Bills Digest no. 130 2007–08
National Health Amendment (Pharmaceutical Benefits
Scheme) Bill 2008
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact officer & copyright details
National Health Amendment
(Pharmaceutical Benefits Scheme) Bill 2008
introduced: 29 May
House: House of Representatives
Portfolio: Health and Ageing
Schedule 1, 3 and 4 - on
Schedule 2 - the day after Royal
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
The National Health Amendment (Pharmaceutical Benefits Scheme)
Bill 2008 (the Bill) aims to:
- widen the criteria used to determine that brands of
pharmaceutical items may be co-marketed, and also to allow the
Minister to determine that co-marketed brands stop being
- enable those otherwise eligible to access the Pharmaceutical
Benefits Scheme (the PBS), to do so while working outside Australia
as officers of the Commonwealth, or of a State or Territory (and
also for their accompanying spouses and dependent children)
- provide legally married and de facto couples living apart due
to illness or infirmity the same access to PBS safety net
arrangements as couples living together
- remove provisions for the gazettal of determinations made in
relation to pharmaceutical benefits that may be prescribed by
participating dental practitioners and authorised optometrists,
- make minor technical amendments aimed at improving the
operation of the PBS.
These changes will be achieved through relevant amendments to
Part VII of the National Health Act 1953 (the Act).
The PBS is a Commonwealth Government
program that has operated for approximately 60 years. It aims to provide
Australian residents with affordable access to a range of medicines, whereby
the Commonwealth Government subsidises the costs of those
Consumers get the benefit of this subsidy when getting
prescriptions for medicine filled under the PBS at
Australia has Reciprocal Health Care Agreements with certain
other countries, such as the United Kingdom, Ireland, New Zealand,
Malta, Italy and Sweden. People from those countries who visit
Australia can also access the PBS.
From 1 January 2008, a general patient pays up to $31.30 and a
recipient of a pension or benefit with a concession card pays $5.00
for most medicines listed with the PBS. These payments are called patient
co-payments , which are revised annually in line with the Consumer
Commonwealth Government expenditure on the PBS for 2008-09 is
expected to be $8,908, with a projected increase to $9,247 in
For comprehensive historical information on the PBS, see the
Bills Digest for the National Health Amendment (Pharmaceutical
Benefits Scheme) Bill 2007.
The Bill was introduced into the House of Representatives by the
Hon. Nicola Roxon MP, Minister for Health and Ageing, on 29 May
The previous Government announced a PBS reform package in
According to the Government at the time, the aim of the reforms
to protect patients from higher out of pocket
costs, get better value from market competition among brands of
generic (off-patent) medicines and recognise the importance of
world-class life-enhancing drugs to patients.
The fundamentals of the PBS will not change.
Patients will continue to meet only the standard co-payments and in
some cases will also pay less. The main changes will be in the way
that the Government prices medicines that are operating in a
competitive market. These medicines will take a series of price
drops, and eventually will move to a system where the price they
are actually being sold in the market will reflect the price that
the Government pays.
Ultimately, the previous Government had sought to ensure the
economic sustainability of the PBS, which had been a particular
source of concern for several Governments. In the Health and Ageing portfolio,
as in other portfolios, costs of programs and improving access to
those programs are competing objectives.
The current Bill proposes further amendments, the aims of which
are consistent with the stated aims of that reform package (please
refer to the Purpose section of the Digest above).
The Bill has been reviewed by the Senate Standing Committee for
the Scrutiny of Bills (the Committee) but the Committee did not
comment on it.
At the time of writing, the position of significant interest
groups is not known.
There is no information in the Explanatory Memorandum nor in the
Second Reading Speech for the Bill on whether the Government has
consulted with significant interest groups regarding the proposed
amendments in the Bill.
The Government states that amendments proposed in Schedules 1
and 4 have no financial implications.
However, the Government states that the expected financial
implications for Schedules 2 and 3 are approximately as
- Schedule 2 (pharmaceutical benefits to government officers
working outside Australia) annual cost of $0.3 million, and
- Schedule 3 (pharmaceutical benefits extending to couples who
live apart due to illness or infirmity) annual cost of $1.1
Items 1-5 propose to amend section
84AE of the Act, in an effort to expand the criteria used
in determining whether brands of pharmaceutical items are
Generally, section 84AE of the Act allows two or more brands of
a pharmaceutical item to be treated as the same brand if:
- the regulations prescribe the brands as being co-marketed
brands of that item, or
- the Minister determines that the brands are co-marketed brands
of that item if the brands satisfy certain criteria pursuant to
Item 1 proposes to substitute
paragraphs 84AE(2)(a) and (b) of the Act,
with respect to the meaning of co-marketed brands .
Under proposed subsection 84AE(3B) in
item 5 of Schedule 1 of the Bill
(see below), the Minister would have discretionary power to
determine that all brands that are prescribed by the regulations as
being co-marketed brands of a pharmaceutical item, cease being so
if certain factors are satisfied.
The effect of the proposed amendment in item 1
is that the Minister s discretionary power proposed in item
5 may in fact override the regulations that prescribe
brands as being co-marketed brands of a pharmaceutical item.
According to the Government, this proposed amendment would allow
for greater flexibility in accommodating the necessary changes to
be made when new brands of medicines are listed on the PBS.
Items 2-4 propose to amend subsection
84AE(3) by replacing paragraph 84AE(3)(c);
inserting new paragraphs 84AE(3)(d) and
(e); and repealing subsection
84AE(3)note in the Act.
Subsection 84AE(3) of the Act provides for ministerial
determination with respect to co-marketed brands of pharmaceutical
In particular, the proposed amendments in items
2-4 specify that co-marketed brands could be co-marketed
brands of more than one pharmaceutical item with the same drug as
long as all of the pharmaceutical items have exactly the same
Item 5 proposes to insert new
subsections 84AE(3A) and (3B) into the
Proposed subsection 84AE(3A) would give the
Minister discretionary power to vary or revoke a determination made
pursuant to subsection 84AE(3) that two or more brands of a
pharmaceutical item are co-marketed brands if certain criteria are
satisfied. This power to revoke or vary such determinations would
be made by legislative instrument. The criteria for revoking or varying
such determinations reflect recognition that situations change over
time and in some cases, co-marketed brands may no longer meet the
criteria listed in proposed paragraphs
84AE(3)(c)-(e) of the Act (as discussed above).
Proposed subsection 84AE(3B) would give the
Minister discretionary power to determine that co-marketed brands
prescribed as such by the regulations cease to be co-marketed
brands if certain criteria are satisfied. Again, this proposed
provision reflects recognition that situations change over time and
in some cases, co-marketed brands may no longer meet the criteria
listed in proposed paragraphs 84AE(3)(c)-(e) of
the Act. Under this proposed amendment, the Minister s
determination could override the regulations (see also item
Item 6 proposes that amendments proposed in
Schedule 1 above would apply prospectively, in
relation to ministerial determinations made:
- on or after the date of Royal Assent, and
- in relation to brands that, before or after that date, are
listed or co-marketed brands of a pharmaceutical item.
It would be helpful to know what are the Government s and the
pharmaceutical industry s opinions regarding the impact (if any) of
the proposed co-marketing amendments on the pharmaceutical
Items 1-15 propose to amend provisions in the
Act relating to pharmaceutical benefits entitlements and export
restrictions on pharmaceutical items.
As stated in the Explanatory Memorandum, the proposed amendments in Schedule 2
of the Bill would enable people already entitled to pharmaceutical
benefits in Australia, to access those benefits while working
overseas as Commonwealth, State or Territory officers (government
officers) as defined. The proposed amendments would also enable the
accompanying spouses and dependant children of those government
officers to access pharmaceutical benefits.
Notably, spouse is defined in section 84B of the Act as:
(a) a person who is legally married to, and is
not living, on a permanent basis, separately and apart from, that
(b) a de facto spouse of that person.
De facto spouse is defined in section 4 of the Act as:
a person who is living with another person of
the opposite sex on a bona fide domestic basis although
not legally married to that other person.
Therefore, by definition, the proposed amendments would not
apply to same sex couples.
However, it is noted that the Government s 2007
National Platform states that it:
supports legislative and administrative action
by all Australian governments to eliminate discrimination,
including systemic discrimination, on the grounds of race, colour,
sex, religion, age, sexuality, gender identity, disability, genetic
makeup, political or other opinion, national or social origin,
property, birth or other status.
Where necessary, Labor will take special
measures designed to achieve equality and eliminate the effects of
both historic and contemporary discrimination.
In particular, the Government has stated that:
Labor believes that people are entitled to
respect, dignity and the opportunity to participate in society and
receive the protection of the law regardless of their sexuality or
gender identity. Labor supports the enactment of legislation
prohibiting discrimination on the grounds of a person's sexuality
or gender identity and will audit Commonwealth legislation to amend
provisions that unfairly discriminate against any person on the
grounds of sexuality or gender identity.
The definitions of spouse and de facto spouse in the Act and the
proposed amendments in Schedule 2 of the Bill appear to contradict
the Government s pre-election statements.
Items 1 and 2 propose to
amend section 84B and paragraph
87(2)(c) of the Act relating to safety net concession and
pharmaceutical benefits entitlement cards issued to people who are
either legally married or are in de facto relationships within the
meaning of the Act (see above).
Under the Act, a family can combine certain PBS charges toward a
joint safety net threshold and once that threshold is reached, all
members of that family benefit from reduced PBS charges for the
rest of that calendar year. However, couples who live apart because of
illness or infirmity are treated as if they live separately on a
permanent basis; they are not considered to be spouses or de facto
spouses under the Act and do not benefit from having a family
safety net threshold. Consequently, they have to pay more in terms
of PBS contributions before they reach their individual safety net
The proposed amendments in Schedule 3 of the Bill would allow
couples who live apart because of illness or infirmity to continue
to be considered as family for the purposes of entitlement to
safety net concession and pharmaceutical benefits entitlement
cards. In other words, such couples would no longer be considered
as living separately on a permanent basis.
Item 3 applies the amended definition of spouse
for annual safety net entitlement periods commencing from 1 January
of each year from 2009 onwards .
Please refer to the above comments regarding definitions of
spouse and de facto spouse in the Act and exclusion of same sex
Items 1-3 propose to amend the definitions of
combination item has a drug and pharmaceutical item has a drug in
accordance with proposed amendments in Schedule 1 of the Bill
relating to co-marketed items.
In addition, items 4 and 5
propose to amend subsections 88(1A) and 88(1C) of
Subsection 88(1A) and 88(1C) in the Act refer to the Minister s
determinations specifying the pharmaceutical benefits for which
participating dental practitioners and authorised optometrists may
The proposed amendments would replace the requirement to publish
the Minister s determination in the Government Gazette
with the requirement that the Minister s determination be made by
legislative instrument. The Government submits that publication in
the Government Gazette would be unnecessary because the
legislative instruments proposed by these amendments must be
registered in the Federal Register of Legislative Instruments
Item 6 proposes that items 4
and 5 of Schedule 4 above would
apply prospectively, to determinations made on or after the date of
In general, the proposed
amendments in this Bill would result in greater access to and
affordability of the PBS for people otherwise entitled to use it.
The proposed amendments are intended to allow for greater
flexibility and efficiency of the PBS.
However, two important
issues remain to be addressed:
- what effect, if any, would the proposed co-marketing provisions
have on the pharmaceutical industry, and
- the conflict between the Government s pre-election commitment
regarding same sex couples and the amendments proposed in the
. See Department of Health and Ageing,
About the PBS ,
accessed on 3 June 2008. The PBS operates under Part VII of the
Act, as well as the National Health (Pharmaceutical Benefits)
Regulations 1960 made under the Act.
12 June 2008
Bills Digest Service
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