National Health Amendment (Pharmaceutical Benefits) Act 2015 No. 89, 2015 An Act to amend the National Health Act 1953, and for related purposes Contents 1 Short title 2 Commencement 3 Schedules Schedule 1—Amendments commencing day after Royal Assent National Health Act 1953 Schedule 2—Amendments commencing 1 November 2015 National Health Act 1953 Schedule 3—Amendments commencing 1 January 2016 National Health Act 1953 National Health Amendment (Pharmaceutical Benefits) Act 2015 No. 89, 2015 An Act to amend the National Health Act 1953, and for related purposes [Assented to 26 June 2015] The Parliament of Australia enacts: 1 Short title This Act may be cited as the National Health Amendment (Pharmaceutical Benefits) Act 2015. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provisions Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day this Act receives the Royal Assent. 26 June 2015 2. Schedule 1 The day after this Act receives the Royal Assent. 27 June 2015 3. Schedule 2 1 November 2015. 1 November 2015 4. Schedule 3 1 January 2016. 1 January 2016 Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act. (2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act. 3 Schedules Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Amendments commencing day after Royal Assent National Health Act 1953 1 Paragraphs 84AG(4)(a) and (b) Repeal the paragraphs, substitute: (a) either: (i) section 99ADH has applied to a brand of a pharmaceutical item; or (ii) the price of the brand of the pharmaceutical item is reduced under 99ADHB; and (b) the Minister has determined, under paragraph (1)(b), that the drug in the pharmaceutical item is in a therapeutic group; 2 At the end of subsection 84AG(4) Add "or the price of the brand of the pharmaceutical item was reduced under section 99ADHB". 3 At the end of section 85 Add: Brand or pharmaceutical item that is biosimilar or bioequivalent to listed item is taken to have the same drug (9) If: (a) a listed brand of a pharmaceutical item (the listed brand) has a drug; and (b) another brand of the pharmaceutical item, or a brand of another pharmaceutical item, is biosimilar or bioequivalent to the listed brand; then, for the purposes of this Part, the other brand or pharmaceutical item is taken to have the same drug as the listed brand. (10) Subsection (9) does not affect the separate declarations of the following drugs made under subsection (2) before the commencement of this subsection: (a) epoetin lambda; (b) epoetin alfa. 4 After section 85D Insert: 85E Minister may enter into deeds with responsible persons Making deeds (1) The Minister may, on behalf of the Commonwealth, enter into a deed with a person who is, or seeks to be, determined by the Minister under section 84AF to be the responsible person for a brand of a pharmaceutical item. (2) The deed must relate to one or more of the following: (a) one or more pharmaceutical items; (b) pharmaceutical benefits within the meaning of: (i) this Act; or (ii) the Australian Participants in British Nuclear Tests (Treatment) Act 2006; or (iii) the Military Rehabilitation and Compensation Act 2004; or (iv) Part VA of the Veterans' Entitlements Act 1986. (3) Without limiting subsection (2), the deed may make provision for one or more of the following: (a) reimbursing the Commonwealth in relation to the provision of pharmaceutical benefits in circumstances set out in the deed; (b) providing the Commonwealth with information in relation to pharmaceutical benefits. Existing deeds to be covered by this section (4) A deed of a kind covered by subsections (1) to (3) entered into by the Minister or another person on behalf of the Commonwealth before the commencement of this section has effect as if, when it was made, it was made by the Minister under this section. 5 Subsection 90(3C) Omit "30 June 2015", substitute "30 June 2020". 6 Section 99AC Omit: Subdivision CA sets out the circumstances in which price reductions are required for new brands of pharmaceutical items that have the same drug as an existing brand of a pharmaceutical item that is subject to an outstanding staged reduction under section 99ACK. The listing of the new brand or brands also provides a trigger for price reductions to occur under Subdivision D (see sections 99ACM and 99ACN) for existing brands of pharmaceutical items that have that drug. Subdivision D provides for other price reductions for pharmaceutical items (including for combination items in some cases). These price reductions: (a) are triggered when Subdivision B applies to require a 16% price reduction to a new brand of a pharmaceutical item; or (b) are triggered when Subdivision CA applies to a new brand of a pharmaceutical item that has the same drug as an existing brand of a pharmaceutical item that is subject to an outstanding staged reduction; or (c) arise if the pharmaceutical item has a drug on F2 on a particular day. substitute: Subdivision D provides for other price reductions for pharmaceutical items. These price reductions: (a) are triggered when Subdivision B applies to require a 16% price reduction to a new brand of a pharmaceutical item; or (b) arise if a pharmaceutical item has had a drug on F1 for 5 years on a particular day. 7 Subsection 99ACA(1) (definitions of relevant price and subject to an outstanding staged reduction) Repeal the definitions. 8 Subsection 99ACC(6) Repeal the subsection, substitute: Subject to statutory price reduction (6) A listed component drug contained in a drug in a combination item becomes subject to statutory price reduction if section 99ACB, subsection 99ACF(1) or (2) or section 99ADH has applied to a listed brand of a pharmaceutical item that: (a) has the listed component drug; and (b) has the same manner of administration as the combination item. Modified meaning of the same manner of administration (7) For the purposes of subsection (6), a combination item whose drug contains a listed component drug has the same manner of administration as another pharmaceutical item that has (or whose drug contains) the listed component drug if the manner of administration set out in a determination under subsection 85(5) for the combination item, to the extent that the manner of administration relates to the listed component drug: (a) if the other pharmaceutical item is not a combination item—is the same as the manner of administration set out in a determination under subsection 85(5) for the other pharmaceutical item; or (b) if the other pharmaceutical item is another combination item—is the same as the manner of administration set out in a determination under subsection 85(5) for the other combination item, to the extent that the manner of administration relates to the listed component drug. 9 Subdivision CA of Division 3A of Part VII Repeal the Subdivision. 10 Subsection 99ACF(1) (heading) Repeal the heading, substitute: Reduction equal to percentage 11 Subsection 99ACF(1) Omit "or amount". 12 Subsection 99ACF(1) (table, heading to column headed "Percentage or amount for section") Repeal the heading, substitute: Percentage 13 Subsection 99ACF(1) (table items 2 to 10) Repeal the items, substitute: 2 99ACHA 5% 14 Subsection 99ACF(2) (heading) Repeal the heading, substitute: Reduction more than percentage 15 Paragraph 99ACF(2)(b) Omit all the words after "reduced by more", substitute "than the percentage specified in column 3 of the table for the section referred to in column 2; and". 16 Paragraph 99ACF(2)(c) Omit "or amount". 17 Subsection 99ACF(3) Repeal the subsection. 18 Subsection 99ACF(5) Repeal the subsection. 19 Section 99ACG (heading) Repeal the heading, substitute: 99ACG Other price reductions do not apply if a price disclosure reduction has applied 20 Subsections 99ACG(1) and (1A) Repeal the subsections. 21 Subsection 99ACG(2) (heading) Repeal the heading. 22 Subsection 99ACG(2) Omit "(2)". 23 Paragraph 99ACG(2)(a) Repeal the paragraph, substitute: (a) on a day, either: (i) section 99ADH has applied to a listed brand of a pharmaceutical item (the first item); or (ii) the price of the first item is reduced under section 99ADHB; and 24 Subparagraph 99ACG(2)(b)(iii) Omit "any item (other than item 4, 5, 6 or 7)", substitute "item 1". 25 Sections 99ACI to 99ACQ Repeal the sections, substitute: 99ACHA 5% statutory price reduction for drugs on F1 (1) This section applies to a brand of a pharmaceutical item on a 5% price reduction day if: (a) the drug in the pharmaceutical item is on F1 on the 5% price reduction day; and (b) on the 5% price reduction day, the drug in the pharmaceutical item has been on F1 for at least 5 years; and (c) the approved ex‑manufacturer price of a brand of a pharmaceutical item that has the drug has not been reduced under this Subdivision on a previous 5% price reduction day. (2) In this section, each of the following is a 5% price reduction day: (a) 1 April 2016; (b) 1 April 2017; (c) 1 April 2018; (d) 1 April 2019; (e) 1 April 2020. 26 Subsection 99ADB(1) Insert: originator brand has the meaning given by subsection (6B). 27 After subsection 99ADB(6) Insert: (6A) The regulations may prescribe information that the method or formula must not take into account (including information that has been provided in compliance with the price disclosure requirements). Information prescribed for the purposes of this section may include information relating to originator brands. (6B) The Minister may, by legislative instrument, determine that a brand of a pharmaceutical item that has a drug on F2 is an originator brand. (6C) In deciding whether to determine that a brand of a pharmaceutical item is an originator brand, the Minister must have regard to whether, when the brand of the pharmaceutical item was first determined under subsection 85(6): (a) the drug in the pharmaceutical item was on F1; or (b) subsection 85AB(5) applied to the drug. (6D) Subsection (6C) does not apply if the drug is on F2 on 31 March 2016. 28 At the end of Subdivision E of Division 3B of Part VII Add: 99ADHB Flow on price reductions for brands of combination items When section applies (1) This section applies if: (a) there is an approved ex‑manufacturer price (the existing price) in force for a brand (the existing brand) of a combination item; and (b) the combination item is not an exempt item; and (c) the combination item has a drug on F2; and (d) a brand of a pharmaceutical item (the non‑combination item) that is not a combination item has a drug (the common drug) that is in the combination item; and (e) the combination item has the same manner of administration as the non‑combination item; and (f) on a day (the reduction day) after the day the existing price came into force for the existing brand of the combination item, section 99ADH applied to the brand of the non‑combination item. Note: The meaning of the same manner of administration is modified for the purposes of this section by subsection (7). Price reduction (2) The existing price ceases to have effect at the end of the day before the reduction day. Each claimed price (if any) for the existing brand of the combination item ceases to be in force at the end of the day before the reduction day. (3) The Minister may agree, under a price agreement, or determine under subsection 85B(2), an approved ex‑manufacturer price (the new price) for the existing brand of the combination item that comes into force on the reduction day. (4) If the approved ex‑manufacturer price for the existing brand of the combination item would also have been reduced under subsection 99ADH(3) on the reduction day: (a) the approved ex‑manufacturer price agreed or determined by the Minister under subsection (3) of this section must not be more than the price under subsection 99ADH(3) (if that subsection applied); and (b) subsection 99ADH(3) does not apply to the existing brand of the combination item on the reduction day. (5) If the Pharmaceutical Benefits Advisory Committee gives advice to the Minister under subsection 101(4AC) in relation to the combination item, the Minister may have regard to the advice in considering whether the new price should be less than the existing price. (6) In deciding whether or not the new price should be less than the existing price, the Minister must also take into account: (a) the approved ex‑manufacturer price, on the reduction day, of: (i) each brand of each pharmaceutical item that is not a combination item and has the common drug and the same manner of administration as the existing brand of the combination item; and (ii) each brand of each pharmaceutical item that is a combination item and has the same drug and manner of administration as the existing brand of the combination item; and (b) the quantity of the common drug in the existing brand of the combination item. Modified meaning of the same manner of administration (7) For the purposes of this section, the existing brand of the combination item has the same manner of administration as a pharmaceutical item that is not a combination item (the non‑combination item) if the manner of administration set out in a determination under subsection 85(5) for the combination item, to the extent that the manner of administration relates to the common drug, is the same as the manner of administration set out in a determination under subsection 85(5) for the non‑combination item. Claimed price reduction (8) If, on the day before the reduction day, a determination under subsection 85B(3) specified a claimed price (the previous claimed price) for a particular pack quantity of the existing brand of the combination item, the Minister may, in a determination under subsection 85B(3), specify a claimed price (the new claimed price) for the existing brand of the combination item that comes into force on the reduction day. (9) The new claimed price must not exceed the old claimed price reduced by the percentage worked out as follows: where: AEMP1 means the amount of the approved ex‑manufacturer price of the existing brand of the combination item on the day before the reduction day. AEMP2 means the approved ex‑manufacturer price of the existing brand of the combination item on the reduction day. Back‑capture reduction day (10) Paragraph (1)(f) has effect as if the last application of section 99ADH to a brand of a pharmaceutical item that occurred before 1 April 2016 had occurred instead on the back‑capture reduction day. (11) The back‑capture reduction day is: (a) unless paragraph (b) applies—1 October 2016; or (b) a day after 1 October 2016 determined by the Minister by legislative instrument made before 1 October 2016. (12) Subsection (10) does not apply in relation to a brand of pharmaceutical item if section 99ADH applied to any brand of the pharmaceutical item on 1 April 2016 or 1 October 2016. Section does not limit Minister's powers (13) This section does not limit the Minister's powers, after the reduction day, to make further price agreements or determinations under section 85B in relation to the existing brand of the combination item. 29 Paragraphs 99AEI(2)(da) and (db) Repeal the paragraphs. 30 Paragraph 99AEI(3)(b) Omit "existing item; or", substitute "existing item.". 31 Paragraphs 99AEI(3)(c) and (d) Repeal the paragraphs. 32 Section 99Y Omit "30 June 2015", substitute "30 June 2020". 33 Subsection 100A(2) Omit "17", substitute "20". 34 At the end of subsection 100A(2) Add: Note: One of the members of the Committee (other than the Chairperson) may be appointed as the Deputy Chairperson of the Committee: see subsection 100B(1D). 35 Before paragraph 100A(3)(a) Insert: (aa) industry; 36 Subsections 100A(5A) and (6) Repeal the subsections. 37 After subsection 100B(1) Insert: (1AA) A person appointed under subsection 100A(3) in respect of paragraph 100A(3)(aa) must be appointed from nominations made by the following: (a) industry organisations prescribed by the regulations for the purposes of this paragraph; (b) industry organisations that the Minister invites to make nominations for the appointment. (1AB) A person appointed under subsection 100A(3) in respect of paragraph 100A(3)(a) must be appointed from nominations made by the following: (a) consumer organisations prescribed by the regulations for the purposes of this paragraph; (b) individuals or consumer organisations that the Minister invites to make nominations for the appointment. 38 Paragraph 100B(1A)(a) Repeal the paragraph. 39 After subsection 100B(1B) Insert: (1C) The Minister must appoint one of the members of the Committee as the Chairperson of the Committee. (1D) The Minister may appoint one of the members of the Committee (other than the Chairperson) as the Deputy Chairperson of the Committee. (1E) The Chairperson and the Deputy Chairperson (if any) are to be appointed on a full‑time or part‑time basis. (1F) The other members of the Committee are to be appointed on a part‑time basis. 40 Application of amendments (1) The amendments made by item 27 of this Schedule apply in relation to a period for which a weighted average disclosed price of a brand of a pharmaceutical item is determined, if the period ends on or after 31 March 2016. (2) Section 99ADHB, as inserted by item 28 of this Schedule, does not apply in relation to a reduction day (within the meaning of that section) before 1 April 2016. (3) The amendments made by items 33 to 39 of this Schedule apply to appointments made on and after the commencement of this Schedule. Schedule 2—Amendments commencing 1 November 2015 National Health Act 1953 1 After subsection 85(6) Insert: Schedule equivalents (6A) If the Minister determines a brand of a pharmaceutical item under subsection (6), the Minister may, by legislative instrument, determine that, for the purposes of paragraph 103(2A)(b), the brand is to be treated as equivalent to one or more other brands of pharmaceutical items. (6B) In deciding whether the brand of pharmaceutical item is to be treated as equivalent to one or more other brands of pharmaceutical items, the Minister must have regard to any advice given by the Pharmaceutical Benefits Advisory Committee. (6C) If, on 1 November 2015, the Schedule of Pharmaceutical Benefits specifies that a brand of a pharmaceutical item is equivalent to one or more other brands of pharmaceutical items, the specification is taken to have been made following a determination to that effect under subsection (6A). 2 After subsection 101(4AACC) Insert: Functions relating to determinations under subsection 85(6A) (4AACD) The Pharmaceutical Benefits Advisory Committee may give advice to the Minister in relation to whether or not the Minister should determine that a brand of a pharmaceutical item is to be treated as equivalent to one or more other brands of pharmaceutical items. Schedule 3—Amendments commencing 1 January 2016 National Health Act 1953 1 Subsection 84(1) Insert: allowable discount has the meaning given by subsection 87(2AAAA). 2 Paragraphs 84AAA(1)(a) and (b) Repeal the paragraphs, substitute: (a) the pharmaceutical item in the pharmaceutical benefit is specified in an instrument under subsection (2); and (b) the supply of the pharmaceutical benefit is made within the period specified in an instrument under subsection (2) following a previous supply to the person of: (i) the pharmaceutical benefit; or (ii) another pharmaceutical benefit that has the same pharmaceutical item as the pharmaceutical benefit; or (iii) another pharmaceutical benefit that is Schedule equivalent to the pharmaceutical benefit; whether or not the previous supply was a supply of a kind described in paragraph 84C(4A)(a); and 3 Subsection 84AAA(2) Repeal the subsection, substitute: (2) The Minister may, by legislative instrument, specify: (a) pharmaceutical items for the purposes of paragraph (1)(a); and (b) periods following previous supply for the purposes of paragraph (1)(b). 4 Paragraphs 84C(1C)(a) and (b) After "under paragraph 87(2)(a)", insert "(without any allowable discount)". 5 Paragraph 84C(4)(c) After "aggregate of $28.60", insert "(less any allowable discount)". 6 Paragraph 84C(4)(d) After "aggregate of $4.60", insert "(less any allowable discount)". 7 Paragraphs 87(2)(a), (b) and (c) After "$4.60", insert "(less any allowable discount)". 8 Paragraph 87(2)(e) After "$28.60", insert "(less any allowable discount)". 9 After subsection 87(2) Insert: (2AAAA) For a supply other than an early supply, the allowable discount is an amount of not more than $1. 10 Paragraph 87(2AB)(d) After "amount", insert "(without any allowable discount)". 11 Paragraph 99(2)(b) After "exceeded the amount", insert "(without any allowable discount)". [Minister's second reading speech made in— House of Representatives on 27 May 2015 Senate on 16 June 2015] (74/15)