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REGULATORY IMPACT STATEMENT

Drugs, Poisons and Controlled Substances

Regulations 2006

This Regulatory Impact Statement has been prepared in accordance with the requirements of the Subordinate Legislation Act 1994. Its purpose is to inform interested parties regarding the proposed new regulations. Comments and submissions are invited by 6 March 2006 and should be addressed as outlined in the Forward. Prepared for the Department of Human Services, Melbourne Victoria by Jaguar Consulting Pty Ltd ABN 56089 615636. Published by the Victorian Government Department of Human Services, Melbourne, Victoria. © Copyright State of Victoria 2006. This publication is copyright, no part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. This document may also be downloaded from the Department of Human Services web site at: www.health.vic.gov.au/dpu Authorised by the State Government of Victoria, 120 Spencer Melbourne, Victoria. January 2006

http://www.health.vic.gov.au/dpu

Forward Section 7 of the Subordinate Legislation Act 1994 provides that ‘unless an exception certificate or an exemption certificate is issued in respect of a proposed statutory rule, the responsible Minister must ensure that a regulatory impact statement is prepared in respect of a proposed statutory rule’. This Regulatory Impact Statement has been prepared with respect to the proposed Drugs, Poisons and Controlled Substances Regulations 2006. The Regulatory Impact Statement assesses the likely costs and benefits of the proposed statutory rule and discusses possible alternatives. The Minister for Health has given notice of the preparation of this Regulatory Impact Statement in accordance with section 11 of the Subordinate Legislation Act 1994. Interested organisations, health professionals and members of the public are now invited to make comments and submissions. Responses to the Regulatory Impact Statement or proposed regulations should be addressed to:

Megan Smith Drugs and Poisons Unit Department of Human Services GPO Box 4057 MELBOURNE VIC 3001 Email: [email protected]

The closing date for receipt of comments and submissions is 6 March 2006. It should be noted that all comments and submissions received in response to this Regulatory Impact Statement will be treated as public documents.

Regulatory Impact Statement: Drugs, Poisons and Controlled Substances Regulations 2006 3

mailto:[email protected]

Summary The proposed Drugs, Poisons and Controlled Substances Regulations 2006 will replace the Drugs, Poisons and Controlled Substances Regulations 1995, which are due to sunset 29 May 2006. The proposed regulations make only limited amendments to the existing regulations. The regulations constitute the principal regulations made under the Drugs, Poisons and Controlled Substances Act 1981 (the Act). The Act is itself the central piece of Victorian legislation seeking to control the manufacture, supply, storage, prescription, possession and use of drugs and poisons. The Act seeks to control the possession and use of drugs and poisons, including medicines, in the interests of minimising harms to public health. The drugs and poisons subject to regulation are:

• those that are subject to improper use ; • those that have a potential for harm if administered inappropriately and

thus must be taken on expert advice; and • those that require additional control because they have inherent dangers

(includes certain agricultural and industrial chemicals and animal and human medicines).

The Act provides for regulations to impose specific controls on the drugs and poisons industry, providers of health services and health professionals and other appropriately trained individuals in relation to matters such as the manufacture, sale, possession, administration, use, supply, distribution and storage of potentially hazardous substances. Key controls include a licensing and permitting system, secure storage requirements and controls on the right to possess and prescribe drugs and poisons. The Act also covers packaging and labelling1, to ensure members of public have access to information regarding safe use of chemicals. The controls provided in the regulations are intended to minimise both the risk of diversion of drugs to illicit purposes (entailing drug abuse) and the risk of inappropriate drug treatments occurring, leading to problems of lack of efficacy and, potentially, harms to health. As noted, the proposed regulations constitute a continuation, with some refinements, of regulatory approaches to drugs and poisons that have been in place for some decades. There is a high degree of commonality in the approaches to the regulation of drugs and poisons taken internationally and in Australia. This reflects a clear consensus on the need for, and appropriate type of, restrictions on the availability of drugs and poisons. Drugs and poisons regulation inevitably intersects with other areas of regulation, such as the regulation of a range of health professions. As well, there are complex interactions between Federal and State regulation. These factors, together with the long history of drugs and poisons regulation and consequent unavailability of an unregulated “control scenario” mean that it is not possible to conduct a formal and complete benefit/cost analysis of the proposed regulations.

1 through incorporation of the Standard for the Uniform Scheduling of Drugs and Poisons (SUSDP).


However, the case that the regulations will deliver net benefits to the community can be established via qualitative arguments as to the merits of the regulatory model employed, supported by evidence of the size of existing harms due to misuse and abuse of drugs and poisons and inferences as to the extent to which the regulations employed to date have been effective in minimising these harms. Quantitative cost data have also been included in this Regulatory Impact Statement in order to verify as far as possible that the costs imposed by the regulations are not disproportionate to the benefits sought to be achieved. It is difficult to attribute specific costs to the regulations per se. The major compliance requirements are specified, at least in broad terms, in the enabling Act, while the regulations provide the detail that allows implementation. Moreover, in many cases, the regulations are “permissive” in nature: that is, in their absence, the prohibitions and limitations on certain activities established by the Act would be farther reaching than is the case with the regulations. The regulations are supported by stakeholder groups and are not considered by them to be unduly burdensome. The regulations make only very limited amendments to the sunsetting regulations which they will replace. Thus, stakeholders have substantial experience with the administration of these regulations and fully understand their compliance obligations. Their support for the regulations reflects this experience. The nature of the broader regulatory structure in relation to drugs and poisons, at State, Federal and International levels, is such that there are very few feasible alternatives to the proposed regulations. One alternative has been identified and involves relying to a far greater extent on professional regulations and professional regulatory bodies to determine what drugs and poisons can be used and supplied by particular groups of health professionals. This alternative could be seen as having benefits deriving from the making of regulatory decisions at a level closer to the issues of day-to-day practice and experience of individual health professions. This could arguably lead to more appropriate decisions being made and a more responsive regulatory structure generating and allowing greater dynamic efficiency. However, significant potential costs were identified. These included the fact that this model would compromise, to some degree, the achievement of a consistent and strategic approach to drug regulation. As well, professional regulatory bodies are likely to lack specific skills in effective drug regulation. In instances where a number of regulatory bodies needed to be involved, the lack of an overall co-ordinating regulatory body could also jeopardise the achievement of good regulatory outcomes. Currently the Department of Human Services is able to exercise regulatory control impacting across the spectrum of professional organisations. The combination of these considerations suggests that the effectiveness of regulation overall would be likely to be significantly lower under this alternative. Given these factors, it is considered that the proposed regulations are likely to yield greater net benefits to the society than the alternative. In sum, the proposed regulations are expected to support effectively existing systems of drug regulation that aim to:

• Reduce to a practical minimum the incidence of drug abuse, by controlling the availability of drugs subject to abuse;

• Maximise the effectiveness of drug prescription for therapeutic purposes and minimise the extent of “medication incidents” involving negative


outcomes, by restricting the right to prescribe and supply drugs to those with appropriate expertise; and

• Minimise the incidents of poisonings and other misuse of drugs, whether accidental or not, again by limiting the supply of drugs and poisons.

Given the widespread prevalence of drug and poison use and abuse in society, the system of regulation of which the proposed regulations form an integral part yields very substantial benefits to society as a whole by effectively minimising the size of the problems of drug misuse and abuse. By contrast, the identifiable costs are relatively modest and the conclusion that the regulations can be expected to entail net benefits is clear.


Table of Contents

1. Introduction..............................................................................................................................9 1.1. Overview ...............................................................................................................................9 1.2. Regulatory context ............................................................................................................9 1.3. Victorian regulation .........................................................................................................10

2. Objectives of the proposed regulations .................................................................12

3. Authorising provisions......................................................................................................12

4. Nature and extent of the problem .............................................................................13 4.1. Overview .............................................................................................................................13 4.2. Explanation of the proposed measure, likely impact and enforcement regime ..............................................................................................................................................17 4.3. Affected parties and enforcement .............................................................................19

5. Description of the proposed regulations ...............................................................21 5.1. General ................................................................................................................................21 5.2. The National Standard for the Uniform Scheduling of Drugs and Poisons.21 5.3. Summary of the proposed regulations ....................................................................22

6. Expected benefits of the proposed regulations .................................................32 6.1. Overview .............................................................................................................................32 6.2. Quantitative benefit estimates....................................................................................35 6.3. Benefits associated with proposed changes to the existing regulations.....39 6.4. Enforcement activity.......................................................................................................44

7. Expected costs of the proposed regulations .......................................................46 7.1. Overview .............................................................................................................................46 7.2. Summary of affected parties .......................................................................................48 7.3. Quantitative estimates...................................................................................................49 7.4 Fees Regulations ..............................................................................................................52

8. Alternatives to the proposed regulations..............................................................56 8.1. Alternatives and the regulatory context .................................................................56 8.2. Regulation by individual professional organisations...........................................57

9. Small business impacts ....................................................................................................60

10. Conclusion: Comparison of proposed regulation and identified alternatives .....................................................................................................................................61

11. Evaluation strategy ........................................................................................................63


12. Consultation........................................................................................................................64

13. Statement of compliance with National Competition Policy ..................67

Appendix 1: Setting the proposed fees .........................................................................69 Appendix 1A: Salaries and operating costs......................................................................76 Appendix 1B: Administration costs .......................................................................................77 Appendix 1C: Total costs for new applications and renewals ...................................80

Appendix 2: Proposed Drugs, Poisons and Controlled Substances Regulations 2006.........................................................................................................................85


1. Introduction 1.1. Overview The proposed Drugs, Poisons and Controlled Substances Regulations 2006 will replace the current Drugs, Poisons and Controlled Substances Regulations 1995, which are due to sunset due to the operation of the Subordinate Legislation Act 19942. The proposed regulations make only limited amendments to the existing regulations. The regulations constitute the principal regulations made under the Drugs, Poisons and Controlled Substances Act 1981 (the Act). The Act is itself the central piece of Victorian legislation seeking to control the manufacture, supply, storage, prescription, possession and use of drugs and poisons. 1.2. Regulatory context The context within which the regulations operate includes a range of international treaties and Commonwealth/State agreements. Many quite extensive and specific obligations exist as a result of these international and national obligations. At the international level, Australia is a signatory to international treaties, including the Single Convention on Narcotic Drugs (1961), which aims to combat drug abuse by coordinated international action. Under the reporting requirements of the 1961 convention, Australia reports on domestic consumption and stocks of controlled substances, including Schedule 8 poisons. This enables Australia to identify potential diversions and stockpiling of narcotics. Drugs and poisons regulations in each State and Territory assist in this process and enable Australia to meet its reporting and monitoring obligations under the treaty. Australia has a complex framework of Commonwealth, State and Territory legislation that provides a suite of controls to provide for the safe and effective use of potentially poisonous substances in the community. Commonwealth legislation largely controls end use safety, quality and efficacy of therapeutic medicines and agricultural products, whereas State and Territory legislation imposes restrictions on Scheduled substances, including who may supply these substances, to whom they may be supplied and under what circumstances. The controls imposed by State and Territory legislation relate to where the substances are listed in the Commonwealth Standard (i.e. the Schedule and associated appendices as listed in the Standard for the Uniform Scheduling of Drugs and Poisons), and may include additional State or Territory specific controls. All States and Territories adopt the Schedules to the Commonwealth Standard and because of this there is a high degree of uniformity with respect to the legislation and regulatory controls across Australia. The major National Competition Policy review of drugs, poisons and controlled substances legislation in Australia conducted in 2000 (the Galbally Review) was satisfied that most of the controls provided a net benefit to the community as a whole, in relation to the potentially most harmful substances. Given the widespread use of drugs, poisons and controlled substances and the potential for harm, the Galbally Review concluded that some degree of reduced competition and higher costs were acceptable in some circumstances. It noted that the harm

2 Victorian regulations are automatically revoked ten years after being made, unless sooner revoked. They must then be formally remade if required. This ensures that the continuing case for regulation is established. Sunsetting is therefore a fundamental regulatory review mechanism.


to the community resulting from use of certain harmful substances would increase in a significantly less regulated context. The Galbally Review reports strong support from stakeholders for the objectives of the current legislation, which was considered to provide a net benefit to the community as a whole. Lack of national uniformity imposed the most costs. In summary the Galbally Review found there were strong reasons for Australia to have a comprehensive system of legislative controls that regulate drugs, poisons and controlled substances. It recommended measures to improve regulatory and administrative efficiency, and reduce the level of regulation. The majority of these measures have been implemented or are being worked through by the Commonwealth and States and Territories. 1.3. Victorian regulation The Act seeks to control the possession and use of poisons and drugs, including medicines, in the interests of minimising harms to public health. The drugs and poisons subject to regulation are:

• those that are subject to improper use ; • those that have a potential for harm if administered inappropriately and

thus must be taken on expert advice; and • those that require additional control because they have inherent dangers

(includes certain agricultural and industrial chemicals and animal and human medicines).

As part of the system of controlling the possession and use of drugs and poisons, the Act provides for regulations to impose specific controls on health professionals and other appropriately trained individuals in relation to matters such as the manufacture, sale, possession, administration, use, supply, distribution and storage of potentially hazardous substances. Key controls include a licensing and permitting system, secure storage requirements and controls on the right to possess and prescribe drugs and poisons. The Act also covers packaging and labelling3, to ensure members of public have access to information regarding safe use of chemicals. The regulations give effect to the Act in a number of ways:

• they authorise particular classes of people, who would not otherwise be authorised, to be in possession of drugs and poisons;

• they establish consistent standards for equivalent functions carried out by the range of health professionals; and

• they set limits on the scope of lawful practice of health professionals in relation to the use and prescription of drugs and specify that activity outside this scope constitutes an offence.

The current regulations will sunset on 29 May 2006 as a result of the operation of the Subordinate Legislation Act 1994. The proposed regulations will replace the sunsetting regulations, with amendments aimed at improving the overall effectiveness of regulation. Thus, they will continue the general approach to the control of potentially harmful substances that has been in place in Victoria for many decades, namely to restrict access to such substances to those who need them and are properly equipped to handle them. 3 Through incorporation of the Standard for the Uniform Scheduling of Drugs and Poisons.


Access to drugs and poisons is controlled via a process of listing substances within “Schedules”. The Schedule into which each substance is placed depends on its toxicity and potential risk to the user, and the public’s need to have access to the substance. The content of these Schedules is determined at a national level, with the Act incorporating the Commonwealth standard, namely the Standard for the Uniform Scheduling of Drugs and Poisons. The regulations authorise individuals and others to possess poisons or controlled substances and limit the purpose and extent of possession. The regulations adopt a consistent approach to controls on access to poisons or controlled substances for all those authorised to possess them. The specific controls adopted vary in accordance with the poisons Schedule. The Schedules for which regulations are needed are Schedules 2,3,4,7 (certain poisons), 8 and 9. Regulations are not needed to cover other Schedules, nor are they needed in relation to non-scheduled poisons. The key proposed changes proposed to the existing regulations are as follows: Major changes

• Additional persons will be authorised to possess Schedule 4 poisons under specified conditions, including officers employed in ambulance services, dental auxiliaries and orthoptists.

• Provision has been made for the writing, sending, checking and retaining of prescriptions, orders or instructions by electronic means (in accordance with the Electronic Transactions (Victoria) Act 2000).

• Current requirement that only nurses can administer drugs to residents in aged-care services catering only to high-care residents will be removed. It is intended that provisions requiring nurses to manage the administration of drugs to high care residents in all aged care facilities will be inserted into the Act to replace the existing regulation.

• Drug storage requirements will be standardised, such that Schedule 8 poisons used in aged care facilities will no longer be required to be stored in a Drug Cabinet. Moreover, impractical record keeping requirements in aged care will be eliminated by removing the requirement to maintain a drug register for Schedule 8 poisons when they are supplied fully labelled by the pharmacist in tamper evident dose administration containers.

• New licence and permit categories will be created to benefit small businesses and new fees will be adopted that are better aligned with administrative costs incurred in respect of different types of licence and permit holders.

Other changes

• The regulation restricting possession of Schedule 4 poison samples for demonstration purposes by sales representatives to a maximum of one, is removed. In accordance with the Galbally review, this activity is to be regulated nationally, through an industry Code of Practice imposed as a condition of manufacturing and wholesale licences.

• The authorisation given to persons acting on behalf of others to possess their Schedule 4, 8 or 9 poisons is clarified to include those persons providing care.

• Owners and custodians of herds and flocks of animals will be authorised to possess prescribed animal medicines supplied in stockfeed directly from manufacturers.


• Remove repetitive labelling requirements for human and animal medicines, and for bulk supplies of animal medicines where both the manufacturer’s original label and additional written instructions are provided.

• Introduce consistencies in requirements for storage and access to Schedule 4 poisons between pharmacies and other health professionals, to recognise workplace requirements.

• Medical officers acting under the instructions of warrant holders may now use, supply or prescribe under the terms of the warrant and prescriptions will need to contain the warrant holder’s name and number.

• Restrictions on optometrists’ ability to issue repeat prescriptions are removed.

• The regulations will give clearer direction to pharmacists when they are required to notify prescribers if they suspect oversupply of drugs of dependence.

• The regulations will relax storage requirements such that limited emergency stocks of Schedule 8 poisons need not be stored in a Drug Cabinet.

• Authorise nurses and other registered health professionals to destroy the remains of Schedule 8 and Schedule 9 poisons, supplied in sterile containers such as ampoules, without a witness.

2. Objectives of the proposed regulations The stated objectives of the regulations are to:

• Facilitate and enhance the orderly sale, supply, prescribing, administration and use of drugs, poisons and controlled substances by health professionals, authorised persons, licensed or permitted persons and the general public;

• Prescribe fees relating to the provision of licences and permits under the Act; and

• Prescribe forms and other matters necessary to be prescribed for the purposes of the Act.

More generally, however, the regulations are a mechanism by which the public is provided with ongoing protection from the harmful effects of the misuse and abuse of poisons and controlled substances.

3. Authorising provisions The proposed regulations are made under sections 129, 131, 132, 132A and 132B of the Act.


4. Nature and extent of the problem 4.1. Overview The problem that the proposed regulations seek to address is the inappropriate use of drugs, poisons and controlled substances. The improper use of different drugs and poisons can lead to differing kinds of harmful effects:

• Poisoning: The most readily apparent results of inappropriate use are poisoning of the user. The effects of poisoning can be observed in many ways, ranging from mild pain and discomfort to severe illness and in extreme cases, permanent incapacitation, birth defects and death.

• Drug Dependence: The abuse of certain substances can also lead to dependence, with its associated health effects and potential for anti social and criminal behaviour.

• Failures of effectiveness: Use of medicines inappropriately may also result in lack of efficacy – that is, in a failure to treat the relevant malady as effectively as is possible. This may not result in harm to the user per se, but is associated with avoidable costs in terms of unnecessarily lost work/school time, avoidable expenditures on the ineffective drugs and loss of treatment options for example with the indiscriminate use of antibiotics and the development of antibiotic resistance.

These problems may arise in the following ways: Prescription of drugs: Inadequate control over the range of people authorised to prescribe drugs would increase the incidence of the wrong drugs being prescribed for a therapeutic purpose. This means that illnesses would not be treated effectively and that negative health outcomes may occur due to adverse reactions to medication (including negative interactions between different medications). Diversion of drugs: Inadequate controls on the manufacture and supply of drugs would mean increased diversions of drugs to illicit purposes. This would increase the incidence of drug dependence, with its various social and economic costs. Those at greater risk would include both the general public and those involved in the supply of drugs. The regulations seek to address these problems by implementing mechanisms that control public access to drugs, poisons and controlled substances, such that those substances end up in the hands only of those who have a legitimate need for them. The regulations also seek to limit opportunities for diversion that may result in improper use of the substances and possible harmful effects. The substances that are the subject of these regulations are human and animal medicines and certain highly regulated toxic non-therapeutic chemicals. Certain of these substances may end up in illicit use, while the majority would end up in legitimate use for the treatment of illness and infection and the alleviation of suffering. Inappropriate use of the latter substances has capacity for significant harm, over both the short term and the longer term. As well, as noted above, restrictions on the prescription and use of drugs can help improve efficacy and, hence, the cost effectiveness of the use of medicines. These potential harms have long been recognised. As long ago as 1857, concerns were raised in Victoria over the widespread use and abuse of patent medicines


containing opiates. Children were considered to be particularly at risk because of their low tolerance. Other poisons that were considered for control at the time were arsenic and strychnine. The first legislation to be passed to deal with these issues was the Poisons Act 1876, which established requirements for the proper labelling of a range of drugs that were used in the treatment of illnesses and infection and their sale by qualified persons. Since that time, the number of chemicals available has increased exponentially and the uses to which they are put have also increased. As a result, the prevalence of drugs, poisons and other dangerous chemicals has increased substantially over time. The risk to human health and the environment has evidently also increased with the greater proliferation and complexity of these agents and their more widespread use. As the number of new chemicals has increased, and their availability to the public has increased, regulatory controls have needed to be continually upgraded in order to control the risk to human health and the environment to acceptable levels for the community. The Second National Report on Patient Safety, prepared by the Australian Council for Safety and Quality in Health Care in 2002 (‘the Second Report’) estimated that in any two-week period, 70 per cent of Australians will have taken at least one medicine. This percentage is even higher – as high as 90 per cent – for older members of the community who, moreover, often take more than one form of medicine at a time. Therefore, the potential for harmful health effects due to inappropriate and incorrect prescription, misuse and abuse is significant. Moreover, the prevalence of therapeutic drugs in the community underlines the need to control access by ensuring a secure “trail” from manufacture to supply. Evidence of the size of the problem: incidence of poisoning Even in the presence of the current regulatory controls over the supply and use of drugs, there is a substantial incidence of poisoning. This indicates that, even though the regulations are consistent with international practice and are considered to be relatively effective, the prevalence of drug use in the community is such that poisoning cannot be averted entirely. The following data on the current size of the problem of poisoning are presented to allow the reader to infer the probable size of these harms where controls such as those contained in the regulations not maintained. Poisoning, or ‘medication incidents’ that result in harm to the person receiving health care, can occur wherever medicines are administered, for example in hospitals, specialist clinics, day surgeries, and general practitioners, dentists and authorised optometrists surgeries, as well as within aged care, community and domestic settings. Factors that commonly lead to problems include the following:

• Handwritten prescriptions that are difficult to read; • Selection of incorrect strength and / or dosage; • Medication names that sound alike; • Medication packages that look alike; • Medicine administered to the wrong patient; • Patient or carer misunderstands the directions; • Medication use is not adequately monitored; and • Potentially harmful medicine interactions are not recognised.

The Second Report estimated that between two and three per cent of all hospital admissions in Australia in 1999/00 (approximately 140,000 admissions) related to problems with medicines, such as an adverse reaction to a prescribed medicine or the inadvertent ingestion of a dangerous substance, and their harmful effects.


This indicates that problems with medicines constitute one of the most prevalent causes of hospital admission: for example, the 140,000 admissions cited above is more than double the 60,700 admissions for asthma recorded over the same period. Moreover, to the extent that medication incidents also occur within the hospital setting, this admission figure is likely to be an underestimate of the true size of the problem: The Second Report cites one study that estimates that approximately 40 per cent of adverse drug events that resulted in a hospital admission were avoidable. Overall, the Second Report estimates the costs to the public health system alone of these admissions due to medication incidents at $380 million per annum. Poisons Information Centre data An additional source of data on the incidence of adverse impacts due to accidental or deliberate misuse of drugs and poisons is the Victorian Poisons Information Centre (PIC)4. The PIC is the main telephone advisory service for poisons information. According to the PIC Annual Report, it received over 40,000 calls during 2004, with 27,424, or around 75 per day, relating to an actual exposure to a poison. Of this number, the main causes of exposure are as follows:

• Accidental exposure: 85% • Deliberate exposure: 9% • Therapeutic error: 4% • Other: 2%

Table 1 shows the main substances generating calls to the PIC. Table 1: Main substances generating PIC calls

Of the ten substances listed in Table 1, four (benzodiazepines, cough and cold preparations, antidepressants and oral contraceptives) are substances that are included within the scope of these regulations. These four substances accounted for 2,824 incidences of poisoning. Clearly, the regulations only operate up until the poisons or controlled substances are in the hands of those persons who are legitimately able to possess them. Thus, they do not have any direct bearing on the storage or use of those medicines by those in possession of them, including where this is contrary to instructions on the label. This means that they have little bearing on a number of the underlying causes of the medication incidents and poisonings reported above. However, it is apparent that, in the absence of the controls on the supply of drugs imposed by the regulations the substances in question would be still more

4 See Annual Report 2004. Victorian Poisons Information Centre, pp4-7.


widespread in the community and the incidence of such poisoning incidents would inevitably be somewhat greater than that currently observed. The cost of poisoning incidents is clearly significant. According to PIC data, of the calls made 4,135 resulted in the caller being referred to a hospital while a further 2,494 resulted in the caller being referred to a general practitioner. Other aspects of the problem Aside from the deleterious health effects of the misuse of drugs and poisons, there is a substantial potential for additional medical costs to be incurred, with these costs being borne both by individuals and by the broader community via the financing of the public health system. Another significant problem for the community is the misuse and abuse of Scheduled medicines, such as psychoactive pharmaceutical drugs. While they are not deemed to be illicit drugs in themselves and can generate significant benefits when prescribed for individual patient care and administered correctly, they create problems for the community when they are illegally diverted and used illicitly. These drugs include stimulants such as dexamphetamine, morphine tablets and oxycodone tablets. These substances can provide strong and immediate pain relief but their misuse can have serious consequences, particularly when combined with other substances. Another substantial problem is with diversion of drugs that are not psychoactive themselves, but are used in the manufacture of illicit drugs (eg pseudoephedrine). The misuse of these drugs has obvious health implications for individuals. However, an associated problem is that of criminal and anti social activity such as prescription forgeries and thefts from pharmacies and doctors’ surgeries. Dependent individuals may also become unable to hold a job and may suffer homelessness and other social problems. In sum, their ability to function in society may be substantially compromised. All of these problems have substantial potential costs to society attached to them. A further type of problem is that of failure to treat maladies effectively due to prescribing the wrong drugs, resulting in greater duration and potentially complications of illness as well as additional costs associated with the administration of more appropriate medications. Data on the incidence of these problems are not readily available. However, in the absence of the clear set of controls that exist in Australia over the training and professional registration of individuals who can prescribe and dispense poisons or controlled substances, there would be even greater scope for medication misadventure. Summary The above discussion indicates that, even in the presence of the current, substantial set of legislative and regulatory controls, significant problems relating to the misuse and abuse of drugs continue to be encountered. These problems are, to some degree inevitable, given the widespread use of drugs and poisons in society. However, it is apparent that even a small proportionate increase in such problems would have substantial social and economic costs. The remaking of the sunsetting regulations is essential to ensure firstly that health professionals and others are able to be in possession of drugs and poisons, secondly that effective controls on drugs, poisons and other toxic chemicals are maintained and thirdly that both the incidence of adverse effects associated with their use and the potential for adverse societal impacts resulting from diversion and misuse will continue to be minimised.


4.2. Explanation of the proposed measure, likely impact and enforcement regime The Act regulates the availability of drugs and poisons by:

• Adopting Schedules 2 to 9 of the Commonwealth Standard (Standard for the Uniform Scheduling of Drugs and Poisons5 (SUSDP))) by reference, with penalties for non-compliance with the provisions of the Commonwealth Standard that relate to labelling, storage, packaging or advertising; and

• Establishing a system of authorising, licensing and permitting according to profession or activity.

As noted above, it is not possible to completely eradicate all incidents of inappropriate and harmful exposure to drugs, poisons and other controlled substances. For example, despite best efforts, error may be made in prescribing a particular drug or poison or a particular patient may react badly to a substance even if there were no signs or genuine reason to suspect that they were going to, given the available evidence. Therefore, the regulations endeavour to minimise the extent of medication incidents by requiring those entrusted with the right to possess and prescribe such substances to implement appropriate safeguards and implement appropriate systems to reduce the likelihood of such problems occurring. The proposed regulations will continue a long history of regulation of access to potentially harmful substances. Like the existing regulations they implement agreed national approaches to regulation. Also like the current regulations, they are performance-based, so appropriately trained medical professionals are provided with some flexibility as to how they are to comply with the regulations. This approach has been in place since 1995 and has had the effect of reducing the length and complexity of the regulations and of reducing direct compliance costs. In general, performance-based regulation can reduce compliance costs by providing flexibility as to means of compliance. This means, for example, allowing compliance strategies to take account of work practices and clinical requirements. In this specific context, the performance-based approach reinforces and complements other legislative and regulatory instruments that require high standards of education and training. This applies to registered health professionals authorised under section 13(1) of the Act to be in lawful possession of poisons in the practice of their professions. Those authorised under section 13(1) of the Act are registered medical practitioners, pharmacists, veterinary practitioners, dentists, nurse practitioners and registered optometrists endorsed under section 11 of the Optometrists Registration Act 1996. In this Regulatory Impact Statement (RIS) this group is referred to as “registered health professionals”. In general, the regulations recognise the high level of training and the professional ethics binding this group and, as a consequence, adopts the approach that it is appropriate to allow registered health professionals to determine compliance arrangements within a performance-based regulatory framework.

5 The Standard is published by the Commonwealth Government under the authority of the Therapeutic Goods Act 1989


Moreover, the introduction of the performance-based regulatory approach has been supported by the publication of guidance material in the form of the Guide to the Drugs, Poisons and Controlled Substances Regulations 19956. First published in 1995, it has been updated as required and new guidance will be provided for stakeholders to support the proposed regulations. Difference between current and proposed regulations The proposed regulations build on the approach of the current regulations but make a range of amendments from minor administrative changes to those with substantial impact, that reflect both the Department of Human Services (DHS) experience over the previous ten years in implementing the current regulations and the outcomes of consultation with interested parties. Stakeholders that have been consulted include health professional registration boards, other Government agencies and medical, dental, pharmaceutical, optometry, veterinary, nursing and aged care organisations. Major amendments include the addition of new groups of authorised persons who are able to possess certain drugs and poisons in the practice of their professions (ambulance services, dental auxiliaries and orthoptists), provisions that recognise that it is not the intention of the regulations to preclude electronic prescriptions when the electronic means used is consistent with the requirements of the Electronic Transactions (Victoria) Act 2000, recognition of ongoing evolution in the management of an ageing population by introducing changes to storage and record keeping requirements for Schedule 8 poisons, and introduction of new regulatory fees for issuing licences and permits. Other amendments relate to existing provisions and aim to improve understanding and compliance. Amendments of relevance to veterinary practitioners enable the direct supply of veterinary products from stockfeed manufacturers to end users and introduce reduced labelling requirements for animal medications supplied in bulk. Storage of Schedule 4 poisons can now be treated consistently across the health professions, in so far as these poisons may be stored in the treatment room which may remain unlocked during day-to-day activities, as long as an authorised person is present. Some restrictions on prescribing are removed in the new regulations. Optometrists will be able to issue repeat prescriptions. In addition a medical practitioner acting under the direction of other medical practitioner who holds a warrant to use certain highly regulated poisons, is able to maintain the supply of that poison to specific patients. The new regulations give clearer directions to pharmacists in responding to suspected oversupply of drugs of dependence. This increases the capacity of pharmacists to put a curb on “doctor shopping activity” by individuals. Other amendments introduce practical solutions to poisons management. These include relaxing the normal storage requirement of the Drug Cabinet for storage of limited emergency stocks of Schedule 8 poisons, plus enabling nurses to destroy the remaining contents of sterile solutions of Schedule 8 and Schedule 9 poisons, rather than requiring medical practitioners or pharmacists to do this task and removing the requirement for a witness. An amendment also clarifies that a

6 See www.health.vic.gov.au/dpu/


http://www.health.vic.gov.au/dpu

person providing care of another person, is able to be in possession of their prescribed medication. The removal of the current regulation on possession of samples of Schedule 4 poisons by sales representatives, will allow for adoption of a national industry Code of Practice and thereby allow for national consistency. Other minor amendments are editorial and include for instance, removal of unnecessary definitions. A more detailed overview of the proposed changes to the existing regulations is given in Section 5. This has been integrated into the broader description of the regulations so that the changes can be better placed into context by the reader. 4.3. Affected parties and enforcement A wide range of parties is affected by the proposed regulations. These include:

• The medical, veterinary, dental, optometry, nurse practitioner and pharmacy professions, as well as other allied health professionals such as nurses, podiatrists, dental auxiliaries and orthoptists;

• The pharmaceutical and chemical industries; • Educational and research organisations; • Organisations and bodies that provide health services, such as ambulance

services, medical clinics, day surgeries and hospitals and approved providers of residential aged care;

• Miscellaneous organisations with genuine need to possess poisons or controlled substances, eg ship masters, yacht owners, qualified ski patrollers, Director of State Emergency Services and Municipal Officers, Environmental Health Officers and Immunisation Nurses;

• The public • Certain poisons retailers; and • Animal owners.

At a broader level, it should be noted that the whole of society is materially affected by the regulations, given the substantial externalities that are associated with the misuse of drugs, poisons and chemicals, as discussed above. The proposed regulations will be administered by the Drugs and Poisons Unit (DPU) of DHS. The DHS budget for 2005-06 is $10.9 billion, of which $1.6 million is devoted to the administration of the drugs and poisons legislation (i.e. the Act and its associated regulations, of which the proposed regulations will constitute the principal set). The DPU is staffed by administrative and technical staff with training in the medical, pharmacy, veterinary, science, nursing and legal fields. The DPU field officers visit regulated groups including health professionals, manufacturers and suppliers of drugs and poisons. The DPU also assesses applications from the pharmaceutical and chemical industries and health service providers who wish to obtain a licence to manufacture or wholesale drugs and poisons or a permit to purchase drugs and poisons. Licences and permits are issued under the Act. Assessment generally involves a site visit, the length and detail of which depends on the nature and size of the organisation and the substance involved. The DPU also conducts systematic monitoring and audit of persons and organisations subject to the Act and investigation of complaints and alleged breaches of the legislation and regulations.


Monitoring often involves a review of a professional’s or organisation’s systems for restricting access to controlled substances and ensuring they are, prescribed and supplied appropriately. This includes a review of the adequacy and security of storage facilities, record keeping practices and reconciliation to demonstrate that substances are not diverted from their intended source. Another key function of the DPU is the issue of warrants and treatment permits to medical practitioners to allow for the controlled prescription and use of drugs with the potential to cause significant harm to the population, if misused. Such drugs are those with addictive or teratogenic effects (i.e. causing birth defects).


5. Description of the proposed regulations 5.1. General The regulations are made under the authority of Sections 129, 131 and 132 of the Act. Section 129 authorises the making of regulations for the purpose of preventing the improper use of both drugs of dependence and Schedules 1, 4, 8 and 9 poisons. To this end it authorises regulations to regulate or control the manufacture, sale, possession, administration, use, supply, distribution and storage of those substances. Section 131 authorises regulations to be made to protect persons engaged in manufacture, sale, use or distribution or for the protection of the public from regulated poisons. In particular, it authorises regulations prohibiting manufacture, sale, supply etc, or restricting these activities by requiring them to be carried out under certain conditions, including licensing. It also authorises the making of regulations prescribing precautions to be taken in regulating or controlling the manufacture, storage use or handling of any such regulated poisons. Pursuant to these powers, the regulations deal only with regulated poisons as determined under the Act. These include drugs of dependence defined in Schedule 11 of the Act, and poisons included in the Schedules of the Commonwealth Standard, the SUSDP. The regulations deal with poisons listed in Schedules 4 and Schedule 8 (prescribed poisons), certain Schedule 7 poisons with high toxicity, Schedule 9 restricted poisons, and to a lesser extent Schedule 2 and Schedule 3 poisons, generally supplied by pharmacists. The regulations recognise that Schedule 5 and Schedule 6 poisons and most Schedule 7 are effectively regulated elsewhere. The regulations put restrictions around legitimate access to poisons or controlled substances, and establish fees for the inspection of premises seeking to manufacture and supply or purchase poisons or controlled substances. 5.2. The National Standard for the Uniform Scheduling of Drugs and Poisons Pursuant to inter-governmental agreements, Victoria adopts a nationally uniform standard for scheduling drugs and poisons. This forms the basis for the controls applied to various categories of drugs under the regulations. Victorian legislation to adopt the Schedules to the SUSDP by reference was passed in September 1994. The SUSDP is produced and updated by the National Drugs and Poisons Scheduling Committee, a sub committee of the Australian Health Ministers Advisory Council (AHMAC)7. The following outlines the Schedule’s classification of drugs and poisons and provides examples under each Schedule:

• Schedule 1. Blank • Schedule 2. Pharmacy Medicine – Substances, the safe use of which

may require advice from a pharmacist and which should be available from a pharmacy or, where a pharmacy service is not available, from a licensed person. Examples are cough and cold remedies and some pain relievers.

• Schedule 3. Pharmacist Only Medicine – Substances, the safe use of which requires professional advice but which should be available to the

7 As noted above, the Schedule is given authority by the Therapeutic Goods Act 1989.


public from a pharmacist without a prescription. Examples are antifungal creams, cough and cold medicines and bronchodilator sprays.

• Schedule 4. Prescription Only Medicine, or Prescription Animal Remedy – Substances, the use or supply of which should be by or on the order of persons permitted by State or Territory legislation to prescribe and should be available from a pharmacist on prescription. Examples are antibiotics, diuretics, antihypertensive medicines, oral contraceptives, stronger analgesics , prostaglandins, ovulatory stimulants, oral retinoids and thalidomide and benzodiazepines.

• Schedule 5. Caution – Substances with a low potential for causing harm, the extent of which can be reduced through the use of appropriate packaging with simple warnings and safety directions on the label. Examples are household poisons such as methylated spirits and turpentine.

• Schedule 6. Poison – Substances with a moderate potential for causing harm, the extent of which can be reduced through the use of distinctive packaging with strong warnings and safety directions on the label. Examples are agricultural and industrial chemicals such as strong acids, alkalis and pesticides.

• Schedule 7. Dangerous Poison – Substances with a high potential for causing harm at low exposure and which require special precautions during manufacture, handling or use. These poisons should be available only to specialised or authorised users who have the skills necessary to handle them safely. Special regulations restricting their availability, possession, storage or use may apply. Examples are chlorine, cyanide, dangerous agricultural chemicals, strychnine and arsenic.

• Schedule 8. Controlled Drug – Substances which should be available for use but require restriction of manufacture, supply, distribution, possession and use to reduce abuse, misuse and physical or psychological dependence. Examples include morphine, pethidine, codeine, most barbiturates, flunitrazepam and methadone.

• Schedule 9. Prohibited Substance – Substances which may be abused or misused, the manufacture, possession, sale or use of which should be prohibited by law except when required for medical or scientific research or for analytical, teaching or training purposes with approval of Commonwealth and / or State or Territory Health Authorities. Examples are illicit, mind-altering drugs such as heroin, cannabis and lysergic acid.

5.3. Summary of the proposed regulations This section briefly summarises the proposed regulations and highlights areas in which substantive changes are made to the existing (sunsetting) regulations. The full text of the regulations is attached as an appendix to this RIS. Part 1 This part relates to preliminary matters such as the objectives of the regulations, authorising provisions and definitions. Part 2 This part relates to drugs of dependence and Schedule 4, 8 and 9 poisons. Access to these substances is limited and they are only to be obtained via prescription by a registered health professional, or under a licence, permit or warrant, or under an approval granted by the Secretary of DHS. The divisions (1 to 9) within this part specify requirements with respect to possession, treatment, supply, storage, records, administration, destruction (Schedule 8 and 9 poisons),


cultivation of narcotic plants, and warrants for ovulatory stimulants, prostaglandins, retinoids and thalidomide. Division 1 - Possession While maintaining broader restrictions on the possession and use of the relevant poisons, the regulations in this section provide some flexibility and authorise other persons to possess certain poisons or controlled substances for administration in specific circumstances. These provisions recognise that in some situations where the possession for administration of certain drugs is necessary, it may be neither practical nor possible for a registered health professional to be present. These situations include when a person has had one of the poisons prescribed for a medical condition, persons caring for or assisting such persons, and when a carrier or messenger is delivering one of the poisons to a person who is authorised to possess it, such as a registered health professional. As well, nurses are authorised to possess poisons or controlled substances on the instruction of a registered health professional, under the conditions of a health services permit (eg in hospitals, including under standing orders), or where they have Secretary approval to possess in defined circumstances (eg immunisation nurses). Other persons who may be authorised include ambulance officers and paramedics employed by regulated ambulance services, St John Ambulance members with recognised level of training, ship owners, yacht owners or crew members when they are involved in races conducted under Yachting Australia rules, registered optometrists, podiatrists, orthoptists, dental auxiliaries, qualified ski patrollers, State Emergency Services, municipal officers, environmental health officers and immunisation nurses. Division 2 - Treatment This Division specifies the steps a registered health professional must take before administering, prescribing, selling or supplying various poisons or controlled substances8. Registered health professionals must take steps to ensure that the poison or controlled substance is for medical treatment and that there is a therapeutic need for the poison or controlled substance. Additional steps are needed to identify persons before supplying Schedule 8 or 9 poisons. The prescriber or supplier needs to be as sure as they can be by taking reasonable steps, that the person is who they say they are. In effect, if the prescriber or supplier does not already know the person, they would be expected to ask to see common forms of identification, for example a Drivers Licence, Medicare Card or Health Concession Card. This Division also specifies that pharmacists may only supply certain poisons under specific circumstances, such as on the prescription or order of a registered health professional or other authorised person. The regulations allow the pharmacist to supply in an emergency, on copies of prescriptions and on prescriptions issued in other States and Territories. Where it becomes apparent that someone has obtained poisons or controlled substances under false pretences, a registered health professional must notify the Secretary of DHS and a member of the Victoria Police.

8 For example, a dentist must ensure that the drug or poison is for the dental treatment of a person under his or her care, that they have taken all reasonable steps to ascertain the identity of the individual and that all reasonable steps have been taken to ensure a therapeutic need exists for that drug or poison.


This Division also requires registered health professionals other than in specified circumstances to hold permits prior to treating individuals with drugs of dependence, such as methadone. Division 3 - Supply This Division specifies who is able to prescribe the poisons in question (registered health professionals with the exception of pharmacists) and the style and particulars required for prescriptions. The strictest requirements apply to Schedule 8 poisons and Schedule 9 poisons. The regulations also specify requirements for the supply of poisons in emergency situations (by oral instruction for example), details that must be verified prior to supply on a prescription (for example that the prescription was written by the purported prescriber) and the required labelling for poison containers. The regulations define circumstances under which prescriptions must not be supplied, including if the prescription has exceeded its allowable lifespan, if the quantities specified on the prescription would be exceeded or have previously been supplied, or if the pharmacist suspects the prescription has been forged or altered. Supplied prescriptions for Schedule 8 or Schedule 9 poisons must be retained intact by the registered health professional making the supply for 3 years. The proposed regulations differ from the current regulations. For example, in recognition of the Electronic Transactions (Victoria) Act 2000, the regulations allow for an electronic signature as well as the handwritten signature on a prescription. Where a person is prescribed a drug of dependence or Schedule 8 or 9 poison and a pharmacist has reason to believe that a similar prescription may have been issued recently, the pharmacist must take reasonable steps to inform the current prescriber of the earlier supply. Such steps aim to promote the rational supply and use in particular of drugs of dependence, and curb tendencies by certain individuals to obtain excessive amounts of these poisons by “doctor shopping”. One important change to the requirements for labelling affects veterinary practitioners supplying in bulk for flock or herd treatment of animals. Under these circumstances, the veterinary practitioner need not label each container (this may be a lengthy and onerous task), provided each container contains the manufacturer’s label and the veterinary practitioner provides written instructions containing information consistent with what would be required on a label. Division 4 - Storage This Division specifies the steps that must be taken to ensure that Schedule 4, 8 and 9 poisons are stored safely and securely and as a result, inappropriate access is denied. Requirements relate to the dimensions and security of storage facilities and ongoing obligations to ensure a storage facility remains locked and secured. The most stringent storage requirements relate to Schedule 8 and 9 poisons where, in most circumstances, these poisons must still be stored in a drug cabinet that complies with minimum required security standards. Some flexibility has been incorporated into the new regulations. For example, registered medical practitioners and veterinary practitioners may now choose to store Schedule 4 poisons within the treatment room, as opposed to a “lockable storage facility”, as long as this room is locked to prevent access to unauthorised persons when the medical practitioner is not present. This change is desirable as it brings medical practitioners and veterinary practitioners in line with existing practice in pharmacies, and enables the treatment room to remain unlocked during day-to-day activities, as long as the medical practitioner or veterinary


practitioner is present. More importantly, this change is being made because the increase in security risk that it entails is considered to be very small in relation to the much more important benefits in terms of ready access in case of emergency and greater flexibility and convenience in the day to day running of these practices. In this context, it is emphasised that the medical and veterinary practitioners in question will be on the premises at all times and will be using the room in which the drugs are stored as part of their normal activities. Other regulations allow Schedule 8 poisons used in residential aged care to be stored in lockable rooms or lockable fixed storage facilities rather than requiring them to be stored in a drug cabinet. Other new regulations allow for storage of minimal volumes (up to 6 ampoules) of Schedule 8 or Schedule 9 poison to be stored in a lockable facility other than a drug cabinet, when set aside for emergency use. Finally, application may be made to the Secretary of DHS to store substances other than Schedule 8 and 9 poisons together with these poisons in the storage facility. Division 5 - Records This Division outlines who is obliged to keep records of the manufacture, preparation, use, transfer within and between premises, administration, sale, supply, disposal or destruction of Schedule 4, 8 or 9 poisons. Such parties are required to keep such details as the date of a particular event relating to that poison, the name and quantity of the poison and the names and details of the parties involved. These regulations ensure that transactions involving these poisons are accountable and any diversion, via illegal means, for example, can be identified. The most stringent records apply to Schedule 8 and 9 poisons where an accurate balance for each poison must be kept (i.e. via the drug register). The new regulations allow for records of Schedule 8 and 9 poisons to be kept electronically provided that they cannot be altered, obliterated, deleted or removed without detection. In addition, an adjustment to normal record keeping requirements for Schedule 8 poisons has been made for prescribed medication for persons in residential aged care. In the case of high care residents receiving medication from tamper-evident dose administration containers fully labelled by the registered health professional for the individual, the requirement to maintain the drug register is waived. Division 6 - Administration This Division states that a poison or controlled substance supplied by a registered health professional may only be administered to the person or animal for whom it was supplied. Secondly, the regulations specify the process that must be followed when a Schedule 4, 8 or 9 poison is to be administered to a patient. For example, a registered health professional who instructs a nurse to administer the medication, must provide a written instruction in a legible and durable form and confirm that order with a signature. The new regulations more clearly allow the Electronic Transactions (Victoria) Act 2000 to prevail in the case of electronically transmitted instructions. As is currently the case, the proposed regulations prohibit self-prescribing of drugs of dependence, or Schedule 4, 8, or 9 poisons. This means it is unlawful for a registered health professional to prescribe or supply one of these poisons to themselves. The most substantial change in administration relates to the administration of medication to high care residents in residential aged care which will be dealt with through legislative change. The new regulations will not include the current requirement that, in residential aged care services catering only for “high care”


residents, only a nurse is able to administer medication. Instead, it is proposed that a provision be inserted in the Act requiring that nurses manage the administration of medication to high care residents in all residential aged care services. This change will enable consistent requirements to apply across all aged care services with high care residents, while also providing greater flexibility in the use of staff resources and a more appropriate level of supervision. Division 7 – Destruction of Schedule 8 and Schedule 9 poisons Regulations specify the circumstances under which Schedule 8 and 9 poisons may be destroyed and prohibit their wilful destruction. Controls on destruction of these poisons form one part of the safeguards contained in the regulations against diversion of Schedule 8 and 9 poisons to illicit uses. These poisons can be destroyed by registered health professionals in the presence of specified witnesses and records kept. A new regulation enables nurses and other registered health professionals to destroy the unused contents of previously sterile containers without a witness. The existing safeguards requiring a record of destruction remain. Division 8: Cultivation of narcotic plants The regulation relates to section 72 of the Act and enables the Secretary of DHS to authorise the cultivation of narcotic plants for non-therapeutic use. This allows for limited use of narcotic plants in research. Division 9: Warrants for ovulatory stimulants, prostaglandins, retinoids and thalidomide This Division requires that registered medical practitioners hold warrants for the purchase, use, supply and prescription of ovulatory stimulants, a prostaglandin, a retinoid or thalidomide. These substances require additional controls because of their high potential to cause adverse effects if not handled responsibly. The reasons for restricting supply are described below:

Ovulatory stimulants: use is confined to Fellows of the Royal Australasian College of Obstetricians and Gynaecologists with expertise in reproductive medicine, because of the risk of multiple pregnancies. Prostaglandins: used during late pregnancy to facilitate labour, but can cause uterine overactivity that may cause foetal distress or lead to uterine rupture. Controls restrict use to a limited number of medical practitioners with specialist qualifications at hospitals with facilities to monitor foetal welfare during labour. Retinoids: used to treat severe acne, and can cause birth defects if taken during pregnancy. Restricting use to dermatologists and physicians encourages familiarity with the risk, and prevention of use during pregnancy, and optimal use of non-retinoid treatment of severe acne, thus optimising the overall use of retinoids. Thalidomide: used to treat a limited range of serious medical conditions, and can cause birth defects if taken during pregnancy. Restricting use to a limited number of specialists ensures that they are familiar with the risk,


and use it appropriately in the context of optimal non-thalidomide treatment.

A new clause is included to allow a warrant holder to instruct another doctor to use, supply or prescribe a drug in accordance with the existing warrant. This means that established treatment in hospitals and clinics can continue if the original warrant holder is absent. In addition, both the warrant number and warrant holder’s name will be required on any prescription written for a relevant poison.

Part 3 - Prescribed Poisons for Categories of Nurse Practitioner Refers to the various categories of nurse practitioner and the lists of poisons or controlled substances they are authorised to possess, use, sell or supply. Part 4 – Schedule 3 Poisons This Part applies to registered health professionals and licence and permit holders. It places the conditions on treatment with, and storage, display and supply of, Schedule 3 poisons (i.e. non-prescription medicines that are normally supplied only from a pharmacy). Registered health professionals must take all reasonable steps to ensure that a therapeutic need exists for the poison before it is supplied. In addition, these poisons must be stored in a way as not to enable self-selection by the public. It is an offence for anyone to supply a Schedule 3 poison merely to support drug dependence. Part 5 – Schedule 7 Poisons

This Part specifies that only those authorised or permitted under the Act or the regulations may manufacture, sell, supply, purchase or obtain, possess or use a listed regulated Schedule 7 poison. Retailers must also store Schedule 7 poisons in such a way as to deny or supervise public access. Special Schedule 7 substances are defined in the regulations as those substances listed as special Schedule 7 substances in Part 2 of Chapter 1 of the Poisons Code, and further described as those listed in Appendix C of Part 5 of the Commonwealth Standard. They are of such danger to health as to warrant prohibition of sale, supply and use. The regulations restrict possession and use to persons holding a licence, permit or warrant has been issued under the Act or regulations. Part 6 – General Requirements This Part imposes a number of conditions relating to all poisons or controlled substances, irrespective of the specific conditions contained in other sections of these regulations. A person who sells or supplies a poison by wholesale or retail must ensure it is in its original unopened pack. A member of the Victoria Police or the Secretary of DHS must be notified of the theft or loss of a poison. Part 7 – Licences and Permits Issued Under the Act This Part prescribes the regulatory fees for licences and permits issued under the Act. It lists fees for new applications, renewals and amendments, which operate across Schedules 2,3,4,7,8 and 9 (other than heroin). Licence fees relate to manufacture and/or sale or supply by wholesale, retail (Schedules 2 and 7).


Permits enable industry, educational and research facilities and health services to purchase or obtain poisons or controlled substances (other than by prescription or from a pharmacy). In accordance with the Commonwealth Standard, licences to retail Schedule 2 poisons are not issued unless the premises are more than 25 kilometres from the nearest pharmacy business. Proposed changes to the range of licence and permit fee categories will align the extent of the regulatory requirements more closely with the scale and scope of the intended operations of the applicant. This will have the effect of reducing the administrative costs of applying for and obtaining a licence or permit, as well as licence and permit fees, for significant numbers of smaller businesses. Licences and permits have a 12-month duration, in accordance with the requirements of Section 21 of the Act. Fees The Act provides for fees to be charged for the issue of licences to manufacture and/or sell or supply by wholesale, or retail and permits to purchase or otherwise obtain poisons and controlled substances. This function is separate from other aspects of the proposed regulations. Typically, those organisations that apply for licences are involved in chemical and pharmaceutical manufacture and wholesale distribution. Organisations that apply for permits to purchase or otherwise obtain poisons or controlled substances include industry, educational and research organisations (university and hospital research departments, research facilities) and organisations providing health services, such as ambulance services, day clinics, aged care facilities and hospitals. The issue of licences and permits allows for restricted poisons and controlled substances to be possessed in specific circumstances. Mandatory inspections and compliance audits of premises relating to licences and permits, helps to ensure that poisons are handled effectively and securely. Therefore, the licensing regime requires licence and permit holders to establish and maintain appropriate storage, security and record keeping systems, as they are accountable for the responsible handling of the poisons. The regulatory fee for licences and permits relates solely to the administration of that system. It covers costs involved in mandatory inspections, ongoing audits, reviews of new and amended Poisons Control Plans, minor amendments and providing specialist advice to existing and potential licence and permit holders. The regulatory fee does not encroach on areas where it is established Government policy that costs are funded by consolidated revenue in the public interest. This includes administration of the Schedule 8 treatment permit system, the warrant system for certain listed regulated poisons, the Pharmacotherapy Program, monitoring the activities of and providing advice to registered health professionals supplying poisons or controlled substances on prescription to the general public and conducting compliance investigations and prosecutions. Therefore, regulatory fee revenue does not recover DHS total costs for administering the Act and regulations, but rather that proportion which is incurred in relation to licence and permit holders. Legislation has provided for fees to be charged for the issue of licences and permits since 1983, and fees have been set at a level that recovers the direct costs described above since 1995.


The proposed fees for each type of licence or permit are outlined in Table 2. Where possible, the current fees are presented in parentheses for comparison. However, as discussed in the footnotes, some categories of licences have been changed from those applied under the current regulations. This renders direct comparison impossible in many cases. In the regulations the fees are presented as fee units, with the value of a fee unit being $10.49 as of 1 July 2005.


Table 2: Proposed licence and permit fees for manufacture, supply, and purchase of poisons

Type of Licence or Permit Proposed Fees (existing fees) Application Renewal Amendment MA Manufacture and sale or supply by

wholesale of any Schedule 8 or 9 poison, other than heroin

$1128.37 ($1147.60)

$773.94 ($1,088.90)

$55 ($55.60)

MP 4 Manufacture and sale or supply by wholesale Schedule 4 poisons

$826.66 ($844.50)9

$404.65 ($501.40)

55 ($55.60)

MP 2,3,7

Manufacture and sale or supply by wholesale Schedules 2, 3 or 7 poisons

$597.24 ($844.50)

$210.98 ($501.40)

55 ($55.60)

MPR 7 Manufacture and sale or supply by retail any Schedule 7 poison (other than a Schedule 7 poison included in the Poisons Code in the list of substances that are not for general sale by retail)

$517.30 ($544.40)

$194.99 ($350.40)

55 ($55.60)

WA Sale or supply by wholesale any Schedule 8 or 9 poison other than heroin

1128.37 ($1147.60)

$773.94 ($1,088.9)

55 ($55.60)

WP 4 Sale or supply by wholesale Schedule 4 poisons (together with any Schedule 2, 3 or 7 poisons)

$826.66 ($778.40)

$404.65 ($464.70)

55 ($55.60)

WP 2,3,7

Sale or supply by wholesale Schedule 2, 3 or 7 poisons

597.2410 ($778.40)

210.98 ($464.79)

55 ($55.60)

WA Indent

Sale or supply by wholesale any Schedule 8 or 9 poison other than heroin – by Indent

517.30

350.89 55

WP4 Indent

Sale or supply by wholesale Schedule 4 poisons (together with any Schedule 2, 3 or 7 poisons) – by Indent

517.30 238.11 55

WP 2,3,7 Indent

Sale or supply by wholesale Schedule 2, 3 or 7 poisons – by Indent

517.30 194.99 55

GDL Sale or supply by retail any Schedule 2 poison

353.13 ($446.90)

147.62 ($251.80)

55 ($55.60)

Permit 8,9

Permit to purchase or obtain or use any Schedule 8 or 9 poison, or any Schedule 8 or 9 poison plus any Schedule 2, 3, 4 or 7 poison for industrial, educational or research purposes

501.83 ($660.90)

191.89 ($346.20)

55 ($55.60)

9 Categories of licences to manufacture and sell by wholesale have been revised from the current regulations. Thus, while licence MA is unchanged, separate licence fees for MP4 and MP2,3,7 are provided to enable a lower fee to be charged for inspections where S4 poisons are not involved 10 Wholesale sale and supply licence categories have changed, to cover supply by indent and to provide a separate and lower fee where inspection of S4 poisons is not involved.


Table 2: continuedPermit 2,3,4,7

Permit to purchase or obtain and use any Schedule 2, 3, 4 or 7 poisons for industrial, educational or research purposes

459.71 ($560.20)

162.86 ($312.60)

55 ($55.60)

Health Services Permit – to purchase or obtain and use any poisons or controlled substances for the provision of health services Type A Type A – single site, no beds 379.77

($560.20) 151.43 ($312.60)

55 ($55.60)

Type B Type B – residential aged care, single storage facility (no bed limit) OR single site of 1 to 30 beds

581.76 ($560.20)

214.81 ($312.60)

55 ($55.60)

Type C Type C – multiple sites and no beds OR 31 to 100 beds

800.02 ($642.00)

358.67 (339.90)

55 ($55.60)

Type D Type D – multiple sites OR more than 100 beds

1135.23 ($909.50)

506.48 ($429.00)

55 ($55.60)

NB: Indent refers to supply of drugs where the licence holder does not take possession A detailed explanation of each of these steps for estimating the cost of receiving, assessing, approving and monitoring licence and permit applications and the subsequent justification for setting the fees at the proposed level is included in Appendix 1. SCHEDULES Schedule 2 contains the FORMS and Schedule 3 contains the prescribed poisons that various categories of nurse practitioner (e.g. wound management, intensive care unit liaison, young people’s health and palliative care) are authorised to obtain, have in their possession and use, sell or supply.


6. Expected benefits of the proposed regulations 6.1. Overview 6.1.1. Best practices in drug regulation As noted above, there is a high degree of commonality in the approaches to drug regulation taken internationally. This reflects the substantial degree of consensus that exist as to the nature and extent of the problems associated with the misuse and abuse of drugs and, importantly, the appropriate controls. The World Health Organisation (WHO) has set out the key elements that must be contained within a complete and fully effective system of drug regulation. In general, drug legislation must:

• Define the categories of medicinal products and activities to be regulated; • State the missions and goals of drug regulation; • Create the administrative bodies necessary for implementing drug

regulation, and define their structural and functional relationships; • Define the qualifications and standards required for those handling drugs; • Create mechanisms to ensure that all responsible parties are licensed and

inspected and ensure compliance with drug legislation and with the standards and specifications laid down for persons, premises and practices;

• Define the norms, standards and specifications necessary for ensuring the safety, efficacy and quality of drug products, as well as the appropriateness and accuracy of product information;

• State the terms and conditions for suspending, revoking or cancelling licences to import, manufacture, export, distribute, sell, supply or promote drugs;

• Establish the administrative measures and legal sanctions that will be applied if drug legislation provisions are violated;

• Create mechanisms for ensuring the transparency and accountability of drug regulatory authorities to the government, the public and consumers;

• Create mechanisms for ensuring government oversight11. The centrality of the current regulations to drug legislation can be seen in the fact that they deal with seven of the ten key elements of drug legislation identified above by WHO. The elements of an effective regulatory system to which the proposed regulations contribute are underlined above. WHO concludes that Australia’s system of drugs regulation includes all of the necessary elements cited above. However, it also points to the substantial difficulties involved in attempting to measure the effectiveness of regulatory systems within countries in controlling the misuse of drugs and in making meaningful comparisons between countries. The WHO findings point to the difficulties inherent in providing comprehensive estimates of the benefits of the existing regulations and, by extension, the benefits of the proposed regulations. However, a number of partial indicators of the likely benefits are highlighted in this section. 11 Ratanawijitrasin, S & Wondemagegnehu, E, Effective Drug Regulation: A Multicountry Study. World Health Organisation, (2002), pp 128-9.


6.1.2. Overview of major benefits attributable to the proposed regulations As noted in Section 4, there are several broad categories of benefits attributable to the regulations. These relate to the minimisation of the following adverse outcomes:

• Poisoning: Due to accidental or intentional ingestion of poisons or harmful chemicals or to ingestion of inappropriate drugs or drugs in inappropriate quantities;

• Drug dependence: Due to the abuse of certain substances, leading to adverse health and social consequences, including criminal behaviour; and

• Failures of effectiveness: Use of medicines inappropriately leading to a lack of efficacy – that is, in a failure to treat the relevant malady as effectively as is possible, leading to increased pain and suffering and economic losses.

The major mechanisms employed by the Act and regulations to minimise these harms are restrictions on the right to manufacture and sell drugs by wholesale, restrictions on the right to possess and supply drugs and restrictions in relation to the storage and destruction of drugs. In general terms, the links between these controls and the achievement of the benefits noted above are as follows:

Restriction on right to manufacture and sell by wholesale (the Act) Licensing of manufacturers provides an important mechanism for allowing the quality of drugs being manufactured to be monitored and controlled. Quality control helps ensure the effectiveness of the therapeutic use of drugs while minimising the risk of poisoning due to substances contaminating drugs. It also helps to ensure that drugs cannot be diverted to illicit uses by helping to enable a system of tracking of all drug manufacture and supply to be adopted. Reducing the incidence of drug diversion is an important means of minimising the risk of illicit use and consequent drug dependence. Restriction on the right to prescribe and supply drugs and circumstances of prescribing and supply (the Act and regulations). Restricting the right to prescribe drugs to persons with appropriate medical qualifications12 ensures that sound clinical judgements are made with respect to the appropriate drug to treat particular conditions and that adverse outcomes due to negative drug interactions and drug intolerance are avoided. These controls therefore assist in maximising the effectiveness of drug use and minimising poisoning (broadly defined). Restrictions relating to the storage and destruction of drugs (regulations) These restrictions are aimed at minimising the risk of drugs being diverted to illicit purposes by either theft or illicit supply. They form part of a broader system of accountability for the movement of drugs throughout their “lifecycle” from production (or production of precursor chemicals in some cases) to use or

12 Essentially medical practitioners, but also a range of allied health professionals to a limited degree, involving a narrow range of drugs.


destruction. As noted above, minimising illicit use of drugs will minimise the risks of both poisonings and of drug dependence. 6.1.3. Other benefits attributable to the regulations Performance-based standards The regulations also represent a performance-based approach that seeks to minimise compliance costs while maintaining necessary controls. This approach was first applied in 1995 when the current regulations were made. It has not only reduced the size of the regulations but enables health professionals to determine the most effective and efficient way to comply with the regulations consistent with their own work practices. For example, previous prescription in relation to the required design and installation of drug safes was replaced by performance based requirements whereby a particular design of cabinet set the minimum security standard and installation was defined by minimum times for which facilities could resist hand and power tool attack. Therefore, the proposed regulations reinforce and complement other legislative and regulatory instruments in relation to the training and professional standards for medical practitioners, dentists, veterinarians and pharmacists. They rely on the high standards imposed on these professionals in terms of professional qualifications. Conversely, the regulations ensure that those without the necessary professional qualifications, training or legitimate need are prevented from accessing dangerous substances. National uniformity benefits Finally, the proposed regulations satisfy commitments made by the Victorian Government to enact national standards for the control of drugs and poisons, such as the SUSDP. Reliance on national standards, nationally agreed codes of practice and a consistent approach across jurisdictions can be expected to enhance understanding of the rationale for, and application of, the standards by health professionals and therefore assist compliance. This also applies to manufacturers and distributors, particularly those that operate across a number of jurisdictions. Manufacturers also reap important cost savings in relation to packaging and labelling as a result of the establishment of uniform standards in respect of these requirements. It should be noted that these national uniformity issues are essentially in the province of the Act and that the regulations are simply instrumental in implementing supporting matters, for example in relation to storage requirements. Refining the regulations over time The regulations have been continuously refined and improved in response to emerging issues and improved knowledge. This has allowed the costs of maintaining high levels of control over drug use to be minimised and, in some cases, has led to improvements in the effectiveness of the regulations. The following section provides some specific examples of the beneficial outcomes of recent regulatory changes in order to demonstrate the capacity for even small improvements in the regulatory environment to yield substantial benefits to the community.

• The existing regulations place a substantial check on “doctor shopping” by individuals seeking to obtain multiple prescriptions for drugs of dependence or Schedule 8 poisons from different medical practitioners within the same time period (defined as 8 weeks). If an individual


presents a prescription from a different medical practitioner to the pharmacist, and the pharmacist recognises that earlier supply has occurred, the pharmacist is obliged to inform the current prescriber of that fact. This mechanism enables communication between the medical practitioners and the pharmacist to determine the most appropriate action. It reduces the potential for individuals to fraudulently obtain prescriptions for Schedule 8 poisons. This regulation is extended in the new regulations such that a pharmacist only needs to have “reason to believe” that an earlier supply was made, and is to take “all reasonable steps” to inform the current prescriber

• The capacity of the regulations to cater for computer generated

prescriptions that include the handwritten signature of the prescriber, without each registered medical practitioner being individually approved, means that computer generated prescriptions are widely adopted and the doctors instructions are more likely to be accurately interpreted by the pharmacist and relayed on the pharmacist label.

• Electronic monitoring of access to storage systems of Schedule 4 and 8

poisons within certain ambulance services now allows the ambulance officers to restock their ambulances from the nearest ambulance station. This promotes efficiency, as well as accountability and security.

• Existing regulations no longer specify the exact manner in which poisons

transactions need to be recorded. Earlier regulations detailed specific recording requirements for ward-to-ward transfers of poisons within hospitals. The existing regulations enable hospitals to use electronic poisons management systems.

• Earlier regulations required that Schedule 8 records and cumulative totals

be kept manually to identify alterations to records, while other records could be maintained electronically. This meant for example that relevant wholesalers maintained a manual and an electronic recording system. The existing regulations allow new technologies in stock control that also track alterations to records. These systems are now adopted by major wholesalers, and are starting to be seen within pharmacies.

• Earlier regulations specified the construction of the drug cabinet, including

detail on how the cabinet should be attached to the floor or walls, that was needed to store drugs of dependence. The current regulations do not specify how the cabinet should be attached to the floor and walls but require that it should resist manual or power tool attack for certain specified times.

6.2. Quantitative benefit estimates It is inherently difficult to quantify or attach a monetary value to many of the benefits that the proposed regulations will generate as strict controls on the use of drugs, poisons and harmful chemicals have been a place in Victoria for a long period of time. Thus, it is difficult to infer the degree of effectiveness of the regulations by reference to the characteristics of an estimated unregulated scenario. That the likely benefits are substantial is indicated by the very great prevalence of the drugs in question. For example, it was noted above that, in any two-week period, approximately 70 per cent of Australians will take at least one form of medicine. The widespread use of pharmaceuticals within society highlights the


prevalence of the risks that are associated with accidental or deliberate misuse. Such misuse can have severe health consequences, up to and including death, as well as contributing to a range of other social problems, including criminal behaviours. Furthermore, this RIS has previously noted that a large number of hospital admissions and cases treated in general practice are due to the adverse effects of drugs and poisons. It has been estimated that across Australia 140,000 hospital admissions annually are due to adverse drug events while an additional 400,000 cases are treated in general practice. One authority estimates that such events are the fifth most common cause of death among hospitalised patients13. It was noted that a large proportion of these incidents were potentially avoidable. In the context of Schedule 4, 8 and 9 drugs (i.e. medicines), the causes of medication incidents, where inappropriate exposure to particular substances causes harm to a patient receiving health care can be attributed to a number of factors, such as:

• Errors in the administration where the patient did not receive prescribed medicine at the right time or received an incorrect dose;

• Errors in prescription where medical records are incorrectly transcribed; • Errors in dispensing where the incorrect medicine is dispensed from a

hospital pharmacy; • Errors in medication records where previous adverse reactions or allergies

were not properly documented; • Errors in the review of medical records; • Communication problems either between health professionals or between

a health professional and a patient, due to problems of legibility or the completeness of records;

• Errors in pharmacies where an incorrect or inappropriate medicine or dosage is provided or if a prescription is incorrectly interpreted. These problems often occur when product names look or sound similar or if packaging is similar.

More generally, many of these incidents can be attributed to failures of appropriate systems or procedures for the control of the possession and use of potentially harmful substances, a failure on the part of health professionals to adhere to proper procedures or misuse by patients (either deliberately or inadvertently). To the extent that failure to comply with the existing drugs and poisons regulations contributes to the overall impact of medication incidents, it is apparent that, in the absence of the controls provided for in the regulations, a substantially greater incidence of these adverse incidents would be expected. In principle, the benefits of the regulations are found in the reduction in adverse impacts related to drugs and poisons vis-à-vis what would be expected in an unregulated scenario. Some examples of the mechanisms by which the proposed regulations will contribute to a reduction in the rate of misuse of drugs and poisons are as follows:

13 Use of potentially inappropriate medications among elderly common in some European countries Fialova, D., et al. Journal of the American Medical Association, Vol 293, No. 11, March 2005.


• Regulation 25 ensures that only those with appropriate training and qualifications are legally able to write a prescription. A person other than a medical practitioner, nurse practitioner, veterinary practitioner, dentist or optometrist is prohibited from writing a prescription for a Schedule 4, 8 or 9 poison. This restriction substantially reduces the likelihood that medicines will be illegally supplied or prescribed inappropriately and thereby minimises adverse health outcomes due to adverse drug reactions, including deleterious combinations of drugs. It also increases the likely cost-effectiveness of drug prescription;

• Regulation 26 ensures that those able to prescribe certain poisons must communicate the range of specified instructions clearly to the pharmacist in terms of the substance and the patient to receive the substance. This is done either in legible handwriting or in a manner approved by the Secretary that is secure and legible. Details to be included relate to the prescriber, the patient, the date of the prescription and directions for the precise dose and frequency of administration. These provisions reduce the likelihood that the pharmacist will supply the incorrect poison for a person or include the incorrect instructions on the label. This in turn will reduce the risk that the incorrect person will take incorrect poison or dosages, which would result in reduced efficacy and, potentially harm to health;

• Regulation 35 ensures that Schedule 8 and 9 poisons are stored securely by specifying that they must be held in a lockable storage facility subject to certain minimal structural requirements. This requirement reduces the capacity for break-ins and consequently the incidence of theft of drugs, particularly by drug dependent persons or those supplying the illegal drug trade, and thus minimises the incidence of self-harm due to misuse of drugs and societal costs; and

• Regulation 40 ensures that complete, accurate and durable records are kept of transactions involving controlled substances which in turn, assists the identification of any diversion from their intended to source. This is done by requiring people involved in the transaction to record details such as the date on which it occurred, the name, form, strength and quantity of the substance and details of other parties to the transaction. These provisions also reduce the expected incidence of misuse of drugs.

In general, it is clear that the regulations help to reduce the number of “medication incidents” that arise due to several causes. Equally, other causes of medication incidents are beyond the scope of the regulations and they will not have any effect on the number of incidents that are attributable to these causes. This factor – i.e. that observed harms relate to many causes, only some of which are affected by the regulations – contributes further to the difficulties of quantification cited above. Moreover, it must be recalled that Victoria is already operating in a regulated environment and has done for decades past. Therefore, baseline information on the harms that can be expected to occur in a similar, but non-regulated, environment is impossible to obtain. Given this, one approach to estimating the likely benefits of the current regulatory restrictions on drugs and poisons is to review the available evidence on harms currently resulting from the abuse of drugs and poisons or from their inappropriate use and to infer the additional harms that might be expected to occur in the absence of an effective regulatory regime. In effect, data on the size of the harms that persist in the presence of the current regulatory arrangements provide an indication of the scale of the problem, while adopting a range of estimates on the probable effectiveness of the existing regulatory structure would allow inferences to be drawn as to how much greater these harms would likely be in the absence of regulation. The difference then constitutes a measure of the probable benefits of the regulatory structure.


Such an approach is highly approximate. Moreover, it does not allow us to separate the likely impacts of the proposed regulations from those of the Act and of other interlocking elements in the broader Federal and State regulatory structure. A further issue to be considered is that the environment within which the regulations operate is one in which the prescribing of medication in general and drugs of dependence in particular, has escalated dramatically. The more widespread use of drugs, for both licit and illicit purposes, necessarily means that the size of the potential harms associated with drug misuse and abuse are also increasing substantially. This suggests that even relatively static trends in terms of actual harms reported can be considered as constituting evidence of improved effectiveness when set against the background of increasing potential harms. Cost of medication incidents As noted above, a key purpose of the regulations is to ensure that medications are used effectively and that adverse outcomes from the use of medication area avoided. However, despite the substantial controls imposed by legislation and regulation there remains a significant incidence of adverse impacts due to medication use. For example, the Second Report estimated that medication incidents where there is harm to a patient receiving health care accounted for approximately 2 to 3 per cent (or 140,000) of all hospital admissions in Australia each year. The Report suggested that as many as 40 per cent of these incidents were preventable. More recent data are available from ABS14 and broadly confirm these estimates. These show that, across all hospital types, 3.8% of principal diagnoses leading to admissions relate to “injury, poisoning and certain other consequences of external causes”. A substantial proportion of these admissions would relate to adverse medication incidents. ABS data 15 provides average cost data for public hospital stays. These data show that the average cost per patient day (Australia wide) is $1,115, with an average stay of 4.0 days. These data can be combined with the above estimates of admissions due to medication incidents to obtain some indication of the aggregate costs involved. As noted above, around 40 per cent of the 140,000 annual admissions due to this cause were considered to be avoidable. This amounts to 56,000 avoidable admissions due to medication incidents per annum. Applying the average stay of 4 days and average daily rate of $1,115 to these data provides the following estimate:

56,000 x $1,115 x 4 = $249.8 million per annum. That is, even in the presence of the regulations, avoidable medication incidents still cost around $250 million per annum Australia-wide. In present value terms, this cost is equal to $1.93 billion over ten years. By no means would all of these admissions relate to matters that are covered by the proposed regulations: indeed, probably a minority of cases would fit within this category. However, these estimates clearly indicate that a significant problem remains even in the presence of longstanding regulatory controls. The implicit benefit of having these controls in place, in terms of avoidance of substantially greater harms due to medication incidents, is thus apparent.

14 See ABS 4390.0 Private Hospitals Australia 2003-04. 15 ABS 1301.0 2005 Health care delivery and financing


Efficiency benefits. ABS data in relation to the Pharmaceutical Benefits Scheme (PBS)16 show that, in 2003-04, 165.4 million PBS prescriptions were issued, equal to an average of 8.2 prescriptions per person. The cost of these prescriptions to the Australian Government was $5.6 billion, while patients also paid a substantial further amount in co-contributions. The size of these expenditures underscores the importance of ensuring that drugs are only prescribed in circumstances in which they can confidently be expected to generate positive clinical outcomes and, indeed, that they represent the most efficient and effective available drug. Clearly, the regulations contribute substantially to ensuring that this is the case by requiring that drugs only be obtained from a regulated health professional on a valid prescription. If it is speculated that PBS expenditures might otherwise be, say, 50 per cent higher, due to lower efficiency of prescription, the additional costs to government alone would be around $2.8 billion per annum. This is equivalent to $21.6 billion over ten years in present value terms. Again, this projected benefit (i.e. avoidance of these additional expenditures as a result of effective regulatory controls) excludes the gain due to lower patient co-contributions. 6.3. Benefits associated with proposed changes to the existing regulations RIS in respect of sunsetting regulations are required to analyse benefits and costs against a notional unregulated alternative scenario. The above discussion adopts this perspective. However, where the sunsetting regulations are to be replaced with largely similar regulation, it is also important to clarify the purpose of the proposed changes and to highlight the benefits and costs associated with them. This section provides detail on these issues. 6.3.1. Dental auxiliaries to become authorised for possession As noted in Section 4.3, the proposed regulations would allow the Secretary of DHS to authorise dental auxiliaries (i.e. dental hygienists and dental therapists) to possess certain Schedule 4 poisons, such as local anaesthetics.

Dental auxiliaries administer local anaesthetic as part of their clinical practice. This enables them to perform the range of tasks specified in the Dental Practice Board of Victoria’s (DPBV) Code of Practice, which was promulgated in April 2002. Tasks include ‘local anaesthesia for dental procedures’.

Dental auxiliaries are appropriately trained to be able to administer local anaesthetics competently and are registered through the professional body.

Dental therapists may be employed by Dental Health Services Victoria (DHSV) and other external organisations, and dental hygienists are mostly employed in the private sector. Under current arrangements (i.e. without the separate authorisation the proposed regulations will provide) a dental auxiliary would need to be acting under the supervision of a dentist, or the organisation utilising the skills of the dental auxiliary would need to hold Health Services Permit in order for a dental auxiliary to be able to possess local anaesthetics. These options could be costly for dental organisations.

16 Ibid.


The new authorisation provides a clear recognition that dental auxiliaries need to be in possession of certain Schedule 4 poisons in the conduct of their profession. It allows greater efficiency in the day-to-day activities of dental auxiliaries and introduces greater flexibility and cost effectiveness in their movement throughout the dental workforce.

There are no costs associated with this amendment.

6.3.2. Orthoptists to become authorised for possession The proposed regulations would also allow orthoptists to be authorised by the Secretary to possess certain Schedule 4 poisons, such as eye drops. Orthoptists are degree-qualified allied health care practitioners specialising in the clinical application of ocular physiology and optics. According to the Orthoptists Association of Australia approximately three quarters of orthoptists work in conjunction with ophthalmologists either in public hospital settings or in sponsored private practices. Orthoptists form an important part of the eye health team providing investigative testing of diseases such as glaucoma, assessment and management of eye movement disorders and rehabilitation of persons with sight loss due to eye diseases such as age-related macular degeneration. They have adequate training to possess and administer eye drops, and will be practicing under the direction of a registered medical practitioner or authorised optometrist. The proposed change to allow separate authorisation for persons registered as orthoptists with the Australian Orthoptic Board to possess Schedule 4 poisons that are local anaesthetics and cycloplegics in topical eye preparations. The change reflects that made in New South Wales in 1996, whereby orthoptists can administer restricted substances (Schedule 4 eye drops) on the direction of a medical practitioner, in public hospitals and community health centres. The change will promote the efficient use of trained resources and help to minimise costs and improve access to services. There are no costs associated with this amendment. 6.3.3. Administration of drugs in aged care services As noted above, the existing requirement that only nurses are able to administer drugs in high care residential aged care services will be removed. New requirements will be inserted into the Act. These will apply controls to the administration of medication to all aged care services regulated by the Aged Care Act 1997 (Commonwealth), while introducing a more flexible regime requiring nurses to make a professional judgement as to who should administer medication to high care residents according to guidelines established by the Nurses Board of Victoria. The change is consistent with the Aged Care Act 1997 (Commonwealth), where nurses are required to develop care plans for aged care residents. The proposed requirements will ensure that medication management is included in care plans. Changes in storage and record keeping requirements for Schedule 8 poisons are proposed to introduce a uniform standard for storage and record keeping for all aged care services where there is at least one high care resident. The proposed regulations require that Schedule 8 medications be locked away, but not


necessarily within a Drug Cabinet. In addition, they no longer make it essential to maintain a drug register for Schedule 8 poisons that are prescribed for specific residents, supplied in tamper-evident dose administration containers and labelled by the pharmacist. To maintain such a register (which means maintaining an ongoing drug balance) when medication is supplied in dose administration containers would be onerous and impractical. The changes enable all poisons or controlled substances for all residents in aged care services to be handled consistently and with the same degree of security. This means that approved providers and their staff do not need to manage different storage and record keeping systems that depend upon the resident category and the poison Schedule. In aged care facilities that currently do not have a Drug Cabinet, there will be no requirement to purchase one. Given that most medications will be prescribed for the individual residents, and that most would be Schedule 4 rather than Schedule 8, and that some medications at least would be provided in tamper evident dose administration containers, the opportunities for diversion of Schedule 8 poisons are assessed as low under the new regulations. Diversion from tamper evident dose administration containers would be immediately apparent and could be quickly investigated. If the residential aged care facilities did need to hold stocks of poisons or controlled substances (i.e. other than medication prescribed and dispensed for a specific patient), then they would need to obtain a Health Services Permit and the stricter storage and record keeping requirements would apply. 6.3.4 Ambulance officers and paramedics to be authorised to possess certain drugs The proposed regulations will allow ambulance officers and paramedics employed in regulated ambulance services, as well as appropriately qualified members of St John Ambulance Australia (Vic) to be in possession of the poisons or controlled substances listed in the Health Services Permit of their employing organisation. In effect, these officers are already permitted to possess the relevant poisons or controlled substances, since this is the effect of the employing organisations’ Health Services Permits. However the new regulations make it transparent that officers from these organisations are in legal possession of certain poisons or controlled substances to use for emergency treatment of the public. The benefit of this change is in removing any uncertainty as to the position of these officers. 6.3.5 Electronic transactions It is the intention of the proposed regulations to more clearly provide for the writing, sending, checking and retaining of prescriptions, orders or instructions by electronic means, provided the methods used meet the requirements of the Electronic Transactions (Victoria) Act 2000. This means that where handwritten signatures were specified, signatures are now required. A signature can be a handwritten signature, or where electronic transactions are used, a signature that can be achieved by a method that meets the requirements of the Electronic Transactions (Victoria) Act 2000. Consequently, where a handwritten signature is no longer provided on an electronically transmitted document, the new regulations require a person to take reasonable steps to verify the prescription was written by the purported prescriber. In the case of electronically transmitted prescriptions, reasonable steps would be expected to include confirming that the process used by a purported prescriber complied with the provisions of the Electronic Transactions


(Victoria) Act 2000. It is intended that DHS will be active in working with medical and pharmacy organisations to give guidance on this issue. The Electronic Transactions (Victoria) Act 2000 recognises the importance of developments in information technology. It provides a framework for using electronic transactions, including in dealings with government and promotes confidence in electronic transactions. Consequently there are benefits for the regulations not to stand in the way of introducing more flexible and efficient electronic transactions, as long as equivalence in identity and security are maintained. 6.3.6 Other changes The remaining changes to the proposed regulations largely introduce refinements and efficiencies into the current system. They are designed to facilitate drugs and poisons transactions while operating within the safeguards of the current regulatory framework. Samples of medicines The proposed regulations do not include a restriction on possession of Schedule 4 poisons samples by sales representatives (being agents of drugs and poisons licence holders). This facilitates the adoption in Victoria of the new national industry Code of Practice, which allows more flexible arrangements for industry. Adherence to the code will become a condition of the drugs and poisons licence. Veterinary medicines The proposed regulations will allow owners and custodians of herds and flocks of animals to possess prescribed medications in stockfeed when supplied directly from the stockfeed wholesaler. This practical change means that bulk medicated stockfeed can legally be transported directly from the wholesale supplier to the animal owner, instead of being supplied from the supplier, to the veterinary practitioner and on to the animal owner. There are no costs to this change, and existing safeguards apply because the medicated stockfeed can only be lawfully supplied on the order of a veterinary practitioner. Labelling requirements The proposed regulations introduce efficiencies in labelling of containers of drugs and poisons beyond the manufacturer’s label. The proposed regulations will allow a veterinary practitioner not to separately label each container of Schedule 4 medication supplied in bulk, as long as each container retains the manufacturer’s original label and the veterinary practitioner supplies written instructions. This change enables the practical and efficient use of resources, as long as safeguards are in place. There has also been a slight change in the wording for labelling requirements to allow writing on the labelling panels of starter packs of medicines. Storage requirements The proposed regulations reduce inconsistencies in requirements for storage and access to Schedule 4 poisons as they apply to different health professionals. Currently, Schedule 4 poisons need to be locked away unless access is needed. However, this requirement does not apply in pharmacies, where Schedule 4 poisons are not locked away but are stored in open shelves under the continual


supervision of the pharmacist. The change will allow Schedule 4 poisons stored in the treatment room of medical and veterinary practices to be accessible in a similar manner. The room will not need to be continually locked and unlocked throughout the day, but may remain unlocked during busy times as long as an authorised person, i.e. a medical practitioner is present to supervise. The room is to remain locked when the authorised person is otherwise occupied or absent. The change allows medical practices to determine efficient and secure working arrangements around any Schedule 4 poisons stored (and used) in the treatment room. Similarly, the proposed regulations relax storage requirements for Schedule 8 poisons stored in limited stocks (up to six divided doses) for emergency use. These stocks will not need to be stored in a Drug Cabinet, and consequently can be mobilised quickly and easily in an emergency. This would relate to emergency poisons stored in a Crash Trolley. The emergency supply needs to remain locked, to ensure emergency supplies are present when needed, however the security level is reduced. Reduced security would provide easier illegal access to these poisons, however given the limited stocks involved and the benefits of emergency treatment for patients, there overall benefit is assessed as outweighing the cost. Prescription of Schedule 8 and 9 drugs The proposed regulations enable medical practitioners acting under the instructions of other medical practitioners who hold a warrant to use certain highly regulated human therapeutics (specialists), to continue to supply that medication. This enables continuity of care of the patient if the warrant holder is absent, or if the patient does not have ready access to the warrant holder (eg lives some distance from the specialist). As an additional safeguard, any prescriptions or orders written by the subordinate medical practitioner are to include the name of the warrant holder. Prescription by optometrists The proposed regulations remove a current restriction on the issuing of repeat prescriptions by optometrists. The practical change recognises that optometrists may need to treat patients with long-term eye complaints. Over-supply of drugs of dependence The proposed regulations give clearer directions to pharmacists on how to deal with instances where they suspect patients are seeking oversupply of drugs of dependence and Schedule 8 or Schedule 9 poisons (“doctor shopping” behaviour). Under the existing regulations the pharmacist must have supplied the patient previously. Under the proposed regulations, the pharmacist may know or suspect that the patient was previously supplied from another pharmacist. The pharmacist is to take reasonable steps to inform the current prescriber that the patient has obtained prescriptions from other prescribers. This highly beneficial regulation aims to bring the prescribers together, to devise strategies to curb irrational patient behaviour if needed. Destruction of Schedule 8 and 9 drugs The proposed regulations enable nurses and other registered health professionals to destroy the remains of Schedule 8 and Schedule 9 poisons supplied in sterile containers without a witness. As with other legitimate destructions, the activity must be recorded. The change enables timely and efficient destruction of waste contents in hospital theatres and wards, to prevent the containers being


inadvertently reused or diverted, and when containers cannot be safely resealed and transferred to the pharmacy for disposal. 6.4. Enforcement activity While there is substantial voluntary compliance with many forms of regulation, data on enforcement activity constitutes one important indicator of the extent to which the regulations are ensuring behavioural changes in practice. The DPU internal database records 95 successful prosecutions against since 1995, or an average of 9.5 per annum. Of these, slightly more than two thirds (66) involved medical practitioners, another 23 involved pharmacists and four involved veterinary practitioners. Medical practitioners were most commonly prosecuted for offences under the Act:

• Failure to notify DHS that they have reason to believe that a patient is a drug dependent person (Section 33);

• Prescribing a person a Schedule 8 drug with out the required permit (Section 35); and

• Obtaining drugs of dependence by false representation (Section 78). These Sections 33, 35 and 78 were represented in 26 (39%), 34 (52%) and 27 (41%) of cases, respectively. Prosecutions of medical practitioners under the following existing regulations most commonly occurred in relation to their own drug abuse:

• Failure to establish a therapeutic need existed for the drug (Regulation 7); • Included false or misleading particulars on a prescription (Regulation 23); • Administering a drug obtained on a prescription in the name of a patient to

themselves (Regulation 44); and • Self-administering a drug that was not prescribed for them (Regulation

47). Prosecutions under regulations 7, 23, 44 and 47 were represented in 13 (20%), 10 (15%), 25 (38%) and 28 (42%) of cases, respectively. The drug most frequently self-administered by medical practitioners was the Schedule 8 drug, pethidine, and to a lesser extent the Schedule 4 drug, codeine compound tablets. Pharmacists were most commonly prosecuted for supplying anabolic steroids or other drugs of dependence without prescriptions and dispensing forged prescriptions where complying with the regulations would have identified the forgeries presented. More recently pharmacists have been detected and prosecuted for offences associated with their drug abuse. Offences most commonly prosecuted:

• Sale or supply of drugs without a prescription (Regulation 12). • Failing to verify the authenticity of a Schedule 8 prescription with the

purported prescriber when not familiar with the prescriber’s handwriting (Regulation 25).

• Failing to notify a prescriber that the patient had obtained a similar prescription from another prescriber within the previous eight weeks (Regulation 29).

• Failing to record the supply of Schedule 4 or 8 drugs (Regulation 39).


Some pharmacists were also prosecuted for offences under the Act, Section 36, failing to notify the Department when called upon to supply greater quantities of or more frequently than appears reasonably necessary, or in a few cases obtaining by false representation, Schedule 4 or 8 drugs. Six of 23 cases involving pharmacists (26%) involved Section 36. Breaches of Regulations 12, 25, 29 and 39 were cited in 13 (56%), 7 (30%), 6 (26%) and 7 (30%) prosecutions of pharmacists, respectively. Veterinarians have mainly been prosecuted for supplying Schedule 4 drugs, drugs of dependence, especially anabolic steroids, not for the treatment of animals but for illegal use. DHS, through the DPU, adopts a risk-based approach to compliance activity and enforcement. Some investigations are resolved quickly following an interview with the person concerned. Other cases are complex and require efforts over months to piece together a brief of evidence. Cases involving professional misconduct are referred to the respective professional registration boards. Departmental resources are targeted to cases with potentially the most severe impact on public health or confidence in the public health system. Usually the DPU follows minor breaches with a warning and education of responsibilities. Investigations are finalised or reassessed as progressively more information becomes available. Penalties The penalties applicable to breaches of the provisions of the regulations are described in Section 129 (1) (h), Section 131 (g), Section 132 (oa) and Section 132 (x) of the Drugs, Poisons and Controlled Substances Act 1981 and Section 129(2) of the Drugs, Poisons and Controlled Substances Act 1981. The former Sections establish that any contravention of regulations made under the Act is liable to a penalty of up to 100 penalty units. However, Section 129(2) establishes that a registered medical practitioner, registered optometrist, nurse practitioner, veterinary practitioner, dentist or pharmacist who contravenes the regulations is guilty of an indictable offence and can be liable to a penalty of up to 200 penalty units, up to 5 years imprisonment, or both. These penalties are substantial, but reflect the fact that significant responsibilities lie with highly trained health professionals and that they relate to the misuse of dangerous drugs and poisons.


7. Expected costs of the proposed regulations 7.1. Overview The proposed regulations effectively remake the current regulations and more importantly, maintain an approach to regulation that has been in place in Victoria for many decades. As such, the proposed regulations create very few additional obligations for those that currently apply to affected parties. In fact, the proposed regulations have been drafted to overcome some of the more problematic aspects of the current regulations, in relation to compliance costs, particularly by seeking to accommodate current work practices and administrative arrangements. That said, it is clear that the regulations and, more broadly, the legislative structure of which they form an integral part, impose substantial costs on a wide range of parties in society. Broadly speaking, these costs include:

• Costs to consumers of medicines of the prescription supply system, including the requirement to attend a doctor or other relevant professional to obtain a prescription.

• Costs to health service providers including hospitals, day surgeries, ambulance services, medical clinics and individual health practitioners in implementing the storage, records and security requirements of the regulations and in paying regulatory fees for health services permits.

• Costs to manufacturers, wholesalers and suppliers of poisons or controlled substances in implementing the storage, records and security requirements of the regulations and in paying the regulatory fee for the licence to possess these poisons.

• Costs to industry, educational and research establishments needing to purchase or obtain poisons or controlled substances, in implementing the storage, records and security requirements of the regulations and in paying the regulatory fee for the permit.

• Costs in time to registered medical practitioners in making applications for Schedule 8 treatment permits, pharmacotherapy permits and making applications for warrants to prescribe and supply certain restricted poisons; associated costs for DHS in administration, monitoring and compliance of the treatment permit system, warrant system and pharmacotherapy program; and

• Costs to DHS in administering the Act and Regulations. Attribution of costs – regulation vs private interests A fundamental difficulty in estimating the size of these costs arises from the conceptual problem of the extent to which costs incurred in complying with a range of requirements can reasonably be attributed to the regulations. It is probable that, in the absence of the legislative and regulatory controls imposed under the Act, quite similar arrangements would, in any case, exist in most areas. To the extent that this is so, the costs attributable to the regulations are very much smaller than at first glance seems to be the case. Some examples of areas in which other factors would be expected to lead to arrangements similar to those required in the regulations are as follows:

• Secure storage. The regulations impose requirements to store drugs securely on a wide range of parties. However, there are clearly other reasons why most or all such parties would choose to ensure that drugs


were securely held in the absence of a regulatory requirement. Most notably, while the regulatory requirements seek to prevent theft in the interests of minimising drug abuse, the owners of drugs have clear private interests in preventing theft – both in order to minimise monetary losses and in order to minimise disruption to their activities. Clearly, the costs of secure storage arrangements are not primarily attributable to the regulations.

• Record-keeping requirements. The regulations require records to be kept as to drug movements, again largely in order to ensure that drugs are not diverted to illicit purposes. For manufacturers, suppliers and health professionals, there are clear private interests served by keeping sound records. From the point of view of manufacturers and suppliers, all businesses require sound information to function efficiently and information on input and stock flows is clearly fundamental to this. Similarly, health professionals have clear management based incentives to undertake detailed record-keeping.

• Prescription requirements. The requirement for Schedule 4, 8 and 9 drugs to be supplied only on prescription aims to ensure that effective drug therapies are supplied and that ineffective drugs or those to which there could be adverse reactions are not supplied. While consumers have some tendency toward “self-prescription”, particularly where a drug has previously been supplied to them, all accept the general logic of requiring an expert to make a judgement as to appropriate treatments. Thus, relatively few consumers would seek access to drugs other than on the advice of medical practitioners, even in the absence of regulatory restrictions17. The exception is those whose intention is to abuse drugs. The prescription system would, however, be required even in the absence of a need to limit opportunities for drug abuse. Thus, the costs of the prescription system are only attributable in small part to the regulations.

As well, it should be noted that many of the compliance costs associated with the proposed regulations would be incurred by health professionals, regardless of the nature of the regulatory framework applying to the possession and use of drugs, poisons and other controlled substances. It is expected that the nature of the training and their membership of professional associations would encourage the appropriate treatment and handling of these substances, irrespective of the obligations created by these regulations. By contrast, one area in which costs are clearly attributable directly to the legislation and regulations is that of the costs of licence and permit requirements and of DHS monitoring and enforcement activities. These costs are quantified as far as possible in the following section. Attribution of costs – legislation vs regulations The above discussion has discussed costs associated with both the Act and the proposed regulations. This reflects the fact that, in many areas, it is difficult to disaggregate these costs and attribute them simply to the Act or to the regulations. This difficulty of disaggregation arises from the fact that the regulations largely give effect to requirements that are, in the first instance, established in the Act itself. In fact, as noted elsewhere, the impact of the regulations in many areas is permissive: that is, they allow certain things to be

17 There are, necessarily, questions of judgement at the margin as to which drugs should be restricted to prescription only supply. However, this discussion focuses on the issue of having a prescription system, rather than the specific issues of how broadly or narrowly it should operate.


done by certain groups of people, whereas these things would otherwise be prohibited by virtue of the provisions of the Act. To this extent, the provisions of the regulations can be considered to be cost reducing, since they create flexibility and lower the costs associated with making drugs available in a controlled environment, vis-à-vis the general requirements established under the Act itself. 7.2. Summary of affected parties This section identifies the main affected parties and provides data on the numbers of companies, other entities or individuals in each group. This information provides a general overview of the extent of the application of the regulations and supports the quantitative cost data provided in Section 7.3., below. Those who are directly affected by the regulations are, in the main, required to hold licences or permits to manufacture, supply, sell, purchase or possess drugs. As of 1 September 2005, the number of premises that were regulated under the licence and permit system was 1217. Table 3 provides a breakdown of this total into the main categories of licences and permits Table 3: Licences and permits on issue as at September 2005 Licence/permit type Number Total (%) Total licences to manufacture and sell or supply by wholesale:

144 (12%)

Licence to manufacture and sale or supply by wholesale of any Schedule 8 or 9 poison, other than heroin

10

Licence to manufacture and sale or supply by wholesale Schedules 2, 3, 4 or 7 poisons

134

Total licences to sell or supply by wholesale 279 (23%)

Licence to sell or supply by wholesale any Schedule 8 or 9 poison other than heroin

28

Licence to sell or supply by wholesale Schedule 2, 3, 4 or 7 poisons

222

Licence to sell or supply by retail any Schedule 2 poison 29 Total permits to purchase, obtain or use 383

(31.6%) Permit to purchase or obtain or use any Schedule 2, 3, 4, 7, 8 or 9 poison for industrial purposes

275

Permit to purchase or obtain or use any Schedule 2, 3, 4, 7, 8 or 9 poison for educational and research purposes

108

Health services permit all types 411 (34%)

Total 1,217 Table 3 shows that licences and permits can be broken into four broad types: licences to manufacture, licences to supply by wholesale, permits to purchase, obtain or use, and health services permits. The total of the two former categories – representing the drugs and poisons industry – is 423 licences, or 35 per cent of the total. Permits to purchase, obtain and use poisons or controlled substances of all types (including health services permits) account for 794 permits, or 65 per cent of the total number of licences and permits. Of these, health services permits are the most common, with 411, or slightly more than one third of all licences and permits being of this type. Most if not all of the private and public hospitals and day treatment centres in Victoria would hold a health services permit.


A total of 47 new licences and 78 permits were issued during 2005. This constitutes slightly more than 10 per cent of the total number of licences and permits currently on issue. New licences and permits were issued in all of the above categories. Within the health community, a very large number of health professionals, premises and organisations are affected by the drugs and poisons regulations. According to the 2003-2004 published Annual Reports for the respective registration boards, in 2004, almost 110,000 individuals would have needed to deal with drugs and poisons regulations. These include:

• 3,628 registered dental care providers (including 2,288 dentists, 312 dental specialists, 288 dental prosthetists, 211 dental therapists, 122 dental hygienists, and 363 dental students) (Annual Report of the Dental Practice Board of Victoria 1 July 2003 to 30 June 2004)

• 18,016 medical practitioners (including 397 provisional registrations)

(Medical Practitioners Board of Victoria Annual Report 2004)

• 2,499 medical students (Medical Practitioners Board of Victoria Annual Report 2004)

• 77,144 nurses (Nurses Board of Victoria Annual Report 2003/2004)

• 947 optometrists (plus 155 endorsed therapeutic optometrists)

(Optometrists Registration Board of Victoria Annual Report to the Minister for Health Year ended 30 June 2004)

• 5,040 pharmacists (Pharmacy Board of Victoria 128th annual report 2004)

• 2,023 veterinary practitioners (Veterinary Practitioners Registration Board

Victoria Annual Report 2003-2004) In addition, in 2004 there were 1,160 approved community pharmacies, 63 pharmacy departments and 36 pharmacy depots (Pharmacy Board of Victoria 128th annual report 2004) and 135 private hospitals (ABS 4390.0 Private Hospitals 2003-04). Currently in 2005 there are 121 public hospitals, including 49 Melbourne Metropolitan Hospitals and Health Services Locations and 72 Rural Public Hospitals, Multipurpose Services and Rural Public Health Services (Department of Human Services Victorian Government Health Information, current as of 21 September 2005). 7.3. Quantitative estimates Section 7.1., above, has indicated that many of the costs associated with the proposed regulations are unquantifiable and that there are substantial issues of attribution of costs, even where quantification can be attempted. Given this, the following material must be seen simply as an attempt to quantify impacts associated with the regulations wherever possible and, thereby, to provide some “order of magnitude” estimates of key costs associated with the regulations. 7.3.1. Costs to the Department of Human Services The responsibility for the administration of the Act and the proposed regulations lies with the DPU of the DHS. Approximately $1.6 million of the DHS budget for 2004-2005 is assigned to the direct administration costs of the Act and associated regulations. Adding overhead costs including accommodation expenses,


departmental corporate costs and database depreciation costs brings the total cost of the DPU to approximately $2.4 million per annum. In present value terms, this is equal to $18.5 million over the assumed ten-year life of the regulations. Approximately 23% (5.2/23 FTE) of DPU full time equivalent staff are engaged in licence and permit related activities, suggesting that this function costs approximately $550,000 per annum. This cost is almost entirely recouped from licence and permit-holders through fee payments: the revenue obtained from licences and permits in 2004-2005 was approximately $540,000. 7.3.2. Costs to regulated parties Licence and permit related costs As noted above, licence and permit fee revenue in 2004-05 totalled $540,000. This represented full recovery of the costs of those activities of the DPU that are directly related to the administration of the licence and permit system, as noted above. Section 7.4., below, discusses the nature of the changes being made to the system of licences and permits, involving changes to the categories of licence and permit that will be available, and discusses the consequent changes being made to the fee structure. The revenue from the revised fee structure is expected to be equal to the currently collected aggregate revenue. This reflects the fact that full cost recovery is currently being achieved and that there are not expected to be any net increases in administrative cost arising from the implementation of the new fee structure. Further information on the calculation of the new fee structure is also contained at Appendix 1. The expected fee revenue under the proposed regulations will therefore remain at approximately $540,000 per annum. This constitutes a direct cost to licence and permit holders. This cost is equivalent to $4.2 million per annum in present value terms over the ten-year life of the regulations. Data on the costs borne by licence and permit holders in undertaking licensing activity are not available. However, in general, it is expected that the compliance costs borne by licensees simply in preparing and submitting licence applications, facilitating inspections and undertaking related tasks are of the order of one to three times the costs borne by the regulatory agency. Applying this “rule of thumb” multiplier suggests that the licence and permit requirements of the regulations may cost the drugs and poisons industry and health service providers in the vicinity of $540,000 - $1.62 million per annum. Over the assumed ten-year life of the regulations, this is equivalent to between $4.2 and $12.5 million in present value terms. These costs are essentially administrative in nature and do not include the costs of complying with any substantive requirements of the regulation (beyond licensing itself). However, it should be noted that this is an area in which the question of attribution of costs arises, since the licensing system is largely set out in the Act, while the regulations simply give effect to the Act’s intentions. Secure storage costs One area in which some specific quantitative data has been obtained in relation to substantive compliance costs relates to the cost of the secure drug storage devices (drug cabinets) required under the regulations. Quotes for the provision


of suitable devices were obtained from two manufacturers, with the following results:

• One company quotes prices ranging from $665 to $4275 to supply various sized units constructed from 10mm steel plate with a 6 lever pick resistant key lock, consistent with the regulation requirements.

• A second company quoted prices of $725 to $1180 for drug cabinets of varying size, also constructed of 10mm steel plate and 6 lever key locks.

These estimates suggest that the minimum cost of a drug cabinet is in the vicinity of $700, while most sizes arguably cost between $700 and $1,200. Clearly, however, large users may incur costs up to, and beyond, $4,000. Quotations were also sought for the supply of a lockable refrigerator: a device of this type would conform to regulatory requirements for the storage of Schedule 4 poisons (these are simply required to be stored in a locked facility). This may include a lockable refrigerator. A current price range from one supplier for a variety of sized lockable and temperature monitored laboratory refrigerators is $1,900 to $2,840 (GST exclusive). A less expensive option is to purchase a domestic refrigerator and install a lock. While these costs are non-trivial, it is clear that drug cabinets have a long expected lifespan, probably measured in terms of several decades. A lockable refrigerator would also be expected to have a substantial lifespan. Many premises have had such equipment in place for many years. Given this, the equivalent annual cost of a drug cabinet would clearly be small, perhaps being in the range of $100 - $300 per annum for most operators. Moreover, it was noted above that only a proportion of this cost can reasonably be attributed to the regulations, given that there are clear commercial and/or professional incentives for them to ensure that drugs are safely stored. Expansion of the scope of the regulations in the aged care context As noted in Section 6.3.3., the scope of the regulations is to be expanded to include all aged care services, rather than simply “high care” services, as at present. There is a cost to implementing this change in respect of aged care services where there are high care residents. Facilities that have not been regulated by Victorian drugs and poisons legislation before (mixed care facilities comprised of low care facilities and hostels that have high care residents) will now need to comply with the regulations. However, the modifications to storage and record keeping regulations for Schedule 8 poisons used in aged care services essentially allow the status quo to be maintained for most of those services. That is, requirements in relation to drug storage for aged care services, applying under proposed Regulation 36, are less stringent than those currently applied to high-care services. Such services will not need to have a drug cabinet to store Schedule 4 and 8 poisons, but will simply be required to store these items either in a locked storage room or in a locked cabinet which, in the case of Schedule 8 poisons, will be required to be affixed to a wall or to the floor. It is expected that most of these services will already have similar arrangements in place, since there is a clear commercial and professional need to ensure that inappropriate access to drugs is prevented. Hence, it is not believed that there will be any additional substantive costs generated as a result of this change. For new “high-care” services, the removal of the current requirement to purchase a drug cabinet will lead to cost savings.


There will be an additional regulatory cost for the DHS because additional aged care services as above will fall under Victorian drugs and poisons legislation. There will be a cost involved in maintaining audit, monitoring, compliance and enforcement activities. Experience with the current regulation of nursing homes suggests that this cost should not be great, however some activity is expected especially in the early stages of implementation. Changes to the regulation of administration of drugs in the aged care context As discussed above, the proposed regulations will not include the current requirement that only nurses administer drugs in high-care residential aged care services. However, it is expected that alternative requirements for the administration of drugs to high care residents in all aged care services will be adopted in the Act itself. These provisions are being adopted in the primary legislation because matters required to be specified, such as provision of a definition of “manage the administration of drugs” have been determined to be beyond the scope of the regulations. 7.4 Fees Regulations Table 2, above outlines the proposed fees that would be applied to organisations or individuals applying for or varying a licence or permit to manufacture and sell, supply, purchase, obtain or uses poisons and controlled substances. The proposed fees have been set at levels that are expected to fully recover the direct costs associated with the administration of the licence and permit requirements. That is, fee revenue will recover the costs associated with assessing and approving licence and permit applications. This is consistent with current practice and with government fees and charges guidelines and economic efficiency considerations more generally. The specific fees have been developed following a detailed examination of the time, and therefore, cost of each step associated with the consideration and ongoing administration of each application. The costs of assessing various applications vary significantly, particularly in relation to the Schedules of the poisons for which a licence or permit is sought: more dangerous poisons or those with a greater propensity for abuse clearly justify the imposition of stricter security requirements and more extensive inspection and approval arrangements. Other factors causing variation in the size of the assessment task include the size of the applicant and complexity of their operations. The methodology used to estimate the costs involved in considering and approving an application for a licence or permit is based on the following:

• Determining the tasks, officer classification level and time needed to deliver the licence and permit system. Tasks include audit procedures and the provision of advice at the outset and on an ongoing basis;

• Calculating hourly rates, including salaries, salary on-costs, operating costs and indirect operating costs for each officer classification level;

• Allocating charges according to the actual cost of the time of the officer involved; and

• Assigning a records management cost across all active licences and

permits.


Appendix 1 contains a detailed description of the methodology for estimated the cost involved with each category of licence or permit and therefore, the basis for the fee. Overview of inspection and assessment procedures Typically, DHS visits an applicant in response to an application for a licence or permit. The application includes a Poisons Control Plan developed by the applicant, designed to show that they understand their responsibilities under the regulations. The applicant is required to nominate a suitably trained person to ensure that the applicant fulfils their obligations. The inspection will determine whether the applicant’s premises are suitable, sanitary and adequately equipped (as required by the Act) which includes confirmation that the substances are not accessible to persons who are not equipped to handle them appropriately. All new applications require inspection of the premises; applications for renewal are made annually and the process for subsequent approvals depends on the type of licence or permit. Inspectors will also consider records and manufacturing procedures to ensure they are safe and that adequate reconciliation is undertaken to prevent unintended diversion of the substance. Other factors include that the applicant understands the labelling and packaging requirements of poisons and engages personnel with the necessary qualifications and experience.. Following a visit to the applicant, field staff prepare an inspection report and submit a report to a Senior Officer for review and to initiate any action that may be needed. For most applications for renewal, a site visit is not required. The size of the fee that is charged depends on the substance in question and the nature of the applicant (such as number of beds in the case of an organisation such as a hospital that provides health care services). Specific fees proposed The proposed fees for each type of licence or permit are given in Table 2. Where possible, the current fees are presented in parentheses for comparison. However the categories of licences have been changed from those applied under the current regulations. This renders direct comparison impossible in some cases. The purpose of the changes to the licence categories is to improve the fairness of the fee structure. Six new licence categories have been created. These are for new applications and renewals for the wholesale sale or supply of Schedule 2,3,4,7,8,or 9 poisons by indent. These fees are generally lower and reflect the fact that supply by indent does not involve holding stock of the poisons being sold. This, in turn, means that stock security issues are not required to be addressed as for wholesale suppliers generally and that the assessment and approval task is, concomitantly, less complex.


Comparison of current and proposed fees There are 35 separate fees (covering new applications, renewals and the amendment fee) in the new regulations. Of these, 27 separate fees are carried over from the existing fees, and eight are new fees. The eight new fees correspond to applications and renewals for three new licence types for wholesale sale or supply of Schedule 2,3,4,7,8,or 9 poisons by indent, and one new Health Services Permit (Type A) specifically introduced for single site premises without overnight beds, in particular general medical practice premises. The expected revenue from the proposed fees is equal to that raised by the existing fees. However, there have been changes in specific fee levels. Of the 27 fees relating to existing licence types:

• 5 fees are higher than at present, with the increases ranging from 6% to 25%. The largest change is for new applications for Type C and Type D Health Services Permits, designed to cater for organisations with multiple sites requiring inspections, or for the largest hospitals. Renewal fees for Type C and Type D permits are increased by 6% and 8%, respectively.

• 17 fees, almost two thirds of the total, are lower than at present, with the

proposed fee levels calculated at 44% to 95% of existing fees. The most substantial reductions are for new applications and renewals of licences for manufacture and/or wholesale sale or supply where Schedule 4 poisons are not involved (down to 71% of the existing fee for new applications and 42% for renewals), general dealer licences (79% and 59% of the existing fee for applications and renewals, respectively) and applications and renewals for permits to purchase poisons or controlled substances for industrial, educational and research purposes.

• 5 fees have been amended by amounts equal to less than 5% of the

existing fee. This includes the amendment fee in all categories. The new Type A Health Services Permit fee for applications and renewals is set at 68% and 48%, respectively of the existing fee (also Type A Health Services Permit). The new fees represent a substantial saving for services, in particular general medical practices, choosing to utilise this category. As noted above, the proposed fees are the result of a substantial exercise aimed at accurately modelling the average costs associated with the review and approval of each specific type of licence and permit application. The proposed fees will therefore achieve a better matching between costs and revenues for individual application types than at present. Substantially larger numbers of fees have been reduced than have been raised. Explanation of changes to licence/permit categories and likely impacts The introduction of new licence and permit categories is unlikely to affect the total number of licences, since the scope of activities requiring licences and permits to be held is effectively unchanged. Thus, there will be movement between licence and permit categories, but a similar total number of licence and permit holders. As noted above, the purpose of the changes is to provide clearer distinctions between different types of activities and to ensure that assessment arrangements and associated fee levels reflect the scope and nature of activities being


undertaken. In addition to the introduction of new licences for wholesale supply by indent, changes have been made in relation to health services permits, as follows:

• A new Type A Health Services Permit is proposed to cater for medical practices and day surgeries. The category was created following requests from general practice organisations. Uptake is untested but anticipated to be favourable. General practice organisations and DHS plan to develop guidance to assist with implementation of the new regulations, for general practitioners.

• Type B Health Services Permits have been restructured to accommodate

changes in the application of the regulations to residential aged care facilities and small hospitals. These would have been included in the previous Health Services Permit Type A (non-residential and residential up to 30 beds), so no substantial change in numbers is expected.

• Type C Health Services Permits have been restructured to accommodate

services with multiple distribution points such as ambulance services, and medium sized hospitals, as in the existing regulations.

• Type D Health Services Permits have been restructured to accommodate

hospitals with multiple sites necessitating additional DHS resources for travel, inspection and reporting, and large public and private hospitals.

Assessment of the proposed changes to the structure of licence and permit fees As discussed above, the proposed changes to licence and permit fees have been designed to ensure a closer linkage between the fees paid and the resources used by DHS in assessing licence and permit applications and undertaking related functions. The revised licence and permit structure has also been designed to ensure that licence and permit categories distinguish appropriately between businesses in terms of the scale and scope of their operations. These changes will clearly improve the efficiency and the equity of the licence and permit arrangements. No basis can be identified, in the current context, for departing from the basic fee-setting assumption of ensuring cost recovery. Thus, by ensuring a better rapport between costs and revenues at the level of individual licence types, these changes will maximise the net benefits associated with this aspect of the regulatory structure.


8. Alternatives to the proposed regulations 8.1. Alternatives and the regulatory context The range of feasible alternatives to the proposed regulations is closely constrained by a number of factors. Firstly, international approaches to the regulation of drugs and poisons are substantially harmonised. As part of this harmonisation, Australia is a signatory, along with most other countries, of international treaties that require the implementation of substantial efforts to restrict the availability of drugs across their entire “lifecycle”, from manufacture to use or disposal. In particular, as noted above, Australia is a signatory to the Single Convention on Narcotic Drugs (1961), which aims to combat drug abuse by coordinated international action. Under the reporting requirements of the 1961 convention, Australia reports on domestic consumption and stocks of controlled substances, including Schedule 8 poisons. This enables Australia to identify potential diversions and stockpiling of narcotics. Drugs and poisons regulations in each State and Territory assist in this process and enable Australia to meet its reporting and monitoring obligations under the treaty. Thus, any alternative to the proposed regulations would need to incorporate many of their features via alternative mechanisms to ensure continued adherence to the treaty. Practically speaking, the treaty requirements therefore significantly limit the range of regulatory options available. In addition, the introductory sections of this RIS have noted that there is a substantial degree of national harmonisation of regulation governing drugs and poisons. These derive in part from the fact that there are both Federal and State government areas of responsibility that interact in a complex manner and in part reflect the reality of a nationally focussed industry. This national regulatory harmonisation also substantially limits the extent to which any alternative regulatory approaches can be considered to be practical and feasible. Finally, account must be taken of the terms of the Act under which the proposed regulations are made. The Act establishes in broad terms most of the regulatory arrangements in place, while the regulations largely give effect to the Act by specifying particular elements of the broad regulatory approach set out in the Act. For example the Act establishes that:

• The supply of any poisons or controlled substances other than as authorised or licensed under the Act and its regulations is illegal;

• Authorised health professionals can possess, use and supply drugs in the lawful practice of their professions. If the regulations did not define lawful practice, the professions could traffic in drugs of dependence with impunity.

• Possession of Schedule 4, Schedule 8 and Schedule 9 poisons without being licensed under the Act or authorised under the Act or regulations is illegal.

In particular, it can be noted that the form of the Act in many places is to prohibit certain things except to the extent that they are specifically authorised by the regulations. To this extent, the regulations can be seen as permitting, rather than prohibiting, various matters in connection with drugs and poisons.


If the regulations did not exist, then the only persons able to obtain, possess and to use, sell or supply any poison or controlled substance or drug of dependence would be a registered medical practitioner, pharmacist, veterinary practitioner, dentist or nurse practitioner (certain poisons) and registered optometrist (certain poisons). The Act envisages, however, that regulations may authorise others outside the professions to be in lawful possession of poisons in certain defined circumstances. For example, if the regulations did not exist, individual persons, carers, helpers, nurses, animal owners, delivery van drivers, couriers, ambulance officers, ship and yacht crew members, certain optometrists, podiatrists, dental auxiliaries, ski patrollers, municipal officers, immunisation nurses and emergency workers could not legally possess restricted poisons or controlled substances. It is difficult to envisage an alternative system that would allow possession under controlled circumstances, as effectively as the regulatory system that has evolved and that the new regulations seek to continue. If the regulations did not exist, persons would still be able to apply for and be issued with licences to manufacture, sell and supply by wholesale poisons, and sell or supply by retail (certain poisons) and obtain a permit to purchase or otherwise obtain poisons or controlled substances, or a warrant to purchase or otherwise obtain or use regulated poisons. The Act requires an inspection of premises and payment of a prescribed fee. Without the regulations there would be no prescribed fee, or baseline criteria for inspections. Alternative systems would need to be devised. Medical practitioners would still need to apply for permits to treat persons with drugs of dependence, but there would be no uniform procedure for making the application, as the regulations prescribe the Forms needed. Thus, within the framework set out by the Act, as well as the broader political and legislative environment, there are few options other than the making of regulations of the form proposed. The major identifiable alternative is considered below. 8.2. Regulation by individual professional organisations As noted above, the form of the Act is such that the making of some variant of the proposed regulations is, in each sector, an inescapable necessity. That said, it is possible to envisage an alternative form of the regulations that was substantially less specific in relation to the obligations of members of registered health professions in relation to the possession, storage, prescription and supply of drugs and poisons and the range of drugs and poisons to which they would have access in the course of undertaking their professional roles. The most plausible alternative to the regulations’ approach of setting out these matters in a single body of regulation would be to provide a substantial role for the relevant professional regulatory bodies in determining what drugs, if any, are required within the scope of practice of a particular profession and what restrictions should apply in respect of a particular profession’s use of those drugs. As noted, an alternative along these lines would still require regulations to be made under the Act. The key difference would be that significant substantive elements currently covered under the regulations would, instead, be covered under individual professional Acts and Regulations. In relation to possession and supply of drugs and poisons, the Act states that this can only be done by professionals in the lawful practice of their professions. Therefore regulation must define the scope of that lawful practice. However, it is


not necessarily the case that this definition must be within the proposed regulations. Moreover, it is possible that requirements in respect of prescription, supply, storage and record keeping, could be set out either in regulations relating to individual professions or else in quasi-regulatory or self-regulatory instruments such as codes of practice, guidance notes and the like. Such an approach would, however, inevitably lead over time to substantial inconsistencies in the requirements that were applicable to the different professions. Moreover, there are likely to be substantial problems in respect of monitoring and the enforcement of sanctions under this alternative, particularly where offences went beyond the scope of professional misconduct and moved in the direction of criminal activity (for example, the trafficking of drugs.). Even where the requirements in relation to prescription, supply, storage and record keeping were incorporated into professional registration Acts or associated regulations (i.e., rather than self-regulatory or co-regulatory alternatives), this would imply the substitution of a number of separate regulatory systems, with no overall coordination or standards setting, for the current situation of one efficient and independent form of regulation. While this would be safer for the community than self-regulation, it is unlikely to be as efficient or effective overall as the current system. This approach is considered to be feasible but not desirable. Expected benefits of the alternative The main benefit of this alternative would be that decisions as to the appropriate scope of practice within which drugs and poisons could be possessed or prescribed by a particular profession would be made by the board responsible for the regulation of that profession. These boards generally have a detailed and specific understanding of the nature and scope of the profession’s practice and the role or potential role of particular drugs within it. They can also be expected to have a more thorough understanding of the nature and extent of the training undertaken by members of the profession and the extent to which this adequately equips them to make decisions concerning the use of certain drugs. These factors could be seen as providing for better decision-making regarding appropriate access to drugs, since decisions would be made at a level that is closer to the individual professions involved. This accords with the general principle of subsidiarity which suggests that regulatory effectiveness and efficiency are enhanced if decision-making occurs as close to the regulated parties as possible. A particular area in which this approach might be seen to have benefits vis-à-vis that of the proposed regulations relates to the dynamic evolution of the regulations: that is, in ensuring that they are amended in a timely manner in response to changes in available drugs and, perhaps more importantly, changes in the nature and scope of practice of particular professions. Thus, the regulators of an individual profession are arguably more likely to become aware of the need for changes to regulations relating to drugs to be used by that profession in a timely fashion and to implement those changes. This could have potentially significant benefits in efficiency terms due to better utilisation of a profession’s expertise. Expected costs of the alternative A potentially significant cost of the alternative relates to the fact that there would be no baseline to ensure that uniform standards applied across the professions. There would possibly be a need to establish an independent body of oversight, to


monitor and compare the effectiveness of the separate bodies. Regulatory (and quasi-regulatory) responses to regulation would likely become a two-tiered process, and would be expected to be less efficient, and less effective in applying consistent and uniform standards. A further issue relates to the incentives that would arguably exist if the regulators of individual professions had responsibility for determining issues of access to drugs. As these bodies are generally closely aligned to the regulated profession, it is arguable that they would be under constant pressure to broaden the scope of practice within which access to drugs and poisons was sanctioned. This is consistent with the frequently observed trend for professional regulatory bodies to generally favour extension of the scope of operation and enhancements to the perceived status of the profession they are regulating. Continuing pressure of this kind, especially on a body that could be perceived as not independent from the profession, could be seen as inconsistent with the underlying purpose of the regulations which is to ensure that the supply of drugs is tightly controlled and that they are only made available where they are clearly required for therapeutic purposes. A further concern would relate to the level of relevant skills possessed by professional regulatory bodies. It is likely that many would lack sufficient specific understanding of issues related to drug regulation to ensure that sound decisions were made systemically. This could potentially mean co-opting other expertise onto regulatory boards in order to acquit these responsibilities. These issues clearly raise an additional question as to whether the alternative would be capable of achieving regulatory outcomes that were as high quality as those currently being achieved.


9. Small business impacts Victorian Government policy acknowledges that regulation tends to have disproportionate impacts on small business, particularly because they lack economies of scale (i.e., in the presence of fixed elements among regulatory costs, the relative cost of compliance is necessarily larger) and, in most cases, the ability to deploy specific expertise to manage compliance issues. Given this issue, specific consideration should be given to the issue of whether regulatory requirements are likely to impose unreasonable burdens on small business and, if so, whether regulatory redesign is required. The proposed regulations have been assessed in terms of their impacts on small business and have been found, in general, to be appropriately structured to avoid undue impacts on small businesses. Specific small business impacts of particular importance arising as part of this assessment are as follows:

• The restructuring of licence and permit categories will provide greater flexibility for licence applicants. This will mean that some smaller businesses will be able to obtain licences that are more appropriately tailored to the nature and scale of their activities and which, as a result, involve both lower licence/permit fees and lower compliance costs generally due to reduced requirements for verification of applications, inspections and the like18;

• More flexible drug storage requirements will reduce the costs of storage cabinets for some small businesses, while also providing for greater operational flexibility for small general practitioners in particular;

• Some small aged care providers will incur additional costs by virtue of being brought within the ambit of the regulations for the first time (see Section 7). This will largely entail a requirement to store drugs in locked rooms or cabinets. However, it is not considered that this will entail substantive costs, since most affected businesses are expected currently to be adopting complying arrangements, or to be able to bring themselves into compliance with only minor changes.

18 See Section 7.4. and Appendix 1 for further detail.


10. Conclusion: Comparison of proposed regulation and identified alternatives The proposed regulations constitute a continuation, with some refinements, of regulatory approaches to drugs and poisons that have been in place for some decades. There is a high degree of commonality in the approaches to the regulation of drugs and poisons taken internationally and in Australia. This reflects a clear consensus on the need for, and appropriate type of, restrictions on the availability of drugs and poisons. These restrictions cover virtually the whole “lifecycle” of the drug, from manufacture through to wholesale supply, storage and retail sale to disposal. Drugs and poisons regulation inevitably intersects with other areas of regulation, such as the regulation of a range of health professions. As well, there are complex interactions between Federal and State regulation. These factors, together with the long history of drugs and poisons regulation and consequent unavailability of an unregulated “control scenario” mean that it is not possible to conduct a formal and complete benefit/cost analysis of the proposed regulations. That said, the decision criterion employed in assessing the proposed regulations and comparing them with the identified alternatives is, in effect, one of maximising the expected net benefits of the regulatory structure to be adopted. The contention that the regulations will deliver net benefits to the community is largely based on qualitative arguments as to the merits of the regulatory model employed, supported by evidence of the size of existing harms due to misuse and abuse of drugs and poisons and inferences as to the extent to which the regulations employed to date have been effective in minimising these harms. Quantitative cost data has also been included in order to verify as far as possible that the costs imposed by the regulations are not disproportionate to the benefits sought to be achieved. In this context, it should be noted that it is difficult to attribute specific costs to the regulations per se. The major compliance requirements are specified, at least in broad terms, in the enabling Act, while the regulations provide the detail that allows implementation. Moreover, in many cases, the regulations are “permissive” in nature: that is, in their absence, the prohibitions and limitations on certain activities established by the Act would be farther reaching than is the case with the regulations. The regulations are accepted by stakeholder groups and are not considered by them to be unduly burdensome. The National Competition Policy review of the Act and regulations (the Galbally Review) found that there was strong support from stakeholders for the objectives of the legislation and that they uniformly considered that it provides a net benefit to the community as a whole. The regulations make only very limited amendments to the sunsetting regulations which they will replace. Thus, stakeholders have substantial experience with the administration of these regulations and fully understand their compliance obligations. Their acceptance for the regulations reflects this experience. The nature of the broader regulatory structure in relation to drugs and poisons, at State, Federal and International levels, is such that there are very few feasible alternatives to the proposed regulations. One alternative has been identified and was discussed in the preceding section. This involved relying to a far greater extent on professional regulations and professional regulatory bodies to determine what drugs and poisons could be used and supplied by particular groups of health professionals. This alternative could be seen as having benefits


deriving from the making of regulatory decisions at a level closer to the issues of day-to-day practice and experience of individual health professions. This could arguably lead to more appropriate decisions being made and a more responsive regulatory structure generating and allowing greater dynamic efficiency. However, significant potential costs were identified. These included the fact that this model would compromise, to some degree, the achievement of a consistent and strategic approach to drug regulation and that the effectiveness of regulation overall may suffer as a result. Moreover, many professional regulatory bodies would be likely to lack specific skills in relation to the issues arising in the context of drug regulation and some questions could therefore arise over their ability to make appropriate decisions, and their perceived independence. Finally, requiring decisions to be made by numerous regulatory boards is likely to entail higher regulatory costs than is the case under a more centralised approach. Given these factors, it is considered that the proposed regulations are likely to yield greater net benefits to the society than the alternative. In sum, the proposed regulations are expected to support effectively existing systems of drug regulation that aim to:

• Reduce to a practical minimum the incidence of drug abuse, by controlling the availability of drugs subject to abuse;

• Maximise the effectiveness of drug prescription for therapeutic purposes and minimise the extent of “medication incidents” involving negative outcomes, by restricting the right to prescribe and supply drugs to those with appropriate expertise; and

• Minimise the incidents of poisonings and other misuse of drugs, whether accidental or not, again by limiting the supply of drugs and poisons.

The above analysis has established the widespread prevalence of drug and poison use and abuse in society and thus the potential costs of not continuing with existing systems to restrict supply of such drugs. It can therefore readily be inferred that the system of regulation of which the proposed regulations form an integral part yields very substantial benefits to society as a whole. By contrast, the identifiable costs are relatively modest and the conclusion that the regulations can be expected to entail net benefits is clear.


11. Evaluation strategy Government policy is that regulation should be evaluated periodically to ensure that it is meeting its stated objectives and that its impacts are in line with initial expectations. As discussed elsewhere in this RIS, the proposed regulations represent a refinement of currently existing regulations. The current regulations are, themselves, the latest iteration of a regulatory structure that has been in place to achieve the same set of underlying objectives for very many decades. This broad context means that there is substantial experience with the implementation of regulations of the form proposed and that there is little reason to believe that the implications of making these new regulations will be at odds with current expectations. That said, it must be recognised that regulatory environments change over time and that regulatory structures must continue to evolve and adapt in response to these changes. The DHS has a continuing and substantive dialogue with a wide range of stakeholders affected by these regulations. In addition, substantial data are habitually collected in relation to matters of relevance to the regulations, as discussed in other parts of this RIS. As a consequence, regulations in this area are kept under constant review and, as a result, amendments are frequently made in response to emerging issues. This represents a process of “continuing evaluation”, which is expected to continue following the implementation of the proposed regulations.


12. Consultation A first round of consultation in respect of the proposed regulations was commenced at the end of 2003. At that time, DPU wrote to approximately 90 stakeholders requesting suggestions for improvements to the existing drugs and poisons regulations. Stakeholders included:

• organisations representing medical professionals in the pharmacy, medical, veterinary, nursing, aged care, dental, chemical, optometry, podiatry and ambulance fields;

• hospital organisations; • industry bodies and professional registration bodies; • government bodies including the Victorian Department of Human Services,

Health Insurance Commission , Local Government and health departments in other States and Territories and the Commonwealth.

In addition, consultation was undertaken with Victoria Police, the Victorian Farmers Federation, Emergency Services, forensic services, hospital clinical departments and security organisations. A second round of consultation commenced in August 2004 with the circulation for comment of a Consultation Draft of the proposed regulations to the same list of approximately 90 stakeholders. Thirty-two written responses were received. All key stakeholder groups are generally supportive of the remaking of the regulations in broadly their existing forms. Specific issues were raised, however, in relation to several areas. The main stakeholder comments received are summarised in Table 4, below. It should be noted that, where grouped responses are provided, not all comments may have come from all groups. Organisations that responded with “no comment”, were largely supportive, sought clarification or provided comment beyond the scope of the regulations are not included. Table 4: Summary of issues raised in consultation and DHS responses Key issues raised Response in proposed regulations

Medical Organisations (Responses were received from: Medical Practitioners Board Victoria (MPBV), Australian Medical Association (Vic) (AMAV), Royal Australian College of General Practitioners/General Practice Divisions Victoria (RACGP/GPDV)) That the regulations enable electronic transmission of prescriptions

Regulations amended to do this

That the regulations enable more flexible poisons access, storage and record keeping arrangements, to reflect a clinic based approach to poisons management and accountability

More flexible storage incorporated for medical practices, together with greater accessibility to a Health Services Permit for medical practices

Schedule 4 and Schedule 8 poisons Not included, on security grounds19

19 Schedule 8 poisons are recommended to be stored separately from Schedule 4 poisons because many Schedule 8 poisons are highly sought after for illegal purposes. In general Schedule 4 poisons need to be accessed more frequently than Schedule 8 poisons, and were they stored together, persons who rarely if


Key issues raised Response in proposed regulations

should be able to be stored together except for provision that S4 poisons that are also classified as drugs of dependence may be stored with S8 poisons.

Schedule 8 poisons should be able to be stored in a multi purpose safe

Regulations do not prohibit storage of Schedule 8 poisons in a dedicated drawer of a safe

More accessible Health Services Permit for general practitioners

Devised a separately costed category for Health Services Permits for medical practices

Supported the current regulation that nurses only are able to administer prescribed medication in nursing homes

Current regulation to be replaced with provisions in the Act to enable nurses to manage administration of medication to high care residents in nursing homes and other residential aged care services, rather than being required to actually administer every dose. Introduces equity in medication administration for all high care residents across aged care services, and allows for greater utilisation of nursing skills. Medical organisations subsequently supported this approach.

Aged Care Organisations (Responses were received from: Victorian Association for Health and Extended Care(VAHEC), Aged Care Association of Victoria (ACAV)) Did not support the current regulation that nurses only are to administer prescribed medication in residential aged care

Current regulation to be replaced with provisions in the Act to enable nurses to manage administration of medication to high care residents in nursing homes and other residential aged care services, rather than being required to actually administer every dose.

Nursing Organisations (Responses were received from: Australian Nursing Federation (ANF), Royal District Nursing Service (RDNS), University of Melbourne School of Nursing and Head of General Practice, Victorian Council of Peak Nursing Organisation (VCPNO)) Supported the current regulation that nurses only are to administer prescribed medication health services, including residential aged care

See above.

Requested nurses be required to See above.

ever needed to access the Schedule 8 poisons would nevertheless have ready access to them when they went to collect the Schedule 4 poisons.


Key issues raised Response in proposed regulations

administer medication to all high care residents in aged care services, not just those in nursing homes. Veterinary Organisations (Australian Veterinary Association (Vic)(AVAV), Department of Primary Industries (DPI), Veterinary Practitioners Board Victoria (VPBV)) Requested tighter wording to identify the animals involved on prescriptions for livestock poisons


Proposed to reduce labelling requirements for veterinary poisons provided for bulk treatment


Supported changes allowing future activity in electronic transmission of prescriptions


Other comments The Australian Podiatry Association Victoria sought clarification on how to compile and have approved a list of poisons for podiatrists to possess. This did not relate to the regulations. St John Ambulance Victoria requested authorisation to possess poisons for use in ambulance services. The regulations are amended to allow for this. A third round of consultation was conducted in November and December 2004 and January 2005. DHS visited all major stakeholders who had provided substantial comment on the August 2004 Consultation Draft as part of this process. DHS organised meetings with RDNS, medical organisations (MPBV, AMAV, RACGP/GPDV), veterinary organisations (AVAV, DPI, VPBV) and the Australian Podiatrists Association (Vic). DHS also consulted with Aged Care organisations in February 2005. A final major round of consultation was conducted in June – July 2005. These focused on demonstrating how the proposed regulations had addressed the respective issues of concern raised in earlier consultation. During this round of consultations, medical, pharmacy and veterinary organisations indicated that they were largely supportive of the proposed regulations. The ANF remained concerned with the specific issue of regulating the administration of prescribed medication in aged care, including the fact that the proposed regulations do not require nurses, as opposed to personal care workers, to administer medication to high care residents in aged care, and changes to storage and record keeping requirements for certain medication used in aged care. Throughout 2005 DHS consulted on a continuing basis with major nursing organisations in an endeavour to resolve differences and find common ground on the issue surrounding the administration of medication in aged care and wider community services. DHS held an Information Session for stakeholders in the aged care industry and nursing organisations on 21 July 2005, to explain background and proposed regulations of relevance to those sectors.


13. Statement of compliance with National Competition Policy The National Competition Policy Agreements (“NCPA”) set out specific requirements with regard to all new legislation adopted by jurisdictions that are party to the agreements. Clause 5(1) of the Competition Principles Agreement sets out the basic principle that must be applied to both existing legislation, under the legislative review process, and to proposed legislation:

The guiding principle is that legislation (including Acts, enactments, Ordinances or Regulations) should not restrict competition unless it can be demonstrated that: The benefits of the restriction to the community as a whole outweigh the costs; and The objectives of the regulation can only be achieved by restricting competition.

Clause 5(5) provides a specific obligation on parties to the agreement with regard to newly proposed legislation:

Each party will require proposals for new legislation that restricts competition to be accompanied by evidence that the restriction is consistent with the principle set out in sub-clause (1).20

Accordingly, every regulatory impact statement must include a section providing evidence that the proposed regulatory instrument is consistent with these NCP obligations. While the proposed regulations clearly impose substantial limits on competition in the supply of drugs, these can be seen as the minimum necessary to ensure harm minimisation, as indicated by the fact that similar provisions are in place not only Australia wide but in most other Western countries. In this context, it should be noted that there are no specific limits on the numbers of persons who can undertake any of the regulated activities and that the discussion of cost impacts included in this RIS indicates that the costs involved are not likely to constitute a barrier to entry to any of the relevant occupations or businesses. It should also be emphasised that the regulations remake, largely without substantive amendment, the existing regulations. These regulations, together with the authorising Act were subjected to a National Competition Policy assessment in 2000. This review reported strong support from stakeholders for the current legislation and found there were strong reasons for Australia to have a comprehensive system of legislative controls that regulate drugs, poisons and controlled substances. Some recommendations as to measures to improve regulatory and administrative efficiency, and reduce the level of regulation were made and the

20 Clause 5, Competition Principles Agreement, 11 April 1995 accessed at www.ncc.gov.au/pdf/PIAg-001.pdf


http://www.ncc.gov.au/pdf/PIAg-001.pdf

majority of these have been implemented or are in the process of being implemented by the Commonwealth and States and Territories. The Galbally Review’s assessment that the existing legislation is in compliance with the NCP was subsequently accepted by the National Competition Council. No substantial changes to the regulatory environment over the past five years have been identified that would warrant revisiting these conclusions.


Appendix 1: Setting the proposed fees Methodology The methodology used to develop the proposed new fees regulations involved the following:

• determining the tasks, officer classification level and times needed to deliver and permit system;

• calculating hourly rates, including salaries, salary on-costs, operating costs and indirect operating costs for each officer classification level:

• allocating charges according to the actual costs of the time(s) of the officer(s) involved; and

• assigning a records management cost across all active licences and permits.

Description of Tasks, Times and Classification Levels a) Administrative tasks Administrative tasks cover all non-inspection related activities. Tasks include checking applications for completeness and accuracy, record keeping, preparation of licence and permit documents and correspondence. Table 5 describes the administrative and inspection tasks (described in b) conducted on applications for a new or amended licence or permit, the time taken and classification of the officer performing the task. Table 5: Tasks, times and officer classification associated with assessment of applications for new or amended licences or permits requiring inspection Task Input Time (hr) Classification Administration check of the application to ensure all required documentation is present

Admin 0.3 VPS-4

Senior Officer allocates the application to appropriate Field Officer

Inspection 0.4 VPS-5

Field Officer pre-screens the application and arranges to inspect the premises


Field Officer travels to the premises, conducts the inspection, assesses the Poisons Control Plan and prepares the inspection report

Inspection From 2.5 to 14.5 (depending on categories of substances involved – Table 8)

VPS-4

Senior Officer reviews the inspection report

Inspection From 0.5 to 2.0 (depending on

VPS-5


Task Input Time (hr) Classification complexity of premises and report – see Table 8)

Senior Officer prepares the recommendations for the delegate


Report with recommendations is finalised

Admin 0.1 VPS-2

The delegate approves the issue of the licence or permit

Admin 0.1 VPS-6

Preparation and checking of licence/permit document

Admin 0.6 VPS-4

Licence/permit sent to applicant and Depart records updated

Admin 0.3 VPS-2

Administration tasks do not include the costs of pre-screening and assessing the application, inspecting premises, writing the inspection report and review of the inspection report and writing the recommendations by a Senior Officer. Administration tasks, time and cost associated with renewals for licences and permits are provided in Table 6. Table 6: Administration tasks, times and officer classification associated with renewal of licences and permits Task Time

(hr) Classification

Prepare renewal report forward renewal notice to licence or permit holder

0.1 VPS-4

Check applications for renewal and pass to Senior Officer to deal with significant amendments

0.1 VPS-4

Processing of Poisons Control Plan amendments 0.4* VPS-4 Prepare and check renewed licence or permit document and forward to the holder

0.3 VPS-4

*Estimated to take an average of 1.2hrs every three years. Administration tasks, time and officer classifications involved in processing minor amendments to licences and permits are provided in Table 7.

Table 7: Administration tasks, times and officer classification associated with amendments Task Time

(hr) Classification

Review of application/recommendation 0.3 VPS-5 Update records/prepare new document 0.4 VPS-2 Check for accuracy 0.3 VPS-4 Forward to client 0.2 VPS-2


b) Inspection procedure A Field Officer reviews the information provided in the application, conducts a physical inspection of the premises and compiles the inspection report. A Senior Officer reviews the report and makes recommendations, including recommendations for further action if needed. Activities include assessment of application information, including the new Poisons Control Plan or amendments to an existing Poisons Control Plan and carrying out any supplementary checks. Licences and permits are linked to the one specified premises. Time taken to check the Poisons Control Plan varies with the type of application and ranges from 0.5 hour to 2 hours. Inspections are conducted of the premises for all new applications for licences and permits, at the predetermined re-inspection frequency for applications for permits and licence renewals, and when the existing licence or permit holders advises they are moving to new premises. Physical inspection of premises involves the following activities:

• Examination of records of purchase, supply, use and/or disposal of the poisons or controlled substances referred to in the licence or permit. In the case of permits for the provision of health services, inspection includes examination of patient medication records and reconciliation of purchases/orders with the administration records.

• Examination of security, so that poisons or controlled substances are not

accessible to persons who are not adequately equipped to deal with them or who may wish to misappropriate them.

• Examination of premises to ensure that they are suitable, sanitary and

adequately equipped. This examination is to help ensure that mistakes are minimised and that products are true to label and of satisfactory quality.

• Assessment of responsible persons to ascertain that they are capable of

complying with the legislation and other standards and that the persons in charge are fit and proper and appropriately qualified or experienced for their responsibilities.

• Examination of labelling and packaging to assess capacity to comply with

legislative standards designed to protect the public and provide safe use information.

Currently there are 4.8 FTE Field Officers servicing approximately 1250 active licences and permits. To make most efficient and effective use of inspection capacity, the timing and frequency of inspections and the time allocated to conduct inspections are related to the perceived public risk. Inspections of premises for new licences or permits are high priority, followed by inspections of new premises for existing licence or permit holders and re-inspections tied to licence or permit renewals. Inspectors are assigned geographical areas, and to allow efficiency in travel costs, lower priority inspections are batched. Resources use din the inspection reflect the size of the premises, the security controls required, the extent of the hazard (toxicity) of the substances, and the activities of the licence or permit holder (e.g. manufacturing compared with sale or use). Consequently, inspection of a major hospital or premises dedicated to the manufacture and wholesale of Schedule 8 and Schedule 9 poisons occupy the most resources, estimated at 16.7 and 16.45 hours, respectively, whereas inspection of premises for a general dealer occupies an estimated 3.95 hours.


Inspection of premises engaged in wholesale or supply of indent stock involves a visit and record check only. Estimated inspection times for each type of licence and permit used to calculate the respective fees are shown in Table 8. The inspection includes the time for the pre-screening and assessing the Poisons Control Plan, travelling to and conducting the inspection and writing and review of the inspection report and recommendations. Table 8: Total time spent for inspections, including pre-screen, travel, physical inspection, check of the poisons control plan and preparation and review of the inspection reports and recommendations. ID Type of Licence or Permit VPS-4

time (hr)*

VPS-5 time (hr)**

MA Manufacture and sell by wholesale any Schedule 8 or Schedule 9 poison other than heroin

13.75 2.7

MP4 Manufacture and sell or supply by wholesale Schedules 4 poison

9.25 1.7

MP 2,3,7 Manufacture and sell or supply by wholesale Schedules 2, 3 or 7 poisons

6.75 1.7

MPR 7 Manufacture and sell or supply by retail any Schedule 7 poison (other than a Schedule 7 poison included in the Poisons Code in the list of substances that are not for general sale by retail)

5.25 1.7

WA Sell or supply by wholesale any Schedule 8 or Schedule 9 other than heroin

13.75 2.7

WP 4 Sell or supply by wholesale Schedule 4 poisons

9.25 1.7

WP 2, 3, 7 Sell or supply by wholesale Schedule 4 poisons

6.75 1.7

WA/WP Indent

Sell or supply by indent only any Schedule 2, 3, 4, 7 and 8 poisons and Schedule 9 poison other than heroin

5.25 1.7

GDL Sell or supply by retail any Schedule 2 poison

2.75 1.2

Permit 8, 9 Permit to purchase or obtain and use poisons any Schedule 8 or 9 poisons, or any Schedule 8 or 9 poison plus any Schedule 2, 3, 4, 7 poison for industrial, educational or research purposes

5.25 1.45

Permit 2, 3, 4, 7

Permit to purchase or obtain and use poisons any Schedule 2, 3, 4, 7 poisons for industrial, educational or research purposes

4.75 1.2

HSP Permit to purchase or obtain and use any poisons or controlled substances for the provision of health services Type A Type B Type C Type D

3.25 6.75 8.75 14.75

1.2 1.45 1.7 1.95


*includes 0.25 hour for pre-screening and arranging the visit to the premises **includes 0.7 hour for allocation and compiling recommendations The level of public risk is also factored into the frequency of re-inspections for licence and permit renewals for existing holders. Re-inspection frequencies are established at practical levels and designed to provide an acceptable level of compliance monitoring. Re-inspections are scheduled to occur between every 1.5 years to every 7 years, depending on the public risk. The highest frequency of re-inspection is reserved for premises dealing with drugs of dependence, for example premises to be used for the manufacture and/or wholesale of Schedule 8 poisons. In addition, Victoria is required to monitor the use of Schedule 8 poisons as part of Australia’s responsibilities under international treaties to which it is a signatory. The cost of the re-inspection includes the annual cost for administration and provision of advice, and the cost of re-inspection. Licence and permit holders are expected to amend the Poisons Control Plan as often as necessary, and to provide the amended plan to the Department for review. The renewal fee builds in costs to cover an average of one review or assessment of amendments to the Poisons Control Plan every 3 years. Renewal costs are annualised to account for the three-yearly review of the Poisons Control Plan (annualising factor of 0.33) and the other various re-inspection frequencies as defined in Table 9. Table 9: Re-inspection frequency for licence or permit renewal Licence or permit Type

Poisons Control Plan Review

Re-inspection

Average rate of once every:

Rate – once every:

Annualising factor

MA 3 years 1.5 years 0.67 MP 4 3 years 3 years 0.33 MP 2, 3, 7 3 years 5 years 0.2 MRP 7 3 years 5 years 0.2 WA/Indent 3 years 1.5 years 0.67 WP 4/Indent 3 years 3 years 0.33 WP 2, 3, 7/Indent 3 years 5 years 0.2 GDL 3 years 7 years 0.143 Permit 8, 9 3 years 5 years 0.2 Permit 2, 3, 4, 7 3 years 7 years 0.143 Permit for health services Type A

3 years

7 years

0.143

Type B 3 years 5 years 0.2 Type C 3 years 4 years 0.25 Type D 3 years 3 years 0.33 c) Provision of advice Clients frequently contact the Drugs and Poisons Unit at DHS for advice about the Act and Regulations, the status of their existing licence or permit, with requests for application or amendment forms and with queries on the implementation of legislative and other standards and the scheduling of drugs and poisons. In addition, Field Officers conduct ad hoc visits to pharmacies during which they


answer questions and raise awareness as well as monitoring prescribing trends in particular for drugs of dependence, and conduct any necessary follow up. The advisory service is provided through Field Officers conducting such ad hoc visits and the daily Duty Officer in the Office who is usually assisted by other trained and experienced officers. Field Officers spend at least one day per week as Duty Officer and with the assistance of others as required, respond to telephone and written enquiries clients across the range of licence and permit holders, health professionals and the public. The total cost of providing the advisory service is based on the input cost of the various officers providing the advice and is expressed as a percentage of FTE. Across all levels, DHS allocates 1.4 FTE to provide advice, of which an estimated 0.9 FTE is related to licences and permit matters. The time involved in providing the advisory service for licence and permit holders is shown in Table 10. Table 10: Time spent in provision of advice Classification Time (% of FTE) VPS-5 30% x 1 VPS-5 6% x 2 VPS-4 6% x 3 VPS-4 Administration 30% x 1 The expected number of active licences and permits for 2005-06 is 1250. The total cost of providing the advisory service is $102,262.20, and is apportioned across low input and high input licence and permit types as defined in Table 11. Low input licence and permit types (Tier 1) are estimated to account for 25% of advice costs, while high input licence and permit types (Tier 2) are estimated to account for 75% of advice costs. This corresponds to an advice cost of $48.10 for Tier 1 and $144.30 for Tier 2 licences and permits. These costs are incorporated into the new application and annual renewal fees. Table 11: Advice Input – Tier 1 and Tier 2 Tier 1 Low Input

Tier 2 High Input

MP 2, 3, 7 MA MRP 7 MP 4 WP 2, 3, 7 WA WA/Indent WP4 WP 4/Indent Health Services Permit Type C WP 2, 3, 4, 7 Health Services Permit Type D GDL Permit 8, 9 Permit 2, 3, 4, 7 Health Services Type A Health Services Type B d) Rationale for calculation of fees

New Applications Fees for new licences or permits are calculated to cover costs for administration (including record keeping), full inspection and provision of advice. In calculating the fee for a new licence or permit application, the following formula is used.


Application Fee = Administration costs + Inspection costs + Provision of advice.

Renewals In the case of renewals of licences and permits, a slightly more complex calculation is required, and the following formula is used: Renewal Fee = Administrative costs (including record keeping) + Annualised Inspection costs (including annualised Poison Control Plan amendment costs) + Provision advice.

Providing Advice In calculating a fee for providing advice, the total cost of time spent by all officers in providing advice on licence and permit functions of the Drugs and Poisons Unit is apportioned across low input (Tier 1) and high input (Tier 2) licence and permit types.

Amendments Amendment fees are calculated as follows:

i. Amendment with inspection – the fee is the same as for new applications ii. Amendment without inspection – the fee reflects the administrative cost.

Database Depreciation Costs

Database depreciation costs are estimated at $62,500 per year. This is derived by assuming the replacement development cost would be the same as the original development costs, i.e. $500,000 and that the database would be replaced in 2011, i.e. after 8 years of operation. An estimated 30% of Database usage is dedicated to licences and permits. The Database services an estimated 1250 active licences and permits per year. The depreciation cost at 30% of total cost is $18,750 per year (noting that maintenance costs are not included). This corresponds to $15 per active licence or permit per year. This is added into the Administration costs for initial application and renewal. Note that the cost of a replacement database is uncertain at this time. Costs are calculated in Appendices 1A, 1B, and 1C Fees are converted to fee units valid for 2005-2006. APPENDICES Appendix 1A Salaries and operating costs Appendix 1B Administration costs Appendix 1C Total costs for new applications and renewals


Appendix 1A: Salaries and operating costs Table 12: Resource cost per hour – salaries and salary on-costs, direct and indirect operating costs and corporate costs Salaries mid level

1 Oct 2005 Salary, plus salary on-costs (19.57%)(1)

Salary costs plus all other on-costs $ (2)

Total resource cost per hour $ (3)

VPS-6 $94,055 $112,462 $145,975 $73.62 VPS-5 $72,474 $86,657 $122,726 $61.90 VPS-4 $60,670 $72,543 $105,661 $53.29 VPS-3 $51,818 $61,959 $84,913 $42.83 VPS-2 $40,672 $48,632 $68,800 $34.70

(1) Salary and salary on-costs (salaries selected at mid level and includes salary increase of 1 October 2005 (Victorian Public Service Agreement 2004))

(2) Includes (1) plus accommodation cost, operating expenses, other indirect costs, corporate support and motor vehicle cost (Field Officers only) (as provided in Table 13).

(3) Hourly rate calculated as total cost/365.25x14/76. Table 13: Additional costs – salary on-costs, direct and indirect operating costs, accommodation and corporate costs Payroll tax 5.72% Workcover 1.00% Superannuation 9.00% Holiday loading 1.35% Long Service Leave 2.50%

Total = 19.57%

Accommodation $10,000 Per Officer Operating expenses (1) 10% direct salary Other indirect costs (2) 5% direct salary Corporate support (3) 10% direct salary Motor vehicles $7,950 Per Field Officer (VPS-5

and VPS-4) Database Charge (4) $18,750 per year Amalgamated into Admin

costs for initial application or renewal, at $15.00 per active licence or permit

DHS Planning and Resources Branch provided all direct and indirect costings

(1) Section operating budget – eg travel and accommodation, stationery, telephone, printing, postage, staff development and training, depreciation on computers and office machines

(2) Desktop licences, fringe benefits tax, IT data line payments (3) Library, legal, administration and financial services (4) Database depreciation costs – assume a replacement cost equal to the original

development cost of $500,000, replacement within 8 years, development costs for licences and permits at 30% of total costs, corresponds to depreciation of $18,750 per year, and over 1250 active licences and permits corresponds to $15 per licence or permit.


Appendix 1B: Administration costs Table 14: Administration costs for new applications, renewals and amendments New Applications Classification Time taken in all

steps (hr) Cost per hour $

Total cost $

VPS6 0.10 73.62 7.36 VPS5 0.00 61.90 0.00 VPS4 0.90 53.29 47.96 VPS3 0.00 42.83 0.00 VPS2 0.40 34.70 13.88 Database 15.00 Total 84.20

Renewals

VPS6 0.00 73.62 0.00 VPS5 0.00 61.90 0.00 VPS4 0.90 53.29 47.96 VPS3 0.00 42.83 0.00 VPS2 0.00 34.70 0.00 Database 15.00 Total 62.96

Amendments

VPS6 0.0 73.62 0.00 VPS5 0.3 61.90 18.57 VPS4 0.3 53.29 15.99 VPS3 0.0 42.83 0.00 VPS2 0.6 34.70 20.82 TOTAL 55.38


Table 15: Costs of inspections, including preparation of inspection reports

Type of Licence or Permit Proposed Fees

VPS-4 time (hr)

VPS-5 time (hr)

Total cost $

MA Manufacture and sale or supply by wholesale of any Schedule 8 or 9 poison, other than heroin

13.75 2.7 899.87


9.25 1.7 598.16

MP 2,3,7


6.75 1.7 464.94


5.25 1.7 385.00


13.75 2.7 899.87


9.25 1.7 598.16

WP 2,3,7


6.75 1.7 464.94

WA/WP Indent

5.25 1.7 385.00


2.75 1.2 220.83

Permit 8,9

Permit to purchase or obtain or use any Schedule 8 or 9 poison, or any Schedule 8 o 9 poison plus any Schedule 2, 3, 4 or 7 poison for industrial, educational or research purposes

5.25 1.45 369.53

Permit 2,3,4,7


4.75 1.2 327.41

Health Services Permit – to purchase or obtain and use any poisons or controlled substances for the provision of health services Type A Type A – single site, no beds 3.25 1.2 247.47 Type B Type B – residential aged care,

single storage facility (no bed limit) OR single site of 1 to 30 beds

6.75 1.45 449.46


8.75 1.7 571.52


14.75 1.95 906.73


Table 16: Time and Cost for provision of advice

Classification Time (% of FTE) Cost (% total cost) VPS-5 30% x 1 $36,817.80 VPS-5 6% x 2 $14,727.12 VPS-4 6% x 3 $19,018.98 VPS-4 Admin 30% x 1 $31,698.30 Total FTE 0.9 $102,262.20 Advice costs are apportioned across licence and permit types according to estimate resource inputs. Tier 1 licence and permit types account for approximately 65% of the total number of active licences and permits but are estimated to account for 25% of resource inputs. Tier 2 licence and permit types account for approximately 35% of the total number of active licences and permits but are estimated to account for 75% of resource inputs. Accordingly, for an estimated 1250 active licences and permits, Tier 1 types are costed at $48.10 and Tier 2 types are costed at $144.30.


Appendix 1C: Total costs for new applications and renewals Table 17: New Applications - Total administration, inspection and advice costs Type of Licence or Permit Admin

Cost $ Inspect-ion Cost $

Advice cost $

Total cost $


84.20 899.87 144.30 1128.37


84.20 598.16 144.30 826.66

MP 2,3,7


84.20 464.94 48.10 597.24


84.20 385 48.10 517.30


84.20 899.87 144.30 1128.37


84.20 598.16 144.30 826.66

WP 2,3,7


84.20 464.94 48.10 597.24

WA/WP Indent

84.20 385 48.10 517.30


84.20 220.83 48.10 353.13

Permit 8,9


84.20 369.53 48.10 501.83

Permit 2,3,4,7


84.20 327.41 48.10 459.71

Health Services Permit – to purchase or obtain and use any poisons or controlled substances for the provision of health services Type A Type A – single site, no beds 84.20 247.47 48.10 379.77 Type B Type B – residential aged care,


84.20 449.46 48.10 581.76


84.20 571.52 144.30 800.02


84.20 906.73 144.30 1135.23


Table 18: Renewals - total administration, inspection and advice costs for licences and permits

Type of Licence or Permit Admin

Cost $ Annual- ised Inspect-ion Cost $

Advice cost $

Total cost $


62.96 566.68 144.30 773.94


62.96 197.39 144.30 404.65

MP 2,3,7


62.96 99.92 48.10 210.98


62.96 83.93 48.10 194.99


62.96 566.68 144.30 773.94


62.96 197.39 144.30 404.65

WP 2,3,7


62.96 99.92 48.10 210.98

WA Indent

62.96 239.83 48.10 350.89

WP4 Indent

62.96 127.05 48.10 238.11

WP 2,3,7 Indent

62.96 83.93 48.10 194.99


62.96 36.56 48.10 147.62

Permit 8,9


62.96 80.83 48.10 191.89

Permit 2,3,4,7


62.96 51.80 48.10 162.86


Health Services Permit – to purchase or obtain and use any poisons or controlled substances for the provision of health services Type A Type A – single site, no beds 62.96 40.37 48.10 151.43 Type B Type B – residential aged care,


62.96 103.75 48.10 214.81


62.96 151.41 144.30 358.67

Type D Type D – multiple sites OR > 100 beds

62.96 299.22 144.30 506.48


Table 19: Proposed licence fees for manufacture and supply of poisons, expressed in fee units21

Proposed Fees – Fee Units Type of Licence or Permit Application Renewal Amendment


107.6 73.8 5.3


78.8 38.6 5.3

MP 2,3,7


56.9 20.1 5.3


49.3 18.6 5.3


107.6 73.8 5.3


78.8 38.6 5.3

WP 2,3,7


56.9 20.1 5.3

WA Indent

Sale or supply by wholesale any Schedule 8 or 9 poison other than heroin – by Indent

49.3 33.4 5.3

WP4 Indent

Sale or supply by wholesale Schedule 4 poisons (together with any Schedule 2, 3 or 7 poisons) – by Indent

49.3 22.7 5.3

WP 2,3,7 Indent

Sale or supply by wholesale Schedule 2, 3 or 7 poisons – by Indent

49.3 18.6 5.3


33.7 14.1 5.3

Permit 8,9


47.8 18.3 5.3

Permit 2,3,4,7


43.8 15.5 5.3

21 Table calculated on the basis of the current value of a fee unit of $10.49, as published in the Government Gazette of 14 April 2005


Health Services Permit – to purchase or obtain and use any poisons or controlled substances for the provision of health services Type A

Type A – single site, no beds 36.2 14.4 5.3

Type B

Type B – residential aged care, single storage facility (no bed limit) OR single site of 1 to 30 beds

55.5 20.5 5.3

Type C

Type C – multiple sites and no beds OR 31 to 100 beds

76.3 34.2 5.3

Type D

Type D – multiple sites OR more than 100 beds

108.2 48.3 5.3

NB: Indent refers to supply of drugs where the licence holder does not take possession.


Appendix 2: Proposed Drugs, Poisons and Controlled Substances Regulations 2006


regulatory impact statement - … · the act also covers packaging and labelling1, to ... 1 through...

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