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2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
NATIONAL HEALTH AMENDMENT
(SIMPLIFIED PRICE DISCLOSURE) BILL 2013
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health, the Hon Peter Dutton MP)
NATIONAL HEALTH AMENDMENT
(SIMPLIFIED PRICE DISCLOSURE) BILL 2013
OUTLINE
The Simplified Price Disclosure (SPD) measure was announced by the former
government as part of its Economic Statement in August 2013. It will deliver savings
to the Budget of $835 million commencing 1 October 2014 and these savings are
already factored into the forward estimates for the Pharmaceutical Benefits Scheme
(PBS) and Repatriation Pharmaceutical Benefits Scheme (RPBS). Not implementing
the SPD policy would require the Government to find the savings from other
programmes.
The Bill amends the National Health Act 1953 (the Act) to improve the operation of
the PBS and deliver better value for money for all Australians.
The PBS provides Australians with timely, reliable and affordable access to necessary
and cost-effective medicines. Price disclosure has been part of PBS pricing policy
since 2007 and is a routine part of maintaining PBS listings for medicines with more
than one brand. Price disclosure arrangements seek to ensure that the price at which the
Government subsidises multiple-brand medicines more closely reflects the sale prices in
the market.
SPD would streamline the operation of the current price disclosure arrangements. All
medicines would be merged into one ongoing cycle rather than having several
different cycles over the year. The changes would allow price reductions to occur
sooner, and more frequently, after medicines become subject to market competition.
This would be achieved by reducing the length of each price disclosure cycle from 18
months to 12 months. The first SPD reduction would occur on 1 October 2014.
The changes would also result in savings to consumers because they will pay less for
some PBS medicines.
SPD would be achieved by amending the Act and regulations. The Act amendments
would:
expressly provide that 1 April or 1 October are price disclosure reduction days,
with other days continuing to be able to be prescribed by the regulations;
ensure that the existing PBS price for a medicine is not reduced by a price
disclosure reduction unless the weighted average market price is at least 10%
less than the PBS price on the day the 10% test is applied; and
contain an appropriate application provision to manage existing disclosure cycles.
The Bill provides for the amending Act to commence on the day it receives royal assent.
Financial Impact Statement
SPD arrangements will deliver savings to the Budget of $835 million commencing
1 October 2014.
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STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011
National Health Amendment (Simplified Price Disclosure) Bill 2013
This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
The Bill amends the National Health Act 1953 (the Act) to improve the operation of
the Pharmaceutical Benefits Scheme (PBS) by achieving better value for medicines
that are subject to competition in the marketplace.
The PBS provides Australians with timely, reliable and affordable access to necessary
and cost-effective medicines. Price disclosure arrangements seek to ensure that the
price at which the Government subsidises multiple-brand medicines more closely
reflects the prices in the market.
Simplified Price Disclosure (SPD) would streamline the operation of price disclosure
arrangements and allow price reductions to occur sooner, and more frequently, after
medicines become subject to market competition. All medicines would be merged
into one ongoing cycle rather than having several different cycles over the year. The
length of each price disclosure cycle would be reduced from 18 to 12 months. The
first SPD reduction would occur on 1 October 2014.
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 for subsidised
access to medicines for Australians. The proposed amendments also improve access
to medicines, because consumers will pay less for some PBS medicines as a result of
these changes.
Conclusion
This Bill is compatible with human rights because it advances the protection of human rights.
The Hon Peter Dutton MP, Minister for Health
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NATIONAL HEALTH AMENDMENT
(SIMPLIFIED PRICE DISCLOSURE) BILL 2013
NOTES ON CLAUSES
Clause 1 - Short Title
This clause provides that the Bill, once enacted, may be cited as the National Health
Amendment (Simplified Price Disclosure) Act 2013.
Clause 2 - Commencement
This clause provides that the amending Act commences on the day it receives royal
assent.
Clause 3 - Schedule(s)
This clause provides that each Act 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 has effect according to its terms.
SCHEDULE 1 -- Simplified price disclosure
1 Subsection 99ADB(1) (definition of relevant day)
The amendment would ensure that the existing PBS price for a medicine is not
reduced by a price disclosure reduction unless the weighted average market price is at
least 10% less than the PBS price on the day the 10% test is applied (`relevant day').
The amendment would move the `relevant day' from the end of the period in respect
of which the `weighted average disclosed price' of a listed brand is determined, to the
next day. The new `relevant day' is the day that a reduced price may take effect from
a previous price disclosure cycle.
The practical effect of moving the 10% test forward one day is to preserve the 10%
buffer afforded in the existing arrangements for companies to respond to market
forces.
The 10% test appears in paragraph 99ADH(1)(c) of the Act. The date on which the
10% test is applied is set by the `relevant day' [definitions of `unadjusted price
reduction', `applicable approved ex-manufacturer price' and `relevant day' in
subsections 99ADB(1) and (3A) of the Act.]
The item would also remove paragraph (a) of the definition of `relevant day' which
contains a spent reference to a data period ending 30 September 2012.
2 Subsection 99ADH(2)
The amendment would ensure that Parliament's intent to implement SPD is clear, by
expressly providing for 1 April or 1 October in any year to be price disclosure
reduction days.
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SPD will provide for two opportunities each year for price disclosure reduction to
occur for a medicine, 1 April and 1 October.
The ability to prescribe reduction days will be retained in subsection 99ADH(2), and
the actual reduction day for a medicine (for example, 1 October 2014) will continue to
be determined by the Minister under paragraph 99ADH(1)(aa) of the Act.
3 Application of amendments
This item provides that the SPD amendments apply to a data period which ends on or
after 1 February 2014.
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