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National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2010

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

   

National Health Act 1953

1  Subsection 84(1)

Insert:

relevant price : see subsection 99ACF(5).

2  Subsection 84(1)

Insert:

subject to an outstanding staged reduction : see subsection 99ACA(1).

3  Section 99AC

Repeal the section, substitute:

99AC   What this Division is about

This Division is about price reductions for listed brands of pharmaceutical items.

Subdivision B requires there to be at least a 12.5% price reduction in the price of a new brand of a pharmaceutical item (other than a combination item) when it lists. The listing of the new brand of the pharmaceutical item also provides a trigger for price reductions to occur under Subdivision D (see section 99ACH) for:

(a)   other existing brands of the pharmaceutical item; and

(b)   existing brands of pharmaceutical items that have the same drug and manner of administration; and

(c)   existing brands of pharmaceutical items that have a drug in the same therapeutic group and the same manner of administration.

Subdivision C sets out the circumstances in which price reductions are required for combination items.

Subdivision CA sets out the circumstances in which price reductions are required for new brands of pharmaceutical items that have the same drug as an existing brand of a pharmaceutical item that is subject to an outstanding staged reduction under section 99ACK. The listing of the new brand or brands also provides a trigger for price reductions to occur under Subdivision D (see sections 99ACM and 99ACN) for existing brands of pharmaceutical items that have that drug.

Subdivision D provides for other price reductions for pharmaceutical items (including for combination items in some cases). These price reductions:

(a)   are triggered when Subdivision B applies to require a 12.5% price reduction to a new brand of a pharmaceutical item; or

(b)   are triggered when Subdivision CA applies to a new brand of a pharmaceutical item that has the same drug as an existing brand of a pharmaceutical item that is subject to an outstanding staged reduction; or

(c)   arise if the pharmaceutical item has a drug on F2 on a particular day.

4  Subsection 99ACA(1)

Insert:

relevant price : see subsection 99ACF(5).

5  Subsection 99ACA(1)

Insert:

subject to an outstanding staged reduction : a brand of a pharmaceutical item is subject to an outstanding staged reduction on a day if:

                     (a)  on any day before that day, section 99ACK had applied to the brand of the pharmaceutical item; and

                     (b)  on the day before that day, the agreed price, or the determined price and claimed price, of the brand of the pharmaceutical item had not been reduced, because of the application of section 99ACF in relation to section 99ACK or 99ACM, by 25% of the relevant price of the brand of the pharmaceutical item.

6  After Subdivision C of Division 3A of Part VII

Insert:

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

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

When this section applies

             (1)  Subject to subsection (2), this section applies to a brand (the new brand ) of a pharmaceutical item (the trigger item ) on a day (the reduction day ) if:

                     (a)  on the reduction day, a determination under subsection 85(6) comes into force in relation to the new brand of the trigger item; and

                     (b)  on the day before the reduction day:

                              (i)  the new brand of the trigger item was not a listed brand of the trigger item; and

                             (ii)  a brand (the existing brand ) of a pharmaceutical item (the existing item ) was a listed brand of the existing item; and

                     (c)  the new brand of the trigger item is bioequivalent or biosimilar to the existing brand of the existing item; and

                     (d)  the trigger item and existing item have the same drug and manner of administration; and

                     (e)  on the reduction day, either or both of the following are subject to an outstanding staged reduction:

                              (i)  the existing brand of the existing item;

                             (ii)  a brand (the related brand ) of a pharmaceutical item (the related item ) that has the same drug as the existing item and the trigger item.

Note 1:       For the purposes of this subsection, the new brand and the existing brand may be the same brand, or the trigger item and the existing item may be the same pharmaceutical item.

Note 2:       For the purposes of this subsection, the new brand and the related brand may be the same brand, or the trigger item and the related item may be the same pharmaceutical item.

Note 3:       For the purposes of this subsection, the existing brand and related brand may be the same brand, or the existing item and related item may be the same pharmaceutical item.

When this section does not apply

             (2)  This section does not apply if, before the reduction day, this section applied to:

                     (a)  the new brand, or another listed brand, of the trigger item; or

                     (b)  a listed brand of another pharmaceutical item that has the same drug as the new brand of the trigger item.

Note:          Subsection (1) is taken not to have applied in relation to a brand of a pharmaceutical item in some cases: see section 99AEI.

Price reduction

             (3)  The Minister:

                     (a)  may, under section 85AD, make a price agreement for the new brand of the trigger item; and

                     (b)  must not make a determination under section 85B in relation to the new brand of the trigger item.

             (4)  Subject to subsection (5), the agreed price for the new brand of the trigger item that comes into force on the reduction day must not exceed the approved price to pharmacists, on the day before the reduction day, of the existing brand of the existing item, reduced by the same amount that the agreed price or determined price of the existing brand of the existing item is reduced by on the reduction day under item 6 or 7 of the table in section 99ACF.

Apportioning if quantities are different

             (5)  If:

                     (a)  the approved price to pharmacists, on the day before the reduction day, of the existing brand of the existing item is for a particular quantity or number of units of that item; and

                     (b)  the agreed price for the new brand of the trigger item is not for the same quantity or number of units;

then, for the purposes of subsection (3), the approved price to pharmacists of the existing brand of the existing item is taken to be adjusted proportionally to what it would have been if the quantity or number of units of the existing brand of the existing item had been the same as the quantity or number of units of the new brand of the trigger item.

This section does not limit Minister’s powers

             (6)  This section does not limit the Minister’s powers, after the reduction day, to make:

                     (a)  further price agreements; or

                     (b)  determinations under section 85B;

for the new brand of the trigger item.

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

When this section applies

             (1)  Subject to subsection (2), if:

                     (a)  on a day (the reduction day ), a determination under subsection 85(6) comes into force in relation to 2 or more brands (the new brands ) of pharmaceutical items (the trigger items ); and

                     (b)  the new brands of the trigger items:

                              (i)  are bioequivalent or biosimilar; and

                             (ii)  have the same drug and manner of administration; and

                     (c)  on the day before the reduction day, the new brands of the trigger items were not listed brands of the trigger items; and

                     (d)  on the day before the reduction day, there was not a listed brand of a pharmaceutical item that:

                              (i)  is bioequivalent or biosimilar to the new brands of the trigger items; and

                             (ii)  has the same drug and manner of administration as the new brands of the trigger items; and

                     (e)  on the reduction day, a listed brand (the existing brand ) of a pharmaceutical item (the existing item ):

                              (i)  has the same drug as the trigger items; and

                             (ii)  is subject to an outstanding staged reduction;

then this section applies to the new brands of the trigger items.

Note 1:       For the purposes of this subsection, the new brands may be the same brand, or the trigger items may be the same pharmaceutical item.

Note 2:       For the purposes of this subsection, any of the new brands and the existing brand may be the same brand, or any of the trigger items and the existing item may be the same pharmaceutical item.

When this section does not apply

             (2)  This section does not apply if, before the reduction day, this section applied to:

                     (a)  the new brands, or another listed brand, of the trigger items; or

                     (b)  a listed brand of another pharmaceutical item that has the same drug as the new brands of the trigger items.

Note:          Subsection (1) is taken not to have applied in relation to a brand of a pharmaceutical item in some cases: see section 99AEI.

Price reduction

             (3)  The Minister:

                     (a)  may, under section 85AD, make a price agreement for the new brands of the trigger items; and

                     (b)  must not make a determination under section 85B in relation to the new brands of the trigger items.

This section does not limit Minister’s powers

             (4)  This section does not limit the Minister’s powers, after the reduction day, to make:

                     (a)  further price agreements; or

                     (b)  determinations under section 85B;

for the new brands of the trigger items.

7  Subsection 99ACF(1)

Omit “by the following:”, substitute “by the percentage or amount specified in column 3 of the table for the section referred to in column 2.”.

8  Paragraphs 99ACF(1)(d) and (e)

Repeal the paragraphs.

9  Subsection 99ACF(1) (after table item 2)

Insert:

2A

99ACIA

2%

10  Subsection 99ACF(1) (table item 4)

Repeal the item, substitute:

4

99ACK

the amount that equals the staged percentage, on the reduction day, of the relevant price for the brand of the pharmaceutical item

5

99ACL

the reduction percentage specified in subsection 99ACL(2)

6

99ACM

the amount that equals the outstanding staged percentage, on the reduction day, of the relevant price for the brand of the pharmaceutical item

7

99ACN

the reduction percentage specified in subsection 99ACN(2)

8

99ACO

5%

9

99ACP

the reduction amount specified in subsection 99ACP(2)

10

99ACQ

the reduction percentage specified in subsection 99ACQ(2)

11  Subsection 99ACF(5)

Repeal the subsection, substitute:

             (5)  In this section:

outstanding staged percentage for a listed brand of a pharmaceutical item on a reduction day, means 25% less each staged percentage that has applied under item 4 of the table in subsection (1) to the brand of the pharmaceutical item on a day before the reduction day.

relevant price of a listed brand of a pharmaceutical item means:

                     (a)  for the agreed price or determined price—the amount that was the agreed price or determined price in force in relation to the brand of the pharmaceutical item on 31 July 2008; and

                     (b)  for the claimed price the amount that was the claimed price in force in relation to the brand of the pharmaceutical item on the day before the reduction day.

staged percentage on a reduction day for a listed brand of a pharmaceutical item, means the percentage that is prescribed for the purposes of paragraph 99ACK(3)(b) for the reduction day.

12  After subsection 99ACG(1)

Insert:

2% reduction on 1 February 2011 does not apply if a 12.5% reduction has applied

          (1A)  If:

                     (a)  on 1 December 2010, a 12.5% administrative price reduction or any of the following applies to a listed brand of a pharmaceutical item:

                              (i)  section 99ACB;

                             (ii)  section 99ACD or 99ACE;

                            (iii)  subsection 99ACF(1) or (2) because of item 1 of the table in section 99ACF; and

                     (b)  apart from this subsection, item 2A of the table would apply in relation to the brand of the pharmaceutical item, or another listed brand of the pharmaceutical item, on 1 February 2011;

then item 2A of the table does not apply on 1 February 2011 in relation to the brand of the pharmaceutical item or the other brand of the pharmaceutical item.

Note:       The heading to subsection 99ACG(1) is replaced by the heading “ 2% reduction on 1 August 2008, 2009 or 2010 does not apply if a 12.5% reduction has applied ”.

13  Subparagraph 99ACG(2)(b)(iii)

Repeal the subparagraph, substitute:

                            (iii)  subsection 99ACF(1) or (2) because of any item (other than item 4, 5, 6 or 7) of the table in section 99ACF;

Note 1:    The heading to subsection 99ACG(2) is replaced by the heading “ Other price reductions do not apply if a price disclosure reduction has applied ”.

Note 2:    The heading to section 99ACI is altered by adding at the end “ on 1 August 2008, 2009 and 2010 ”.

14  After section 99ACI

Insert:

99ACIA   2% statutory price reduction on 1 February 2011

                   If:

                     (a)  on 31 January 2011, a price agreement or a determination under section 85B is in force in relation to a listed brand of a pharmaceutical item; and

                     (b)  on 11 October 2010, the drug in the pharmaceutical item was in Part A of F2; and

                     (c)  on 1 February 2011, the pharmaceutical item is not an exempt item;

then this section applies to the listed brand of the pharmaceutical item on 1 February 2011.

15  Subsection 99ACK(1)

Omit “This section”, substitute “Subject to subsection (1A), this section”.

Note:       The heading to section 99ACK is altered by omitting “ phased ” and substituting “ staged ”.

16  After subsection 99ACK(1)

Insert:

          (1A)  This section does not apply to a brand of a pharmaceutical item on a reduction day if, on that day, section 99ACM applies or had previously applied to the brand of the pharmaceutical item.

17  At the end of Subdivision D of Division 3A of Part VII

Add:

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

             (1)  This section applies to a listed brand (the existing brand ) of a pharmaceutical item (the existing item ) on a day (the reduction day ) if, on the reduction day:

                     (a)  the existing brand of the existing item is not subject to an outstanding staged reduction; and

                     (b)  a listed brand (the staged brand ) of a pharmaceutical item (the staged item ) is subject to an outstanding staged reduction; and

                     (c)  section 99ACK applies to the staged brand of the staged item; and

                     (d)  the existing item and the staged item have the same drug.

Note:          For the purposes of paragraphs (b) and (d), the existing brand and the staged brand may be the same brand, or the existing item and the staged item may be the same pharmaceutical item.

             (2)  For the purposes of item 5 of the table in section 99ACF, the reduction percentage for the existing brand of the existing item is the percentage that is worked out as follows:

Method statement

Step 1.   See column 3 of item 4 of the table in section 99ACF to work out the amount (the staged brand’s reduction amount ) by which the agreed price or determined price of the staged brand of the staged item is reduced on the reduction day.

Step 2.   Work out what percentage the staged brand’s reduction amount represents of the agreed price or determined price of the staged brand of the staged item on the day before the reduction day.

The reduction percentage is the percentage worked out at step 2.

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

                   This section applies to a listed brand (the staged brand ) of a pharmaceutical item (the staged item ) on a day (the reduction day ) if, on the reduction day:

                     (a)  the staged brand of the staged item is subject to an outstanding staged reduction; and

                     (b)  section 99ACEA or 99ACEB applies to a brand (the new brand ) of a pharmaceutical item (the trigger item ); and

                     (c)  the staged item and the trigger item have the same drug.

Note:          For the purposes of paragraphs (b) and (c), the staged brand and the new brand may be the same brand, or the staged item and the trigger item may be the same pharmaceutical item.

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

             (1)  This section applies to a listed brand (the existing brand ) of a pharmaceutical item (the existing item ) on a day (the reduction day ) if, on the reduction day:

                     (a)  the existing brand of the existing item is not subject to an outstanding staged reduction; and

                     (b)  section 99ACM applies to a listed brand (the staged brand ) of a pharmaceutical item (the staged item ) on the reduction day; and

                     (c)  the existing item and the staged item have the same drug.

Note:          For the purposes of paragraphs (b) and (c), the existing brand and the staged brand may be the same brand, or the existing item and the staged item may be the same pharmaceutical item.

             (2)  For the purposes of item 7 of the table in section 99ACF, the reduction percentage for the existing brand of the existing item is the percentage that is worked out as follows:

Method statement

Step 1.   See column 3 of item 6 of the table in section 99ACF to work out the amount (the staged brand’s reduction amount ) by which the agreed price or determined price of the staged brand of the staged item is reduced on the reduction day.

Step 2.   Work out what percentage the staged brand’s reduction amount represents of the agreed price or determined price of the staged brand of the staged item on the day before the reduction day.

The reduction percentage is the percentage worked out at step 2.

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

                   If:

                     (a)  on 31 January 2011, a price agreement or a determination under section 85B is in force in relation to a listed brand (the relevant brand ) of a pharmaceutical item (the relevant item ); and

                     (b)  on 11 October 2010, the drug in the relevant item was in Part T of F2; and

                     (c)  on 1 February 2011, the relevant item is not an exempt item; and

                     (d)  on 1 February 2011, the relevant brand of the relevant item is not subject to an outstanding staged reduction; and

                     (e)  on 1 February 2011, there is not another listed brand of a pharmaceutical item that:

                              (i)  is subject to an outstanding staged reduction; and

                             (ii)  has the same drug as the relevant item;

then this section applies to the relevant brand of the relevant item on 1 February 2011.

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

             (1)  If:

                     (a)  on 31 January 2011, a price agreement or a determination under section 85B is in force in relation to a listed brand (the relevant brand ) of a pharmaceutical item (the relevant item ); and

                     (b)  on 11 October 2010, the drug in the relevant item was in Part T of F2; and

                     (c)  on 1 February 2011, the relevant item is not an exempt item; and

                     (d)  on 1 February 2011, the relevant brand of the relevant item is subject to an outstanding staged reduction;

then this section applies to the relevant brand of the relevant item on 1 February 2011.

             (2)  For the purposes of item 9 of the table in section 99ACF, the reduction amount for the relevant brand of the relevant item is the amount that is worked out as follows:

Method statement

Step 1.   Work out the relevant price of the relevant brand of the relevant item.

Step 2.   Work out the amount (the comparison amount ) that equals 25% of the relevant price.

Step 3.   Subtract the comparison amount from the relevant price.

The reduction amount is 5% of the amount worked out at step 3.

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

             (1)  If:

                     (a)  on 31 January 2011, a price agreement or a determination under section 85B is in force in relation to a listed brand (the relevant brand ) of a pharmaceutical item (the relevant item ); and

                     (b)  on 11 October 2010, the drug in the relevant item was in Part T of F2; and

                     (c)  on 1 February 2011, the relevant item is not an exempt item; and

                     (d)  on 1 February 2011, the relevant brand of the relevant item is not subject to an outstanding staged reduction; and

                     (e)  on 1 February 2011:

                              (i)  another listed brand (the staged brand ) of a pharmaceutical item (the staged item ) is subject to an outstanding staged reduction; and

                             (ii)  the relevant item and the staged item have the same drug;

then this section applies to the relevant brand of the relevant item on 1 February 2011.

             (2)  For the purposes of item 10 of the table in section 99ACF, the reduction percentage for the relevant brand of the relevant item is the percentage that is worked out as follows:

Method statement

Step 1.   See column 3 of item 9 of the table in section 99ACF to work out the amount (the staged brand’s reduction amount ) by which the agreed price or determined price of the staged brand of the staged item is reduced on the reduction day.

Step 2.   Work out what percentage the staged brand’s reduction amount represents of the agreed price or determined price of the staged brand of the staged item on the day before the reduction day.

The reduction percentage is the percentage worked out at step 2.

18  After paragraph 99AEI(2)(d)

Insert:

                   (da)  the new brand of the trigger item referred to in section 99ACEA; or

                   (db)  one of the new brands of the triggers items referred to in section 99ACEB; or

19  At the end of subsection 99AEI(3)

Add:

               ; or (c)  if subsection 99ACEA(1) applied to the delisted brand of the existing item—for the purposes of subsection 99ACEA(2), subsection 99ACEA(1) is taken not to have applied to the delisted brand of the existing item; or

                     (d)  if subsection 99ACEB(1) applied to the delisted brand of the existing item—for the purposes of subsection 99ACEB(2), subsection 99ACEB(1) is taken not to have applied to the delisted brand of the existing item.