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Management and communication of medicine shortages and discontinuations in Australia

Guidance for sponsors and other stakeholder bodies

1 May 2019

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Appendix 4: PBS medicine supply guarantee

Granting price increases and exemptions where prices of medicines have become unviable and discontinuation of supply is planned.

Under the National Health Act 1953, the Minister can agree a higher price for a medicine listed on the PBS. The Minister exercises this power where it is necessary to retain listing of clinically important medicines on the PBS.

In implementation of this measure, it is critical:

  • that pharmaceutical companies provide accurate cost of goods and supply information to make an assessment of a reasonable price increase
  • that accurate information is obtained from pharmaceutical companies about their intention to de-list if a price increase is not granted
  • to strike a balance between retaining clinically needed medicines and reasonable prices where there is no economic evaluation available for those medicines.

Temporary PBS listing of unregistered medicines where a registered medicine is in short supply

When temporary supply of an overseas-approved product has been granted by the TGA under section 19A of the Act, the Department of Health will negotiate a price for a temporary product to ensure that it can be listed on the PBS.

In implementation of this measure, it is critical:

  • to ensure that companies are not being paid (on a longer term basis) more for temporary supply of a different brand of medicine, especially in circumstances where they are the main/sole supplier for the permanently listed PBS item
  • to best evaluate how much to pay for temporary listings when there is no formal economic evaluation for that medicine
  • to encourage the temporary supplier to seek permanent registration on the ARTG if the PBS medicine has been permanently discontinued, to ensure that it is a temporary measure rather than an ongoing arrangement.

Requirements that manufacturers guarantee supply of certain medicines for up to 24 months after listing and that they notify the Minister's delegate if they are unable to supply

Guarantee of supply provisions are included in the National Health Act 1953. The purpose of the provisions is to require new responsible persons (suppliers) of F2 drugs to guarantee supply for 24 months, or until another new brand of that drug is listed, and to notify the Minister if they are unlikely to be able to supply during that initial 24 month period.

The provisions address a concern that one brand might be listed to cause a price reduction affecting competitors with no intention to supply. It was intended to deter sponsors from entering the Australian market without a viable business model able to support their long term participation in the market.

The supplier of a guaranteed brand must notify the Minister where there is an issue with supply (refer to section 99AEG of the National Health Act 1953). There are criminal penalties for non-compliance. In situations where a supplier has failed to meet their obligations, the Minister has discretion (under s99AEH) to: delist the relevant brand, delist any of the supplier's other PBS listed brands or refuse to list a new brand from that supplier.

It is a condition of PBS listing that a supplier agrees to the 'Assurance of Supply' arrangements, including that they have sufficient stock to meet demand. There is also a 'Guarantee of Supply' form for notifying the Department if the supplier is having, or is likely to have, supply issues.

In implementation of this measure it is critical to note that the intention of the guarantee of supply provisions was not to address supply shortages. Supply shortages are more likely to take place after the 24 month period has elapsed.

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