Questions and Answers - Price Disclosure Originator Brand Removal

Page last updated: 21 September 2015

Question
Will single brand pharmaceutical item data be removed from price disclosure calculations?

Answer
If the originator brand is the only brand listed for that pharmaceutical item (or other listed brands are all also originator brands), it will not be removed from calculations. It will be retained for the WADP calculation.

The brand will be determined as an originator, but without effect on removal of data until a non-originator brand enters the market in the same pharmaceutical item.

Note: ‘Pharmaceutical item’ means the legally determined pharmaceutical item. That is, a drug in a particular form with a particular manner of administration, without regard to pack size, maximum quantity and repeats.

The ‘PBS Pricing Fact Sheet – 2015 Price Disclosure Changes’ on the PBS website gives further details and examples.

Further, if the final weighted average percentage difference across all brands with a particular drug and manner of administration is higher when originator brand data is included, then the outcome with originator brand data included will be used.

Question
What safeguards are in place to protect low volume / low discount pharmaceutical items?

Answer
Safeguards will be place for low volume / low discount pharmaceutical items. See the ‘PBS Pricing Fact Sheet – 2015 Price Disclosure Changes’ on the PBS website for further details and examples.

Question
How were the thresholds for low volume/low discounting items set? 

Answer
The thresholds for identifying low volume/low discounting items were considered taking into account the range of different products on the PBS, and experience with disclosed data.  The criteria are deliberately tight, as the policy is intended to pick up only those products that have no significant discounting at all.  Other options are available if a company believes that imposition of the reduction will impact their ability to continue to supply an essential product (see price increase question).

Question
Can companies apply for price increases outside the current annual process? Is there a mechanism to pre-emptively grant price increases that offset price disclosure reductions?

Answer
In exceptional circumstances, companies may request an ad hoc price review of a product outside its scheduled review period.  Details on both the annual review and ad hoc process are set out in the Requesting a Change to an Existing Price fact sheet on the PBS website.  If price increases are approved, and depending on the timing of a price increase application, consideration can also be given to not determining (or revoking) any outstanding price disclosure price reduction.  

Question
How can a brand be determined an originator if it was never in F1 or the Combination Drug List?

Answer
When determining originator brands for drugs already on F2 up to and on 31 March 2016, the requirement for the Minister to take into account whether the brand was already listed when the drug was on the F1 formulary or the Combination Drug List does not apply. This approach was adopted because of the historical issues, including that although many F2 drugs have been listed on the PBS for a very long time, formularies F1 and F2 have only existed since 2007.

For drugs on F2 after 31 March 2016, the fact a brand was listed for the drug at the time of movement from F1 to F2 is not the only basis for ‘originator brand’ status – it is a criteria that has been included in the Act.  As an example, the Explanatory Memorandum for the National Health Amendment (Pharmaceutical Benefits) Bill 2015, notes that it will also be relevant that a brand is similar to a listed brand when the drug was on F1.

For example, brand ‘banana’ meets the criteria in subsection 99ADB(6C), so similar brands ‘bananaplus, ‘bananaextra, ‘banana20mg’ may also be determined as originator brands.

Question
Why does the 30 month clock for pharmaceutical items start before there is a listing of a second brand of a pharmaceutical item?

Answer
The clock starts when the drug/MoA first meets all the F2/multi-branded criteria which are detailed in the ‘PBS Pricing Fact Sheet – 2015 Price Disclosure Change’s on the PBS website. This is consistent with the current application of movement to F2, and consistent with the policy that all products containing a drug are subject to price disclosure, even if the pharmaceutical items are not all multi-branded.