Cost Recovery, Fees and charges - Frequently Asked Questions

Page last updated: 27 August 2015

 

 

What is PBS cost recovery?

From 1 January 2010, Amendments to the National Health Act 1953 provide authority for the cost recovery of services provided by the Commonwealth from applicants seeking new, or changes to existing, listings of medicines, vaccines and other products or services on the PBS or NIP. The operational processes of PBS cost recovery are prescribed by the National Health (Pharmaceuticals and Vaccines – Cost Recovery) Regulations 2009.

Cost recovery provides an important means of improving the efficiency with which Australian Government products and services are produced and consumed. The cost of evaluating, pricing and listing medicines, vaccines and other products or services on the PBS or NIP was previously fully funded by the taxpayer. 

Does PBS cost recovery affect the price of my medicines and vaccines supplied under the PBS or NIP?

No. Medicines subsidised under the PBS are provided directly to the Australian community by approved pharmacists, medical practitioners and hospitals. Co-payment and other charges are not affected under the cost recovery arrangements. Your co-payment will not increase as a result of cost recovery.

Cost recovery does not affect the current NIP arrangement whereby the States and Territories provide vaccines free of charge to health providers to administer to patients in the community.

Is the independence of the Pharmaceutical Benefits Advisory Committee (PBAC) compromised by PBS cost recovery?

No. The PBAC remains an independent, essential and valued expert body. To ensure this independence, the Department’s funding of the assessment and listing process remains separate to the recovery of fees. Fee revenue is returned to Government Consolidated Revenue.

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Which services are being cost recovered?

The costs for PBAC and associated services related to evaluating, pricing and listing products on the PBS and the NIP are being recovered.

What consultations were undertaken prior to implementation of the cost recovery measure?

Consultations were undertaken with key stakeholders, including pharmaceutical industry peak bodies, health professional groups and consumer representative bodies over a number of years. The outcomes of these consultations were considered when drafting the legislation and regulations.

The PBS cost recovery measure was subject to extensive Parliamentary scrutiny, including debate and two Senate Community Affairs Committee Inquiries between May and September 2008. The second Senate Community Affairs Inquiry was into the draft Regulations. Both Inquiry Reports recommended that the cost recovery measure proceed.

The major issue raised in both inquiries was ensuring continued access to PBS-listed products for small patient population groups, such as Aboriginal and Torres Strait Islander patients, and patients receiving palliative or paediatric care.

If there is a shortfall in overall fee revenue, are services affected?

No. The Department’s funding of this process remains separate to the recovery of fees. Fee revenue generated is returned to Government Consolidated Revenue.

Are all applications in relation to listing on the PBS or NIP subject to fees?

No. In certain circumstances an exemption or waiver of fees may apply.

Fee exemptions

Some submissions will be exempt from fees. These are detailed in Part 5.1 of the Regulations. Examples include submissions identified by the TGA as an ‘orphan drug’ or where a medicine is for ‘temporary supply’.

Temporary supply may be required where a listed PBS product manufacturer, or sponsor, has temporary difficulties in supplying a registered medicine which the Department deems essential for patient care.

If the TGA is willing to grant permission for temporary supply of a similar product through granting an exemption from entry in the Australian Register of Therapeutic Goods (ARTG) until normal supply of the registered medicine can be restored, the Department, on the recommendation of the PBAC, may list this product on the PBS on a temporary basis.

In a national emergency, the Secretary to the Department may consider the supply of a drug, medicinal preparation or vaccine to be necessary because of a public health event of national health significance; or, because of a public health emergency under section 2B or 12A of the Quarantine Act 1908, and may exempt submissions from cost recovery fees for the PBAC assessment and PBS or NIP listing process.

The applicant must provide supporting documentation at the time of lodgement to verify the status of exemption sought under the categories of ‘orphan drug’ or ‘temporary supply’.

Fees waivers

An applicant may apply to the delegate of the Secretary to waive the fee if the submission involves a public interest component and where payment of the fee would make proceeding with the application financially unviable. Further details may be found in Part 5 of the Regulations.

The applicant must provide supporting documentation at the time of lodgement with the application for waiver. The delegate may request further information from the applicant, and/or other sources, before making a decision.

Can fees be waived before lodgement of a PBAC submission?

No. The fee cannot be waived before lodgement of a PBAC submission. The fee can only be waived on receipt of the actual submission. However, the Department can provide an early indication about whether a particular submission fits within the fee waiver requirements if discussed at a PBAC pre-submission meeting.

Pre-submission meetings can take place at most times before lodgement of the submission for PBAC consideration. However, meetings are not available in the week before the deadline for lodging a major submission.

Discussions on fee waiver at a pre-submission meeting should be supported by a short document containing information on what the medicine, vaccine or other product seeks to do, its benefit, the target population including estimated utilisation and a brief outline of the financial viability or otherwise of the application.

At the pre-submission meeting, senior PBAC Secretariat staff will be able to provide an initial, non-binding, assessment against the waiver criteria. The provisional assessment will permit the company to make a reasonably informed business decision whether or not to proceed with developing the submission.

A company may seek further meetings before lodging the application to ensure the submission still meets the ‘provisional fee waiver’ criteria as the business case and data develop over time.

Will there be capacity to review a fee decision? 

Should the applicant disagree with the fee determination of the delegate, the regulations provide for a review process. Further details on rights of review can be found in Part 6 of the Regulations.

How does cost recovery operate?

Applicants are charged fees for services provided in relation to their submission to have a medicine subsidised. When a submission is lodged the fee category is determined and a request for payment is sent to the applicant. The submission process continues and once payment has been received, the submission may be considered by the PBAC.

Do I have to complete an application form?

Yes. An application form, titled ‘PBS service fee application form: to accompany PBAC submission (Word 320KB) (hereafter, the Application Form) will need to be completed for any submission to list a new drug, to amend or extend an existing listing.

The Application Form must be completed by the applicant, signed by an authorised person, and lodged with the submission to the PBAC Secretariat. It requires a ‘self-assessment’ by the applicant as to the category of the submission to the PBAC. In most cases the category is reasonably evident to the applicant in the preparation of the submission. Should the applicant be unsure of the category they are encouraged to seek clarification from the PBAC Secretariat before submitting the application.

The fee category ‘self-assessment’ is not binding on the Department. The Department will determine the fee payable after consideration of the applicant’s ‘self-assessment’ and advise in writing, the fee payable. If intending to apply for a fee exemption or a fee waiver, the applicant is required to nominate the fee category that would apply in the absence of the exemption or waiver.

Following receipt of the submission and the Application Form by the Department, and following fee category assessment by Departmental staff, the Application Form will be separated from the submission. The information included on the Application Form will be used to initiate fee processing only and will not be provided to the PBAC.

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What are the submission categories?

The submission categories are defined in the National Health (Pharmaceuticals and Vaccines – Cost Recovery) Regulations 2009.

The definitions in the Regulations are explained in the Explanatory Statement (Minute No. 42 of 2009).

The Regulations and the Explanatory Statement do not introduce any changes to the way the PBAC Secretariat currently evaluates submissions.

PBS Cost Recovery Fee Category Description
PBS Cost Recovery Fee Category Description

Submission Category

Description

PBAC Evaluation – Major

(Regulations 2.3 - 2.6)

In general, a major application seeks to list new drugs or medicinal preparations for PBS subsidy or to make substantial changes to current listings.

An application for a variation to an existing listing may also be major if it requires the PBAC to apply a health advantage test (as defined in reg. 2.4).

Major evaluations are complex evaluations of drugs for which PBS listing may have significant financial implications.

PBAC Evaluation – Minor

(Regulations 2.7 – 2.11)

In general, minor applications include those for new forms of an already listed drug or medicinal preparation or changes to the conditions of their prescription or supply.

These applications involve changes to existing items that do not have significant cost implications but do require consideration by PBAC for clinical effectiveness and/or potential impact on the PBS.

An otherwise major application may be deemed minor if it involves a resubmission (reg. 2.10) or a medicinal food (reg. 2.11).

PBAC Secretariat Listing

(Regulations 2.12, 2.13)

 

A secretariat listing is a minor application that is straightforward and not considered as a separate agenda item at a meeting of PBAC. PBAC still decides the merit of each application. Secretariat listings may be considered in or out of session by PBAC.

Generic

Listing of a new brand medicine

(Regulation 2.14)

Generic applications occur where a new product is listed on the PBS because it is bioequivalent or biosimilar and the price is already determined by an existing item.

However, if the application is in respect of a product listed in Schedule 2 of the Regulations (currently somatropin and glucose indicators), it is deemed to be an exception under reg. 2.9 and 2.13 and is classified as minor or PBAC Secretariat Listing.

Independent Review

(Regulation 4.3)

Independent review is available for applicants where the PBAC has declined to recommend the listing of a new drug on the PBS or in certain circumstances where PBAC has not recommended the listing of an additional indication of an already listed drug – refer to www.independentreviewpbs.gov.au for additional information.

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What process must be followed for a major submission?

It is recommended, although not mandatory, that an authorised representative of the applicant contact the PBAC Secretariat for a preliminary discussion about the intended submission. At these pre-submission meetings, the Secretariat can provide advice on the application process and will provide guidance, where appropriate, on fee exemptions and waivers.

The Application Form must be downloaded from the PBS website and completed by an authorised representative of the applicant. It is important that the Application Form is completed fully to reduce the risk of delay in processing of the submission.

On the Application Form, the applicant is required to nominate the fee category for the applicant’s submission. That is, the Major submission category should be selected. If intending to apply for a fee exemption or a fee waiver, the applicant is required to nominate the fee category that would apply in the absence of the exemption or waiver – in this case, the Major submission category.

The submission is to be compiled in the usual manner, in accordance with the Guidelines for preparing submissions to the Pharmaceutical Benefits Advisory Committee (the Guidelines). These Guidelines are periodically updated.

The Application Form should be forwarded to the PBAC Secretariat with the submission. The address for major submissions is:

Mailing address:

PBAC Secretariat
MDP 952
Pharmaceutical Evaluation Branch
Department of Health
GPO Box 9848 
CANBERRA ACT 2601

Physical address:

PBAC Secretariat
Level 9
Sirius Building
23 Furzer Street
Phillip ACT 2606

An applicant is not required to forward fee payment with the submission. Following receipt of the submission and a Departmental assessment of the fee category, a request for payment letter with an accompanying invoice will be forwarded to the Responsible Person nominated on the Application Form.

What process must be followed for a minor submission?

It is recommended, although not mandatory, that an authorised representative of the applicant contact the PBAC Secretariat for a preliminary discussion about the intended submission. At these pre-submission meetings, the Secretariat can provide advice on the application process and will provide guidance, where appropriate, on fee exemptions and waivers.

The Application Form must be downloaded from the PBS website and completed by an authorised representative of the applicant. It is important that the Application Form is completed fully to reduce the risk of delay in processing of the submission.

On the Application Form, the applicant is required to nominate the fee category for the applicant’s submission. That is, the Minor submission category should be selected. If intending to apply for a fee exemption or a fee waiver, the applicant is required to nominate the fee category that would apply in the absence of the exemption or waiver – in this case, the Minor submission category.

The submission is to be compiled in the usual manner, in accordance with the Guidelines for preparing submissions to the Pharmaceutical Benefits Advisory Committee (the Guidelines). These Guidelines are periodically updated.

The Application Form should be forwarded to the PBAC Secretariat with the submission. The address for minor submissions is:

Mailing address:

PBAC Secretariat
MDP 952
Pharmaceutical Evaluation Branch
Department of Health
GPO Box 9848 
CANBERRA ACT 2601

Physical address:

PBAC Secretariat
Level 9
Sirius Building
23 Furzer Street
Phillip ACT 2606

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On occasion, a PBAC Secretariat review of the submission will indicate that the submission is suitable for PBAC Secretariat Listing without referral to the PBAC. The applicant will be notified of this decision. The fee payment amount relevant to PBAC Secretariat Listing will apply.

An applicant is not required to forward fee payment with the submission. Following receipt of the submission and a Departmental assessment of the fee category, a request for payment letter with an accompanying invoice will be forwarded to the Responsible Person nominated on the Application Form.

What process must be followed to apply for listing of a new brand of an existing listed product (generic listing)?

In respect of listing of a new brand of an existing listed product it is not necessary that the applicant contact the PBAC Secretariat for a preliminary discussion about the intended submission. However, if there is any uncertainty about the nature of the submission (for example, where potential exists for the submission to fall within the minor submission category), the applicant is advised to contact the PBAC Secretariat for clarification. At these pre-submission meetings, the Secretariat can provide advice on the correct submission category and the relevant application process. The PBAC Secretariat can also provide guidance, where appropriate, on fee exemptions and waivers

Completion of an Application Form is not required for submissions for new brand (generic) listings.

An application for listing a new brand (generic) equivalent of an already-listed drug does not usually require a submission to PBAC. Applications should be sent to the Listing Unit within the Pharmaceutical Evaluation Branch. The Listing Unit Requirements outline the information that needs to be submitted for these applications. Further information can be obtained by contacting the Listing Unit.

The address for the Listing Unit is as follows:

Mailing address:

Listing Unit
MDP 952
Pharmaceutical Evaluation Branch
Department of Health
GPO Box 9848
CANBERRA ACT 2601

Physical address:

Listing Unit
Level 9
Sirius Building
23 Furzer Street
Phillip ACT 2606

An applicant is not required to forward fee payment with the submission. Following receipt of the application and a Departmental assessment of the fee category, a request for payment letter with an accompanying invoice will be forwarded to the Responsible Person nominated by the applicant.

What are the pricing fee categories?

The pricing categories are defined in the National Health (Pharmaceuticals and Vaccines – Cost Recovery) Regulations 2009.

The definitions in the Regulations are explained in the Explanatory Statement (Minute No. 42 of 2009).

The pricing assessment category will not necessarily be determined by the submission evaluation category, but will reflect the extent of the work required of the Pharmaceutical Benefits Pricing Authority.

Pricing fee categories

Pricing Category

Description

Complex – Pricing

(Regulation 3.3)

 

Complex pricing negotiations are those that involve an increase in the cost to government or require calculation of dose relativity to be undertaken during the course of pricing negotiations, or where the Commonwealth and the applicant enter into a deed or deeds of agreement relating to the supply of the proposed or currently listed drug, special pharmaceutical product or designated vaccine subject to the application.

Simple – Pricing

(Regulation 3.4)

Simple pricing negotiations are those that require consideration by the PBPA and will not involve an increase in the cost to the Commonwealth in relation to the supply of pharmaceutical benefits.

Secretariat – Pricing

(Regulation 3.5)

A ‘Secretariat – Pricing’ application is considered as a PBAC Secretariat Listing and is not considered by the PBPA.

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Fees and payments

The recovery of fees associated with the evaluation and listing of medicines, vaccines and other products or services on the PBS and NIP commenced on 1 January 2010.

The prescribing regulations that underpin PBS and NIP cost recovery are the National Health (Pharmaceutical and Vaccines – Cost Recovery) Regulations 2009.

Part 4.7 of the regulations provides for the annual indexation of fees based on increases in the Consumer Price Index.

The fourth indexation of these fees, in line with the annual CPI increase of 1.3 per cent, will take place on 1 July 2015. The adjusted fees are detailed below.

Fee Structure from 1 July 2015
Cost Recovery Fee Structure from 1 July 2015
Lodgment Pricing Independent Review
Major $129,721 Complex $27,138 $129,721
Minor $13,568 Simple $6,682
Secretariat $1,085 Secretariat $1,085
Generic $543

Should you have any queries, please email PBS Cost Recovery.

How are the fees determined?

Fees reflect the cost of processing submissions and arranging listing on the PBS.

How and when are the cost recovery measure and the fees reviewed?

The PBS cost recovery legislation required an independent review of the cost recovery arrangements to commence as soon as possible after the second anniversary of the Bill becoming law, that is, around July 2011. The Review was completed in November 2011 and the resultant report will be tabled in Parliament.

In addition, the Department is providing ongoing monitoring of fees to ensure they remain at an appropriate level. In accordance with the Australian Government cost recovery guidelines, a full review will be conducted within five years of commencement.

When do I need to pay?

Three payment points have been identified.

1. When lodging a submission (includes resubmissions).

2. At completion of pricing negotiations.

3. At request for an independent review of a PBAC decision.

Fees are to be paid by the due date indicated in the invoice. The invoice will be sent by email and post. Please do not forward payments before an invoice is received from the Department. In some circumstances, where short timeframes are required before the Department incurs major expenses, for example undertaking an independent review, a 14 day terms of trade for payment will be required.

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How do I pay?

Payment should be made by electronic funds transfer (EFT) to the account nominated on the invoice. A request for payment letter, which will accompany the invoice, will advise the applicant of a Unique Identifying Number assigned by the Pharmaceutical Evaluation Branch to identify the application throughout the fee process. The invoice number must be entered in the free text portion of the EFT transaction when paying.

Fees must be paid in full at the time of payment. Each submission must be accompanied by an individual full payment; that is, if two submissions are lodged, two EFT payments must be made. Payments cannot be grouped into one, as each submission will have its own Unique Identifying Number.

Payment by instalment will not be accepted unless by prior agreement with the Department’s delegate. Partial payments may only be accepted in exceptional circumstances and must be agreed to, in advance, by the Department’s delegate.

What do I need to do if my company has a computerised financial control system and we need to add the Department of Health to the system for payment processing purposes?

You should contact the PBS cost recovery team advising them of the issue and providing a copy of the form used by your company detailing the information required. The PBS cost recovery team can be contacted via email (PBScostrecovery@health.gov.au).

Please allow at least a week for the provision of such information. Companies are welcome to lodge these requests before receiving an invoice from the Department.

What happens if the fee is not paid or is late?

If the lodgement fee has not been received by the due date, as outlined in the invoice’s terms of trade, the Department may halt further work on processing the submission until the fee is paid. Before work halts, or referral for debt recovery action, the Department will contact the applicant.

Unpaid fees shall be a debt owing to the Commonwealth and will be subject to standard Commonwealth debt recovery processes. 

Will ad hoc price review submissions to the PBPA in relation to an existing listing incur a fee?

No. A fee will apply to ad hoc price reviews initiated by the Department. However, where an applicant company initiates a price review request, this action will fall under the cost recovery guidelines. The pricing fee category of complex, simple or PBPA Secretariat Listing will be applied depending on the amount of work involved.

What happens if an applicant withdraws a submission?

An applicant may withdraw a submission at any time after lodgement. If it is withdrawn in the first 14 days following receipt of advice of the fee payable, no fee is payable. If for any reason the fee has already been paid, the applicant is entitled to a full refund of any fees paid. If the submission is withdrawn after 14 days have passed from advice of the fee payable on the invoice (that is, on or after day 15), the full fee remains payable.

If the applicant wishes to withdraw a submission, the request must be in writing, on appropriate company letterhead and signed by a suitably authorised representative.

What are the critical times associated with lodgement fees?

Under the Regulations, some decisions or actions in respect of fee payments, whether decisions or actions on the part of the applicant or on the part of the Department, must occur within a prescribed period. This applies particularly where the Department is likely to incur significant expense in the event of delay.

In respect of decisions made by the applicant, critical time frames include:

Applicant seeking a full refund of a fee following withdrawal of the application.

Written notice of withdrawal must be forwarded to the Department within 14 days of receipt by the applicant of advice of the fee payable.

Applicant seeking internal review of a Departmental decision with regards to evaluation fee category.

Request for review must be made within 14 days of receipt by the applicant of Departmental invoice and notice of the evaluation category.

Applicant seeking internal review of a Departmental decision with regards to pricing fee category.

Request for review must be made within 14 days of receipt by the applicant of Departmental invoice and notice of the pricing category.

Applicant seeking internal review of a Departmental decision not to approve a request for fee waiver.

Request for review must be made within 14 days of receipt by the applicant of Departmental notice of the fee waiver decision.

 

 

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