Australian Greens Additional Comments
Introduction
1.1
The Government’s decision to defer the listing of seven drugs and one
vaccine on the PBS has been universally condemned by the pharmaceutical
industry, health practitioners and consumers. The Australian Greens agree with
the evidence received to this effect and support the recommendations of the
majority report. The Government should resile from its current strategy of
reviewing all listing decisions in cabinet and looking for short-term savings
by deferring individual medicines.
1.2
However, we acknowledge the necessity of the executive Government’s role
in the listing process. All decisions of the PBAC are based on a solid
cost-benefit analysis, so all recommendations are therefore a sound long-term
investment in the nation’s health. There may be cases where a genuine conflict
arises between long-term benefits - which may accrue over decades - and the
exigencies of short-term budget management. For this reason, it’s appropriate
that the Government should have the final say on the timing of additions to the
Schedule. It is important that any such decisions are made via a process that
is open, transparent and accountable.
1.3
As the Government noted in relation to funding bowel cancer screening
versus funding a late stage bowel cancer drug,,
there are competing and urgent priorities for every health dollar,[1]
and it is important that the PBS operate as efficiently as possible. Evidence
to the inquiry suggests several other avenues that may be more profitably
explored as ways to achieve better PBS efficiency.[2]
Achieving lower priced generic medicines
1.4
Several witnesses and other analysts have suggested that the price paid
for generic medicines is high by world standards and there are large savings
still to be realised in this area.[3]
Statutory price reductions combined with mandatory price disclosure have led to
some savings, but creates little incentive for generics companies to discount
heavily in order to gain market share. Further gains may be made if the
incentives could be realigned.
1.5
Tendering, along the lines employed in New Zealand, has usually been
discounted in Australia as being incompatible with a thriving generics
industry. However, other mechanisms have been suggested. Dr Liliana Bulfone has
outlined a scheme[4]
in which generics manufacturers make private bids, and are listed on the
Schedule at the lowest price for that drug. Other brands then attract a
corresponding brand premium at the pharmacy, which may encourage generics
manufacturers to make further discounts in order to be able to secure and hold
market share.
1.6
Reform in this area is particularly important as 'blockbuster' drugs such
as Lipitor®
(atorvastatin) go off-patent. With billions potentially to be saved[5]
this seems a more worthwhile area of potential reform than ad hoc deferrals of
PBAC approved medicines. A strengthening of price reporting and price reduction
mechanisms, within and across therapeutic groups, should be considered.
Evergreening of patents by originator companies
1.7
Delays in the introduction of generic versions of widely-used drugs can
have a significant effect on PBS expenditure. The committee heard testimony about
the 'evergreening' of patents, where originator companies use the copyright
system or minor and even spurious innovations to litigate and extend the patent
protection of their drugs.[6]
This can have the effect of deferring, for a period of years, the availability
of cheaper generic medicines on the PBS with a subsequent cost to the public
purse.
1.8
Reform in this area is difficult as the integrity of the patent system
and intellectual property rights must be maintained. In the case of a dispute
over the expiration of a pharmaceutical patent, it is clearly up the originator
company and the generic medicines industry to litigate the intellectual
property issues. If the generic manufacturer is successful, they are able to
recoup lost profits from the originator company for the period by which the
introduction of a generic drug was delayed. Under these circumstances, the
Commonwealth has not sought to recover the costs to the PBS which can be
substantial. Attempts to do so would have to be reconciled with the rights of
patent holders to defend genuine claims, but if the Commonwealth was able to
recover some of these costs, the incentives to use the courts to delay generics
manufacturers without a solid basis would be lessened. In some instances,
savings to the PBS could amount to tens of millions of dollars.[7]
Savings from change of prescriber habits
1.9
The cost impact of listing a medicine on the PBS is often difficult to
predict as it can be heavily dependent on the take-up by prescribers. The issue
of 'leakage', where drugs are prescribed outside of their anticipated
therapeutic group, is well known. This real-world variation in prescriber
behaviour could have an impact on the cost-effectiveness of the drug, for
instance, if a drug becomes widely prescribed under sub-optimal therapeutic
settings. Although it makes clear sense for the price of drugs to be reviewed,
a review of the cost-effectiveness may suggest areas where doctor education or
a change in the listing settings could make significant savings. For example,
one of the most prescribed PBS medicines is Lipitor® 40mg (atorvastatin). In many cases, a lower
dose may provide the same clinical outcome, but there is currently little reason
for doctors to start at a smaller (and cheaper) dosage or reduce the dosage at
a later date. There is potential for significant savings to be realised through
a combination of education of practitioners and changes to the therapeutic
conditions attached to a drug's listing.
Recommendation 1
That the Government investigate alternative methods of pricing
generic medicines as an alternative cost-saving measure to the deferral of
listings by Cabinet.
Senator
Richard Di Natale
Navigation: Previous Page | Contents | Next Page