Ged Kearney (Cooper, Australian Labor Party, Assistant Minister for Health and Aged Care) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The National Health Amendment (Technical Changes to Averaging Price Disclosure Threshold and Other Matters) Bill 2024amends the National Health Act 1953 to clarify the operation of provisions relating to pricing and supply arrangements for older and low-cost medicines.

Under the National Health Act 1953, price reductions can occur for multi-branded medicines listed on the Pharmaceutical Benefits Scheme—these are known as price disclosure price reductions. These price reductions ensure that the subsidy paid by the Commonwealth under the PBS for a particular medicine more closely reflects the price actually paid in the market for a medicine by a pharmacist.

This results in price reductions to some medicines on the PBS on 1 April and 1 October of each year. These reductions are based on data submitted to the department by medicines companies about their sales volume and revenue. A price reduction can occur where the difference between the PBS price and the average market price that the medicine is being sold at meets thresholds in section 99ADH of the act.

Amendments under the bill clarify provisions that were introduced through the National Health Amendment (Enhancing the Pharmaceutical Benefits Scheme) Act 2021 that implemented reforms negotiated with the medicines industry through strategic agreements to improve access to medicines for Australian patients.

The amendment act included new provisions to support supply of the medicines that Australians need and use every day. This was achieved through the 'Medicines Supply Security Guarantee' which included reforms to improve the supply of older, lower cost multi-branded medicines referred to in the act as 'designated brands'.

This bill will make technical amendments only, which are intended for avoidance of doubt and therefore are not intended to change the operation of the provisions in the amendment act which have been in effect since 1 July 2022.

The bill includes amendments that apply retrospectively and prospectively to ensure the understanding of the provisions is consistent with the parliament's intention when it passed the amendment act, removing any possible doubt as to how these provisions have operated to date, and how they will continue to operate. The amendments clarify provisions in section 99ADH of the act which relate to the 12.5 per cent average unadjusted price reduction test, and section 99ADHC of the act which relates to the timing of when a brand becomes a designated brand.

The amendments to section 99ADH of the National Health Act 1953 reflect the policy intent outlined in the explanatory memorandum for the 2021 act, which states in relation to designated brands with an approved ex-manufacturer price greater than $4:

…there will be no further price reductions under the Act unless, over a period of three consecutive data collection periods (1.5 years), the brand is discounted on average by 12.5% or more without taking a price reduction, or if the brand is discounted by more than 30% in any one price disclosure cycle.

The amendments clarify paragraph 99ADH(6)(b), that, for a brand to pass the 12.5 per cent average unadjusted price reduction test, a price reduction cannot have occurred as a result of calculations using data from the three consecutive data collection periods used in the test.

Each data collection period is six months in duration; therefore three consecutive data collection periods result in a period of 1.5 years between a possible price reduction for designated brands that have discounted on average by 12.5 per cent or more in those periods.

Section 99ADHC of the National Health Act 1953 sets out the conditions for a brand to be a designated brand and subject to a range of more protective pricing and supply provisions. These provisions include price disclosure thresholds, floor price protections, and the minister's powers under division 3CA if a medicine company offers a discount or incentive in relation to sales of a designated brand with an AEMP of $4 or less. Designated brands are also subject to the minimum stockholding requirements under division 3CAA. As outlined in the explanatory memorandum for the amendment act in relation to designated brands:

Where a PBS listed brand is protected by the price reduction floor, it will be subject to a condition that minimum stocks of the brand are held in Australia

As there are various consequences that flow from a brand of pharmaceutical item being identified as a 'designated brand', it is necessary to clarify the timing on when a brand becomes a designated brand. The bill provides a definition of 'previous data collection period' to make clear which data collection period the 'previous data collection period' refers to, which is required to determine whether or not a brand is a designated brand. This in turn ensures it's clear that each of the operative provisions associated with a designated brand are effective from the same date on which a brand becomes a designated brand.

The bill includes provisions that are retrospective, commencing from 1 July 2022, in the interests of providing certainty to the various medicine supply chain stakeholders due to the inherent complexity associated with the PBS statutory framework. Although the amendments do not change the intended meaning of the provisions, they are made for the avoidance of doubt to avoid potential ambiguity. Therefore, retrospectivity and validation remove any potential doubts regarding past price reductions subsequent to which subsidies have already been paid to approved suppliers by reference to reduced approved ex-manufacturer prices.

In conclusion, this bill includes technical amendments only that will provide clarity regarding the operation of sections 99ADH and 99ADHC of the National Health Act 1953 that relate to designated brands. These amendments are consistent with the parliament's intention when it passed the amendment act and the overarching policy intent of the price disclosure regime.

Debate adjourned.