EXPLANATORY STATEMENT

 

Select Legislative Instrument 2010 No. 49

 

National Health Act 1953

 

National Health (Pharmaceutical Benefits) Amendment Regulations 2010 (No. 1)

 

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 by the Act to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

The Regulations make changes the National Health (Pharmaceutical Benefits) Regulations 1960 (the Principal Regulations) to remove redundant provisions and amend the Schedule which lists brands of pharmaceutical items scheduled for phased statutory price reductions.

 

For pricing purposes, including statutory price reductions, listed drugs can be determined to belong to therapeutic groups. This grouping of medicines for pricing purposes means that the Australian Government (the Government) pays the same amount for medicines that deliver similar health outcomes. Subsection 84AG(1) of the Act provides that the

Minister for Health and Ageing may determine one or more therapeutic groups and that two or more listed drugs are in the same therapeutic group.

 

The Principal Regulations currently prescribe six therapeutic groups (as authorised by subsection 84AG(6) of the Act) with effect from the commencement of section 84AG on

1 August 2007. These therapeutic groups are prescribed by regulation 9AAD and Schedule 4 to the Principal Regulations.

 

The National Health (Pharmaceutical Benefits – Therapeutic Groups) Determination 2010 (PB 1 of 2010) commenced on 21 January 2010. PB 1 of 2010 determines, pursuant to subsection 84AG(1) of the Act, nine therapeutic groups and the drugs that are in each of those therapeutic groups. The nine groups include the six therapeutic groups that are currently prescribed in Schedule 4 to the Principal Regulations.

 

The Regulations remove regulation 9AAD and Schedule 4 from the Principal Regulations as they are no longer needed.

 

Section 99ACK of the Act, together with section 99ACF, provides for a 25 per cent statutory price reduction phased over time for prescribed brands of pharmaceutical items in the F2T formulary. Regulation 37B, together with Schedule 5, of the Principal Regulations prescribes these brands of pharmaceutical items, the reduction days for these brands and the percentage reductions for each reduction day.

 

The Explanatory Memorandum for the National Health (Pharmaceutical Benefits) Amendment Regulations 2008 (No. 2) sets out the Government's intention that a new bioequivalent brand listing of any of the drugs in contained Schedule 5 will trigger the application of any outstanding amount of the phased 25 per cent price reduction for all brands of the drug that are specified in Schedule 5 (the new brand will be offered PBS-listing at the new lower price). The reduction will be applied on the date of listing of the new brand. This process reflects the Government policy of applying price reductions to medicines operating in a competitive market while protecting single-brand medicines from unsustainable price reductions. The Regulations are designed to give effect to this policy.

 

New brands of pharmaceutical items that have the drugs pantoprazole and lansoprazole are to be listed on the Pharmaceutical Benefits Scheme (PBS) on 1 April 2010. The Regulations amend the reductions days and the amount of the percentage reductions for the existing PBS-listed brands of pantoprazole or lansoprazole currently contained in Schedule 5. This has the effect of applying the remainder of the 25 per cent phased price reduction to the currently listed brands of pantoprazole or lansoprazole on 1 April 2010.

 

The Regulations also remove the Zoton brand of the drug lansoprazole, which is used for the treatment of ulcers, in a 30 milligram capsule, oral administration, from Schedule 5 to the Principal Regulations as that brand of pharmaceutical item is no longer listed on the PBS.

 

These amendments stem from the PBS Reform Policy 2007. During the implementation phase of the Government's PBS Reform policy in 2007 all affected pharmaceutical companies and key industry bodies were consulted with regard to the changes effected by the PBS Reform policy in 2007. The amendments to Schedule 5 of the National Health (Pharmaceutical Benefits) Regulations 1960 were also made after consultation with affected pharmaceutical companies and key industry bodies in late 2009 and early 2010. The amendments to Regulation 9AAD and Schedule 4 are entirely mechanical in nature and these amendments have no impact on industry and as a result no consultation was undertaken.

 

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

 

The Regulations commence the day after registration on the Federal Register of Legislative Instruments.

 

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