Why some drugs are publicly subsidised and others are not

Several factors, including if the effects of the medicine are worth its cost, help decide whether a drug is subsidised by the government. Tetiana Yurchenko/Shutterstock

Decisions whether to publicly fund new drugs or not are often tough.

Should the government fund a drug that has promising early results or wait until its effects and safety issues are better understood? Should patients be allowed to access drugs that may be of benefit as soon as possible but then be exposed to unknown risks?

Until recently, I was a member of the Pharmaceutical Benefits Advisory Committee (PBAC), a group of clinicians, a health economist and a consumer representative, that advises the health minister about placing new drugs on the Pharmaceutical Benefits Scheme (PBS).

Most drugs prescribed in Australia are accessed through this scheme, so it’s important to health-care consumers (which, ultimately, is all of us) that drugs can be accessed fairly and in a timely manner through the system.

What PBAC does

The committee considers about 150 submissions a year. The sponsor of the drug is usually a pharmaceutical company (although recently a group including the Cancer Council and Heart Foundation sponsored a submission for nicotine patches).

The PBAC decides whether the drug is better than, or at least as good as, currently available treatments; if its benefits outweigh any side effects; and if the effects of the drug are worth its cost.

Much of the data is complex, so the committee also receives advice from people with training in statistics, trial methods and health economics.

When a drug only has early data (that is, it’s new to the market and clinical trials only have short-term results), the committee is particularly cautious about which patients will be using the drug, and its safety.

In some cases, drugs that initially looked beneficial and were listed on the PBS have turned out to have major safety issues, such as the increased risk of heart attacks with the arthritis drug rofecoxib, and the diabetes drug rosiglitazone.

The PBAC may also reject a submission because the price is too high or because the pharmaceutical company is suggesting that a drug be used in too wide a range of patients.

In most cases, the people who gain most from a medical treatment are those with more severe disease. Drugs are likely to be more effective in this group and the treatment effects are more likely to outweigh any risk of side effects.

If a submission is rejected, the company has the choice of lowering the price, restricting the use of the drug to patients more likely to benefit or putting in place agreements that reduce the financial risk to the government.

Given the growth in the costs of prescription medicines, these negotiations are critical.

New cancer drugs

Deloitte Access Economics recently released a report commissioned by Medicines Australia’s Oncology Industry Taskforce. Medicines Australia is the peak body of the pharmaceutical industry in Australia.

The report was on the same subject as the ABC 4Corners episode that aired last night - new, really expensive cancer drugs.

The report contends that a growing number of Australian cancer patients are unable to access cancer medicines compared to some of their overseas counterparts.

One of its suggestions is that drugs be reimbursed earlier, and that patients be placed on registries to assess “real world” observations rather than wait for the results of clinical trials.

But registries of patients will not be adequate to assess the effectiveness of a drug fairly. A study published last week in Nature showed that we don’t know whether interventions are going to be of benefit or harmful before we do a clinical trial.

Another suggestion is that the government should pay more for cancer drugs used at the end of human life.

As a general practitioner, I believe a strength of the PBAC is that it considers health outcomes across all diseases. Diseases with strong lobby groups should not be permitted to demand and secure more funding than other illnesses.

At present, cancer and non-cancer drugs are just as likely to get a PBS listing - it depends on effectiveness and cost-effectiveness not whether it is a cancer drug or not.

This is not to say that the type of disease or consumer issues are unimportant in the drug approval decision-making process. A new drug for the treatment of metastatic melanoma, for instance, was approved by PBAC in June this year, at the cost of $110,000 per patient a year.

The cost of the drug is much higher than what the PBAC would normally consider acceptable, but it was recognised that no other effective therapies are available for this group of patients.

The initial application to the PBAC was first considered in July 2011, but the drug was only approved after the company agreed to decrease its price.

Keeping it fair

The Australian health-care budget is growing at rates that are unsustainable; a recent Grattan Institute report identified the growth in health expenditure as the greatest risk to Australian government budgets.

The Deloitte Access Economics report’s suggestion that Australian taxpayers pay more for expensive end-of-life drugs – often with expected gains of only a few months of life – is an issue that needs public debate.

The PBAC process has allowed drugs that are effective to be available for all Australians at a reasonable cost and in a timely fashion. And the process does take longer than systems that do not routinely assess cost-effectiveness, such as the United States, which does not have a public health system.

If people are interested in the reasons for the committee’s decisions, there is increasing transparency of the PBAC system. Increasing access to cancer drugs at the expense of PBAC’s process can only have costly consequences.