Step 7: Entering agreements to share risk

Risk sharing arrangements can be recommended by the Pharmaceutical Benefits Advisory Committee (PBAC), the Pharmaceutical Benefits Pricing Authority (PBPA) or the Department of Health and Ageing, and are designed to help maintain the appropriateness and cost-effectiveness of listed medicines. 

These agreements are negotiated between officers of the Department of Health and Ageing, representing the Australian Government, and the sponsor of a medicine, and are formalised in a legal document called a ‘Deed of Agreement’.

In these negotiations, you may for example agree to enter a price volume agreement where you agree to reduce the price of your medicine by a percentage, once utililisation reaches an agreed limit.

• If making a submission on pricing for the PBPA you must lodge it with the PBPA secretariat by the cut off date.
• PBPA meets five to six weeks after the Pharmaceutical Benefits Advisory Committee (PBAC) meeting and considers such things as:
• information on the claims made in your submission
• advice from the PBAC
• information about the proposed price
• the price and use of comparative medicines
• the cost of producing the medicine and associated costs.
• PBPA may recommend that:
• the price is accepted 
• negotiations take place for a lower price, or prices within a specific range
• for some medicines, risk sharing arrangements be developed and agreed.

For more information, refer to the Guidelines for Deeds of Agreement

You can find contact details for the PBAC and PBPA on the PBS Contacts page