Payments to approved hospital authorities for the supply of
pharmaceutical benefits prescribed by a hospital employee
COMMONWEALTH OF AUSTRALIA
National Health Act 1953
PHARMACEUTICAL BENEFITS
DETERMINATION UNDER SUBSECTION 99(4)
I, DAVID REDDY, Acting Assistant Secretary, Department of Health and Ageing and delegate of the Minister for Health and Ageing, pursuant to subsection 99(4) of the National Health Act 1953, hereby determine the rates of payment to an approved hospital authority in respect of supply of pharmaceutical benefits to patients receiving treatment in or at a public hospital in respect of which the hospital authority is approved.
Part I — General
1. This Determination commences on 1 October 2006.
2. This Determination consists of the following Parts:
Part I — General
Part II — Ready-Prepared Pharmaceutical Benefits
Part III — Chemotherapy Pharmaceuticals
Part IV — Extemporaneously-Prepared Pharmaceutical Benefits
3. In this Determination:
“Chemotherapy Pharmaceutical” means a drug or medicinal preparation made available as a pharmaceutical benefit in the Chemotherapy Pharmaceuticals Access Program established under arrangements made under section 100 of the Act;
“exceptional prescription” means a prescription for an extemporaneously-prepared pharmaceutical benefit which is not a standard formula preparation and for which the price of the ingredients, calculated in accordance with paragraphs 20 to 22, is not less than twice the amount calculated in accordance with paragraph 36 excluding container price, dispensing fee and administration fee;
“extemporaneously-prepared pharmaceutical benefit” means a pharmaceutical benefit other than a ready-prepared pharmaceutical benefit or a Chemotherapy Pharmaceutical;
“patient co-payment” means the charge, if any, that may be made under subsection 87(2) of the Act for the supply of a pharmaceutical benefit by an approved pharmacist or an approved medical practitioner;
“price ex manufacturer” means the amount that the manufacturer of a drug and the Minister agree, from time to time, to be taken to be the appropriate maximum price for sales of the drug to approved hospital authorities for the quantity of the drug contained in the manufacturer’s pack;
“public hospital” means a hospital (as defined in subsection 3(1) of the Health Insurance Act 1973) or a day hospital facility (as defined in subsection 4(1) of the National Health Act 1953) that provides public hospital services;
“ready-prepared pharmaceutical benefit” means a pharmaceutical benefit in respect of which there is in force a determination under subsection 85(6) of the Act;
“standard formula preparation” means an extemporaneously-prepared pharmaceutical benefit that is specified in Schedule 5 to the determination in force under paragraph 98C(1)(b) of the Act;
“the Act” means the National Health Act 1953;
“the Regulations” means the National Health (Pharmaceutical Benefits) Regulations 1960 made under the Act;
“the Secretary” means the Secretary to the Commonwealth Department of Health and Ageing.
4. The amount payable to a hospital authority in respect of the supply of a pharmaceutical benefit to a patient receiving treatment in or at a public hospital in respect of which the hospital authority is approved will be the amount by which the dispensed price for the supply of the pharmaceutical benefit, worked out in accordance with this determination, exceeds the patient co-payment.
5. Where an approved hospital authority supplies a pharmaceutical benefit and the dispensed price for the supply of the pharmaceutical benefit, worked out in accordance with this determination, does not exceed the patient co-payment, the supply and receipt of that pharmaceutical benefit shall be deemed not to be the supply and receipt of a pharmaceutical benefit, other than for the purposes of Division 1A of Part VII of the Act.
6. A payment in respect of the supply of a pharmaceutical benefit will not be made unless supply of that pharmaceutical benefit was made in accordance with the Act, the Regulations and the relevant determinations made under the Act.
7. Where in respect of a drug or medicinal preparation there is a determination in force under subsection 85(6) of the Act of a brand or brands under which that drug or medicinal preparation may be supplied as a pharmaceutical benefit under Part VII of the Act, no payment by the Commonwealth will be made in respect of the supply by an approved hospital authority of any other brand or brands of that drug or medicinal preparation.
Part II — Ready-Prepared Pharmaceutical Benefits
8. For the purposes of this Part, the manufacturers’ packs of pharmaceutical benefits on which the prices ex manufacturer are:
(a) standard packs — a standard pack for a ready-prepared pharmaceutical benefit is the pack that contains a quantity or number of units of the benefit equal to the quantity or number of units specified as the maximum quantity of the benefit in the determination in force under paragraph 85A (2) (a) of the Act; and
(b) non-standard packs — a non-standard pack for a ready-prepared pharmaceutical benefit is any pack of the benefit, other than a standard pack, that is used for pricing purposes.
9. Subject to paragraph 13A, the dispensed price of a ready-prepared pharmaceutical benefit will be:
(a) where a quantity of a benefit is ordered and supplied that is equal to the quantity contained in a standard or non-standard pack, the price ex manufacturer, increased by a mark-up of one-ninth of that price, of that standard or non-standard pack, as applicable; or
(b) where a quantity of a benefit is ordered and supplied that is less than the quantity contained in a standard or non-standard pack, the amount worked out in accordance with paragraph 11; or
(c) where a quantity of a benefit is ordered and supplied that is more than the quantity contained in a standard or non-standard pack, the price ex manufacturer, increased by a mark-up of one-ninth of that price, for each complete standard or non-standard pack, as applicable, contained in the quantity supplied, plus the amount worked out in accordance with paragraph 11 in respect of that remainder, if any, of the quantity supplied that is less than the quantity contained in a standard or non-standard pack, as applicable.
10. The price for a ready-prepared pharmaceutical benefit will in each case be taken to the nearest cent, one half cent being counted as one cent.
11. Subject to paragraph 13A, where a quantity of a benefit is ordered and supplied that is less than the quantity contained in a standard or non-standard pack (i.e., a broken quantity), the amount referred to in subparagraph 9(b) or (c) will be worked out by:
(a) ascertaining the percentage that the quantity or number of units in the broken quantity bears to the quantity or number of units in the standard or non-standard pack, as applicable; and
(b) taking that percentage of the price ex manufacturer, increased by a mark-up of one-ninth of that price, of the standard or non-standard pack, as applicable.
12. Notwithstanding anything contained elsewhere in this Determination, the dispensed price in respect of the supply of a quantity of a ready-prepared pharmaceutical benefit will not exceed the dispensed price for a greater quantity of that benefit.
13. Where a prescription calls for a quantity of one of the pharmaceutical benefits specified in Schedule 4 to the determination in force under paragraph 98C(1)(b) of the Act as being a benefit the complete pack of which will be supplied regardless of any lesser quantity ordered, the dispensed price will be worked out on the basis that the complete pack was supplied.
13A. The mark-up of one-ninth referred to in subparagraphs 9(a), 9(c) and 11(b) does not apply to the supply of any of the following pharmaceutical benefits:
Capecitabine Tablet 500 mg
Glatiramer Acetate Powder for subcutaneous injection 20 mg in single use
vial and 1 ampoule diluent 1.1 mL
Interferon Beta-1a Injection set comprising 1 vial powder for injection 30
micrograms (6,000,000 I.U.) and 1 ampoule solvent 2 mL
Interferon Beta-1a Injection 44 micrograms (12,000,000 I.U.) in 0.5 mL
pre-filled syringe
Interferon Beta-1b Injection set comprising 1 vial powder for injection
8,000,000 I.U. (250 micrograms) and solvent”
Part III — Chemotherapy Pharmaceuticals
14. The dispensed price of a Chemotherapy Pharmaceutical will be:
(a) where a quantity of a Chemotherapy Pharmaceutical is ordered and supplied that is equal to the quantity contained in the manufacturer’s pack, the price ex manufacturer of that pack; or
(b) where a quantity of a Chemotherapy Pharmaceutical is ordered and supplied that is less than the quantity contained in the manufacturer’s pack, the amount worked out in accordance with paragraph 16; or
(c) where a quantity of a Chemotherapy Pharmaceutical is ordered and supplied that is more than the quantity contained in the manufacturer’s pack, the price ex manufacturer for each complete manufacturer’s pack contained in the quantity supplied; plus the amount worked out in accordance with paragraph 16 in respect of that remainder, if any, of the quantity supplied that is less than the quantity contained in the manufacturer’s pack.
15. The price for a Chemotherapy Pharmaceutical will in each case be taken to the nearest cent, one half cent being counted as one cent.
16. Where a quantity of a Chemotherapy Pharmaceutical is ordered and supplied that is less than the quantity contained in the manufacturer’s pack (i.e., a broken quantity), the amount referred to in subparagraph 14(b) or (c) will be worked out by:
(a) ascertaining the percentage that the quantity or number of units in the broken quantity bears to the quantity or number of units in the manufacturer’s pack; and
(b) taking that percentage of the price ex manufacturer for the manufacturer’s pack.
17. Notwithstanding anything contained elsewhere in this Determination, the dispensed price in respect of the supply of a quantity of a Chemotherapy Pharmaceutical will not exceed the dispensed price for a greater quantity of that drug.
Part IV — Extemporaneously-Prepared Pharmaceutical Benefits
18. In this Part:
“agreed purchase quantity”, in relation to an ingredient, means the quantity of the ingredient that is agreed upon between the Secretary and the Pharmacy Guild of Australia as the quantity for which the basic wholesale price is to be ascertained;
“wastage” means the combined loss that arises from:
(a) transferring drugs and chemicals from the package in which they are delivered to the approved hospital authority to the dispensing package delivered to the patient; and
(b) deterioration; and
(c) obsolescence.
19. The dispensed price of an extemporaneously-prepared pharmaceutical benefit, including standard formula preparations, will, subject to paragraph 35, be the sum of the following amounts:
(a) the amounts in respect of the ingredients in the quantities supplied, worked out in accordance with paragraphs 20 to 22; and
(b) the amount in respect of the appropriate container, worked out in accordance with paragraph 29.
20. For the purposes of paragraph 19 the amount in respect of an ingredient of an extemporaneously-prepared pharmaceutical benefit, where the quantity of the ingredient is equal to the agreed purchase quantity, will be the sum of:
(a) the basic wholesale price of the ingredient;
(b) mark-up of 10 per cent on (a); and
(c) additional mark-up, where applicable, of 10 per cent, 20 per cent, 30 per cent or 40 per cent, to cover wastage, that is agreed upon between the Secretary and the Pharmacy Guild of Australia.
21. For the purposes of paragraph 19 the amount in respect of an ingredient of an extemporaneously-prepared pharmaceutical benefit, where the quantity of the ingredient is less than the agreed purchase quantity, will be ascertained as follows:
(a) by ascertaining the basic pricing unit to be used for the quantity to be dispensed by reference to the table of basic pricing units in the table shown hereunder;
(b) by ascertaining the cost of the basic pricing unit by reducing the amount ascertained in accordance with paragraph 19 by the quantity factor or factors in the table shown hereunder appropriate to the basic pricing unit required and rounding off the resultant amount to the nearest cent, one half cent being counted as one cent; and
(c) by multiplying the cost of the basic pricing unit by the fraction that the quantity to be dispensed bears to the quantity contained in the basic pricing unit, except for:
(i) quantities exceeding 700 milligrams or 700 microlitres but not exceeding 1 gram or 1 millilitre which will be priced at the amount for 1 gram or 1 millilitre;
(ii) quantities exceeding 7 grams or 7 millilitres but not exceeding 10 grams or 10 millilitres which will be priced at the amount for 10 grams or 10 millilitres; and
(iii) quantities exceeding 80 grams or 80 millilitres but not exceeding 90 grams or 90 millilitres which will be priced at the amount for 80 grams or 80 millilitres.
For the purposes of this paragraph the quantity of the ingredient will be calculated to the next higher 50 milligrams or 50 microlitres.
Quantity Basic Pricing Unit to be Used
Up to and including 700 milligrams or 100 milligrams or 100 microlitres price
700 microlitres
Over 700 milligrams or 700 microlitres and price as 1 gram or 1 millilitre
up to and including 1 gram or 1 millilitre
Over 1 gram or 1 millilitre and up to 1 gram or 1 millilitre price
and including 7 grams or 7 millilitres
Over 7 grams or 7 millilitres and up to price as 10 grams or 10 millilitres
and including 10 grams or 10 millilitres
Over 10 grams or 10 millilitres and up to 10 grams or 10 millilitres price
and including 80 grams or 80 millilitres
Over 80 grams or 80 millilitres and up to price as 80 grams or 80 millilitres
and including 90 grams or 90 millilitres
Over 90 grams or 90 millilitres 100 grams or 100 millilitres price
Quantity Factors
To ascertain the 100 grams or 100 millilitres price, divide the 500 grams or 500 millilitres price by 5 or divide the 1 kilogram or 1 litre price by 10.
To ascertain the 10 grams or 10 millilitres price, divide the 100 grams or 100 millilitres price plus 12½ per cent by 10.
To ascertain the 1 gram or 1 millilitre price, divide the 10 grams or 10 millilitres price plus 25 per cent by 10.
To ascertain the 100 milligrams or 100 microlitres price, divide the 1 gram or 1 millilitre price plus 25 per cent by 10.
22. For the purposes of paragraph 19 the amount in respect of an ingredient of an extemporaneously-prepared pharmaceutical benefit, where the quantity of the ingredient is greater than the agreed purchase quantity, will be worked out as follows:
(a) except in the case of drugs which are unstable or packed sterile, as specified in Schedule 3 to the determination under paragraph 98C(1)(b) of the Act, by dividing the quantity dispensed by the quantity contained in the agreed purchase quantity and multiplying by the basic wholesale price of the agreed purchase quantity; or
(b) where the ingredient is one of the drugs which are unstable or packed sterile, as specified in Schedule 3 to the determination under paragraph 98C(1)(b) of the Act, by multiplying the price of the agreed purchase quantity by the number of whole packs of the agreed purchase quantity required to dispense the quantity of the ingredient.
23. The dispensed price in respect of an extemporaneously-prepared pharmaceutical benefit which comprises a vehicle which is specified in the prescription under a particular name and an additional specified ingredient or ingredients will be calculated in accordance with the provisions of paragraph 24 or 25 as applicable.
24. Where the vehicle is a single liquid ingredient and one or more other ingredients are added, displacement of the vehicle by solids (if any) will be disregarded for pricing purposes and the dispensed price for the pharmaceutical benefit as a whole will be calculated in accordance with the provisions of paragraph 19.
25. Where the vehicle is a liquid compounded from two or more ingredients and one or more other ingredients are added, displacement of the vehicle by solids (if any) will be disregarded for pricing purposes and the amounts for the respective ingredients will be the sum of:
(a) the price of each ingredient of the vehicle; and
(b) the price of each ingredient which is added to the vehicle;
calculated in each case in accordance with paragraph 20, 21 or 23 as applicable.
26. The amount worked out in respect of an ingredient in accordance with paragraph 19 will be taken to the nearest cent, one half cent being counted as one cent, provided that the minimum amount in respect of an ingredient will be one cent.
27. The basic wholesale price of a drug used in the preparation of an extemporaneously-prepared pharmaceutical benefit will be calculated as the arithmetic average of wholesale costs of the drug, in a purchase quantity agreed upon by the Secretary and the Pharmacy Guild of Australia and available from wholesale drug distributors. For this purpose the basic wholesale price of a drug will be ascertained as at 1 May in each year and will take effect on 1 August in the same year.
28. In calculating the amount in respect of an ingredient or the basic wholesale price of a basic pricing unit, the amount so calculated will be taken to the nearest cent, one half cent being counted as one cent, provided that the minimum amount in respect of an ingredient will be one cent.
29. The price for each size and type of container for extemporaneously-prepared pharmaceutical benefits will be based on the average of wholesale costs for that container, in the purchase quantity agreed upon between the Secretary and the Pharmacy Guild of Australia and available from wholesale drug distributors, plus 10 per cent of that average, taken to the nearest cent, one half cent being counted as one cent. For this purpose the wholesale costs of the particular containers will be ascertained as at 1 May in each year and will take effect on 1 August in the same year.
30. Where a wholesale drug distributor will not supply containers of a particular size or type in the purchase quantity agreed upon by the Secretary and the Pharmacy Guild of Australia, the price of the purchase quantity will be calculated by multiplying the price of the smallest quantity above the agreed purchase quantity, in which the distributor will supply containers of that size and type, by the fraction that the quantity in the agreed purchase quantity bears to the quantity in which the distributor will supply.
31. In the case of bulk powders the price for the container will be the price for a screw cap jar which is nominally rated to hold at least double the quantity supplied.
32. Where a prescription orders a quantity of an extemporaneously-prepared pharmaceutical benefit in excess of the capacity of the largest size container of the appropriate type for which provision is made, the price for the container will be calculated as if the pharmaceutical benefit had been supplied in more than one of the containers for which provision is made.
33. Notwithstanding anything contained elsewhere in this Determination, the dispensed price in respect of the supply of a quantity of an extemporaneously-prepared pharmaceutical benefit will not exceed the dispensed price for a greater quantity of that benefit.
34. Notwithstanding anything contained elsewhere in this Determination, in calculating the price in respect of the supply of a quantity of an ingredient of an extemporaneously-prepared pharmaceutical benefit, that price will not exceed the price of a greater quantity of that ingredient.
35. Extemporaneously-prepared pharmaceutical benefits that are not standard formula preparations will be classified for pricing purposes according to the form of preparation in accordance with the Third Schedule to the determinations in force under sections 85, 85A and 88 of the Act. Except in the case of exceptional prescriptions or where the approved hospital authority has made an election pursuant to paragraph 36, the dispensed price for such a pharmaceutical benefit will be worked out as follows:
(a) on the 16th day of the month or as near as practicable thereto the total number of grams or millilitres, as the case may be, priced during the previous four weeks or period as near as practicable thereto, for each form of preparation will be ascertained together with the total amount (exclusive of container costs) paid for each total quantity;
(b) the total amount paid (exclusive of container costs) ascertained in accordance with subparagraph (a) for each type of preparation will be divided by a number equal to one-tenth of the number of grams or millilitres, as the case may be, for that form of preparation ascertained in accordance with subparagraph (a);
(c) the dispensed price will be the average 10 grams or 10 millilitres rate ascertained in accordance with subparagraph (b) calculated at about the 16th day of the month prior to the month of supply for the particular form of preparation, multiplied by one-tenth of the number of grams or millilitres, plus an amount for a container worked out in accordance with paragraph 29;
(d) on the 16th day of the month or as near as practicable thereto, if no prescriptions have been priced during the previous four weeks or period as near as practicable thereto for any of the standard formula preparations listed for a particular form of preparation, the dispensed price will be ascertained by taking the average 10 grams or 10 millilitres rate (exclusive of container costs) of all the standard formula preparations listed for that form of preparation multiplied by one-tenth of the number of grams or millilitres, plus an amount for a container worked out in accordance with paragraph 29;
(e) the dispensed price of a benefit worked out in accordance with subparagraph (c) or (d) will in either case be taken to the nearest cent, one half cent being counted as one cent.
36. An approved hospital authority may elect to calculate dispensed prices of extemporaneously-prepared pharmaceutical benefits that are not standard formula preparations in accordance with paragraph 19 instead of receiving payment in accordance with paragraph 35.
37. Where an approved hospital authority that has not made an election pursuant to paragraph 36 supplies an extemporaneously-prepared pharmaceutical benefit and there is no standard formula preparation of the form supplied (and an average price is therefore not available), the dispensed price will be worked out in accordance with paragraph 19.
38. Where the benefit comprises a standard formula preparation plus an additive, and the approved hospital authority has not made an election pursuant to paragraph 36, the amount payable will be the dispensed price worked out in accordance with paragraph 35, unless the approved hospital authority indicates that the benefit is to be priced as if had specified only the standard formula preparation without the additive, in which case the amount payable will be the dispensed price for the standard formula preparation without the additive worked out in accordance with paragraph 19.
39. Notwithstanding the provisions of paragraph 35, an approved hospital authority that has not made an election pursuant to paragraph 36 may calculate the dispensed price for an exceptional prescription in accordance with paragraph 19.
Dated this 27th day of October 2006.
DAVID REDDY
Acting Assistant Secretary
Access and Systems Branch
Department of Health and Ageing
Delegate of the Minister for Health and Ageing
