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Key Points:

Forthcoming legislation

The previous month has seen legislativeactivity regarding one of the three proposed bills outlined in our July edition of Insights.

The proposed Therapeutic Goods Amendment (Regulatory Issues) Bill was introduced into the House of Representatives on 17 August 2005 as the Therapeutic Goods Amendment Bill 2005. We have discussed the Bill in the regulatory section of this issue of Insights.

Debate on the Bill was adjourned in the House of Representatives on 17 August, and on 7September the Senate Selection of Bills Committee referred the Bill to the Senate Community Affairs Legislation Committee.

The Committee has been asked to focus on the new enforcementoptions for the TGA and to:

• consider if the Bill provides sufficient detail on the scope of alleged breaches to which infringement notices may apply, on the use of alternatives to court proceedings, and the extent to which the process of investigation of offences will be in line with procedural fairness (including the use of media during investigations and prosecutions);
• ascertain if the Bill adequately accommodates differences between registrable and listed goods;
• examine inequity implications for Australian based manufacturers due to the non-applicability of the civil penalty regime to foreign entities; and
• examine the need for an ad hoc appeals mechanism against the imposition of an infringement notice and a fine under the civil penalties regime currently included in the Guidelines, to be included in the Regulations to preserve the appeal mechanism and prevent arbitrary variations and application.

Public submissions must be lodged for consideration by 5 October 2005, and the Committee is due to report on 28 October 2005.

To date, there has been no legislative activity regarding the Therapeutic Products Bill, or the Therapeutic Products (Consequential Provisions) Bill.

Bill to relax patent certification under TGA Act

The Therapeutic Goods Amendment Bill (No. 2) 2005 has just been tabled in Parliament. According to the Explanatory Memorandum:

"Concerns have been raised that the current patent certification requirements under the Act are broader than they need to be because they apply to products such as complementary medicines that rely on readily accessible public data, and to originator medicines that submit their own safety or efficacy data. It is considered that the application of the current certification requirements to such products imposes an unnecessary burden on industry."

The amendments in the Bill will:

• restrict the patent certification requirement under the Act to only those applicants who have to submit safety or efficacy data of the goods as part of the process of applying for inclusion of their product in the Australian Register of Therapeutic Goods, and who rely on safety or efficacy data previously submitted to theTherapeutic Goods Administrationby another person in relation to an approved product, as part of the process of applying for approval of that product;
• require that applicants for the registration or listing of goods either notify the Secretary that the patent certification requirements under section 26B(1) do not apply, or provide a certificate required under that sectionin relation to patents.

Pathology services review

The Final Report to the Department of Health and Ageing of the "Review of Enforcement and Offence Provisions of the Health Insurance Act 1973 as they Relate to Provision of Pathology Services Under Medicare" has recently been released.

The Federal Government is considering the Report which recommends the strengthening of offence and enforcement provisions in the Health Insurance Act as they relate to relationships between pathology providers and requesting practitioners.

Sections 129AA and 129AAA of the Act are intended to prevent Medicare funding being paid out for pathology services that provide no benefit to patients. It is questionable, however, how effective these sections have been. Anecdotal evidence shows that breaches of these sections occur and, there has been no prosecution brought under either section since at least the early 1990s.

One significant aspect of the report is that it states claims have been made that a minority of pathology providers make payments, or other consideration, so that practitioners will refer patients to them. In addition, there are also claims that some medical practitioners are alleged to demand payments from pathology providers for directing their patients to them. The Report recommends strengthening the Act to make it clearer that such relationships are prohibited and enforcement action can be taken.

The Minister for Health and Ageing, Tony Abbott, has supported the Report's findings and will be responding formally to its recommendations shortly. Before doing so, Minister Abbott will seek the views of key industry organisations both on the recommendations and on an implementation timetable.

Drug subsidy transparency

Drug manufacturers will now be obliged to publicly disclose details of unpublished clinical trials, as part of a more transparent approval process to secure government pharmaceutical subsidies. Previously, drug companies have refrained from discussing information on grounds of commercial confidentiality.

The Pharmaceutical Benefits Advisory Committee ("PBAC") chairman has said that once an application to list a drug on the Pharmaceutical Benefits Scheme ("PBS") has been finalised, a "public summary document" would be issued, setting out the reasons for the PBAC decision to recommend acceptance or rejection of the drug. Under the Free Trade Agreement between Australia and the United States, formal hearings before the PBAC to argue in support of their applications and the right to ask for an independent review will be available to the drug companies.

The public summary document will convey sufficient clinical and economic data that will allow parties to understand why a decision was made and the basis for that decision. Both published and unpublished data will be made available. The document would also explain the reasons for imposing any restrictions on the number of medical conditions for which a drug can be prescribed and still attract a PBS subsidy.

The public summary document will be available at www.health.gov.au about 16 weeks after each PBAC meeting. PBAC meetings are usually held in March, July and November of each year.

The first public summary document should be available by November and will be discussed in a later issue of Insights.

OFT scrutinises drug pricing scheme

Britain's competition watchdog, the Office of Fair Trading, has launched a market study into the Pharmaceutical Price Regulation Scheme ("PPRS"). This scheme is the method of control by which the Department of Health sets a cap on the profits that each drug company can earn on its annual sale of branded medicines to the National Health Service, thereby controlling the price of these drugs. The current five year scheme negotiated between the Department of Health and the Association of the British Pharmaceutical Industry commenced on 1 January 2005.

The stated aims of the PPRS are to ensure the NHS has access to good quality branded medicines at reasonable prices; to promote a strong and profitable pharmaceutical industry capable of such sustained research and development expenditure to lead to the future availability of new and improved medicines and to encourage the efficient and competitive development and supply of medicines to pharmaceutical markets in the UK and other countries. The OFT will assess whether the scheme operates as an effective means of meeting these aims. The study will last until at least spring 2006.

The OFT study could result in recommendations that the government consider changes to the PPRS, referral to the Competition Commission, enforcement action, or a clean bill of health for the scheme.