PBS Publications
Manual of Resource Items and Their Associated Costs for use in submissions to the Pharmaceutical Benefits Advisory Committee involving economic evaluation
Drugs under evaluation.
>>Contents
>> Preface
>> Introduction
>> General principles
>> How to use this manual
>> Drugs
>> Medical services
>> Diagnostic/Investigational services
>> Hospital services
>> Community-based services
>> Variation to unit costs
This category of resource item refers to all drugs used as part, or as a by-product of, the non-hospital treatment therapy in which the proposed drug or its main comparator applies. Drugs prescribed or used in a hospital setting are excluded from this category and are included in the category 'Hospital Services'.
The unit of measurement to be applied to all categories of drugs is mg per day together with the prescribed period of treatment. In some instances, such as drugs administered by aerosol spray, alternative units of measurement may be more appropriate. In such instances details of the unit of measurement used should be specified and based on the normal recommended dosage.
There are three main categories of drugs used in economic evaluations.
4.1 Proposed drug
This refers to the drug which is the subject of the application for listing on the Schedule of Pharmaceutical Benefits, as identified on the Department of Health and Ageing form PB11, 'Application to list a Drug or Medicinal Preparation as a Pharmaceutical Benefit'. The price applied to this drug for the purpose of its economic evaluation is the equivalent of the 'Dispensed Price for Maximum Quantity' as defined in the Schedule of Pharmaceutical Benefits.
The PB11 form requires the applicant seeking listing to propose a List Price (i.e. a maximum price to the pharmacist) for the proposed drug and thus constitutes the formal application for PBS listing. The List Price is then further adjusted for the currently approved level of mark-up and the currently approved fixed composite dispensing fee to derive the Dispensed Price for Maximum Quantity (DPMQ). The dispensing fee and approved mark up are fixed by the Pharmacy Remuneration Tribunal (PRT), and are periodically varied (see Appendix 2). At the time of publication, the approved mark-up was as follows:
Preparers of major submissions to the PBAC should therefore ascertain the current dispensing fee and use the most up to date approved mark-up (available from the Manual on the Internet) and apply them to the List Price to derive the equivalent of the DPMQ for the proposed drug.
If the DPMQ of a drug is less than the statutory general patient contribution rate arrangements between the Government and the Pharmacy Guild of Australia allow for an extra charge to be added to the price up to a maximum of the general patient contribution rate. The method for calculating this extra charge is given in Section 4.2.1. In most instances where the DPMQ for the proposed drug is less than the statutory general patient contribution, so will be the comparator drug. In these cases, having determined the appropriate extra charged for the comparator drug (as per the method in Section 4.2.1), preparers of major submissions to the PBAC should apply the same extra charge to the price of the proposed drug.
In all cases, except private hospital patients, the price to be applied to a Highly Specialised Drug proposed for Section 100 listing is the Price to Commonwealth (which is the ex-manufacturer's price without any mark-ups or dispensing fees) as found in the relevant section of the Schedule of Pharmaceutical Benefits.
For the proportion of Highly Specialised Drugs dispensed through private hospitals, current remuneration rates comprise the normal PBS ready-prepared dispensing fee plus a mark-up ascertained as follows:
Details of the price components used in the economic evaluation should be specified in the submission. For further information, refer to Sections 2.8 and Section 3.5 and Appendices F and I of the PBAC Guidelines.
4.2 Main comparator drug and co-prescribed drugs
Co-prescribed drugs are those prescribed in conjunction with, or affected by, the proposed drug or its comparator therapy. Two types of drugs are included in this category.
4.2.1 PBS drugs
These include co-prescribed drugs already included in the Schedule of Pharmaceutical Benefits. The price to be applied to a pack of each drug for the purpose of an economic evaluation is the DPMQ as defined in the Schedule of Pharmaceutical Benefits, plus any applicable premiums or charges. The submission should specify the effective date of the Schedule of Pharmaceutical Benefits that was used to derive the price of a drug when finalising the economic evaluation.
If the DPMQ of the drug is less than the general patient contribution, then an extra charge may be added to the price, provided that the total does not exceed the general patient contribution rate. The extra charge comprises a fee for the pharmacist to record the prescription on the patient's Prescription Record Form and an additional charge agreed between the Government and the Pharmacy Guild of Australia. The extra charge is applied only in a proportion of these cases. In order to determine the weighted average of this additional charge, the following procedure should be followed.
Preparers of major submissions to the PBAC should refer to "Table 2" in the most recent version of Australian Statistics on Medicines. For any particular drug, the final number in the row marked 'Survey' may be referred to as 'a'. Similarly, the final number in the row marked 'PBS/RPBS' may be referred to as 'b'. The ratio a / (a + b) should then be multiplied by the extra charge to derive the weighted average extra charge. This figure should then be added to the DPMQ and any applicable premiums, with the resulting price used for the purpose of economic evaluations.
The general patient contribution is specified in the Schedule of Pharmaceutical Benefits, along with any additional fees for safety net prices, such as the charge to record the prescription on the patient's Prescription Record Form. The additional charge is agreed between the Government and the Pharmacy Guild of Australia, and is currently set at 10% of General Patient Contribution + $0.50, with a maximum amount payable set at the general patient contribution. The basis for these charges is available in the 'Third Community Pharmacy Agreement" between The Commonwealth of Australia and The Pharmacy Guild of Australia and successor agreements. Details of the price components and calculations should be provided in the submission.
Costs should be adjusted if there are several generic alternatives on the PBS where a brand premium applies. In such cases the price should be further adjusted according to the volume of prescriptions for each brand processed by the PBS over the most recent 12 months.
4.2.2 Non-PBS drugs
Non-PBS drugs are those co-prescribed drugs that are not listed on the PBS. The price to be applied to these drugs for the purpose of economic evaluation should be gained through the Arrow Private Prescription Program.
Arrow Pharmaceutical Products supplies the majority of Australian pharmacies through the Arrow Private Prescription Program. The maximum price to a patient at an Arrow-participating pharmacy for non-PBS drugs is listed on the Arrow Pharmaceutical Products website. Where possible, these prices should be used. For drugs that are not available through the Arrow Private Prescription Program, prices should be sourced from a direct-order company such as Pharmacy Direct, which is in competition with Arrow Pharmaceutical Products. The details of where the prices used in the economic evaluation originated should be included and justified in the submission.
4.3 Over-the-counter drugs
Over-the-counter drugs are those drugs for which no prescription is required, but whose consumption may be affected by the proposed drug or its comparator therapy. The price to be applied to a pack of each over-the-counter drug in an economic evaluation is the recommended retail price suggested by the manufacturer. The details of where the prices used in the economic evaluation originated should be included and justified in the submission. Where drugs are available both on the PBS and over-the-counter, the PBS price should be used.
4.4 Drug delivery systems
Drug delivery systems relate to consumables and equipment required for the delivery of some drugs, eg. insulin pens, nebulisor units. It is not feasible to identify and cost all such items in this Manual, as they are context-specific. Where such items are applicable to an economic evaluation, a price equivalent to the average price charged to the consumer should be used in the economic evaluation, and details provided of the basis on which it has been determined.
