Bills Digest No. 132  1998-99 National Health Amendment Bill (No. 1) 1999

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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 Bill.


Passage History
Main Provisions
Contact Officer and Copyright Details

Passage History

National Health Amendment Bill (No.1) 1999

Date Introduced: 17 February 1999

House: Senate

Portfolio: Health and Aged Care

Commencement: The operative provisions commence on Proclamation or otherwise six months and one day after the Act receives Royal Assent.


To amend the National Health Act 1953 to restrict the export of medication subsidised under the Pharmaceutical Benefits Scheme.


The Pharmaceutical Benefits Scheme (PBS) is a significant area of Commonwealth Government outlays. Total payments by the Commonwealth Government under the PBS reached $2.78 billion in 1997-98, up from $1.80 billion in 1993-94. The average cost to the Government per prescription was $20.31 in 1997-98.(1) The Health Insurance Commission (HIC) has responsibility for the operational aspects of the PBS.

Access to subsidised medicines under the PBS is restricted to Australian residents and visitors from countries with which Australia has a Reciprocal Health Care Agreement. These countries are the United Kingdom, Ireland, New Zealand, Malta, Italy, Sweden, the Netherlands and Finland.(2)

Several joint exercises conducted by the Australian Customs Service and the HIC at Brisbane, Sydney and Melbourne airports indicated that a problem exists with large quantities of medications leaving Australia. For example, x-ray equipment revealed pharmaceuticals as the entire contents of some large suitcases. As a result of these exercises, some 19 people have been prosecuted over the last two years.

In his Second Reading Speech, the Minister notes that the National Health Act 1953 currently prohibits a person from disposing of a PBS medication in a manner not intended in the prescription. This includes selling or exporting the medication overseas. The amendments contained in the bill will allow the HIC to address the situation where the subsidised medication is in the possession of another person or is being forwarded overseas by a person for whom the medication was not prescribed.

Measures in the National Health Amendment Bill (No. 1) 1999 give effect to a 1998-99 Budget decision to address the issue of PBS-subsidised medicines which are inappropriately sent overseas. The Budget foreshadowed a multi-pronged approach to dealing with the problem: strengthening the relevant legislation, liaison between the HIC and the Australian Customs Service and the development of targeted education and awareness campaigns by the HIC. Medical advisers from the HIC will counsel, liaise and work with doctors who are found to be prescribing medicines which are sent overseas. It was estimated in the Budget that these measures would result in savings of $68.2 million over the four years from 1998-99.(3)

Main Provisions

Schedule 1 of the Bill contains amendments to the National Health Act 1953. Item 1 inserts Division 4D which is a legislative framework for restricting the export of certain medications that are subsidised by the Federal Government under the PBS.

Throughout the proposed division, three criteria repeatedly arise in determining whether the export restriction and related enforcement machinery apply. The restriction does not apply to drugs that are:

  • not prescription drugs, or
  • not obtained under the PBS, or
  • for personal use or the use of a travelling companion.

For the purpose of the analysing the provisions of this Bill, these will be referred to as 'the criteria'.

Proposed section 99ZI prohibits 'drug like substances' (this term is broadly defined in proposed section 99ZH to include tablets, aerosols, creams and patches normally associated with the administration of pharmaceutical preparations) from being carried out of Australia unless they fall within the criteria. Similar restrictions apply to the consigning of a drug like substance for export under proposed section 99ZI(2). A person will be deemed to be carrying drugs if they are contained in the person's baggage (proposed s99ZI(3)). Proposed subsection 99ZI(4) is designed to deal with any problem of inconsistency of laws. It provides that the restrictions contained in the Bill are in addition to export restrictions imposed by other Commonwealth, State or Territory Laws.

Proposed sections 99ZJ and 99ZK are concerned with empowering customs officers to detain drugs being carried out of Australia or consigned for export and to retain related documents. The section provides that an officer may impound the drugs if he is not satisfied that any of the criteria listed above have been met. In doing so, customs officers must act in accordance with guidelines issued by the CEO of Customs under proposed section 99ZS. These guidelines are disallowable instruments under the Acts Interpretation Act 1901.

Proposed subsections 99ZJ (2), (3) and (4) outline means for satisfying a customs officer that detained drugs are not subject to export restriction because they come within the listed exemptions. Despite the presentation of such evidence, a customs officer retains the discretion to detain the drugs in question (proposed s99ZJ(5)). Proposed subsection 99ZJ(6) concerns procedures for customs officers in dealing with documents submitted under the preceding subsections.

Under proposed section 99ZL customs officers are given the power to examine and inspect baggage and articles consigned for export in order to determine whether a drug like substance is present. Drugs detained by customs officers must be transferred to the HIC. If drugs are detained, exporters must be given a notice stating the reason for detention and the procedures that will follow (proposed section 99ZN).

Proposed section 99ZO provides that once drugs are taken to the HIC, they are to be examined to determine whether they are subject to export restriction. If they are not prescription drugs and not prohibited exports, they must be reconsigned or returned. If the drugs are prescription drugs but not prohibited exports, the HIC must notify the exporter and invite the exporter to apply for the return of the drugs within 60 days. Unless proceedings for an offence have commenced in relation to the drugs, they will be forfeited to the Commonwealth after 60 days if no application has been made.

A right of compensation under proposed section 99ZP is available if it can be established that the drugs were not those of a kind whose export is restricted and that the exporter had a good reason for failing to apply for their return. The level of compensation is the market value of the substances at the time of their destruction.

The liability of the Commonwealth and its officers is limited under the new division. Under proposed section 99ZR, acts done in good faith do not give rise to any liability. This immunity is subject to the proviso that if the exporter seeks compensation, the HIC must pay in cases where the Commission should have returned or reconsigned goods (ie under s99ZO) but that they have been lost or are unusable.

Proposed section 99ZT provides that goods detained for breach of the criteria are forfeited to the Commonwealth.

Item 2 amends section 103 of the National Health Act 1953 which deals with offences. Proposed subsection 103(4AA) provides a penalty of 2 years imprisonment for persons who possess or consign for export, more than the 'designated quantity' of a pharmaceutical benefit. The section provides for two defences: (1) where the drug has been supplied for medical or dental treatment of the person, and (2) the person has another reasonable excuse.

In any prosecution under proposed subsection 103(4AA) the burden of proving that the exceptions apply will rest on the defendant (proposed ss103(4AB)).

A 'designated quantity of pharmaceutical benefit' is defined in proposed subsection 103(4AC) as twice the total quantity that can properly be supplied on one PBS prescription.

Evidentiary requirements for a prosecution under proposed subsection 103(4AA) are outlined in proposed subsection 103(4AD). A certificate provided by the HIC which states that a substance is a 'pharmaceutical benefit' and that the quantity of the pharmaceutical to which the offence relates is greater than the permitted quantity; is prima facie evidence of those matters.

Subsection 103(4) of the National Health Act 1953 prohibits a person from dealing with the pharmaceutical benefit in a way other than that for which the prescription was written or the pharmaceutical benefit supplied. Proposed subsection 103(4AE) states that a person cannot be convicted of breaches of subsection 4 and proposed subsection 4A in for the same conduct.


  1. Commonwealth Department of Health and Family Services, Expenditure and prescriptions:
    twelve months to 30 June 1998
    , Department of Health and Family Services, Canberra, 1998.

  2. Commonwealth Department of Health and Family Services, The Australian Pharmaceutical
    Benefits Scheme
    , Department of Health and Family Services, Canberra, March 1998.

  3. Health and Family Services, 'Encouraging Quality Use of Medicines: Health Insurance
    Commission compliance and education measures', Budget Fact Sheet 5, 1998.


Contact Officer and Copyright Details

Paul Mackey & Mark Tapley
12 March 1999
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1999

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Published by the Department of the Parliamentary Library, 1999.

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