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2004-2005-2006-2007
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS SCHEME)
BILL 2007
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by authority of the Minister for Health and Ageing, Hon Tony Abbott MP)
NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS SCHEME)
BILL 2007
OUTLINE
Several Government amendments are being proposed to ensure the legislation has its
intended effect.
The Bill provides that the Minister may, by legislative instrument, determine therapeutic
groups. The amendments require the Minister to obtain advice from the Pharmaceutical
Benefits Advisory Committee (PBAC) before forming a new group; however, PBAC's
advice will not be binding on the Minister.
The amendments vary the 25% staged reductions provided for in the Bill for the prescribed
F2 drugs. They allow for no reductions, or reductions less than 25% to apply to these drugs.
In addition, a number of minor and technical amendments are being proposed.
FINANCIAL IMPACT STATEMENT
These amendments will have negligible financial impact.
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NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS SCHEME)
BILL 2007
NOTES ON AMENDMENTS
Amendment 1
The criteria for co-marketed brands in proposed subparagraphs 84AE(3)(c) and (d) in the Bill
require that there be no other listed brands of that pharmaceutical item and no other listed
brands of bio-equivalent pharmaceutical items. This amendment replaces those criteria with
a wider criterion, so that the requirement will be that there be no listed brands of any
pharmaceutical item that has that drug.
Amendments 2-4
These amendments concern proposed section 84AG in the Bill, which provides for the
determination of therapeutic groups. Amendment 2 adds a new heading above subsections
(1) to (5). The effect of amendment 3 is that the Minister must obtain written advice from
PBAC before determining a new therapeutic group after the commencement of the amending
Act. That advice is not binding on the Minister. The Minister may decide to determine a
therapeutic group despite receiving advice to the contrary from PBAC, and conversely, the
Minister may decide not to determine a therapeutic group despite advice from PBAC that a
group should be determined. The new function is conferred on PBAC by amendment 20.
Amendment 4 provides for the making of regulations to prescribe existing therapeutic groups
at the commencement.
Amendments 5-7
Amendments 5, 6 and 7 are directed at the situation where the listing of a brand of a
pharmaceutical item on a particular day occurs at the same time as the delisting of an existing
brand of an existing item, and had the two brands been listed on the one day, the drug would
not satisfy the criteria for F1. It is intended that in such a situation the drug still be moved to
F2, notwithstanding the existing brand delists.
Amendment 5 will thus have the effect that where there is one listed brand of a
pharmaceutical item having a particular drug on the day before the Minister makes a
determination of a formulary for that drug, and there is another listed bioequivalent brand of
a pharmaceutical item having that drug on the day the determination is made, the drug must
be determined to be on F2. If the drug is in a therapeutic group, this will also affect other
drugs in that therapeutic group.
Amendment 6 has the same effect for combinations items as amendment 5 has for other
pharmaceutical items.
Amendment 7 defines relevant period and has application to both amendments 5 and 6.
Amendment 8
This is a minor technical amendment to provide for the possibility that the new brand being
listed has previously been listed on the PBS, and subsequently delisted, but is now being
relisted. If the brand was subject to a 12.5% price reduction during the period it was
previously listed, this amendment will ensure that it will not be subject to another 12.5%
reduction at the time of its relisting.
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Amendment 9
This amendment concerns which price reductions in the component drugs may be flowed on
to combination items. The Bill provides for the 12.5%, 2% and 25% price reductions to be
flowed on. This amendment adds price reductions as a result of price disclosure.
Amendment 10
This amendment corrects an omission in the Bill. 12.5% reductions do not apply where they
have previously applied. Subsection 99ACD(2) in the Bill provides for the case where a
12.5% reduction has previously applied under the legislation. This amendment inserts new
subsection (1A) to cover the situation where the 12.5% reduction has previously applied
administratively. It applies to combination items in a parallel way to which subsection
99ACB(2) applies to other pharmaceutical items.
Amendment 11
This is a minor technical amendment identical in form and effect to amendment 8. This
amendment applies to new brands of combination items in the same way that amendment 8
applies to new brands of other pharmaceutical items.
Amendment 12
This amendment provides for the possibility of therapeutic groups containing combination
drugs. Although there are currently no therapeutic groups containing combination drugs, this
amendment will apply the same rules to combination items as are applied to other
pharmaceutical items, if such groups are determined in the future. It is a parallel provision
applying to combination items in the same way that proposed paragraph 99ACB(2)(c) applies
to other pharmaceutical items.
The effect of this amendment is that, if the drug in the trigger combination item is in a
therapeutic group, and another drug in that therapeutic group with the same manner of
administration has been subject to a 12.5% reduction, proposed section 99ACD in the Bill
does not apply, with the effect that the trigger combination item is not subject to a 12.5%
price reduction under that section.
Other provisions providing for the possibility of therapeutic groups containing combination
drugs are contained in amendments 10 and 14.
Amendments 13 - 14
These amendments add a new subparagraph (iii) to paragraph 99ACE(1)(c) to provide for the
possibility that the drug in the new combination item is in a therapeutic group. Other
provisions providing for the possibility of therapeutic groups containing combination drugs
are contained in amendments 10 and 12.
These amendments ensure that a 12.5% price reduction to a new brand of a combination item
will flow on to other combination items having a drug in the same therapeutic group with the
same manner of administration.
Amendment 15
This amendment concerns proposed section 99ACF in the Bill which provides the
mechanism for implementing the statutory price reductions (ie, the 12.5% flow-ons, and the
2% and 25% price reductions). If reductions greater than the required percentage or amount
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have not been agreed or determined, the required reductions are deemed. The amendment is
a consequence of amendments 17 - 19, and provides for the case where there is no staged
reduction percentage prescribed for a particular reduction day (proposed new paragraph (e)).
Proposed new paragraph (d) involves no substantive change from the Bill.
Amendment 16
This amendment concerns subsection 99ACF(2) which applies when reductions in the
approved price to pharmacists (ie, the agreed or determined price) and the claimed price,
which are greater than the required percentage or amount, have been agreed or determined.
Amendment 16 is a consequence of amendments 17 - 19, and provides for the case where
there is no staged percentage prescribed for a particular reduction day. In such a case, there
are no required price reductions.
Amendments 17 - 19
These amendments relate to the staged 25% price reductions. They provide for greater
flexibility in the regulation making power than is provided in the Bill.
Under proposed section 99ACK in the Bill, if a listed brand of a pharmaceutical item that has
a drug on F2T on 1 August 2008 is prescribed in the regulations, it is not subject to the 25%
price cut it otherwise would be subject to on that day under proposed section 99ACJ.
Amendment 17 has the effect that the regulations may prescribe staged reductions for these
brands, whereas the Bill required these reductions to be prescribed.
Amendment 18 has the effect that staged reduction percentages may be prescribed for one or
more of the reduction days that are prescribed. The provision in the Bill provided that a
staged reduction percentage be prescribed for each of the prescribed reduction days.
Amendment 19 has the effect that if staged reduction percentages are prescribed, the
percentages must not total more than 25%. The Bill provided for the percentages to equal
25%.
Amendment 20
This amendment confers a new function on PBAC of advising the Minister whether it
considers a therapeutic group should or should not be determined. This relates to the
Minister's functions under proposed subsection 84AG(1). This amendment relates to
amendment 3, which requires the Minister to obtain PBAC advice before creating a new
therapeutic group, but provides that the advice does not bind the Minister.
Amendment 21
This is a technical transitional provision adding subsections 85AB(4) and (5) to the list of
subsections to which the transitional provision concerning brand determinations applies.
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