Designated Brands

Page last updated: 1 July 2022

From 1 July 2022, brands of pharmaceutical items that are ‘designated brands’ will be subject to floor price protections under s99ADHC of the National Health Act 1953 (Cth). Designated brands are subject to minimum stockholding requirements from 1 July 2023.

Designated brands meet one of the following criteria under s99ADHC of the Act:

  • the drug and manner of administration of the brand’s pharmaceutical item has been on F2 for at least 42 months, and at least 30 months have passed since the first price disclosure price reduction for any brand of pharmaceutical item with the same drug and manner of administration (42-month clock) (s99ADHC(1)(a));
  • the approved ex-manufacturer price (AEMP) of the brand is $4 or less (s99ADHC(1)(b));
  • the AEMP of the brand has been increased on and after 1 July 2022 through a new price agreement and the Minister has determined that the brand be designated (s99ADHC(1)(c)); and
  • the AEMP of the brand has received a one-off, automatic price increase on 1 October 2022 under s104B of the Act (s99ADHC(1)(d)).

Medicines that are listed in Schedule 2 of the Poisons Standard, in a quantity that is equal to or greater than the PBS quantity, are not designated brands.

Floor price protections

Designated brands with an AEMP of $4 or less are not subject to price reductions under Part VII of the Act. That is, they will not have their prices reduced as a result of an anniversary, first new brand, combination item flow-on or price disclosure reduction. The price may reduce below $4 through a price agreement between the responsible person and the Minister.

Designated brands with an AEMP of more than $4 are subject to the 30% threshold or the 12.5% average test and 10% threshold (see Price Disclosure Reduction thresholds below).

If a designated brand with an AEMP of more than $4 exceeds one of the thresholds, the price disclosure reduction will not reduce the AEMP any lower than $4. For example, if a designated brand has an AEMP of $4.50, a Weighted Average Disclosed Price (WADP) that exceeds the 12.5% average test and 10% threshold and will be subject to a 25% reduction, instead of a new AEMP of $3.38 applying, the new AEMP will be $4 and the designated brand is protected from any further price reductions.

A brand that is not a designated brand and hence not subject to floor price protections, may have price disclosure reductions (or other price reductions under Part VII of the Act) that reduce the AEMP below $4. Should this price reduction occur, the brand will become a designated brand once the price reduces to $4 or less.

Price Disclosure reduction thresholds for designated brands

A price disclosure reduction may occur when the unadjusted price reduction meets the relevant threshold. The relevant price disclosure thresholds are set out in s99ADH(1)(c) of the Act, and for designated brands are as follows:

  1. For designated brands with an AEMP of more than $4 – 30%; or
  2. For designated brands with an AEMP of more than $4, if there has been discounting averaging at least 12.5% over the last 3 data collection periods including the one for which calculations are performed and there has not been a price reduction under s99ADH of the Act – 10%.

Refer to the ‘s99ADH price reduction application decision tree’ in the Price Disclosure Reforms under the New Strategic Agreement Fact Sheet.

Discounting of designated brands

The investment which has been made by the Australian Government through one-off price increases for brands with an AEMP of less than $3.50 and floor price protections is intended to support minimum stockholding requirements under Division 3CAA of the Act. This investment is not to be passed on by industry as discounts or incentives.

If discounts or incentives are provided in relation to brands with an AEMP of $4 or less, they will be apportioned to the responsible person’s brands with AEMPs more than $4, as part of the calculations which are performed in step 3A in s73A of the Regulations to determine the WADP ($) for price disclosure purposes. Further information regarding price disclosure calculations is contained in the Price Disclosure Guidelines.

Under s99AEL of the Act, if incentives are offered for brands with an AEMP of $4 or less, the Minister has powers to:

  1. delist the brand that incentives have been offered for;
  2. delist a brand or brands of any pharmaceutical item of the responsible person;
  3. refuse to list a brand or brands of any pharmaceutical item of the responsible person; or
  4. refuse to declare a legal instrument drug, form, or manner of administration for a brand supplied by the responsible person.

Further information about the Minister’s powers is outlined in s99AEL of the Act.

Minimum Stockholding Requirements

From 1 July 2023, designated brands will be subject to the minimum stockholding requirements outlined under Division 3CAA of the Act.

If the designated brand has received a price increase on or after 1 July 2022, the Responsible Person for the brand will be required to hold 6 months’ supply of the brand’s ‘usual demand’. If the designated brand has not received a price increase on or after 1 July 2022, the Responsible Person will be required to hold 4 months’ supply of the brand’s ‘usual demand’. Usual demand is defined under section 85B of the National Health (Pharmaceutical Benefits) Regulations 2017 Regulations

For further information regarding stockholding requirements, see the Medicines Supply Security Guarantee page.

List of Designated Brands

A list of designated brands is available here (excel 126KB).

The list of designated brands published on 1 July 2022 includes a projected list of the designated brands which will be subject to minimum stockholding requirements from 1 July 2023.

An updated designated brand list will be published biannually on 1 October and 1 April. The updated list will include:

  1. A current list of designated brands as at the date the list is published.
  2. A projected list of the designated brands which will be subject to stockholding requirements 12 months after the publication of the projected list, to provide advance notice for responsible persons.

The designated brand list will include the number of months which the responsible person is required to keep in stock for each brand which will be 4 or 6 months or ‘another quantity’ determined by the Minister.