Fact sheet for the Administration, Handling and Infrastructure fee
What is the Administration, Handling and Infrastructure fee?
Pharmacies in Australia are remunerated to support access to, and the quality use of,
Pharmaceutical Benefit Scheme (PBS) medicines. As of 1 July 2015, changes to how pharmacies are
remunerated are being implemented as one of the components of the Sixth Community Pharmacy
Agreement (6CPA) with the introduction of the Administration, Handling and Infrastructure (AHI)
fee.
This implementation of the AHI fee follows comprehensive consultation and discussion with a range
of pharmacy stakeholders, as well as industry and consumers, and will delink pharmacy
remuneration from the price of PBS subsidised medicines.
The AHI fee is predominantly fixed and replaces the former six tier retail mark-up. This recognises
that the impact of PBS pricing policy, such as price disclosure, had previously impacted the
remuneration provided to pharmacy for handling and dispensing PBS medicine.
While for some medicines the AHI fee paid by the Commonwealth will be higher than the previous
pharmacy mark-up, for other medicines it will be lower. The new three tier AHI fee does not replace
the four tier mark-up applied to certain s100 medicine dispensing situations (e.g. s100 Highly
Specialised Drugs Private Hospital and Community Pharmacy).
The Government will continue to provide pharmacy dispensing fees and dangerous drug fees. Other
existing fees (e.g., container fees) will also continue.
What is the impact?
This AHI fee will ensure that consumers can continue to access their medicines through over 5,400
pharmacies across Australia. It ensures pharmacies are remunerated fairly for providing medicines to
consumers, and delivers surety while a full review of pharmacy remuneration and regulation is
undertaken in the first two years of the 6CPA.
The delinking of remuneration from the price of a medicine will allow changes to pricing policy,
while not having significant impact on pharmacy remuneration.
Annual Indexation
From 1 July 2016, the AHI fee will be indexed annually using the Consumer Price Index rather than
the Wage Cost Index 9 (WCI9).
Implementation Arrangements
The Department of Health is working with the Department of Human Services (DHS) on the
implementation arrangements for the new AHI fee structure. It is expected that DHS will be able to
automatically process the flat fee components of the three tier AHI fee, however, the variable
component of the middle tier is not expected to be automated until 1 July 2016.
It is anticipated that DHS will complement the automatic payments through the usual PBS Online
process, with a manual payment to accommodate the variable component. This payment is intended to
be made on a monthly basis, with the first manual payment expected in mid-August 2015.
Attachment 1: Examples of calculations under the AHI
Administration, Handling and Infrastructure fee (replaces 6 tier retail pharmacy mark-up)
There are three tiers of payment under the AHI:
Tier 1
For a maximum quantity of a listed brand with a
price to pharmacists less than $180
$3.49 per dispense*
Tier 2
For a maximum quantity of a listed brand with a
price to pharmacists from $180 to $2,089.71
$3.49, plus 3.5% of the amount
by which the price to
pharmacists exceeds $180, per
dispense*
Tier 3
For a maximum quantity of a listed brand with a
price to pharmacists more than $2,089.71
$70.00 per dispense*
*Note: There is no change to the basis of the payment of the total mark-up / AHI (i.e. – in the table
above, per dispense means per listed PBS item maximum quantity (MQ) supplied. Fee is calculated
from the per pack price with AHI applied for maximum quantity, proportionate to the number of
packs required for maximum quantity, and will be adjusted if less or more than the maximum
quantity is supplied).
Examples of calculations under the AHI
“Factor of MQ” is the ratio between the maximum quantity and pack size, i.e. (MQ ÷ Pack Size). This
is also equivalent to the maximum quantity described by reference to the number of packs required
to make up the maximum quantity, e.g. as referenced below:
MQ ÷ Pack Size = Factor of MQ
16 ÷ 4 = 4
DPMQs in the examples below are given without including any dangerous drug, container or other
applicable fees.
NON BROKEN PACKS
TIER 1
FORMULA
Price for AHI tier assessment
= PtP x FACTOR OF MQ
AHI value per pack
= ROUND [$3.49 / FACTOR OF MQ]
Pack price with AHI
= AHI per pack + PtP
DPMQ
= {ROUND (AHI pack price x Factor of MQ)} +
(dispensing fee)
Example
PtP = $7.32; Pack Size = 4; Max Qty = 16
$7.32 (ptp) x 4 = $29.28 puts you in the $3.49 AHI tier
$3.49 / 4 = $0.8725 rounded to $0.87
Per pack fee = $0.87
Per pack price with AHI = $0.87 + $7.32 = $8.19
DPMQ = {ROUND ($8.19 x 4)} + $6.93 (dispensing fee) = $39.69
TIER 2
FORMULA
Price for AHI tier assessment
= PtP x FACTOR OF MQ
AHI value per pack
= ROUND [{((PtP x FACTOR OF MQ - $180) x 3.5%)
+ $3.49} / FACTOR OF MQ]
Pack price with AHI
= AHI per pack + PtP
DPMQ
= {ROUND (AHI pack price x Factor of MQ)} +
(dispensing fee)
Example 1
PtP = $76.32; Pack Size = 1; Max Qty = 16
$76.32 (ptp) x 16 = $1221.12 puts you in ‘$3.49 plus 3.5%’ AHI bracket
{[($76.32 x 16 = $1,221.12 - $180) x 3.5%] + 3.49} / 16 = $2.495575 rounded to $2.50
(only round at the end of the calculation)
Per pack fee = $2.50
Per pack price with AHI = $2.50 + $76.32 = $78.82
DPMQ = {ROUND ($78.82 x 16)} + $6.93 (dispensing fee) = $1,268.05
Example 2
PtP = $76.32; Pack Size = 4; Max Qty = 16
$76.32 (ptp) x 4 = $305.28 puts you in ‘$3.49 plus 3.5%’ AHI tier
{[($76.32 x 4 = $305.28 - $180) x 3.5%] + 3.49} / 4 = $1.9687 rounded to $1.97
(only round at the end of the calculation)
Per pack fee = $1.97
Per pack price with AHI = $1.97 + $76.32 = $78.29
DPMQ = {ROUND ($78.29 x 4)} + $6.93 (dispensing fee) = $320.09
TIER 3
The same approach would be taken as per the $3.49 flat fee tier.
BROKEN PACKS
The worked example below requires a broken pack to make up the maximum quantity. The same
approach would apply for any packs that are broken, regardless of whether the dispensed quantity is
above or below the maximum quantity. The example below does not include all container or other
applicable fees which may apply, for which there is no change in the approach.
Broken Pack Example: PtP = $76.32; Pack size 2; Max Qty = 7; Max Qty Factor = 3.5
1. Determine AHI fee tier
$76.32 x 3.5 (unrounded) = $267.12 puts you in ‘$3.49 plus 3.5%’ tier
2. Calculate per pack AHI fee
{[($267.12 - $180) x 3.5%] + 3.49} / 3.5 (Factor of MQ) = $1.86834285714
Per pack AHI fee = $1.87 (rounded)
Per pack price with AHI = $1.87 + $76.32 = $78.19
3.
Calculate for wastage for dispensing 1 from pack of 2
Wastage table percentage
The following Wastage Factor Table is used to calculate the price payable for quantities supplied
from the standard pack.
Wastage Factor Table
Column A
Column B
5
10
10
18
15
26
20
32
25
38
30
44
35
50
40
54
45
58
50
62
55
66
60
70
65
74
70
78
75
82
80
86
85
90
90
94
The appropriate wastage table percentage is as follows:



the percentage of the amount supplied from the amount in the standard pack is determined;
and
where this percentage is the same as a percentage listed in Column A of the table, the
percentage used is the figure shown in Column B; or
where the percentage is not the same as a percentage in Column A, then the nearest upward
percentage in Column A applies, and the percentage used is the figure in Column B.
For example, 24 tablets are supplied from a standard pack of 100. Thus 24 per cent of the number
contained in the standard pack is supplied. As this percentage does not appear in Column A, the
next higher (i.e., 25 per cent) is used. Reading down from 25 per cent to Column B, the wastage
table percentage is found to be 38 per cent.
Based on Wastage table above, 50% of the pack equals 62% wastage factor:
$78.19 x 62% = $48.48 (rounded)
4.
Calculate dispensed price for max qty
$78.19 x 3 (price with AHI for 3 packs) = $234.57 + $48.48 (wastage from 0.5 pack) =
$283.05 (rounded)
DPMQ = $283.05 + $6.93 (dispensing fee) = $289.98
95 100
98 100