8.2 Finalisation of the budget impact
Page last updated: October 2016
The PBAC considers Section 4 (estimates of use and financial cost) in submissions to list medicines/vaccines on the PBS/NIP. Following a positive recommendation, the estimates of use are reviewed by departmental officers to check that each component of the estimates of use and costs would be correct at the expected time of listing and reflect the PBAC recommendation to the minister. These officers also review the financial model structure and inputs to ensure this is accurate and complete.
The finalised model of use through the PBS and the RPBS is provided to each sponsor of the medicine for review, comment and clarification. The sponsor is required to agree to the estimates of use and costs. Where a sponsor is unable to agree to the estimates of use and cost, the listing process will stop and a further submission to the PBAC may be required.
Finalisation of the agreed utilisation and financial impact requires an email from the sponsor documenting agreement of the:
- requested price (including published price if applicable)
- financial model supporting estimates of use and financial impact.
Following the sponsor’s agreement, the financial model is circulated to other areas of the Department of Health (eg Medical Benefits Division) and other affected government agencies.
If the listing is subject to an RSA or MAP, the agreed estimates form a basis for these arrangements (refer to Section 8.4).
8.2.1 Review of budget impact
The department reviews estimates of use and costs following the PBAC’s recommendation. The reviewed financial model is provided to sponsors.
Sponsors are given up to five business days to review and comment on the estimates of utilisation and financial impact. If a sponsor believes there are errors in the model, there is an opportunity to discuss the model with the department. Any substantial revision may require a new submission to the PBAC.
Following agreement of the estimates of utilisation and financial impact between the departmental officer and the sponsor, the other affected divisions of Health and portfolio agencies are approached to review the costs. A finalised cost to the Australian Government is considered by the Department of Finance. This finalised cost is included in the recommendation to list to the Minister for Health.
8.2.2 Budget impact timeframes
The financial impact of all listings on the PBS and the RPBS are considered by each responsible area of the Australian Government. The Minister for Health will also consider costs in relation to the Medicare Benefits Schedule, the Department of Human Services and any other area affected by a listing on the PBS and the RPBS schedules. Where the net cost to the Australian Government of listing a medicine is greater than $20 million in any of the forward years, the minister refers the listing to the Cabinet for consideration. Refer to Section 4 of the PBAC Guidelines for further details of the requirements for estimating budget impact.
Refer to Appendix A for contact details.