# 9. Pricing PBS Prescriptions

### Pricing principles

The same pricing principles apply to all PBS prescriptions.

For ready-prepared pharmaceutical benefits, payment is made on the basis of the lowest-priced brand.

For a pharmaceutical benefit not listed as a ready-prepared item, and where a formulation title is stated but no formulary specified, payment is made on the basis of precedence given to formularies by State/Territory legislation.

Prices published in the Schedule do not include any component for goods and services tax (GST).

### Pricing dates

Ready-prepared pharmaceutical benefits are priced on the first day of February, April,
June, August, October and December for items supplied as from each of those days respectively.

Extemporaneously-prepared pharmaceutical benefits and containers are priced on the
first day of May each year for items supplied as from the first day of August that
year.

### Pricing ready-prepared items

#### For maximum quantities

The price payable for a pharmaceutical benefit is shown in the Schedule against the item. The price is for the maximum quantity available.

The maximum quantity of some pharmaceutical benefits, such as eye drops and oral suspensions, has been determined as a single pack corresponding to the manufacturer's pack. These packs cannot be broken, so if a PBS prescription calls for less, the maximum quantity should be supplied and claimed from the Department of Human Services. Packs not to be broken are indicated by a double dagger (‡) in the Schedule.

#### For lesser quantities

For items where the standard pack is the same as the maximum quantity, and the pack can be broken, the price payable for a lesser quantity is established as follows:

- an amount equal to the dispensing fee, and if applicable the dangerous drug fee, is deducted from the benefit price as shown in the Schedule;
- to this new amount, a wastage percentage is applied, determined from the Wastage Factor Table;
- then the amount equal to the dispensing fee, dangerous drug fee (if applicable), and appropriate container fee, is added.

In no case shall the price for a broken quantity be more than the dispensed price of the Schedule's maximum quantity.

When a standard pack is not the same as the maximum quantity, the price of the pharmaceutical benefit concerned has an asterisk next to it and the standard pack rate is set out in Section 3 of the Schedule. The price payable for the quantity supplied is established by:

- applying the appropriate wastage table percentage to the standard pack rate;
- then adding an amount equivalent to the dispensing fee, the dangerous drug fee where applicable, and the appropriate container fee.

In no case shall the supply of a broken quantity, which is less than the item's maximum quantity, cost more than the dispensed price for the maximum quantity.

No container fee is payable when the quantity of pharmaceutical benefit supplied is more than the quantity contained in the standard pack.

#### Wastage table percentage

The following Wastage Factor Table is used to calculate the price payable for quantities supplied from the standard pack.

##### Wastage Factor Table

Column A - | 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, 75, 80, 85, 90, 95, 100 |

Column B - | 10, 18, 26, 32, 38, 44, 50, 54, 58, 62, 66, 70, 74, 78, 82, 86, 90, 94, 98, 100 |

The appropriate wastage table percentage is as follows:

- the percentage of the amount supplied from the amount in the standard pack is determined; and
- where this percentage is the same as a percentage listed in Column A of the table, the percentage used is the figure shown in Column B; or
- where the percentage is not the same as a percentage in Column A, then the nearest upward percentage in Column A applies, and the percentage used is the figure in Column B.

For example, 24 tablets are supplied from a standard pack of 100. Thus 24 per cent of the number contained in the standard pack is supplied. As this percentage does not appear in Column A, the next higher (i.e., 25 per cent) is used. Reading down from 25 per cent to Column B, the wastage table percentage is found to be 38 per cent.

### Pricing extemporaneously-prepared items

#### General

The price payable for supplying the maximum quantity of standard formula preparations is shown in the Standard Formulae List.

The following principles apply in determining prices of all pre-priced extemporaneous formulae on the list.

They also apply when a pharmacist elects to price extemporaneous PBS prescriptions outside the list, including exceptional PBS prescriptions.

The amount payable is the sum of:

- the recovery price of each ingredient as shown in the Drug Tariff;
- the price of the appropriate container as shown in the price section; and
- a dispensing fee as shown in the price section.

#### Pricing of ingredients

When the quantity dispensed is not specified in the Drug Tariff, the recovery price is as follows:

- determine the basic pricing unit relative to the quantity dispensed by referring to
the following table:
**Quantity****Basic Pricing Unit**Up to and including 700 mg 100 mg price rate Over 700 mg and up to and including 1 g price as if 1 g Over 1 g and up to and including 7 g 1 g price rate Over 7 g and up to and including 10 g price as if 10 g Over 10 g and up to and including 80 g 10 g price rate Over 80 g and up to and including 90 g price as if 80 g Over 90 g 100 g price rate - find the recovery price of the basic pricing unit by applying the following quantity divisors to the recovery price shown for the ingredient in the Drug Tariff:
- 100 g price is 500 g price divided by 5, or 1 kg price divided by 10
- 10 g price is 100 g price plus 12.5 per cent divided by 10
- 1 g price is 10 g price plus 25 per cent divided by 10
- 100 mg price is 1 g price plus 25 per cent divided by 10
- find the recovery price by multiplying the price of the basic pricing unit – as established in 2 – by the fraction that the quantity dispensed bears to the basic pricing unit.

For pricing purposes the quantity is to be taken to the next upward 50 milligrams or 0.05 millilitres.

The minimum recovery price for any ingredient is one cent. In other cases where a fraction of a cent occurs, the price is to be taken to the nearest cent (a half cent being taken up to the next cent).

In no case shall the recovery price for a quantity of an ingredient exceed the recovery price for a greater quantity of that ingredient.

Where liquids are purchased by weight, the recovery price includes the 'Specific Gravity Factor'.

Special pricing provisions apply to drugs marked '(a)' or '(b)' in the Drug Tariff.

For drugs marked '(a)', the pricing rules shown above apply to quantities up to the quantity listed in the Drug Tariff. Greater quantities are priced on a linear basis: the recovery price is ascertained by multiplying the fraction that the quantity dispensed bears to the quantity listed in the Drug Tariff by the price shown for the quantity listed.

Drugs marked '(b)' are packed sterile or are unstable, and all quantities are priced as if whole pack(s) were required. The recovery price is ascertained by multiplying the fraction that the quantity dispensed bears to the quantity listed in the Drug Tariff, taken to the next whole number, by the price shown for the quantity listed.

#### Pricing PBS prescriptions where extra ingredients are added to a formula

Where the vehicle is liquid and one or more solid ingredients are added, displacement of the liquid by the solid ingredients is disregarded for pricing purposes.

#### Containers

When a quantity is for more than the container sizes listed in this Schedule, payment will be made as if that quantity had been supplied in the minimum number of containers necessary to supply that quantity.

A double size container is allowed for bulk powders.

#### Special provisions for extemporaneous PBS prescriptions outside the Standard Formulae List

If a pharmacist elects to price extemporaneous PBS prescriptions outside the Standard Formulae List, there can be no variation for three months. This applies to all extemporaneously-prepared formulae not on the list, and includes both PBS and RPBS prescriptions.

If a pharmacist does not elect to price out these PBS prescriptions, he/she will be paid at an average reimbursement rate.

Under this system, payment is made on the basis of an average 10 g/mL rate applied to the category of preparation concerned, i.e., the price will be determined by multiplying the appropriate 10 g/mL rate by the number of 10 g/mL units supplied and adding container and dispensing fees. For example, an 80 mL mixture would be priced at eight times the average 10 mL rate for mixtures, with container and dispensing fee added.

The average 10 g/mL rate for each type of preparation is calculated monthly. It applies to PBS prescriptions supplied in the following month.

PBS prescriptions ordering a combination of standard formula preparations fall outside the scope of the Standard Formulae List and therefore are subject to this section.

Any variant to a formula included in the list (adding or deleting an ingredient or varying the dose) takes the formula dispensed outside the list.

When an ingredient is added to a standard formula and the recovery price for the standard formula plus additive under the average price system is less than for the standard formula alone, the pharmacist may have the PBS prescription priced as a basic standard formula item.