Medicines Supply Security Guarantee

Page last updated: 22 July 2022

Increasingly, global medicine shortages are interrupting 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 is designed to help protect Australian patients, pharmacists, and prescribers from the impact of global medicines shortages.

From 1 July 2023, Minimum Stockholding Requirements will apply where manufacturers will be required 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 will 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 risk 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 will apply on 1 October 2022 to low-cost medicines that meet 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 is:

  1. $2 or less, the AEMP will increase to $2.50;
  2. more than $2 but not more than $3, the AEMP will increase by $0.50; and
  3. more than $3 but less than $3.50, the AEMP will increase 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, will not receive a price increase.

A list of medicines subject to price increases on 1 October 2022 and the indicative AEMP can be found in the Indicative 1 October 2022 price increase list (Excel 75KB).

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 will apply under Division 3CAA of the Amendment Act.

The minimum stockholding requirements will apply for ‘designated brands’ which meet one of the following criteria under s99ADHC of the Act:

  1. 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 will be 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
  2. the AEMP of the brand is $4 or less (s99ADHC(1)(b)); or
  3. 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
  4. 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 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.

Stockholding Guidelines will be published in due course which will provide further details of the minimum stockholding requirements including reporting requirements, compliance obligations and the process for Responsible Persons to request a Ministerial Determination of ‘another quantity’ (s99AEKC).

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

  1. A current list of designated brands subject to stockholding requirements 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 i.e. 4 or 6 months or ‘another quantity’ determined by the Minister.