Federal Register of Legislation - Australian Government

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A Bill for an Act to amend the National Health Act 1953, and for related purposes
Administered by: Health
For authoritative information on the progress of bills and on amendments proposed to them, please see the House of Representatives Votes and Proceedings, and the Journals of the Senate as available on the Parliament House website.
Registered 27 May 2015
Introduced HR 27 May 2015

 

 

 

 

 

2013 – 2014 ‑ 2015

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS) BILL 2015

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health, the Hon Sussan Ley MP)


 



NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS) BILL 2015

 

OUTLINE

 

The Pharmaceutical Benefits Scheme (PBS) operates under Part VII of the National Health Act 1953 (the Act) and provides Australians with timely, reliable and affordable access to necessary and cost-effective medicines. 

 

The PBS Access and Sustainability Package (the Package) was announced by the Australian Government in May 2015.  The Package establishes pharmacy funding, medicines pricing arrangements and a range of sector improvements to ensure ongoing access to innovative medicines through a sustainable PBS.  It contains measures negotiated following consultations with a wide range of stakeholders from pharmacy, pharmaceutical industry and consumer groups, including measures relating to the Sixth Community Pharmacy Agreement (6CPA) between the Commonwealth of Australia and the Pharmacy Guild of Australia.  

 

The elements of the Package which require amendment to the Act are:

·         applying a one‑off five per cent statutory price reduction for single brand medicines after being listed on the F1 formulary for five years.  The first reduction day will be 1 April 2016, and the last, 1 April 2020;

·         changing price disclosure arrangements for multiple‑brand medicines which have been listed on the F2 formulary for three years or more.  The originator brand will be removed from the calculation of the weighted average disclosed price.  The first reduction day will be 1 October 2016;

·         applying flow‑on price disclosure reductions from component drugs to multiple‑brand combination medicines on the F2 formulary.  The first reduction day will be 1 April 2016, with a once only back-capture reduction day on 1 October 2016;

·         revising Pharmaceutical Benefits Advisory Committee (PBAC) membership arrangements;

·         allowing approved pharmacists to discount patient co‑payments by a maximum of one dollar for each PBS supply on a prescription, commencing 1 January 2016;

·         extending safety net early supply rules to apply to more medicines;

·         continuing the legislative provisions for pharmacy location rules and the role of the Australian Community Pharmacy Authority, otherwise due to sunset on 30 June 2015, until 30 June 2020.  

In addition, there are minor technical amendments to support the intended operation of the Act.

 

Five per cent statutory price reduction for single brand drugs

The proposed five per cent reduction for drugs on the F1 formulary will apply, once only, for all forms and strengths of a drug on the first 1 April that occurs on or after the day the drug has been listed on F1 for five years, from 2016 to 2020. 

 

Removal of originator brand from price disclosure calculations

Price disclosure reductions are a routine part of maintaining PBS listing for multiple‑brand drugs.  Removing originator brands from price disclosure calculations will affect weighted average disclosed prices and price reductions because originators tend to maintain higher prices than other brands, and therefore draw the weighted average up.  The new price disclosure arrangements will apply to medicines that have been listed on the F2 formulary for three years or more.  The originator brand will be removed as part of the calculation of the weighted average disclosed price.  The period during which the originator will be retained in the calculation is to allow time for brands listing on F2 to gain market share.  Various safeguards will be included in the regulations to provide that the originator brand is included in the calculation if there is no other brand, and if including the originator results in a greater price disclosure percentage reduction.

 

Flowing price disclosure reductions for component drugs to multiple brand medicines

The process for flowing‑on price disclosure reductions for component drugs to multiple-brand combination medicines will operate in a similar manner to arrangements for single brand combination medicines.  If the combination medicine itself has an upcoming price disclosure reduction on the same day as the component drug, the outcome that achieves the lesser PBS price would be chosen.  This process will commence on 1 April 2016, with a back-capture day on 1 October 2016 to flow‑on any outstanding prior price disclosure reductions for component drugs to multiple‑brand combination medicines.  

 

Pharmaceutical Benefits Advisory Committee membership changes

The changes for the PBAC recognise the significant increase in the number and complexity of submissions to list medicines on the PBS.

The amendments increase the maximum number of members of the PBAC by three, provide for a Deputy Chairperson role, include provision for the nomination of an industry member, and allow nominations for consumer members to be made by a broader range of consumer organisations and individuals.  The Chairperson and Deputy Chairperson will be able to be appointed on a full‑time or part‑time basis.  Other non‑legislative changes will improve the capacity, flexibility, efficiency and transparency of PBAC processes and reduce the time to list medicines for certain types of submissions.

 

Maximum one dollar patient co-payment discount

Community pharmacies are currently required by the Act to charge no less than the legislated amount as the co‑payment for a PBS supply.

From 1 January 2016, pharmacists will be able to reduce co‑payment amounts by up to one dollar for each dispensed medicine.  Pharmacists can choose whether to offer a reduction, and the amount to the one dollar maximum.  A reduced co‑payment supply will count for safety net purposes and the amount accruing to the safety net threshold is the amount charged.  Co‑payments cannot be reduced for ‘early supply’ prescriptions and, consistent with existing safety net policy, the usual full co‑payment will apply.

Extension to early supply rules

Safety net early supply provisions will be amended to remove reference to 20 days as the early supply interval.  This will enable early supply rules to apply to any PBS medicine and the resupply interval to be appropriate to the particular medicine.  It will allow the use of a medicine, the listed quantity and the resupply interval to be better aligned.

The PBAC makes recommendations regarding the medicines it considers suitable for inclusion under early supply rules. 

Existing arrangements that allow pharmacists to dispense an early repeat supply with the usual PBS subsidy but with no safety net benefits will continue.

Extension of sunset provisions for location rules to 30 June 2020

The head of power in the Act for the pharmacy location rules and the Australian Community Pharmacy Authority will be extended until 30 June 2020.  

Because the details of the pharmacy location rules are determined separately, the effect of extending the expiry is that current arrangements can continue without interruption past the end of June 2015.

A review of pharmacy location rules will be conducted within two years as part of a broader review of pharmacy remuneration and other arrangements.

Technical amendments

The Bill also contains technical amendments to support the intended operation of the Act.  These include amendments relating to PBS listing for bioequivalent and biosimilar medicines and treating brands as Schedule equivalent.  For transparency, the Bill also amends the Act to expressly recognise pricing deeds, which are a long standing mechanism via which pharmaceutical companies reimburse the government in relation to certain medicines.

Commencement

The Bill provides for commencement on Royal Assent.  Schedule 1 will commence on the day after Royal Assent, Schedule 2 on 1 November 2015, and Schedule 3 on 1 January 2016.

Financial Impact Statement

The Bill will enable net savings to Government for the PBS and Repatriation Pharmaceutical Benefits Scheme from the PBS Access and Sustainability Package of more than $3.7 billion over five years.


 

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) BILL 2015

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 implements the elements of the Pharmaceutical Benefits Scheme (PBS) Access and Sustainability Package (the Package) announced by the Australian Government (the Government) in May 2015 for which amendments to the National Health Act 1953 (the Act) are required. 

The Package will establish community pharmacy funding through the Sixth Community Pharmacy Agreement (6CPA), change pricing arrangements for PBS medicines and facilitate improvements to the pharmaceutical sector.  It will also ensure ongoing access to new and innovative medicines through a sustainable PBS.  

The Bill contains amendments to pricing, patient co-payments and safety net arrangements for the PBS.  These include a one-off five per cent statutory price reduction for single brand drugs; removal of the originator brand from price disclosure calculations; flow‑on of price disclosure reductions from component drugs to multiple‑brand combination medicines; and a maximum one dollar discount of patient co‑payments for PBS prescriptions.  The Bill also extends the sunset provisions for pharmacy location rules and the Australian Community Pharmacy Authority until 30 June 2020 and increases the number of members of the Pharmaceutical Benefits Advisory Committee (PBAC).

Human rights implications

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

The PBS assists with advancement of this human right by providing subsidised access to medicines for Australians. 

The measures in the Bill are part of a balanced package designed to build and maintain capacity to provide consumer access to new and innovative, and increasingly expensive, medicines as quickly as possible.  They also support the principle that PBS funding needs to be focussed on medicines which are essential medical treatments and which carry a higher cost to consumers.

Over the last year, the PBAC has considered an average of nearly $4 billion worth of submissions at each of its three meetings.  The estimated cost of new listings from the November 2014 and March 2015 meetings alone is more than $4 billion over five years.  This is a significant and continual pipeline of investment for the Government and it is new money the Government must find on an ongoing basis.

A number of measures in the Bill will benefit consumers.  They will incur reduced out-of-pocket expenses because pharmacies will have the option of discounting patient co-payments by a maximum of one dollar on every prescription.  The average concessional card holder who uses 17 scripts per year could save $17, while average concessional patients over 65 years could save $43.

Taxpayers and consumers will also benefit from lower prices for both innovator and generic medicines listed on the PBS.

The extension of safety net early supply rules will promote quality use of medicines and responsible use of PBS entitlements, as well as discourage waste and reduce the quantity of unused medicines in the community.  It will also result in savings that can be used to list new and innovative medicines on the PBS. 

While not requiring amendments to the Act, another measure in the Package will result in removal of certain low-cost ‘over the counter’ medicines from the PBS.  These medicines are available directly from pharmacies without a prescription.  This change will be made via legislative instrument and on the advice of the PBAC.  In recommending this change, the PBAC also recommended over-the-counter medicines that should remain on the PBS, including medicines listed for use by Aboriginal and Torres Strait Islander people and palliative care listings.  While out‑of‑pocket expenses for some low-cost medicines will increase for some consumers, the policy is consistent with the need to focus funding on higher cost, essential medicines.

Changes to PBAC membership arrangements will improve the capacity, flexibility, efficiency and transparency of PBAC processes and reduce the time to list medicines for certain types of submissions.  This will also benefit consumers.

The Package, including the measures in the Bill, is the result of extensive consultation and negotiation across the whole PBS supply chain.  Over four months, the Government worked with more than 20 stakeholder groups to develop a strongly supported package of measures.  Inputs and ideas were canvassed and received from all sectors and detailed negotiations were held with the pharmacy and pharmaceutical industry, as well as consumer organisations. 

Together, the measures in the Package provide a fair and balanced approach in which benefits and savings are shared across PBS stakeholders to ensure continued and improved access to medicines for consumers.

Conclusion

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

The Hon Sussan Ley MP, the Minister for Health


 

NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS) BILL 2015

 

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) Act 2015.

 

Clause 2 – Commencement

This clause provides that the Bill will commence on Royal Assent.  Schedule 1 will commence on the day after Royal Assent, Schedule 2 on 1 November 2015, and Schedule 3 on 1 January 2016.

 

Clause 3 – Schedule(s)

This clause provides that legislation that is specified in a Schedule to this Bill is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule has effect according to its terms.  The Schedules amend the National Health Act 1953 (the Act).

 

 

SCHEDULE 1           Amendments commencing on the day after Royal Assent

National Health Act 1953

 

Item 1      Paragraphs 84AG(4)(a) and (b)

Item 2      At the end of subsection 84AG(4)

Section 84AG relates to the Minister’s power to determine a therapeutic group.  These items propose consequential amendments to section 84AG due to the new flow‑on price disclosure reductions for component drugs to combination medicines with a drug in F2.  See new section 99ADHB (item 28).

 

Currently, the Minister must remove a drug from a therapeutic group on the day section 99ADH applies to any brand of pharmaceutical item with that drug.  The amendment provides that a drug must also be removed from a therapeutic group on the day the price of a brand of a pharmaceutical item is reduced under new section 99ADHB.

 

Section 99ADH relates to price disclosure price reductions, and new section 99ADHB relates to the flow‑on of price disclosure reductions.

 

Item 3      At the end of section 85

This item inserts a new subsection 85(9) into section 85 of the Act.  The subsection provides that if a listed brand of a pharmaceutical item has a drug (the listed brand), and another:

  • brand of the same pharmaceutical item; or
  • brand of a different pharmaceutical item;

is bioequivalent or biosimilar to the listed brand

then, for the purposes of Part VII of the Act, the other brand of pharmaceutical item is taken to have the same drug as the listed brand.

 

Bioequivalent or biosimilar medicines are intended to share the same drug with the medicine to which they are a match.  The proposed amendment supports the intended operation of the PBS since 2007 Act amendments introduced statutory price reduction.

 

The item also includes a new subsection 85(10) which provides that subsection 85(10) does not affect the separate declarations of epoetin alfa and epoetin lambda made under subsection 85(2) before the commencement of subsection 85(10).

 

Item 4      After section 85D

This item, for transparency, amends the Act by inserting a new section 85E to expressly recognise pricing deeds, which are a long standing mechanism for reimbursement of the government by pharmaceutical companies in relation to certain medicines.

 

It is current practice for deeds with pharmaceutical companies to be used to facilitate the listing of medicines on the PBS, or to support certain PBS listing changes.  These deeds can be the result of advice from the Pharmaceutical Benefits Advisory Committee (PBAC) that the listing of a new medicine on the PBS, or a change to a PBS listing, should include a risk‑sharing arrangement which limits the exposure of the Commonwealth to costs associated with the listing of the medicine, for example, where PBAC has concerns regarding potentially inappropriate utilisation of the medicines on the PBS.

 

In other circumstances, companies seek to enter into rebate deeds with the Commonwealth so that the published price of the medicine is higher than the effective price.  The Commonwealth, once the reimbursement under the deed is taken into account, effectively pays less.  These deeds often enable the listing of PBS medicines at prices which would otherwise be unacceptable to companies as a published price. Deeds may also include other requirements regarding PBS listed medicines including requirements to provide data regarding health outcomes or utilisation figures.

 

Deeds are finalised between the time of the PBAC recommendation and the PBS listing.  The proposed section does not affect the operation of the Act.  In particular:

·         the PBAC assesses clinical and cost‑effectiveness in accordance with its functions; and

·         claims for payment from approved suppliers are paid by the government in accordance with the statutory rate of payment under Part VII of the Act.

 

The statutory rate of payment to approved suppliers uses a PBS base price, the ‘approved ex‑manufacturer price’, set by a section 85AD price agreement or subsection 85B(2) determination.  If a deed exists for an effective price, later reimbursement from the pharmaceutical company under the deed effectively reduces the cost to the government of monies it has paid to approved suppliers under the Act.

 

This item also includes a grandfathering provision so that all deeds entered into by the Minister or the Commonwealth prior to the commencement of this provision will be taken to have been made under this new section.

 

 

Item 5      Subsection 90(3C)

Section 90 of the Act relates to approval of a pharmacist as an approved pharmacist to supply pharmaceutical benefits under Part VII of the Act.  Subsection 90(3C) of the Act provides that a number of subsections in section 90, including subsections 90(3A) and (3B), cease to have effect at the end of 30 June 2015.

 

Subsection 90(3A) of the Act requires the Secretary to refer a pharmacist’s application to be an approved pharmacist to the Australian Community Pharmacy Authority (the Authority).  Subsection 90(3B) of the Act then requires the positive recommendation of the Authority, before the Secretary may approve a pharmacist for the premises.

 

The provisions due to cease at the end of 30 June 2015 relate to the role of the Authority in the approval process, or, carve out certain limited exceptions, where a matter need not be referred by the Secretary to the Authority, but may be considered by the Secretary directly.

 

This item amends subsection 90(3C) to remove the ‘30 June 2015’ cessation date, and replace it with ’30 June 2020’.  The proposed amendment to subsection 90(3C) is consequential and linked to the proposed amendment to subsection 99Y of the Act, which relates to Division 4B of Part VII of the Act (item 32).

 

Item 6      Section 99AC

Section 99AC describes what ‘Division 3A – Price reductions’ in Part VII of the Act is about.  This item removes the description of Subdivision CA of Division 3A, relating to outstanding 25% statutory price reductions for certain drugs in F2, which have now occurred.  Subdivision CA is proposed for repeal by item 9.  There are a number of items proposing removal of spent provisions or references relating to the outstanding 25% price reductions.

 

This item also amends the description of Subdivision D, which applies to:

  • the flow on 16% reduction under section 99ADH; and
  • the new five per cent reduction if a pharmaceutical item has had a drug on the F1 formulary for five years on a particular day.

 

References to the 25%, outstanding 25%, 5% and various 2% reductions for certain drugs on the F2 formulary, which have now occurred, are removed from the description of Subdivision D.  The 25% reduction occurred on 1 August 2008, the last 2% reduction occurred on 1 February 2011, and the 5% reduction occurred on 1 February 2011.  There are a number of items proposing removal of spent provisions or other references relating to the 25%, 5% and 2% price reductions.

 

Item 7      Subsection 99ACA(1) (definitions of relevant price and subject to an outstanding staged reduction)

This item repeals  the definitions relevant price and subject to an outstanding staged reduction in subsection 99ACA(1) of the Act, which relate to spent price reductions.

 

 

Item 8      Subsection 99ACC(6)

This item relates to section 99ACC of the Act which flows‑on statutory price reductions for listed component drugs to single brand combination medicines (‘single brand combination items’).  The item amends subsection 99ACC(6), and add a new subsection 99ACC(7).

 

A ‘combination item’ is a pharmaceutical item that has a drug that contains at least two other drugs or medicinal preparations, at least one of which is itself a PBS‑listed drug: subsection 84(1) of the Act.

 

A single brand combination item has a subsection 85(2) drug to which subsection 85AB(5) of the Act applies.  The subsection 85(2) drug is not on the F1 or F2 formulary.  Instead the drug is placed on a ‘combination drug list’ and the drug is not directly subject to statutory price reductions that apply to drugs on the F1 or F2 formulary.  This status ceases if a bioequivalent or biosimilar trigger brand lists on the PBS – a 16% statutory price reduction then occurs, the drug moves to the F2 formulary, and price disclosure requirements commence.

 

While the drug remains on the combination drug list, section 99ACC operates to flow‑on the statutory price reductions that occur for a F1 or F2 listed component drug which is contained in the subsection 85(2) drug on the combination drugs list.

 

Subject to statutory price reduction

This item simplifies subsection 99ACC(6) as certain statutory price reductions for F2 drugs are now spent.  

 

The statutory price reductions applicable to listed component drugs with the same manner of administration flowed‑on by section 99ACC to a single brand combination item will be:

  • a 16% for an F2‑listed component drug (unless a combination item);
  • a price disclosure reduction for an F2 listed component drug; and
  • the new five per cent price reduction for an F1 listed component drug.

 

Modified meaning of the same manner of administration

Subsection 99ACC(7) provides, for the purposes of subsection 99ACC(6), for a modified meaning of the same manner of administration.  On occasion, a combination item has a subsection 85(5) manner of administration that is ‘double-barrelled’ due to the nature of the combination item.  When this occurs, a price flow‑on fails as a two‑part manner of administration, for example ‘oral / injection’, is not the same as the manner of administration specified as ‘oral’ and ‘injection’ for the single component items.  The modified manner of administration allows the flow‑on to occur when there is a double-barrelled manner of administration.

 

Example 1: Drug A (oral) has a price disclosure reduction day.  Under the modified meaning of manner of administration, section 99ACC is triggered for single brand Drug [A+B] (oral/injection) for the same day.  The Minister considers any PBAC advice, and AEMPs for all brands of pharmaceutical items with Drug A (oral) are reduced, including proportionate reductions for combination items.

 

Item 9      Subdivision CA of Division 3A of Part VII

This item repeals Subdivision CA of Division 3A of Part VII, which relates to outstanding 25% price reductions which have occurred.

 

Item 10    Subsection 99ACF(1) (heading)

This item substitutes a new heading for subsection 99ACF(1), removing reference to ‘or amount’.  This reference, and other similar references to ‘amount’, relate to price reductions that have occurred.

 

Item 11    Subsection 99ACF(1)

Item 12    Subsection 99ACF(1) (table, heading to column headed “Percentage or amount for section”)

These items remove spent references to ‘amount’.

 

Item 13    Subsection 99ACF(1) (table items 2 to 10)

This item substitutes a new item 2 referring to new section 99ACHA and the new five per cent (5%) reduction for drugs on the F1 formulary for five years on a particular day.

 

The item also repeals old items 2 to 10 of the table to section 99ACF(1) of the Act, as these price reductions have occurred.  The new five per cent reduction applies for all forms and strengths of a drug and makes use of the usual statutory price reduction mechanisms provided for in section 99ACF of the Act.

 

Item 14            Subsection 99ACF(2) (heading)

Item 15 and 16           Paragraphs 99ACF(2)(b) and (c)

These items remove spent references to ‘amount’ or similar.

 

Item 17    Subsection 99ACF(3)

This item  removes subsection 99ACF(3) as it is not possible for item 1 (16% - drug on F2) and new item 2 (5% - drug on F1) to have a price reduction on the same day.

 

Item 18    Subsection 99ACF(5)

This item repeals subsection 99ACF(5) which contains definitions of outstanding staged percentage, relevant price, and staged percentage, relating to spent price reductions.

 

Item 19    Section 99ACG (heading)

This item substitutes a simplified heading to section 99ACG to provide that other price reductions do not apply if a price disclosure reduction has applied.

 

Item 20    Subsections 99ACG(1) and (1A)

Item 21    Subsection 99ACG(2) (heading)

Item 22    Subsection 99ACG(2)

Item 20 repeals subsections 99ACG(1) and (1A) which relate to spent statutory price reductions.  Item 21 removes a heading to subsection 99ACG(2) which is no longer required, and item 22 reflects that section 99ACG no longer requires subsections.

 

Item 23    Paragraph 99ACG(2)(a)

Item 24    Subparagraph 99ACG(2)(b)(iii)

Items 22 and 23 amend subsection 99ACG(2) to provide that if section 99ADH has applied or new section 99ADHB has reduced the price of a listed brand of a pharmaceutical item on a day, then, on and after that day the 16% price reductions cannot apply to any brand of a pharmaceutical item sharing the same subsection 85(2) drug and manner of administration.

 

Section 99ADH relates to price disclosure reductions, and new section 99ADHB flows price disclosure reductions for component drugs on to combination medicines with multiple brands.

 

The amendments have the same effect that section 99ACG does at present, but references to spent statutory reductions are removed, and the reference to new section 99ADHB is added.

 

Item 25    Sections 99ACI to 99ACQ

This item repeals spent sections 99ACI to 99ACQ which relate to the 25%, outstanding 25%, 5% and 2% statutory price reductions for drugs on F2, which have occurred.

 

This item also inserts new section 99ACHA containing a one‑off five per cent statutory price reduction for drugs on F1 which have been PBS‑listed for five years, starting 1 April 2016, with a last reduction day on 1 April 2020.  The reduction applies for all forms and strengths of the drug.

 

Item 26    Subsection 99ADB(1)

This item amends subsection 99ADB(1) to introduce a new term, ‘originator brand’, which has the meaning given by new subsection 99ADB(6B) of the Act.

 

Item 27    After subsection 99ADB(6)

This item amends subsection 99ADB by adding new subsections 99ADB(6A) to (6D).  Section 99ADB is located in Division 3B (Price disclosure), Part VII of the Act.

 

The amendments contained in items 26 and 27 are required to enable the originator brand to be removed from price disclosure calculations for multiple‑brand medicines. The first affected price disclosure reduction day will be 1 October 2016

 

The Minister applies the method set out in the regulations to determine the ‘weighted average disclosed price’ for a brand, using information provided in accordance with the price disclosure requirements by responsible persons (pharmaceutical companies) relating to sales prices in the market.

 

Subsection 99ADB(6A) provides that the regulations may prescribe information that the method must not take into account (including information that has been provided in compliance with the price disclosure requirements).  Information prescribed for the purposes of this section may include information relating to originator brands.

 

Amendments to the regulations will be required to implement this measure.  It is proposed that the regulations would provide that any weighted average disclosed price calculated by a method which excludes the originator brand would not be determined until the drug has been on the F2 formulary for three years.  In addition, there will be safeguards in the regulations such as including the originator brand in the calculations if there is no other brand, and if inclusion of the originator results in a greater price reduction.

 

Subsection 99ADB(6B) provides that the Minister may, by legislative instrument, determine that a brand of a pharmaceutical item is an originator brand. Determinations of originator brands will occur following consultation with responsible persons.  It will not be required that an originator brand be determined for all pharmaceutical items containing drugs in F2.

 

Subsection 99ADB(6C) provides that in deciding whether to determine a brand of pharmaceutical item as an originator brand, the Minister must have regard to whether, when the brand was first determined under subsection 85(6), it had a drug on the F1 formulary, or subsection 85AB(5) applied to the drug (ie, single brand combination item on the combination drugs list).

 

It will also be relevant that a brand is similar to a brand that meets the criteria in subsection 99ADB(6C).  For example, brand ‘banana’ meets the criteria in subsection 99ADB(6C), so similar brands ‘bananaplus’, ‘bananaextra’, ‘banana 20mg’ may also be determined as originator brands.

 

Subsection 99ADB(6D) provides that subsection 99ADB(6C) does not apply if the drug is on the F2 formulary on 31 March 2016.  For drugs in F2 on 31 March 2016, relevant considerations for the Minister would include whether a brand was the first brand of the drug available on the PBS (or brands where co-marketed).

 

Item 28    At the end of Subdivision E of Division 3B of Part VII

This item introduces new section 99ADHB to provide for statutory price reductions which flow‑on price disclosure reductions for component drugs to combination medicines with a drug in the F2 formulary on the same day.  The first reduction day is 1 April 2016, with a once only back‑capture reduction day on 1 October 2016.

 

The section would operate in a similar manner to current section 99ACC of the Act which flows on statutory price reductions, including price disclosure reductions, for component drugs to single brand combination medicines on the combination drugs list (that is, drugs to which subsection 85AB(5) applies, and which are on neither on the F1 or F2 formulary).

 

When section applies

The section applies if:

  • there is an approved ex‑manufacturer price (the existing price) in force for a brand (the existing brand) of a combination item;
  • the combination item has a drug on F2;
  • a brand of pharmaceutical item, which is not itself a combination item, has a drug which is also in the combination item (a common drug); and
  • the combination item and the trigger brand of pharmaceutical item with the common drug share the same manner of administration.

 

The section applies on the same price disclosure reduction day that section 99ADH applied for the trigger brand of pharmaceutical item with the common drug.

 

The section does not apply to a brand of combination item that is not PBS‑listed the day before the reduction day: proposed paragraph 99ADHB(1)(f) of the Act.  That brand would list on the PBS at the reduced price.  The new section does not apply to a section 84AH ‘exempt item’: paragraph 99ADHB(1)(b) of the Act.

 

All PBS‑listed brands of pharmaceutical items have an ‘approved ex manufacturer price’ (AEMP) set by price agreement or price determination: section 85AD or subsection 85B(2) of the Act.  The AEMP is used when setting the rate of payment to approved pharmacists and other approved suppliers for PBS supplies of medicines under Part VII of the Act.

 

A ‘combination item’ is a pharmaceutical item that has a drug that contains at least two other drugs or medicinal preparations, at least one of which is itself a PBS listed drug: subsection 84(1) of the Act.  To avoid unnecessary complexity, the new section does not flow on price disclosure reductions for other combination items.

 

Price reduction

Subsection 99ADHB(2) provides that the existing price (AEMP) ceases to have effect at the end of the day before the reduction day.  If there is a ‘claimed price’, that also ceases.  A ‘claimed price’ creates a ‘special patient contribution’ for the patient to pay in addition to the usual patient co-payment: subsection 85B(3) and (5) of the Act.

 

Subsection 99ADHB(3) provides that the Minister may agree, under a price agreement, or determine under subsection 85B(2) of the Act, an AEMP (the new price) for the existing brand that comes into force on the reduction day.

 

The new section does not apply if the existing brand is no longer a listed brand under subsection 85(6) on the reduction day.

 

Subsection 99ADHB(4) ensures that the AEMP agreed or determined by the Minister for the existing brand of the combination item for the reduction day must not be more than the upcoming price disclosure reduction (if any) for the existing brand of the combination item on the same reduction day.  Since a reduction will not occur under subsection 99ADH(3) of the Act (price disclosure reduction), the price disclosure reduction for the existing brand of the combination item is turned off.

 

Subsection 99ADHB(5) provides that the Minister may have regard, when considering whether the new price should be less than the existing price, to any advice provided by the PBAC under subsection 101(4AC) of the Act, regarding the combination medicine.

 

Subsection 99ADHB(6) provides that the Minister, in deciding whether or not the new price should be less than the existing price, must take into account the AEMPs on reduction day of:

  • brands of pharmaceutical items with the common drug (which are not combination items), and have the same manner of administration as the existing brand of the combination item; and
  • brands of combination items that have the same subsection 85(2) drug and manner of administration as the existing brand of the combination item.

 

The Minister is also to consider the quantity of the common drug in the existing brand of the combination item.

 

To avoid unnecessary complexity, when the combination item has a drug on F2 and is itself subject to price disclosure requirements, the Minister does not consider the AEMPs of combination items with a different subsection 85(2) drug.

 

Modified meaning of the same manner of administration

Subsection 99ADHB(7) provides, for the purposes of this section, for a modified meaning of the same manner of administration.  On occasion, a combination item has a subsection 85(5) manner of administration that is ‘double-barrelled’ due to the nature of the combination item.  The modified manner of administration allows the flow‑on to occur when there is a double-barrelled manner of administration.

 

Claimed price reduction

Subsection 99ADHB(8) and (9) create a cap related to any claimed price in force on the day before the reduction day for a particular pack quantity of the existing brand of the combination item, to ensure that it, if a claimed price exists on the reduction day, it is proportionately reduced along with the AEMP.  This is to ensure that the special patient contribution paid by the patient does not increase.

 

Back-capture reduction day

Subsections 99ADHB(10), (11) and (12) provide for a back-capture reduction day on 1 October 2016.  The back-capture reduction day would flow‑on the last price disclosure reduction for component drugs to multiple brand combination medicines.  It will only apply where section 99ADH has not already applied on 1 April 2016, or will not already apply on 1 October 2016.  This will flow‑on price disclosure reductions for the common drug that occurred prior to 1 April 2016, but have not occurred since.

 

There is also provision to change the 1 October 2016 back-capture day to a later day, by legislative instrument made before 1 October 2016.

 

Section does not limit Minister’s powers

Subsection 99ADHB(13) provides that the new section does not limit the Minister’s powers, after reduction day, to make further price agreements or determinations under section 85B in relation to the brand of the combination item.

 

Item 29    Paragraphs 99AEI(2)(da) and (db)

Item 30    Paragraph 99AEI(3)(b)

Item 31    Paragraphs 99AEI(3)(c) and (d)

Section 99AEI is contained in Division 3C, Part VII of the Act, relating to Guarantee of Supply.  The amendments remove references to section 99ACEA and 99ACEB from section 99AEI, as they are spent guarantee of supply references relating to the outstanding 25% reductions.  There is no guaranteed brand of a guaranteed item whose failure or inability to supply could trigger the spent provisions.

 

Item 32    Section 99Y

Section 99Y of the Act provides that unless sooner repealed, Division 4B of Part VII of the Act, which deals with the Australian Community Pharmacy Authority (the Authority) ceases to have effect at the end of 30 June 2015.  The Authority considers applications from pharmacists for approval as an approved pharmacist to supply pharmaceutical benefits under Part VII of the Act.

 

Division 4B deals with such matters as the establishment, functions, and membership of the Authority.  In making a recommendation whether or not to approve a pharmacist as an approved pharmacist, in respect of particular premises, the Authority must comply with ‘location’ rules determined by the Minister under section 99L (which is also in Division 4B).  These rules are the National Health (Australian Community Pharmacy Authority Rules) Determination 2011.

 

This item amends section 99Y to provide that Division 4B of Part VII of the Act ceases at the end of 30 June 2020.  The proposed amendment provides for the continued operation of the Authority, the section 99L head of power for the Minister to make rules, and the current location rules themselves.

 

Within the first two years of the 6CPA there will be a comprehensive review and public evaluation of both pharmacy remuneration and the location rules (which are a legislative instrument), to allow for a transparent assessment of their appropriateness and their role in supporting access to PBS medicines.

 

Item 33    Subsection 100A(2)

This item increases the maximum number of PBAC members, excluding the Chairperson, from 17 to 20.

 

Item 34    At the end of subsection 100A(2)

This item inserts a note to ensure that it is clear that the Deputy Chairperson may be appointed from one of the PBAC members (other than the Chairperson) referred to in subsection 100A(2).

 

Item 35    After paragraph 100A(3)(a)

This item inserts a new paragraph 100A(3)(aa) referring to ‘industry’.  The effect of this amendment is to include industry as one of the member groups from which members of the PBAC may be nominated and selected.  Appointment of an industry member is not mandatory as it is not one of the groups of interests or professions from which at least one member must be selected.

 

The reference to an ‘industry’ member is intended to provide for the appointment of a member to the PBAC with expertise in a pharmaceutical or health-related industry relevant to the work of the PBAC.

 

Item 36    Subsection 100A(5A) and (6)

This item repeals subsections 100A(5A) and (6) of the Act, as the provisions dealing with the full‑time or part‑time status of PBAC members will move to section 100B.

 

Item 37    After subsection 100B(1)

This item deals with nominations to the Minister for appointment of consumer and industry PBAC members.  

 

Paragraph 100A(3)(aa) of the Act provides for PBAC members to be selected from industry.

 

New subsection 100B(1AA) provides for an industry member to be appointed from nominations made to the Minister by industry organisations specified by the regulations for this purpose, and by industry organisations invited by the Minister to make nominations.

 

Paragraph 100A(3)(a) of the Act provides for at least one PBAC member to be selected from consumers.

 

New subsection 100B(1AB) will continue to provide for a consumer member to be appointed by the Minister from nominations made by consumer organisations specified in regulations for this purpose.  This provision will shift from its current location in paragraph 100B(1A)(a) of the Act.  Paragraph 100B(1AB)(b) will now also provide for individuals and consumer organisations to be invited by the Minister to make nominations for a consumer member.

 

Item 38    Paragraph 100B(1A)(a)

This item is consequential to item 37, and repeals paragraph 100B(1A)(a) which shifts to subsection 100B(1AB) of the Act.

 

Item 39    After subsection 100B(1B)

This item inserts new subsections 100B(1C) to (1F) dealing with appointment of PBAC members.

 

Subsection 100B(1C) provides that the Minister must appoint a PBAC member as the Chairperson of the PBAC.  This provision currently appears in the regulations.

 

Subsection 100B(1D) provides that the Minister may appoint one of the PBAC members (other than the Chairperson) as the Deputy Chairperson of the PBAC.

 

Subsection 100B(1E) provides that the Chairperson, and the Deputy Chairperson (if any), are to be appointed on a full-time or part-time basis.  This is a change to the current requirement in the Act that the Chairperson must hold office on a full-time basis.

 

Subsection 100B(1F) provides that the other PBAC members are to be appointed on a part-time basis.  This is already the case; the provision is being moved from section 100A of the Act.

 

Item 40    Application of amendments

This item provides for the application of certain amendments contained in Schedule 1.

 

Subsection 40(1) provides that the originator brand amendments made by item 27 of this Schedule apply in relation to a period for which a weighted average disclosed price of a brand of a pharmaceutical item is determined, if the period ends on or after 31 March 2016.  This ensures the first price disclosure reduction day to which the originator brand measure applies is 1 October 2016.

 

Subsection 40(2) provides that section 99ADHB, as inserted by item 28 of this Schedule, does not apply in relation to a reduction day (within the meaning of new section 99ADHB) before 1 April 2016.

 

Subsection 40(3) provides that the amendments made by items 33 to 39 of this Schedule apply to PBAC appointments made on and after the commencement of this Schedule.

 

 

SCHEDULE 2        Amendments commencing on 1 November 2015

National Health Act 1953

 

Item 1      After subsection 85(6)

Item 2      After subsection 101(4AACC)

These items insert new subsections 85(6A) to (6C) into section 85 under the subheading ‘Schedule equivalents’, and insert a new subsection 101(4AACD) into section 101 of the Act, which deals with PBAC functions.

 

The proposed amendments are technical amendments designed to support the operation of paragraph 103(2A)(b) of the Act, which contains an exception to the application of an offence provision in subsection 103(2) of the Act.

 

Subsection 103(2) of the Act provides (relevantly) that a pharmacist to whom a prescription is presented shall not supply, in purported pursuance of Part VII of the Act, anything other than the pharmaceutical benefit that is directed to be supplied in the prescription.  The penalty for the offence provision is $2,000 or imprisonment for 12 months, or both.  The $2,000 is converted to $3,400 by the Crimes Act 1914.

 

The exception in subsection 103(2A) provides that a pharmacist is not prohibited from supplying, instead of the pharmaceutical benefit directed to be supplied, a substitute benefit provided that:

·         the person who prescribed the pharmaceutical benefit did not indicate on the prescription that only the specified benefit was to be supplied;

·         the Schedule of Pharmaceutical Benefits issued by the Department states that the specified benefit and the substitute benefit are equivalent;

·         the substitute benefit is a listed brand of a pharmaceutical item; and

·         the supply of the substitute benefit is not prohibited by a law of the State or Territory in which the substitute benefit is supplied.

 

Subsection 85(6A) provides that if the Minister determines a brand of pharmaceutical item under subsection 85(6) of the Act (PBS listed brand), the Minister, may, by legislative instrument, determine that, for the purposes of paragraph 103(2A)(b) of the Act, the brand is to be treated as equivalent to one or more other brands of pharmaceutical items.  Subsection 85(6A) expressly provides for the Minister’s decision-making power, and the Minister’s decision to appear in a legislative instrument.

 

Subsection 85(6B) provides that in deciding whether a brand of pharmaceutical item is to be treated as equivalent to one or more other brands of pharmaceutical items the Minister must have regard to any advice given by the PBAC.  The proposed amendment expressly supports the role of PBAC expert advice in decisions regarding ‘Schedule equivalence’, which is the basis of brand substitution at the pharmacy level.  It is not required, or intended, that the PBAC provides advice on each occasion that the Minster considers whether to determine if a brand is to be treated as equivalent to one or more other brands of pharmaceutical items.  However, where PBAC advice exists, the Minister must have regard to this advice in making a decision.

 

Considerations which will be relevant for the Minister when considering whether to determine that a brand is to be treated as equivalent for the purposes of paragraph 103(2A)(b) include any advice from the PBAC and any information provided by the Therapeutic Goods Administration (TGA) on matters it considers in undertaking its roles and functions.  Under the Therapeutic Goods Act 1989, the TGA considers submissions from sponsors in support of bioequivalence or biosimilarity between products.  Submissions from sponsors providing evidence of TGA outcomes can also be relevant to PBS listing processes.

 

Subsection 85(6C) provides that if, on 1 November 2015, the Schedule of Pharmaceutical Benefits specifies that a brand of pharmaceutical item is equivalent to one or more other brands of pharmaceutical items, the specification is taken to have been following a determination to that effect under new subsection 85(6A).

 

 

SCHEDULE 3        Amendments commencing on 1 January 2016

National Health Act 1953

 

Item 1      Subsection 84(1)

This item inserts the phrase ‘allowable discount’ into subsection 84(1) (Interpretation) of the Act.  The phrase ‘allowable discount’ has the meaning given by new subsection 87(2AAAA).

 

Item 2      Paragraphs 84AAA(1)(a) and (b)

Item 3      Subsection 84AAA(2)

These items amend section 84AAA of the Act which relates to ‘early supply’ of a pharmaceutical benefit.

 

If a PBS supply is supplied within less than the specified interval after the supply of the same pharmaceutical item or an equivalent pharmaceutical benefit it is an ‘early supply’ and PBS safety net rules do not apply.  The PBAC provides advice to the Minister regarding early supply: subsection 101(3AA) of the Act.

 

A PBS supply which is an ‘early supply’ does not count towards the PBS safety net threshold, and if the patient co-payment would otherwise be reduced by PBS safety net, the patient co-payment for the PBS supply reverts as if the PBS safety net threshold were not met.

 

The period ‘within 20 days’ is specified in the Act.  The amendment provides for the Minister to specify 20 days, or another period, in a legislative instrument.

 

Item 4      Paragraphs 84C(1C)(a) and (b)

This item amends paragraphs 84C(1C)(a) and (b) which relate to issuing of entitlement safety net cards for concessional patients.  The amendments ensure that the amount used to determine whether a co‑payment that would otherwise be charged, if totalled with amounts previously charged to an individual or family would meet or cross the safety net threshold, is the full co‑payment amount without any allowable discount.

 

Item 5 to 6      Paragraphs 84C(4)(c) and (d)

These items make two consequential amendments to paragraph 84C(4)(c) (general patient) and 84C(4)(d) (concessional patient).  The amendments ensure that these paragraphs, which relate to amounts counting towards PBS safety net, can still be complied with if an approved pharmacist or approved medical practitioner (dispensing doctor) provides an ‘allowable discount’ on the PBS supply of the pharmaceutical benefit.

 

Items 7 to 8     Paragraphs 87(2)(a), (b), (c), and (e)

These items amend section 87 of the Act, which deals with limited charges for pharmaceutical benefits, including the patient co-payments, to permit an approved pharmacist, or approved medical practitioner (dispensing doctor), to decide to provide an allowable discount to a patient.

 

Item 9      After subsection 87(2)

This item inserts new subsection 87(2AAAA) into section 87 of the Act.  The new subsection provides that for a supply other than an early supply, the allowable discount is an amount of not more than $1.

 

Item 10    Paragraph 87(2AB)(d)

This item amends subsection 87(2AB) which relates to paragraphs 87(2)(b) and (c) (crossing the PBS Safety Net threshold).  Paragraph 87(2AB)(b) of the Act provides that the higher co‑payment amount that would otherwise apply (that is, before the PBS Safety net threshold is met), is used to determine whether if that amount were charged for a PBS supply, and if totalled with amounts previously charged the total  would meet or cross the threshold, and bring the amount actually charged down – that is, to general patient reduced charge or nil.

 

To reflect the existing provision, the amendment provides that any allowable discount is ignored to work out whether the PBS safety net threshold is met.  Then, once it is known whether the PBS threshold is met or not, the allowable discount can apply to the patient co-payment for the PBS supply, which may or may not have been reduced by PBS safety net.

 

Item 11    Paragraph 99(2)(b)

This item amends section 99 of the Act, which deals with payment for supply of pharmaceutical benefits.  The amendment to paragraph 99(2)(b) ensures that the Australian Government does not pay an approved pharmacist or approved medical practitioner (dispensing doctor) more when the allowable discount occurs.