Australian Government
Outcome 2 – Access to Pharmaceutical Services
Department of Health
COST RECOVERY IMPLEMENTATION STATEMENT
LISTING OF MEDICINES ON THE PHARMACEUTICAL BENEFITS
SCHEME AND DESIGNATED VACCINES ON THE NATIONAL
IMMUNISATION PROGRAM
1 July 2015 – 30 June 2016
Cost recovery involves government entities charging individuals or non-government
organisations some or all of the efficient costs of a specific government activity. This may
include goods, services or regulation, or a combination of them. The Australian Government
Cost Recovery Guidelines (the CRGs)1 set out the overarching framework under which
government entities design, implement and review cost recovered activities.
1
The CRGs are available on the Department of Finance website (www.finance.gov.au).
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1.
INTRODUCTION
1.1
Purpose of the CRIS
This CRIS provides information on how the Department of Health implements cost recovery
for the applications for the listing of medicines on the Pharmaceutical Benefits Scheme
(PBS) and designated vaccines on the National Immunisation Program (NIP). It also reports
financial and non-financial performance information for Outcome 2 – Access to
Pharmaceutical Services and contains financial forecasts for 1 July 2015 - 30 June 2016 and
three forward years. The department of Health will maintain the CRIS until the activity has
been discontinued.
1.2
Description of the activity
 What is the activity being cost recovered?
The costs for the Pharmaceutical Benefits Advisory Committee (PBAC) and associated
services related to evaluating, pricing and listing products on the Pharmaceutical Benefits
Scheme (PBS) and the National Immunisation Program (NIP) are being recovered
 What policy outcomes will the activity achieve?
The activity aims to provide access to clinically-effective, innovative, cost-effective,
medicines to all Australians, and ensure the sustainability of the PBS.
 Why is cost recovery appropriate for the activity?
Fees reflect the cost of processing submissions and arranging listing on the PBS. Cost
recovery can provide an important means of improving the efficiency with which Australian
Government services are provided and consumed. As well as giving an important message
about the cost of resources involved, it can also improve equity by ensuring that those who
use the services bear the costs.
Under the National Medicines Policy, in 2014-15, the Government introduced a range of
measures that ensure:





timely access to the medicines Australians need;
at a cost individuals and the community can afford;
that those medicines meet appropriate standards of quality, safety and efficacy; and
are underpinned by programmes that support quality use of medicines; and
help maintain a responsible and viable medicines industry.
Prior to passage of the legislation providing authority to impose a cost recovery charge for
processes associated with the evaluation and listing of items of the PBS and NIP, two
inquiries by the Senate Standing Committees on Community Affairs confirmed that the
application of cost recovery principles to the PBS and NIP listing process was appropriate.
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Section 99YBC of the National Health Act 1953 (the Act) requires that an Independent
Review of the Impact of PBS Cost Recovery commence after the second anniversary of the
amendments coming into force and be completed within four months of that date.
The Act provides that the Review must be conducted by a panel (committee) of at least five
people, four of whom are nominees of the Minister for Health and the other being a
nominee of the Consumers Health Forum of Australia. The details of this Independent
Review of the Impact of PBS Cost Recovery can be found:
http://www.pbs.gov.au/info/news/2012/09/independent-review-impact-of-pbs-costrecovery
The PBS cost recovery legislation required an independent review of the cost recovery
arrangements to commence as soon as possible after the second anniversary of the Bill
becoming law, that is, around July 2011. The Review was completed in November 2011 and
the resultant report was tabled in Parliament.
The activities and processes undertaken by the Department in connection with the listing of
medicines on the PBS are classified below:
Activities
Process to gain PBS Listing
Processes
Receipt of a submission for listing
Evaluation of a submission
Committee reviews:
 Economics Sub Committee (ESC);
 Drug Utilisation Sub Committee (DUSC); and
 Pharmaceutical Benefits Advisory Committee (PBAC).
Liaison with applicant
Decision to recommend listing or reject
Pricing negotiations
Ministerial (or delegate) decision
Cabinet decision (where relevant)
Listing of medicine on the Schedule of Pharmaceutical Benefits
and ongoing management and maintenance of the Schedule
PBS Scheme Support
Services to Government related to
the PBS listing process*
Monitor compliance of suppliers with restrictions
Provision of information to sponsors
Liaison with sponsors
Tracking and monitoring of submissions
Policy development
Policy implementation
Policy advice
Drafting and answering ministerial correspondence
Preparing ministerial briefings and handling ministerial queries
Independent Review (PBS)
Development of legislation
Independent reviews of PBAC recommendations
*these activities are not cost recovered
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 Who will pay cost recovery charges?
PBAC considers submissions from industry sponsors of medicines, medical bodies, health
professionals, private individuals and their representatives. However, for new products or
new indications, it is normally the sponsor or manufacturer who holds the data required for
such a submission. Applicants are charged fees for services provided in relation to their
submission to have a medicine subsidised. When a submission is lodged the fee category is
determined and a request for payment is sent to the applicant. The submission process
continues and once payment has been received, the submission may be considered by the
PBAC.
Fees and payments
The recovery of fees associated with the evaluation and listing of medicines, vaccines and
other products or services on the PBS and NIP commenced on 1 January 2010. The
prescribing regulations that underpin PBS and NIP cost recovery are the National Health
(Pharmaceutical and Vaccines – Cost Recovery) Regulations 2009.
Part 4.7 of the regulations provides for the annual indexation of fees based on increases in
the Consumer Price Index. The fourth indexation of CPI increase is at 1.3 per cent, this will
take place from 1 July 2015. The adjusted fees are detailed below:
Fee Structure from 1 July 2015
Lodgment
Pricing
Independent Review
Major
$129,721
Complex
$27,138
Minor
$13,568
Simple
$6,682
Secretariat
$1,085
Secretariat
$1,085
Generic
$543
$129,721
2.
POLICY AND STATUTORY AUTHORITY TO COST RECOVER
2.1
Government policy approval to cost recover the activity
 When did the government announce the decision to cost recover this activity?
Cost recovery for PBS applications commenced on 1 January 2010 following passage of the
PBS through Parliament on 16 June 2009.
Further information can be found: https://www.comlaw.gov.au/Details/F2009L04013
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Cost recovery is implemented according to the government decision as described in the
table below:
PBS Cost Recovery Fee Category Description
Submission
Category
Description
PBAC Evaluation
In general, a major application seeks to list new drugs or medicinal preparations for PBS
– Major
subsidy or to make substantial changes to current listings.
An application for a variation to an existing listing may also be major if it requires the PBAC
to apply a health advantage test (as defined in reg. 2.4).
(Regulations 2.3 2.6)
Major evaluations are complex evaluations of drugs for which PBS listing may have
significant financial implications.
PBAC Evaluation
In general, minor applications include those for new forms of an already listed drug or
– Minor
medicinal preparation or changes to the conditions of their prescription or supply.
(Regulations 2.7 – These applications involve changes to existing items that do not have significant cost
2.11)
implications but do require consideration by PBAC for clinical effectiveness and/or potential
impact on the PBS.
An otherwise major application may be deemed minor if it involves a resubmission (reg.
2.10) or a medicinal food (reg. 2.11).
PBAC Secretariat
Listing
A secretariat listing is a minor application that is straightforward and not considered as a
(Regulations 2.12, separate agenda item at a meeting of PBAC. PBAC still decides the merit of each application.
2.13)
Secretariat listings may be considered in or out of session by PBAC.
Generic
Generic applications occur where a new product is listed on the PBS because it is
bioequivalent or biosimilar and the price is already determined by an existing item.
Listing of a new
brand medicine
However, if the application is in respect of a product listed in Schedule 2 of the Regulations
(currently somatropin and glucose indicators), it is deemed to be an exception under reg. 2.9
(Regulation 2.14)
and 2.13 and is classified as minor or PBAC Secretariat Listing.
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Independent
Independent review is available for applicants where the PBAC has declined to recommend
Review
the listing of a new drug on the PBS or in certain circumstances where PBAC has not
recommended the listing of an additional indication of an already listed drug – refer to
(Regulation 4.3)
Pricing
www.independentreviewpbs.gov.au for additional information.
Description
Category
Complex – Pricing Complex pricing negotiations are those that involve an increase in the cost to government or
require calculation of dose relativity to be undertaken during the course of pricing
(Regulation 3.3)
negotiations, or where the Commonwealth and the applicant enter into a deed or deeds of
agreement relating to the supply of the proposed or currently listed drug, special
pharmaceutical product or designated vaccine subject to the application.
Simple – Pricing
Simple pricing negotiations are those that require consideration by the Department and will
not involve an increase in the cost to the Commonwealth in relation to the supply of
(Regulation 3.4)
pharmaceutical benefits.
Secretariat –
An application is in the Pricing Secretariat pricing category if neither a complex pricing
Pricing
category nor a simple pricing category applies.
(Regulation 3.5)
2.2
Statutory authority to charge
The National Health Act 1953 - SECT 99YBA legislation provides authority for cost
recovery charges. Legislative Instrument 2009 No. 372. Further information can be
found at https://www.comlaw.gov.au/Details/F2009L04013
Payment of fees for certain services
1) The regulations may make provision in relation to services provided by the
Commonwealth in relation to the exercise of a power by the Minister under any of
the following:
a) section 9B;
b) a provision in Part VII (other than a provision in that Part prescribed by the
(regulations).
2) Without limiting subsection (1), the regulations may make provision in relation to
the following:
(a) the making of applications for those services;
(b) prescribing fees for those services;
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(c) the time that prescribed fees are due and payable (including
extending the time for payment of the fees);
(d) the manner of payment of prescribed fees (including payment by
instalments);
(e) the payment of penalties in respect of late payment of prescribed
fees;
(f) exemptions from prescribed fees;
(g) the waiver, remission or refund of prescribed fees;
(h) the refusal to provide those services until a prescribed fee is paid;
(i) the review of decisions made under the regulations.
3) A prescribed fee must not be such as to amount to taxation.
4) A prescribed fee is payable to the Commonwealth.
5) A prescribed fee that is due and payable may be recovered by the Commonwealth as
a debt due to the Commonwealth.
Source:
http://www.austlii.edu.au/au/legis/cth/consol_act/nha1953147/s99yba.html
3.
COST RECOVERY MODEL
3.1
Outputs and business processes of the activity
 What are the outputs of the activity?
The ouputs of this activity are to list cost-effective, innovative, clinically effective medicines
on the Pharmaceutical Benefits Scheme (PBS). The PBS is the primary means through which
the Australian Government ensures Australians have timely and affordable access to
pharmaceuticals.
2015-16 Estimated (indexed at 1.3 %) Unit Costs
(based on the 2014-15 indexed 2007-08 model)
Unit Cost ($)
Total Cost
($ million)
Major
Assumed
submission
volume
93
129,998
12.089
Minor
76
13,645
1.037
Secretariat
Subtotal for Submission & PBAC Evaluation
Tier 1 (now Simple Pricing)
39
5
6,662
0.033
Tier 2/3 (now Complex Pricing)
75
27,978
2.098
Subtotal for Pricing for Listing
Generics
Total
100
-
15.257
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3.2
Costs of the activity
2015-16 Estimated (indexed at 1.3 %) Costs of Activities used to deliver the outputs
(based on the 2014-15 indexed 2007-08 model)
Activity
Cost ($ million)
2015-16
2014-15
Cost ($ million)
2.9%
1.3 %
Receipt and processing of application
0.717
0.726
Expert evaluation
8.358
8.467
Committee review
3.890
3.941
Price and risk sharing discussions
1.327
1.344
Restrictions related activities
0.513
0.520
Liaison with applicants
0.256
0.259
Total Cost of Listing Process
15.061
15.257
Costs to be included in Charges
The costs included in the PBS fees comprise:
Direct Staff Costs
Staff costs include the base salary, superannuation and other direct employee costs of staff
who are directly involved in the listing process. They are based on the Department’s
Enterprise Agreement.
Other Direct Costs
Other direct costs incurred in connection with the PBS listing process include
committee costs:
 Pharmaceutical Benefits Advisory Committee (PBAC);
 Economics Sub-Committee (ESC);
 Drug Utilisation Sub-Committee (DUSC);
 Pricing negotiations;
 other relevant ad-hoc committees and working groups;
 external evaluations;
 legal fees associated with the development of pricing agreements;
 IT systems supporting the PBS listing process; and
 administration costs.
Overheads
Overhead costs include:
 IT infrastructure maintenance;
 property operating expenses;
 business support group (finance, human resources etc); and
 executive costs.
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Pharmaceutical
Evaluation Section
Pricing & High Cost
Drugs
Policy Implementation
Section
Publishing, Industry
Liaison & Listing
Branch Executive
Branch Total
PBS Listing
Related
Non-PBS Listing
Related
Total
PBAC Secretariat
Section
2007-08 Apportioning of staff costs for cost recovered (PBS listing) and Budget funded (non-PBS listing)
activities
The table below shows the Full Time Equivalent (FTE) staffing requirements used in the 2007-08 cost model.
13.4
14.25
11.63
0
9.05
4.9
53.23
0
0.86
2.9
10.14
2.55
2.1
18.55
13.4
15.11
14.53
10.14
11.6
7
71.78
An FTE in the Australian Public Service context refers to the number of hours worked. Fulltime staff members are defined as those who ordinarily work 35 hours or more per week.
Staff working fewer than 35 hours per week are defined as working part-time. This
definition is based on that used by the Australian Bureau of Statistics.
Attribution of Costs to Activities
The costing model developed in 2007-08 uses a two stage process to allocate overhead
costs: 1) to each business unit; and then 2) to activities. This methodology enables
resources to be allocated to activities based on their consumption at each stage of the
process through to the final output.
The cost data for the listing of medicines on the PBS were estimated on the following basis:

the regulatory activities to be delivered on a cost recovery basis were identified in
consultation with relevant staff (see section 2: Overview);

an estimate of the resource cost base was developed, based on the internal budgets
developed by the Department;

staff costs and associated overheads were allocated to activities based on estimates
of resource requirements advised by staff;

direct costs were allocated to activities to which they relate; and

overheads were attributed to activities in proportion to the staff numbers.
Annual Cost Estimates
The estimates provided below are based on the 2007-08 cost model.
Estimated Costs of Activities based on the 2007-08 model
Activity
Receipt and processing of application
Expert evaluation
Committee review
Price and risk sharing discussions
Restrictions related activities
Cost ($ million)
0.67
7.80
3.63
1.24
0.48
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Liaison with applicants
0.24
Total Cost of Listing Process
14.06
Estimated Unit Costs based on the 2007-08 model
Major
Minor
Secretariat
Subtotal for Submission & PBAC Evaluation
Tier 1 (now Simple Pricing)
Tier 2/3 (now Complex Pricing)
Subtotal for Pricing for Listing
Generics
Assumed
submission
volume
93
76
39
Unit Cost
($)
Total Cost
($ million)
119,757
12,570
-
11.137
0.955
-
5
75
6,139
25,775
0.031
1.933
100
14.057
The volume, cost and revenue estimates presented in the two previous tables were derived
using the cost model developed in 2007-08. The model has not been updated since then
and does not factor in any cost increases or changes in demand that occurred over this
period.
In accordance with the Government’s commitment to deregulation and to allow sufficient
time for the finalisation of review of the PBS cost model, for this interim CRIS the
Department has applied a Consumer Price Index (CPI) rate of 1.3 % to estimate the costs for
2015-16 (see the following two tables), which is less than the cumulative rise in costs
incurred by the Department since 2007-08. The volume of submissions has also been left
unchanged, but will be revisited as part of the cost model review.
It is anticipated that the revised volume, costs and associated cost recovery revenue will be
presented in the next CRIS scheduled for commencement on 1 July 2016.
2015-16 Estimated (indexed at 1.3 %) Costs of Activities
(based on the 2014-15 indexed 2007-08 model)
Activity
Cost ($ million)
2014-15
2.9%
Receipt and processing of application
0.717
2015-16
Cost ($ million)
1.3 % %
0.726
Expert evaluation
8.358
8.467
Committee review
3.890
3.941
Price and risk sharing discussions
1.327
1.344
Restrictions related activities
0.513
0.520
Liaison with applicants
0.256
0.259
Total Cost of Listing Process
15.061
15.257
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2015-16 Estimated (indexed at 1.3 %) Unit Costs
(based on the 2014-15 indexed 2007-08 model)
Unit Cost ($)
Total Cost
($ million)
Major
Assumed
submission
volume
93
129,998
12.089
Minor
76
13,645
1.037
Secretariat
Subtotal for Submission & PBAC Evaluation
Tier 1 (now Simple Pricing)
39
5
6,662
0.033
Tier 2/3 (now Complex Pricing)
75
27,978
2.098
Subtotal for Pricing for Listing
Generics
Total
100
-
15.257
Charging Structure
The charging structure presented in this CRIS was developed in 2007-08 to reflect the
services provided at that time to industry, the milestones within the process and the levels
of complexity associated with different submissions. The Department intends to complete a
comprehensive review and update of its costing model, which will have an impact on the
charging structure.
It is anticipated that the revised volume, costs and associated cost recovery revenue will be
presented in the next CRIS scheduled for commencement on 1 July 2016.
Note: The Department publishes information about fees and their indexation under this
regulation on its website at http://www.pbs.gov.au.
3.3
Design of cost recovery charges
 Which cost recovery charges (fees and/or levies) are used?
The cost recovery charges (fees and/or levies) which are defined by submission categories
as described in the National Health (Pharmaceuticals and Vaccines – Cost Recovery)
Regulations 2009. The fee category descriptions are as follows;
PBS Cost Recovery Fee Category Description
Submission
Category
PBAC Evaluation
Description
In general, a major application seeks to list new drugs or medicinal preparations
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– Major
for PBS subsidy or to make substantial changes to current listings.
(Regulations 2.3 2.6)
An application for a variation to an existing listing may also be major if it requires
the PBAC to apply a health advantage test (as defined in reg. 2.4).
Major evaluations are complex evaluations of drugs for which PBS listing may have
significant financial implications.
PBAC Evaluation
– Minor
In general, minor applications include those for new forms of an already listed
drug or medicinal preparation or changes to the conditions of their prescription or
supply.
(Regulations 2.7 –
2.11)
These applications involve changes to existing items that do not have significant
cost implications but do require consideration by PBAC for clinical effectiveness
and/or potential impact on the PBS.
An otherwise major application may be deemed minor if it involves a resubmission
(reg. 2.10) or a medicinal food (reg. 2.11).
PBAC Secretariat
Listing
(Regulations 2.12,
2.13)
A secretariat listing is a minor application that is straightforward and not
considered as a separate agenda item at a meeting of PBAC. PBAC still decides the
merit of each application. Secretariat listings may be considered in or out of
session by PBAC.
Generic
Generic applications occur where a new product is listed on the PBS because it is
bioequivalent or biosimilar and the price is already determined by an existing
item.
Listing of a new
brand medicine
(Regulation 2.14)
Independent
Review
(Regulation 4.3)
However, if the application is in respect of a product listed in Schedule 2 of the
Regulations (currently somatropin and glucose indicators), it is deemed to be an
exception under reg. 2.9 and 2.13 and is classified as minor or PBAC Secretariat
Listing.
Independent review is available for applicants where the PBAC has declined to
recommend the listing of a new drug on the PBS or in certain circumstances where
PBAC has not recommended the listing of an additional indication of an already
listed drug – refer to www.independentreviewpbs.gov.au for additional
information.
Source: http://www.pbs.gov.au/info/industry/listing/elements/fees-and-charges
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The recovery of fees associated with the evaluation and listing of medicines, vaccines and
other products or services on the PBS and NIP commenced on 1 January 2010.
The prescribing regulations that underpin PBS and NIP cost recovery are the National Health
(Pharmaceutical and Vaccines – Cost Recovery) Regulations 2009.
Part 4.7 of the regulations provides for the annual indexation of fees based on increases in
the Consumer Price Index.
The fourth indexation of these fees, in line with the annual CPI increase of 1.3 per cent, will
take place on 1 July 2015. The adjusted fees are detailed below.
Fee Structure from 1 July 2015
Lodgment
Pricing
Independent Review
Major
$129,721
Complex
$27,138
Minor
$13,568
Simple
$6,682
Secretariat
$1,085
Secretariat
$1,085
Generic
$543
$129,721
 Why was this type of charge chosen?
The charging structure presented in this CRIS was developed in 2007-08 to reflect the
services provided at that time to industry, the milestones within the process and the levels
of complexity associated with different submissions. The Department intends to complete a
comprehensive review and update of its costing model, which will have an impact on the
charging structure. It is anticipated that the revised volume, costs and associated cost
recovery revenue will be presented in the next CRIS scheduled for commencement on 1 July
2016.
The volume, cost and revenue estimates were derived using an indexed version of the cost
model developed in 2007-08. The model has not been updated since then, and hence cost
recovery fees calculated using the model do not factor in any cost increases or changes in
demand that occurred over this period.
To allow sufficient time for the proper review of the PBS cost model and for administrative
simplicity purposes in this interim period, the Department applied a CPI rate of 1.3 % to
estimate the fees and fee revenue for 2015-16 (see the table above), which is less than the
cumulative rise in costs incurred by the Department since 2007-08. The volume of
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submissions has also been left unchanged, but will be revisited as part of the cost model
review.
The revised volume, costs and associated cost recovery revenue will be presented in the
next CRIS. The first application of CPI (at the rate of 1.6%) was applied to fees from 1 July
2012.The second and third application of CPI was 2.5% for 2013 and 2.9% for 2014. The
fourth application of CPI (at the rate of 1.3%) will be applied to fees from 1 July 2015.
The CPI figure is annually derived from the Australian Bureau of Statistics website for the
last quarter of the financial year. Further information can be found:
http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0/
 How do the charges relate to costs of outputs/business processes of the activity?
The charging structure presented in this CRIS was developed in 2007-08 to reflect the
services provided at that time to industry, the milestones within the process and the levels
of complexity associated with different submissions. The Department intends to complete a
comprehensive review and update of its costing model, which will have an impact on the
charging structure. It is anticipated that the revised volume, costs and associated cost
recovery revenue will be presented in the next CRIS scheduled for commencement on 1 July
2016.
 Where is the current schedule of charges published?
http://www.pbs.gov.au/info/industry/listing/elements/fees-and-charges
2015-2016 charge rates and revenue estimates for the current budget year
Cost Recovery Type 2015-2016
Estimated
Estimated
Fee Structure
indexed Fee
volume
total revenue
($)(Rate)
($ million)
Lodgement Major
Lodgement Minor
Lodgement
- PBAC
Secretariat
Lodgement Generic
Pricing Complex
Pricing Simple
Pricing Secretariat
Independent
Review
TOTAL
Fee
$129,721
93
Fee
$13,568
76
Fee
$1,085
39
Fee
$543
100
Fee
$27,138
72
Fee
$6,682
10
Fee
$1,085
43
Fee
$129,721
-
Output
Business process
= $129,721 × 93 =
$12.064 million
= $13,568× 76
= $1.031 million
= $1,085 × 39
= $0.042 million
Output 2
Business process 2.2
Output 2
Business process 2.2
Output 2
Business process 2.2
=$536 x 100
=$0.054 million
=$27,138 x 72
=$1.954 million
=$6,682 x 10
=$0.067 million
=$1,085 x 43
=$0.047 million
-
Output 2
Business process 2.2
Output 2
Business process 2.2
Output 2
Business process 2.2
Output 2
Business process 2.2
Output 2
Business process 2.2
$15.259 million
Output 2
Business process 2.2
*No revenue has been projected as Independent Review events are rare and only occur on ‘as need be’ basis.
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Cost recovery fees are charged on a per submission basis. Actual revenue may vary in line with the fluctuations
in the actual number and type of submissions, and the number of waivers or exemptions applicable. For
example, for 2013-14, approximately 20% of revenue was waived or exempted .
4.
RISK ASSESSMENT
The Department of Health considers the proposed 2015-16 Cost Recovery Implementation
Statement for listing of medicines on the PBS and designated vaccines on the National
Immunisation Program arrangements as having medium to low risk.
Cost Recovery is not new for PBS items. It has been in place since 1 January 2010 and the
fees have increased by CPI annual since introduction. The proportion of submission that are
eligible for fee waivers and exemptions presents a risk of revenue not meeting expenses.
During 2015-16, the Department will complete a comprehensive review of the original
costing model. It is anticipated that the revised volume, costs and associated cost recovery
revenue, which require further consultation will be presented in the next CRIS scheduled for
commencement on 1 July 2016.
5.
STAKEHOLDER ENGAGEMENT
In accordance with relevant provisions of the National Health Act 1953, an independent
review of PBS cost recovery was undertaken in 2012. The Committee that undertook the
Review extended the opportunity to Medicines Australia, Generic Medicines Industry
Association of Australia (GMiA), AusBiotech and the Consumers Health Forum of Australia
(CHF) to provide a submission. Each of these four organisations presented matters for the
Committee’s consideration.
In accordance with the requirements of the Australian Government Cost Recovery
Guidelines, periodic reviews of cost recovery arrangements are to be undertaken no less
frequently than every five years. PBS Cost Recovery commenced 1 January 2010. During
2015-16, the Department will complete a comprehensive review of the original costing
model. It is anticipated that the revised volume, costs and associated cost recovery revenue,
which require further consultation, will be presented in the next CRIS scheduled for
commencement on 1 July 2016.
6.
FINANCIAL ESTIMATES
Financial estimates for the activity for the budget and three forward years
Expenses = X
A
2015-2016
($ million)
$15.26
B
2016-2017
($ million)
$15.46
C
2017-2018
($ million)
$15.66
D
2018-2019
($ million)
$15.86
Revenue = Y
$12.21*
$12.37*
$12.53*
$12.69*
Balance = Y – X
-$3.05
-$3.09
-$3.13
-$3.17
Cumulative balance
-$16.01
-$19.10
-$22.23
-$25.40
Explain material
variance
Approximately 20% of all PBAC submissions each year are eligible and granted Fee
Waivers and Exemptions which exempts the sponsor from paying cost recovery fees.
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Explain balance
management strategy
A review of the current cost model is expected to be completed in time for the
following CRIS on 1 July 2016.
*Cost recovery fees are charged on a per submission basis. Actual revenue may vary in line with the
fluctuations in the actual number and type of submissions, and the number of waivers or exemptions
applicable. For example, for 2013-14, approximately 20% of revenue was waived or exempted.
7A.
FINANCIAL PERFORMANCE
Activity performance during the previous financial years
2010-2012*
($ million)
2012-2013
($ million)
2013-2014
($ million)
2014-2015
($ million)
Expenses = X
14.06
14.28
14.64
15.06
Revenue = Y
14.53**
9.22**
9.87**
11.46**
Balance = Y – X
0.47
-5.06
-4.77
-3.60
Cumulative balance
0.47
-4.59
-9.36
-12.96
Explain material
variance
The number of submissions per meeting and per year is variable. In addition to this
approximately 20% of all PBAC submissions each year are eligible and granted Fee
Waivers and Exemptions which exempts the sponsor from paying cost recovery
fees. This trend accounts towards the overall negative cumulative balance.
Explain impact on
balance management
strategy
A review of the current cost model is expected to be completed in time for the
following CRIS on 1 July 2016.
*1 January 2010-30 June 2012 this period was the first period for which the 2007-2008 Cost Recovery model
was implemented.
**Cost recovery fees are charged on a per submission basis. Actual revenue may vary in line with the
fluctuations in the actual number and type of submissions, and the number of waivers or exemptions
applicable. For example, for 2013-14, approximately 20% of revenue was waived or exempted.
7B.
NON-FINANCIAL PERFORMANCE
The charging structure presented in this CRIS was developed in 2007-08 to reflect the
services provided at that time to industry, the milestones within the process and the levels
of complexity associated with different submissions.
The Department intends to complete a comprehensive review and update of its costing
model, which will have an impact on the charging structure. It is anticipated that the revised
volume, costs and associated cost recovery revenue will be presented in the next CRIS
scheduled for commencement on 1 July 2016.
8.
KEY FORWARD DATES AND EVENTS



October 2015: Review of current Cost Recovery cost model.
May 2016: Secretary and Minister approval of new CRIS.
July 2016: Publication and Implementation of new CRIS 2016-17.
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9.
CRIS APPROVAL AND CHANGE REGISTER
Date of CRIS change
CRIS change
Approver
Basis for change
July 2015
Certification of CRIS
Secretary
Compliance with new Cost
Recovery Guidelines
Page 18 of 18