New PBS listing rule spooks pharma, doctors and patients

Uncertainty about how drugs will be listed on the PBS has patient groups, health professionals and the pharmaceutical industry worried. LadyofProcrastination/Wikimedia Commons

Any parent who watches kids’ weekend footy knows that if the ref misses a breach of the rules, merry hell breaks loose.

But referees are human and sometimes make errors. We forgive the odd one pretty quickly but it’s a different matter altogether if there’s a fundamental change in the rules of the game.

In that case, all players need to be informed and often the change is accompanied by education followed by a period of adjustment as everybody gets used to the new rules.

There’s been a similar change of rules for pharmaceutical reimbursement and the players say the game is no longer fair.

The sellers (pharmaceutical companies), the buyer (Australian Government) and the consumers of the product (citizens) are not happy with the apparent new rules of the pharmaceutical game.

Uncertainty about these new rules has got industry, health professionals and patient groups spooked.

Changed rules

In the past, when the Pharmaceutical Benefits Advisory Committee (PBAC) recommended a medication for listing on the Pharmaceutical Benefits Scheme (PBS), the decision only went to Cabinet for ratification if the annual expenditure was more than $10 million.

The howls of protest are loud and clear in the just-released Finance and Public Administration References Committee report on the Government’s administration of the PBS.

The pharmaceutical industry claims the Government has changed the rules, and the Government correctly retorts that they’ve always had the right to review PBS listings. They are, after all, the custodians of the national budget.

Tight economic climate notwithstanding, the real issue here is not whether the rules have changed so much as no one knows what rules are being applied by Cabinet to decide which drugs will be listed.

To say that new listings must be justified by finding cost savings to offset new expenditure – as the government does – is mission impossible. If one program must be closed or greatly reduced in order to fund another then it is going to be a long wait for this requirement to be realised.

The real problem is that the certainty, predictability and management of risk that’s part of the PBAC process (which is underpinned by legislation) is being eroded.

Industry works to the evidence-based rules that govern the review of new drugs through the PBAC process. These are not rules that apply to Cabinet. If evidence is being sacrificed to affordability then that needs to be made clear to everyone.

Bark and bite

That’s why we’re hearing industry threats to withdraw drugs from Australia and warnings of even more dire consequences if it’s left with the uncertainty of not knowing what might happen once a PBAC recommendation gets to Cabinet.

But the threat to the sustainability of the pharmaceutical industry in Australia seems grossly exaggerated.

The Australian Government spends about $8 billion a year on pharmaceutical benefits – that’s money that goes directly into the pockets of pharmaceutical companies and directly to citizens who derive the health benefit. That much hasn’t changed.

What has changed is the future profitability of individual companies that have pinned their financial forecasts on new drugs coming to market – fully subsidized by the Australian Government.

Bringing a new drug to market is a commercial decision. If reaching the required return on the investment depends upon PBS listing and an acceptable price (and this will nearly always be the case) then it’s likely that industry may not bring new drugs to the Australian market.

The key question for patients is whether an alternate drug is already available on the PBS. If a suitable drug is already on the PBS list then the Government feels that the loss to citizens is minimal.

The counter-argument is that this ignores the plight of individual patients for whom the listed drug is not clinically suitable.

While funding decisions are made at the “population level” it’s possible to tailor a listing to account for groups of patients. But it’s much more difficult to do this at the individual level.

Difficult decisions

It’s easier to say no to new expenditure than review current expenditure. If the intention of the Australian Government to continue Cabinet review of all PBAC recommendations then everybody needs to know the new rules of the game.

They need to know whether there is a cap on new expenditure and whether additional criteria are being applied to listing new drugs on the PBS.

The players may not like it but the change presents the opportunity to adjust and continue to play or leave the field. If a player leaves there is always another who is prepared to come on and play.