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Why medicines take so much time to get listed on the PBS

The Australian government introduced a controversial delay to the approval process for subsidised medicines last year, in an attempt to cut costs. We decided to examine the timelines of the approval process…

The biggest delay is arguably at the stage where sponsors can exert the most control over timing. Chris Kelly

The Australian government introduced a controversial delay to the approval process for subsidised medicines last year, in an attempt to cut costs. We decided to examine the timelines of the approval process in response because such delays reduce access to affordable medicines.

Our research found that while the government decision meant approvals took longer, there are longer delays caused by pharmaceutical companies. These occur earlier in the approval process and could be having an even greater impact on access.

The drug approval process

For a new drug to be approved in Australia, it must first be assessed for safety by the Australian Drug Evaluation Committee (ADEC), which reviews drugs for listing by the Therapeutic Goods Administration (TGA). Product sponsors (usually pharmaceutical companies), who provide information about the drug for evaluation, can then apply to have their drug subsidised by the government through inclusion in the Pharmaceutical Benefits Scheme (PBS). This makes the drug much more affordable for patients and increases the market for it.

To be on the PBS, a drug must be assessed by the Pharmaceutical Benefits Advisory Committee (PBAC) for effectiveness and cost effectiveness, and the government must agree to fund it.

Until early 2011, if PBAC recommended a medicine, the health minister approved it for PBS listing. Only medicines that cost more than $10 million a year had to go to Cabinet for approval, and only two drugs (Viagra and nicotine patches) had ever been rejected by Cabinet after a positive PBAC recommendation.

But in February 2011, the health minister announced that all PBAC recommendations would now need Cabinet review. In addition, seven drugs were identified for indefinite deferral – despite PBAC and minister approval, they would not be subsidised.

These decisions were criticised by pharmaceutical companies, consumer groups, medical professionals and a Senate committee for decreasing the affordability of medicines. Most of the drugs were approved after a seven-month delay, and the government agreed to a moratorium on the requirement for Cabinet review.

Timelines and delays

The time between PBAC recommendation and listing on the PBS is only one part of the approval process.

We were interested in examining these delays in the context of the whole approval process, starting at the time of ADEC approval. We started by looking at all medicines approved by ADEC in 2004, to see how long it took for the sponsor to submit the drug to PBAC for review, and how long it took for the product to be recommended by PBAC for listing on the PBS.

On average, there was a 17-month delay from ADEC approval of a drug to the first review by PBAC. In the two years after a drug was approved by ADEC, only 43% were submitted to PBAC and 32% had been approved. This is consistent with other research that has found that the time between ADEC and TGA approval and PBS listing has increased steadily from 13.6 months in 2000 to 34.2 months in 2009.

Although pharmaceutical companies were critical of the seven-month deferrals in 2011, we found a much longer delay occurring earlier in the review process – the time between TGA listing and PBAC submission. And this stage arguably is where sponsors can exert the most control over timing.

One of the reasons that companies may not apply for PBS listing is the cost of a submission. A major submission requires the collection of rigorous data on effectiveness and cost effectiveness, which requires significant time and resources.

Recent changes

Although not in place during our study, since 2010 the PBS has also charged cost-recovery fees of up to $19,500 a submission. The time and resources to prepare a PBAC submission may mean companies choose not to apply for PBS listing at all, and look for alternative ways of selling their products either directly to individuals, or by finding funding through special access schemes, private insurance companies, hospitals or charitable organisations.

Our research shows that while the 2011 policy changes did delay access to affordable new treatments, there are longer delays earlier in the approval process caused by product sponsors. High submission costs, the availability of alternative sources of funding, and the need to negotiate a price with the pricing authority creates disincentives for pharmaceutical companies to apply for PBS listing.

These issues will need to be addressed by future policy initiatives to ensure Australians have timely access to medicines made affordable by the PBS.
See more Explainer articles on The Conversation.

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