Government ‘wasting millions’ on prescription drugs


Government ‘wasting millions’ on prescription drugs

By Naomi Woodley and staff, ABCUpdated March 18, 2013, 11:06 am



The Federal Government is wasting $1.3 billion a year on prescription drugs and Cabinet ministers should not have a say in which drugs are listed on the PBS, according to a new report.

Drugs are currently assessed for safety, quality and cost-effectiveness before the Pharmaceutical Benefits Pricing Authority decides on an appropriate price.

It is then up to the Health Minister and Federal Cabinet to decide if the medicine should be subsidised by listing it on the PBS.

But a report by the Grattan Institute says Australians should be paying lower prices for their prescription drugs, with a new independent body set up to determine pricing.

It says Cabinet ministers are not qualified to make decisions about which drugs to fund.

Professor Stephen Duckett, former secretary of the federal health department and the director of the institute’s health program, says the process is costing Australia billions of dollars each year compared to other countries.

“Australia is probably wasting $1.3 billion a year because we pay too much for generic drugs, that are drugs that are off patent,” he said.

He says Cabinet should be involved in setting a cap for the PBS, but that is it.

“What’s the skill that Cabinet brings to this decision? They’re not the experts, none of them are clinicians, none of them have actually been involved and seen the detail of the cost effectiveness work,” he said.

“So they’re just an unnecessary overlay that’s second-guessing expert decisions.”

Professor Duckett says Australians should demand lower prices for generic drugs, and delays in adding drugs to the PBS should be ironed out.

He says the time is right for the Government to act, because the current five-year pricing agreement with Medicines Australia expires in July next year.

“Consumers themselves would save money,” he said.

‘More choice’

But Federal Health Minister Tanya Plibersek says the Government is already acting.

“On the pricing of generic drugs, I’d say that price disclosure has meant that 1,400 brands over 127 medicines are up to 87 per cent cheaper over the last four years, and in fact another 60 drugs will go down in price on April 1,” she said.

“It’s certainly true that using the market-based system that we use in Australia it can take up to 18 months to see that price drop.

“The advantage of our system over the sort of tendering system that this report calls for is that we still have a much greater range of choice for patients.”

Ms Plibersek says while the Grattan report is good, there are also risks in following the lead of countries like New Zealand and Canada.

“Lowest price is not always best value because we need to have certainty of supply, we need to have a range of products available so that consumers can use the ones that suits them most, and we also have a much healthier pharmaceutical manufacturing industry in Australia,” she said.
She says the Government will always look to get the best value for consumers.

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