85AFlow on price reductions for brands of combination items

#### 85A Flow on price reductions for brands of combination items (1) This section sets out, for the purposes of subsection 99ADHB(2) of the Act, the method for calculating the reduced approved ex‑manufacturer price of an existing brand of a combination item on the reduction day mentioned in that subsection. (2) The reduced approved ex‑manufacturer price of the brand of the combination item is the amount worked out by the following formula:  where: > component drug, in relation to a drug in a combination item, means a drug or medicinal preparation that is contained in that drug. > day before combination item AEMP means the approved ex‑manufacturer price of the brand of the combination item on the day before the reduction day. > day before component AEMPs means the sum of: (a) the approved ex‑manufacturer prices, on the day before the reduction day, of any one brand of each of the listed component items, adjusted in accordance with subsection (3); and (b) if the combination item includes one or more component drugs that are not listed component drugs—the non‑listed component price. > differential reduction percentage means: (a) if there is only one listed component item for which the approved ex‑manufacturer price of any one brand of the listed component item has been reduced under a provision in Division 3B of Part VII of the Act on the reduction day—the difference between 100% and the percentage by which the approved ex‑manufacturer price of any one brand of the listed component item in the combination item has been so reduced; or (b) if there are 2 or more listed component items for which the approved ex‑manufacturer price of any one brand of each of those listed component items has been reduced under a provision in Division 3B of Part VII of the Act on the reduction day—the difference between 100% and the average of the percentages by which the approved ex‑manufacturer price of any one brand of each of those listed component items has been so reduced. > listed component drug means a component drug in relation to which a declaration under subsection 85(2) is in force. > listed component item, for each listed component drug that is in the combination item and in a non‑combination item as mentioned in paragraph 99ADHB(1)(d) of the Act, means the pharmaceutical item that has: (a) the same listed component drug as the non‑combination item; and (b) the same manner of administration as the combination item as referred to in subsection 99ADHB(7) of the Act; and (c) subject to subsection (4) of this section, the smallest difference in the total quantity or amount of the listed component drug contained in the quantity or number of units in the pricing quantity of any one brand of the pharmaceutical item compared to the total quantity or amount of the listed component drug in the pricing quantity of the brand of the combination item. > non‑listed component price means the day before combination item AEMP reduced (but not below zero) by the sum of the approved ex‑manufacturer prices, on the day before the reduction day, of any one brand of each of the listed component items, adjusted in accordance with subsection (3). > reduction day component AEMPs means the sum of: (a) the approved ex‑manufacturer prices, on the reduction day, of any one brand of each of the listed component items, adjusted in accordance with subsection (3); and (b) if the combination item includes one or more component drugs that are not listed component drugs—the non‑listed component price multiplied by the differential reduction percentage. (3) For the purposes of the definitions of day before component AEMPs, non‑listed component price and reduction day component AEMPs in subsection (2), adjust the approved ex‑manufacturer price of a brand of a listed component item so that the value attributed to the listed component drug in the combination item reflects: (a) any difference in quantity or amount; and (b) any difference in pricing quantity; of the listed component drug in the listed component item. (4) For the purposes of paragraph (c) of the definition of listed component item in subsection (2), if there is more than one pharmaceutical item that has the smallest difference as referred to in that paragraph, the pharmaceutical item that: (a) is not an exempt item; and (b) results in the smallest reduction under this section to the approved ex‑manufacturer price of the brand of the combination item; is taken to be the listed component item for the purposes of this section.