Ministerial Discretion to reduce or not apply Statutory Price Reductions

Page last updated: 1 April 2022

Under Division 3A of Part VII of the National Health Act 1953 (Act) the Minister for Health (or the Minister’s delegate) can exercise discretion to reduce or not apply the following Statutory Price Reductions (SPRs).

  • Anniversary price reductions (5, 10 and 15 year)
    An anniversary price reduction* applies to F1 medicines on the fifth anniversary (5 per cent reduction), tenth anniversary (5 per cent reduction) and fifteenth anniversary (26.1 per cent reduction to increase to 30 per cent reduction on 1 April 2027) of a drug being listed on the PBS.
  • First new brand reductions
    A first new brand price reduction is applied to existing PBS-listed products when the first new brand (the trigger item) that is bioequivalent or biosimilar and has the same drug and manner of administration as an existing item, lists on the PBS. The reduction that applies is 25 per cent off the current Approved Ex-Manufacturer Price (AEMP), or a reduction to bring the price to 60 per cent off the earliest of the 1 January 2016 or the date of listing AEMP. This includes first new brand reductions where the drug has been listed for between 5 and 10 years and the new brand is considered a new presentation (refer to New Presentation Guidance Material). All related brands that have the same drug and manner of administration as the trigger item, will also have their AEMPs reduced by the same percentage reduction.
  • Catch-up price reductions
    A catch-up price reduction* will apply on 1 April 2023 to brands of any drugs that have been listed on the PBS for fifteen years or more, that are not exempt items and have not taken a price disclosure reduction. The size of the catch-up price reduction is calculated in accordance with the formula outlined in section 99ACN(2) of the Act and will vary depending on previous reductions under Division 3A of the Act that have applied to the pharmaceutical item. The reduction will be up to a maximum of 36.82 per cent.
  • Combination flow-on price reductions
    A combination item is a drug that contains at least two drugs, where at least one drug is listed on the PBS. For example, drug Purple+Orange where drug Purple is PBS listed and drug Orange is not PBS listed.  When a PBS listed component is subject to a SPR, the SPR will automatically flow-on to that component in the combination item. Components that are not PBS listed will be subject to the same SPR as the listed component. The formulas for flow-on reductions to combination items are set out regulations 65A and 85A of the National Health (Pharmaceutical Benefits) Regulations 2017.

*All SPR reductions are capped at 60 per cent off (or 40 per cent of) the Listed Brand’s AEMP on 1 January 2016 or the AEMP at a later date of listing.

Guidance Material for Ministerial Discretion to reduce or not apply Statutory Price Reductions

Sponsors can make a request to the Minister for the exercise of discretion to reduce or not apply a SPR to a particular medicine.

In deciding whether to exercise their discretion, the Minister must take into account what the AEMP would otherwise be if they do not exercise discretion (i.e., what the new price would be if the full reduction applied) and may take into account any other matter that they consider relevant.

The process for seeking Ministerial discretion and a summary of some other matter that the Minister may consider relevant is outlined in the Ministerial Discretion Guidance Material (PDF 532KB) - (Word 130KB).

Making a request

All Ministerial discretion requests are cost recovered (fees are listed on the PBS website), and must be made through the Health Products Portal (HPP) using the ‘list management service requests’ submission type. All relevant information in the HPP form should be completed, which includes completing cost of goods information.

On 1 July 2022, a list of medicines subject to reductions occurring on 1 April 2023 (catch-up SPRs, anniversary SPRs and combination flow on SPRs) will be made available on the PBS website, including the indicative 1 April 2023 AEMP. Authorised Representatives will be able to apply for Ministerial discretion in accordance with the following timeframes.

Ministerial discretion application timeframes for SPRs occurring on 1 April 2023

Date

Milestone

1 Jul 2022

Publication of indicative list of medicines subject to 1 April 2023 reductions

Ministerial Discretion applications open

29 Jul 2022

Closing date for Ministerial Discretion applications

10 Oct 2022

Indicative Ministerial Discretion outcomes

(Responsible Persons will be provided with an opportunity to submit further information)

25 Oct 2022

Closing date for sponsors to submit additional information

15 Nov 2022

Sponsors notified of final Ministerial Discretion outcomes

15 Jan 2023

Closing date for 1 April 2023 delisting request

(Some delist requests may require PBAC consideration therefore a 1 April 2023 delist date cannot be guaranteed).

1 Apr 2023

Reduction Day

 

Ministerial discretion application timeframes for first new brand reductions

FNB application close

Originator notification

MD application close

Indicative MD outcome

Additional information due

Final MD outcome**

Reduction date

 

5 business days*

10 business days

20 business days

5 business days

10 business days

 

14 Apr 2022

26 Apr 2022

10 May 2022

7 Jun 2022

15 Jun 2022

29 Jun 2022

1 Aug 2022

1 Jun 2022

8 Jun 2022

23 Jun 2022

21 Jul 2022

28 Jul 2022

11 Aug 2022

1 Oct 2022

1 Aug 2022

8 Aug 2022

22 Aug 2022

19 Sep 2022

26 Sep 2022

11 Oct 2022

1 Dec 2022

30 Sep 2022

10 Oct 2022

24 Oct 2022

21 Nov 2022

28 Nov 2022

12 Dec 2022

1 Feb 2023

1 Dec  2022

8 Dec 2022

22 Dec 2022

30 Jan 2023

6 Feb 2023

20 Feb 2023

1 Apr 2023

1 Feb 2023

8 Feb 2023

22 Feb 2023

22 Mar 2023

29 Mar 2023

14 Apr 2023

1 Jun 2023

31 Mar 2023

11 Apr 2023

26 Apr 2023

24 May 2023

31 May 2023

15 Jun 2023

1 Aug 2023

1 Jun 2023

8 Jun 2023

23 Jun 2023

21 Jul 2023

28 Jul 2023

11 Aug 2023

1 Oct 2023

1 Aug 2023

8 Aug 2023

22 Aug 2023

19 Sep 2023

26 Sep 2023

11 Oct 2023

1 Dec 2023

*In some instances where the medicine is subject to a Deed of Agreement it may not be possible to notify the new AEMP within five business days. In these instances, Responsible Persons will be notified that an application has been received within five business days and will be notified of the new AEMP as soon as possible.

**Late delisting requests may be considered for a delist on the reduction date following notification of the final Ministerial discretion application outcome.

New presentation listing without triggering First New Brand SPRs

Sponsors can request that a new presentation of a particular drug not trigger ‘First New Brand’ SPRs if listing of the new presentation is sought up to the tenth anniversary of the drug being a PBS listed drug. Guidance on the operation of the new presentation exemption can be found in the New Presentation Ministerial Discretion Guidance Material (PDF 91KB) - (Word 62KB).

Requests can be emailed to the PBS Statutory Price Reductions Inbox using the List Management Application Form.

Further information

For further information or questions please contact the PBS Statutory Price Reductions Inbox.