EXPLANATORY STATEMENT

 

Select Legislative Instrument 2010 No. 296

National Health Act 1953

National Health (Pharmaceutical Benefits) Amendment Regulations 2010 (No. 5)

 

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 amend the National Health (Pharmaceutical Benefits) Regulations 1960 (the Principal Regulations) to give effect to changes to be made to the Act by Schedule 4 to the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2010 (the Amending Act).

 

Schedule 4 of the Amending Act will expand and accelerate the price disclosure arrangements in Part VII Division 3B of the Act by providing for price disclosure by drug companies (responsible persons) from 1 December 2010 for all non exempt medicines listed on F2. Pharmaceutical Benefits Scheme (PBS) drugs may be placed into the F1 or F2 formulary, which provides a basis for different treatment under the Act, mainly for pricing purposes. The formulary allocation depends on whether or not the drug is or has been subject to PBS market competition. These amendments mean the previous price disclosure arrangements for both mandatory and voluntary disclosure no longer apply, with all F2 drugs to be treated in the same way for price disclosure and no ‘new brand’ trigger for price disclosure obligations.

 

The Regulations also provide other related changes, including to the way that disclosure cycles and reporting periods work, and are based on experience in the operation of price disclosure since 2007 and on consultation with industry.

 

Like the current arrangements under the Principal Regulations, affected companies are required to disclose information during price disclosure cycles about sales of certain PBS medicines under the Regulations. Weighted average disclosed prices (WADP) will be calculated for medicines during the cycle by applying the method in regulation 37G and using the data disclosed by responsible persons during the cycle. The WADP calculation will be used to make a WADP determination for the purpose of price disclosure reductions on a reduction day at the end of the cycle.

 

The Regulations create new main and supplementary price disclosure cycles. Most F2 medicines are in a main price disclosure cycle each year. Medicines new to price disclosure might initially be in a supplementary price disclosure cycle. Placement into a main, or initial supplementary cycle, depends on the date when a medicine became subject to price disclosure and whether other medicines with the same drug and manner of administration were already in a cycle. For medicines placed in an initial supplementary cycle, this permits a shorter time to the first possible price reduction day than would be the case if the medicine started price disclosure in a main cycle. After being in an initial supplementary cycle the medicine would move to a main cycle, and thereafter would be in a main cycle each year.

 

Each main or supplementary cycle after the main cycle commencing 1 December 2010 is for a period of at least 18 months, with data collection occurring for a period of at least 12 months, followed by a processing period of six months. However, the main cycle commencing 1 December 2010 is 16 months. This is based on a 10 month data collection period and a six month processing period. This main cycle contains all non-exempt F2 medicines not previously subject to price disclosure. Section 99ADJ of the Act may be activated for this cycle to achieve a minimum average 23 per cent price reduction on 1 April 2012.

 

A listed brand new to price disclosure, where any listed brand of pharmaceutical item with the same drug and manner of administration is already subject to price disclosure, joins an existing disclosure cycle with the other brand(s).

The Regulations provide that price disclosure data, including incentives is disclosed by a responsible person, from the day the listed brand becomes subject to price disclosure, in six month reporting periods. A reporting period of less than six months may occur, where this is needed to allow for brands new to price disclosure, or movement from a supplementary to a main cycle. The six month reporting period is designed to be less onerous for responsible persons than the current quarterly reports plus annual reports. The data will be submitted within six weeks of the end of a reporting period, two weeks less time than previously allowed for.

 

The Regulations also prescribe an additional reduction day of 1 December so that the price disclosure reduction days align with other regular Pharmaceutical Benefits Scheme price change dates of 1 April, 1 August and 1 December each year. There are also transitional provisions for brands already subject to price disclosure reductions.

 

The Regulations also remove inactive regulations 9AAA, 9AAB, and Schedules 1 and 2 containing formulary listings which have been replaced by determinations under sections 85AB and 85AC of the Act.

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 1 December 2010.

Consultation

Price Disclosure was the subject of extensive consultation with pharmaceutical industry representatives prior to its introduction in August 2007. Proposals to amend the price disclosure arrangements were the subject of further consultation with industry representatives in early 2010. Detailed consultation about matters required to be amended in the Principal Regulations has occurred during 2010 through working group meetings with Medicines Australia, the Generic Medicines Industry Association, the National Pharmaceutical Services Association, and Australia's Biotechnology Organisation. Information meetings have also been held with pharmaceutical companies in mid 2010.

Revocation of the prescription of drugs on particular formularies is mechanical in nature, improving clarity of the law, as those provisions are no longer required. The initial prescription of drugs on formularies in the Regulations was intended to be an interim measure because drugs can move from F1 to F2, and new drugs are listed, requiring new formulary allocations. Since 1 August 2007, when the formularies regulations commenced, drugs have been allocated to formularies through legislative instruments made under the Act. All relevant listed drugs, including those that were allocated to formularies in the Regulations, have been allocated to formularies in other legislative instruments. Revocation of the prescription of drugs on formularies simply removes provisions that are no longer required.

ATTACHMENT

 

Details of the National Health (Pharmaceutical Benefits) Amendment Regulations 2010 (No. 5)

 

Part 1 Preliminary

 

Regulation 1 Name of Regulations

This regulation provides that the title of the Regulations is the National Health (Pharmaceutical Benefits) Amendment Regulations 2010 (No. 5).

 

Regulation 2 Commencement

This regulation provides for the Regulations to commence on 1 December 2010.

 

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

This regulation provides that Schedule 1 amends the National Health (Pharmaceutical Benefits) Regulations 1960 (the Principal Regulations).

 

Part 2 Transitional

 

Regulation 4 Definitions for Part 2
This regulation contains definitions used in Part 2.

 

Regulation 5 Transitional - listed brand subject to price disclosure and annual reporting period ends before 1 December 2010
This regulation provides for the transitional arrangements to apply for the three price disclosure cycles where the annual reporting period under regulation 37J of the Principal Regulations as in force immediately prior to 1 December 2010 ended before
1 December 2010, but the reduction day for the brand under section 99ADH as in force immediately prior to 1 December 2010 has not yet taken place.

 

The Act and Principal Regulations as in force immediately prior to 1 December 2010 apply for brands in respect of these cycles until the end of the reduction day for the brand. Regulation 5 applies to both disclosing and non-disclosing brands, as non-disclosing brands with the same drug and manner of administration are subject to price disclosure reduction. Regulation 5 is consistent with the application provision contained in Schedule 4 of the Amending Act.

For two of the three cycles to which regulation 5 applies, determinations under subsections 99ADB(4) and (5) of the Act relating to annual reporting period 1 January 2009 to 31 December 2009 (inclusive) (PB43 of 2010) and 1 May 2009 to 30 April 2010 (inclusive) (PB85 of 2010) have been made, and responsible persons have received notices under section 99ADH of the Act for a prescribed reduction day of 1 April 2011. These cycles are referred to administratively as ‘cycle 03/08’ (PB43 of 2010) and ‘cycle 01/09’ (PB85 of 2010).

For the remaining cycle to which regulation 5 applies, referred to administratively as ‘cycle 02/09’, the annual reporting period ended on 31 August 2010.

The Act and Principal Regulations as in force immediately prior to 1 December 2010 apply for this cycle, including the requirement to provide six months notice of a prescribed reduction day.

Under the Principal Regulations as in force immediately prior to 1 December 2010, listed brands in these three cycles have moved to a new annual reporting period immediately after the end of the previous annual reporting period. Subregulation 5(3) ensures that it is clear that regulation 6 applies for these brands in relation to the next annual reporting period.

 

Regulation 6 Transitional - listed brand subject to price disclosure and annual reporting period does not end before 1 December 2010 – data collection period
This regulation provides for the transitional arrangements to apply for the three price disclosure cycles where the annual reporting period under regulation 37J of the Principal Regulations as in force immediately prior to 1 December 2010 did not end before 1 December 2010. The Act and Principal Regulations as amended on 1 December 2010 apply, with transitional adjustments provided for in regulations 6 to 10. Regulation 6 applies to both disclosing and (previously) non-disclosing brands with the same drug and manner of administration. The regulation is consistent with the application provision contained in Schedule 4 of the Amending Act.

 

The purpose of the transitional arrangements in regulations 6 to 10 is to transition the annual reporting period for these three price disclosure cycles into an (extended) data collection period in a transitional price disclosure cycle, and then, movement to the next available main disclosure cycle. The transitional arrangements are designed to allow for the total period of these three transitional disclosure cycles, and the main disclosure cycle next applying, to be at least eighteen months, with a data collection period of not less than twelve months.

The three price disclosure cycles to which regulation 6 apply were referred to administratively as ‘cycle 03/09’ (annual reporting period began on 1 January 2010, and was to end on 31 December 2010), ‘cycle 01/10’ (annual reporting period began on 1 May 2010, and was to end on 30 April 2011), and ‘cycle 02/10’ (annual reporting period began on 1 September 2010, and was to end on 31 August 2011).

Regulation 6 provides for:

·        ‘cycle 03/09’ to become the ‘first transitional disclosure cycle’ with a data collection period in that disclosure cycle beginning on 1 January 2010 and ending at the end of 30 September 2011;

·        ‘cycle 01/10’ to become the ‘second transitional disclosure cycle’ with a data collection period in that disclosure cycle beginning on 1 May 2010 and ending at the end of 30 September 2011;

·        ‘cycle 02/10’ to become the ‘third transitional disclosure cycle’ with a data collection period in that disclosure cycle beginning on 1 September 2010 and ending at the end of 31 January 2012.

 

No brands with a new drug and manner of administration join these three transitional disclosure cycles, so the data collection period for each brand in each of the transitional disclosure cycles have the same beginning and end, as indicated above.

 

Regulation 7 Transitional - listed brand subject to price disclosure and annual reporting period does not end before 1 December 2010 – quarterly reporting period and information

This regulation provides for the transition of quarterly reporting periods under the Principal Regulations as in force prior to 1 December 2010 into reporting periods, and for incentives information previously provided for an annual reporting period to be provided for a reporting period.

 

Subregulation 7(1) provides that for the first transitional disclosure cycle, the quarterly reporting period under regulation 37J of the Principal Regulations as in force prior to 1 December 2010 that began on 1 October 2010 is taken to be a reporting period that ends at the end of 31 March 2011. This subregulation extends the old quarterly reporting period into a first reporting period of six months.

 

Subregulation 7(2) provides that for the second transitional disclosure cycle, the information that must be provided for the quarterly reporting period under regulation 37J of the Regulations as in force prior to 1 December 2010 that began on 1 August 2010 must be provided within two months after the end of that reporting period.

 

Subregulation 7(3) provides that for the second transitional disclosure cycle, the quarterly reporting period under regulation 37J of the Principal Regulations as in force prior to 1 December 2010 that began on 1 November 2010 is taken to be a reporting period that ends at the end of 31 March 2011. This subregulation extends the old quarterly reporting period into a first reporting period of five months.

Subregulation 7(4) provides that for the third transitional disclosure cycle, the quarterly reporting period under regulation 37J of the Principal Regulations as in force prior to 1 December 2010 that began on 1 September 2010 is taken to be a reporting period that ends at the end of 31 March 2011. In addition, the last reporting period in the data collection period begins on 1 October 2011 and ends at the end of 31 January 2012. This subregulation extends the old quarterly reporting period into a first reporting period of seven months, and provide for a last reporting period of four months.

 

Subregulation 7(5) provides, in respect of all three transitional disclosure cycles, that the information about incentives to be provided under paragraphs 37H(1)(i) and (j) of the regulations (as amended) for the reporting period ending at the end of 31 March 2011 must include information about incentives mentioned in those paragraphs for the period beginning on 1 January, 1 May, or 1 September 2010 (as applicable) and ending at the end of 31 March 2011.

 

Subregulation 7(6) provides that in regulation 7 ‘relevant date’ has the meaning given by paragraph 6(1)(b).

 

Regulation 8 Transitional –listed brand having same drug and manner of administration as listed brand already subject to price disclosure requirements – first reporting period for brand in third transitional cycle

This regulation deals with a situation where subregulation 37F(1) applies, that is, a brand new to price disclosure (the relevant brand) having the same drug and manner of administration as a listed brand already subject to price disclosure requirements (the other brand), where the other brand is in the third transitional cycle. The regulation provides that the first reporting period for the relevant brand in the third transitional cycle begins on the relevant day and end at the end of the first of the following days to occur after the relevant day, being 31 March or 30 September 2011, or 31 January 2012. This recognises that the first reporting period should not require data prior to the day that a brand becomes subject to price disclosure.

Regulation 9 Transitional – listed brand moving from first or second transitional disclosure cycle to main disclosure cycle

This regulation provides for movement from the first or second transitional disclosure cycle to a main disclosure cycle on 1 October 2011.

The data collection period for the brand in the main disclosure cycle begin on 1 October 2011 and end at the end of 30 September 2012.

Regulation 10 Transitional – listed brand moving from third transitional disclosure cycle to main disclosure cycle
This regulation provides for movement from the third transitional disclosure cycle to a main disclosure cycle on 1 February 2012, and for the data collection period for the brand in the main disclosure cycle to commence on 1 February 2012 and end at the end of 30 September 2013.

 

The regulation also provides for the first reporting period in the data collection period for the brand in the main disclosure cycle to begin on 1 February 2012 and end at the end of 31 March 2012, being a first reporting period of two months.

SCHEDULE 1 – AMENDMENTS

Item [1] – Subregulation 5(1), definition of authority prescription
This item substitutes a new definition of authority prescription which refers in paragraph (b) of the definition to ‘paragraph 85(7)(b)’ instead of‘subsection 85(2A)’ of the Act. Paragraph 85(7)(b) of the Act is the correct reference when Schedule 6 to the Amending Act commences on 1 December 2010. Other changes to the definition improve clarity, but the effect of the definition remains unchanged.

Item [2] – Regulations 9AAA and 9AAB
This item removes regulations 9AAA and 9AAB which place listed drugs on F1 and F2, and in Part A or Part T of F2. These ‘formulary’ listings in the Principal Regulations are no longer needed as they have been replaced by determinations under sections 85AB and 85AC of the Act. A determination that a listed drug is in Part A or Part T of F2 ceases to be in force on 1 December 2010: subsection 85AC(5) of the Act.

Item [3] – Before regulation 37A
This item inserts a Division heading.

Division 1 General

Item [4] – Regulation 37A, after the definition of approved price to pharmacists
This item inserts definitions of data collection period and disclosure cycle. The definitions are required to direct the reader to regulations 37EC and 37EB respectively, which deal with those concepts.

Item [5] – Regulation 37A, definition of first mandatory brand
This item substitutes a definition of interim supplementary disclosure cycle for first mandatory brand. The definition of first mandatory brand is no longer needed.

Item [6] – Regulation 37A, after the definition of listed
This item inserts a definition of main disclosure cycle. The definition is required to direct the reader to regulation 37EB(2)(a), which identifies a main disclosure cycle as one of the kinds of cycle provided for in the Regulations.

Item [7] – Regulation 37A, definition of mandatory brand
This item omits the definition of mandatory brand. The definition of mandatory brand is no longer needed.

Item [8] – Regulation 37A, definition of related brand
This item substitutes a definition of reporting period for related brand. The definition of related brand is no longer needed.

Item [9] – Regulation 37A, definition of subsequent mandatory brand
This item substitutes definitions of supplementary disclosure cycle A and supplementary disclosure cycle B for the definition of subsequent mandatory brand. The definition of subsequent mandatory brand is no longer needed.

Item [10] – Regulation 37A, definition of volunteered brand
This item omits the definition of volunteered brand, which is no longer needed.

Item [11] – Regulation 37D, heading
This item inserts a new heading for regulation 37D. Regulation 37D remains unchanged.

Item [12] – Regulation 37D
This item amends regulation 37D to provide that it does not apply to a listed brand of pharmaceutical item to which regulation 37DA applies.

Item [13] – After regulation 37D
This item inserts new regulations 37DA and 37DB, and a new Division heading.

37DA Approved ex-manufacturer price – listed brand having same drug and manner of administration as listed brand already subject to price disclosure requirements and prior disclosure cycle
This item inserts a new regulation 37DA, which provides for an ‘approved ex-manufacturer price’ which applies to a brand of pharmaceutical item (the relevant brand) to which regulation 37F applies, if the circumstances mentioned in subregulation 37F(3) apply, and only for the last day of the data collection period in the prior disclosure cycle.

A note to subregulation 37DA(1) provides that regulation 37F applies to listed brands of pharmaceutical items that have the same drug and manner of administration as listed brands that are already subject to price disclosure requirements.

Subregulations 37F(3) and regulation 37DA are necessary to ensure that for the relevant brand the ‘applicable approved ex-manufacturer price’ used in regulation 37G works appropriately in alignment with other brands in the prior disclosure cycle with the same drug and manner of administration.

Subregulation 37DA(2) contains the same method for working out the ‘approved ex-manufacturer price’ as appearing in regulation 37D of the Principal Regulations, with references to ‘approved price to pharmacists’ replaced with ‘reference price’. The method is used for working out the approved ex-manufacturer price for the relevant brand on the last day of the data collection period for the brand in the prior disclosure cycle.

A note to subregulation 37DA(2) provides that the price worked out under subregulation 37DA(2) is used to work out the weighted average disclosed price for the brand in the prior disclosure cycle in step 11 of regulation 37G.

Subregulation 37DA(3) provides that for subregulation 37DA(2) the ‘reference price’ for a relevant brand is the approved price to pharmacists of the relevant brand on the day the price disclosure requirements first apply under section 99ADD of the Act (the relevant day), plus any amount that the Act requires to be deducted from the approved price to pharmacists if the relevant brand had been a listed brand on and after the last day of the data collection period for the brand in the prior disclosure cycle to and including the relevant day.

Subregulation 37DA(4) provides that ‘prior disclosure cycle’ and ‘relevant day’ have the meaning given by regulation 37F.

Division 2 Weighted average disclosed price

37DB Application
This regulation provides that, for subsection 99ADB(6) of the Act, Division 2 prescribes the method for determining the weighted average disclosed price of a listed brand of pharmaceutical item, and, also provides for matters that are relevant to that method.

A note to regulation 37DB provides that the method is set out in regulation 37G.

Item [14] – Subregulation 37E(1)
This item substitutes a new subregulation 37E(1) which is shorter. The effect of subregulation 37E(1) remains unchanged.

Items [15] and [16] – Subregulation 37E(2)
These items amend subregulation 37E(2) by removing references to ‘for the reporting period’ and ‘provided about’ and inserting ‘provided for the whole of the data collection period for’. The amendment inserts the new term for the period for which information about brands of pharmaceutical items is to be provided, and ensures that for at least one brand information is provided for the whole of the reporting periods in a data collection period. The effect of subregulation 37E(2) remains unchanged.

Item [17] – Subregulation 37E(4), note
This item substitutes a revised note to subregulation 37E(4) which includes reference to new regulation 37JA and 37J, for reporting periods.

Item [18] – Regulations 37F to 37H
This item substitutes regulations 37F to 37H with new regulations 37EA to 37H, and a new Division heading. The substituted provisions deal with new concepts of disclosure cycles and data collection periods that are necessary for the method for determining the weighted average disclosed price, and also provide amendments to the method itself to incorporate new concepts and provide clarity. The substituted provisions also provide for both the previous quarterly and annual reporting period information to be provided under the new concept of a reporting period.

37EA Disclosure cycles and data collection periods for listed brands of pharmaceutical items – general
Regulation 37EA provides that regulations 37EB to 37F set out matters about disclosure cycles and data collection periods to be used for the method set out in regulation 37G for determining the weighted average disclosed price of a listed brand of pharmaceutical item.

A note states that section 99ADA of the Act provides that Division 3B of Part VII (Price disclosure) of the Act does not apply to brands of exempt items.

37EB Disclosure cycles
Subregulation 37EB(1) provides that for the purposes of determining the weighted average disclosed price of a listed brand of pharmaceutical item there are several kinds of disclosure cycles during which information is provided in compliance with the price disclosure requirements, data is processed and a reduction day occurs.

Subregulation 37EB(2) provides that the kinds of disclosure cycles are the main disclosure cycles, the interim supplementary disclosure cycle, supplementary disclosure cycles A, and supplementary disclosure cycles B.

Note 1 to subregulation 37EB(2) states that regulations 37ED and 37F set out when a brand of pharmaceutical item is in a particular cycle. Regulations 37EG and 37EH set out when a brand of pharmaceutical item moves from a supplementary cycle to a main cycle.

Note 2 to subregulation 37EB(2) states that for transitional arrangements, see Part 2 of the Regulations.

 

The disclosure cycles consist of main disclosure cycles, supplementary disclosure cycles A, supplementary disclosure cycles B, and the interim supplementary disclosure cycle. The main disclosure cycles are the standard kind of disclosure cycle. That is, most brands subject to price disclosure requirements will be in a series of main disclosure cycles, and all brands subject to price disclosure requirements if allocated to another kind of disclosure cycle will move to a series of main disclosure cycles.

 

The supplementary disclosure cycles are simply to allow new F2 listings after

1 December 2010, where the drug and manner of administration first becomes subject to price disclosure requirements, to have a disclosure cycle of at least eighteen months, with a data collection period of at least twelve months. The brand then moves to the next

 

available data collection period in a main disclosure cycle. Due to the 1 December 2010 commencement date, there is also a one-off interim supplementary disclosure cycle, to achieve the same effect as the supplementary disclosure cycles A and B would have in later years.

Subregulation 37EB(3) provides that there is only one interim supplementary disclosure cycle.

37EC Data collection periods
Subregulation 37EC(1) provides that in each disclosure cycle there are data collection periods for which information must be provided about brands of pharmaceutical items in compliance with the price disclosure requirements.

Subregulation 37EC(2) provides that in a disclosure cycle there is only one data collection period for each brand of a pharmaceutical item, and all brands of pharmaceutical items that have the same drug and manner of administration have the same data collection period. Subregulation 37EC(2) also provides that, in a disclosure cycle, the data collection periods for brands of pharmaceutical items that have different drugs, or that have the same drug with a different manner of administration, may commence on different days, and, all data collection periods end on the same day.

The ‘same day’ is 30 September for a main disclosure cycle, 31 January for a supplementary disclosure cycle A, and 31 May for a supplementary disclosure cycle B and the interim supplementary disclosure cycle.

37ED Listed brand having a drug and manner of administration not subject to price disclosure requirements before relevant day – first disclosure cycle and beginning of data collection period for brand
Regulation 37ED allocates a listed brand new to price disclosure to its data collection period in its first disclosure cycle. Listed brands to which regulation 37ED apply are placed in a main disclosure cycle, interim supplementary disclosure cycle, or supplementary disclosure cycle A or B, depending on the day on which price disclosure requirements first apply to the listed brand under section 99ADD of the Act.

Regulation 37ED applies when a listed brand is new to price disclosure due to the application of section 99ADD on commencement of the Amending Act on 1 December 2010, or, on or after 1 December 2010, due to movement of a drug from F1 to F2, or new listing of a F2 brand of pharmaceutical item with a drug and manner of administration not previously subject to price disclosure requirements.

Subregulation 37ED(1) sets out the listed brands to which regulation 37ED applies. Regulation 37ED applies to a listed brand of pharmaceutical item (the ‘relevant brand’) if the price disclosure requirements first apply under section 99ADD of the Act for a relevant brand on a day (the ‘relevant day’). In addition, no requirement to comply with the price disclosure requirements must have arisen under the Act before the relevant day for the relevant brand or any other listed brand of pharmaceutical item having the same drug and manner of administration.

Subregulation 37ED(2) allocatesthe relevant brand to a main disclosure cycle if the relevant day for the brand is 1 December 2010, or, between 2 June and 1 October in a year (inclusive).

Subregulation 37ED(3) allocates the relevant brand to the interim supplementary disclosure cycle if the relevant day for the brand is between 2 December 2010 and 1 June 2011 (inclusive).

Subregulation 37ED(4), except where subregulation (3) applies, allocates the relevant brand to a supplementary disclosure cycle A if the relevant day for the relevant brand is between 2 October in a year and 1 February in the next year (inclusive).

Subregulation 37ED(5), except where subregulation (3) applies, allocates the relevant brand to a supplementary disclosure cycle B if the relevant day for the relevant brand is between 2 February and 1 June in a year (inclusive).

Subregulation 37ED(6) provides that the data collection period for the relevant brand in the first disclosure cycle for the brand begins on the relevant day.

A note to subregulation 37ED(6) states that the data collection period for a brand in the main disclosure cycle and to which section 99ADJ of the Act applies begins on 1 December 2010 and end at the end of 30 September 2011.

 

Section 99ADJ of the Act provides for the achievement of a minimum average 23 per cent price reduction on 1 April 2012 across the non exempt medicines in F2 that become subject to price disclosure on 1 December 2010, and the single brand combination items containing any of those F2 drugs.

37EE End dates for data collection periods for relevant brands covered by regulation 37ED

Subregulation 37EE(1) provides that the data collection period for a relevant brand in a main disclosure cycle ends at the end of 30 September in the year after the year in which the relevant day for the brand occurs.

Subregulation 37EE(2) provides that the data collection period for a relevant brand in the interim supplementary disclosure cycle ends at the end of 31 May 2012.

Subregulation 37EE(3) provides that the data collection period for a relevant brand in a supplementary disclosure cycle A ends, if the relevant day is between 2 October in a year and 31 December in the year (both dates inclusive), at the end of 31 January in the second year after the year in which the relevant day for the brand occurs. However, if the relevant day for the brand is between 1 January in a year and 1 February in the year (both dates inclusive), the data collection period in a supplementary disclosure cycle A ends at the end of 31 January in the year after the year in which the relevant day for the brand occurs.

Subregulation 37EE(4) provides that the data collection period for a relevant brand in a supplementary disclosure cycle B ends at the end of 31 May in the year after the year in which the relevant day for the brand occurs.

A note to subregulation 37EE(4) refers readers to regulations 37EG and 37EH for how a listed brand moves from a supplementary disclosure cycle to a main disclosure cycle.

Subregulation 37EE(5) provides that in regulation 37EE ‘relevant brand’ has the meaning given by subregulation 37ED(1), and ‘relevant day’ has the meaning given by paragraph 37ED(1)(a).

37EF Subsequent main disclosure cycle – subsequent data collection periods
Regulation 37EF provides that a subsequent data collection period for a brand in a subsequent main disclosure cycle begins on 1 October of the year in which the previous data collection period in the previous main disclosure cycle for the brand ended and ends at the end of 30 September in the following year.

37EG Listed brand moving from supplementary disclosure cycle A to main disclosure cycle
Regulation 37EG provides that if a listed brand is in a supplementary disclosure cycle A, the data collection period for which ends at the end of 31 January in a year, the brand moves to a main disclosure cycle on 1 February in the year.

The data collection period for the brand in the main disclosure cycle begins on 1 February in the year and ends at the end of 30 September in the next year.

37EH Listed brand moving from interim supplementary disclosure cycle and supplementary disclosure cycle B to main disclosure cycle
Regulation 37EH provides that if a listed brand is in the interim supplementary disclosure cycle or a supplementary disclosure cycle B, the data collection periods for which both end at the end of 31 May in a year, the brand moves to a main disclosure cycle on 1 June in the year.

The data collection period for the brand in the main disclosure cycle begins on 1 June in the year and ends at the end of 30 September in the next year.

37F Listed brand having same drug and manner of administration as listed brand already subject to price disclosure requirements – disclosure cycle and beginning of data collection period for brand
Regulation 37F allocates a listed brand new to price disclosure to a data collection period in a disclosure cycle. Listed brands to which regulation 37F applies will be placed in the same disclosure cycle as the other brands already subject to price disclosure, with the same drug and manner of administration.

Regulation 37F applies when a listed brand is new to price disclosure due to the application of section 99ADD, on or after 1 December 2010, due to new listing of a F2 brand of pharmaceutical item with a drug and manner of administration already subject to price disclosure requirements.

Subregulation 37F(1) sets out the listed brands to which regulation 37F applies. Regulation 37F applies to a listed brand of pharmaceutical item (the ‘relevant brand’) if the price disclosure requirements first apply under section 99ADD of the Act for a relevant brand on a day (the ‘relevant day’) and both on and before the relevant day, the price disclosure requirements apply for any other listed brand of any pharmaceutical item having the same drug and manner of administration (the other brand) as the relevant brand.

Subregulation 37F(2) provides that if the end of the data collection period for a disclosure cycle (the relevant disclosure cycle) for the other brand is after the relevant day, then, the relevant brand is in the relevant disclosure cycle, and the relevant brand joins the data collection period for the other brand on the relevant day. Although the relevant brand is subject to price disclosure requirements on and from the relevant day, and does not disclose data prior to the relevant day, the data collection period that the relevant brand joins begins and ends as provided for the other brand.

If the relevant day is 1 December 2010, this means that the listed brand new to price disclosure joins the data collection period for the other brand in the first, second or third transitional disclosure cycles.

If the relevant day is after 1 December 2010, depending on the relevant day and the location of the other brand, this means that the listed brand new to price disclosure joins the data collection period for the other brand in a main, supplementary, interim supplementary or transitional disclosure cycle.

Subregulation 37F(3) provides that if the other brand is in both the relevant disclosure cycle and a disclosure cycle (the prior disclosure cycle) before the relevant disclosure cycle, and the relevant day is before the reduction day for the other brand for the prior disclosure cycle, then, the relevant brand is also in the prior disclosure cycle. In addition, subregulation 37F(3) provides that the relevant brand is in the data collection period for the other brand (in the prior disclosure cycle) for the purposes of calculating the weighted average disclosed price for the relevant brand.

A note to subregulation 37F(3) states that although data is not required to be provided for the relevant brand in the prior disclosure cycle, a weighted average disclosed price is determined for the relevant brand using the method in regulation 37G. Also, regulation 37DA provides a method for working out the approved ex-manufacturer price on the last day of the data collection period in the prior disclosure cycle.

Subregulation 37F(3) has the effect that where the other brand(s) with the same drug and manner of administration have not yet had their reduction day arising out of a prior disclosure cycle, the listed brand new to price disclosure is also allocated to that prior disclosure cycle, to ensure that it too has a reduction day arising out of that prior disclosure cycle (if applicable). Without this provision, the price of the listed brand new to price disclosure may be out of alignment with the prices of other listed brands with the same drug and manner of administration.

37G Weighted average disclosed price
Regulation 37G sets out the method for determining the weighted average disclosed price of a listed brand of pharmaceutical item and every listed brand of pharmaceutical item having the same drug and manner of administration for the data collection period for the brands in a disclosure cycle (the WADP method).

 

The weighted average disclosed price of a brand of a pharmaceutical item is worked out taking into account data for:

 

• the brand of pharmaceutical item (steps 1 - 6);
• other brands of the pharmaceutical item (steps 7 and 8); and

 

• all brands of other pharmaceutical items having the same drug and manner of administration (steps 9 and 10).

 

The data used in the WADP calculation is:

·        the data disclosed (under the price disclosure requirements) for the data collection period for these brands in the disclosure cycle; and

·        data on the PBS volume of each pharmaceutical item for that data collection period.

Regulation 37G is old regulation 37F renumbered, with changes to reflect the commencement of Schedule 4 of the Amending Act, and the move from quarterly and annual reporting periods to data collection periods in a disclosure cycle.

References to ‘mandatory brand’ and ‘related brand’ are removed, since section 99ADD, together with section 99ADA of the Act, applies price disclosure requirements to a responsible person for a non-exempt listed brand of pharmaceutical item that has a drug on F2. The concept of mandatory and voluntary compliance with the price disclosure requirements no longer apply.

References to quarterly and annual reporting periods are removed, and replaced with references to data collection period and disclosure cycle.

 

The first month of data for newly listed brands remain excluded when the WADP method is applied. This exclusion is located in subregulations 37G(3) and (6).

 

Regulation 37G refers to ‘applicable approved ex-manufacturer price’ instead of ‘approved ex-manufacturer price’ to reflect the new definition of ‘applicable approved ex-manufacturer price’ appearing in subsection 99ADB(1) of the Act.

Subregulation 37G(14), unlike the former WADP method, does not contain a ‘ten per cent test’. This is because paragraph 99ADH(1)(c) of the Act ensures that a price disclosure reduction cannot take place unless the ‘unadjusted price reduction’ for the brand of pharmaceutical item is at least 10 per cent. It is not necessary to also include the ‘ten per cent test’ in the WADP method.

 

In addition, including brands which will not have a price disclosure reduction arising out of a disclosure cycle due to paragraph 99ADH(1)(c) in the determination under subsection 99ADB(4) is more transparent for industry.

 

Subregulation 37G(15) contains a definition of ‘adjusted volume’ which is used in subregulation 37G(5), step 3 of the WADP method. This definition provides for a reference to paragraph 85A(2)(a) of the Act, being the statutory provision under which maximum quantity is determined. The subregulation also provides for the use of ‘agreed quantity’, as defined in the Act, where there is no maximum quantity determined. This option is necessary to allow regulation 37G to work appropriately, at times, when pharmaceutical benefits are supplied in accordance with special arrangements under section 100 of the Act.

 

Division 3 Price disclosure requirements

37H Price disclosure requirements – content of information for reporting periods
Regulation 37H deals with the information required for a reporting period. It replaces old regulations 37G and 37H which dealt with quarterly and annual reporting periods. The information which will be required for a reporting period is the same as the information required for a quarterly reporting period, with the addition of the incentives information required for an annual reporting period.

Subregulation 37H(2) provides that for the first reporting period to which subregulation 37G(3) or (6) applies, the information mentioned in paragraph 37H(1)(h) (sales revenue and volume data) for the first month of the reporting period is to be provided separately This is to allow the exclusion of this data from the WADP method to take place.

Subregulation 37H(4) provides that if information must be provided under paragraph 37H(1)(h) (sales revenue and volume data), it must not also be provided under paragraph 37H(1)(i) or (j) (incentives data).

Item [19] – Subregulation 37I(1)
This item removes a reference to 37G from subregulation 37I(1), which is no longer required due to renumbering of the Principal Regulations, and the removal of annual reporting periods.

Item [20] – Regulation 37J
This item substitutes an amended regulation 37J and insert a new regulation 37JA.

37J Price disclosure requirements – information and reporting periods
Regulation 37J prescribes the reporting deadlines for price disclosure data.

Subregulation 37J(1) provides, for paragraph 99ADC(1)(c) of the Act, that the information mentioned in regulation 37H must be provided within six weeks after the end of each reporting period for the brand of the pharmaceutical item.

Subregulation 37J(2) provides, subject to subregulations (3) to (6) and regulation 37JA, that a reporting period for a brand of a pharmaceutical item is the period of six months ending at the end of 31 March of each year and 30 September of each year. Then, each successive period of six months in which the brand is subject to the price disclosure requirements.

Usually, this means two reporting periods in a main disclosure cycle, being:

• 1 October to 31 March; and
• 1 April to 30 September.

However, a reporting period of less than six months applies at certain times, to accommodate the first reporting period for brands in the main disclosure cycle commencing on 1 December 2010, brands new to price disclosure, and movement from a supplementary or interim supplementary disclosure cycle to the main disclosure cycle. The situations where the reporting period will be less than six months are provided for in subregulations 37J(3) to (6), and also in regulation 37JA.

Subregulation 37J(3) deals with a brand to which regulation 37ED applies, that is, a brand new to price disclosure having a drug and manner of administration not subject to price disclosure requirements before the relevant day. The subregulation provides that the first reporting period begins on the relevant day and end at the end of 31 March or 30 September (whichever date occurs first). This recognises that the first reporting period should not require data prior to the day that a brand becomes subject to price disclosure requirements.

 

Subregulation 37J(3) applies for the first reporting period for brands in the main disclosure cycle commencing on 1 December 2010, which are a four month period commencing on

1 December 2010.

Subregulation 37J(4) deals with a brand to which regulation 37F applies, that is, a brand new to price disclosure having the same drug and manner of administration as a listed brand already subject to price disclosure requirements, when it is in the relevant disclosure cycle. The subregulation provides that the first reporting period begins on the relevant day and ends, if the other brand mentioned in regulation 37F is in the interim supplementary disclosure cycle, or supplementary disclosure cycle A or B, at the end of the reporting period for the other brand. However, in any other case, including when the other brand is in the first or second transitional disclosure cycles, the first reporting period ends at the end of 31 March or 30 September (whichever date occurs first). The subregulation recognises that the first reporting period should not require data prior to the day that a brand becomes subject to price disclosure.

Subregulation 37J(5) deals with a brand to which regulation 37EG applies, that is, a listed brand moving from a supplementary disclosure cycle A to a main disclosure cycle. To allow for movement into the main disclosure cycle, the subregulation provides that the first reporting period in the data collection period in the first main disclosure cycle for the brand begins on 1 February in the year the brand moves to the main disclosure cycle and ends at the end of 31 March in the year. This means a shorter reporting period of two months.

Subregulation 37J(6) deals with a brand to which regulation 37EH applies, that is, a listed brand moving from the interim supplementary disclosure cycle or supplementary disclosure cycle B to a main disclosure cycle. To allow for movement into the main disclosure cycle, the subregulation provides that the first reporting period in the data collection period in the first main disclosure cycle for the brand begins on 1 June in the year the brand moves to the main disclosure cycle and end at the end of 30 September in the year. This means a shorter reporting period of four months.

A note to subregulation 37J(6) states that for transitional arrangements, see Part 2 of the National Health (Pharmaceutical Benefits) Amendment Regulations 2010 (No. 5) (the Regulations).

37JA Price disclosure requirements – additional reporting periods
Subregulations 37JA(1) and (2) deal with the last reporting period for a brand in a data collection period in a supplementary disclosure cycle A. The data collection period in a supplementary disclosure cycle A ends at the end of 31 January in a year. The subregulation provides that the last reporting period begins on 1 October and ends at the end of 31 January

in the next year. This means a shorter reporting period of four months, with an end date other than 31 March or 30 September.

Subregulations 37JA(3) and (4) deal with the last reporting period for a brand in a data collection period in a supplementary disclosure cycle B. The data collection period in a supplementary disclosure cycle B end at the end of 31 May in a year. The subregulation provides that the last reporting period begins on 1 April and ends at the end of 31 May in the year. This means a shorter reporting period of two months, with an end date other than 31 March or 30 September.

Subregulation 37JA(5) and (6) deal with the last reporting period for a brand in a data collection period in the interim supplementary disclosure cycle. The data collection period in the interim supplementary disclosure cycle ends at the end of 31 May 2012. The subregulation provides that the last reporting period begins on 1 April 2012 and ends at the end of 31 May 2012.

A note to subregulation 37J(6) states that for transitional arrangements, see Part 2 of the Regulations.

Item [21] – Before regulation 37K
This item inserts a heading to Division 4 because the new Division 4 is inserted for more clarity in the subject matter dealt with in each division in the Principal Regulations.

Division 4 Price reduction day

 

Item [22] – Regulation 37K
This item adds, for subsection 99ADH(2) of the Act, an additional reduction day of 1 December. This means there are three reduction days for the purposes of price disclosure, being 1 April, 1 August, and 1 December. This amendment also ensures price disclosure reduction days are aligned with current price change dates agreed under the 5^th Community Pharmacy Agreement.

Item [23] – Schedules 1 and 2
This item omits Schedules 1 and 2 because these ‘formulary’ listings in the Principal Regulations are no longer needed as they have been replaced by determinations under sections 85AB and 85AC of the Act.