsection 100AA(2).  Under the proposed amendments, such drugs will be declared under subsection 85(2) and under subsection 85(2A). 

 

Proposed new subsection 85(2A) provides that if the Minister declares a drug under subsection 85(2), and PBAC has recommended that the drug be made available only under a special arrangement under section 100, the Minister must, by legislative instrument, declare that the drug can only be supplied under a section 100 special arrangement.

 

New subsection (2A), combined with existing subsection (2), ensures that PBAC’s role in relation to the listing of drugs will be the same under the amended Act as it currently is. 

 

As is the case now, under the amended Act the Minister will not be able to list a drug on the PBS, either as a generally available drug, or a section 100 only drug, unless PBAC has recommended that it be so listed.  The listing procedures for generally available drugs are not changed by the amendments.  Existing subsection 101(4) requires there to be a PBAC recommendation before a drug may be declared under paragraph 85(2)(a).  This means that a drug may not be made generally available on the PBS without a PBAC recommendation. 

 

Subsection 85(2A), which is the proposed new mechanism for declaring drugs to be section 100 only drugs, provides no general power for the Minister to make such declarations.  The power is limited to the situation where PBAC has made a recommendation that the drug be a section 100 only drug.  This equates to the current requirement for a PBAC recommendation before a drug is declared as a section 100 only drug (existing subsection 100AA(4)); section 100AA is proposed to be repealed in item 15 of this Schedule.

 

If PBAC recommends that a drug be made generally available under Part VII, the Minister may declare the drug under subsection 85(2), but PBAC’s advice is not binding and the Minister may choose not to make the declaration (existing subsections 85(2) and 101(4), which are not modified by this Bill).

 

If PBAC recommends that a drug be made available only under special arrangements under section 100, the Minister may, under the existing Act, declare the drug under subsection 100AA(2), but PBAC’s advice is not binding and the Minister may choose not to make the declaration (subsection 100AA(4)).  Under the amended Act, the same situation applies.  The Minister may choose to accept PBAC’s recommendation and declare the drug under both subsections 85(2) and 85(2A).  Alternatively, the Minister may choose not to accept PBAC’s advice and make no declarations in relation to the drug. What the Minister may not do, however, having received a ‘section 100 only’ recommendation from PBAC is make the drug generally available under Part VII, ie, the Minister may not make a subsection 85(2) declaration in relation to the drug, without also making a subsection 85(2A) declaration.

 

The requirements for the delisting drugs are dealt with in item 19 below.

 

This item also inserts a note under the proposed new subsection alerting readers to the proposed new provision of the Act (subsection 101(4AAF)) concerning delisting of section 100 only drugs.

 

Item 7

This item repeals subsections 85(2AA), (2AB) and (2AC).  Item 19 reinserts these subsections as subsections 101 (4AAA), (4AAB) and (4AAC).  They are being moved to section 101 to consolidate, so far as possible, PBAC’s functions in relation to the listing and delisting of drugs in the one section, along with all the other functions of PBAC.

 

New headings to subsections 85(3), (5) and (6) are also noted in this item.  The headings are to be Forms, Manners of administration , and Brands , respectively.

 

Item 8

This item inserts proposed new subsections 85(7) and (8).

 

Proposed new subsection (7) is the current subsection (2A).  Its move is proposed because it deals with ‘pharmaceutical benefits’, rather than ‘drugs’, and thus is thought to fit better at the end of the section, ie, at the end of the listing process, rather than at the declaration of a drug stage.  A new heading is being inserted for the subsection.  There are minor wording changes to the subsection to align the wording with current drafting practice, but they do not affect the meaning of the subsection.

 

Proposed new subsection (8) has the heading Pharmaceutical benefits that can only be supplied under special arrangements

 

Proposed new paragraph 85(8)(a)  provides that the Minister may, by legislative instrument, determine that particular pharmaceutical benefits can only be supplied under a special arrangement under section 100.   This subsection provides a transparent mechanism for making certain forms of drugs available only under section 100 arrangements, while other forms of the drugs are available generally under

Part VII. 

 

As the drug is to be available generally, the drug is declared under subsection 85(2), and no declaration of the drug is made under subsection 85(2A).  The forms, manners of administration and brands in which the drug is to be available are then determined under subsections (3), (5) and (6) respectively.  The Minister may then determine, under new paragraph 85(8)(a), that particular pharmaceutical benefits (ie, brands of drugs in particular forms and with particular manners of administration), are to be available only under special arrangements made under section 100.  For instance, the Minister may make such a determination in relation to a particular form of a medicine (eg, a higher strength, or an injectible version), which is used under specialist supervision in a hospital.

 

It will be necessary for the Minister to make a determination under new paragraph 85(8)(a) to come into effect on the commencement of this amendment (which is expected to be 1 December 2010).   This declaration will cover all existing section 100 only pharmaceutical benefits (other than those pharmaceutical benefits that have a s100 only drug, ie, a drug covered by subsection 85(2A)), ie, it will cover all section 100 only forms and manners of administration of a drug where other forms and manners of administration of the drug are generally available.  

 

Proposed new paragraph 85(8)(b)  provides that the Minister may, by legislative instrument, determine that one or more of the circumstances in which a prescription may be written for a pharmaceutical benefit under paragraph 85(7)(b) are circumstances in which the particular pharmaceutical benefit can only be supplied under special arrangements under section 100. 

 

Where the Minister has determined circumstances in which a prescription for particular pharmaceutical benefit may be written under paragraph 85(7)(b), the Minister may then determine, under paragraph 85(8)(b), that in some of those circumstances the pharmaceutical benefit is to be only available under section 100 arrangements.

 

A particular pharmaceutical benefit may be suitable for treatment of several conditions or ‘indications’, but for a particular indication it may only be made available under section 100 arrangements.   For example, a particular pharmaceutical benefit may be generally available for use in the treatment of a range of conditions, but may be made available only under section 100 arrangements for the treatment of a particular paediatric condition, where that treatment is given under specialist supervision in a hospital. 

 

Item 9

This item inserts proposed new section 85AA.

 

Section 85AA    Pharmaceutical benefits that can only be supplied under a special arrangement

 

This section provides for the consequences of a drug being declared under subsection 85(2A) and a determination being made in respect of a pharmaceutical benefit under subsection 85(8).

 

Subsection (1) provides that if a drug is declared under subsection 85(2A), then every pharmaceutical benefit that has that drug can only be supplied under Part VII in accordance with a special arrangement under section 100.

 

Subsection (2) provides that if the Minister makes a determination in relation to a pharmaceutical benefit under paragraph 85(8)(a), then that pharmaceutical benefit may only be supplied under Part VII in accordance with a special arrangement under section 100.

 

Subsection (3) provides that if the Minister makes a determination under paragraph 85(8)(b) about the circumstances in which a pharmaceutical benefit may only be supplied under section 100 arrangements, then in those circumstances, that pharmaceutical benefit may only be supplied under Part VII in accordance with a special arrangement under section 100.

 

Item 10

This item substitutes a reference to subsection 85(7) in place of the current reference to subsection 85(2A) throughout section 88A.  This reflects the move of this subsection to the end of section 85.  Its wording was not altered.

 

Items 11

This item and items 12, 13 and 14 amend section 100. 

 

Item 11 replaces the existing term special pharmaceutical product with the term pharmaceutical benefit in subsection 100(1).  This reflects the fact that all medicines supplied under section 100 arrangements are to come within the definition of a pharmaceutical benefit under the amendments proposed in this Schedule.   Section 100 arrangements may now be made in respect of pharmaceutical benefits, rather than special pharmaceutical products.  While a change in terminology is proposed, there will no change to the categories of medicines in respect of which section 100 arrangements may be made.

 

The second change that would result from the amendment in item 11 is that the Minister would in future be able to make special arrangements for, or in relation to , providing that an adequate supply of pharmaceutical benefits will be available in the specified circumstances.  Currently, section 100 provides that the Minister may make special arrangements for providing that an adequate supply will be available.  There has been some uncertainty as to the scope of the arrangements that may be supported by this wording.  The inclusion of the words for, or in relation to, is intended to make it clear that a section 100 arrangement may include provisions dealing with any matter that relates to the supply of the pharmaceutical benefits under the arrangement and is not limited to matters that directly ensure that an adequate supply is available to persons in the specified circumstances.  An arrangement may also include provisions on certain matters that could be dealt with under other provisions of the Act, such as by attaching conditions to an approval. 

 

Items 12 and 13

Item 12 substitutes new paragraphs 100(1)(b) and (c) in place of current paragraph (b) and item 13 inserts a proposed new subsection 100(1A) which supports paragraph 100(1)(b).

 

Proposed new paragraph (b) is very similar to current subparagraph (1)(b)(ii).  The word medical is being removed from the expression medical treatment , however.  Part VII of the Act provides for the supply of pharmaceutical benefits for dental and optometrical purposes.  The removal of medical from this paragraph will enable section 100 arrangements to be made to ensure supply of pharmaceutical benefits to persons who are receiving treatment , and so will now include dental and optometrical treatment, for instance. 

 

New paragraph (b) enables the provision of medicines under section 100 arrangements that are not generally available under Part VII.  (Existing subparagraph 100(1)(b)(ii) currently provides for this.)  This paragraph will support making special arrangements under s 100 in relation to the medicines covered by new subsection 100(1A), ie, where the Minister has declared or determined:

 

·          that a drug be made available only under special arrangements under section 100 (new subsection 85(2A));

 

·          that a pharmaceutical benefit be made available only under special arrangements under section 100, eg, a section 100 only form of a medicine (new paragraph 85(8)(a)); or

 

·          the circumstances in which a pharmaceutical benefit can only be supplied under special arrangements under section 100 (new paragraph 85(8)(b)).

 

 

There are a variety of reasons that the Minister might make declarations or determinations under new subsections 85(2A) and 85(8), including cost considerations and patient safety. For instance, methoxyflurane is currently only available under a section 100 arrangement because that drug is only suitable for use in an emergency under the supervision of trained personnel and is thus not suitable to be made generally available under Part VII.  PBAC recommended that this drug should only be made available under section 100.  

 

Proposed new paragraph (c) widens the current provision in relation to convenience and efficiency.  The current provision links convenience and efficiency to the circumstances in which the patient is receiving treatment.  The proposed new provision enables pharmaceutical benefits to be supplied under a section 100 arrangement if they can be more conveniently or efficiently supplied under the arrangement.  The amendments will ensure that section 100 arrangements can be made for this purpose:

  • not only to address convenience and efficiency to the patient, but also to address convenience and efficiency to the Commonwealth;
  • where it is more convenient or efficient to supply the pharmaceutical benefits using a section 100 arrangement, and not only when the benefits cannot be conveniently or efficiently supplied under the general provisions of Part VII.

This will enable arrangements to be made to ensure that pharmaceutical benefits are supplied at a more efficient cost to the Commonwealth.  For example, it will ensure that section 100 arrangements aimed at minimizing wastage and unnecessary expense in the delivery of particular treatments, are able to be made.   

It will also, for example, enable arrangements to be made:

·          where pharmaceutical benefits can be more conveniently supplied to particular persons under a section 100 arrangement because provisions of Part VII (or instruments made for the purposes of Part VII) operate as a barrier to those persons obtaining medication (for example, it may be that pharmaceutical benefits cannot be conveniently supplied to some sections of the population, including certain indigenous persons or certain homeless persons, because the requirement to pay patient co-payments operates as a barrier to supply);

·          where pharmaceutical benefits can be more conveniently supplied under a section 100 arrangement because provisions of Part VII (or instruments made for the purposes of Part VII) operate as a barrier to approved suppliers distributing those products (for example, the remuneration arrangements provided for under the Act may not be adequate in certain circumstances);

·          where pharmaceutical benefits can be more conveniently supplied to particular persons under a section 100 arrangement because there is not an approved supplier in the area in which the person lives, or an approved supplier that the person can readily access.

Paragraphs 100(1)(a), 100(1)(b) and 100(1)(c) are not intended to limit each other in any way and a particular arrangement may be made for more than one purpose.

 

Item 14

This item amends subsection 100(3).  Current subsection (3) enables a section 100 arrangement to modify the effect of Part VII of the Act in relation to the supply of pharmaceutical benefits covered by the arrangement.  The amendments make it clear that a section 100 arrangement may also modify the effect of regulations and other instruments made for the purposes of Part VII.  For example, in a hospital setting it may be more convenient and efficient to order the supply of a pharmaceutical benefit using a medication chart, rather than preparing a separate prescription in accordance with the regulations.

 

Item 15

This item repeals section 100AA.  As all medicines supplied under section 100 arrangements will now be pharmaceutical benefits, the concept of a special pharmaceutical product is no longer required.  The matters currently dealt with in section 100AA will be covered by other provisions in the Act under other amendments proposed in this Schedule .

 

Item 16 to 18

These amendments remove references to special pharmaceutical products from section 101.  In each case, there is a reference to pharmaceutical benefits, which will remain, and which will now also cover all section 100 medicines.  Thus, these amendments have not resulted in any change in application of the provisions concerned.

 

Item 18 also inserts a heading to subsection 101(4) ‘ Functions relating to declarations under subsection 85(2)

 

Item 19

This item inserts 6 new subsections into section 101.

 

·          Proposed new subsections 101(4AAA), (4AAB) and (4AAC)

 

Existing subsections 85(2AA), (2AB) and (2AC) have been proposed to be repealed in item 7 of this Schedule.  These three subsections are reinserted by this item as new subsections 101(4AAA), (4AAB) and (4AAC).  No change has been proposed to the subsections.   They are simply being moved from section 85 to section 101 in order to consolidate, so far as possible,  the PBAC functions in relation to the listing and delisting of drugs into the one section of the Act.  Notes are being inserted into section 85 to alert readers to the related subsections in section 101.

 

These three subsections, which deal with the delisting of drugs (revocations and variations of subsection 85(2) declarations of drugs), will now follow subsections 101(4) and (4A) which deal with PBAC’s role in relation to the listing of drugs.  The new heading above the four subsections (which is noted in item 18 above) is to be Functions relating to declarations under subsection 85(2) .



·          Proposed new subsections 101(4AAD), (4AAE) and (4AAF)

 

New subsections (4AAD), (4AAE) and (4AAF) are proposed to be inserted under the heading, Functions relating to declarations under subsection 85(2A) .  The Minister may make a declaration under proposed new subsection 85(2A) in relation to a drug that has been declared under subsection 85(2).  The effect of a subsection 85(2A) declaration is that the drug may only be supplied under special arrangements made under section 100, and may not be made available generally under Part VII.

 

Proposed new subsection (4AAD) provides PBAC with the function of providing recommendations to the Minister from time to time as to the drugs which it considers should be made available only under special arrangements under section 100.  This function complements the PBAC function provided for in subsection 101(3) of providing recommendations to the Minister as to the drugs which should be made available as pharmaceutical benefits under Part VII.  Although subsection 101(3) is sufficiently wide to cover section 100 drugs, as they will be pharmaceutical benefits made available under Part VII, a separate PBAC function in relation to section 100 only drugs is thought to be desirable.

 

Proposed new subsection (4AAE) gives the Minister the power to vary or revoke, by legislative instrument, a declaration under subsection 85(2A) in relation to a drug.  This mirrors the PBAC role in relation to subsection 85(2) declarations, which is proposed to be moved to subsection 101(4AAA).

 

The combined effect of subsections 101(4AAE) and (4AAA) is that:

 

·          If the Minister wishes to delist a section 100 only drug, so that it is not available at all under Part VII:

 

o    The Minister must revoke both the subsections 85(2A) and 85(2) declarations in relation to that drug, so that it is no longer a listed drug;

 

o    Advice is required from PBAC before the subsection 85(2) declaration may be revoked, and that advice must be tabled in Parliament.

 

These requirements are the same as the current requirements for delisting of a section 100 only drug in subsections 100AA(5), (6) and (7), which are proposed to be repealed.

 

Proposed new subsection (4AAF) provides that:

 

          If:

(a)            the Minister proposes to revoke or vary a declaration under subsection 85(2A) in relation to a drug; and

 

(b)           thereafter the drug could be supplied under Part VII otherwise than under a special arrangement under section 100:

 

    then, the Minister can only make the revocation or variation if:

 

(c)            the Minister also revokes the declaration under subsection 85(2); or

 

(d)           PBAC recommends against the Minister revoking the subsection 85(2) declaration.

 

The effect of subsection (4AAF) is that:

 

·          If the Minister wishes to change the availability of a drug that is currently only available under section 100 to general availability under Part VII, then:

 

o    The Minister must have a recommendation from PBAC that the subsection 85(2) declaration should not be revoked.  This recommendation is, in effect, a recommendation that the drug should be made generally available under Part VII.

 

This requirement for a PBAC recommendation before making a drug generally available under Part VII is the same as the requirement under the current legislation.

 

Items 20 - 22

These items omit references to special pharmaceutical product, or products, in the sections or subsections specified.  In each case, a reference to pharmaceutical benefit, or benefits, remains.  As all special pharmaceutical products will be pharmaceutical benefits under the amendments proposed in this Schedule, there will be no change in application of the sections or subsections.

 

Items 23 - 25

These items omit references to special pharmaceutical product or products, and associated references to product, or products, in the specified subsections of section 135AA.  In each case, a reference to pharmaceutical benefit, or benefits, remains.  As all special pharmaceutical products will be pharmaceutical benefits under the amendments proposed in this Schedule, there will be no change in application of the subsections.

 

Item 26

This item repeals the definition of special pharmaceutical product in subsection 135A(24).  As the term is no longer to be used in the section, the definition is no longer required.

 

Item 27

This item omits special pharmaceutical products from the definition of Pharmaceutical Benefits Program in subsection 135AA(11).  A reference to pharmaceutical benefits remains.  As all special pharmaceutical products will be pharmaceutical benefits under the amendments proposed in this Schedule, there will be no effective change in the meaning of the definition.

 

 



Part 2 - Consequential amendments

 

Health Insurance Act 1973

 

Item 28

This item substitutes a proposed new definition of pharmaceutical benefit in subsection 81(1) of the Health Insurance Act 1973 .  The new definition differs from the current one in that it omits reference to special pharmaceutical products.  However, section 100 medicines will be pharmaceutical benefits covered by the new definition.

 

 

Medicare Australia Act 1973

 

Item 29

This item substitutes a proposed new definition of pharmaceutical benefit in section 3 of the Medicare Australia Act 1973 .  The new definition differs from the current one in that it omits reference to special pharmaceutical products.  However, section 100 medicines will be pharmaceutical benefits covered by the new definition.

 

 

Part 3 - Application and transitional provisions

 

Item 30    Definitions

This item defines two terms that are used in the application and transitional provisions in this Part.

Item 31    Application of amendments

This item provides that the amendments made by this Schedule apply on and after the commencement of the Schedule (commencement) in relation to:

·                 declarations or determinations that are made under section 85 on or after commencement (including declarations or determinations that affect the operation of section 100 arrangements made before commencement); and

·                 special arrangements that are made under section 100 on or after commencement.

The purpose of the provision is to ensure that instruments and arrangements made under sections 85 and 100 prior to commencement continue to operate after commencement. However, it is intended that declarations and determinations made under section 85 after commencement, including under the new power in subsection 85(7), will operate in relation to section 100 arrangements made prior to commencement.

Item 32    Transitional provisions relating to legislative instruments made before commencement

Subitem (1)

This subitem provides that drugs and medicinal preparations that are specified in Schedule 6 of the existing instrument made under subsection 85(2) of the Act (as amended) are to be treated (and may be dealt with) as if a declaration had been made in relation to them under subsections 85(2) and 85(2A).  The effect of the amendment is to provide for those drugs to be made available only through special arrangements made under section 100.  This reflects existing practice.  Currently, the drugs specified in Schedule 6 of the declaration made under subsection 85(2) of the Act are only available through special arrangements under section 100. 

Subitem (2)

This subitem provides that the drug or medicinal preparation (methoxyflurane) specified in the existing instrument made under paragraph 100AA(2)(a) of the Act is to be treated (and may be dealt with) as if a declaration had been made in relation to that drug under subsections 85(2) and 85(2A). Methoxyflurane is currently made available through a special arrangement under section 100.  This transitional provision is necessary as a consequence of the repeal of section 100AA.  It ensures that methoxyflurane may continue to be made available through section 100 arrangements after section 100AA is repealed.

Subitem (3)

The existing power in subsection 85(2A) has been moved to subsection 85(7).  This subitem preserves any instrument made under subsection 85(2A) in force immediately before commencement by specifying that such an instrument is to be treated (and may be dealt with) as if it had been made under new subsection 85(7).

 

Item 33    Transitional provisions relating to PBAC advice or recommendations given before commencement

Subitem (1)

Currently, it is necessary for the Minister to obtain advice from PBAC under subsection 85(2AB) before exercising the power in subsection 85(2AA) to delist a drug or medicinal preparation.  This subitem specifies that any advice provided by PBAC prior to commencement under subsection 85(2AB) in relation to a proposed revocation or variation under subsection 85(2AA) is to be treated (and may be dealt with) as if it had been obtained under subsection 101(4AAB), and as if it related to a proposed revocation or variation under subsection 101(4AAA).  This is a consequential amendment that is necessary because the existing subsections 85(2AA) and 85(2AB) are being moved to subsections 101(4AAA) and 101(4AAB).  The purpose of the subitem is to ensure that the relocation of the provisions does not require the Minister to obtain fresh advice from PBAC in relation to a matter that the Committee has already considered.

Subitems (2) and (3)

Currently, it is necessary for the Minister to:

·                 obtain a recommendation from PBAC before declaring a drug or medicinal preparation under subsection 100AA(2) (subsection 100AA(4)(a)); and

·                 obtain the advice of PBAC before removing a drug from that declaration (subsection 100AA(5)).

Section 100AA is to be repealed and equivalent powers to make drugs available only under section 100 arrangements are to be inserted in section 85. As is currently the case, the Minister must only exercise the powers in section 85 after obtaining, depending on the circumstances, a recommendation from, or the advice of, PBAC (proposed subsections 101(4AAD) and 101(4AAF)).

These subitems specify that any advice or recommendation provided by PBAC prior to commencement under subsection 100AA(4)(a) or subsection 100AA(5) is to be treated  (and may be dealt with) as if it had been obtained under subsection 101(4AAD) or subsection 101(4AAF), as the case may be.  The purpose of the subitems is to ensure the Minister is not required to obtain fresh advice or a fresh recommendation from PBAC in relation to a matter that Committee has already considered.

 



Schedule 7 - Miscellaneous

 

National Health Act 1953

 

Item 1

This item omits the words ‘Subject to subsection (3)’ from the start of subsection 85(2).  The words currently have no effect and are being omitted because they are unnecessary.

 

Items 2 and 3

These items make a minor wording change to the specified provisions without changing their meaning.

 

Item 4

This item replaces subsection 99ACC(6).  Section 99ACC provides that statutory price reductions that occur to a component drug are flowed on to single brand combination items having that drug.  Most statutory price reductions apply in relation to all brands of pharmaceutical items having a particular drug (eg, the one-off 2%, 25% and staged 25% existing reductions and the proposed new 2% and 5% one-off reductions and modified provisions relating to the outstanding 25% staged reductions).  However, other statutory price reductions (the existing 12.5%, and proposed new 16%, new brand price reduction , and price disclosure price reductions) apply in relation to all brands having a particular drug and a particular manner of administration .  Existing section 99ACC has a wider operation than intended, in that it flows on all statutory price reductions to the component drug to the single brand combination item.  New subsection (6) ensures that where appropriate (ie, for the 16% new brand reductions and price disclosure reductions), the flow-ons are restricted to same manner of administration, ie, to cases where the brand of pharmaceutical item having the component drug which is subject to one of those statutory price reduction has the same manner of administration as the single brand of the combination item.

 

Item 5

This item corrects an error in subsection 99ACD(1).  The subsection is currently expressed to be subject to subsections (2) and (3).  However, there is no subsection (3).  It should be subject to subsections (1A) and (2).

 

Item 6

This item makes a minor wording change to the specified provision to clarify the section being referred to.