Fact sheet – Pricing a first new brand of an existing pharmaceutical benefit

Page last updated: 1 December 2016

Formularies

Benefits listed on the PBS are allocated to a ‘formulary’ which, in essence, indicates whether the benefit is single-branded or multi-branded.  Formularies are allocated at the level of drug, so that all pharmaceutical items with the same drug have the same formulary.

Formulary 1 (F1) contains drug’s that:

  • have no brands of pharmaceutical items that are bioequivalent or biosimilar to each other (ie, does not have ‘multiple brands’);
    and
  • are not interchangeable at the patient level with a drug that has multiple brands listed on the PBS (i.e. not part of a therapeutic group that has multiple brands).

Formulary 2 (F2) contains all drugs (excluding single brand combination drugs) that do not meet the criteria for F1, i.e.:

  • has multi-brands; and
  • drugs which are in therapeutic groups because they are interchangeable with other drugs that have multiple brands.

Single-brand combination drugs do not belong to either formulary, and are instead allocated to an administrative list called the Combination Drugs List (CDL).

16% Statutory Price Reductions

Responsible persons seeking to list the 'first new brand' of a pharmaceutical item for a drug and manner of administration already included on the PBS are required to offer a minimum 16% reduction in the approved ex-manufacturer price for the pharmaceutical item.  In accordance with section 99ACB or 99ACD (as relevant) of the National Health Act 1953, the minimum 16% mandatory price reduction applies to any new bioequivalent or biosimilar brand of any PBS listed pharmaceutical item that has not previously been subjected to a 16% reduction (or 12.5%, prior to February 2011).

The price reduction will flow on to other brands of items of that drug which share the same manner of administration as the new brand. If the new brand contains a drug in a Therapeutic Group, the reduction also flows on to the items containing other drugs in that Group that have the same manner of administration.  If the new brand contains a drug which is a component of a drug on the Combination Drug List, the reduction also generally flows on to that component of the combination drug.