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PB 109 of 2016 Determinations/Health as made
This instrument repeals and remakes PB 39 of 2016 to bring into effect reductions to the approved ex-manufacturer price of certain PBS medicines that were calculated as a result of Price Disclosure.
Administered by: Health
Registered 15 Dec 2016
Tabling HistoryDate
Tabled HR07-Feb-2017
Tabled Senate07-Feb-2017
Date of repeal 17 Jun 2017
Repealed by National Health (Weighted average disclosed price – October 2017 reduction day) Determination 2017 (PB 44 of 2017)

EXPLANATORY STATEMENT

 

INSTRUMENT NUMBER PB 109 OF 2016

 

NATIONAL HEALTH ACT 1953

 

National Health (Weighted average disclosed price – April 2017 reduction day)
Determination 2016

Authority

This legislative instrument is made pursuant to subsection 99ADB(4) and paragraph 99ADH(1)(aa) of the National Health Act 1953 (the Act) and makes certain determinations relating to price disclosure for brands of pharmaceutical items with a data collection period ending 30 September 2016 (2017 April Cycle).

Purpose

This legislative instrument determines a ‘weighted average disclosed price’ (WADP) for listed brands in the 2017 April Cycle under subsection 99ADB(4) of the Act.

This legislative instrument also determines a reduction day of 1 April 2017 for listed brands in the 2017 April Cycle with a data collection period ending on 30 September 2016.

Part VII of the Act is the legislative basis for the Pharmaceutical Benefits Scheme (PBS) by which the Commonwealth provides reliable, timely, and affordable access to a wide range of medicines for all Australians.

Part VII, Division 3B of the Act deals with price disclosure. Price disclosure provides for the ‘approved ex-manufacturer price’ of a ‘brand of a pharmaceutical item’ to be reduced on a reduction day in certain specified circumstances. The reduction is based on sales revenue, incentives and volume data collected from responsible persons (drug companies) and occurs in accordance with the Act and the National Health (Pharmaceutical Benefits) Regulations 1960 (the Regulations).  

A responsible person for a listed brand in Schedule 1 of this instrument, provided that the ‘approved ex-manufacturer price’ for the listed brand on 1 April 2017 would otherwise be more than the ‘adjusted approved ex-manufacturer price’, will receive a price reduction for the listed brand on and from 1 April 2017: subsections 99ADH(3) and (4).  

This legislative instrument is the second determination which provides for changes to the price disclosure arrangements for removal of ‘originator brand’ data from the calculation of the ‘adjusted approved ex-manufacturer price’, as a result of amendments to the Act by the National Health Amendment (Pharmaceutical Benefits) Act 2015 and Regulations by the National Health (Pharmaceutical Benefits) Amendment (2015 Measures No.1) Regulation 2015. Originator brands are determined by legislative instrument under subsection 99ADB(6B) of the Act. The current instrument is the National Health (Originator Brand) Determination 2015 (PB 100 of 2015).

Subsection 99ADB(4) – ‘weighted average disclosed price’

Subsection 99ADB(4) of the Act provides that the Minister may, by legislative instrument, determine the WADP of a listed brand in accordance with the Regulations.  

Subsection 99ADB(6) of the Act provides that without limiting subsection 99ADB(4), the regulations may prescribe a method for determining the WADP for a listed brand. The method may take into account information (if any) that has been provided in compliance with the price disclosure requirements, and any other information, about the listed brand, other listed or delisted brands of the same pharmaceutical item, and all listed or delisted brands of all pharmaceutical items that have the same drug and manner of administration as the pharmaceutical item.

Part 6A, Division 2, Subdivision 2 of the Regulations provides the method for determining a WADP for a listed brand of pharmaceutical item for a ‘data collection period’. ‘Data collection period' is defined in regulation 37C.

The Act and Regulations provide for brands that are part of the 2017 April Cycle. A brand is in the 2017 April Cycle if:

·         the listed brand had a data collection period of six months or more on 30 September 2016;

·         the brand was in the 2016 October Cycle; or

·         the price disclosure requirements first apply to a brand on a day, and another brand with the same drug and manner of administration is in the 2017 April Cycle.

A brand of an exempt item (section 84AH) is excluded from price disclosure and so does not have data collected or a determination for a reduction day: section 99ADA of the Act.  

The price for new brands of existing pharmaceutical items listed on the PBS after 30 September 2016 will be reduced as a flow-on reduction under section 99ADHA on 1 April 2017 if at least one existing brand of the same pharmaceutical item is in Schedule 1. No WADP or reduction day is determined for these listed brands.

Paragraph 99ADH(1)(c) – unadjusted price reduction for listed brand must be at least 10% or no price reduction for listed brand on reduction day

Paragraph 99ADH(1)(c) of the Act (read with paragraph 99ADH(3)) provides that a price reduction for a listed brand will not occur unless the ‘unadjusted price reduction’ for a listed brand is at least 10%. The ‘unadjusted price reduction’ for a listed brand is defined in subsection 99ADB(1).

Listed brands where the unadjusted price reduction is calculated to be at least 10% appear in Schedule 1 to this instrument. Listed brands where the unadjusted price reduction is calculated as less than 10% appear in Schedule 2 to this instrument. Listed brands in Schedule 2 will not have a price disclosure related reduction on 1 April 2017.

Subsection 99ADB(4) – determining an ‘adjusted approved ex-manufacturer price’ for a listed brand in Schedule 1

Subsection 99ADB(7) provides that a subsection 99ADB(4) determination for a listed brand may include the ‘adjusted approved ex-manufacturer price’ for the listed brand.

It is the ‘adjusted approved ex-manufacturer price’ that is compared to what would otherwise be the current ‘approved ex-manufacturer price’ of a listed brand on reduction day: subsections 99ADH(3) and (4) of the Act. The Explanatory Memorandum for the 1 December 2010 amendments to the Act explain that it is included in the subsection 99ADB(4) determination ‘for the assistance of companies and in the interests of transparency’.

In this instrument, where a WADP is determined for listed brands in Schedule 1, the ‘adjusted approved ex-manufacturer price’ is equal to the amount of the WADP. Since
listed brands in Schedule 2 will not have a reduction on 1 April 2017, the ‘adjusted approved ex-manufacturer price’ is not included in Schedule 2.


Paragraph 99ADH(1)(aa) – determining a reduction day

A price disclosure reduction day must be 1 April, 1 October, or another day prescribed under subsection 99ADH(2) of the Act. Regulation 37A provides that 1 August and
1 December are prescribed days.

In order for a price reduction to occur for a listed brand, one of the reduction days in the Act or prescribed in the Regulations must be determined for the listed brand under paragraph 99ADH(1)(aa), or, the reduction must flow-on to the listed brand to match the reduction on the same date for another listed brand with the same pharmaceutical item, due to section 99ADHA of the Act.

This instrument determines 1 April 2017 as the reduction day for the relevant brands for the 2017 April Cycle.

Revocation

This instrument revokes the previous determination made under subsection 99ADB(4) and paragraph 99ADH(1)(aa) of the Act for the 2016 October Cycle (PB 39 of 2016) because listed brands in this cycle have had their reduction from this cycle.

Consultation

This instrument affects certain pharmaceutical companies with medicines listed on the PBS. Pharmaceutical companies were consulted in relation to the introduction of price disclosure requirements during the policy development for introduction of price disclosure in 2007, during implementation phases, and during the development and implementation of the further PBS reforms of 2010, pricing changes in 2012, simplified price disclosure amendments in 2014 and measures announced in the 2015 PBS Access and Sustainability Package. Consultation occurred through meetings with peak industry bodies. Further information on price disclosure was also disseminated through peak industry bodies, during meetings with the Price Disclosure Working Group and directly to companies through information sessions conducted in March 2011, June 2012, and March 2016, and distribution of associated educational material at the time of amendments.  

Pharmaceutical companies with a listed or delisted brand subject to the price disclosure requirements for the 2017 April Cycle disclosed information relevant to this determination directly to Australian Healthcare Associates Pty Ltd (AHA), known as the Price Disclosure Data Administrator (PDDA). AHA is prescribed in sub-regulation 37T(6) as the person to whom, in accordance with paragraph 99ADC(1)(a), a responsible person is to provide price disclosure information. The PDDA provided responsible persons with an opportunity to check that the information disclosed to the PDDA was translated correctly to PDDA data files. This was done prior to that data being used to apply the method set out in the Regulations to arrive at the WADP for listed brands. 

This instrument commences on the day after it is registered on the Federal Register of Legislation.  

This instrument is a legislative instrument for the purposes of the Legislation Act 2003.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
National Health (Weighted average disclosed price – April 2017 reduction day) 
Determination 2016
This Legislative Instrument 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 Legislative Instrument
This National Health (Weighted average disclosed price –  April 2017 reduction day) Determination 2016 makes certain determinations relating to price disclosure for listed brands of pharmaceutical items with a data collection period ending 30 September 2016 (2017 April Cycle).
Part VII of the National Health Act 1953 (the Act) is the legislative basis for the Pharmaceutical Benefits Scheme (PBS) by which the Commonwealth provides reliable, timely, and affordable access to a wide range of medicines for all Australians.
Part VII, Division 3B of the Act deals with price disclosure. Price disclosure provides for the ‘approved ex-manufacturer price’ of a ‘brand of a pharmaceutical item’ to be reduced on a reduction day in certain specified circumstances. The reduction is based on sales revenue, incentives and volume data collected from responsible persons (drug companies) and occurs in accordance with the Act and the National Health (Pharmaceutical Benefits) Regulations 1960 (the Regulations).
This legislative instrument determines a ‘weighted average disclosed price’ (WADP) for listed brands in the 2017 April Cycle under subsection 99ADB(4) of the Act. 
This legislative instrument also determines a reduction day of 1 April 2017 for listed brands in the 2017 April Cycle which are mentioned in Schedule 1 or 2 of this instrument.
A responsible person for a listed brand in Schedule 1 of this instrument, provided that the ‘approved ex-manufacturer price’ for the listed brand on 1 April 2017 is more than the ‘adjusted approved ex-manufacturer price’, will receive a price reduction for the listed brand on and from 1 April 2017: subsections 99ADH(3) and (4) of the Act.  
Human rights implications
This legislative instrument 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 by patients to medicines. 
The price disclosure program progressively reduces the price of some PBS medicines which are subject to competition, ensuring better value for money from these medicines. These reductions may also result in patients accessing these medicines at lower prices.
Conclusion
This Legislative Instrument is compatible with human rights because it advances the protection of human rights.
Penny Shakespeare
First Assistant Secretary
Pharmaceutical Benefits Division
Department of Health