Medicines Supply Security Guarantee
Page last updated: 1 April 2024
Global medicine shortages interrupt the supply of medicines that are the mainstay of treatment for some of the most prevalent health conditions in the Australian community. In 2019 and 2020, medicines supplied by manufacturers for $4 or less per pack were the most susceptible.
Amendments made by the National Health Amendment (Enhancing the Pharmaceutical Benefits Scheme) Act 2021 (Cth) (Amendment Act) give effect to the commitments in the new Strategic Agreements with the medicines industry, which includes the Minimum Stockholding Requirements. The Minimum Stockholding Requirements are designed to help protect Australian patients, pharmacists, and prescribers from the impact of global medicines shortages.
From 1 July 2023, Minimum Stockholding Requirements apply which require manufacturers to hold a minimum of either 4 or 6 months’ of stock in Australia for certain PBS listed medicines, referred to as ‘Designated Brands’. While these measures will not prevent shortages that are outside of the control of Australian companies, they will help to ensure that Australian manufacturers are better placed to continue supply when global disruptions occur. Greater buffers allow time for supply disruptions to be resolved and ensure better continuity of supply for Australians, including through identifying alternative sources of supply (where possible).
The investment by the medicines industry in managing supply chain risks through the minimum stockholding requirements is supported by the Australian Government through one-off price increases on 1 October 2022 and floor price protections for low-cost medicines.
Price increases on 1 October 2022
A one-off price increase was applied on 1 October 2022 to low-cost medicines that met the criteria under section 104B of the Amendment Act. For medicines on the F2 formulary, where the Approved Ex-Manufacturer Price (AEMP) on 30 September 2022 was:
- $2 or less, the AEMP increased to $2.50;
- more than $2 but not more than $3, the AEMP increased by $0.50; and
- more than $3 but less than $3.50, the AEMP increased to $3.50.
Medicines that are listed in Schedule 2 of the Poisons Standard, in a quantity that is equal to or greater than the PBS quantity, did not receive a price increase.
A list of medicines subject to price increases on 1 October 2022 and the confirmed AEMP can be found in the 1 October 2022 price increase list (Excel 199 KB).
Further information regarding the 1 October 2022 price increases is available in the ‘PBS Price Increases on 1 October 2022 – Fact Sheet’ (PDF 216KB) - (Word 42KB).
Minimum Stockholding Requirements
From 1 July 2023, Minimum Stockholding Requirements apply under Division 3CAA of the National Health Act 1953 (Cth) (the Act).
The minimum stockholding requirements apply for ‘designated brands’ which meet one of the following criteria under s99ADHC of the Act:
- the drug/MoA of the brand’s pharmaceutical item has been on F2 for at least 42 months and at least 30 months must have passed since the first price disclosure price reduction for any brand of the same drug/MoA (42-month clock) (s99ADHC(1)(a)). A drug/MoA is taken to have been on F2 for at least 42 months if at the end of the previous data collection period, the drug/MoA has been on F2 for at least 42 months, and on a day at least 42 months before the end of the previous data collection period, the drug/MoA was multi-branded (s99ADHC(6)); or
- the AEMP of the brand is $4 or less (s99ADHC(1)(b)); or
- the AEMP of the brand has been increased on and after 1 July 2022 through a new price agreement and a determination is in force in relation to the brand (s99ADHC(1)(c)); or
- the AEMP of the brand has received a 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 excluded from the minimum stockholding requirements.
If the designated brand has received a price increase on or after 1 July 2022, the Responsible Person for the brand is 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 is 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.
Minimum Stockholding Guidelines
The PBS Minimum Stockholding Guidelines are available at the links below and were published on 21 October 2022.
The purpose of the Guidelines is to assist Responsible Persons to comply with the minimum stockholding requirements outlined in Part VII, Division 3CAA of the Act, which commences on 1 July 2023. The Guidelines summarise compliance requirements and provide additional supporting detail outlining minimum stockholding requirements, reporting requirements, compliance obligations, and the process for Responsible Persons to request a Ministerial Determination of ‘another quantity’.
Ministerial determinations of ‘another quantity’
The Minister can exercise their discretion to make a minimum stockholding determination of ‘another quantity’ where there are practical barriers to comply with the requirement to hold 4 or 6 months of stock.
The Guidelines describe how Responsible Persons can request a Ministerial determination for another stockholding quantity for a particular brand, including the matters the Minister may consider relevant. For further detail, including the timelines for applications to be made, refer to Section 6 of the Guidelines.
To submit an application for a Ministerial determination, after reviewing the Guidelines, Responsible Persons should complete the application form linked below, and submit the application form together with any supporting documents to pbsstockholding@health.gov.au
Stockholding Disclosure Requirements
Responsible Persons are required to provide stockholding disclosure every 6 months, by the following deadlines for each reporting period.
- By 11 November for the period 1 April - 30 September
- By 12 May for the period 1 October - 31 March
Stockholding data is disclosed to the Price Disclosure Data Administrator (PDDA). Further details of the stockholding disclosure requirements including what data is required to be disclosed are in Section 7.1 of the Guidelines.
Requirement to report breaches
From 1 July 2023, Responsible Persons are required under the Act to notify the Department as soon as practicable of any likely or actual breach of the minimum stockholding requirement. Further details of this obligation are in Section 7.2 of the Guidelines.
If a Responsible Person notifies of a likely breach, which later proceeds to an actual breach, the Responsible Person must also submit an actual breach notification.
Notifications of a likely or actual breach of the minimum stockholding requirements must be provided on the following form and submitted by email to pbsstockholding@health.gov.au
Instructions on how to complete the notification form are included on page one. If you require the Notification Form in a Word document format for accessibility reasons, please email pbsstockholding@health.gov.au
For any other enquiries regarding the Minimum Stockholding Requirements, please email the Department at pbsstockholding@health.gov.au
Designated Brands subject to minimum stockholding requirements
A list of designated brands subject to stockholding requirements from 1 July 2023 is published on the Designated Brands page.
An updated designated brands list is published biannually on 1 April and 1 October. The updated list includes:
- A current list of designated brands as at the date the list is published.
- 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 brands list includes the number of months which the Responsible Person is required to keep in stock for each brand which is 4 or 6 months ‘usual demand’ or ‘another quantity’ determined by the Minister.
