Guarantee of supply
Page last updated: 28 March 2019
The details and conditions of guarantee of supply requirements
The guarantee of supply requirements apply to newly listed brands that are bioequivalent or biosimilar to an existing listed brand and have the same drug and manner of administration.
The new brand could be listed under the same pharmaceutical item as the existing bioequivalent/biosimilar brand or as a different item. It is known as the guaranteed brand. Where two or more bioequivalent or biosimilar brands are listed on the Schedule of Pharmaceutical Benefits on the same date, they will each be subject to the guarantee of supply requirements (regardless of whether there is an existing bioequivalent item on the Schedule of Pharmaceutical Benefits).
The Responsible Person for a guaranteed brand must be able to supply the guaranteed brand within a reasonable period after receiving a request to supply from a wholesaler or approved pharmacist.
Listing a new item does not trigger a guarantee of supply requirement, unless that item is bioequivalent or biosimilar to an existing item.
The guarantee of supply requirements also apply to existing brands on the Formulary F2 (including F2A and F2T) that offer a voluntary price reduction which is accepted by the Minister and published on the Schedule of Pharmaceutical Benefits. If two brands offer the same reduced price (and these are accepted by the Minister) the brand that was first to offer that amount will become the guaranteed brand.
Where the guaranteed brand is supplied for a number of indications the supply requirement extends to prescriptions under all indications.
The guarantee of supply period begins on the day of the new bioequivalent or biosimilar brand listing or the effective date of a lower price offer and ends after 24 months unless another brand has taken over the obligation in which case it will end when that brand assumes the obligation.
The responsible person for the guaranteed brand will be responsible for complying with guarantee of supply provisions from the date of listing. This can be done by monitoring changes to the Schedule each month.
Where the responsible person wishes to advise a failure to supply a brand of an item listed on the PBS, or a belief that a failure to supply is likely to occur, the responsible person should email the completed Guarantee of Supply form to PBS Listings.
The guarantee of supply provisions will deter suppliers from entering the Australian market without a viable business model able to support their long term participation in the market. Interruptions to supply are disruptive for patients, prescribers and pharmacists. The provisions also ensure that the government has as much notice as possible about supply failures so that their impact on patients, prescribers and pharmacists can be minimised. These provisions are contained in Division 3C of Part VII (sections 99AE to 99AEL) of the National Health Act 1953 (the Act).
Guarantee of Supply – Rules
The Guarantee of Supply Requirement
Suppliers of a guaranteed brand of a pharmaceutical item are required to ensure that they are able to supply any order from a pharmacy within a reasonable period of time after receiving the order (sections 99AEB, 99AEE and 99AEF of the Act).
This requirement applies to new brands of pharmaceutical items of existing F2 medicines and to new brands of medicines moving to F2 from either F1 or the Combination Drugs List.
The requirement also applies to existing brands of medicines on F2 where the responsible person1 offers a price reduction which is accepted by the Minister. It does not include medicines on F1.
When two or more new bioequivalent or biosimilar brands of a pharmaceutical item of an F2 medicine list on the same day, they will all become the new guaranteed brands and will all be subject to the guarantee of supply provisions.
Guarantee of Supply Period
The guarantee of supply period for the guaranteed brand of the pharmaceutical item will be up to 24 months from the date of listing.
Guarantee of supply periods for a guaranteed brand can be shortened in the following circumstances:
- a new bioequivalent or biosimilar brand of that pharmaceutical item is listed, replacing the current guaranteed brand as the new guaranteed brand of that pharmaceutical item; or
- where the responsible person for an existing brand of a pharmaceutical item offers a price reduction that is accepted by the Minister, that brand of the pharmaceutical item replaces the current guaranteed brand to become the new guaranteed brand of the pharmaceutical item. Where more than one responsible person offers a price reduction for more than one brand of a pharmaceutical item, then the responsible person for the brand which was the first to offer the agreed price reduction becomes the responsible person for the new guaranteed brand.
These provisions are contained in subsections 99AEC(3) and 99AED(3) of the Act.
Inability to Supply and Failure to Supply – Duty of a Responsible Person to Notify the Minister
If a responsible person for a guaranteed brand forms the belief that they will be unable to supply or will fail to supply that guaranteed brand within a reasonable time, they must notify the Minister, in writing, of that belief.
If a responsible person is unable to supply or does fail to supply the guaranteed brand, they must notify the Minister in writing as soon as practicable of that failure or inability, unless they have already done so after earlier forming a belief that this would happen.
These provisions are contained in section 99AEG of the Act.
Penalties for Failure to Notify the Minister
A responsible person found guilty of failure to comply with either of these requirements to notify the Minister will face a maximum penalty of 60 penalty units.
This penalty provision is contained in subsection 99AEG(3) of the Act.
Consequences for Guaranteed Brands of Failure or Inability to Supply
In a situation where a failure to supply or inability to supply occurs, the Minister may:
- delist that brand; and/or
- delist other brands of that responsible person; and/or
- refuse to list new brands of that responsible person.
In deciding to take these actions the Minister may take into account a range of factors, such as the number of times a supply failed and the reasons for the failures, and the impact of such a decision on patient access to medicines.
These provisions are contained in section 99AEH of the Act.
The legislation does not create an offence for failure to supply per se because failure to supply may be beyond the control of the responsible person or may be reasonable in the circumstances.
Consequences for Other Brands
If the Minister delists a brand that failed to supply, and no other new brand lists, the Minister may take one or more of the following actions:
- increase the AEMP of other brands of the pharmaceutical item that received a price reduction when the delisted brand was originally listed (this applies only in circumstances where the brand that failed to supply triggered a statutory price reduction);
- move the medicine from F2 back to F1 (or back to the Combination Drugs List, if appropriate) (this applies only in circumstances where the brand that failed to supply triggered a drug to move from F1 to F2);
- revoke any voluntary price disclosure elections if requested by other responsible persons with other brands of that pharmaceutical item.
These provisions are contained in sections 99AEI to 99AEL of the Act.
1 Responsible person: the responsible person is the person who has notified the Minister under section 84AF of the Act that the person is or will be the supplier of a particular brand of a drug to wholesalers, or to approved pharmacists. The responsible person must be the same for all pharmaceutical items marketed under a particular brand.
* This page provides information on Pharmaceutical Benefits Scheme (PBS) Reform and does not constitute legal advice.