EXPLANATORY STATEMENT

 

Select Legislative Instrument 2008 No. 116

 

National Health Act 1953

 

National Health (Pharmaceutical Benefits) Amendment Regulations 2008 (No. 2)

 

Section 140 of the National Health Act 1953 (the Act) provides, in part, that the

Governor-General may make regulations, not inconsistent with the Act, prescribing all matters which are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

The purpose of the Regulations is to make amendments to the National Health (Pharmaceutical Benefits) Regulations 1960 (the Principal Regulations). These amendments relate to reforms to the Pharmaceutical Benefits Scheme (the PBS) which were given effect through amendments to the Act and Principal Regulations on 1 August 2007. The reforms provided for new pricing arrangements to enable the Government to capture the benefits of competition where drugs have multiple brands.

 

These amendments to the Principal Regulations do not represent changes to the fundamental pricing arrangements introduced through the reforms. They provide additional detail and adjustments to the Principal Regulations.

 

These new amendments to pricing arrangements have been subject to consultation with the pharmaceutical industry through Medicines Australia and the Generic Medicines Industry Association. In addition, pharmaceutical companies directly affected by changes to the reduction days and the percentage price reductions have been consulted individually.

 

Details of the Regulations are set out in the Attachment.

 

The Act specifies no conditions that need to be met before the power to make the Regulations may be exercised.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.

 

 

ATTACHMENT

 

Details of the National Health (Pharmaceutical Benefits) Amendment Regulations 2008 (No. 2)

 

Regulation 1 – Name of Regulations

 

This regulation provides that the title of the Regulations is the National Health (Pharmaceutical Benefits) Amendment Regulations 2008 (No. 2).

 

Regulation 2 – Commencement

 

This regulation provides for the Regulations to be scheduled to commence on the day after they are registered on the Federal Register of Legislative Instruments.

 

Regulation 3 – Amendment of National Health (Pharmaceutical Benefits) Regulations 1960

 

This regulation provides that the National Health (Pharmaceutical Benefits) Regulations 1960 (the Principal Regulations) are amended as set out in Schedule 1.

 

Schedule 1 – Amendments

 

Item 1

This item replaces the figure of $970 with the figure of $1 000 in the formula in paragraph 37D(a) for calculating the approved ex-manufacturer price from the approved price to pharmacists. This amendment is required to reflect detail in the Fourth Community Pharmacy Agreement between the Commonwealth Government and the Pharmacy Guild of Australia which specifies a different mark-up structure for items with a price to pharmacists above $1 000 compared to those priced at $1 000 or less.

 

Item 2

This item amends the method of calculation of the weighted average disclosed price in subregulation 37F(4), as provided for under subsection 99ADB(6) of the Act. The purpose of this amendment is to exclude from the calculation any income derived from the sale of brands above the approved ex-manufacturer price. This is achieved by calculating a price percentage difference for each brand. If the price percentage difference is less than zero, it is taken to be zero for the purposes of the calculation of the weighted average disclosed price.

 

Item 3

This item inserts a new regulation 37HA to assign the relevant person at the Department of Health and Ageing as the person or entity to whom responsible persons should provide price disclosure information. This is allowed for under paragraph 99ADC (1)(a) of the Act.

 

Item 4

This item substitutes current Schedule 5 with a new Schedule 5 to alter the reduction days and percentage price reductions for four brands of pharmaceutical items (Nexium, Somac, Pariet and Zanidip) that will have a 25 per cent price reduction phased in over time under section 99ACK of the Act.

This follows a Government decision to extend the phased price reduction. It is a condition of this extension that a new bioequivalent brand listing of any of these drugs will result in the remainder of the 25 per cent price reduction for that drug (including the existing and new brand) being applied on the date of listing of the new brand. If this occurs, further amendments to the Principal Regulations will be required.