Significant amendments to the National Health Act 1953 (Cth) (Act) will be introduced as part of a raft of reforms under the Government’s PBS Access and Sustainability Package.

Last week, the Senate passed the National Health Amendment (Pharmaceutical Benefits) Bill 2015(Bill) which will amend Part VII of the Act, driving down the price of listed medicines and promoting the use of biosimilars.  The key amendments to the Act include:

  • 5% price cuts to F1 medicines listed on the PBS for more than 5 years

Price cuts will apply five years from the date of listing regardless of whether there are subsequent extension of indications.  The first 5% cut will take place on 1 April 2016.

  • Bioequivalent or biosimilar medicines share the same "drug"

Pharmaceutical items which are bioequivalent or biosimilar will be deemed to have the same drug and will be listed on the F2 formulary triggering 16% statutory price reductions.

  • Removal of originator brands from price disclosure calculations for F2 medicines

To further reduce prices across F2 medicines, calculations to determine price disclosure- related reductions for medicines that have been listed on the F2 formulary for three years will be amended to exclude sales data from more expensive originator brands.

  • "A" flagging of biosimilars

The Minister for Health will be empowered to determine whether a biosimilar is substitutable for an originator biologic at the pharmacy level.   The Minister is not required to seek the Pharmaceutical Benefits Advisory Committee's (PBAC) advice, though any advice sought must be considered.

  • Additional listing dates for generic medicines

The number of dates for listing a generic medicine and triggering associated statutory price reductions will increase from three to six per year. These dates are 1 February, 1 April, 1 June, 1 August, 1 October and 1 December.

The PBS Access and Sustainability Package is anticipated to generate savings of $3.7 billion over the next five years but the Government has not ruled out introducing further price cuts.

Australia out of step with international position on biosimilars

From 1 November 2015, the Act will empower the Minister for Health to determine that one brand of pharmaceutical item is a "schedule equivalent" to one or more other listed brands. 

This will enable the Minister to determine that an originator biologic can be substituted for a biosimilar at the pharmacy level without physician involvement, a position that is inconsistent with that adopted in the US and Europe. 

The Minister will be required to have regard to any advice given by the PBAC in determining substitutability, but is not required to seek such advice.  In April this year, PBAC advised the Minister that the Committee's default position is that biosimilars are suitable for substitution at the pharmacy level where the data is supportive.  The data PBAC indicated it would have regard to includes the absence of data suggesting there are significant differences in the clinical effectiveness or safety of the biosimilar compared with the originator biologic.

While described by the Government as a "minor technical amendment" to the Act, the new powers of the Minister could have potentially serious ramifications to patient safety. There is widespread industry concern that PBAC is not best placed to advise the Minister on these issues, rather any such advice should come from the TGA, the body with primary responsible for assessing medicine safety and efficacy.

Precedent on this issue is anticipated shortly.  In its July 2015 meeting, PBAC is expected to consider whether Eli Lilly's insulin glargine biosimilar (Basaglar®) is substitutable for Sanofi's biologic, Lantus®.