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National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2012

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2010-2011-2012

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

NATIONAL HEALTH AMENDMENT

(PHARMACEUTICAL BENEFITS SCHEME) BILL 2012

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health, the Hon. Tanya Plibersek MP)





NATIONAL HEALTH AMENDMENT

(PHARMACEUTICAL BENEFITS SCHEME) BILL 2012

 

 

OUTLINE

 

The National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2012 (the Bill) amends the National Health Act 1953 (the Act) to improve the operation of pricing and price disclosure for pharmaceutical items supplied under the Pharmaceutical Benefits Scheme (PBS) and to enable medicines to be listed for supply only via PBS prescriber bags.

 

The PBS provides timely, reliable and affordable access to necessary medicines as part of the National Medicines Policy and the broader Government framework for improving the health of Australians and the effectiveness and efficiency of the health system.

 

The amendments in the Bill apply to Part VII of the Act.  The provisions in this Part form the basis of the operation of the PBS.

 

For the purposes of setting and maintaining prices for PBS medicines, the Act currently requires that prices are expressed at different levels for different functions.  For example, at the time of listing on the PBS, prices are currently referred to as an approved price to pharmacists (which includes the manufacturer price and a wholesale margin).  The Commonwealth price (including mark-ups and fees for dispensing), and PBS price reductions are calculated based on approved price to pharmacists.  However, the wholesale margin is sometimes removed for price calculations because it is not relevant to all mechanisms of supply.  Price disclosure calculations also require removal of the wholesale margin because they operate on approved ex-manufacturer price .

 

The amendments in the Bill remove approved price to pharmacists and replace it with approved ex-manufacturer price as the core PBS price in the Act.  In addition, the amendments provide for price setting for different brands and quantities of a pharmaceutical item, and calculations for price reductions, patient charges and price disclosure to operate from one base ex-manufacturer price for each pharmaceutical item.  This will enable pricing functions to operate uniformly at ex-manufacturer level across the PBS, including where the same item is listed under different PBS programs and mechanisms of supply.

 

Transitional provisions include a method for converting current PBS prices to an ex-manufacturer amount using prices in force on the day before the commencement date of 1 October 2012.  Prices under the new pricing structure will be equivalent, or as close to equivalent as possible, to the corresponding approved and claimed price for each brand and quantity of a pharmaceutical item. 

 

Minor price adjustments will be necessary for a small number of pharmaceutical items to achieve a uniform PBS price.  The Act provides that negotiated approved ex-manufacturer prices effective on 1 October 2012 take precedence over the converted price.  It is proposed that where price adjustments are necessary they be negotiated by weighting existing multiple prices, although other methods of achieving a negotiated price outcome can be used and may be appropriate in some cases.  The process for arriving at a single weighted average price by reference to PBS volumes is familiar to pharmaceutical companies.  The transition to the new prices is designed to be cost neutral overall.

 

Pricing-related changes

Schedule 1 of the Bill amends the Act to:

·          remove the concept of approved price to pharmacists and replace it with approved ex-manufacturer price for the purposes of making a price agreement or determination for the appropriate maximum price for a brand of pharmaceutical item.

·          require that only one approved ex-manufacturer price be agreed or determined for a brand of pharmaceutical item - that being the price for the lowest listed pack quantity (which is defined as the pricing quantity ) for any brand of that item.  The same price applies for the same quantity of different brands.  If the brand has a pack quantity different from the pricing quantity, the price for that quantity is calculated from the approved ex-manufacturer price as a proportional ex-manufacturer price .

·          allow different quantities of a brand of a pharmaceutical item to have claimed prices which are not the same as, nor proportional to, the approved ex-manufacturer price for the pricing quantity of the pharmaceutical item, nor proportional to each other.  This retains the ability of a responsible person for a brand (i.e., a pharmaceutical company) to have a claimed price that is higher than the price that would otherwise apply.  This results in an amount payable by the patient for the brand, which will continue to be the difference between the Commonwealth prices calculated for the claimed and approved prices.

·          amend provisions so that the basis for calculating the Commonwealth price for supply by approved pharmacists is the approved ex-manufacturer price or proportional ex-manufacturer price.   It is intended that the wholesale mark-up (which is the difference between an ex-manufacturer price and a price to pharmacists) be included in the legislative instrument that determines the manner for calculating Commonwealth price.

·          change the pricing level at which 16 per cent price reductions apply on the listing of a new brand from being the approved price to pharmacist to the approved ex-manufacturer price.

·          amend provisions for price disclosure to replace terms based on approved price to pharmacists with similar terms based on approved ex-manufacturer price such that price disclosure calculations and reductions operate directly at ex-manufacturer level but otherwise remain effectively the same.  This removes the need to convert between approved price to pharmacists and ex-manufacturer prices for price disclosure calculations and reductions.

 

Schedule 1 of the Bill includes the transitional provisions to arrive at a new single ex-manufacturer price on 1 October 2012.  A new negotiated price will take precedence over provisions for a default new ex-manufacturer price.  If no negotiated price is reached, and no new price is set out in the National Health (Pharmaceutical Benefits) Regulations 1960 (the Regulations), the Act provides the method for converting approved prices to pharmacists which are current on 30 September 2012 to an equivalent approved ex-manufacturer price.

Consistent with other price change provisions in the Act, existing claimed prices, providing for a patient paid premium or special patient contribution, will be converted to ex-manufacturer level by applying a change equivalent to the change in approved price.

Single brand combination items are all required to reach new price agreements or determinations to continue their PBS listings because there are special considerations when pricing these medicines.  The new prices will be negotiated taking into account the converted ex-manufacturer portion of the component drug prices.

Price disclosure changes for cycle with 1 April 2013 reduction day

Schedule 2 of the Bill also amends the Act to enable ex-manufacturer based pricing to be used for the price disclosure cycle with a data collection period ending on 30 September 2012 and a reduction day on 1 April 2013.

 

The applicable date for comparing the prices disclosed by companies for that cycle with the relevant PBS prices is changed from the last day of the data collection period, 30 September 2012, to the following day, 1 October 2012.  Ex-manufacturer prices for each brand will commence on 1 October 2012, providing for comparison of uniform prices within each pharmaceutical item. 

 

The Bill also provides for new brands of existing pharmaceutical items listing between the end of data collection and the reduction day to have their price reduced to the same as existing brands.  This is administratively efficient because the approved price for all brands is the same.

 

Listing changes

Schedule 3 of the Bill makes technical changes to improve provisions for listing medicines on the PBS to enable medicines to be listed for supply only via PBS prescriber bags.  The current mechanisms for listing medicines for prescriber bags either require an arrangement for supply under section 100 of the Act or rely on the medicine being listed in the Schedule of Pharmaceutical Benefits for prescribing more generally.

 

Related amendments

The changes in the Bill need to be reflected in corresponding amendments to the Regulations and instruments made under the Act and Regulations to enable arrangements for prices and payments under the new pricing structure to be in place for 1 October 2012 commencement.

 

Commencement

The Bill provides for the amending Act and each of its Schedules to commence on 1 October 2012.  The ex-manufacturer price for a PBS medicine may be agreed after the Act is enacted, but before its commencement day of 1 October 2012, provided the agreement does not come into effect until on or after 1 October 2012.  This is necessary because PBS prices need to be settled well before their starting date to be included in the Schedule of Pharmaceutical Benefits and to meet requirements for administration of the Scheme.

 

Financial Impact Statement

Schedule 1 of the Bill will have no impact on forward estimates.   The transitional arrangements are designed to achieve ex-manufacturer prices for PBS medicines which are equivalent, or as close to equivalent as possible, to current prices.  Price changes will be agreed, including via weighting or averaging where appropriate, such that the outcome for PBS expenditure will be as close to cost neutral as possible.

 

Schedules 2 and 3 have no financial impact.

 

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

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

 

National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2012

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the Bill

The Bill amends the National Health Act 1953 to improve pricing and listing procedures for medicines supplied under the Pharmaceutical Benefits Scheme (PBS).

The amendments provide for PBS prices to be expressed in a uniform way across different programs based on one ex-manufacturer price for all brands of a pharmaceutical item and for that price to be used to set prices for different quantities, and to calculate price changes, patient charges and price disclosure reductions.  There are minor technical changes for listing PBS medicines for supply only through PBS prescriber bags.

 

None of the amendments makes any substantive changes to the law.  There are no changes to the availability of, or access to, PBS medicines.  The pricing effects for PBS patients, pharmaceutical companies, wholesale suppliers and pharmacies are nil or insignificant.

 

Human rights implications

This Bill engages Articles 2 and 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) by assisting with the progressive realisation by all appropriate means of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.

 

The PBS is a benefit scheme which assists with advancement of this human right by providing for subsidised access for people to medicines.  This is a positive step towards attaining the highest standard of health for all Australians.  Efficient operational arrangements for the PBS support effective administration of the Scheme.

 

Conclusion

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

 

The Hon. Tanya Plibersek MP, Minister for Health



NATIONAL HEALTH AMENDMENT

(PHARMACEUTICAL BENEFITS SCHEME) BILL 2012

 

 

NOTES ON CLAUSES

 

Clause 1 - Short Title

This clause provides that the Bill, once enacted, may be cited as the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2012 .

 

Clause 2 - Commencement

This clause provides that the Act commences on 1 October 2012.

 

Clause 3 - Schedule(s)

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 — Approved ex-manufacturer price

 

Part 1 - Amendments

 

National Health Act 1953

 

Item 1 - Subsection 84(1)

This item inserts a definition of a new term approved ex-manufacturer price into the Interpretation section of Part VII of the Act (subsection 84(1)).  This definition replaces the current definition which is in subsection 99ADB(1) of the Act and is being repealed (see item 55 of this Schedule).  The approved ex-manufacturer price of a listed brand of a pharmaceutical item is the price agreed by the Minister and the responsible person (the agreed price ) in a price agreement under subsection 85AD(1) of the Act, or the price determined by the Minister (the determined price ) in a price determination under subsection 85B(2).

 

Under other proposed amendments in this Schedule, the approved ex-manufacturer price is to replace the approved price to pharmacists as the core PBS price in the Act.

 

Item 2 - Subsection 84(1) (definition of approved price to pharmacists )

This item repeals the definition of approved price to pharmacists.  This term is being removed from the Act and being replaced with approved ex-manufacturer price.

 

Items 3 and 4 - Subsection 84(1) (Paragraphs (a), (b) and (c) of the definition of Commonwealth price )

These items amend the definition of Commonwealth price to clarify its meaning.  They make it clear that the Commonwealth price is a price for a particular quantity or number of units of a pharmaceutical benefit.  For example, the Commonwealth price for 10 tablets of a particular pharmaceutical benefit will be different from the Commonwealth price for 20 tablets of the same pharmaceutical benefit.

 

Item 5 - Subsection 84(1)

This item inserts a cross reference in the Interpretation provision of Part VII (subsection 84(1)) to the subsection (subsection 84AK(3)) in which the proposed new term determined quantity will be defined.

 

Item 6 - Subsection 84(1)

This item inserts a cross reference in the Interpretation provision of Part VII (subsection 84(1)) to the subsection (subsection 84AK(2)) in which the proposed new term pack quantity will be defined.

 

Item 7 - Subsection 84(1)

This item inserts a cross reference in the Interpretation provision of Part VII (subsection 84(1)) to the subsection (subsection 84AK(1)) in which the proposed new term pricing quantity will be defined.

 

Item 8 - Subsection 84(1)

This item inserts a cross reference in the Interpretation provision of Part VII (subsection 84(1)) to the section (section 85D) in which the proposed new term proportional ex-manufacturer price will be defined.

 

Item 9 - Subsection 84(1) (definition of special patient contribution )

This item amends the definition of special patient contribution in subsection 84(1) of the Act by altering the cross-reference to the subsection in the Act in which the term is defined, flowing from the amendments to section 85B in item 16 of this Schedule.  The term is now defined in subsection 85B(5) of the Act.  There has been no substantive change to the meaning of the term.

 

Item 10 - Subsection 84C(7)

This item amends subsection 84C(7) in two respects.  It clarifies that the price for a pharmaceutical benefit will depend on the particular quantity or number of units.  It also provides that the Minister’s determination under the subsection (the determination of the manner in which a price is to be calculated for safety net purposes) must be made by legislative instrument.

 

Item 11 - Paragraph 84C(8)(a)

This item replaces the expression approved price to pharmacists with the expression ‘ approved ex-manufacturer price or a proportional ex-manufacturer price’ in paragraph 84C(8)(a) of the Act.  In making a determination of the manner in which a price is to be calculated for safety net purposes under subsection 84C(7), the Minister will now be required to base that manner on the approved ex-manufacturer price or a proportional ex-manufacturer price of the brand in the case of pharmaceutical benefits that are listed brands of pharmaceutical items.  The existing paragraph 84C(8)(a) requires the manner to be based on the approved price to pharmacists .  The change in the base price is not intended to change the price for safety net purposes; the manner determined under subsection 84C(7) will include the addition of the wholesale mark-up, where appropriate.

 

Item 12 - Subsection 84C(10)

This item repeals subsection 84C(10).  The subsection requires the Minister to make a subsection 84C(7) determination by notice published in the Gazette .  Under the amendment to subsection 84C(7) proposed in item 10 of this Schedule, the determination will be required to be by legislative instrument.

 

Item 13 - At the end of Division 1 of Part VII

This item inserts a new section (section 84AK) into the Act at the end of Division 1 of Part VII.  Division 1 of Part VII is the Preliminary Division of the Pharmaceutical Benefits Part of the Act.

 

Section 84AK     Quantities of pharmaceutical items

This section defines three proposed new terms that are important to the new pricing arrangements provided for by the amendments in this Schedule and to the calculation of Commonwealth payments for pharmaceutical benefits.

 

Pricing quantity is defined in subsection 84AK(1).   The pricing quantity of a listed brand of a pharmaceutical item is the lowest of any pack quantity of any listed brand of the pharmaceutical item.  The approved ex-manufacturer price of a brand of a pharmaceutical item must be agreed or determined by reference to the pricing quantity of the brand (see items 14 and 16 of this Schedule, respectively).  Under the definition, the pricing quantity will be the same for all brands of a particular pharmaceutical item.

 

Pack quantity is defined in subsection 84AK(2).  The subsection empowers the Minister to determine, for a listed brand of a pharmaceutical item, that one or more quantities or numbers of units of the pharmaceutical item is a pack quantity of the brand.  Responsible persons will request the Minister to determine pack quantities for each of their PBS pack sizes.  The pricing quantity will have an approved ex-manufacturer price .  Other pack quantities will have proportional ex-manufacturer prices , calculated under proposed new section 85D (see item 17 of this Schedule).

 

Determined quantity is defined in subsection 84AK(3).  The subsection empowers the Minister to determine, for a listed brand of a pharmaceutical item, that one or more quantities or numbers of units of the pharmaceutical item is a determined quantity of the brand.  The determined quantity will be used, when there is no appropriate maximum quantity , in a number of legislative instruments as the basis for selecting the appropriate formula for wholesale and pharmacy mark-ups used in calculating Commonwealth payments for the supply of pharmaceutical benefits.  The determined quantity is also used, when there is no appropriate maximum quantity , in the proposed transitional provisions in Part 2 of this Schedule in the selection of the appropriate formula to use for the removal of the wholesale mark-up when converting approved prices to pharmacists to ex-manufacturer prices (see item 71 of this Schedule) as part of the process of working out the default ex-manufacturer prices on 1 October 2012.

 

Item 14 - Subsection 85AD(1)

This item substitutes a new subsection 85AD(1).  New subsection (1) provides that the Minister and the responsible person for a listed brand of a pharmaceutical item may agree, by reference to the pricing quantity of the brand, an amount that is for the purposes of Part VII (ie, for the purposes of the PBS) taken to be the appropriate maximum price for the pricing quantity of the brand.

 

An agreement under section 85AD is defined as a price agreement in subsection 84(1) of the Act.  Where a price agreement is in force in relation to a brand of a pharmaceutical item, the amount specified in the agreement (the agreed price ) is the approved ex-manufacturer price of the brand (see the definition of these terms, as proposed to be amended by the Bill, in subsection 84(1) of the Act).

 

The proposed substituted Note under subsection (1) refers to limitations on the Minister’s power to agree prices under subsection 85AD(1).  The limitations in Division 3A of Part VII concern occasions when statutory price reductions apply and are referred to in the existing Note.  The new Note also mentions the limitations in proposed new section 85C.  Section 85C requires the approved ex-manufacturer price for all brands of a particular pharmaceutical item to be the same price (see item 17 of this Schedule).

 

Item 15 - Subsection 85AD(2)

Subsection 85AD(2) sets out a number of matters that do not matter at the time a price agreement under subsection 85AD(1) is made, provided the matters are satisfied at the time the agreed price comes into force.  This is necessary because PBS prices need to be settled well before they come into effect.  Item 15 adds two additional matters: the quantity or number of units is not yet a pricing quantity , and the brand is not yet a listed brand.

 

Item 16 - Section 85B

This item repeals existing section 85B and inserts a new section 85B.  Changes to the section reflect the proposed changes to pricing contained in this Schedule, particularly the requirement for one approved ex-manufacturer price for a brand of a pharmaceutical item, that price being a price for the pricing quantity , and proportional ex-manufacturer prices for other pack quantities

 

Subsection (1) provides that section 85B applies to a listed brand of a pharmaceutical item.

 

Subsection (2) provides that if the Minister and the responsible person have been unable to agree a price for a brand of a pharmaceutical item, the Minister may determine, by reference to the pricing quantity of the brand, an amount that is for the purposes of Part VII (ie, for the purposes of the PBS) taken to be the appropriate maximum price for the pricing quantity of the brand.

 

A determination under subsection 85B(2) is defined as a price determination in subsection 84(1) of the Act.  Where a price determination is in force in relation to a brand of a pharmaceutical item, the amount specified in the determination (the determined price ) is the approved ex-manufacturer price of the brand (see the definition of these terms, as proposed to be amended by this Schedule, in subsection 84(1) of the Act).

 

The proposed substituted Note under subsection (2) refers to limitations on the Minister’s power to determine prices under subsection 85B(2).  The limitations in Division 3A of Part VII concern occasions when statutory price reductions apply and are referred to in the existing Note.  The new Note also mentions the limitations in proposed new section 85C (see item 17 of this Schedule).  Section 85C requires the approved ex-manufacturer price for all brands of a particular pharmaceutical item to be the same price.

 

Subsection (3) provides that the Minister may, by reference to a pack quantity of a brand of a pharmaceutical item, determine an amount that is taken to be the price claimed by the responsible person for that quantity.  The amount specified in a determination under subsection 85B(3) is defined as the claimed price in subsection 84(1) of the Act.

 

Under subsection (3) there may be claimed prices for any pack quantity for which the responsible person claims a price.  That is, there may be multiple claimed prices for a brand of a pharmaceutical item under subsection 85B(3), even though there may be only one determined price for the brand under subsection 85B(2).

 

A responsible person may claim a price for the pricing quantity if they and the Minister cannot agree a price for this quantity.  The Minister may then determine the price the Minister sought under subsection (2) and this determined price will be the approved ex-manufacturer price .

 

A responsible person may claim a price for pack quantities other than the pricing quantity when they are not happy with the proportional ex-manufacturer prices for these pack quantities that are derived from the approved ex-manufacturer price for the pricing quantity .  They may do this irrespective of whether the approved ex-manufacturer price is an agreed price or a determined price .

 

Subsection (4) is identical to existing subsection (5).

 

Subsection (5) replaces existing subsections (4) and (6).  The consolidation of these subsections has not changed their meaning.  The amount of the special patient contribution is still calculated in the same way.

 

Item 17 - After subsection 85B

This item inserts two new sections, sections 85C and 85D, into the Act.

 

Section 85C    Each brand of a pharmaceutical item is to have the same approved ex-manufacturer price

Section 85C limits the Minister’s power to agree a price, or to determine a price, for a brand of a pharmaceutical item.  Where there are multiple brands of a particular pharmaceutical item, the Minister must agree or determine the same price for each brand.  In other words, the approved ex-manufacturer price of every brand of a particular pharmaceutical item must be the same.  Subsections 85AD(1) and 85B(2) require those prices to be agreed or determined, respectively, by reference to the pricing quantity of the brand.  The definition of pricing quantity in new subsection 84AK(1) ensures that the pricing quantity is the same quantity for all brands of a particular pharmaceutical item. 

 

Section 85C, supported by the other subsections mentioned, ensures that the Commonwealth pays the same amount for identical medicines.

 

 

Section 85D    Proportional ex-manufacturer prices

Section 85D provides for there to be proportional ex-manufacturer prices for pack quantities (other than the pricing quantity ) of a listed brand of a pharmaceutical item. 

 

The section sets out a formula for making the proportional calculation.  The approved ex-manufacturer price (which is a price for the pricing quantity ) is divided by the pricing quantity , and then multiplied by the pack quantity .

 

Example:

  • if the approved ex-manufacturer price is $20 for a pricing quantity of 20,
  • then, the proportional ex-manufacturer price for a pack quantity of 40 will be:

  $20   x  40  =  $40.

   20

 

Section 85D ensures that prices for different pack sizes remain proportional.  Each time there is a change in the approved ex-manufacturer price for a brand of a pharmaceutical item, the prices for other PBS pack sizes of that brand will change automatically under section 85D.

 

Item 18 - Subsection 87(2A)

This item amends subsection 87(2A) by changing the reference to a determination under section 85B of the Act to a determination under subsection 85B(3).  Subsection 87(2A) concerns special patient contributions and these result from determinations of claimed prices under subsection 85B(3).  The amendment clarifies subsection 87(2A); the more specific reference makes it easier for readers to identify the relevant determinations referred to.

 

Item 19 - Paragraph 98B(1)(a)

This item clarifies the expression Commonwealth price in line with the amendments to the definition of that term proposed in items 3 and 4 of this Schedule.

 

Item 20 - Paragraph 98B(2)(a)

This item replaces the expression approved price to pharmacists with the expression ‘ approved ex-manufacturer price or a proportional ex-manufacturer price’ in paragraph 98B(2)(a) of the Act.

 

Under amended paragraph 98B(1)(a) the Pharmaceutical Benefits Remuneration Tribunal has the function of determining the manner in which the Commonwealth price for particular quantities or numbers of units of a pharmaceutical benefit is to be worked out for the purpose of payments to pharmacists.

 

Amended paragraph (2)(a) requires that manner to be based on the approved ex-manufacturer price or a proportional ex-manufacturer price of the brand in the case of pharmaceutical benefits that are listed brands of pharmaceutical items.  The existing paragraph (2)(a) requires the manner to be based on the approved price to pharmacists .  It is intended that the wholesale mark-up (which is the difference between an ex-manufacturer price and a price to pharmacists) will be included in the manner determined by the Tribunal, so that the overall level of remuneration to pharmacists will not be affected by the change in the base price. 

 

Item 21 - Subsection 98B(3) (definition of approved price to pharmacists )

This item repeals the definition of approved price to pharmacists .  With the change to ex-manufacturer pricing, the approved ex-manufacturer price is replacing the approved price to pharmacists as the core price in the Act.  The term approved ex-manufacturer price is currently defined in the Act, but a new definition is proposed to be inserted in subsection 84(1) of the Act by item 1 of this Schedule.

 

Item 22 - Paragraph 98C(1)(a)

This item clarifies the expression Commonwealth price in line with the amendments to the definition of that term proposed in items 3 and 4 of this Schedule.

 

Item 23 - Paragraph 99(2AA)(b)

This item amends paragraph 99(2AA)(b) of the Act by changing the reference to subsection 85B(5) of the Act to a reference to subsection 85B(4).  The amendment flows from the amendments to section 85B in item 16 of this Schedule; new subsection 85B(4) is identical to existing subsection 85B(5).

 

Item 24 - Subsection 99(4)

This item amends subsection 99(4) to make it clear that payments to approved hospital authorities in respect of the supply of pharmaceutical benefits depend upon the particular quantities or numbers of units of the pharmaceutical benefits supplied.  The amendment is in line with the proposed amendments in items 3 and 4 of this Schedule clarifying the definition of Commonwealth price .

 

Item 25 - Subsection 99ACB(5)

This item changes the reference in subsection 99ACB(5) to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

Item 26 - Subsection 99ACB(6)

This item substitutes a new apportionment provision in subsection 99ACB(6).  The differences between the current and new apportionment provisions reflect the changes to pricing provided for in this Schedule.

 

Section 99ACB provides for certain new brands of pharmaceutical items to be priced at least 16 per cent less that the price of an existing brand on the day before the listing of the new brand.  New subsection (6) provides for the price of the existing brand on the day before the new brand lists, to be apportioned, if the pricing quantity for the existing brand on that day is different from the pricing quantity on the day the new brand lists.

 

For example:

If:

·          on the day before the listing of the new brand:

o    the pricing quantity for the existing brand is 20; and

o    the AEMP of the existing brand is $20;  and

·          on the day the new brand lists:

o    the pricing quantity for the existing (and all other brands) is 10

(it changes from 20 to 10 because the new brand has a smaller pack size of 10);

then:

  • the price of the existing brand on the day before the listing day is apportioned as follows:

 

$20   x  10  =  $10;

  20

  • Under subsection (5), the AEMP of the new brand must not exceed $10, reduced by 16%.   (The new AEMP is for the new pricing quantity of 10).

 

Item 27 - Subparagraph 99ACC(4A)(d)(i)

This item changes the reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

Item 28 - Paragraph 99ACC(4B)(a)

This item changes the reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

Item 29 - Subsection 99ACD(5)

This item changes the reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

Item 30 - Paragraphs 99ACD(6)(b) and (c)

This item changes the reference in each paragraph to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

Item 31 - subsection 99ACD(7)

This item substitutes a new apportionment provision in subsection 99ACD(7).  The differences between the current and new apportionment provisions reflect the changes to pricing provided for in this Schedule.

 

Section 99ACD provides for certain new brands of combination items to be priced at least 16 per cent less that the price of an existing brand on the day before the listing of the new brand.  New subsection (7) provides for the price of the existing brand on that day to be apportioned if the pricing quantity for the existing brand on that day is different from the pricing quantity on the day the new brand lists.

 

The apportionment provision works in the same way as the new apportionment provision in subsection 99ACB(6) provided for in item 26 of this Schedule.  See item 26 for an example of the application of that apportionment provision.

 

Item 32 - Subsection 99ACE(2)

This item changes the reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

 

Item 33 - Subsection 99ACE(2)

This item changes the reference in the subsection to ‘the claimed price’ to a reference to ‘each claimed price’.  There is no substantive change to the operation of the subsection.  The subsection currently has the effect that each claimed price for a related brand of the related pharmaceutical item ceases to be in force at the specified time, and the subsection will continue to have that effect.  The change in wording reflects the changes to pricing provided for in this Schedule, particularly the requirement that there now be only one approved price for a brand of a pharmaceutical item. 

 

Item 34 - Subparagraph 99ACE(3)(a)(ii)

Subsection 99ACE flows on a 16 per cent price reduction to a new brand of a combination item to related brands of related combination items.  Subsections (3) and (4) provide for the price of the related brand on the reduction day, to be no higher than its price on the day before the reduction day, reduced by 16 per cent.  However, these provisions are subject to a number of qualifications concerning previous reductions to the price of the related brand.  This item makes the provision in paragraph (3)(a) subject to a further qualification, namely that set out in new subsection (4B) of the section.  This new subsection is being inserted by item 40 of this Schedule and is explained under that item.  The corresponding provisions in paragraph (3)(b), (4)(a) and (4)(b) of section 99ACE are also made subject to new subsection (4B) in items 36, 38 and 39 of this Schedule respectively.

 

Item 35 - Paragraph 99ACE(3)(b)

This item clarifies the paragraph by changing the reference to a ‘determination under section 85B’ to a reference to a ‘price determination’.  Section 85B currently provides for several different types of determinations, and new section 85B, which is provided for in item 16 of this Schedule, will continue to do so.  The amendment will make it easier for readers to identify the specific type of determination being referred to.

 

Item 36 - Subparagraph 99ACE(3)(b)(ii)

Subsection 99ACE flows on a 16 per cent price reduction to a new brand of a combination item to related brands of related combination items.  Subsections (3) and (4) provide for the price of the related brand on the reduction day, to be no higher than its price on the day before the reduction day, reduced by 16 per cent.  However, these provisions are subject to a number of qualifications concerning previous reductions to the price of the related brand.  This item makes the provision in paragraph (3)(b) subject to a further qualification, namely that set out in new subsection (4B) of the section.  This new subsection is being inserted by item 40 of this Schedule and is explained under that item.  The corresponding provisions in paragraph (3)(a), (4)(a) and (4)(b) of section 99ACE are also made subject to new subsection (4B) in items 34, 38 and 39 of this Schedule respectively.

 

Item 37 - Subsection 99ACE(4)

This item clarifies the paragraph by changing the reference to a ‘determination under section 85B’ to a reference to a ‘price determination’.  Section 85B currently provides for several different types of determinations, and new section 85B, which is provided for in item 16 of this Schedule, will continue to do so.  The amendment will make it easier for readers to identify the specific type of determination being referred to.

 

Item 38 - Paragraph 99ACE(4)(a)

This item substitutes a new paragraph 99ACE(4)(a).  The new paragraph differs from the existing paragraph in three respects:

  • it changes the reference to a ‘determination under section 85B’ to a reference to a ‘price determination’;
  • it removes the reference to a claimed price; and

·          in subparagraph (ii), it adds subsection (4B) as an additional qualification to the subparagraph.

 

The first change and the third change are identical to the changes made to paragraph (3)(b) of  the section, and the explanations of the two changes in items 35 and 36 respectively of this Schedule, apply equally to these changes to paragraph (4)(a).

 

The second change, the removal of the reference to a claimed price, is being made because claimed prices are to be dealt with in their own subsection; see proposed new subsection 99ACE(4A) in item 40 below.

 

Item 39 - Paragraph 99ACE(4)(b)

Subsection 99ACE flows on a 16 per cent price reduction to a new brand of a combination item to related brands of related combination items.  Subsections (3) and (4) provide for the price of the related brand on the reduction day, to be no higher than its price on the day before the reduction day, reduced by 16 per cent.  However, these provisions are subject to a number of qualifications concerning previous reductions to the price of the related brand.  This item makes the provision in paragraph (4)(b) subject to a further qualification, namely that set out in new subsection (4B) of the section.  This new subsection is being inserted by item 40 of this Schedule and is explained under that item.  The corresponding provisions in paragraph (3)(a), (3)(b) and (4)(a) of section 99ACE are also made subject to new subsection (4B) in items 34, 36 and 38 of this Schedule respectively.

 

Item 40 - After subsection 99ACE

This items inserts two new subsections, subsections (4A) and (4B), into section 99ACE of the Act.

 

New subsection (4A) provides for reductions to claimed prices for the related brand of the related combination item.  This replaces the current provision for reductions to claimed prices in paragraph (4)(a), which is being  removed by the amendments in item 38 of this Schedule.  There is no substantive difference between current paragraph (4)(a) and new subsection (4A) with respect to reductions in claimed prices.

 

New subsection (4B) provides for prices to be apportioned if the pricing quantity for the related brand on the reduction day is different from the pricing quantity on the day before that day.  Subsection 99ACE flows on a 16 per cent price reduction to a new brand of a combination item to related brands of related combination items.  Subsections (3) and   (4) provide for the price of the related brand on the reduction day, to be no higher than its price on the day before the reduction day, reduced by 16 per cent.  If the pricing quantity changes between the two days, the price of the related brand on the day before the reduction day is apportioned under new subsection (4B) to take account of the change in quantity, for the purpose of applying the price reduction provisions in subsections (3) and (4).

 

For example, say the price of the related brand was $20 for a pricing quantity of 20 on the day before the reduction day.  Then, on the reduction day the pricing quantity changed to 10 (because a lower pack quantity became available):

 

  • The $20 price of the related brand on the day before the reduction day is apportioned to reflect the change in the pricing quantity :

 

$20   x  10  =  $10

  20

  • On the reduction day, the AEMP of the related brand must be no higher than $10, reduced by 16%.  (This is the new price of the brand for the new pricing quantity of 10.)

 

Item 41 - Paragraphs 99ACE(5)(b) and (c)

This item changes each reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

Item 42 - Subsection 99ACEA(4)

This item substitutes a new subsection 99ACEA(4).  It changes the reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing, but does not otherwise change the meaning of the subsection.

 

Item 43 - Subsection 99ACEA(5)

This item substitutes a new apportionment provision in subsection 99ACEA(5).  The differences between the current and new apportionment provisions reflect the changes to pricing provided for in this Schedule.

 

Section 99ACEA provides for certain new brands of pharmaceutical items having drugs with outstanding price reductions to be priced at no more than the price of an existing brand on the day before the listing of the new brand, reduced by the outstanding staged price reductions.  New subsection (5) provides for the price of the existing brand on that day to be apportioned if the pricing quantity for the existing brand on that day is different from the pricing quantity on the day the new brand lists.

 

The apportionment provision works in the same way as the new apportionment provision in subsection 99ACB(6) provided for in item 26 of this Schedule.  See item 26 for an example of the application of that apportionment provision.

 

Item 44 - Paragraph 99ACF(1)(c)

This item substitutes a new paragraph 99ACF(1)(c).  There is no substantive change to the meaning of the paragraph.  The change in wording reflects the changes to pricing provided for in this Schedule.

 

Item 45 - Subsection 99ACF(1)

This item changes the wording of subsection 99ACF(1).  There is no substantivechange to the operation of the subsection.  The subsection currently applies the statutory price reductions in the table to the approved prices and claimed prices (if any) of the brand, and it will continue to do so.  The change in wording reflects the changes to pricing provided for in this Schedule, particularly the requirement that there now be only one approved price for a brand of a pharmaceutical item.

 

The item makes the reduction in the approved price (the AEMP) subject to proposed new subsection (2A) which is being inserted into the Act by item 49 of this Schedule.  This subsection is an apportionment provision which applies if the pricing quantity of the brand on the reduction day is different from the pricing quantity on the day before that day.

 

On the reduction day, the AEMP of the brand on the day before the reduction day, is reduced by the percentage or amount in the table.  However, the AEMP must be a price for the pricing quantity (see items 14 and 16).  Thus, the price of the brand on the day before the reduction day must be apportioned to reflect the new pricing quantity before the reduction is applied, so that the result is a new price for the new pricing quantity .  There is no apportionment provision now because the approved price to pharmacists of the brand may be a price for any quantity and that quantity does not change.  The new requirement for the AEMP to be a price for the pricing quantity and the possibility of the pricing quantity changing (due to a new lower PBS pack size for the pharmaceutical item becoming available) makes it necessary to have an apportionment provision now.

 

Item 46 - Paragraph 99ACF(2)(b)

If a reduction of more than the required percentage or amount occurs, the reductions provided for in subsection 99ACF(1) do not apply.  Subsection 99ACF(2) sets out when reductions greater than required have taken place.  In order to make a proper comparison of the AEMP of the brand on the day before the reduction day and on the reduction day, it is necessary to apportion the prices on the day before, to reflect a change in the pricing quantity between the two days, if there is such a change.  Thus the reduction calculation provided for in paragraph (2)(b) is being made subject to the new apportionment provision in new subsection (2A) in item 49 of this Schedule.

 

Item 47 - Paragraph 99ACF(2)(b)

This item changes each reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

Item 48 - Paragraph 99ACF(2)(c)

This item substitutes a new paragraph 99ACF(2)(c).  The paragraph provides for reductions to claimed prices of more than the required percentage or amount.  There is no substantive difference between the current and substituted paragraphs.  The change in wording reflects the changes to pricing provided for in this Schedule.

 

Item 49 - After subsection 99ACF(2)

This item inserts a new subsection (2A) in section 99ACF of the Act.  Subsection (2A) is an apportionment provision.  It applies in relation to the reductions to the AEMP referred to in subsection (1) and in paragraph (2)(b) of section 99ACF; see items 45 and 46 of this Schedule for an explanation of the need for the apportionment provision.

 

The apportionment provision works in the same way as the new apportionment provision in subsection 99ACE(4B) provided for in item 40 of this Schedule.  See item 40 for an example of the application of that apportionment provision.

 

Item 50 - Paragraph 99ACF(3)(b)

This item changes the wording of paragraph 99ACF(3)(b) of the Act.  There is no substantive change to the operation of the subsection.  The subsection provides for the order in which price reductions are to occur if two or more reductions under subsection 99ACF(1) are to occur on the one day.  This order is not changed by the changes in wording.  The changes reflect the changes to pricing provided for in this Schedule, particularly the requirement that there now be only one approved price for a brand of a pharmaceutical item.

 

Item 51 - Subparagraph 99ACK(3)(b)(ii)

This item substitutes a new subparagraph 99ACK(3)(b)(ii).  There is no substantive difference between the current and substituted paragraphs.  The change in wording reflects the changes to pricing provided for in this Schedule.

 

Item 52 - Section 99AD (last paragraph)

This item changes the reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

Item 53 - Subsection 99ADB(1) (definition of adjusted approved price to pharmacists )

This item repeals the definition of adjusted approved price to pharmacists .  With the change to ex-manufacturer pricing, the approved ex-manufacturer price is replacing the approved price to pharmacists as the core price in the Act.  The adjusted approved ex-manufacturer price will replace the adjusted approved price to pharmacists .  The term adjusted approved ex-manufacturer price is currently defined in the Act, but a new definition is proposed to be substituted by item 1 of Schedule 2.

 

Item 54 - Subsection 99ADB(1) (definition of agreed quantity )

This item repeals the definition of agreed quantity as this term is no longer to be used in the Act.  The agreed quantity is the quantity by reference to which the approved price to pharmacists for a brand of a pharmaceutical item was agreed or determined.  Under the amendments proposed in this Schedule, the approved ex-manufacturer price of a brand of a pharmaceutical item is to be agreed or determined by reference to the pricing quantity (see items 13, 14 and 16 of this Schedule).

 

Item 55 - Subsection 99ADB(1) (definition of approved ex-manufacturer price )

This item repeals the definition of approved ex-manufacturer price.  A new definition of that term is proposed in item 1 of this Schedule.

 

Item 56 - Subsections 99ADB(2) and (3)

This item repeals these two subsections.

 

Subsection 99ADB(2) confers a power to make regulations prescribing a formula for converting an adjusted approved ex-manufacturer price to an adjusted approved price to pharmacists for the purposes of the definition in the Act of adjusted approved price to pharmacists .  As that term is being removed from the Act, the regulation-making power is no longer needed.

 

Subsection 99ADB(3) confers a power to make regulations prescribing a formula for converting an approved price to pharmacists to an approved ex-manufacturer price for the purposes of the definition in the Act of approved ex-manufacturer price .  A new definition of that term is proposed in item 1 of this Schedule and the regulation-making power is no longer needed.

 

Item 57 - Subsection 99ADB(7)

This item substitutes a new subsection 99ADB(7).  The existing subsection is, in effect, being amended by removing the power to include the adjusted approved price to pharmacists of a brand of a pharmaceutical item in a weighted average disclosed price determination under subsection 99ADB(4) of the Act.  The reason for this is that with the change to ex-manufacturer pricing, the adjusted approved price to pharmacists is no longer relevant and that term is being removed from the Act (see item 53 of this Schedule).  Under amended subsection 99ADB(7), a weighted average disclosed price determination under subsection 99ADB(4)  may still include the adjusted approved ex-manufacturer price of the brand.

 

Subsection 58 - Subsection 99ADH(3)

This item changes each reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing. 

 

Subsection 99ADH(3) gives effect to price disclosure price reductions.  The amended subsection will provide that on the reduction day, the approved ex-manufacturer price of the brand of the pharmaceutical item is reduced to the adjusted approved ex-manufacturer price of the brand.  The approved ex-manufacturer price is a price for the pricing quantity .  The proportional ex-manufacturer prices for other pack quantities will automatically be adjusted under proposed new section 85D so that each of those prices remains proportional to the approved ex-manufacturer price having regard to the relative quantities to which each price relates (see item 17 of this Schedule).

 

Item 59 - At the end of subsection 99ADH(3)

This item adds a new Note at the end of subsection 99ADH(3).  The new Note alerts readers to the fact that, for the purposes of subsection (3), the adjusted approved ex-manufacturer price of the brand is worked out under new subsection (4A), if the pricing quantity of the brand is not the same on the relevant day and the reduction day.  New subsection (4A) provides for the apportionment of that price to reflect the change in quantity.

 

Item 60 - Subsection 99ADH(4)

This item substitutes a new subsection (4), and inserts a new Note under subsection (4) and a new subsection (4A), into section 99ADH of the Act.

 

Substituted subsection (4) differs from the existing subsection in its terminology only; references to the approved price to pharmacists and the adjusted approved price to pharmacists have been replaced with references to the approved ex-manufacturer price and the adjusted approved ex-manufacturer price .  The substantive operation of the subsection remains the same; it reduces the claimed price by the same percentage as the determined price is reduced under subsection (3).

 

The new Note under subsection (4) is the same as the new Note under subsection (3) which was inserted by item 59, except that it applies to subsection (4), whereas the Note in item 59 applies to subsection (3).  See item 59 for an explanation of the Note.

 

New subsection (4A) provides for the adjusted approved ex-anufacturer price referred to in subsections (3) and (4) to be apportioned to reflect the change in quantity, if the pricing quantity on the reduction day is different from the pricing quantity on the relevant day .  The adjusted approved ex-manufacturer price of a brand is defined as the amount equal to the weighted average disclosed price (WADP) of the brand (see proposed new definition to be substituted into subsection 99ADB(1) of the Act by item 1 of Schedule 2).  The WADP is a price for the quantity that was the pricing quantity on the relevant day .  ( Relevant day is proposed to be defined in subsection 99ADB(1) of the Act - see the proposed new definition in item 3 of Schedule 2.)  Subsection (3) provides for the AEMP of the brand to be reduced to the WADP/AAEMP on the reduction day .  However, if the pricing quantity has changed, it is necessary to apportion the WADP/AAEMP to obtain an equivalent price for the new pricing quantity .  The AEMP of the brand is then reduced to this apportioned WADP/AAEMP.

 

Item 61 - After section 99ADH

This item inserts a proposed new section 99ADHA into the Act.

 

Section 99ADHA      Price reductions for brands listing after end of data collection period

Section 99ADHA provides for price disclosure price reductions for new brands of existing pharmaceutical items which are listed on the PBS after the end of the data collection period for a disclosure cycle, but before the reduction day for the cycle.

 

Under the Regulations, when a new brand of a pharmaceutical item is listed on the PBS and it has a drug and manner of administration already subject to price disclosure, the new brand is placed in the disclosure cycles that the drug with the manner of administration is in.  There will always be a cycle with a data collection period underway.  Depending on the timing of the new listing, there may also be a prior cycle for the drug/manner of administration which is still current; if so, this cycle will be in the period between the end of the data collection period and the reduction day .

 

New brands which join prior cycles do not contribute any data to the cycle and do not affect calculations for other brands in the cycle.   At the moment they have weighted average disclosed prices calculated for them and on the reduction day their prices are reduced to their weighted average disclosed price (which is also their adjusted approved ex-manufacturer price ).  In order to do this, it is necessary to calculate an applicable approved ex-manufacturer price for them under the Regulations.

 

However, for new brands of existing pharmaceutical items joining a prior cycle, it is not necessary to perform this process.  All brands of a pharmaceutical item must have the same AEMP (see new section 85C in item 17 of this Schedule), so the AEMP of the new brand can be directly reduced on the reduction day to the reduced AEMP of the existing brand.  Subsection (2) has this effect.

 

If the AEMP of the brand is reduced under subsection (2) and the new brand has claimed prices for particular pack quantities, those claimed prices are reduced under subsection (3) by the same percentage as the percentage reduction in the AEMP.

 

New section 99ADHA applies only to new brands of existing pharmaceutical items.  New brands of new pharmaceutical items which join prior disclosure cycles will still have price reductions on the reduction day under the current mechanism, ie, they will have applicable approved ex-manufacturer prices and weighted average disclosed prices calculated for them under the Regulations and their AEMPs will be reduced to their weighted average disclosed prices/ adjusted approved ex-manufacturer prices on the reduction day.

 

Item 62 - Paragraph 99AED(2)(d)

This item changes the reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

Item 63 - Section 99AEI (heading)

This item changes the reference in the heading to section 99AEI to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.  Item 65 makes a corresponding change to subsection (2) of the section.

 

Item 64 - Paragraph 99AEI(2)(b)

This item substitutes new paragraphs (b) and (ba) for current paragraph (b) of subsection 99AEI(2) of the Act.  There is no substantive change to the operation of the subsection.  The subsection currently enables the Minister to increase the approved prices and claimed prices (if any) of a brand whose prices were reduced as a consequence of the listing on the PBS of another brand, which has now been delisted by the Minister because it failed to meet its guarantee of supply obligations under Division 3C of Part VII of the Act.  The amended subsection will continue to provide for this.  The change in wording reflects the changes to pricing provided for in this Schedule, particularly the requirement that there now be only one approved price for a brand of a pharmaceutical item.

 

Item 65 - Subsection 99AEI(2)

This item changes the reference to the approved price to pharmacists to a reference to the approved ex-manufacturer price in line with the change to ex-manufacturer pricing.

 

 

Part 2 - Application, saving and transitional provisions

 

Division 1 - Preliminary

 

Item 66 - Definitions

This item defines a number of terms for the purposes of the application, saving and transitional provisions.  Many of the terms are used in the Act and have the same meaning.  Some other important terms are:

  • approved ex-manufacturer price of a brand of a pharmaceutical item on the commencement day (which is 1 October 2012 under clause 2 of the Bill) - the definition sets out the various items in the Schedule which provide for these prices;
  • new Act - means the Act as amended by this Act; and
  • old Act - means the Act as in force on the day before the commencement day (ie, in force on 30 September 2012).

 

Item 67 - Rounding amounts

This item provides for amounts worked out under Part 2 to be rounded to the nearest whole cent, with 0.5 cents being rounded upwards.  An identical provision in the Act (section 84AI) applies to amounts worked out under Part VII of the Act.

 

 

Division 2 - Converting approved price to pharmacists to approved ex-manufacturer price of brands of pharmaceutical items (other than single brands of combination items)

 

The amendments in Part 1 of this Schedule (items 1 - 65) change the basis of PBS pricing from the approved price to pharmacists to the approved ex-manufacturer price .  These amendments come into effect on 1 October 2012 and it is therefore necessary for all brands of pharmaceutical items to have an approved ex-manufacturer price in place on that date for their PBS listing to continue.

 

The items in this Division provide for the approved prices to pharmacists for each brand of a pharmaceutical item on 30 September 2012 to be converted to an approved ex-manufacturer price for that brand on 1 October 2012.  However, there is also provision in the Division for the approved ex-manufacturer prices on 1 October 2012 to be arrived at by other means.

 

The Division provides that the approved ex-manufacturer price of a brand of a pharmaceutical item on 1 October 2012 will be:

  • the agreed price or the determined price if a new price agreement or a new price determination comes into force on 1 October 2012; or
  • if there is no new agreed price or determined price , the approved ex-manufacturer price prescribed in the regulations if there is such a price; or
  • if there is no new agreed price or determined price and no price prescribed in the regulations, the default approved ex-manufacturer price provided for in the Division.

 

Item 68 - Price agreements

This item provides for certain price agreements that are in force on 30 September 2012 to continue in force on and after 1 October 2012.

The price agreements that continue in force, and that do not continue in force, are those provided for in item 72 of this Schedule .  A brand of a pharmaceutical item may only have one price agreement or one price determination continue in force (see item 72).  Item 69 below concerns the continuation of price determinations and mirrors this item.

 

While item 72 governs which agreements continue in force, this item governs the content of the continuing agreements.

 

Subitem 68(2) provides in relation to a continuing agreement, that:

(a)   the price agreement is to continue in force as if it were made under subsection 85AD(1) of the new Act;

(b)   the price in the continuing agreement is the amount provided for in item 70; this amount is the agreed price and the approved ex-manufacturer price from 1 October 2012; and

(c)   the quantity by reference to which that price is taken to be agreed is the pricing quantity of the brand.

 

Thus, although a price agreement made under subsection 85AD(1) of the old Act may continue in force on and after 1 October 2012 as if it were made under subsection 85AD(1) of the new Act, the content of that agreement will change by the operation of paragraph (2)(b), and  may change by the operation of paragraph (2)(c), of this item.

 

The agreed price will be changed by the operation of paragraph (2)(b); see item 70 and the related item 71 for details on how the new ex-manufacturer price is worked out.

 

The quantity by reference to which the agreed price is agreed, may also be changed by the operation of paragraph (2)(c).  Subsection 85AD(1) of the new Act requires a price agreement for a brand of a pharmaceutical item to be made by reference to the pricing quantity of the brand.  Thus, paragraph (2)(c) ensures that the quantity in a continuing agreement is the pricing quantity .

 

Item 69 - Price determinations

This item provides for certain price determinations that are in force on 30 September 2012 to continue in force on and after 1 October 2012.  It mirrors item 68 which provides for continuing price agreements .

 

The price determinations that continue in force, and that do not continue in force, are those provided for in item 72 of this Schedule .  A brand of a pharmaceutical item may only have one price determination or one price agreement continue in force (see item 72).

 

While item 72 governs which price determinations continue in force, this item governs the content of the continuing determinations.

 

Subitem 69(2) provides in relation to a continuing price determination , that:

(a)  the price determination is to continue in force as if it were made under subsection 85B(2) of the new Act;

(b)  the price in the continuing determination is the amount provided for in item 70; this amount is the determined price and the approved ex-manufacturer price from 1 October 2012; and

(c)  the quantity by reference to which that price is taken to be determined is the pricing quantity of the brand.

 

Thus, although a price determination made under subsection 85B(2) of the old Act may continue in force on and after 1 October 2012 as if it were made under subsection 85B(2) of the new Act, the content of that determination will change by the operation of paragraph (2)(b), and may change by the operation of paragraph (2)(c), of this item.

 

The determined price will be changed by the operation of paragraph (2)(b); see item 70 and the related item 71 for details on how the new ex-manufacturer price is worked out.

 

The quantity by reference to which the price is determined, may also be changed by the operation of paragraph (2)(c).  Subsection 85B(2) of the new Act requires a price for a brand of a pharmaceutical item to be determined by reference to the pricing quantity of the brand.  Thus paragraph (2)(c) ensures that the quantity in a continuing determination is the pricing quantity .

 

Item 70 - The approved ex-manufacturer price on the commencement day

This item provides for the amount that is to be the approved ex-manufacturer price on 1 October 2012 in a price agreement that continues in force under item 68 or a price determination that continues in force under item 69.

 

The approved ex-manufacturer price on 1 October 2012 is:

(a)   if an amount is prescribed in regulations for the brand of the pharmaceutical item - that amount; and

(b)  if no amount is prescribed in regulations - the default approved ex-manufacturer price of the brand worked out under item 71.

 

Provision has been made to prescribe a price in regulations to cover cases where the default approved ex-manufacturer price is not considered appropriate, eg, if anomalies in current prices of brands distort the calculation under item 71.

 

The provision in this item for an AEMP for a brand of a pharmaceutical item on 1 October 2012 does not limit the Minister’s power to agree or determine another AEMP for the brand after that day.

 

Item 71 - Working out the default approved ex-manufacturer price

This item sets out the method for working out the default approved ex-manufacturer price of a brand of a pharmaceutical item.

 

The default approved ex-manufacturer price is the approved ex-manufacturer price that is the agreed price from 1 October 2012 in an agreement that continues under item 68 or the determined price in a determination that continues under item 69, if the regulations do not prescribe another price (see item 70).

 

Item 71 sets out five steps for working out the default approved ex-manufacturer price of a brand of a pharmaceutical item.  Each of these steps is explained in detail below, but, in brief, the method involves taking one pharmaceutical item at a time, and doing the following:

·          Each of the existing approved prices to pharmacists for each brand of the particular pharmaceutical item is converted to an ex-manufacturer price by removing the wholesale mark-up;

·          As these prices may be prices for any quantity, a proportional price for the pricing quantity is worked out from each price;

·          If all the resulting prices are the same, or if there is only one price, then that price is the default approved ex-manufacturer price for each of the brands of the pharmaceutical item;

·          If the resulting prices are different amounts, the default approved ex-manufacturer price for each of the brands of the pharmaceutical item is the lowest of these prices.

 

The five steps set out in item 71 are:

 

Step 1 - Identify the APP and agreed quantity

For any particular pharmaceutical item, there may be one or more brands, and each brand may have one or more approved prices to pharmacists (being prices for different quantities or pack sizes).  Steps 1 to 3 are applied to one approved price to pharmacists at a time, with Step 4 then requiring steps 1 to 3 to be repeated for each approved price to pharmacists for each brand of the pharmaceutical item.

 

Step 1 (subitem (2)) requires the identification of:

·          the approved price to pharmacists that is being converted, and

·           the quantity (the agreed quantity ) by reference to which that price was agreed or determined.

 

Step 2 - Work out the ex-manufacturer price for the agreed quantity

In this step the approved price to pharmacists is converted to an ex-manufacturer price by removing the wholesale mark-up.

 

The way the wholesale mark-up is calculated varies, depending on a number of factors, so it is first necessary to work out which wholesale mark-up formula applies.  Subitems (3) to (5) are directed at working out the appropriate wholesale mark-up formula.  Then the appropriate formula is applied in subitem (6), (7), or (8) to convert the approved price to pharmacists for the agreed quantity to an ex-manufacturer price for the agreed quantity .

 

Identify the appropriate wholesale mark-up (subitems (3) to (5))

The appropriate wholesale mark-up formula is identified by following the processes set out in subitems (3) to (5):

 

Subitem (3)

  • List the maximum quantities and determined quantities of each listed brand of the pharmaceutical item (other than a maximum quantity that applies only to a supply in section 100 only circumstances).  A maximum quantity is a maximum quantity for prescribing purposes determined under paragraph 85A(2)(a) of the Act, and a determined quantity is a quantity determined under proposed new subsection 84AK(3) of the Act (see item 13 of this Schedule in relation to the determined quantity ).

 

Subitem (4)

  • Identify the quantity (tagged the relevant quantity ) which is:

 

(a)  the highest whole number multiple of the agreed quantity identified in Step 1 from:

(i)    any maximum quantity on the list; or

(ii)   if there are no maximum quantities on the list, from any determined quantity on the list; or

(b)   if no relevant quantity is identified in (a) above, then identify the quantity that is closest to the agreed quantity (or if 2 quantities are equally close, the higher of those quantities) from:

(i)    any maximum quantity on the list; or

(ii)    if there are no maximum quantities on the list, from any determined quantity on the list.

 

Subitem (5)

·          Taking the relevant quantity worked out under subitem (4) and the approved price to pharmacists identified in step 1 (subitem (2)), work out the price to pharmacists for the brand for the relevant quantity proportionally from the approved price to pharmacists for the agreed quantity .  This is done by dividing the approved price to pharmacists for the agreed quantity by the agreed quantity and then multiplying this by the relevant quantity .

 

The appropriate formula for the wholesale mark-up depends on whether or not the price to pharmacists for the relevant quantity of the brand worked out under subitem (5) is above $1,000.  If the price to pharmacists for the relevant quantity of the brand is less than, or equal to, $1,000, the formula in subitem (6) applies, and if that price is more than $1,000, the formula in subitem (7) or (8) applies, depending on the particular facts.

 

Apply appropriate formula to convert the approved price to pharmacists for the agreed quantity to an ex-manufacturer price for the agreed quantity (subitems (6) to (8))

The removal of the wholesale mark-up from the approved price to pharmacists for the agreed quantity to arrive at an ex-manufacturer price for the agreed quantity is done by one of the following methods, having regard to the price to pharmacists for the relevant quantity for the brand worked out under subitem (5):

 

Subitem (6)

·            If the price to pharmacists for the relevant quantity of the brand is less than, or equal to, $1,000:

o     then the ex-manufacturer price for the agreed quantity of the brand is worked out by dividing the approved price to pharmacists for the agreed quantity by 1.0752.

 

Subitem (7)

·            If the price to pharmacists for the relevant quantity of the brand is more than $1,000, and the relevant quantity and the agreed quantity are the same:

o     then the ex-manufacturer price for the agreed quantity of the brand is worked out by subtracting $69.94 from the approved price to pharmacists for the agreed quantity .

 

Subitem (8)

·            If the price to pharmacists for the relevant quantity of the brand is more than $1,000, and the relevant quantity and the agreed quantity are not the same:

o     then the ex-manufacturer price for the agreed quantity of the brand is worked out by subtracting the amount specified below from the approved price to pharmacists for the agreed quantity :

§   the amount to subtract is $69.94 divided by the relevant quantity and then multiplied by agreed quantity .

 

Step 3 - Work out the proportional ex-manufacturer price

 

Step 2 resulted in an ex-manufacturer price for the agreed quantity for the brand of the pharmaceutical item.  In step 3 this ex-manufacturer price for the agreed quantity is converted to a proportional ex-manufacturer price for the pricing quantity .

 

Step 3 (subitem (9)) provides for the proportional ex-manufacturer price for the pricing quantity to be calculated by dividing the ex-manufacturer price for the agreed quantity (calculated in step 2), by the agreed quantity , and then multiplying this by the pricing quantity .

 

Step 4 - Repeat steps 1 to 3 for each relevant brand

 

Step 4 (subitem (10)) requires steps 1 to 3 to be repeated for each approved price to pharmacists for each brand of the pharmaceutical item.  The result will be one or more proportional ex-manufacturer prices for the pricing quantity for each brand of the pharmaceutical item.  There will be a proportional ex-manufacturer price corresponding to each approved price to pharmacists identified in step 1.

Step 5 - Work out the default approved ex-manufacturer price

 

Step 5 (subitem (11)) specifies that the default approved ex-manufacturer price of each brand of the particular pharmaceutical item on 1 October 2012 is:

·            if only one proportional ex-manufacturer price was worked out under steps 1 to 4, or all the prices worked out were the same price - that price; or

·            if the proportional ex-manufacturer prices worked out under steps 1 to 4 were different prices - the lowest of those prices.

 

Item 72 - When price agreements or determinations are not preserved under item 68 or 69

Item 68 provides for certain price agreements that are in force on 30 September 2012 to continue in force on and after 1 October 2012.  Item 69 provides for certain price determinations that are in force on 30 September 2012 to continue in force on and after 1 October 2012.  Item 72 sets out which price agreements and which price determinations that are in force on 30 September 2012, do not continue in force after the end of that day.  Some price agreements and price determinations are left in force under item 72.

 

Item 72 provides that a price agreement or price determination in relation to a brand of a pharmaceutical item does not continue in force after 30 September 2012 if:

(a)   a new price agreement for the brand comes into force under subsection 85AD(1) of the new Act on 1 October 2012; or

(b)   a new price determination for the brand comes into force under subsection 85B(2) of the new Act on 1 October 2012; or

(c)   the brand is a single brand of a combination item (in which case item 73 of this Schedule applies);

 

If any of (a) to (c) applies, all price agreements and/or price determinations in relation to that brand of pharmaceutical item cease to have effect at the end of 30 September 2012.  The previous agreements and/or determinations are replaced by the new agreement referred to in (a), or the new determination referred to in (b), or in the case of single brands of combination items, by the new agreement provided for in item 73 of this Schedule.  The approved ex-manufacturer price for the brand of the pharmaceutical item on and after 1 October 2012 is the price in that new agreement or new determination.

 

The remaining provisions of item 72 (ie, paragraph (1)(d) and subitems (2) and (3)) provide for the situation where:

·            there is more than one price agreement or price determination in force for a brand of a pharmaceutical item on 30 September 2012; and

·            no new price agreement or price determination for the brand has been made to come into effect on 1 October 2012.

 

It is necessary for the brand to have a price agreement or a price determination in force on 1 October 2012 as it must have an approved ex-manufacturer price on that day for its PBS listing to continue.  The amount of that approved ex-manufacturer price is provided for in item 70.  However, an approved ex-manufacturer price is either an agreed price or a determined price , and it is therefore necessary for there to be a price agreement or price determination in force for the brand on 1 October 2012 as a vehicle for that price.

 

Thus, in the remaining provisions of item 72 (ie, paragraph (1)(d) and subitems (2) and (3)) there will be one price agreement or one price determination which continues in force for the brand on and after 1 October 2012.  (This contrasts with the other provisions of item 72 (ie, paragraphs (1)(a) to (c)) which terminate all existing agreements and determinations, because in those cases there is a new agreement or determination in place to replace them.)

 

Although one agreement or determination will continue in force under these provisions, the content of the agreement or determination will change under item 68 or 69, respectively.  A new AEMP will be substituted into the agreement or determination under these items and a new quantity (the pricing quantity ) may also be substituted.

 

Paragraph 72(1)(d) and subitems 72(2) and (3), combined with subitem (4), cause the agreements and determinations in force on 30 September 2012 to cease to have effect at the end of that day, or to continue in force on 1 October 2012, as set out in the following table:

 

 

Agreements and Determinations in force for the brand of the pharmaceutical item on 30 September 2012

 

Is one of those agreements or determinations (in force on 30 September 2012) for the pricing quantity?

 

Agreements and Determinations which continue in force on and after 1 October 2012

 

Agreements and Determinations which cease at the end of 30 September 2012

 

Relevant provisions of item 72

 

One or more agreements and/or one or more determinations

 

Yes, an agreement or a determination is for the pricing quantity

 

The agreement or determination for the pricing quantity

 

All other agreements and all determinations

 

Paragraph 72(1)(d)

 

One or more agreements, but no determinations

 

No

 

The agreement for the lowest quantity

 

All other agreements

 

Subitem 72(2)

 

One or more determinations, but no agreements

 

No

 

The determination for the lowest quantity

 

All other determinations

 

Paragraph 72(3)(b)

 

One or more agreements and one or more determinations

 

No

 

The agreement for the lowest quantity

 

All other agreements and all determinations

 

Subitem 72(2) in relation to the other agreements; and paragraph 72(3)(a) in relation to the determinations

 

Item 72 does not explicitly provide for the case of there being only one price agreement or one price determination in force for a brand of a pharmaceutical item on 30 September 2012, and no new agreement or determination coming into force on 1 October 2012.  The consequence is that the agreement or the determination in force on 30 September continues in force on 1 October 2012 under item 68 or 69 respectively as if it were made under the new Act, although its content will be altered as provided in the applicable item.

 

 

Division 3 - Converting approved price to pharmacists to approved ex-manufacturer price of single brands of combination items

 

Item 73 - Price agreements for single brands of combination items

A combination item is defined in subsection 84(1) of the Act as a pharmaceutical item that has a drug that contains at least two other drugs or medicinal preparations, at least one of which is a PBS listed drug.  Single brands of combination items are priced for PBS purposes having regard to the PBS prices of brands of pharmaceutical items that have their component drugs and the same manner of administration.  There is provision for this approach to be altered if there is advice from the Pharmaceutical Benefits Advisory Committee (PBAC).  (For example, see section 99ACC of the Act in relation to price reductions for single brands of combination items.)

 

This item provides for the approved ex-manufacturer price on 1 October 2012 of single brands of combination items to be agreed following these principles.

 

Item 73 applies to a brand of a combination item (a single brand) if:

·            subsection 85AB(5) of the Act applies to the drug in the combination item.  (This means that the drug is not on any formulary because there are no bioequivalent brands of any pharmaceutical item having that drug.)

·            it is the only brand of the particular combination item that is listed on the PBS on 30 September 2012 and on 1 October 2012;

·            there are no brands of other combinations items listed on those days that are bioequivalent or biosimilar to the brand and have the same manner of administration; and

·            on 30 September 2012 there was a price agreement in force for the brand (subitem (1)).

 

The existing price agreement ceases to have effect at the end of 30 September 2012 (subitem (2)) and the Minister is empowered to make a new price agreement that comes into effect on 1 October 2012 (subitem (3)).

 

Subitems (4) and (5) constrain the Minister’s power to agree a price in the new price agreement .

 

Subitem (4) requires the Minister, in agreeing a new price, to take account of:

(a)   the approved ex-manufacturer prices on 1 October 2012 of each brand of a pharmaceutical item that:

(i)    has one of the component drugs, and

(ii)   has the same manner of administration as the single brand; and

(b)   the quantity of the component drug in the combination item.

 

Subitem (5) provides that in agreeing the new price, the Minister may also take into account any advice given by PBAC to the Minister under subsection 101(4AC) of the Act in relation to the combination item.  Subsection 101(4AC) of the Act requires PBAC to advise the Minister if they are satisfied that therapy involving a combination item provides, for some patients, a significant improvement in:

(a)   patient compliance with the therapy; or

(b)   efficacy or reduction in toxicity.

 

The item does not limit the Minister’s powers after 1 October 2012 to make further price agreements (subitem (6)).

 

 

Division 4 - Converting claimed prices of brands of pharmaceutical items

 

Item 74 - Claimed prices

Item 69 provides for certain price determinations in force on 30 September 2012 to continue in force on and after 1 October 2012.  Where a price determination continues in force under that item, the approved ex-manufacturer price provided for in item 70 becomes the price in force under that determination on and after 1 October 2012.

 

For every price determination in force on 30 September 2012, there would also be a related claimed price determination in force on that day.  This item continues in force certain of those claimed price determinations on and after 1 October 2012, and provides for the new claimed price that is taken to be in force under that determination.

 

A claimed price determination will continue in force if the matters set out in subitem (1) are satisfied:

(a)   the brand of pharmaceutical item is listed on the PBS on both 30 September and 1 October 2012;

(b)  there is a claimed price determination in force for the brand on 30 September 2012;

(c)   the claimed price is a price for a quantity which is a pack quantity ;

(d)   no new claimed price determination comes into effect for the brand, for that quantity, on 1 October 2012; and

(e)  the responsible person does not notify the Minister that they no longer claim a price for that quantity with effect from 1 October 2102.

 

If the matters in subitem (1) are satisfied, paragraph (2)(a) continues in force the claimed price determination for the pack quantity on and after 1 October 2012.  Paragraph (2)(b) substitutes the claimed price worked out under item 75 into that claimed price determination.

 

This item may continue in force a claimed price determination for any pack quantity of a brand of a pharmaceutical item.  Thus, more than one claimed price determination for a brand of a pharmaceutical item may continue in force.  In contrast, the price determinations which may continue in force on and after 1 October 2012 under item 69 are limited to one determination for each brand of a pharmaceutical item, being a determination in relation to the pricing quantity . (Although the price determination that is continued may have been for a quantity other than the pricing quantity on 30 September 2012, the price will be a price for the pricing quantity on and after 1 October 2012 under paragraph 69(2)(c) of this Schedule).

 

The fact that there may be many continuing claimed price determinations but only one continuing price determination per brand accords with section 85B of the new Act.  Section 85B provides for there to be only one price determination for a brand of a pharmaceutical item (being a determination for the pricing quantity ) (subsection 85B(2)), but multiple claimed price determinations (being determinations for any or all pack quantities of the brand) (subsection 85B(3)).

 

Item 75- The claimed price on commencement day

This item provides for the new claimed price which is to be substituted into a claimed price determination which continues in force on and after 1 October 2012 under item 74.

 

The new claimed price for a pack quantity is worked out so that the percentage change in the claimed price between 30 September 2012 and 1 October 2012 is the same as:

·            the percentage change in the determined price for that quantity over that period, where the pack quantity is also the pricing quantity ; or

·            the percentage change between the determined price on 30 September 2012 and the proportional ex-manufacturer price for that quantity on 1 October 2012, where that pack quantity is not equal to the pricing quantity .

 

The claimed price provided for in this item only applies if the matters set out in subitem 74(1) are satisfied.  In particular, this claimed price will not apply if the responsible person claims another price and a new claimed price determination comes into force, or the responsible person notifies the Minister that they no longer claim a price for that quantity.

 

 

Division 5 - Other

 

Item 76 - Application of amendments (other than those relating to price disclosure)

This item provides that the amendments to the Act made by Part 1 of Schedule 1 (other than items 52 to 61) apply on and after 1 October 2012 in relation to supplies of pharmaceutical benefits made on or after 1 October 2012.

Item 77 - Application of amendments and transitional provision relating to price disclosure

Subitem (1) provides that the amendments to the Act made by items 52 to 61 apply on and after 1 October in relation to supplies of pharmaceutical benefits made before, on or after that day.  Items 52 to 61 amend sections of the Act in Division 3B of Part VII of the Act.  This Division concerns price disclosure.  It sets out the price disclosure requirements, the consequences of failing to comply with those requirements and provides for price reductions based on information collected under the price disclosure requirements.  These provisions operate at any given time in relation to supplies of pharmaceutical benefits on previous dates.  For this reason, when the Act is amended on 1 October 2012, it needs to apply on and after that date, in relation to supplies of pharmaceutical benefits made before that date, as well as supplies on and after that date.

 

Subitem (2) is a transitional provision which enables the Minister to determine the weighted average disclosed price of a brand of a pharmaceutical item under subsection 99ADB(4) of the amended Act by reference to information about supplies of pharmaceutical benefits before the commencement of the amendments on 1 October 2012.

 

Subitem (3) is a transitional provision relating to a price disclosure price reduction for a brand of a pharmaceutical item under section 99ADH of the Act after 1 October 2012, in cases where:

 

(a)   the weighted average disclosed price of the brand was determined before 1 October 2012;

 

(b)   the reduction day for the brand was determined before 1 October 2012; and

 

(c)   the reduction day is after 1 October 2012.

 

In applying the price reductions under section 99ADH of the new Act on the reduction day, the approved ex-manufacturer price of the brand is to be reduced to the weighted average disclosed price referred to in paragraph (a).  This subitem is intended to apply in relation to the interim supplementary disclosure cycle provided for in regulation 37A of the National Health (Pharmaceutical Benefits) Regulations 1960 .

 

Subitem (3) operates subject to subitems (4) and (5).

 

Subitem (4) provides for the situation where, after 1 October 2012, a weighted average disclosed price referred to in paragraph (3)(a) is revoked and a new weighted average disclosed price is determined for the brand.  In such a case, the AEMP of the brand is reduced under section 99ADH on the reduction day to the amount of the newly determined weighted average disclosed price .  This situation may arise where a mistake is identified in relation to the initially determined weighted average disclosed price .

 

Subitem (5) provides for the situation where, after 1 October 2012, a reduction day referred to in paragraph (3)(b) is revoked and a new reduction day is determined for the brand.  In such a case, the reductions provided for in subsection (3) take place on the newly determined reduction day .

 

Item 78 - Making price agreements before the commencement day

This item enables a price agreement under subsection 85AD(1) of the new Act to be made after this Act is enacted but before its commencement day of 1 October 2012, provided the agreement does not come into effect until on or after 1 October 2012.  This provision is necessary because PBS prices need to be settled well before their starting date.

 

Item 79 - Reductions to the AEMP to include previous reductions to the APP

The operation of a number of subsections of the Act explicitly depends on whether there has previously been a reduction in certain approved prices to pharmacists .  In each of those subsections, the expression approved price to pharmacists is proposed to be replaced with approved ex-manufacturer price on 1 October 2012 under amendments in Part 1 of this Schedule.  Item 78 ensures that the new references to the approved ex-manufacturer price will be taken to include the approved price to pharmacists of the brand before 1 October 2012.  Thus, when the subsections are applied, previous price reductions, both before and after 1 October 2012, will be able to be taken into account in the operation of the subsections.

 

Item 80 - Transitioning regulations made for paragraph 99ACK(3)(b)

This items ensures the continuity of regulations made for the purposes of paragraph 99ACK(3)(b) of the old Act, despite the amendments made to that paragraph by item 51 of this Schedule.  It provides that these regulations continue in force and may be dealt with after 1 October 2012 as if they had been made under the new Act.

 

Item 81 - Regulations

This item empowers to the Governor-General to make regulations prescribing matters provided for in the item.

 



Schedule 2 — Price disclosure

 

Part 1 - Amendments

 

National Health Act 1953

 

Item 1 - Subsection 99ADB(1) (definition of adjusted approved ex-manufacturer price )

This item substitutes a new definition of adjusted approved ex-manufacturer price .  The part of the existing definition concerning the price on 1 April 2012 is being removed as it no longer applies.  Otherwise, the definition is unchanged.

 

Item 2 - Subsection 99ADB(1) (definition of applicable approved ex-manufacturer price )

This item repeals the definition of applicable approved ex-manufacturer price and inserts a cross reference to subsection 99ADB(3A) where the new definition is proposed to be located (see item 4 of this Schedule).

 

Item 3 - Subsection 99ADB(1)

This item inserts a definition of a new term relevant day in subsection 99ADB(1) of the Act.  The relevant day is, generally, the last day of the data collection period for a disclosure cycle.  However, if that day is 30 September 2012, then the relevant day is 1 October 2012.

 

The relevant day has significance in relation to the applicable approved ex-manufacturer price of a brand.  See new subsection 99ADB(3A) in item 4 of this Schedule for an explanation of this term.

 

Item 4 - Before subsection 99ADB(4)

This item inserts two proposed new subsections into section 99ADB for the purposes of defining applicable approved ex-manufacturer price.  The applicable approved ex-manufacturer price of a brand is the price to which the disclosed prices for that disclosure cycle are compared under the price disclosure provisions of the Regulations.

 

Subsection 99ADB(3A) defines the applicable approved ex-manufacturer price of a brand of a pharmaceutical item to be the approved ex-manufacturer price of the brand on the relevant day , which is.

  • the last day of the data collection period in respect of which the weighted average disclosed price of the brand is determined;
  • but, if that day is 30 September 2012, it is the approved ex-manufacturer price on 1 October 2012.

 

The new definition of applicable approved ex-manufacturer price differs from the existing one (which was repealed in item 2 of this Schedule) in that it makes special provision for data collection periods ending on 30 September 2012.  The reason for this is that on 1 October 2012 new approved ex-manufacturer prices will come into effect under the amendments in Schedule 1, and the special provision will enable those prices to be used in the price disclosure calculations for that cycle, rather than the approved prices to pharmacists from the previous day converted to ex-manufacturer prices.

 

Subsection 99ADB(3B) confers power to make regulations to prescribe a method or formula for working out the approved ex-manufacturer price on the relevant day of a brand of a pharmaceutical item which was not listed on the PBS on that day.  New brands of pharmaceutical items having drugs and manners of administration that are included in a price disclosure cycle at the time of their listing, join that cycle.  If the new brand is listed after the relevant day but before the price reduction day for a cycle, it needs an applicable approved ex-manufacturer price to enable the price disclosure calculations to be performed.  These calculations will no longer need to be performed for new brands of existing pharmaceutical items under the amendment in item 61 of Schedule 1 - proposed new section 99ADHA provides an alternative mechanism for reducing the prices of these brands.  However, the calculations will still need to be performed for new brands of new pharmaceutical items.

 

There is an existing regulation which prescribes a method of calculating such a price (regulation 37DA of the National Health (Pharmaceutical Benefits) Regulations 1960 ), but the regulation-making power under which this was made is being repealed (see item 56 in Schedule 1 - repeal of subsection 99ADB(3)).  The new regulation-making power in subsection 99ADB(3B) is intended to support regulation 37DA as proposed to be amended.

 

Item 5 - Section 99ADJ

This item repeals section 99ADJ of the Act.  The section related to price disclosure price reductions on 1 April 2012 and is spent.

 

 

Part 2 - Application provision

 

Item 6 - Application provision

This item provides that the amendments to the Act made by this Schedule apply on and after 1 October 2012 in relation to supplies of pharmaceutical benefits made before, on or after that day.  This application provision is the same as the application provision in subitem 77(1) of Schedule 1 for the amendments relating to price disclosure in that Schedule and has been made for the same reason; see the explanation of subitem 77(1) of Schedule 1.



Schedule 3 — Prescriber bag supplies

 

Part 1 - Amendments

 

National Health Act 1953

 

Item 1 - Subsection 84(1)

This item inserts a definition of a new term prescriber bag provisions into the Interpretation section of Part VII of the Act (subsection 84(1)).  The prescriber bag provisions are sections 93, 93AA and 93AB of the Act.   These sections provide for supply of certain pharmaceutical benefits by medical practitioners, authorised midwives and authorised nurse practitioners, respectively, directly to patients, ie, for supply from these practitioners’ ‘prescriber bags’.

 

Item 2 - Subsection 85(1) (note 1)

This item amends Note 1 under subsection 85(1).  The current Note alerts readers to the fact that, while most pharmaceutical benefits are generally available for supply under Part VII of the Act, some can only be supplied under Part VII under special arrangements made under section 100.  The new Note will alert readers to the fact that some pharmaceutical benefits may also only be available under the prescriber bag provisions of the Act.   The addition of the reference to the prescriber bag provisions reflects the amendments to the Act made by this Schedule.  These amendments provide a mechanism for listing drugs and pharmaceutical benefits on the PBS for supply only through prescriber bags.

 

Item 3 - After subsection 85(2)

This item inserts a new subsection (2AA) into section 85 of the Act.

 

New subsection (2AA) provides the mechanism for declaring drugs that can be supplied only under one or more of the prescriber bag provisions of the Act.  The subsection mirrors subsection (2A) which provides the mechanism for declaring drugs that can be supplied only under special arrangements under section 100.

 

New subsection 85(2AA) provides that if the Minister declares a drug under subsection 85(2) of the Act, and PBAC has recommended that the drug be made available only under one or more of the prescriber bag provisions, the Minister must, by legislative instrument, declare that the drug can only be supplied under that provision or those provisions. 

 

As is the case for the listing of a drug as a section 100 only drug, the Minister will not be able to list a drug as a prescriber bag only drug unless PBAC has recommended that the Minister do so, and must list the drug only in relation to the particular prescribers recommended by PBAC.

 

The Note under the subsection alerts readers to the fact that there are restrictions on the Minister’s ability to vary or revoke a determination under new subsection (2AA).  These restrictions are contained in new subsection 101(4AACC) of the Act which is being inserted by item 12 of this Schedule.

 

Item 4 - After subsection 85(7)

This item inserts a new subsection (7A) into section 85 of the Act.  New subsection (7A) provides that the Minister may, by legislative instrument, determine that particular pharmaceutical benefits can only be supplied under one or more of the prescriber bag provisions.

 

Item 5 - After section 85

This item inserts a proposed new section 85AAA into the Act.

 

Section 85AAA  Pharmaceutical benefits that can only be supplied under the prescriber bag provisions

This section provides for the consequences of a declaration being made in relation to a drug under new subsection 85(2AA) and a determination being made in respect of a pharmaceutical benefit under new subsection 85(7A).

 

Subsection (1) provides that if a declaration is made in relation to a drug under subsection 85(2AA) declaring that the drug can only be supplied under one or more of the prescriber bag provisions, then every pharmaceutical benefit that has that drug can only be supplied under Part VII under that provision or those provisions.

 

Subsection (2) provides that if the Minister makes a determination under subsection 85(7A) that a pharmaceutical benefit can only be supplied under one or more of the prescriber bag provisions, then that pharmaceutical benefit can only be supplied under Part VII under that provision or those provisions.

 

Subsection (3) qualifies subsections (2) and (3) in situations where there is both a declaration under subsection 85(2AA) in relation to a drug and a determination under subsection 85(7A) in relation to a pharmaceutical benefit that has that drug.   In such a case:

·           all pharmaceutical benefits having the drug may be supplied under the prescriber bag provision or provisions mentioned in the drug declaration under subsection (2AA); and

·           the particular pharmaceutical benefit or benefits having the drug mentioned in the determination under subsection (7A) may also be supplied under the prescriber bag provision or provisions mentioned in that determination; but

·           pharmaceutical benefits having that drug may not otherwise be supplied under Part VII of the Act, ie, they are not available for prescriber bag supply by other practitioners, and they are not generally available on the PBS.

 

For instance, if:

·           a declaration is made under subsection 85(2AA) that a particular drug is a medical practitioner prescriber bag supply only drug; and

·           a determination is made under subsection 85(7A) that a particular pharmaceutical benefit having that drug is a nurse practitioner prescriber bag only pharmaceutical benefit;

then:

·           medical practitioners may supply all pharmaceutical benefits having that drug under section 93, including the pharmaceutical benefit that may be supplied by nurse practitioners; and

·           nurse practitioners may supply the particular pharmaceutical benefit under section 93AB; but

·        pharmaceutical benefits having that drug may not otherwise be supplied as prescriber bag supplies by other practitioners, and they are not available for general supply on the PBS.

 

Item 6 - Paragraph 89(b)

This item inserts a reference to new section 93AB into paragraph 89(b) after the current reference to section 93AA.  There has been no substantive change in the meaning of paragraph 89(b).  Current subsection 93AA covers prescriber bag supply by both authorised midwives and authorised nurse practitioners.  Under the amendments proposed in item 11 of this Schedule, section 93AA will now apply only to supply by authorised midwives and section 93AB will apply to supply by authorised nurse practitioners.

 

Item 7 - Section 93 (heading)

This item amends the heading to section 93.  The new heading is more informative about the content of the section - that it concerns prescriber bag supply of pharmaceutical benefits by medical practitioners.

 

Item 8 and 9 - Subsections 93(1) and 93(2)

These items amend subsections 93(1) and (2) respectively by inserting a requirement that the determination made by the Minister under each subsection must be made by legislative instrument.  This is the current practice.

 

Item 10 - Subsection 93(2A)

This item repeals subsection 93(2A) which required the Minister’s determinations under subsections 93(1) and (2) to be published in the Gazette.   These determinations are now required to be made by legislative instrument (see items 8 and 9 of this Schedule).

 

Item 11 - Section 93AA

This item substitutes new sections 93AA and 93AB for current section 93AA.

 

Section 93AA    Prescriber bag supplies - authorised midwives

Section 93AB    Prescriber bag supplies - authorised nurse practitioners

Current section 93AA, which provides for prescriber bag supply by both authorised midwives and authorised nurse practitioners, is being replaced by two sections - section 93AA dealing with supply by authorised midwives, and section 93AB dealing with supply by authorised nurse practitioners.  These two new sections mirror the current section - there has been no change in meaning.  Having separate sections for the different practitioners facilitates the making of declarations under new subsection 85(2AA) and determinations under new subsection 85(7A) in relation to particular practitioners.

 

Item 12 - After subsection 101(4AAC)

This item inserts three new subsections into section 101 of the Act conferring functions on PBAC relating to declarations under new subsection 85(2AA).

 

Subsection (4AACA) 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 one or more of the prescriber bag provisions.  This function mirrors PBAC’s function in subsection (4AAD) in relation to section 100 only drugs. 

 

Subsection (4AACB) gives the Minister the power to vary or revoke, by legislative instrument, a declaration under subsection 85(2AA) in relation to a drug.  New subsection (4AACC) qualifies this power.

 

Subsection (4AACC) provides that:

            If:

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

(b)           thereafter the drug could be supplied under Part VII otherwise than under the prescriber bag provisions:

      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 (4AACC) is that:

·            If the Minister wishes to change the availability of a drug that is currently only available under the prescriber bag provisions 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.

 

Item 13 - Subparagraph 133(1)(bc)(ii)

This item changes the reference in the subparagraph to section 93AA to a reference to section 93AB.  The subparagraph refers to the authority of nurse practitioner to supply pharmaceutical benefits.  This authority is currently conferred under section 93AA of the Act, but will be conferred under section 93AB of the new Act. The amendments are a consequence of existing section 93AA being split into two new sections, sections 93AA and 93AB (see item 11 of this Schedule).  There has been no substantive change to the subparagraph.

 

Item 14 - Paragraph 134(4)(d)

This item replaces paragraph (d) of subsection 134(4) with two new paragraphs, paragraphs (d) and (e).  The changes are a consequence of existing section 93AA being split into two new sections, sections 93AA and 93AB (see item 11 of this Schedule).  There has been no substantive change to subsection 134A(4).

 

Item 15 - Paragraph 139A(1)(de)

This item inserts a reference to new section 93AB into paragraph 139A(1)(de).  The amendment is a consequence of existing section 93AA being split into two new sections, sections 93AA and 93AB (see item 11 of this Schedule).  There has been no substantive change to paragraph 139A(1)(de).

 

 

Part 2 - Application, saving and transitional provisions

 

Item 16 - Definitions

This item defines terms used in Part 2.

 

Item 17 - Application of amendments

This item provides that the amendments to the Act made by this Schedule apply on and after 1 October 2012 in relation to supplies of pharmaceutical benefits made on or after 1 October 2012.

 

Item 18 - Transitioning subordinate legislation relating to prescriber bag supplies

Subitem 18(1) makes special transitional provision in relation to the drug methoxyflurane.  This drug is currently subject to a declaration under subsection 85(2A) of the Act, ie, it has been declared to be a section 100 only drug.  A section 100 arrangement has been made for the supply of the drug by doctors as part of their doctors’ prescriber bags.

 

The amendments made by this Schedule provide for declarations of drugs as prescriber bag only drugs, so it is no longer necessary to do this under special arrangements under section 100 of the Act.  Subitem 18(1) provides that the current subsection 85(2A) declaration in relation to methoxyflurane may be dealt with as if it were a declaration under subsection 85(2AA) of the new Act for supply only under section 93 (ie, for prescriber bag supply by medical practitioners only).   The provision ensures the continuity of existing arrangements regarding methoxyflurane under the new Act.

 

Subitem 18(2) provides that current regulations made for the purposes of current section 93AA of the Act continue in force and may be dealt with as if they had been made for the purposes of sections 93AA and 93AB of the new Act.  This reflects the splitting of existing section 93AA into two sections - new sections 93AA and 93AB.

 

Subitem 18(3) provides that a current legislative instrument made for the purposes of current section 93AA of the Act continues in force and may be dealt with as if it had been made for the purposes of section 93AB of the new Act.  There is one current legislative instrument made under section 93AA and this relates to nurse practitioners only.  With the splitting of existing section 93AA into two sections - new sections 93AA and 93AB, nurse practitioners are now dealt with in section 93AB.  The instrument continues in force as if it had been made under new section 93AB.