8.5 Finalisation of the budget impact
The PBAC considers Section 4 - Use of the medicine in practice in the PBAC Guidelines 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 Utilisation and cost model structure and inputs to ensure this is accurate and complete.
The utilisation and cost model of use through the PBS and the RPBS is provided to each applicant of the medicine for review, comment and clarification. The applicant is required to agree to the estimates of use and costs. Where an applicant 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 applicant documenting agreement of the:
- requested price (including published price if applicable)
- utilisation and cost model supporting estimates of use and financial impact.
Following the applicant’s agreement, the utilisation and cost model is circulated to other areas of the department (e.g. 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).
8.5.1 Review of budget impact
The department reviews estimates of use and costs following the PBAC’s recommendation. The reviewed utilisation and cost model is provided to applicants.
Applicants are given up to five business days to review and comment on the estimates of utilisation and financial impact. If an applicant 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.
The department will check the model has been provided in the correct format. The department will not accept utilisation and cost models that do not comply with the format specified on the PBAC website. Where the applicant believes that the standard template provided on the PBAC website is insufficient to complete the costing, additional calculations can be added, however any substantive change to the template should be discussed with the PBS Estimates team (refer to contact details in Appendix A). Failure to provide costings in the required format will lead to delays. The department will undertake compliance checks and advise the applicant within 3-5 business days whether the utilisation and cost model can progress to content assessment.
Following agreement of the estimates of utilisation and financial impact between the departmental officer and the applicant, 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.
8.5.2 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, Services Australia 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.