tag:theconversation.com,2011:/ca-fr/topics/pharmaceutical-benefits-scheme-2454/articlesPharmaceutical Benefits Scheme – La Conversation2023-04-30T20:02:33Ztag:theconversation.com,2011:article/2014622023-04-30T20:02:33Z2023-04-30T20:02:33ZThe tricky economics of subsidising psychedelics for mental health therapy<figure><img src="https://images.theconversation.com/files/522258/original/file-20230421-14-irzqf9.jpg?ixlib=rb-1.1.0&rect=0%2C270%2C4200%2C2087&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Australia is the world’s first country to legalise the medical use of psychedelics. But not everyone is sure the timing is right. There are still major issues to work out for this move to benefit those most in need. </p>
<p>In particular, there is the question of whether psychedelic medicines will be publicly subsidised, given the lack of data about their cost-effectiveness compared with other treatments. </p>
<p>From <a href="https://www.tga.gov.au/news/media-releases/change-classification-psilocybin-and-mdma-enable-prescribing-authorised-psychiatrists">July 1 2023</a>, authorised psychiatrists will be able to prescribe psilocybin and MDMA for post-traumatic stress disorder and psilocybin for treatment-resistant depression, to be used in conjunction with psychotherapy.</p>
<p>The Therapeutic Goods Administration (TGA), which regulates medicines and medical devices in Australia, made this decision in February, reclassifying psilocybin and MDMA from “Schedule 9” (prohibited substances, only legally available for use in research) to “Schedule 8” (controlled substances). </p>
<p>Many in the field were surprised. Advocacy group <a href="https://mindmedicineaustralia.org.au/psychedelic-assisted-therapies-in-australia-and-faqs/">Mind Medicine Australia</a>, which lobbied hard for the decision, was delighted. But mental health experts such as former <a href="https://australianoftheyear.org.au/recipients/professor-patrick-mcgorry-ao">Australian of the Year</a> Patrick McGorry <a href="https://www.smh.com.au/national/not-so-fast-controversial-mdma-drug-ruling-jumping-the-gun-20230206-p5cido.html">questioned</a> the sufficiency of evidence.</p>
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Read more:
<a href="https://theconversation.com/the-tga-has-approved-certain-psychedelic-treatments-the-response-from-experts-is-mixed-199290">The TGA has approved certain psychedelic treatments: the response from experts is mixed</a>
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<p>The TGA considered the effectiveness and safety of psilocybin and MDMA, as the regulator is supposed to do, but not their cost-effectiveness. This is not a requirement of TGA approval processes, but it is for the regulatory bodies that must approve these treatments for a public subsidy. </p>
<p>The paucity of such evidence is going to be a high hurdle. </p>
<h2>Will they be subsidised?</h2>
<p>How much will such therapy cost? One estimate is <a href="https://www.abc.net.au/news/2023-03-18/psychedelic-charity-accused-lobbying-tga-mdma-psilocybin/102103782">$20,000 to $30,000</a>, comprising the cost of the medication and therapists’ time for sessions. </p>
<p>The pharmaceutical-grade psilocybin and MDMA used in Australian clinical studies has largely been supplied free by US-based not-for-profit organisations such as the <a href="https://www.usonainstitute.org/">Usona Institute</a> and <a href="https://maps.org/">Multidisciplinary Association for Psychedelic Studies</a>. The bureaucratic requirements to import these medications include a permit from the TGA and an import licence and permit from the Office of Drug Control.</p>
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<img alt="Australian clinical trials with psilocybin and MDMA have relied on imports provided free by not-for-profit research groups such as the Multidisciplinary Association for Psychedelic Studies in California." src="https://images.theconversation.com/files/514375/original/file-20230309-18-9i5qvu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/514375/original/file-20230309-18-9i5qvu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/514375/original/file-20230309-18-9i5qvu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/514375/original/file-20230309-18-9i5qvu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/514375/original/file-20230309-18-9i5qvu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/514375/original/file-20230309-18-9i5qvu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/514375/original/file-20230309-18-9i5qvu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Australian clinical trials with psilocybin and MDMA have relied on imports provided free by not-for-profit research groups such as the Multidisciplinary Association for Psychedelic Studies in California.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<p>Increasing supply will require streamlining these import controls. There is also work to be done on the potential for local production. But for now the major determinant of costs for patients will be if the medicines and therapy are subsidised, as many psychological treatments and most psychiatric medications are now.</p>
<p>A subsidy for the psilocybin/MDMA component will require approval by the Pharmaceutical Benefits Advisory Committee, the independent body of medical experts that advises the federal health minister on which drugs should be listed on the Pharmaceutical Benefits Scheme.</p>
<p>This will require a detailed submission (usually from the pharmaceutical supplier) explaining how the medicine will be prescribed, its effectiveness, safety and cost-effectiveness compared with alternatives. Submissions must also include budget impact analysis – that is, how much it will cost if the medicine is listed on the PBS. </p>
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<a href="https://theconversation.com/explainer-how-is-the-price-of-medicine-decided-in-australia-83633">Explainer: how is the price of medicine decided in Australia?</a>
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<p>A subsidy for the psychotherapy component will require listing on the Medicare Benefits Schedule, which funds services such as blood tests, diagnostics and allied health services. This will need endorsement from the <a href="http://www.msac.gov.au/internet/msac/publishing.nsf/Content/about-msac">Medicare Services Advisory Committee</a> (MSAC), which is not a statutory committee like the Pharmaceutical Benefits Advisory Committee but has <a href="https://www.valuehealthregionalissues.com/article/S2212-1099(20)30666-X/fulltext">a similar function</a>.</p>
<h2>Are they cost-effective?</h2>
<p>To date there are no published studies on psilocybin’s cost-effectiveness, and only three on MDMA – all on its use in treating PTSD. </p>
<p>The first of these studies was <a href="https://doi.org/10.1371/journal.pone.0239997">published in 2020</a>, the second <a href="https://doi.org/10.1371/journal.pone.0263252">in February 2022</a> and the third <a href="https://doi.org/10.1007/s40261-022-01122-0">in March 2022</a>. All three used economic modelling to to simulate long-term benefits and costs of MDMA-assisted psychotherapy compared with standard health care, extrapolated from the results of clinical trials (involving a few hundred people).</p>
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<img alt="alt text here" src="https://images.theconversation.com/files/523357/original/file-20230428-20-17qtn6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/523357/original/file-20230428-20-17qtn6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/523357/original/file-20230428-20-17qtn6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/523357/original/file-20230428-20-17qtn6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/523357/original/file-20230428-20-17qtn6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/523357/original/file-20230428-20-17qtn6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/523357/original/file-20230428-20-17qtn6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Phase 3 clinical trials show therapy with MDMA and psychotherapy substantially reduces PTSD symptoms compared to psychotherapy and placebo.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<p>All three conclude MDMA-assisted therapy is a potentially cost-effective treatment for people with chronic and severe PTSD. However, the modelling assumes the effects of MDMA-assisted psychotherapy taken from clinical trials of relatively short durations (with maximum follow up of 18 weeks) will extend over 10 to 30 years. This may be overly optimistic. They were also based on the treatment patterns and costs from the US that differ to those in Australia.</p>
<p>PBAC and MSAC will likely need to carefully weigh this type of evidence to make an assessment about cost-effectiveness.</p>
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Read more:
<a href="https://theconversation.com/psychedelics-researchers-balance-trippyness-with-scientific-rigor-after-history-of-legal-and-cultural-controversy-podcast-191502">Psychedelics researchers balance trippyness with scientific rigor after history of legal and cultural controversy – podcast</a>
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<h2>Estimating ‘off-label’ use</h2>
<p>Another issue to be carefully considered is how many people will likely use these medicines in routine practice. Such estimates are complicated by the risk of off-label use – psychiatrists prescribing psilocybin and MDMA for purposes not listed by the TGA. </p>
<p>An estimated 40–75% of anti-psychotic medicine use is “<a href="https://www1.racgp.org.au/ajgp/2021/may/off-label-medicine-use">off-label</a>”. For example, the anti-psychotic medicine quetiapine is registered for treating schizophrenia and bipolar disorder, but is <a href="https://www.nps.org.au/australian-prescriber/articles/concerns-about-quetiapine-1">often used off-label</a> for conditions such as anxiety or insomnia. This is despite the rules for prescribing quetiapine (the prescriber must state why they are prescribing it). </p>
<p>Allowing only authorised prescribers of psilocybin and MDMA may reduce the risk but not eliminate it. It could mean the cost of the medicines to the health budget ends up being a lot higher than estimated.</p>
<p>The upshot of all this means, in practice, Australia is still a way off from offering a public subsidy for these psychedelic treatments. Which means, come July 1, the number of Australians able to afford these treatments will be small.</p><img src="https://counter.theconversation.com/content/201462/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cathy Mihalopoulos was a member of the Economics Sub-Committee of the Pharmaceutical Benefits Advisory Committee from 2012 to 2022. She receives funding from organisations including National Health and Medical Research Council, Medical Research Future Fund, Department of Health, the Butterfly Foundation. She is an investigator on a clinical trial evaluating psilocybin-assisted psychotherapy for treatment resistant depression with Swinburne University and Woke Pharmaceuticals.</span></em></p><p class="fine-print"><em><span>Christopher Langmead receives funding from the National Health and Medical Research Council, Medical Research Future Fund, Therapeutic Innovation Australia, and Servier Australia. He is co-founder and chief executive of Phrenix Therapeutics Pty Ltd, a biotechnology company developing new medicines for mental health disorders. </span></em></p><p class="fine-print"><em><span>Mary Lou Chatterton receives funding from multiple organisations including National Health and Medical Research Council, Medical Research Future Fund, Department of Health, and the Butterfly Foundation. She is an investigator on a clinical trial evaluating psilocybin-assisted psychotherapy for treatment resistant depression with Swinburne University and Woke Pharmaceuticals. She is also an investigator on a trial of MDMA-assisted therapy for alcohol use disorder and post-traumatic stress disorder funded through the Medical Research Future Fund. </span></em></p>Australia is the first country in the world to legalise the medical use of psychedelics. But without a public subsidy, few Australians will be able to afford them.Cathy Mihalopoulos, Professor, Monash UniversityChris Langmead, Professor, Monash UniversityMary Lou Chatterton, Senior research fellow, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1901372022-09-09T02:43:59Z2022-09-09T02:43:59ZThe price of PBS medicines is coming down. But are we helping the right people?<figure><img src="https://images.theconversation.com/files/483384/original/file-20220908-22-2dsabg.jpg?ixlib=rb-1.1.0&rect=5%2C11%2C1911%2C1264&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.pexels.com/photo/person-holding-blister-pack-3873191/">Polina Tankilevitch/Pexels</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Some Australians will be paying less for prescription medicines from January, in a move <a href="https://www.news.com.au/lifestyle/health/government-to-slash-cost-of-pbs-medicines-under-new-cost-of-living-measures/news-story/2de49504d536ab308f5060d9550a1411">announced this week</a> and designed to ease cost-of-living pressures.</p>
<p>Prime Minister Anthony Albanese <a href="https://www.pm.gov.au/media/cheaper-scripts-millions">said</a> the maximum price of Pharmaceutical Benefits Scheme (PBS) medicines would drop from A$42.50 to $30, at a cost to taxpayers of <a href="https://www.alp.org.au/policies/cutting-the-cost-of-medications">$765.3 million</a>.</p>
<p>There is no reduction for concession-card holders, who will continue to pay up to <a href="https://www.pbs.gov.au/info/about-the-pbs">$6.80</a>.</p>
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<p>Cutting the cost of medicines this way is a welcome move. But the government has missed a chance to better target cost cuts to certain patient groups, for specific medical conditions and for generic drugs.</p>
<h2>Australians are going without medicines</h2>
<p>Australians are currently <a href="https://bmjopen.bmj.com/content/bmjopen/7/1/e014287.full.pdf">paying more</a> for their prescription medicines than some similar countries, including the United Kingdom, Germany, the Netherlands and New Zealand.</p>
<p>And we know many Australians <a href="https://theconversation.com/last-year-half-a-million-australians-couldnt-afford-to-fill-a-script-heres-how-to-rein-in-rising-health-costs-178301">can’t afford</a> to fill their scripts.</p>
<p><a href="https://bmjopen.bmj.com/content/bmjopen/7/1/e014287.full.pdf">Just under 7%</a> of older Australians said they didn’t buy their prescribed medications because they were too expensive, a higher proportion than other similar countries. For the UK, this figure was about 3%, in New Zealand it was just under 5%. </p>
<p>This is a problem because people who cannot afford to buy essential medicines have worse health and <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7735485/">higher mortality</a>. Forgoing medicines may also lead to more health costs in the future, as conditions go untreated and complications arise, leading to emergency care and hospital visits.</p>
<p>So reducing the price of prescription medicines, as announced this week, will mean more people will be able to afford them, with the health and other benefits this brings.</p>
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Read more:
<a href="https://theconversation.com/last-year-half-a-million-australians-couldnt-afford-to-fill-a-script-heres-how-to-rein-in-rising-health-costs-178301">Last year, half a million Australians couldn't afford to fill a script. Here's how to rein in rising health costs</a>
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<h2>Can we better target the price cuts?</h2>
<p>People who cannot afford to fill their scripts <a href="https://journals.sagepub.com/doi/abs/10.1258/jhsrp.2009.009059">are more likely</a> to have a below-average income, be Indigenous, be adults under 65, and have little input in decisions about their medical treatment. A high price for medicine at the pharmacy (known as a co-payment) is another big factor.</p>
<p>So other countries use a variety of strategies to make it easier for people to afford to fill their scripts. These include:</p>
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<li><p>reducing the price of medicines (reducing the co-payment)</p></li>
<li><p>varying the co-payment by patient characteristic (for instance, income, age and health needs)</p></li>
<li><p>promoting the discussion of medicines and their costs between providers (such as doctors, pharmacists) and patients. </p></li>
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<p>Australia already has <a href="https://www.pbs.gov.au/info/about-the-pbs#What_are_the_current_patient_fees_and_charges">different co-payments</a> – one for general patients and a much lower one for concession-card holders. </p>
<p>There is no firm evidence concession-card holders are forgoing medicines at a different rate to the general population because of costs. So, it makes sense to target any price cuts to the general population, with its higher co-payment.</p>
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<a href="https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Emergency department sign with arrow" src="https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=446&fit=crop&dpr=1 600w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=446&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=446&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=560&fit=crop&dpr=1 754w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=560&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/483439/original/file-20220908-18-c2wy2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=560&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">We could make certain drugs cheaper to encourage people to use them, preventing a trip to hospital.</span>
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<p>But there are ways of lowering the co-payment for certain medicines, in particular those that control life-threatening conditions and prevent hospitalisation.</p>
<p>These medicines <a href="https://www.nejm.org/doi/full/10.1056/NEJMsa0807998">include</a> those used to treat asthma, severe mental disorders (such as severe depression, schizophrenia, bipolar disorder), heart diseases and diabetes. </p>
<p>The government could consider lowering the co-payment for these medicines, especially for people with multiple chronic conditions and on lower incomes.</p>
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Read more:
<a href="https://theconversation.com/what-is-the-pbs-safety-net-and-is-it-really-the-best-way-to-cut-the-cost-of-medicines-180315">What is the PBS safety net and is it really the best way to cut the cost of medicines?</a>
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<h2>What else could we do?</h2>
<p>This latest announcement only affects medicines costing more than $30. The patient will pay this co-payment and the government will cover the rest. </p>
<p>But some PBS subsidised medicines are cheaper than the co-payment, so the patient will pay the full cost.</p>
<p>Most of these cheaper drugs are generic drugs – ones no longer under patent protection. So lowering the co-payment will unlikely affect the cost of these.</p>
<p>If we were hoping to cut the cost of medicines even further, we need to target these generic drugs, which Australians <a href="https://grattan.edu.au/wp-content/uploads/2017/03/886-Cutting-a-better-drug-deal.pdf">generally pay more for</a> than people in countries including Canada, New Zealand, Japan and many member states of the European Union.</p>
<p>One reason is these countries set a price for each generic drug by using the best price obtained by other comparable countries. If Australia adopted this international benchmarking pricing, we could be saving even more at the pharmacy.</p>
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Read more:
<a href="https://theconversation.com/explainer-what-is-medicare-and-how-does-it-work-22523">Explainer: what is Medicare and how does it work?</a>
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<p><em>The article has been updated to reflect the cost of PBS medicines affected by the proposed changes.</em></p><img src="https://counter.theconversation.com/content/190137/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Yuting Zhang receives funding from Australian Research Council, Department of Veterans' Affairs, the Victorian Department of Health, and National Health and Medical Research Council. In the past, Professor Zhang has received funding from several US institutes including the US National Institutes of Health, Commonwealth fund, Agency for Healthcare Research and Quality, and Robert Wood Johnson Foundation.</span></em></p>The government has missed a chance to better target cost cuts to certain patient groups, for certain medical conditions, and for generic drugs.Yuting Zhang, Professor of Health Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1822812022-05-01T07:59:46Z2022-05-01T07:59:46ZAlbanese pledges to make gender pay equity a Fair Work Act objective<p>Anthony Albanese has pledged a Labor government would make gender pay equity an objective of the Fair Work Act and strengthen the Fair Work Commission’s powers to order pay rises for workers in low paid industries dominated by women. </p>
<p>The gender equity promise was one of five initiatives in the opposition leader’s policy speech, delivered to an audience of the Labor faithful in Perth on Sunday. </p>
<p>Paying tribute to care worker’s efforts in the pandemic, Albanese said they were the “arteries of our nation” and must be given “the respect and the investment they deserve”. </p>
<p>A Labor government would set up a care and communities sector expert panel and a pay equity expert panel to improve expertise within the commission. </p>
<p>Two former prime minsters, Paul Keating and Kevin Rudd, were at the launch, and Albanese was introduced by Western Australian Premier Mark McGowan. Newly-elected South Australian Premier Peter Malinauskas was also in the audience. </p>
<p>Education spokeswoman Tanya Plibersek, a very popular Labor figure, was missing from the launch, amid commentary in recent days that she has not been prominent during the campaign. Albanese said earlier in the weekend that Plibersek would be missing because she was representing him at Sunday’s May Day rally in Sydney. </p>
<p>Albanese - who has just emerged from a bout of COVID - told his audience that as prime minister he would want to “work with all premiers, regardless of which party they are from. I want to bring all the states together and get things done for the whole country.” </p>
<p>In other announcements, Albanese said Labor would build more electric vehicle charging stations across Australia, reduce pharmaceutical charges, make it easier for people to purchase houses by having the government take partial equity in them, and invest $1 billion in a fund for value-adding to resources. </p>
<p>He said building more electric vehicle charging stations would close the gaps in the network.</p>
<p>“That means you’ll be able to drive an electric vehicle across the country. Adelaide to Perth, Brisbane to Mount Isa. </p>
<p>"Together with Labor’s already announced electric vehicle discount, we’ll make it easier and cheaper for your next car to be electric. </p>
<p>"Imagine a future where you don’t have to worry about petrol bills”. </p>
<p>On pharmaceuticals, Albanese said Labor would reduce the cost of medication on the Pharmaceutical Benefits Scheme (PBS) by $12.50, making it cheaper for general patients. This would mean the maximum people paid for a PBS script would be $30, a reduction of 29%. </p>
<p>Someone taking one medication a month would save $150 a year. Labor’s changes to the PBS would start on January 1 next year. </p>
<p>The government has also just announced also a cut in the cost of medical scripts - by $10 a script.</p>
<p>Under Labor’s “help to buy” housing initiative, the federal government would provide an equity contribution for 10,000 aspiring home owners annually. The scheme would be available for low and middle income earners. </p>
<p>“If you have saved 2% of you deposit, we will contribute up to 40% of the purchase price of a new home or 30% for an existing home”, Albanese said.</p>
<p>He said the plan “will assist Australians to buy a home with a smaller deposit, smaller mortgage and smaller mortgage repayments.</p>
<p>"An Australian Labor government will help you achieve the great Australian dream of homeownership”. </p>
<p>Albanese also announced that as part of Labor’s proposed national reconstruction fund it would invest $1 billion in developing value-adding products from the nation’s resources.</p>
<p>“We will take resources like lithium and nickel - essential elements of the batteries that will power the vehicles of the future - and instead of shipping them to another country to make batteries, we’ll have what we need to make them right here”.</p>
<p>“We’ll bring manufacturing back home”.</p>
<p>Urging Australians to “vote for a better future”, Albanese said: “As your prime minister I won’t run away from responsibility. I won’t treat every crisis as a chance to blame someone else.</p>
<p>"I will show up, I will step up, I will bring people together. I will lead with integrity and treat you with respect”</p><img src="https://counter.theconversation.com/content/182281/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Anthony Albanese on Sunday formally launched Labor’s campaign, with promises for low paid women, and aspiring home buyers.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1803152022-03-31T03:34:52Z2022-03-31T03:34:52ZWhat is the PBS safety net and is it really the best way to cut the cost of medicines?<figure><img src="https://images.theconversation.com/files/455154/original/file-20220330-13-1xo1vg7.jpg?ixlib=rb-1.1.0&rect=1%2C0%2C997%2C627&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/pharmacist-holding-medicine-box-capsule-pack-704036482">Shutterstock</a></span></figcaption></figure><p>Earlier access to free or cheaper medicines is on the cards, after a <a href="https://www.health.gov.au/resources/publications/budget-2022-23-pharmaceutical-benefits-scheme-safety-net">federal budget announcement</a> made earlier this week.</p>
<p>Improved access to subsided prescription drugs through the <a href="https://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> or PBS will benefit Australians who need multiple medicines throughout the year. This is particularly so for people with chronic conditions or who have multiple members in the family who need scripts.</p>
<p>From July 1, access to free or cheaper medicines will kick in sooner, under the so-called <a href="https://www.servicesaustralia.gov.au/pbs-safety-net-thresholds?context=22016">PBS safety net</a>, as the threshold for access has been lowered.</p>
<p>However, this isn’t the only way to reduce the costs of medicines.</p>
<hr>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/health-budget-2022-spends-a-little-on-favoured-interest-groups-but-misses-a-chance-for-real-reform-179835">Health budget 2022 spends a little on favoured interest groups but misses a chance for real reform</a>
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<h2>What’s changed?</h2>
<p>If you only fill a script now and again, concession card holders pay A$6.80 and general patients pay up to $42.50 for a PBS-subsidised medicine.</p>
<p>However, if you need multiple scripts throughout the year, once you reach a certain threshold, the PBS safety net can kick in. Then, medicines are free for concession card holders and cost $6.80 for general patients.</p>
<p>The PBS safety net is <a href="https://www.servicesaustralia.gov.au/pbs-safety-net-thresholds?context=22016">calculated by calendar year</a> and is reset on January 1 each year.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1474168994223386631"}"></div></p>
<p>As of July 1, the <a href="https://www.health.gov.au/resources/publications/budget-2022-23-pharmaceutical-benefits-scheme-safety-net">PBS safety net threshold will be reduced</a> to $244.80 (down from $326.40) for concession card holders and $1,457.10 (down from $1,542.10) for general patients.</p>
<p>You can reach the PBS safety net sooner each year if you <a href="https://www.servicesaustralia.gov.au/how-to-reach-threshold-sooner-family?context=22016">combine your family’s PBS accounts</a>. In other words, if you or your partner or children require multiple medicines, your family may have quicker access to free or cheaper medicines for the rest of the year.</p>
<p>The PBS safety net is not to be confused with the <a href="https://www.servicesaustralia.gov.au/what-are-medicare-safety-nets-thresholds?context=22001">Medicare safety net</a>. This relates to doctors’ fees charged for out-of-hospital services.</p>
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<strong>
Read more:
<a href="https://theconversation.com/explainer-what-is-medicare-and-how-does-it-work-22523">Explainer: what is Medicare and how does it work?</a>
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<h2>Who will benefit?</h2>
<p>An average patient pays about <a href="https://www.aihw.gov.au/reports/australias-health/medicines-in-the-health-system">$121 out-of-pocket costs</a> per year on medicines, way below the PBS safety net thresholds. </p>
<p>So the PBS safety net only affects those who continuously use many prescription drugs. <a href="https://www.health.gov.au/resources/publications/budget-2022-23-pharmaceutical-benefits-scheme-safety-net">Under changes announced in the budget</a>, concession card holders who fill more than 36 prescriptions a year (three per month) or general patients who fill about 34 scripts a year will benefit from the reduced thresholds.</p>
<p>A large proportion of these are <a href="https://www.aihw.gov.au/reports/australias-health/medicines-in-the-health-system">older than 65, with chronic conditions</a>, who require medicines continually.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/455389/original/file-20220331-39548-1tyyit3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Elderly woman's hand resting on walking frame" src="https://images.theconversation.com/files/455389/original/file-20220331-39548-1tyyit3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/455389/original/file-20220331-39548-1tyyit3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/455389/original/file-20220331-39548-1tyyit3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/455389/original/file-20220331-39548-1tyyit3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/455389/original/file-20220331-39548-1tyyit3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/455389/original/file-20220331-39548-1tyyit3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/455389/original/file-20220331-39548-1tyyit3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Elderly people on multiple medications are among those expected to benefit from the latest changes.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/aging-time-1111826444">Shutterstock</a></span>
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</figure>
<p>For elderly patients, some medications are essential to control their symptoms and prevent them from being admitted to hospital. These medications include those to treat heart or mental health conditions.</p>
<p>So the money spent on improving access to these essential medicines could be offset by <a href="https://www.nejm.org/doi/full/10.1056/nejmsa0807998">lower hospital costs</a>.</p>
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<strong>
Read more:
<a href="https://theconversation.com/last-year-half-a-million-australians-couldnt-afford-to-fill-a-script-heres-how-to-rein-in-rising-health-costs-178301">Last year, half a million Australians couldn't afford to fill a script. Here's how to rein in rising health costs</a>
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<hr>
<h2>Other ways to cut costs</h2>
<p>Australia uses a range of mechanisms to manage the costs of prescription drugs, in addition to the PBS safety net. In general, these relate to how the government assesses drugs and sets prices.</p>
<p>After a new drug enters the market, the <a href="https://www.pbs.gov.au/pbs/industry/listing/participants/pbac">Pharmaceutical Benefits Advisory Committee</a> reviews its clinical effectiveness, safety and cost-effectiveness (or “value for money”) compared with other treatments before recommending it for listing on the PBS.</p>
<p>For clinically-equivalent drugs with different brands, the PBS only subsidises up to the price of the <a href="https://www.pbs.gov.au/browse/brand-premium">lowest priced brand</a>. If a patient needs the more expensive medicine, they pay a brand premium.</p>
<p>However, this brand premium <a href="https://www.nps.org.au/consumers/keeping-your-medicines-costs-down#what-is-the-pbs-safety-net?">cannot count towards</a> the PBS safety net threshold. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/cant-pronounce-the-name-of-your-medicine-heres-why-15416">Can't pronounce the name of your medicine? Here's why</a>
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<hr>
<h2>How about cheaper generic drugs?</h2>
<p>Assessing drugs for “value for money” and only subsidising clinically equivalent drugs to the price of the lowest priced brand are among measures allowing Australians access to cheaper <em>brand-name</em> drugs than countries without price controls.</p>
<p>However, Australians pay a higher price for <em>generic</em> prescription drugs – drugs no longer under patent protection – than many other countries. </p>
<p>Generic drugs are often not subsidised because they are cheaper than the PBS general co-payment of $42.50. So patients pay the full cost.</p>
<p>In fact, <a href="https://www.aihw.gov.au/reports/australias-health/medicines-in-the-health-system">about 30%</a> of all PBS-listed medicines cost less than $42.50, many of them generic drugs. </p>
<p>The cost of these PBS-listed, cheaper, non-subsidised generics counts towards your PBS safety net threshold.</p>
<p>To control prices for generic drugs, the government requires manufacturers to disclose how much they charge pharmacies. The government then reduces the amount it pays to pharmacies for each generic drug. </p>
<p>This <a href="https://www.pbs.gov.au/info/industry/pricing/price-disclosure-spd">price disclosure policy</a> has been effective to lower the prices of generic drugs. But this price disclosure policy does not guarantee Australians get the best prices for generic drugs some other countries enjoy.</p>
<p>Instead, the government could set a price for each generic drug, by using the best price obtained by other comparable countries. This <a href="https://grattan.edu.au/wp-content/uploads/2017/03/886-Cutting-a-better-drug-deal.pdf">international benchmarking</a> pricing strategy is used by other countries such as Canada, New Zealand, Japan and many member states of the European Union.</p>
<p>If the Australia government can get cheaper generic drugs as these countries, it would mean substantial savings for many Australians.</p><img src="https://counter.theconversation.com/content/180315/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Yuting Zhang receives funding from Australian Research Council, Department of Veterans' Affairs, and National Health and Medical Research Council.</span></em></p>Changes in the latest federal budget will mostly affect people who need multiple medicines throughout the year, perhaps for chronic disease. But there are other ways to reduce drug costs.Yuting Zhang, Professor of Health Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1537962021-01-31T18:55:13Z2021-01-31T18:55:13ZDoctors must now prescribe drugs using their chemical name, not brand names. That’s good news for patients<figure><img src="https://images.theconversation.com/files/381267/original/file-20210129-21-1wumjzy.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6006%2C4007&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shuterstock</span></span></figcaption></figure><p>From today (February 1), when you receive a prescription in Australia, it will list the name of the medication’s <a href="https://www.pbs.gov.au/info/general/active-ingredient-prescribing">active ingredient</a> rather than the brand name. So, for example, instead of receiving a prescription for Ventolin, your script will say “salbutamol”. </p>
<p>This national legislation change, called <a href="https://www.safetyandquality.gov.au/sites/default/files/2020-12/fact_sheet_-_active_ingredient_prescribing_-_guidance_for_australian_prescribers_0.pdf">active ingredient prescribing</a>, is long overdue for Australian health care. </p>
<p>Using the name of the drug — instead of the brand name, of which there are often many — will simplify how we talk about and use medications. </p>
<p>This could have a range of benefits, including fewer <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/imj.12805">medication errors</a> by both doctors and patients.</p>
<h2>What is an active ingredient?</h2>
<p>The <a href="https://www.tga.gov.au/book/prominence-active-ingredients-medicine-labels">active ingredient</a> describes the main chemical compound in the medicine that affects your body. It’s the ingredient that helps control your asthma or headache, for example. </p>
<p>Drugs are tested to ensure they contain exactly <a href="https://www.tga.gov.au/publication/australian-regulatory-guidelines-prescription-medicines-argpm">the same active ingredients</a> regardless of which brand you buy.</p>
<p>There’s only one active ingredient name for each type of medical compound, although they may come in different strengths. Some types of medications may contain multiple active ingredients, such as Panadeine Forte, which contains both paracetamol and codeine.</p>
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<p>
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<strong>
Read more:
<a href="https://theconversation.com/prescribing-generic-drugs-will-reduce-patient-confusion-and-medication-errors-77093">Prescribing generic drugs will reduce patient confusion and medication errors</a>
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<hr>
<h2>There can be several brand names</h2>
<p>Until now, doctors and other prescribers have used a mixture of brand and active ingredient names when prescribing medicines. An Australian study found doctors used brand names for <a href="https://www.publish.csiro.au/AH/AH12009">80.5% of prescriptions</a>. </p>
<p>Different brands are available for most medications — <a href="https://www.mja.com.au/journal/2011/195/11/whats-name-brand-name-confusion-and-generic-medicines">up to 12</a> for some. Combined with active ingredient names, this equates to thousands of different names — too many for any patient, doctor, nurse or pharmacist to remember. </p>
<figure class="align-center ">
<img alt="A senior man taking a tablet. There are a variety of medications on the table." src="https://images.theconversation.com/files/381268/original/file-20210129-23-15x62ie.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/381268/original/file-20210129-23-15x62ie.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/381268/original/file-20210129-23-15x62ie.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/381268/original/file-20210129-23-15x62ie.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/381268/original/file-20210129-23-15x62ie.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=495&fit=crop&dpr=1 754w, https://images.theconversation.com/files/381268/original/file-20210129-23-15x62ie.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=495&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/381268/original/file-20210129-23-15x62ie.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=495&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Older people are at higher risk of making medication errors, as they tend to take more medications.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>Here’s an example of the problem.</p>
<p>I ask John, a patient whom I’ve just met, whether he takes cholesterol medications, commonly called statins. The active ingredient names for this group of medications all end in “statin” (for example, pravastatin, simvastatin).</p>
<p>“Ummm, I’m not sure, is it a blue pill?” John asks.</p>
<p>“It could come in many colours. It might be called atorvastatin, or Lipitor,” I reply. “Perhaps rosuvastatin, or Crestor, or Zocor?”</p>
<p>“Ah yes, Crestor, I am taking that,” John exclaims, after deliberating for some time.</p>
<p>This is a common and important conversation, but could be simpler for both of us if John was familiar with the active ingredient name.</p>
<p>And while we did eventually come to the answer, this medication could have easily been overlooked, by both John and myself. This may have significant implications and interact with other medicines I might prescribe.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ive-heard-covid-is-leading-to-medicine-shortages-what-can-i-do-if-my-medicine-is-out-of-stock-153628">I've heard COVID is leading to medicine shortages. What can I do if my medicine is out of stock?</a>
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<hr>
<h2>Cause for confusion</h2>
<p>The main problem with using brand names for medications is the potential for confusion, as we see with John.</p>
<p>A prescription written using a brand name doesn’t mean you can’t buy other brands. And your pharmacist may offer to substitute the brand specified for an equivalent generic drug. So, people often leave the pharmacy with a medication name or package that bears no resemblance to the prescription.</p>
<p>When the terms we use to describe medicines in conversation, on prescriptions and what’s written on the medication packet can all be different, patients might not understand which medications they’re taking, or why. </p>
<p>This often leads to doubling up (taking two brands of the same medication), or forgetting to take a certain medication because the name on the package doesn’t match what’s written on your medication list or prescription.</p>
<p>Confusion resulting from using brand names has been associated with serious medication errors, including <a href="https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/211398?casa_token=hA41G4MI1ZQAAAAA:JJTT5NB6FOTsn-ZluZclU9Xxx942FN1mcbjcJ-zJlhJ6SNJc8GoIL0eyE1fdb55JV1s1gzu9aNg">overdoses</a>. Elderly people are the most susceptible, as they’re most likely to take multiple medications.</p>
<p>Even when the confusion doesn’t cause harm, it can be problematic in other ways. If patients don’t understand their medicines, they may be less likely to be proactive in making decisions with their doctor or pharmacist about their health care.</p>
<p>Health professionals can also get confused, potentially leading to <a href="https://www.ismp.org/resources/progress-preventing-name-confusion-errors">prescribing errors</a>.</p>
<h2>What are the benefits of active ingredient prescribing?</h2>
<p>The main benefit of the switch is to simplify the language around medications. </p>
<p>Once we become accustomed to using one standardised name for each medicine, it will be easier to talk about medicines, whether with a family member, pharmacist or doctor. </p>
<p>The better we understand the medications we’re using, the <a href="https://www.sciencedirect.com/science/article/pii/S0025619614003875?casa_token=s6dZMe3HH58AAAAA:ZEY1c6ltPyfJBMuOw6XHH6PdGdAuLpkn6s3WP0gmoSo8UwC7pD-vpwMwqqjp81V9KCbp6PcTtw">fewer errors we make</a>, and the more control we can take over our medication use and decisions.</p>
<figure class="align-center ">
<img alt="A pharmacist studies a woman's prescription." src="https://images.theconversation.com/files/381269/original/file-20210129-13-6xid6s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/381269/original/file-20210129-13-6xid6s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/381269/original/file-20210129-13-6xid6s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/381269/original/file-20210129-13-6xid6s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/381269/original/file-20210129-13-6xid6s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/381269/original/file-20210129-13-6xid6s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/381269/original/file-20210129-13-6xid6s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A pharmacist can let you know which brands of your medication are are available.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>This change will also serve to promote choice.</p>
<p>When you’re prescribed a medicine with a certain name, you’re more likely to buy that brand. In some cases there may be generic medicines that are cheaper and just as effective. Or there may be other forms of the medication that better suit your needs, such as a capsule only available in another brand.</p>
<h2>Not too much will change</h2>
<p>This new rule is not expected to lead to extra work for doctors, pharmacists or other health professionals who prescribe medicines, as most clinical software will make the transition automatically.</p>
<p>Doctors can elect to still include the brand name on the prescription, if they feel it’s important for the patient. But aside from some limited exceptions, the active ingredient name will need to be listed, and will be listed first.</p>
<p>Some active ingredient names may be a bit longer and more complex than certain brand names, so there might be a period of adjustment for consumers. </p>
<p>But in the long term, this change will streamline terminology around medicines and make things easier, and hopefully safer, for everyone.</p>
<p>Next time you receive your prescription, have a look at the name of the active ingredient. Remember it, and use that name when you talk to your family, doctor and pharmacist.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/boomers-have-a-drug-problem-but-not-the-kind-you-might-think-127682">Boomers have a drug problem, but not the kind you might think</a>
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<img src="https://counter.theconversation.com/content/153796/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Grant received funding from the National Health and Medical Research Council.</span></em></p>The language used to describe medications is confusing, with multiple names for the same drug. A change to prescribing rules from today should go a long way to addressing this issue.Matthew Grant, Palliative Medicine Physician, Research Fellow, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1273152019-11-27T06:21:04Z2019-11-27T06:21:04ZWhat is the Pharmacy Guild of Australia and why does it wield so much power?<figure><img src="https://images.theconversation.com/files/303610/original/file-20191125-84213-nnbk8h.jpg?ixlib=rb-1.1.0&rect=0%2C13%2C4373%2C3258&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Pharmacy Guild of Australia was founded in 1928 as an employers' organisation for the owners of community pharmacies.</span> <span class="attribution"><span class="source">From shutterstock.com</span></span></figcaption></figure><p>Across Australia around <a href="https://www.guild.org.au/__data/assets/pdf_file/0026/83672/Guild_Fact_Sheet_September_October_Infographic_2019.pdf">5,700 community pharmacies</a> are responsible for dispensing the majority of prescriptions subsidised under the Pharmaceutical Benefits Scheme (PBS).</p>
<p>These community pharmacies are represented nationally by the <a href="https://www.guild.org.au/">Pharmacy Guild of Australia</a>.</p>
<p>Every five years the Australian government consults with the Pharmacy Guild before delivering the Community Pharmacy Agreement. This agreement governs how pharmacies are reimbursed for dispensing medicines listed on the PBS, and the sorts of services you can access at the pharmacy.</p>
<p>The <a href="http://6cpa.com.au/about-6cpa/">6th Community Pharmacy Agreement</a> expires on June 30, 2020. Negotiations are currently underway for the 7th agreement, expected to cost some <a href="https://www.abc.net.au/radionational/programs/breakfast/convenience-stores-and-petrol-stations-push-to-sell-medicine/11407406">A$20 billion</a> over five years.</p>
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<strong>
Read more:
<a href="https://theconversation.com/explainer-what-is-the-community-pharmacy-agreement-38789">Explainer: what is the Community Pharmacy Agreement?</a>
</strong>
</em>
</p>
<hr>
<p>The Pharmacy Guild is the major player involved in negotiating with the government how much money is spent through the Community Pharmacy Agreement, and where the money goes.</p>
<p>Given the funds at stake, and the importance of ensuring the availability of PBS medicines, it’s pertinent to look at what the Pharmacy Guild is and where its power comes from.</p>
<h2>Ensuring community pharmacies are sustainable</h2>
<p>The Pharmacy Guild of Australia was founded in 1928 as an employers’ organisation for the owners of community pharmacies. Pharmacy owners must be registered pharmacists, but the pharmacy profession is represented separately by the <a href="https://www.psa.org.au/">Pharmaceutical Society of Australia</a>.</p>
<p>The Pharmacy Guild’s key focus is the financial sustainability of community pharmacy. Over the years they’ve sought to protect pharmacists’ income generated from the PBS (between 41% and 46% of their <a href="https://www1.health.gov.au/internet/main/publishing.nsf/Content/4E0B6EEE19F56A40CA2581470016D688/%24File/pharmacy-financial-survey-research-report.pdf">total income</a>, depending on location). </p>
<p>This is highlighted, for example, by the <a href="http://www.apha.org.au/wp-content/uploads/2012/11/You-Cant-Cut-Corners-with-Chemotherapy-an-overview.pdf">2013 fight</a> over dispensing fees for cancer drugs. The Pharmacy Guild was able to recoup <a href="https://archive.budget.gov.au/2013-14/myefo/2013_14_MYEFO.pdf">A$82.2 million</a> to increase dispensing fees for chemotherapy drugs, after <a href="https://www1.health.gov.au/internet/main/publishing.nsf/Content/chemotherapy-review/$File/29%20-%20Pharmacy%20Guild%20of%20AustraliaSubmission%20July%202013.pdf">it protested</a> changes in funding arrangements for <a href="https://www1.health.gov.au/internet/main/publishing.nsf/Content/chemotherapy-review/$File/review-of-chemotherapy-funding-arrangements.pdf">chemotherapy services</a> left pharmacies with a A$277 million shortfall.</p>
<p>Similarly, the Pharmacy Guild was able to coerce the government into providing <a href="https://www.ruralhealth.org.au/sites/default/files/documents/Minister_Hunt_DoH_Budget_17-18_lock-up_presentation.pdf">A$210 million</a> in the 2017-18 budget to community pharmacies as compensation for lower than forecast prescription volumes.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/303611/original/file-20191126-84231-i8j2ij.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/303611/original/file-20191126-84231-i8j2ij.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/303611/original/file-20191126-84231-i8j2ij.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/303611/original/file-20191126-84231-i8j2ij.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/303611/original/file-20191126-84231-i8j2ij.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/303611/original/file-20191126-84231-i8j2ij.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/303611/original/file-20191126-84231-i8j2ij.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Negotiations for the 7th Community Pharmacy Agreement are currently underway.</span>
<span class="attribution"><span class="source">From shutterstock.com</span></span>
</figcaption>
</figure>
<p>Further, the Pharmacy Guild has <a href="https://www.afr.com/opinion/turnbull-government-backs-pharmacies-over-consumers-yet-again-20180508-h0zryn">fiercely and successfully opposed</a> efforts to change the <a href="https://www.guild.org.au/news-events/news/2019/pharmacy-location-rules-delivering-public-benefit-for-decades">location rules</a> which govern the clustering of pharmacies, to allow pharmacies in supermarkets, and other efforts to <a href="https://www.bankwest.com.au/content/dam/bankwest/documents/business/insights/focus-on-pharmacy-report-2019.pdf">increase competition</a>. </p>
<p>The guild has also pushed for pharmacies to receive funding to deliver primary care services to patients. Both the Pharmacy Guild and the Pharmaceutical Society of Australia regard the community pharmacy sector as <a href="https://www.guild.org.au/__data/assets/pdf_file/0026/4769/here-.pdf">an ideal environment</a> to host preventative health initiatives, such as immunisations and screening services.</p>
<p>Under the 6th Community Pharmacy Agreement, funding for these sorts of services has exceeded <a href="http://www.pbs.gov.au/info/general/sixth-cpa-pages/community-pharmacy-programmes">A$1.26 billion</a>. It’s highly likely funding for these activities will be increased in the next Community Pharmacy Agreement.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/pay-pharmacists-to-improve-our-health-not-just-supply-medicines-124641">Pay pharmacists to improve our health, not just supply medicines</a>
</strong>
</em>
</p>
<hr>
<p>Despite the fact uptake of these programs is <a href="https://www.allfin-financial.com.au/australias-successful-pharmacies/">described</a> as “alarmingly low”, this has generated <a href="https://www.smh.com.au/politics/federal/doctors-raise-the-stakes-in-turf-war-with-pharmacists-20190826-p52ks5.html">turf fights</a> between doctors and pharmacists.</p>
<p>Some of the medical opposition is because <a href="https://www.guild.org.au/programs/6cpa">evaluations</a> of a number of long-running pharmacy programs have failed to demonstrate their value. In most cases, there has been insufficient data to enable any assessment of the impact of these programs on health outcomes.</p>
<h2>So why are they so powerful?</h2>
<p>The lobbying capabilities of the Pharmacy Guild executive and its members, the reach into every community, and the <a href="https://ajp.com.au/news/guild-boosts-parties-coffers/">substantial political donations</a> they make, mean politicians are always nervous about treading on community pharmacies’ toes.</p>
<p>Community pharmacies have a unique ability to garner public support for their causes from loyal customers. This can be a potent deterrent for any politician proposing changes the Pharmacy Guild views as adverse.</p>
<p>We saw this <a href="https://www.abc.net.au/news/2013-09-17/threat-to-the-survival-of-local-pharmacies-exaggerated/4948390">during the 2013 election campaign</a> when customers were petitioned to save their local pharmacies, supposedly under threat after a move by the Rudd government to reduce the price of prescription medicines.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/303890/original/file-20191127-112531-t7ggha.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/303890/original/file-20191127-112531-t7ggha.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/303890/original/file-20191127-112531-t7ggha.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/303890/original/file-20191127-112531-t7ggha.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/303890/original/file-20191127-112531-t7ggha.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/303890/original/file-20191127-112531-t7ggha.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/303890/original/file-20191127-112531-t7ggha.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Community pharmacies are often able to cultivate loyal customers.</span>
<span class="attribution"><span class="source">From shutterstock.com</span></span>
</figcaption>
</figure>
<p>In terms of political donations, the Pharmacy Guild was ranked as <a href="https://ajp.com.au/news/guild-boosts-parties-coffers/">the 14th largest political donor</a> in 2017-18 (the latest period we have data for).</p>
<p>Their <a href="https://www.abc.net.au/news/2019-02-01/donations-australia-federal-politics-foreign/10768226">political contributions</a> in that financial year totalled A$220,000. More than half of this (A$139,500) went to the Labor Party, with the remainder going to the Liberal and National Parties.</p>
<p>Most recently a donation of <a href="https://junkee.com/pharmacy-guild-one-nation/200587">A$15,000 to One Nation</a> generated controversy.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-rivalries-between-doctors-and-pharmacists-turned-into-the-turf-war-we-see-today-122534">How rivalries between doctors and pharmacists turned into the 'turf war' we see today</a>
</strong>
</em>
</p>
<hr>
<p>The Pharmacy Guild has been <a href="https://www.guild.org.au/news-events/news/forefront/v08n05/the-guild-and-the-political-process">open</a> about its ability to work within political processes, regardless of who is in government.</p>
<p>Its many critics, however, see the approach as one of manipulation. Former chair of the Australian Competition and Consumer Commission, Graeme Samuel, <a href="https://www.smh.com.au/politics/federal/discount-chemists-the-new-uber-former-accc-chief-backs-pharmacy-deregulation-20190814-p52gxz.html">has described</a> some of the guild’s tactics as “political blackmail”.</p>
<h2>Towards the 7th Community Pharmacy Agreement</h2>
<p>We don’t yet know what’s going to be contained in the 7th Community Pharmacy Agreement.</p>
<p>Regrettably, despite the large sums of money involved and the importance of community pharmacy as a public asset, there’s no transparency around the negotiations. </p>
<p>There’s also been little apparent consultation with other key stakeholders, particularly consumers. The Pharmacy Guild – and with it the interests of its members – appears, unsurprisingly, to be driving where health minister Greg Hunt will go with this agreement.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/relaxing-pharmacy-ownership-rules-could-result-in-more-chemist-chains-and-poorer-care-122628">Relaxing pharmacy ownership rules could result in more chemist chains and poorer care</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/127315/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lesley Russell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Pharmacy Guild represents the owners of community pharmacies around the country. Their reach into every community and large political donations make them more powerful than other lobby groups.Lesley Russell, Adjunct Associate Professor, Menzies Centre for Health Policy, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1137342019-04-09T07:12:17Z2019-04-09T07:12:17ZThe Coalition’s report card on health includes some passes and quite a few fails<figure><img src="https://images.theconversation.com/files/268254/original/file-20190408-2918-1yduncg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Coalition's record on health is patchy, at best. Meanwhile, Labor is already campaigning hard on Medicare. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/hospital-ward-beds-medical-equipment-102915128">Shutterstock </a></span></figcaption></figure><p><em>This article is part of a <a href="https://theconversation.com/au/topics/coalition-record-2019-69102">series</a> examining the Coalition government’s record on key issues while in power and what Labor is promising if it wins the 2019 federal election.</em></p>
<hr>
<p>The Turnbull/Morrison government has a mixed record, at best, on health. </p>
<p>The 2019 budget cash splash includes more promises on health but these will not come into effect until after the election. So they are just promises, not actions that have changed the health system.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/budget-2019-boosts-aged-care-and-mental-health-and-modernises-medicare-health-experts-respond-114194">Budget 2019 boosts aged care and mental health, and modernises Medicare: health experts respond</a>
</strong>
</em>
</p>
<hr>
<p>In 2016-17, the Commonwealth government spent <a href="https://www.aihw.gov.au/reports/hwe/073-1/health-expenditure-australia-2016-17/contents/table-of-contents">A$74.5 billion on health care</a>, mostly on:</p>
<ul>
<li>grants to the states for public hospitals (29% of total spending)</li>
<li>medical specialists and diagnostic tests (18%)</li>
<li>general practice (14%)</li>
<li>the Pharmaceutical Benefits Scheme (14%)</li>
<li>support for private health insurance (8%).</li>
</ul>
<p>Here’s the report card on the Coalition’s performance since the 2016 election.</p>
<h2>1. Grants to the states for public hospitals</h2>
<p>Public hospital funding has been a failure for this government. </p>
<p>The Coalition’s <a href="https://www.abc.net.au/news/2013-05-10/federal-election-policy-health/4657630">2013 election promise to keep the Labor policy on hospital funding growth</a> was not repeated at the 2016 election. The Commonwealth now funds only 45% of the costs of growth, not 50% as previously promised.</p>
<p>This funding gap – Labor calls it a cut – left the government exposed during last year’s by-elections to <a href="https://www.theaustralian.com.au/nation/politics/longman-byelection-hospital-a-pawn-in-seat-war/news-story/86b32e770c203c8c9549cca4d81510d2">charges that it was short-changing local hospitals</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/public-hospital-blame-game-heres-how-we-got-into-this-funding-mess-89498">Public hospital blame game – here's how we got into this funding mess</a>
</strong>
</em>
</p>
<hr>
<p>The claim appeared to gain traction with voters, so we should expect to see a re-run of this tactic in this election. This started with Bill Shorten highlighting the issue in his <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=CHAMBER;id=chamber%2Fhansardr%2F84457b57-5639-432a-b4df-68b704cb3563%2F0288;query=Id%3A%22chamber%2Fhansardr%2F84457b57-5639-432a-b4df-68b704cb3563%2F0032%22">budget reply speech</a>, promising to “put back every single dollar that the Liberals have cut from public schools and public hospitals”.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/268247/original/file-20190408-2924-51u30.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/268247/original/file-20190408-2924-51u30.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/268247/original/file-20190408-2924-51u30.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/268247/original/file-20190408-2924-51u30.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/268247/original/file-20190408-2924-51u30.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/268247/original/file-20190408-2924-51u30.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/268247/original/file-20190408-2924-51u30.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Coalition now funds only 45% of hospital funding growth, down from 50%.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/245905492?size=huge_jpg">hxdbzxy/Shutterstock</a></span>
</figcaption>
</figure>
<p>Despite bribes and threats, the federal government has failed to negotiate hospital funding agreements with Victoria and Queensland, together covering <a href="https://www.abs.gov.au/ausstats/abs@.nsf/0/D56C4A3E41586764CA2581A70015893E?Opendocument">46% of the population</a>. As a result, those states are at risk of being left in a funding limbo when the current arrangements expire on June 30, 2020.</p>
<h2>2. Specialist medical services and diagnostics</h2>
<p>A key challenge for policy on specialist medical services is out-of-pocket costs. <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/Quarterly-Medicare-Statistics">General practitioner bulk-billing rates are good</a>, but patients are angry about the <a href="https://chf.org.au/publications/out-pocket-pain">out-of-pocket costs they face when they go to a specialist</a>. </p>
<p>The government response has been <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/min-advisory-comm-out-of-pocket">a committee</a>, a <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/3A14048A458101B0CA258231007767FB/$File/Report%20-%20Ministerial%20Advisory%20Committee%20on%20Out-of-Pocket%20Costs.pdf">report</a>, and a promise of transparency or, more accurately, a <a href="http://www.health.gov.au/internet/ministers/publishing.nsf/Content/health-mediarel-yr2019-hunt035.htm">promise to encourage voluntary fee transparency</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-need-more-than-a-website-to-stop-australians-paying-exorbitant-out-of-pocket-health-costs-108740">We need more than a website to stop Australians paying exorbitant out-of-pocket health costs</a>
</strong>
</em>
</p>
<hr>
<p>Increased transparency is all well and good, but it puts the burden of reducing out-of-pocket costs on consumers, who generally do not have enough information to make informed choices. The complication rates of different specialists, and other measures of quality, are not yet routinely available to <a href="https://grattan.edu.au/report/all-complications-should-count-using-our-data-to-make-hospitals-safer/">patients</a>, or even GPs. </p>
<p>This area should be marked as a policy fail.</p>
<p>Promises about diagnostic testing before the 2016 election were of two kinds: <a href="https://grattan.edu.au/wp-content/uploads/2019/04/Coalition-plan-for-access-to-affordable-diagnostic-imaging-for-all-Australians-_-Liberal-Party-of-Australia.pdf">more reviews</a> and more <a href="https://www.youtube.com/watch?v=arCITMfxvEc">machines that go ping</a>, the latter dropped into <a href="https://grattan.edu.au/wp-content/uploads/2019/04/PET-Scanner-for-the-Northern-Territory-_-Liberal-Party-of-Australia.pdf">marginal electorates</a> as part of the cargo cult which appears endemic during election campaigns. </p>
<p>Left unaddressed is the need to <a href="https://grattan.edu.au/report/blood-money-paying-for-pathology-services/">reform the pathology market</a> to recognise that pathology provision (such as blood and tissue tests) is a big business and needs to be treated as such, by procuring via tenders rather than fee-for-service.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/268249/original/file-20190408-2912-1v37u5d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/268249/original/file-20190408-2912-1v37u5d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/268249/original/file-20190408-2912-1v37u5d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/268249/original/file-20190408-2912-1v37u5d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/268249/original/file-20190408-2912-1v37u5d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/268249/original/file-20190408-2912-1v37u5d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/268249/original/file-20190408-2912-1v37u5d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Blood testing is big business.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/556394323?src=YyMFtMJUoJy-6i72m0aOog-1-26&size=huge_jpg">Romanets/Shutterstock</a></span>
</figcaption>
</figure>
<p>The government has also failed to end the <a href="https://theconversation.com/getting-doctors-to-reduce-diagnostic-testing-is-hard-but-we-should-keep-trying-42312">over-use of diagnostic tests</a>. This could have been done by reducing payments for tests which have been shown to add little value and <a href="http://www.choosingwisely.org.au/home">encouraging more evidence-based diagnosis</a>. Another fail.</p>
<p>A third key area of specialist provision, mental health, is a mess. Before the 2016 election, the Coalition promised to “<a href="https://grattan.edu.au/wp-content/uploads/2019/04/The-Coalition%E2%80%99s-plan-to-strengthen-mental-health-care-across-Australia-_-Liberal-Party-of-Australia.pdf">strengthen mental health services</a>”. </p>
<p>The latest <a href="https://en.wikipedia.org/wiki/Candide">Panglossian</a> national <a href="https://www.mentalhealthcommission.gov.au/media/245211/Monitoring%20Mental%20Health%20and%20Suicide%20Prevention%20Reform%20National%20Report%202018.pdf">status report on mental health</a> gives no hint of the underlying <a href="https://acem.org.au/getmedia/60763b10-1bf5-4fbc-a7e2-9fd58620d2cf/ACEM_report_41018">problems of poor access</a>, <a href="https://www.abc.net.au/triplej/programs/hack/medicare-subsidised-mental-health-program-has-fundamental-faili/10955008">misdirected funding</a>, <a href="https://www.mja.com.au/journal/2019/210/7/runaway-giant-ten-years-better-access-program">lack of teamwork</a>, and <a href="https://www.creativespirits.info/aboriginalculture/people/aboriginal-suicide-rates#toc2">appalling rates of suicide in Indigenous communities</a>. Yet another fail.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-are-we-losing-so-many-indigenous-children-to-suicide-114284">Why are we losing so many Indigenous children to suicide?</a>
</strong>
</em>
</p>
<hr>
<h2>3. General practice and primary care</h2>
<p>The much-vaunted Turnbull-era <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2018/May/Health_care_homes">Primary Health Care Homes Trial</a> – once the vanguard of a <a href="https://grattan.edu.au/wp-content/uploads/2019/04/Budget-puts-patient-outcomes-at-centre-of-health-reform-_-Liberal-Party-of-Australia.pdf">primary care revolution</a> and core to the government’s policy announcement’s before the 2016 election – has <a href="https://www.sbs.com.au/news/health-care-homes-trial-falling-short">disappeared from the radar</a>. </p>
<p>In its place, announced in this year’s budget, is a <a href="https://www.greghunt.com.au/record-investment-advances-long-term-national-health-plan/">new capitation-type payment for general practitioners</a>. </p>
<p>Although the details are still to be fleshed out, this will probably allow general practitioners to introduce remote consultations – such as advice by email <a href="https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-016-1484-5">for those who want it</a> – and have practice staff reach out to people with chronic illness to track how they are going to reduce future problems.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/more-visits-to-the-doctor-doesnt-mean-better-care-its-time-for-a-medicare-shake-up-110884">More visits to the doctor doesn't mean better care – it's time for a Medicare shake-up</a>
</strong>
</em>
</p>
<hr>
<p>This is a good move, and reflects recommendations from a <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/mbs-review-2018-taskforce-reports-cp/$File/General-Practice-and-Primary-Care-Clinical-Committee-Phase-2-Report.pdf">review of general practice items</a> as part of the broader Medicare Benefits Schedule Review.</p>
<p>Other important recommendations from the general practice review seem to be languishing, and there is no sense that <a href="https://grattan.edu.au/report/building-better-foundations/">overdue primary care reforms</a> are being tackled in a serious and systematic way.</p>
<p>Overall, however, the government has been moving in the right direction in this area, albeit slowly and with false starts. A solid pass.</p>
<h2>4. Pharmaceutical benefits</h2>
<p>Before the 2016 election, federal health minister Greg Hunt <a href="https://medicinesaustralia.com.au/policy/strategic-agreement/">signed agreements</a> promising to talk to and work with all components of the pharmaceutical supply chain. </p>
<p>This has been a success story. New drugs are now listed in line with recommendations from the Pharmaceutical Benefits Advisory Committee, ending the delays and political interference of yesteryear. </p>
<p>Labor has <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=CHAMBER;id=chamber%2Fhansardr%2F84457b57-5639-432a-b4df-68b704cb3563%2F0288;query=Id%3A%22chamber%2Fhansardr%2F84457b57-5639-432a-b4df-68b704cb3563%2F0032%22">promised to do the same</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/268251/original/file-20190408-2924-19kxjfj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/268251/original/file-20190408-2924-19kxjfj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/268251/original/file-20190408-2924-19kxjfj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/268251/original/file-20190408-2924-19kxjfj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/268251/original/file-20190408-2924-19kxjfj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/268251/original/file-20190408-2924-19kxjfj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/268251/original/file-20190408-2924-19kxjfj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Policy pass: drugs are now being listed without delay.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/1281072733?size=huge_jpg">iviewfinder/Shutterstock</a></span>
</figcaption>
</figure>
<p>Pharmaceutical prices have come down, so the prices paid by Pharmaceutical Benefits Scheme (PBS) for drugs are now closer to international best practice. But <a href="https://grattan.edu.au/news/pharmacists-should-have-a-bigger-role-submission-to-senate-select-committee-on-red-tape/">anti-competitive restrictions</a> on pharmacy location remain, to the benefit of <a href="http://johnmenadue.com/john-menadue-the-australian-pharmacy-guild-continues-to-dud-taxpayers-and-patients/">pharmacy owners</a>. </p>
<p>Nevertheless, a strong pass.</p>
<h2>5. The private market</h2>
<p>The private health market is supposed to be an area of strength for a Coalition government. On April 1 this year, this government <a href="https://beta.health.gov.au/health-topics/private-health-insurance/private-health-insurance-reforms">introduced changes to private health insurance</a>: </p>
<ul>
<li>standardising product definitions</li>
<li>allowing deductions to encourage young people to take out insurance</li>
<li>removing many natural therapies (for which there is no evidence that they work) from the subsidised extras packages. </li>
</ul>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/premiums-up-rebates-down-and-a-new-tiered-system-what-the-private-health-insurance-changes-mean-114086">Premiums up, rebates down, and a new tiered system – what the private health insurance changes mean</a>
</strong>
</em>
</p>
<hr>
<p>These changes are <a href="https://theconversation.com/changes-to-lure-young-people-into-private-health-insurance-wont-slow-increase-in-premiums-85663">unlikely to have much impact on private health insurance coverage</a>, which has been declining in recent years.</p>
<p>Overall, no harm has been done, but unfortunately most of the fundamental problems of the private markets have not been confronted. Borderline achievement.</p>
<h2>6. Everything else</h2>
<p>Barely a week goes by when Hunt is not announcing yet another funding initiative. He has two big slush funds from which to dispense goodies: the <a href="https://beta.health.gov.au/initiatives-and-programs/medical-research-future-fund">Medical Research Future Fund</a> and the <a href="https://www.liberal.org.au/latest-news/2018/12/12/125-billion-improve-health-and-care-australian-patients">Community Health and Hospitals Fund</a>. </p>
<p>The criteria for distributing money from these funds is opaque; it is difficult to discern any strategic vision informing the way the largesse is being spread.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/268252/original/file-20190408-2931-c907td.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/268252/original/file-20190408-2931-c907td.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/268252/original/file-20190408-2931-c907td.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/268252/original/file-20190408-2931-c907td.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/268252/original/file-20190408-2931-c907td.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/268252/original/file-20190408-2931-c907td.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/268252/original/file-20190408-2931-c907td.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Health minister Greg Hunt makes frequent health funding announcements.</span>
<span class="attribution"><a class="source" href="https://photos.aap.com.au">AAP/Penny Stephens</a></span>
</figcaption>
</figure>
<p>There was a veritable cornucopia of policies announced before the last election, from <a href="https://grattan.edu.au/wp-content/uploads/2019/04/The-Coalition%E2%80%99s-Plan-for-Continuous-Glucose-Monitoring-_-Liberal-Party-of-Australia.pdf">glucose monitoring</a> to treatment of <a href="https://grattan.edu.au/wp-content/uploads/2019/04/Coalition-plan-to-fight-rare-teen-cancer-_-Liberal-Party-of-Australia.pdf">rare teen cancers</a>. </p>
<p>All were worthy, and most were designed to placate vocal sectoral interests. Most have been implemented, but few will change the fundamentals of the health system or improve integration of the system’s many disparate elements. </p>
<p>Scattered like <a href="https://www.themandarin.com.au/55708-terry-moran-5-big-challenges-facing-public-administration-australia/">programmatic confetti</a>, each of these funding dollops will yield a minor benefit, but together they will lead to more funding silos, less policy integration, and more confusion about the roles of the Commonwealth government and the states. </p>
<p>What’s more, they will give more heart to vested interests, and undermine rational national health policy.</p>
<h2>What Labor has promised so far?</h2>
<p>Health is an area of comparative advantage for Labor – voters tend to <a href="https://www.essentialvision.com.au/trust-in-parties">trust Labor more than the Coalition on Medicare</a>. </p>
<p>Not surprisingly, Labor capitalises on that, and opposition leader Bill Shorten made health policy a key element of his <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=CHAMBER;id=chamber%2Fhansardr%2F84457b57-5639-432a-b4df-68b704cb3563%2F0288;query=Id%3A%22chamber%2Fhansardr%2F84457b57-5639-432a-b4df-68b704cb3563%2F0032%22">budget reply speech</a>. </p>
<p>Last month Labor <a href="https://www.catherineking.com.au/2019/03/25/labor-will-end-morrisons-medicare-freeze-in-first-50-days/">promised to lift the freeze on Medicare rebates for general practice consultations</a>, a promise <a href="https://www.afr.com/news/economy/federal-budget-2019-medicare-freeze-end-just-what-the-doctor-ordered-20190402-1o24rc">matched by the Coalition in the Budget</a>. </p>
<p>Labor has also set out a longer-term vision for reform of the health system, including a proposal for an ongoing “<a href="https://www.catherineking.com.au/2019/02/13/speech-to-the-national-press-club-labors-vision-for-health-care/">reform commission</a>”.</p>
<p>The centrepiece and most expensive was a <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=CHAMBER;id=chamber%2Fhansardr%2F84457b57-5639-432a-b4df-68b704cb3563%2F0288;query=Id%3A%22chamber%2Fhansardr%2F84457b57-5639-432a-b4df-68b704cb3563%2F0032%22">massive “cancer plan” commitment</a> to address out-of-pocket costs for people with cancer. This includes expanded Medicare rebates for MRI scans for cancer patients, a new rebate for bulk-billed visits to oncologists, and a guarantee that all new drugs recommended for listing on the PBS will be listed.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/labors-cancer-package-would-cut-the-cost-of-care-but-beware-of-unintended-side-effects-114979">Labor's cancer package would cut the cost of care, but beware of unintended side effects</a>
</strong>
</em>
</p>
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<img src="https://counter.theconversation.com/content/113734/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Duckett works at Grattan Institute which began with contributions to its endowment of $15 million from each of the Federal and Victorian Governments, $4 million from BHP Billiton, and $1 million from NAB. In order to safeguard its independence, Grattan Institute’s board controls this endowment. The funds are invested and contribute to funding Grattan Institute's activities. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities as disclosed on its website.</span></em></p>Here’s how the Turnbull/Morrison government performed on hospitals, primary care, pharmaceuticals and private health insurance.Stephen Duckett, Director, Health Program, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/814822017-07-24T21:27:10Z2017-07-24T21:27:10ZNew Zealand steamrolls Australia on the pharmaceutical paddock too<p>It’s a good thing for the baby boomers that young people have been locked out of the property market. If Gen X and Gen Y were allowed to fritter away their earnings on mortgage repayments, selfishly amassing their own wealth, they would have less money to subsidise pharmaceuticals for the baby boomers as they hit the outer years.</p>
<p>The Pharmaceutical Benefits Scheme (PBS), once a reasonably efficient beast which cost taxpayers $6.5 billion a year, is likely to surpass $11 billion this year. Most of it goes to Big Pharma, but just how much is hard to tell.</p>
<p>Transparency, from both government and industry, is poor. So it is that Australian taxpayers are held ransom by the power of the pharma lobby, its large political party donations, and the timidity of government to negotiate hard on behalf of its citizens.</p>
<p>With the Bledisloe Cup season almost upon us, it will not cheer Australian rugby supporters to hear that the Kiwis are trouncing us on the pharmaceutical benefits paddock too. Yes, <a href="https://grattan.edu.au/report/cutting-a-better-drug-deal/">we pay three times as much</a> as the Kiwis.</p>
<h2>Australia’s most costly drug revealed</h2>
<p>The cost of Australia’s most expensive drug was finally revealed over the weekend – not by government, and not by a drug company, but by an infectious diseases expert at an AIDS conference in Paris.</p>
<p>Professor Margaret Hellard of the Burnet Institute showed the listed price of Harvoni, the hepatitis C “blockbuster” drug, at US$5,799. The total taxpayer subsidy works out at $A59,079 for a standard 12-week treatment.</p>
<p>Looking at Hellard’s chart, the listed price for a 12-week course of Harvoni (branded sofosbuvir/ledipasvir) is US$91,589 in the US and US$900 in Egypt, where hep C infections run at 10%. Australia is the third-most affordable on the chart – after Egypt and India – but in South America prices remain at more than US$50,000.</p>
<p>Globally, access to this critical cure for hep C is simply unattainable in many poor countries where people are dying daily of the disease.</p>
<h2>R&D comes second to share buybacks</h2>
<p>From an Australian perspective, the immediate public policy issues are price, transparency and accountability. As a rich nation, Australia can still fund blockbuster drugs publicly, but growth in the PBS is unsustainable in the longer term and Big Pharma – heavily subsidised on one front and heavily avoiding tax on the other – is “gaming” government.</p>
<p>In its defence, industry contends the costs of research and development are high, but a study this month found the 18 drug companies listed on the S&P 500 Index spend more money buying back their own shares on Wall Street and paying dividends than they spend on R&D.</p>
<p>The trade-off between shareholders, taxpayers and patients is <a href="https://www.ineteconomics.org/research/research-papers/us-pharmas-financialized-business-model">out of whack</a>: US$516 billion spent on dividends and buy-backs versus US$465 billion spent on R&D over the ten years to 2015. </p>
<p>Gilead Sciences was a major culprit, splashing US$27 billion on buybacks and US$17 billion on research. Buybacks are a capital management initiative that manipulates a share price higher and therefore executive bonuses too. They do nothing for taxpayers and very little for people dying of a disease who can’t afford the cure.</p>
<p>Citing a share market research firm, The New York Times <a href="https://www.nytimes.com/2017/07/14/business/big-pharma-spends-on-share-buybacks-but-rd-not-so-much.html">reports</a> that some US$390 billion in share buybacks have been announced this year, US$13 billion more than at the same time in 2016.</p>
<p>Meanwhile, in Australia, the same Big Pharma companies operate effectively in the dark. A <a href="https://www.michaelwest.com.au/exposed-how-johnson-johnson-cut-its-risk-in-vaginal-mesh-lawsuit/">study by michaelwest.com.au</a> found most of them file Special Purpose financial reports, which allow them to conceal related party transactions with their associates offshore. </p>
<p>As regulators and the Australian Accounting Standards Board dither on closing financial reporting loopholes, many of these pharma giants have switched from the more meaningful General Purpose reports to Special Purpose reporting – all with the trademark connivance of the Big Four global accounting firms.</p>
<p>In the case of <a href="https://theconversation.com/gilead-and-the-billion-dollar-odyssey-80961">Gilead’s hep C cure</a>, it is a sorry state of affairs that basic information about a drug that is so critical to public health and so costly for taxpayers could be withheld for so long from medical professionals and patients.</p>
<p>The financial reporting needs fixing too. The companies fail to properly disclose how much money they make from government. They even fail basic reporting standards.</p>
<p>With enough patience it is possible to find information in the PBS on particular companies and how much they make, but the information is often old and does not drill down clearly to the particular PBS item.</p>
<p>Novartis tops the most recently available list, costing government almost A$800 million for its 3.5 million prescriptions sold. The figures that really stand out, however, are “government cost per script” of $21,572.75 per script for Gilead Sciences and $1,740.04 per Abbvie scipt.</p>
<p>According to Dr James Freeman, who started up a “buyers’ club” to help patients access hep C drug Harvoni at far lower prices, some 34,200 patients were treated in the first year out of about 250,000 infected: “So we only managed 14%.”</p>
<p>“In the context of a real capped price deal, I would have expected that the government would have spent $20 million to $50 million on a TV advertising blitz to maximise uptake,” said Freeman. “We see this for depression, asthma, haemochromatosis. We have not seen it for HCV drugs.”</p>
<hr>
<p><em>This column, co-published by The Conversation with <a href="http://www.michaelwest.com.au/">michaelwest.com.au</a>, is part of the <a href="https://theconversation.com/au/topics/democracy-futures">Democracy Futures</a> series, a <a href="http://sydneydemocracynetwork.org/democracy-futures/">joint global initiative</a> between The Conversation and the <a href="http://sydneydemocracynetwork.org/">Sydney Democracy Network</a>. The project aims to stimulate fresh thinking about the many challenges facing democracies in the 21st century.</em></p><img src="https://counter.theconversation.com/content/81482/count.gif" alt="The Conversation" width="1" height="1" />
<h4 class="border">Disclosure</h4><p class="fine-print"><em><span>Michael West was commissioned by GetUp! and the Tax Justice Network to investigate multinational companies operating in Australia and their tax affairs. </span></em></p>Drug prices in Australia are three times higher than in New Zealand. A key reason is the lack of transparency about taxpayer subsidies for Big Pharma and the companies’ own finances.Michael West, Adjunct Associate Professor, School of Social and Political Sciences, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/769342017-05-03T04:22:05Z2017-05-03T04:22:05ZWeekly Dose: Kalydeco, the drug that treats the cause of cystic fibrosis, not just symptoms<figure><img src="https://images.theconversation.com/files/167444/original/file-20170502-17322-1f2k6hm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">People with cystic fibrosis, Australia's most common inherited condition, have thick mucus, including on the lungs.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/396255907?src=OOFB-3qYwLVlctPd4ckqTw-1-16&size=medium_jpg">from www.shutterstock.com</a></span></figcaption></figure><p>Kalydeco (ivacaftor) is a drug used to treat <a href="http://www.cysticfibrosis.org.au/all/learn/">cystic fibrosis</a>, a disorder that affects many organs, particularly the lungs. Cystic fibrosis is Australia’s most commonly inherited disorder.</p>
<p>The drug has been <a href="http://www.smh.com.au/federal-politics/political-news/cystic-fibrosis-miracle-drug-among-turnbull-governments-310m-pbs-listing-20170430-gvvl0l.html">in the</a> <a href="http://www.theaustralian.com.au/news/latest-news/lifesaving-drugs-lose-hefty-pricetags/news-story/344e8dcc4fbb9f99b0a929a7f2a4cdd1">news</a> recently because, as of <a href="http://www.health.gov.au/internet/ministers/publishing.nsf/Content/health-mediarel-yr2017-hunt040.htm">May 1</a>, 2017 a wider range of people are now eligible to receive it under the <a href="http://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> (PBS).</p>
<p>Before May 1, <a href="https://www.cysticfibrosis.org.au/media/wysiwyg/CF-Australia/medical-documents/CFA_DataRegistryReport_2014_Final.pdf">more than 200</a> Australians over the age of six years were eligible for Kalydeco. <a href="https://www.vrtx.com/story/children-ages-2-5-gating-mutations-australia-be-provided-immediate-access-kalydeco-ivacaftor">Widening its subsidy</a> to certain younger patients aged two to five means <a href="https://www.cysticfibrosis.org.au/media/wysiwyg/CF-Australia/medical-documents/CFA_DataRegistryReport_2014_Final.pdf">another 30</a> children can benefit. This accounts for <a href="https://www.cysticfibrosis.org.au/media/wysiwyg/CF-Australia/medical-documents/CFA_DataRegistryReport_2014_Final.pdf">10 to 12%</a> of patients with cystic fibrosis.</p>
<p>Before PBS listing in 2014, patients and families needed to find A$300,000 per year to fund the drug. Now, for eligible patients, it is available for A$6.30 a script for concession-card holders and A$38.80 for general patients. But patients will still need to satisfy specific criteria (have specific gene mutations) to qualify.</p>
<h2>What is cystic fibrosis?</h2>
<p>Cystic fibrosis affects <a href="https://www.cysticfibrosis.org.au/media/wysiwyg/CF-Australia/medical-documents/CFA_DataRegistryReport_2014_Final.pdf">one in 3,600</a> live births in Australia. It is caused by defects in a single gene, known as the cystic fibrosis transmembrane regulator (CFTR).</p>
<p>The gene has a critical role in controlling how chloride ions (salt) move in and out of cells via proteins called chloride channels. Too much salt and not enough water can lead to mucus becoming very thick and sticky, which can build up in the lungs (and other organs).</p>
<p>This sticky mucus clogs the tiny air passages in the lungs and traps bacteria. Repeated infections and blockages can cause irreversible lung damage, which is the most common cause of death in people with this condition.</p>
<p>Mucus can also cause problems in the pancreas, preventing the release of enzymes needed to digest food and so leading to nutrition problems.</p>
<p>Patients can also have liver disease, chronic sinus infections, diabetes and fertility problems due to this faulty gene.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/167649/original/file-20170503-4128-9jawn0.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/167649/original/file-20170503-4128-9jawn0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/167649/original/file-20170503-4128-9jawn0.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=870&fit=crop&dpr=1 600w, https://images.theconversation.com/files/167649/original/file-20170503-4128-9jawn0.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=870&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/167649/original/file-20170503-4128-9jawn0.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=870&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/167649/original/file-20170503-4128-9jawn0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1093&fit=crop&dpr=1 754w, https://images.theconversation.com/files/167649/original/file-20170503-4128-9jawn0.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1093&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/167649/original/file-20170503-4128-9jawn0.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1093&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Kalydeco.</span>
</figcaption>
</figure>
<h2>How does Kalydeco work?</h2>
<p>The drug was discovered as part of a collaboration with Vertex Pharmaceuticals Inc in the USA and Cystic Fibrosis Foundation, US. It took more than 14 years to develop. </p>
<p>Until it became available, drug therapies for cystic fibrosis were less targeted and only aimed at reducing symptoms in an attempt to slow the disease. </p>
<p>Researchers have found more than 2,000 genetic mutations in the CFTR gene and each leads to a different defect in the chloride channels. Kalydeco is the first medicine to treat the underlying cause of cystic fibrosis in people with specific mutations in this CFTR gene. </p>
<p>It works by targeting certain abnormal chloride channels and opening them to allow chloride ions to move in and out of the cell. This leads to an increase in water levels in the airways helping to thin the mucus.</p>
<p>By keeping the airways well hydrated, mucus can be cleared from the airways, <a href="http://www.kalydeco.com/how-kalydeco-works">reducing the risk of lung infections and progressive lung damage</a>. The reduction in mucus also affects the pancreatic ducts, which in turn results in improvement in glucose levels reducing patients’ risk of cystic fibrosis-related diabetes. </p>
<p><a href="https://dx.doi.org/10.1056/NEJMoa0909825">Studies</a> <a href="https://dx.doi.org/10.1164/rccm.201301-0153OC">of drugs</a> <a href="https://dx.doi.org/10.1056/NEJMoa1105185">like Kalydeco</a>, which work to counter the effects of the faulty CFTR gene, suggest they increase the lifespan of people with cystic fibrosis and decrease the severity of illness. Treating the condition at an earlier stage in the progression of disease may also limit organ damage, reduce illness due to chest infections and improve respiratory-related quality of life. </p>
<h2>How do patients take it?</h2>
<p>In Australia, the medication is available on the <a href="https://www.pbs.gov.au/info/browse/section-100/s100-highly-specialised-drugs">Highly Specialised Drugs Program</a>, which means only doctors with experience in treating cystic fibrosis can prescribe it. The drug comes as a tablet or oral solution that patients take twice a day.</p>
<p>To increase the absorption of Kalydeco, patients take the medication with fatty foods such as butter, eggs, cheese, nuts, avocados, or whole milk.</p>
<h2>How about side-effects and interactions?</h2>
<p>Some patients have high levels of certain liver enzymes while on the drug (which might be a sign of a stressed liver) so doctors need to keep an eye on these. And some adolescents and children develop cataracts (clouding of the eye lens) while on the drug so need to have their eyes monitored.</p>
<p>Most common side effects include: headache, upper respiratory tract infection, stomach pain, diarrhoea, rash, nausea and dizziness. People should also not drive or operate machinery until they know how Kalydeco affects them.</p>
<p>Taking the drug with some antibiotics (like rifampicin and rifabutin); seizure medications (phenytoin, carbamazepine or phenobarbital); and the herbal supplement St John’s Wort can substantially decrease the effectiveness of Kalydeco.</p>
<p>Patients are also recommended to avoid taking it with grapefruit juice, grapefruits or Seville oranges because this makes them increasingly sensitive to it. Anti-fungal medications (ketoconazole, itraconazole, posaconazole, voriconazole or fluconazole), other antibiotics (such as clarithromycin or erythromycin) can also increase Kalydeco exposure, so if taking these medicines at the same time, patients need lower doses of the cystic fibrosis drug.</p>
<p>With the <a href="https://www.pbs.gov.au/medicine/item/10170G-10175M-11097C-11098D-11105L-11109Q">new PBS listing for Kalydeco</a>, younger patients have been provided access to the life-saving treatment aimed at addressing the underlying cause of cystic fibrosis, instead of only treating its symptoms.</p><img src="https://counter.theconversation.com/content/76934/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Odette Erskine is a sub-investigator for clinical trials conducted by Vertex Pharmaceuticals Inc, Australia. She does not receive any direct funding from the company.</span></em></p>Wider availability of the cystic fibrosis drug Kalydeco since May 1, 2017 means younger patients can now access it.Odette Erskine, Respiratory and Sleep Medicine Physician; Clinical Lecturer, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/730502017-03-02T19:08:08Z2017-03-02T19:08:08ZHow to slash half a billion dollars a year from Australia’s drugs bill<figure><img src="https://images.theconversation.com/files/158622/original/image-20170227-18227-1rts1ht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The government is paying too much for pharmaceuticals that are no better than their cheaper counterparts. Let's fix that.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/417910087?src=hSh1GkgYZmWaViIpwQ-zVA-1-10&size=medium_jpg">from www.shutterstock.com</a></span></figcaption></figure><p>Australia is spending more than A$500 million a year too much for pharmaceuticals because of a little known loophole that allows drug companies to overcharge the government for a wide range of drugs.</p>
<p>The loophole results in the government paying different prices through the <a href="http://www.pbs.gov.au">Pharmaceutical Benefits Scheme</a> (PBS) for different drugs that work as well as each other to treat a given medical condition. The problem occurs when the price of one drug drops but the prices of other, newer drugs with equivalent effects do not.</p>
<p>Our <a href="http://www.publish.csiro.au/AH/AH15122">recent paper</a> suggests that by closing this loophole – so the price of these newer but equivalent drugs drops to those of existing, equally beneficial drugs – the government could save more than A$500m a year on its drugs bill.</p>
<h2>The rising cost of health care</h2>
<p>Health expenditure in Australia has long increased at a faster rate than the Australian economy. Over the past 25 years, <a href="http://www.aihw.gov.au/publication-detail/?id=60129554398">government spending on health</a> increased from 15.7% of taxation revenue to 24.1%, and health expenditure increased from 6.5% to 9.7% of total economic activity.</p>
<p>With reduced economic growth and continuing <a href="https://theconversation.com/vital-signs-business-confidence-spikes-but-uncertainty-reigns-73051">uncertainty</a>, this trajectory cannot continue. We need to find ways to provide more cost-effective health care, including reducing the A$10.8 billion the government spent on drugs subsidised on the <a href="https://www.pbs.gov.au/info/statistics/pbs-expenditure-prescriptions-30-june-2016">PBS in 2015/16</a>. </p>
<h2>Let’s talk about statins</h2>
<p>A good example to illustrate the pricing anomaly of equivalent drugs is with statins. This is the class of drugs used to lower cholesterol levels and so reduce the risk of serious cardiovascular events, like heart attacks.</p>
<p>When the first statin was developed, there was evidence it provided high value for money compared to the standard treatment at the time, which was essentially some form of lifestyle advice targeted at improving diet and physical activity. Over time, many drug companies developed their own statin.</p>
<p>But statins have a range of potential side effects, such as headaches, difficulty sleeping, flushing, muscle aches. And each different company’s statin has somewhat different side effects. This means that patients who do not tolerate one form of statin might be able to tolerate another.</p>
<p>There is a benefit in listing multiple different statins on the PBS to allow patients with high cholesterol to find a medication they can tolerate. But the expected benefits of the three most commonly prescribed statins are largely the same for patients at <a href="https://www.nice.org.uk/guidance/cg181/chapter/appendix-a-grouping-of-statins">moderate risk of a cardiovascular event</a>.</p>
<p>When newer statins were listed on the PBS, their prices were matched to the price of already listed statins, which had the same expected effect.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/158637/original/image-20170228-18203-6aw8ht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/158637/original/image-20170228-18203-6aw8ht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/158637/original/image-20170228-18203-6aw8ht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/158637/original/image-20170228-18203-6aw8ht.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/158637/original/image-20170228-18203-6aw8ht.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/158637/original/image-20170228-18203-6aw8ht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/158637/original/image-20170228-18203-6aw8ht.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/158637/original/image-20170228-18203-6aw8ht.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The government could have made considerable cost savings by levelling the price of statins on the PBS.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/322802621?src=QiDas62z74xe0WIRWXsBgQ-1-1&size=medium_jpg">from www.shutterstock.com</a></span>
</figcaption>
</figure>
<p>This price matching is maintained until one of the older drugs loses its patent, at which point the price of the off-patent drug is automatically reduced by 16%. But much larger price reductions often occur as manufacturers of generic versions of the same drug enter the market.</p>
<p>Often pharmaceuticals with the same expected effects come off patent at different times, and this results in potentially large differences in price.</p>
<h2>Let’s look at the numbers</h2>
<p>In 2013, the average price of an older off-patent statin, simvastatin (40mg) was A$22.81, while the average prices of the equivalent doses of the newer statins, atorvastatin (10mg) and rosuvastatin (5mg) were around A$35. More than 2 million prescriptions were filled for atorvastatin (10mg) and rosuvastatin (5mg) in 2013. If the government had paid the same average price as they paid for simvastatin, we would have saved over A$50 million in 2013 alone, just on these two statins. Or to put it another way, the taxpayer paid over A$50 million on statins for no additional improvements in health outcomes that year.</p>
<p>By 2016, two statins for people at high risk of cardiovascular events, atorvastatin and rosuvastatin, had come off patent. But their prices were still different. Atorvastatin (20mg) cost A$15.04 and rosuvastatin (10mg) cost A$24.34. This price difference cost the taxpayer over A$22 million for no additional health benefits in 2016.</p>
<p>Statins are high-profile drugs. But there are significant savings to be made from avoiding overpaying for a wide range of other drugs that provide no additional benefits compared to similar, cheaper medications.</p>
<h2>What we found</h2>
<p>We <a href="http://www.publish.csiro.au/AH/AH15122">reviewed pharmaceuticals listed on the PBS</a> between 2008 and 2011 at the same equivalent price to a pharmaceutical already listed. </p>
<p>We identified 68 listings with the potential for diverging prices for pharmaceuticals with equivalent effects. We then estimated the potential cost savings of maintaining equivalent prices for 12 of the 68 drugs for which accurate estimates could be generated using published PBS data.</p>
<p>The table lists the 12 drugs and the conditions they treat. The estimated potential cost savings ranged from under A$0.5 million to over A$16 million in the 10 months to April 2015. And the savings were still increasing in 2015, from a total of A$48 million in the year to June 2014 to A$73 million in the 10 months to April 2015.</p>
<iframe id="datawrapper-chart-keCUH" src="https://datawrapper.dwcdn.net/keCUH/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="900"></iframe>
<p>In a separate analysis, colleagues at the Grattan Institute estimated <a href="https://grattan.edu.au/report/premium-policy-getting-better-value-from-the-pbs/">annual potential savings of A$320 million</a> from paying the same price for drugs with equivalent effects in seven different drug classes.</p>
<p>Based on these two studies, we estimate that the total savings a year to the Australian taxpayer from paying the same price for drugs with equivalent effects is at least A$500 million and likely closer to A$1 billion.</p>
<h2>What we’d like to see</h2>
<p>The government should pay the same price for pharmaceuticals with equivalent effects. The price should be set at the price of the cheapest equivalent drug.</p>
<p>There will clearly be resistance from the pharmaceutical industry, which will argue higher prices are needed to support research to continue to develop new and more effective drugs. This argument has little merit in the case where multiple companies have developed similar drugs with equivalent effects. </p>
<p>Firstly, we should be providing incentives to companies to develop unique drugs to treat conditions with high unmet needs, not providing incentives for duplicating research and development efforts.</p>
<p>Secondly, our proposal has less impact than the <a href="https://theconversation.com/fixing-australias-bad-drug-deal-could-save-1-3-billion-a-year-12707">New Zealand approach</a>, in which the government buys only one of multiple similar drugs. The New Zealand system pushes prices down further and means only one company receives any return on their research and development costs.</p>
<p>In our proposal, the goal of paying the same price for the same effect could be achieved through the existing <a href="https://grattan.edu.au/report/premium-policy-getting-better-value-from-the-pbs/">therapeutic group premium policy</a>. This policy specifies that the government only pays for the cheapest therapy within a therapeutically equivalent group (with a safety net for patients who cannot tolerate the cheapest therapy or therapies). But only seven therapeutic groups have been defined in Australia. By comparison, Germany has more than 30 therapeutic groups. </p>
<p>But the therapeutic group premium policy is limited by legislative amendments to the <a href="https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=1402467">National Health Act in 2007</a> that effectively prevent the government from setting the same price for patented and off-patent pharmaceuticals. </p>
<p>The potential savings from paying the same price for equivalent drugs is much larger now than in 2007, when the legislative amendments were made. And the state of the economy is much different too. The government should act to revoke the legislative amendments and to expand the application of the therapeutic group premium policy.</p><img src="https://counter.theconversation.com/content/73050/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan Karnon is a member of the Economic Sub-Committee of the Pharmaceutical Benefits Advisory Committee. </span></em></p><p class="fine-print"><em><span>Michael Sorich previously was a member of the Economic Sub-Committee of the Pharmaceutical Benefits Advisory Committee.</span></em></p><p class="fine-print"><em><span>Laura C Edney does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia is spending more than A$500 million a year too much for pharmaceuticals because of a little known loophole that allows drug companies to overcharge the government.Jonathan Karnon, Professor of Health Economics, University of AdelaideLaura C Edney, Research Fellow, University of AdelaideMichael Sorich, Associate Professor in Pharmacology, Flinders UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/591572016-05-12T04:28:37Z2016-05-12T04:28:37ZUnfair if rare: should the PBS change the way it lists cancer drugs?<figure><img src="https://images.theconversation.com/files/122028/original/image-20160511-20698-1rn69bu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Rare cancers are those where the incidence is less than six cases per 100,000 people.</span> <span class="attribution"><span class="source">from shutterstock.com</span></span></figcaption></figure><p>The Pharmaceutical Benefits Scheme (PBS) <a href="https://theconversation.com/new-cancer-drugs-are-very-expensive-heres-how-we-work-out-value-for-our-money-44014">spends over A$9 billion a year</a> subsidising a wide range of drugs to ensure affordability for all Australians. But when it comes to rare cancers – such as bone and soft tissue tumours called sarcomas – the scheme falls short.</p>
<p>This happens for a number of reasons. The main one is that rarity means less value for money. But should our new understanding of how cancers develop and could be treated mean we should change the way the scheme registers cancer drugs?</p>
<h2>Diagnosing cancers</h2>
<p>Cancers used to be diagnosed by determining the organ, such as breast or lung, from which they came. Drugs were, and still are, registered by the Therapeutic Goods Administration (TGA) to use against these cancers if they are effective in clinical trials with acceptable side effects. </p>
<p>Because there are more patients for common cancer trials, and a larger market if the drugs are effective, more drugs to treat these are being tested and therefore registered. Rare cancers are those with an incidence of less than six cases for every 100,000 people. Their rarity means it’s not possible to do the gold standard large randomised controlled trials to determine efficacy. </p>
<p>The TGA refers to drugs used to treat rare diseases as <a href="https://www.tga.gov.au/orphan-drugs">orphan drugs</a> and offers reduced application fees to register these. Despite this, there are still many small bowel cancers or neuroendocrine cancers for which potentially effective drugs are not registered.</p>
<p>Only once the TGA registers a drug for a particular cancer can an application be made for it to be subsidised on the PBS. Drugs are therefore more likely to be subsidised for common cancers, as the PBS evaluates whether the drug’s effectiveness warrants the price sought by the pharmaceutical developer.</p>
<p>But recently there has been a shift in how cancer researchers and doctors classify and treat cancers that could potentially influence the way drugs become registered.</p>
<h2>From location to tumour type</h2>
<p>Previously, chemotherapy drugs killed all dividing cells and relied on normal cells to repair themselves while the cancer cells died. Therapies are now being developed to <a href="https://theconversation.com/how-cancer-doctors-use-personalised-medicine-to-target-variations-unique-to-each-tumour-47349">specifically target</a> the genetic makeup in each tumour - a wave of medicine referred to as “personalised”.</p>
<p>Other therapies – known as immunotherapies – target <a href="https://theconversation.com/the-fourth-pillar-how-were-arming-the-immune-system-to-help-fight-cancer-48152">proteins that prevent the body’s immune cells</a> from killing the cancer. The target proteins are found by looking at which genes in a particular cancer are altered (or mutated) to make the cells replicate and grow into unhealthy tumours. </p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/122022/original/image-20160511-20742-35knta.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/122022/original/image-20160511-20742-35knta.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=699&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122022/original/image-20160511-20742-35knta.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=699&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122022/original/image-20160511-20742-35knta.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=699&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122022/original/image-20160511-20742-35knta.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=879&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122022/original/image-20160511-20742-35knta.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=879&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122022/original/image-20160511-20742-35knta.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=879&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Immunotherapy for Danielle Tindle’s rare cancer is not subsidised by the PBS.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/77073214@N00/5633942440">dingram_kiwi/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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</figure>
<p>So cancer treatment is becoming more dependent on the tumour’s genetic makeup rather than the organ of origin. Cancers at different locations, such as breast and prostate cancer for instance, may have identical targets that can respond to the same therapies. And cancers from the same organ can have different patterns of gene mutations, which means only those with the target may respond to specific drugs.</p>
<p>Drugs called PARP inhibitors, for instance, <a href="http://www.ncbi.nlm.nih.gov/pubmed/27065456">have been successful in breast cancers</a> that carry the BRCA1 or BRCA2 gene mutations. These are being trialled in ovarian cancers with the same gene mutations. </p>
<p>Targeted therapies can be used to treat a rare cancer that shares the same mutations as a common cancer. The immunotherapy drug nivolumab, for instance, is successful in treating melanoma and lung cancer. And, as reported in <a href="http://www.abc.net.au/news/2016-05-09/rare-cancer-patient-dealt-'unfair'-drug-costs/7391874">ABC’s Australian Story program this week</a>, it is being tried as a treatment for 36-year-old Danielle Tindle’s rare neuroendocrine tumour, which shares some characteristics with melanoma and lung cancers. </p>
<p>The issue is that targeted therapies are often coming onto the market at <a href="https://theconversation.com/explainer-how-does-keytruda-treat-melanoma-and-why-is-it-so-costly-40558">over A$100,000</a> for several months of treatment. And while nivolumab is subsidised to treat melanoma, a patient like Danielle has to pay full price, which is reportedly A$5,000 a shot.</p>
<h2>Can we change the system?</h2>
<p>To overcome this disparity, a specific fund could be established for rare cancers so they would not have to compete with more common cancers. Fees for TGA and PBS submissions would be set to encourage pharmaceutical companies to apply to register and list drugs for rare cancers.</p>
<p>Of course, the equity of that solution would depend on the size of the fund relative to need and whether the fund’s money was new or simply reduced the subsidy pool for more common cancers.</p>
<p>Another option is for the TGA to start registering targeted therapies on the basis of the target’s presence in the cancer, irrespective of the cancer’s organ of origin. The issue with this approach is that the evidence for efficacy would only be available from trials of more common cancers.</p>
<p>Also, although a targeted therapy isn’t effective in cancer that doesn’t have the target, the presence of the target <a href="http://www.nejm.org/doi/full/10.1056/NEJMoa1113205">doesn’t guarantee its effectiveness</a>. This is because the tumour’s altered gene may not be responsible for driving the cancer’s growth, or may represent only one of the targets that need to be hit to stop it developing.</p>
<p>So limited trials that show efficacy of targeted therapies for rare cancers could lead to subsidising potentially ineffective drugs. A possible solution would be a risk-sharing model where, for example, a pharmaceutical company could fund initial courses of rare cancer drugs until there was enough evidence of efficacy, at which point the government subsidy would become available. </p>
<p>Such schemes <a href="http://www.ispor.org/research_pdfs/35/pdffiles/PHP15.pdf">have been used in</a> France, Italy, Sweden, the United Kingdom and parts of the United States.</p>
<p>The challenge is to achieve a balance between allocating funding for the greatest good for the largest number of people, while also ensuring patients with rare cancers aren’t unfairly disadvantaged.</p><img src="https://counter.theconversation.com/content/59157/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian Olver has consulted for Teasro. He receives funding for research from the NHMRC, ARC and Cancer Australia.</span></em></p>Should new understandings of how cancers develop and could be targeted mean we should change the way the scheme registers cancer drugs?Ian Olver, Director, Sansom Institute for Health Research; Chair of Translational Cancer Research, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/485952015-10-06T02:49:29Z2015-10-06T02:49:29ZWhy biologics were such a big deal in the Trans Pacific Partnership<p>After five years of negotiations, a <a href="https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/october/trans-pacific-partnership-ministers">deal has finally been reached</a> on the Trans Pacific Partnership Agreement (TPP). But details are sketchy and the final text may not see daylight for several weeks, as it undergoes what’s quaintly referred to as “legal scrub” – the painstaking dotting of the i’s and crossing of the t’s by each of the participating countries’ lawyers.</p>
<p>Before this final round of negotiations in Atlanta, only a handful of issues remained in the way of concluding the massive 12-country trade and investment agreement. One of them – a potential deal-breaker for Australia – was intellectual property protections for <a href="https://theconversation.com/explainer-what-are-biologics-and-biosimilars-45308">biologics</a>, which are expensive medicines derived from living organisms.</p>
<h2>Market exclusivity</h2>
<p>In the United States, <a href="https://theconversation.com/explainer-what-are-biologics-and-biosimilars-45308">biologics</a> are protected from competition by follow-on products (known as biosimilars, which are akin to generic medicines) for 12 years from the time they’re first granted marketing approval by the nation’s drug regulator, the Food and Drug Administration (FDA). This form of protection from competition is distinct from a patent. It prevents a follow-on product from entering the market even when any patents on the originator product have expired. </p>
<p>These 12 years are known as the market exclusivity period. In the TPP negotiations, the biopharmaceutical industry has been insisting the United States push its potential partners to <a href="http://keionline.org/tpp/11may2015-ip-text">adopt a similar period of exclusivity</a>, together with a whole series of other onerous intellectual property provisions, such as requirements to allow patenting of diagnostic, therapeutic and surgical methods of treatment, and of new forms, uses, or methods of using medicines.</p>
<p>Importantly, Australia doesn’t currently have a market exclusivity provision for medicines. Instead, the local drug regulator, the Therapeutic Goods Administration (TGA), provides a “data protection” period of five years for all prescription medicines. During this time, a follow-on product can’t rely on the data submitted to the TGA to support the originator drug’s registration to gain marketing approval.</p>
<p>Without being able to rely on these data, follow-on manufacturers would be forced to repeat the often long – and always expensive – clinical trials required for marketing approval. Repeating the clinical trials would arguably be unethical, since the question of whether the drug is safe and efficacious has already been answered.</p>
<h2>Big savings</h2>
<p>Under existing legislation, the TGA can’t begin to evaluate a biosimilar application during the data protection period. So a follow-on product is unlikely to get to market until at least six years after the originator first enters it. Why then has all this been so important that it stalled the signing of a major trade agreement? </p>
<p>Biologics are used to treat various cancers, multiple sclerosis, a range of immunological conditions, as well as diabetes (insulin is a biologic). They’re the fastest growing segment of the pharmaceutical market globally. </p>
<p>When a biosimilar product is listed on Pharmaceutical Benefits Scheme (PBS) and becomes subsidised by the government, it automatically triggers a 16% price reduction on all versions of the product. Biologics are expensive, so this can amount to tens of millions of taxpayers’ dollars saved every year on just a single product.</p>
<p>Trade Minister Andrew Robb had <a href="http://trademinister.gov.au/releases/2013/ar_mr_131211.html">repeatedly said</a> Australia wouldn’t agree to any TPP provision that would undermine the PBS or go beyond the provisions of the Australia-US Free Trade Agreement (AUSFTA). And this meant holding the line at five years of data protection. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Biologics are medicines derived from living organisms and include insulin.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/sriram/2219886844/">sriram bala/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>But <a href="http://www.citizen.org/documents/new-tpp-maneuvering-on-biotetch-drugs-september-2015.pdf">recent reports</a> have suggested negotiating countries have reached some form of compromise involving a formal period of data protection of five years (the status quo in Australia) with an additional period of up to three years of “safety monitoring” before a biosimilar can be registered. It’s unclear what precisely this would entail, other than representing a period of time in which a follow-on product would be prevented from entering the market. If it’s true, this would effectively become an eight-year market exclusivity period.</p>
<h2>No need</h2>
<p>The devil will be in the details of the agreement. But it’s difficult to see how any extension of monopoly protection could be accomplished without an amendment to Australia’s Therapeutic Goods Act. And that is likely to be politically challenging in an election year, particularly given widespread public concern over the potential for the biologics provision to increase PBS costs. </p>
<p>John Castellani, the president of PhRMA – the <a href="http://www.phrma.org/about#sthash.kfNux1E4.dpuf">Pharmaceutical Research and Manufacturers of America</a>, which represents that country’s biopharmaceutical researchers and biotechnology companies – is <a href="http://www.politicopro.com/financial-services/story/2015/10/the-tpp-deals-winners-and-losers-056514">reported to have said</a> that TPP ministers had:</p>
<blockquote>
<p>… missed the opportunity to encourage innovation that will lead to more important, life-saving medicines… This [12-year] term was not a random number, but the result of a long debate in Congress. </p>
</blockquote>
<p>The industry originally sought 14 years of exclusivity in the United States. 12 years was the outcome of prolonged political horse-trading. </p>
<p>But the industry has never put forward a convincing argument in support of longer periods of data exclusivity, nor any evidence that longer protection leads to new and better drug development. And the <a href="https://www.ftc.gov/sites/default/files/documents/reports/emerging-health-care-issues-follow-biologic-drug-competition-federal-trade-commission-report/p083901biologicsreport.pdf">US Federal Trade Commission said</a> as far back as 2009 that a market exclusivity period for biologics might not be warranted at all. It found there was no evidence of a lack of patentability of new biologic products, nor that market forces weren’t adequate to stimulate their development – two of the arguments often used to support longer data exclusivity. </p>
<h2>Horse trading</h2>
<p>The significance and endurance of the data protection issue in TPP negotiations can’t be overestimated. It was equally contentious in the <a href="http://dfat.gov.au/trade/agreements/ausfta/pages/australia-united-states-fta.aspx">2004 AUSFTA</a>, and it also went down to the wire then. </p>
<p>The issue then wasn’t about exclusivity for biologics, as the US hadn’t yet established a regulatory pathway for approval of biosimilars. Instead, the US pharmaceutical industry was pushing for an additional period of three years of data protection for new uses of existing medicines. This would have meant up to eight years of data protection for all prescription medicines in Australia. Had it been agreed to, it would have resulted in significant additional costs to the PBS. </p>
<p>Those who’ve waded through the <a href="http://dfat.gov.au/about-us/publications/trade-investment/australia-united-states-free-trade-agreement/Pages/chapter-seventeen-intellectual-property-rights.aspx">Intellectual Property Chapter of the AUSFTA</a> might be forgiven for thinking that Australia had actually agreed to the “five plus three” model. But a small footnote provides a kind of get-out-of-jail-free card for Australia, while still retaining the model in the negotiating template. </p>
<p>It refers to the fact that data protection in Australia is granted to combination products where at least one of the components has not been registered before. In the US, exclusivity is limited to combination products where none of the component products have previously been registered. The scope of protection in Australia is thus broader. This is retained as a quid pro quo for the extra data protection.</p>
<p>The obvious question then is whether there’s a similar “out” in the TPP text and, if so, what will the obligations be for other TPP countries? Another key question relates to the <a href="http://keionline.org/tpp/11may2015-ip-text">remainder of the TPP’s intellectual property chapter</a>, and which other expansions of intellectual property protection sought by the US have been agreed to. </p>
<p>Before we can begin to breathe more easily on biologics, we need to know what Australia has horse-traded in other chapters of the agreement to get an “acceptable” outcome on this issue. But it will be some weeks yet before we can find out.</p><img src="https://counter.theconversation.com/content/48595/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ruth Lopert does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Before the last round of negotiations, only a handful of issues remained in the way of concluding the TPP. A potential deal-breaker for Australia was intellectual property protections for biologics.Ruth Lopert, Adjunct professor, Department of Health Policy & Management, George Washington UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/447832015-09-03T04:22:53Z2015-09-03T04:22:53ZExplainer: why are off-label medicines prescribed?<figure><img src="https://images.theconversation.com/files/91686/original/image-20150813-18068-omd1r8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Off-label use is when an approved medicine is prescribed for a different reason, at a different dose, or in different patient groups than originally intended.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/benny_lin/4249354055/">Benny Lin/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>The off-label use of medicines is not illegal and it doesn’t mean regulators have specifically “disapproved” its use. But there are a number of issues to consider before using a medicine off-label.</p>
<p>Before prescription medicines can be used in Australia, the drug company must apply for approval from the government-run <a href="https://www.tga.gov.au/prescription-medicines">Therapeutic Goods Administration</a> (TGA). The same goes for the Food and Drug Administration in the United States, the European Medicines Agency in the European Union, and similar agencies elsewhere in the world.</p>
<p>The drug company has to specify the health conditions the medicine will be used for (also called “indications”), the doses, the routes of administration (tablet, injection, lotion, for instance) and the types of patients who will use the medicine (adults or children).</p>
<p>The drug company has to provide the TGA with evidence to support the use of the medicine in this way, including clinical trial data. The <a href="https://www.tga.gov.au/australian-regulation-prescription-medical-products">TGA then evaluates this evidence</a>. If it supports the request, the medicine will be approved for use as requested in the application.</p>
<p>If a prescription medicine is used for a different reason, at a different dose or route of administration, or in different patient groups from those approved by the TGA, then this is referred to as “off-label” use. </p>
<p>You might have heard that there are concerns about people using <a href="http://www.afr.com/lifestyle/health/mens-health/risks-of-sleeping-with-seroquel-and-other-psychiatric-drugs-20150210-139em9">antipsychotic medicines off-label</a>, for instance, to help with sleeping problems or anxiety.</p>
<h2>Why are medicines prescribed off-label?</h2>
<p>Doctors should prescribe medicines off-label only when there are no suitable TGA-approved medicines to treat a patient. There also needs to be <a href="http://www.catag.org.au/wp-content/uploads/2012/08/OKA9963-CATAG-Rethinking-Medicines-Decision-Making-final1.pdf">evidence to show</a> the medicine is safe and effective for the off-label patient groups or conditions. </p>
<p>Evidence to support use of a medicine for a new indication or in different patient groups often becomes available years after a medicine is first approved. To change the TGA approval to reflect such evidence, the drug company needs to make an application for approval for these new uses. </p>
<p>The TGA approval process is expensive and it may not be in the commercial interests of the drug company to pay the fees to extend the listing, especially for older medicines. </p>
<p>Medicines are also frequently used off-label in groups of <a href="http://www.australianprescriber.com/magazine/36/6/article/1459.pdf">patients who weren’t included</a> in clinical trials for the medicine. This includes children, pregnant women and people receiving palliative care, who are usually excluded from clinical trials. Off-label use of medicines is also common in psychiatry and cancer.</p>
<h2>What are the risks?</h2>
<p>One of the risks with using medicines off-label is that the quality of evidence to support such use may be lower than for approved indications. </p>
<p>The effectiveness of a medicine used for an off-label indication might not have been tested in clinical trials, so the extent to which patients will benefit from using the medicine might be unknown. <a href="http://www.ncbi.nlm.nih.gov/pubmed/14664664">Studies have shown</a> that when medicines are used off-label, they are less effective than medicines used for approved indications.</p>
<p>If the medicine is used for an off-label patient population, the risks and side effects in these patients might be unclear. <a href="http://www.ema.europa.eu/docs/en_GB/document_library/Other/2009/10/WC500004021.pdf">Off-label medicine use is more likely</a> to be associated with side effects.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/91687/original/image-20150813-18068-1y9ts82.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/91687/original/image-20150813-18068-1y9ts82.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/91687/original/image-20150813-18068-1y9ts82.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/91687/original/image-20150813-18068-1y9ts82.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/91687/original/image-20150813-18068-1y9ts82.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/91687/original/image-20150813-18068-1y9ts82.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/91687/original/image-20150813-18068-1y9ts82.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Medicines are frequently used off-label in groups of patients who aren’t included in clinical trials.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/hippie/2435316806/">Philippa Willitts/</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>The cost of using medicines off-label may also be prohibitive. Most prescription medicines in Australia are subsidised on the <a href="http://www.pbs.gov.au/info/about-the-pbs">Pharmaceutical Benefits Scheme</a> (PBS). Patients pay a co-payment for PBS medicines, with the government subsidising the remainder of the cost. Medicines prescribed off-label <a href="http://www.nps.org.au/publications/consumer/medicines-talk/2012/medicinestalk-no39-january-2012/off-label-off-limits">aren’t subsidised</a> on the PBS, so the patient has to pay the full cost. Depending on the medicine, this can be expensive. </p>
<h2>What are the benefits?</h2>
<p>Although there are risks associated with off-label use of medicines, in some situations off-label use may be the best or only treatment option for patients, particularly children, pregnant women and palliative care patients.</p>
<p>Off-label prescribing also allows medicines to be used for new indications or in different patient groups as soon as new evidence becomes available, rather than having to wait for the TGA approval process to occur, which can take some time. </p>
<p>Off-label use of medicines can play an important role in health care, particularly when this is the only treatment option for patients. But it’s important to remember that we still need evidence to show the medicine works for the off-label condition and that the benefits of using the medicine outweigh the risks.</p><img src="https://counter.theconversation.com/content/44783/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lisa Kalisch Ellett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The off-label use of medicines is not illegal and it doesn’t mean regulators have specifically “disapproved” its use. But there are a number of issues to consider before using a medicine off-label.Lisa Kalisch Ellett, Research Fellow, Quality Use of Medicines and Pharmacy Research Centre, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/456482015-08-05T20:17:14Z2015-08-05T20:17:14ZHow the battle over biologics helped stall the Trans Pacific Partnership<p>Talks that were meant to finalise the Trans Pacific Partnership wound up in Hawaii late last week <a href="http://www.abc.net.au/news/2015-08-01/trans-pacific-partnership-delegates-fail-to-reach-final-deal/6665204">without reaching</a> a final deal. Over the last five years, 12 countries – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam – have been involved in negotiating the final text of the deal.</p>
<p>Despite the setback, there will be a strong push to sort out the remaining issues in August. After that the Canadian and US election cycles will make further progress in negotiating the trade deal next to impossible. And one of the most highly charged matters negotiators will be trying to resolve is intellectual property protections for medicines.</p>
<p>Over the next few weeks, Australia’s trade minister, <a href="http://www.andrewrobb.com.au">Andrew Robb</a>, will be under intense pressure to renege on the government’s oft-repeated commitment to <a href="http://trademinister.gov.au/releases/2013/ar_mr_131211.html">reject anything in the deal</a> that could undermine the <a href="http://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> (PBS) or increase the cost of medicines for Australians.</p>
<h2>Data exclusivity</h2>
<p>A key issue affecting drugs is the length of the data-exclusivity period for a class of medicines called biologics, which are produced from living organisms. Biologics include many new and very expensive cancer medicines, such as Keytruda, a melanoma drug <a href="http://www.pm.gov.au/media/2015-06-28/new-drug-listing-keytruda-treat-melanoma">recently listed on the PBS</a>. Without the PBS subsidy, it would cost over A$150,000 to treat a patient for a year.</p>
<p>Data exclusivity refers to the protection of clinical trial data submitted to regulatory agencies from use by competitors. It’s a different type of monopoly protection to patents. While a product is covered by data exclusivity, manufacturers of cheaper follow-on versions of the product can’t rely on the clinical trial data produced by the originator of the drug to support the marketing approval of their product. </p>
<p>Section 25a of Australia’s <a href="https://www.comlaw.gov.au/Details/C2015C00086">Therapeutic Goods Act</a> provides for five years of data exclusivity for all medicines. It makes no distinction between biologics and other drugs. Data exclusivity provides an absolute monopoly that, unlike a patent, can’t be revoked or challenged in court. </p>
<p>The powerful biopharmaceutical industry lobby in the United States has been seeking <a href="http://phrma.org/note-media-elected-officials-support-12-years-data-protection-tpp">12 years of market exclusivity for biologics</a>. </p>
<p>Facing intense opposition from all other countries, the US trade representative fell back this week to eight years. While this was heralded as a new level of “flexibility” in the US position, in reality it remains <a href="http://www.ip-watch.org/2015/07/27/decision-time-on-biologics-exclusivity-eight-years-is-no-compromise/">a significant extension of intellectual property rights</a> in most of the TPP countries.</p>
<p>Thus far, the Australian delegation has apparently maintained the position that it will not go beyond existing domestic law. Days before the talks broke up, the trade minister indicated in <a href="http://www.abc.net.au/radionational/programs/breakfast/andrew-robb-on-the-trans-pacific-partnership/6655730">an interview on ABC Radio National</a> that he didn’t see the sense in accepting a longer monopoly for biologics.</p>
<h2>Good reasons to not budge</h2>
<p>Three factors are likely to be contributing to this resolve. The first is the costs of extending monopolies. These are likely to be <a href="http://dfat.gov.au/trade/agreements/tpp/submissions/Documents/tpp_sub_gleeson_lopert_moir.pdf">hundreds of millions of dollars a year</a> in the short term and could rise exponentially in the longer term as patents gradually expire on biologics already listed on the PBS.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/90718/original/image-20150804-15146-gcmhrq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/90718/original/image-20150804-15146-gcmhrq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/90718/original/image-20150804-15146-gcmhrq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/90718/original/image-20150804-15146-gcmhrq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/90718/original/image-20150804-15146-gcmhrq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/90718/original/image-20150804-15146-gcmhrq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/90718/original/image-20150804-15146-gcmhrq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Without a PBS subsidy, some new medications could cost patients thousands of dollars for a course of treatment.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/the_smileyfish/4018251978/in/photolist-785Ajw-aZeeWr-aYKsUT-aYJjWz-ppcfho-rmg8NM-2Fpbw2-JcsvK-Jcmvo-Jcm7y-8bmupc-9iavuh-44Nbp-4cQ2kF-nLnHsk-nrTkA1-9wYiDe-9x2iEQ-PcucF-dNUoaq-4jyVng-8EGNH-5Xe6m-89nPNh-5ybjn2-Jcsd2-JcmoY-9kZQPN-a2No9t-4EG4Jr-rS6tuE-8BVyEV-Jcmem-oDJSem-3cqncc-4MEcz-7LdwMs-3qiSoa-4HcEMQ-3cuGyW-apMGH2-8i6Wky-6Hmb7b-5WHQvU-bcMb2t-6C7jw-8XQ8a1-8XQ82C-8XQ7rh-781G7c">Toni Fish/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Another pressing consideration is the degree of political opposition to longer medicine monopolies in Australia. Extending the period of data exclusivity would require an amendment to the <a href="https://www.comlaw.gov.au/Details/C2015C00086">Therapeutic Goods Act</a> – a move Labor, the Greens and many independents would strongly oppose. And the failure to get implementing legislation through the Senate could compromise the whole deal.</p>
<p>The third factor is the lack of progress in bargaining for access to US markets; the US reportedly <a href="http://www.afr.com/business/agriculture/us-sugar-paying-millions-to-shut-out-australia-from-tpp-20150803-giqrog">made only a token offer on sugar</a> and <a href="http://www.smh.com.au/federal-politics/political-news/transpacific-partnership-deal-in-doubt-20150731-gioyho.html">withdrew an earlier offer on dairy</a> products.</p>
<p>Eight years of data exclusivity won’t be an appealing option for any of the other TPP countries, with the exception of Japan and Canada, which already allow for eight years. New Zealand’s trade minister recently faced outrage at home over <a href="http://www.radionz.co.nz/news/political/279879/tpp-key-admits-medicine-costs-will-rise">admissions that the cost of medicines may be expected to increase</a> after the agreement. The country’s opposition, also Labor, has declared it won’t support a deal that raises the costs of medicines.</p>
<p>The US stance itself is contradictory as the Obama administration has been <a href="http://www.canberratimes.com.au/comment/tpp-could-force-australia-to-americanstyle-health-system-20150625-ghxdes.html">trying to reduce the exclusivity period for biologics</a> to seven years, to speed up the availability of cheaper alternatives and save an estimated US$16 billion in the next decade.</p>
<p>It seems clear to everyone except US negotiators – and biopharmaceutical industry lobbyists – that the demand for extending data exclusivity for biologics needs to be dropped if the TPP is to be finalised.</p><img src="https://counter.theconversation.com/content/45648/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah Gleeson receives funding from the Australian Research Council. She has received funding from various national and international non-government organisations to attend speaking engagements related to trade agreements and health, including the TPP. She has represented the Public Health Association of Australia on matters related to the TPP, including at the recent TPP negotiations in Maui.</span></em></p><p class="fine-print"><em><span>Ruth Lopert does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Over the next few weeks, the trade minister will be under intense pressure to renege on the government’s commitment to reject anything in the Trans Pacific Partnership that could undermine the PBS.Deborah Gleeson, Lecturer in Public Health, La Trobe UniversityRuth Lopert, Adjunct professor, Department of Health Policy & Management, George Washington UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/416822015-05-13T20:14:03Z2015-05-13T20:14:03ZBudget entrée disappoints but PBS reform still on the menu<figure><img src="https://images.theconversation.com/files/81352/original/image-20150512-22583-kb5wjh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The leaked measures would have benefited consumers and taxpayers, with small imposition on the lucrative bottom lines of pharmacists and the pharmaceutical industry.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/nvinacco/2656558985/">NVinacco/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>A significant element of this year’s budget was <a href="http://www.afr.com/news/policy/budget/government-targets-subsidies-medicine-as-part-of-7b-budget-savings-20150426-1mtqrc">supposed to be major reforms to the Pharmaceutical Benefits Scheme</a> (PBS) with projected savings of more than $3 billion over the next four years. But even though <a href="http://www.abc.net.au/radio/programitem/pg5L7KMoZ6?play=true">health minister Sussan Ley foreshadowed the changes</a>, the budget contained few reforms. </p>
<p>Instead it showed savings of just $252.2 million over five years from adjusting the price of a small number of PBS-listed drugs. But <a href="http://www.health.gov.au/internet/budget/publishing.nsf/Content/2015-2016_Health_PBS_sup1/$File/2015-16_Health_PBS_0.0_Complete.pdf">buried deep on page 53 of the budget papers</a> is a statement that: </p>
<blockquote>
<p>From 1 July 2015, the Government expects to introduce a balanced range of measures to support the longer-term access to, and sustainability of, the PBS. </p>
</blockquote>
<p>It would appear that the announced cuts are just an entree. We must now wait for the main course. </p>
<h2>Budgetary pressures</h2>
<p>As <a href="http://www.health.gov.au/internet/budget/publishing.nsf/Content/2015-2016_Health_PBS_sup1/$File/2015-16_Health_PBS_0.0_Complete.pdf">the budget papers make clear</a>, pharmaceutical expenditure is rising due to the listing of new medications. A key driver has been the emergence of a range of high-cost drugs, such as a treatment for malignant melanoma (trametinib) which costs over $131,000 per course of treatment. </p>
<p>This year’s budget includes funding for seven such drugs, at a projected cost of $1.6 billion over the next four years. But it’s important to note that, at its most recent meeting, the <a href="http://www.pbs.gov.au/info/industry/listing/elements/pbac-meetings/pbac-outcomes/2015-03">Pharmaceutical Benefits Advisory Committee (PBAC)</a>, the expert body that advises government on which drugs to add to the PBS, recommended adding a further $2.5 billion worth of new drugs. </p>
<p>The pipeline of new drugs places real and ongoing pressure on the government to find savings, particularly as the budget papers indicate the projected rate of increase in PBS expenditure will rise significantly over the next few years. Fortunately, when it comes to the PBS, savings are relatively easy to find.</p>
<p>Proposals floated by the government in the media over recent weeks included:</p>
<ul>
<li><a href="http://www.abc.net.au/radio/programitem/pg5L7KMoZ6?play=true">removing many medications from the PBS</a> that could be bought over the counter, such as aspirin and paracetemol </li>
<li><a href="http://www.abc.net.au/pm/content/2015/s4231687.htm">accelerating reductions in the price</a> of generic medicines </li>
<li>closing a <a href="http://www.news.com.au/lifestyle/health/drug-company-trick-of-combining-two-pills-into-one-and-charging-patients-twice-as-much-to-end/story-fneuzlbd-1227337682928">loophole that allows pharmaceutical companies</a> to charge much more for combination drugs, which are simply when two drugs are combined into a single tablet </li>
<li>an <a href="http://www.theaustralian.com.au/subscribe/news/1/index.html?sourceCode=TAWEB_WRE170_a&mode=premium&dest=http://www.theaustralian.com.au/national-affairs/health/budget-2015-drug-firms-prepare-for-war/story-fn59nokw-1227339810429&memtype=anonymous">across-the-board 5% cut</a> to the prices of medications that are still under patent, but have been listed on the PBS. </li>
</ul>
<p>Reportedly, there were also plans to introduce a modicum of competition into the pharmacy sector by allowing pharmacists to offer a discount of up to $1 on their dispensing fees. </p>
<p>The health minister has flagged her willingness to consider a broad range of reforms like these as part of negotiations for the next agreement between the Commonwealth and the retail pharmacy sector. This will cover payments made by government for dispensing drugs. That might explain why the budget papers say new measures will come into force on July 1 2015. The current agreement is due to expire on June 30.</p>
<h2>Good ideas</h2>
<p>The suggested reforms were all good ideas. Take generic medicines, for example. It has long been known that <a href="https://www.mja.com.au/journal/2010/193/3/expiry-patent-protection-statins-effects-pharmaceutical-expenditure-australia-0">Australia has being paying too much</a> for many common generic drugs. While generic drug prices have come down in recent years, we are still paying many times more for medicines such as the antipsychotic Olanzapine, which remains 15 times more expensive than in England. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/81367/original/image-20150512-22571-606my8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/81367/original/image-20150512-22571-606my8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=522&fit=crop&dpr=1 600w, https://images.theconversation.com/files/81367/original/image-20150512-22571-606my8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=522&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/81367/original/image-20150512-22571-606my8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=522&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/81367/original/image-20150512-22571-606my8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=656&fit=crop&dpr=1 754w, https://images.theconversation.com/files/81367/original/image-20150512-22571-606my8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=656&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/81367/original/image-20150512-22571-606my8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=656&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Currently, the government sets generic prices through what’s known as <a href="http://www.pbs.gov.au/info/industry/pricing/eapd">Expanded and Accelerated Price Disclosure</a>. It sets future prices by collecting information on the wholesale prices pharmacies around Australia pay for these medications, which are often at substantial discounts offered by drug manufacturers. </p>
<p>The proposed plan was to accelerate reductions in the price of these medications by excluding the original brand of drug (which is often discounted less than generic brands of the same drug) when calculating average cost. </p>
<p>Similarly, the government could make significant savings by tackling one of the great PBS pricing anomalies concerning <a href="https://www.mja.com.au/journal/2014/200/9/evaluating-costs-and-benefits-using-combination-therapies">combination drugs</a>. Price reductions for these drugs have been much slower than for other types of generic drugs, so they are often much more expensive than individual component drugs. Take the <a href="http://pbs.gov.au/medicine/item/10169F-2275R-4179Y-5436D-8358X-9317J-9354H">stroke prevention medication clopidogrel</a>, which costs around $15 per script on its own, but <a href="http://pbs.gov.au/medicine/item/9296G">$40 when combined with aspirin</a>.</p>
<p>While the 2015 budget papers did indicate an adjustment to the price of one combination (Ezetimibe with simvastatin), closing this pricing loophole across all combination therapies should net the government savings of more than $800 million over the next four years. </p>
<p>Probably the most controversial of the mooted savings measures was an across-the-board cut to subsidies for listed medications after a period of time. Reducing the subsidy on PBS drugs over time, mimics the way the prices for innovative products, such as new features on mobile phones, decline over time.</p>
<p>While this measure would clearly impact the profits of some pharmaceutical manufacturers, it should be seen in the context of many uncertainties these businesses face. The recent decline in the Australian dollar, for instance, creates much greater fluctuations in revenues for these companies than this proposed cut would have. </p>
<h2>Like laws and sausages</h2>
<p>The other group that would have been significantly impacted by the reforms are pharmacy owners as the revenue they receive from discounts on generic drugs would have fallen. But these discounts have always been a bonus on top of the $3 billion a year the retail pharmacy sector receives through the <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/fifth-community-pharmacy-agreement">agreement with the Commonwealth government</a> negotiated by the Pharmacy Guild of Australia.</p>
<p>In the past, the guild has run campaigns arguing such changes would put some pharmacies under threat, one of which it claims <a href="http://www.guild.org.au/news-page/2013/09/19/media-release---over-1-000-000-signatures-for-community-pharmacy">attracted over one million signatures</a>. </p>
<p>What was different about this set of proposed reforms was that the government also floated the idea of allowing pharmacies to discount their dispensing charges. This would have given consumers a direct stake in the reforms because they would have saved money when having prescriptions filled. </p>
<p>But even though the next Community Pharmacy Agreement is imminent and the budget papers hint at PBS reform, we have no way of knowing whether anything will actually change. Reforms are negotiated behind closed doors directly with the Pharmacy Guild and the drug industry lobby group Medicines Australia. </p>
<p>Negotiations have always been far from transparent. It’s never clear what gets traded off by whom and why. Or what relative weight is given to evidence versus stakeholder clout in shaping future reforms. </p>
<p>The limitations of past negotiations were highlighted in a recent National Audit Office report into the last Community Pharmacy Agreement, which involved the framework to allocate $15 billion of taypayer funds. <a href="http://www.anao.gov.au/%7E/media/Files/Audit%20Reports/2014%202015/Report%2025/AuditReport_2014-2015_25B.pdf">The report noted that</a>, among other things, the health department had failed to “keep a record of its meetings with the Pharmacy Guild”. </p>
<p>When it comes to PBS reform, this government appears to have taken <a href="http://www.brainyquote.com/quotes/quotes/o/ottovonbis161318.html#2mO3j3AOKLBBGiWZ.99">the advice of Otto von Bismarck</a>:</p>
<blockquote>
<p>Laws are like sausages, it is better not to see them being made.</p>
</blockquote>
<p>But with so many savings options on the menu, now is not the time to go on a reform diet.</p><img src="https://counter.theconversation.com/content/41682/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philip Clarke does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite numerous leaks about impending changes to medicines policy, the budget showed savings of just $252.2 million over five years from adjusting the price of a small number of PBS-listed drugs.Philip Clarke, Professor of Health Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/397992015-04-09T20:40:50Z2015-04-09T20:40:50ZLeaked TPP investment chapter shows risks to Australia’s health<p>Amid ongoing speculation about the prospects for the Trans Pacific Partnership Agreement (TPP), Wikileaks published another confidential chapter last week, this time on investment. And like almost everything we know about the secretive negotiations for the agreement, the leaked chapter provides plenty of cause for concern.</p>
<p>The leaked <a href="https://wikileaks.org/tpp-investment/">late-stage draft of the investment chapter</a> contains information about the agreement’s investor-state dispute settlement (ISDS) clause. Clauses like this give investors direct access to international arbitration, where they can bring claims against a government over regulatory measures they think may damage their bottom line. </p>
<p>The chapter has a footnote saying Australia is exempt from ISDS, but that may change “subject to certain conditions”. The leaked draft doesn’t indicate the exact nature of these conditions, and the footnote remains in brackets, indicating the issue has not yet been settled.</p>
<p>The Minister for Trade and Investment, Andrew Robb, has repeatedly said the TPP will not adversely affect health policy. In a <a href="http://www.abc.net.au/news/2015-03-17/trans-pacific-partnership-details-will-be/6327068">recent interview</a> with ABC TV, he said the government had insisted on carveouts for health and environmental public policy decisions from investor-state dispute settlement clauses. </p>
<p>But the leaked draft shows these carveouts (which are still under negotiation) are limited to specific areas such as the Pharmaceutical Benefits Scheme, Medicare Benefits Scheme, Therapeutic Goods Administration and the Office of the Gene Technology Regulator. </p>
<h2>ISDS health concerns</h2>
<p>An independent <a href="http://hiaconnect.edu.au/research-and-publications/tpp_hia/">health impact assessment</a> of the TPP negotiations conducted by Australian academics and non-government organisations published in February 2015 found the ISDS clause presents a significant threat to health policy. </p>
<p>Part of the problem is that the TPP defines investments very broadly to include intangible assets and intellectual property, such as trademarks and patents. These kinds of assets are at the heart of current ISDS cases contesting <a href="http://www.italaw.com/cases/851">Australia’s plain packaging laws</a> and <a href="http://www.italaw.com/cases/1625">Canada’s decisions about what medicines can be patented</a>.</p>
<p>Such claims can result in large-scale costs for taxpayers. Not only do the awards for investor-state cases often amount to hundreds of millions of dollars, <a href="http://www.italaw.com/cases/1625">according to the OECD</a> the average cost of fighting a claim is US$8 million. </p>
<p>Another issue that has health advocates worried is the potential “chilling effect” of investor-state dispute settlement mechanisms; the prospect that governments may be deterred from implementing innovative health policies and laws that may be contested by corporations using ISDS clauses. </p>
<p>Director-General of the World Health Organization, Margaret Chan <a href="http://www.who.int/dg/speeches/2012/tobacco_20120320/en/">noted in 2012</a> that legal actions against Uruguay, Norway and Australia were “deliberately designed to instill fear” in countries trying to reduce smoking. <a href="http://www.nytimes.com/2013/12/13/health/tobacco-industry-tactics-limit-poorer-nations-smoking-laws.html?pagewanted=all&_r=3&">Uruguay has publicly acknowledged</a> that it would have had to drop its tobacco control law and settle with Philip Morris if it didn’t have financial support from a foundation set up by Michael Bloomberg.</p>
<h2>Protecting health?</h2>
<p>In addition to the carveouts for specific health programs, the TPP contains purported “safeguards” to protect health and the environment. But these safeguards have also drawn strong criticism, in particular, from eight health and community organisations who wrote to the trade minister last week to <a href="http://www.phaa.net.au/documents/150401%20Letter%20to%20Minister%20Robb%20re%20proposed%20investment%20chapter%20of%20the%20TPP.pdf">outline their concerns</a>.</p>
<p>One of the main concerns centres on the safeguard related to “indirect expropriation”. While Australian law protects against direct expropriation – the seizure of assets by government – the TPP goes further to include instances where a government’s actions have a negative impact on an investment, but do not result in a transfer of property to the state. </p>
<p>The broader scope of expropriation under ISDS in the <a href="http://www.legislation.gov.hk/IPPAAustraliae.PDF">Hong Kong - Australia bilateral investment treaty</a>, for instance, has enabled Philip Morris to contest Australia’s tobacco plain packaging through international arbitration even though <a href="http://www.hcourt.gov.au/assets/publications/judgment-summaries/2012/hca43-2012-10-05.pdf">the High Court determined</a> that there had been no acquisition of property by the state under Australian law.</p>
<p>To safeguard against abuse of this provision, the TPP includes an annex that appears to exempt “non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment…”. But any protective effect intended by this clause may be undermined by the added phrase “…except in rare circumstances.”</p>
<p>This loophole, which invites corporations to argue that their circumstances are rare, is being used in a <a href="http://www.italaw.com/cases/2110">case against Costa Rica</a> over a national park established to protect the nesting grounds of the endangered giant leatherback sea turtle. Nine US investors lodged a dispute, seeking over US$36.5 million in compensation, when Costa Rica suspended development permits for beachfront land within the national park boundaries. The case has yet to be decided.</p>
<p>Another proposed exemption – this time for compulsory licenses – is also <a href="https://www.citizen.org/documents/tpp-investment-chapter-and-access-to-medicines.pdf">highly problematic</a>. Compulsory licences are important mechanisms for ensuring access to medicines, as they allow patents to be bypassed in circumstances such as public health emergencies. But the wording of the exemption in the TPP would allow corporations to argue a compulsory license is not compliant with World Trade Organization rules. Or with the intellectual property chapter of the TPP, which actually provides more expansive rights for corporations. This could create a situation where WTO rules could be interpreted and enforced outside the more flexible and accountable state-state dispute settlement mechanism of the WTO itself.</p>
<p>Other safeguards, such as the explicit link drawn between a clause promising investors “fair and equitable treatment” and customary international law (international obligations that arise from established state practice), <a href="https://www.iisd.org/itn/2013/03/22/a-distinction-without-a-difference-the-interpretation-of-fair-and-equitable-treatment-under-customary-international-law-by-investment-tribunals/">may also prove insufficient</a>. Such a safeguard was <a href="http://www.sice.oas.org/tpd/nafta/Commission/CH11understanding_e.asp">introduced by the parties to the North American Free Trade Agreement in 2001</a> but this did not prevent the tribunal in the recent <a href="http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/disp-diff/clayton-12.pdf">Clayton/Bilcon case</a> from finding that customary international law in this area has evolved over time in a manner that is more in line with the investor’s interpretation, than with that of Canada’s government. The tribunal has yet to make a decision on damages, but the company is seeking US$300 million. </p>
<p>The problems and loopholes characterising the latest leaked TPP draft throw doubt on the government’s claims that it’s taking the concerns of health stakeholders as seriously as the interests of big transnationals. And they highlight exactly why it’s vital for the draft text to be made public and subjected to independent scrutiny before it is signed. Indeed, it would be safer to exclude ISDS from the TPP altogether. </p>
<p>Minister Robb asks us to trust his assurances that Australian health policy will not be negatively affected by this trade agreement. But this latest leaked draft does little to inspire such trust.</p><img src="https://counter.theconversation.com/content/39799/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah Gleeson receives funding from the Australian Research Council. She has received funding from various national and international non-government organisations to attend speaking engagements related to trade agreements and health, including the TPP. She has represented the Public Health Association of Australia on matters related to the TPP.</span></em></p><p class="fine-print"><em><span>Kyla Tienhaara receives funding from the Australian Research Council.</span></em></p><p class="fine-print"><em><span>Sharon Friel receives funding from the Australian Research Council and the National Health and Medical Research Council.</span></em></p>The latest part of the TPP to be leaked is its investment chapter. And like almost everything we know about the secretive negotiations for the agreement, it provides plenty of cause for concern.Deborah Gleeson, Lecturer in Public Health, La Trobe UniversityKyla Tienhaara, Research Fellow Regulatory Institutions Network (RegNet), Australian National UniversitySharon Friel, Director and Professor of Health Equity, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/387892015-04-07T04:37:35Z2015-04-07T04:37:35ZExplainer: what is the Community Pharmacy Agreement?<figure><img src="https://images.theconversation.com/files/77082/original/image-20150406-26512-nagmgn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Patients pay a contribution towards the cost of their medication to the pharmacist who then claims the difference between what they paid and the patient contribution from the government.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/gustavominas/4895616255">Gustavo Gomes/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>The <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/fifth-community-pharmacy-agreement">Community Pharmacy Agreement</a> is a five-year agreement (<a href="http://5cpa.com.au/">now in its fifth cycle</a>) that governs how pharmacies supply medicines listed on the <a href="http://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> (PBS). While the average Australian <a href="http://www.guild.org.au/docs/default-source/public-documents/issues-and-resources/Fact-Sheets/the-fifth-community-pharmacy-nbsp-agreement.pdf?sfvrsn=0">makes more than 14 visits</a> to a community pharmacy every year, not many know about how this agreement impacts pharmacy in Australia.</p>
<p>Pharmacies buy medication from wholesalers, sell them to people who bring in prescriptions and <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/fifth-community-pharmacy-agreement">are reimbursed</a> by the government for drugs listed on the PBS. They’re also paid for the professional advice they provide when dispensing those medicines.</p>
<p>Patients pay a contribution towards the cost of their medication to the pharmacist, who then claims from the government the difference between what they paid the wholesaler and the patient contribution. In the financial year ending June 30 2014, the government spent $9.1 billion on PBS-listed drugs. Exactly what this money went to was governed by the Community Pharmacy Agreement.</p>
<h2>Getting approval</h2>
<p>The agreement is formed between the Pharmaceutical Guild of Australia (PGA) and the Commonwealth government because of a key clause in the <a href="http://www.comlaw.gov.au/Details/C2015C00081">National Health Act 1953</a>. This says any agreement relating to how the Commonwealth remunerates items on the PBS needs to be made with the PGA or another pharmacists’ organisation that represents the majority of “approved pharmacists”. </p>
<p>Approval requires pharmacists to apply to the <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/health-pbs-general-pharmacy-acpa-index.htm-copy2">Australian Community Pharmacy Authority</a> (ACPA), an independent statutory authority that considers applications to supply PBS medicines under Section 90 of the Act. As part of assessing applications, the ACPA has to consider the location of the proposed pharmacy because we need pharmacies to form a distribution network so everyone in the country has access to PBS-listed drugs. </p>
<p>In Australia, you can only own a pharmacy if you are a qualified pharmacist. So the people representing the approved “Section 90” pharmacies are pharmacist-owners, and the Pharmaceutical Guild is their professional organisation.</p>
<h2>A brief history</h2>
<p>The first <a href="http://www.guild.org.au/the-guild/community-pharmacy-agreement">Community Pharmacy Agreement</a> (CPA) began in 1991 and its focus was on optimising the distribution of pharmacy services around the country. At the time, there were concerns that more pharmacies were located in metropolitan areas while regional and rural Australia went without. The agreement introduced a new remuneration framework for pharmacies supplying PBS medicines and created incentives for pharmacies in rural and remote areas. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/77083/original/image-20150406-26502-ysv5gh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/77083/original/image-20150406-26502-ysv5gh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/77083/original/image-20150406-26502-ysv5gh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/77083/original/image-20150406-26502-ysv5gh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/77083/original/image-20150406-26502-ysv5gh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/77083/original/image-20150406-26502-ysv5gh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/77083/original/image-20150406-26502-ysv5gh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In Australia, you can only own a pharmacy if you are a qualified pharmacist.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/renaissancechambara/4487061237">Ged Carroll/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>The CPA was <a href="http://www.comlaw.gov.au/Details/C2004B00706/2e1056bd-e75d-4653-9a1b-d629c8fb221e">also a response</a> to concerns in government and the pharmacy profession about Australia’s large pharmacy-to-population ratio (much higher than other Western countries) and the lack of consistency in various financial drivers across the profession, including for mark-ups and fees for dispensing PBS medicines. </p>
<p>Under the first CPA, the number of pharmacies in Australia fell from 5,500 to 4,950 by the end of 1995. This included voluntary closures of over 600 pharmacies and more than 60 mergers, and cost the government more than $50 million.</p>
<p><a href="http://www.comlaw.gov.au/Details/C2004B00706/2e1056bd-e75d-4653-9a1b-d629c8fb221e">Each subsequent agreement</a> has helped maintain the principle of equal distribution of pharmacies across the country through controls placed on the profession via the location rule, which says a pharmacy may not open within 1.5 kilometres of an existing one.</p>
<p>The <a href="http://5cpa.com.au/">fifth Community Pharmacy Agreement</a>, which commenced on July 1 2010, also contains remuneration ($663 million, or less than 5% of the total CPA budget) for clinical services that enhance patient medication management. These include one-on-one <a href="https://theconversation.com/medicine-reviews-save-lives-and-money-so-why-are-they-capped-23315">medication reviews</a>, which can take between 20 and 30 minutes in-store, or up to an hour in the patient’s home. </p>
<p>The current CPA totals $15.4 billion, with the bulk of the funding ($13.8 billion) allocated directly to individual pharmacies for PBS-related services.</p>
<h2>A final part of the puzzle</h2>
<p>Another critical part of the CPA is the Community Services Obligation (CSO), which is an arrangement between the government and pharmaceutical wholesalers. The core of the CPA arrangement is access to PBS medicines and wholesalers who supply the pharmacies are pivotal players in the supply chain. </p>
<p>The CPA provides direct financial support ($950 million) to certain pharmaceutical wholesalers for any additional cost they may incur in providing the full range of PBS medicines. This ensures the full range is available regardless of pharmacy location and relative cost of supply. It also helps ensure that low-volume PBS medicines, which are often very high-cost drugs, are delivered to community pharmacies anywhere in Australia within 24 hours. </p>
<p>Since its inception 25 years ago, the intent of the Community Pharmacy Agreement has been to ensure all Australians have access to PBS-listed medications, no matter where they live. Australia’s network of around 5,500 community pharmacies have played a pivotal role in realising this goal.</p><img src="https://counter.theconversation.com/content/38789/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lisa Nissen received funding previously from the 3rd and 4th Community Pharmacy Agreement Research and Development Grant Programs. Lisa currently holds an Office of Learning and Teaching (OLT) Research Grant. She is affiliated with the Pharmaceutical Society of Australia (Qld) Branch where she is a branch committee member.</span></em></p><p class="fine-print"><em><span>Judith Singleton does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australians make an average of 14 visits to the pharmacy for medicines and advice every year but most don’t know about the agreement that governs how we buy government-subsidised medicines from them.Lisa Nissen, Professor; Head, School of Clinical Sciences, Queensland University of TechnologyJudith Singleton, Lecturer, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/374822015-02-17T19:04:42Z2015-02-17T19:04:42ZHidden cost of increasing drug co-payment poses a high risk<figure><img src="https://images.theconversation.com/files/72228/original/image-20150217-18500-7fa16r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A rise in the co-payment for medicines may lead to an increase in the rates of discontinuation for some drugs.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/58725530@N07/5652875366/in/photolist-4iUhsN-4iUgZW-4iUgB9-3PeHtR-9BwsUo-5RWzu2-5HSZ9g">Michael Cheng</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Apart from proposing a co-payment for visiting doctors, the last federal budget also contained a proposal to increase the level of co-payments for medications. The government seems to have given little attention to the effect this policy would have on the long-term health of the nation.</p>
<p>Australians buying medicines listed on the <a href="http://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> (PBS) have been required to make a contribution to their cost since the 1960s. Currently, many of us <a href="http://www.pbs.gov.au/info/healthpro/explanatory-notes/front/fee">pay the first A$37.70</a>. Pensioners, the unemployed and those receiving a range of disability benefits have access to a health-care concession card, which reduces this co-payment to A$6.10. </p>
<p>Following <a href="http://www.ncoa.gov.au/report/phase-one/part-b/7-4-the-pharmaceutical-benefits-scheme.html">recommendations of the National Commission of Audit</a>, the <a href="http://www.humanservices.gov.au/corporate/publications-and-resources/budget/1415/measures/health-matters-and-health-professionals/35-90114">2014 budget contained a A$5 increase</a> in the general level of co-payments, from A$37.70 to A$42.70. To date this budget measure has not been passed by the Senate. In early December 2014, <a href="http://www.sbs.com.au/news/article/2014/12/04/pbs-co-pay-delay-cost-millions-dutton">then-health minister Peter Dutton indicated</a> the government intended to legislate the change in 2015.</p>
<p>Our research suggests that, if implemented, this rise may lead to an increase in the rates of discontinuation for some medications. </p>
<h2>Unknown impact</h2>
<p>Australian studies on the impact of co-payments on the use of medications have been surprisingly rare. <a href="http://onlinelibrary.wiley.com/doi/10.1002/pds.1670/abstract;jsessionid=57D0CB1010A8DD3F7490D3CB21D7691C.f03t02">Research published in 2008</a>, which used Australia-wide PBS prescribing information, showed that co-payment increases a decade ago resulted in a “significant decrease in dispensing volumes” for many types of medications.</p>
<p>But there hasn’t been much direct research on the impact of the higher out-of-pocket costs on long-term use of common medicines by people who don’t have a concession card. This may be because this research requires data-linkage to track individual usage of medications over time. </p>
<p>In a <a href="http://www.healthpolicyjrnl.com/article/S0168-8510(15)00006-8/abstract">study to be published in the international journal Health Policy</a>, we focused on the impact of non-concessional co-payments on drug use using information collected for the Australian Hypertension and Absolute Risk Study
(<a href="https://www.mja.com.au/journal/2010/192/5/cardiovascular-risk-perception-and-evidence-practice-gaps-australian-general">AusHEART</a>). The research involved collecting clinical information on patients aged above 55 years when visiting a GP, in order to assess the perception and management of cardiovascular disease risk in Australian primary care.</p>
<p>Our study focused on a subset of 1,260 people who were taking cholesterol-lowering drugs known as statins, which are among the most commonly used in Australia. There’s <a href="http://www.cochrane.org/CD004816/VASC_statins-for-the-primary-prevention-of-cardiovascular-disease">compelling evidence that statins are effective</a> for preventing cardiovascular disease, and that non-adherence leads to <a href="http://journals.lww.com/lww-medicalcare/Abstract/2005/06000/Impact_of_Medication_Adherence_on_Hospitalization.2.aspx">increased hospitalisation rates and greater medical costs</a>. </p>
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<a href="https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=540&fit=crop&dpr=1 600w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=540&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=540&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=679&fit=crop&dpr=1 754w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=679&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/71694/original/image-20150211-25684-15ewxhp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=679&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><span class="source">Authors</span>, <span class="license">Author provided</span></span>
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</figure>
<p>We linked clinical information collected during GP consultation with PBS administrative records on long-term medication use in order to find out what caused these people to stop taking the pills. We found that those who didn’t have a concession card were around 60% more likely to stop taking the medication. Along with being a smoker and a new statin user, this was one of only three factors that had a significant impact on long-term use.</p>
<h2>Which way forward?</h2>
<p>Many types of statin medication have historically cost much more in Australia than other countries. For instance, a <a href="https://www.mja.com.au/journal/2010/193/3/expiry-patent-protection-statins-effects-pharmaceutical-expenditure-australia-0">2010 study</a> comparing the cost of Simvastatin in different places found Australia paid more than four times more for this drug than in England.</p>
<p>To address this discrepancy, the Rudd government introduced a policy of <a href="http://www.pbs.gov.au/info/news/2010/11/Expanded_and_Accelerated_Price_Disclosure">accelerated price disclosure</a> in 2010. The policy bases future drug prices on actual cost to pharmacists. As these are often much lower than official prices, the cost of many generic drugs has been falling. </p>
<p>While the cost of statins in Australia is still higher than in other countries such as England and New Zealand, many of these medications now cost less than the non-concessional level of co-payment; 40mg Simvastatin, for instance, is just under A$12. </p>
<p>Falls in prices like this reduce the out-of-pocket costs for general users, which is likely to improve adherence to medications. Drugs like statins generally require long-term use to effectively reduce cardiovascular disease and prevent premature death. Our study shows increases in drug prices are likely to have the opposite effect. And <a href="http://onlinelibrary.wiley.com/doi/10.1002/pds.1670/abstract;jsessionid=57D0CB1010A8DD3F7490D3CB21D7691C.f03t02">the 2008 study</a> mentioned above shows this may hold true for other medications as well. </p>
<p>Such findings have implications for future government policies regarding co-payments. Clearly, when considering a policy that will increase drug costs, the government needs to consider more than just direct financial impact. Potential downstream costs, such as changes in number of hospitalisations, and health impacts, such as the policy’s effect on the risk of premature mortality, should also be considered.</p>
<p>Our results suggest that reducing the cost of statin medications may not only save taxpayers money, it may also save their lives.</p><img src="https://counter.theconversation.com/content/37482/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philip Clarke receives funding from the National Health and Medical Research Council.</span></em></p><p class="fine-print"><em><span>Emma Heeley, John Chalmers, and Rachel Knott do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Apart from proposing a co-payment for visiting doctors, the last federal budget also contained a proposal to increase the level of co-payments for medications. The government seems to have given little…Rachel Knott, Research Fellow in Health Economics, Monash UniversityEmma Heeley, Senior Research Fellow (Neurological), George Institute for Global HealthJohn Chalmers, Emeritus Professor at The University of Sydney & Senior Director, George Institute for Global HealthPhilip Clarke, Professor of Health Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/325732014-10-23T19:16:26Z2014-10-23T19:16:26ZHow the US trade deal undermined Australia’s PBS<figure><img src="https://images.theconversation.com/files/62468/original/prz9jtf3-1413949474.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Central to the processes of the PBS is the idea that drugs with identical or similar clinical outcomes should have similar prices.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/gallery-524773p1.html?cr=00&pl=edit-00">Thinglass">Thinglass/Shutterstock</a></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
<hr>
<p>Australia’s <a href="http://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> (PBS) is one of the few pieces of national public health policy with unquestioned democratic legitimacy. It was <a href="https://www.mja.com.au/journal/2014/201/1/how-pharmaceutical-benefits-scheme-began">established</a> by the vote of a majority of citizens in a majority of states in a referendum in the late 1940s. Since then, it has lowered the cost of pharmaceuticals to citizens through expert assessment of their cost-effectiveness. </p>
<p>The PBS uses public funds to reimburse pharmaceutical companies for the “health innovation” value of listed medications, as determined after review of scientific evidence by the <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/Pharmaceutical+Benefits+Advisory+Committee-1">Pharmaceutical Benefits Advisory Committee</a>. The government negotiates the price with drug companies and wants a good deal for taxpayers, who ultimately foot the bill.</p>
<p>Central to the processes of the PBS is the idea that drugs with identical or similar clinical outcomes should have similar prices, known as <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/mja_ref_pricing_and_ausfta.pdf">reference pricing</a>. Unfortunately, the PBS process of reference pricing was considerably disrupted by the Australia-US Free Trade Agreement (AUSFTA) – though this is not something the Australian government wishes to admit. </p>
<h2>Australian medicines impacted by trade negotiations</h2>
<p>In the early 2000s, in preparing for the first bilateral trade deal between the United States and Australia, the US representatives <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/mja_ref_pricing_and_ausfta.pdf">were required</a> by legislation to negotiate an agreement that eliminated government price control measures such as reference pricing, which “deny full market access for United States products”.</p>
<p>The same legislation also required the US Department of Commerce to investigate the possible future <a href="http://www.ita.doc.gov/td/chemicals/drugpricing-%20study.pdf">dismantling of reference pricing</a> in other OECD countries. In December 2005, the US <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/mja_ref_pricing_and_ausfta.pdf">sought to implement</a> this agenda through the <a href="http://www.oecd.org/health/valueinpharmaceuticalpricing.htm">OECD Pharmaceutical Pricing Policy project</a>. </p>
<p>The Australian government initially denied the PBS would be in the AUSFTA at all. The AUSFTA ended up, however, specifically addressing Australia’s PBS in an annex. This meant this part of the AUSFTA would apply to Australia without having specific reciprocal obligations for the US. This also was handy for US pharmaceutical companies, as many policymakers in the US actually wanted to copy Australia’s PBS system because of excessively high US drug prices.</p>
<p>Annex 2C of the AUSFTA specified the parties agreed on the importance of pharmaceutical innovation and on pricing systems for pharmaceuticals being governed by both the “operation of competitive markets” (the US position) and “objectively demonstrated therapeutic significance” (the Australian position). </p>
<p>However, it also created a lobbying niche by requiring the PBS system to respond to undefined “innovation”.</p>
<p>In 2004, Australian AUSFTA negotiators reassured the Australian parliament about Annex 2C via a Senate Committee. They <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/jgm_ausfta-med_0.pdf">said</a>:</p>
<blockquote>
<p>… we went into these negotiations with an absolutely clear mandate to protect and preserve the fundamentals of the PBS. That is what this agreement does … there is nothing in the commitments that we have entered into in Annex 2C or the exchange of letters on the PBS that requires legislative change. </p>
</blockquote>
<p>However, when the AUSFTA Medicines Working Group (MWG), which was established under Annex 2C, met for the first time in Washington in January 2006, Australia’s then-trade minister Mark Vaile, <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/jgm_ausfta-med_0.pdf">said</a> that:</p>
<blockquote>
<p>… the core principle that we both agree on in this area … is recognising the value of innovation.</p>
</blockquote>
<p>Unfortunately Vaile did not clarify which approach to pharmaceutical “innovation” he was referring to. Documents obtained under a Freedom of Information application (organised by Pat Ranald of the Australian Fair Trade and Investment Network in 2007) were so redacted that they revealed almost nothing of what was said at the first AUSFTA MWG meeting, raising separate issues about the democratic legitimacy of the AUSFTA.</p>
<p>One disclosed document, presumably discussed in the MWG, was an <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/mja_ref_pricing_and_ausfta.pdf">opinion editorial</a> by a conservative Australian politician in The Australian, which argued that: </p>
<blockquote>
<p>Truly innovative cures should be referenced against innovation in other classes, rather than against generics.</p>
</blockquote>
<p>This approach seems to reflect the US “competitive markets” method of valuing innovation. </p>
<p>Shortly after the AUSFTA MWG met, the Australian parliament (with Liberal majorities in both houses) rapidly passed the <a href="http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r2801">National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007</a>. This new act amended the National Health Act 1953 and from August 2007 divided the PBS into two separate formularies: F1, which mostly contains single-brand medicines, and F2, which mostly contains multiple brand, mainly generic, medicines.</p>
<p>Private sector consultants appear to have been heavily involved in drafting this legislation.</p>
<p>The separation of PBS-listed drugs into two groups (F1 and F2), weakened the role and fiscal benefits of referencing pricing in the PBS. Although there will be reference pricing within F1, an effect of the changes was to insulate high-priced single brand (patented) F1 drugs from price cuts and from the reference pricing that applied under previous PBS processes. </p>
<p>From 2007, once a new drug is listed on the PBS as F1, its price will not be linked to the price of any similar drug in F2. F1 drugs are not interchangeable at the individual patient level with drugs that have multiple brands, so the manufacturers may be able to retain their original PBS price until the listing of a bio-equivalent brand satisfies the new standards for a shift to F2. </p>
<p>Reductions in F2 drug prices will not affect F1 prices, even where the therapeutic effect of an F2 medicine is similar though not necessarily meeting the unscientific and subjective standard of “interchangeable at the individual patient level”.</p>
<h2>US continues to flex its trade muscle for pharma</h2>
<p>In its subsequent free trade negotiations with the US, the South Korean government demanded a process similar to Australia’s current system of evidence-based cost-effectiveness and reference pricing. </p>
<p>After recognising each nation’s differing approach to medicines policy, the Republic of Korea–United States Free Trade Agreement indicates that if South Korea establishes a reimbursement system for pharmaceuticals or medical devices where the amount paid is not based on “competitive market-derived prices”, then it has to “appropriately recognise the value of patented pharmaceutical products”.</p>
<p>The agreement respectively mentions PBS-type “sound economic incentives” as a method of facilitating access to patented medicines and Australian-style “transparent and accountable” procedures as a means of promoting health innovation. However, it creates a Medicines and Medical Devices Committee, similar to the AUSFTA MWG.</p>
<p>This is another example of the US technique to alter the domestic regulatory systems of other nations to achieve greater profits for US companies. And a recent US-India <a href="http://blogs.wsj.com/pharmalot/2014/10/08/will-a-u-s-india-working-group-do-the-bidding-of-the-pharma-industry/">working group on pharmaceutical patents</a> looks like it could be headed the same way. </p>
<h2>An evidence-based approach to pharmaceutical innovation</h2>
<p>The United Kingdom’s <a href="http://www.nice.org.uk/aboutnice/howwework/researchanddevelopment/%20KennedyStudyOfValuingInnovation.jsp">2009 Kennedy Report on Valuing Innovation</a> is directly relevant to debates about how to value pharmaceutical innovation. It strongly promotes the evidence-based approach Australia takes to assessing and valuing innovation through expert assessment of objectively demonstrated therapeutic significance. </p>
<p>The Kennedy Report recommends disinvestment or compensation to the government if an allegedly innovative product fails to offer value or meet expectations made when being evaluated for public funding. It also recommends a working definition of pharmaceutical innovation, emphasising scrutiny of whether the relevant product significantly and substantially improves the way that a current need (including supportive care) is met.</p>
<p>Allowing the US to alter the basic processes of Australia’s PBS represented an inexcusable surrender of Australia’s democratic sovereignty. It represents just how compromised the state has become as a representative of citizens’ interest in the face of corporate power. </p>
<p>It also provides salutary lessons as Australian citizens attempt to prevent their government surrendering democratic sovereignty on an even greater scale by agreeing to investor-state dispute settlement in the US-led Trans-Pacific Partnership Agreement.</p>
<hr>
<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32573/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Faunce receives funding from the Australian Research Council under a discovery grant focusing on developing a governance framework for globalising artificial photosynthesis as a distributed renewable food and fuel technology.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Thomas Faunce, ARC Future Fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/325742014-10-21T05:02:20Z2014-10-21T05:02:20ZIt’s time to fix the free trade bungle on the cost of medicines<figure><img src="https://images.theconversation.com/files/62319/original/zdz9px7s-1413859935.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Reduced access to generics drugs has contributed to the 80% rise in the cost of Australia's Pharmaceutical Benefits Scheme. </span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-178367195/stock-photo-young-asian-girl-holding-red-pills-and-medicine-sitting-on-sofa-at-home.html?src=K-zo1aFO3SdA3gHVhq6YcA-1-90">Diego Cervo/Shutterstock</a></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/uk/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
<hr>
<p>Negotiations for the Trans-Pacific Partnership present an opportunity to correct a mistake made a decade in the Australia-US Free Trade Agreement, which led to Australia paying higher prices for pharmaceuticals. </p>
<p>In July 2004, Tony Abbott, then health minister in the Howard government, issued this statement:</p>
<blockquote>
<p>The price of pharmaceuticals will not rise as a result of the AUSFTA…</p>
</blockquote>
<p>Contrast this to what the Abbott government’s first budget, in May this year, told Australians:</p>
<blockquote>
<p>Over the past decade the cost of the Pharmaceutical Benefits Schedule (PBS) has increased by 80%.</p>
</blockquote>
<p>To be sure, the “price of pharmaceuticals” is not the same thing as “the cost of the PBS”. But since the PBS is responsible for providing medicines to the vast majority of Australians, it is reasonable to infer that a contributing factor has been a rise in the price of pharmaceuticals. It is also reasonable to infer that the AUSFTA is partially to blame for that rise. </p>
<p>The legislative instrument through which the AUSFTA was implemented is the <a href="http://www.comlaw.gov.au/Details/C2004A01355">US Free Trade Agreement Act 2004</a>. The Therapeutics Goods Act 1984 was also amended to require companies seeking marketing approval for a pharmaceutical to provide a patent certificate as part of the <a href="http://www.tga.gov.au/">Therapeutic Goods Administration’s</a> (TGA) regulatory assessment process. </p>
<p>The patent certificate must say if the sponsored medicine will “infringe a valid claim of a patent that has been granted in relation to the therapeutic good (being the patented medicine)” in question. It must also notify the patent holder. </p>
<p>Otherwise known as “patent linkage”, the application for regulatory approval creates a link between a patented medicine and a possible generic substitute. </p>
<p>The patented medicines are categorised as F1 formulary medicines, which means there is no approved substitute. </p>
<p>When a generic medicine comes onto the market, these drugs are contained in the F2 formulary. Generic medicines contain the same active ingredient or have the method of production to the patented drug, or they may be similar in terms of its administration, dosage, method of treatment or indication. </p>
<h2>How does ‘patent linkage’ play out in Australia?</h2>
<p>“Patent linkage” provides advance warning to a patent owner, usually the manufacturer of a patented medicine, that a generic medicines’ manufacturer is about to enter the market with a competing and cheaper substitute medicine.</p>
<p>With the knowledge that a generic medicine will trigger an automatic 16% price drop for the patented medicine – and result in its transfer from the F1 formulary to the F2 formulary – the patent owner applies to the Federal Court of Australia for a preliminary injunction. </p>
<p>The injunction is normally granted and as a result, the marketing of the generic medicine is delayed by an average of three years. </p>
<p>This means that the patented medicine stays in the F1 formulary. This affects the pricing of that medicine not only because the price is higher, but also because medicines in the F2 formulary are subject to mandatory price disclosure. This tends to exert downward price pressure on all medicines within the F2 formulary.</p>
<p>For a generic manufacturer to defeat the injunction, it must mount a challenge to the validity of the allegedly infringed patent. The average cost of patent litigation is about A$5 million and requires a team of specialist patent lawyers, patent attorneys and highly skilled experts. </p>
<p>In addition to the legal cost, the generic manufacturer is, by effect of the injunction, denied sales revenue for the duration of the injunction – not to mention the opportunity cost it incurs as its workforce diverts attention to the patent litigation.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=336&fit=crop&dpr=1 600w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=336&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=336&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=422&fit=crop&dpr=1 754w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=422&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=422&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Patent linkage refers to the link that regulatory approval creates between a patented medicine and a possible generic substitute.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-128359274/stock-photo-close-up-of-chains-linked-with-blue-sky-background.html?src=vbOMd2hJ3Ql9LIYBJVa62w-1-55">Sarahbean/Shutterstock</a></span>
</figcaption>
</figure>
<p>In Australia, legal costs follow the event, meaning that should the generic manufacturer lose, it will also be required to pay a significant percentage of the legal costs incurred by the patent owner in defending its patent.</p>
<p>So, it is critical that a generic company carefully assess any patent that puts at risk a proposed generic medicine launch. This assessment costs money. And unfortunately, because of differences in patent law around the world, it is impossible for a generic manufacturer to extrapolate the results of a patent challenge in one country to that in another.</p>
<h2>How does it affect medicine prices?</h2>
<p>The longer a medicine remains in the F1 formulary, the higher the cost of that medicine to the PBS. This, combined with the consequences on price once that medicine moves into the F2 formulary, creates a significant incentive for patent owners to stop generic competition.</p>
<p>Patent owners encircle a valuable patented medicine with a series of “evergreening” patents. These usually apply after the patent (for the active ingredient) has or is about to expire. This can <a href="https://digitalcollections.anu.edu.au/bitstream/1885/11418/1/Moir%20%26%20Palombi%20Patents%20and%20trademarks%202013.pdf">extend patent protection</a> beyond the normal 20 to 25 year period to a period closer to 40 to 50 years.</p>
<p>Unfortunately, the profit margin for generic manufacturers has fallen significantly due to the <a href="http://www.pbs.gov.au/info/industry/pricing/eapd">price disclosure</a> mechanism, while the cost of patent litigation has risen significantly. Consequently, the capacity of generic manufacturers to assume the risks involved in risky and expensive patent litigation has fallen dramatically. </p>
<p>In the absence of any serious intervention by the Australian Competition and Consumer Commission, it is likely that fewer “evergreening” patents will be challenged in the future. This means that more medicines will remain in the F1 formulary and for a longer period and the costs of medicines will rise. </p>
<p>A consequence of price rises, particularly at a time of economic austerity, is that newer medicines are not being listing on the PBS. The Pharmaceutical Benefits Advisory Committee, which decides which drugs will be subsidised through the PBS, for instance, <a href="http://www.news.com.au/lifestyle/health/government-refuses-subsidy-for-hepatitis-c-medication-sovaldi/story-fneuzlbd-1227071011515">recently rejected</a> the costly drug Sovaldi, despite effectively treating hepatitis C virus infection. </p>
<p>If the Abbott government wishes to limit the <a href="http://www.health.gov.au/internet/budget/publishing.nsf/content/budget2014-hmedia01.htm">annual cost increase</a> of the PBS to 4%, it is critical that only medicines that are truly innovative and deserving of patent protection remain in the F1 formulary. If room in the PBS is to be made for medicines such as Solvadi, then it is essential for more of the older F1 medicines be moved into the F2 formulary more quickly. </p>
<p>The cost of the PBS has risen by 80% in the past ten years. It’s likely that without the AUSFTA, the cost of the PBS, and by inference the cost of medicines, would have risen by much less. </p>
<hr>
<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32574/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Luigi Palombi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Luigi Palombi, Adjunct Professor , Murdoch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/325752014-10-15T19:28:28Z2014-10-15T19:28:28ZCoalition’s policy bodes ill for health in free trade negotiations<figure><img src="https://images.theconversation.com/files/61122/original/3kpr5cxb-1412739450.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It's not yet clear how the Coalition will weigh health issues against economic priorities.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-160735946/stock-photo-an-elderly-woman-about-to-take-a-pill.html?src=cZwQUrXb_KoFaOeOlOqodA-4-112">jdwfoto/Shutterstock</a></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
<hr>
<p>Health is rarely a priority in trade negotiations. But recent developments in Australia suggest it is an even lower priority for the Coalition government than usual. </p>
<p>Over the past two decades, it has become increasingly clear that trade and investment agreements can have significant health impacts. The <a href="http://www.ag.gov.au/tobaccoplainpackaging">current case</a> by tobacco giant Philip Morris Asia against Australia’s tobacco plain packaging laws has cast these issues into sharp relief.</p>
<p>The <a href="http://lpaweb-static.s3.amazonaws.com/Coalition%202013%20Election%20Policy%20%E2%80%93%20Trade%20%E2%80%93%20final.pdf">Coalition’s Policy for Trade</a>, released just before the 2013 election, marks a significant shift in Australian trade policy, not only from previous Labor government but also from the legacy of the Howard years. </p>
<h2>The Howard years</h2>
<p>The negotiations for the Australia-US Free Trade Agreement (AUSFTA) placed these issues firmly on the Australian public’s consciousness for the first time, during 2003-04. From an early stage, it was clear that the US was targeting specific aspects of Australia’s health system.</p>
<p>The Howard government went into the AUSFTA negotiations without an explicit trade policy statement or clear position on health issues. Its position on health was arguably constructed in the negotiation of AUSFTA.</p>
<p>From a public health point of view, the results of AUSFTA were mixed. In many respects, the efforts of the United States to encroach on Australian health policy were successfully rebuffed. Provisions for pharmaceuticals, for instance, <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2257382">largely reflected</a> the status quo in Australia at the time. </p>
<p>And the Howard government refused to agree to the inclusion of an <a href="https://theconversation.com/when-trade-agreements-threaten-sovereignty-australia-beware-18419">investor-state dispute resolution</a> (ISDS) mechanism which would have enabled US corporations to sue Australian governments over their health and environmental policies.</p>
<p>But in accepting pharmaceutical provisions (however limited) in AUSFTA, the government essentially agreed to place health policy on the trade negotiating table. The provisions that were included “locked in” existing policy settings, such as patent term extensions, making them difficult to change. </p>
<p>Australia also made some new commitments, including restrictions on compulsory licensing and a patent linkage mechanism, that arguably placed new limits on our ability to make generic medicines available in a timely way.</p>
<h2>The Rudd/Gillard approach</h2>
<p>The incoming Labor government took a more cautious approach, instigating a <a href="http://www.pc.gov.au/projects/study/trade-agreements">Productivity Commission review</a> of Australia’s bilateral and regional trade agreements. </p>
<p>Following this review, the Gillard government issued a <a href="http://www.acci.asn.au/getattachment/b9d3cfae-fc0c-4c2a-a3df-3f58228daf6d/Gillard-Government-Trade-Policy-Statement.aspx">policy statement</a> that acknowledged “non-trade objectives” that might need to be taken into account and that made explicit commitments to ensure tobacco plain packaging and the Pharmaceutical Benefits Scheme (PBS) were not undermined.</p>
<p>The Gillard policy statement was timely, given Australia had entered into negotiations for the <a href="http://www.dfat.gov.au/fta/tpp/">Trans Pacific Partnership Agreement</a> (TPP) in 2010. Through a series of leaks of negotiating documents in 2011, it became clear that the US was seeking commitments in the TPP that would result in major inroads into health policy in areas such as medicine affordability and public health regulation.</p>
<p>There is some evidence that the Labor government’s position in the TPP negotiations was informed by these principles. This includes statements by then-trade minister Craig Emerson and <a href="https://www.righttoknow.org.au/request/18/response/348/attach/5/img%20415171934.pdf">briefing material</a> prepared by the Department of Foreign Affairs and Trade and released under Freedom of Information. </p>
<p>Leaked drafts of the TPP’s <a href="https://wikileaks.org/tpp/">intellectual property</a> and <a href="http://www.citizenstrade.org/ctc/wp-content/uploads/2012/06/tppinvestment.pdf">investment</a> chapters suggest that until the 2013 election, Australia was resisting many of the US proposals for medicines and seeking to exempt Australia from the ISDS clause.</p>
<h2>The Abbott government</h2>
<p>The <a href="http://lpaweb-static.s3.amazonaws.com/Coalition%202013%20Election%20Policy%20%E2%80%93%20Trade%20%E2%80%93%20final.pdf">Coalition’s Policy for Trade</a> signaled a very different approach. In contrast to the Gillard government statement, the Coalition’s policy makes no mention of health, medicines, the PBS or tobacco plain packaging – or of any other health, social or environmental issues that may be at stake in trade negotiations.</p>
<p>This policy is explicitly pro-industry, reflecting the government’s <a href="http://www.theaustralian.com.au/national-affairs/election-2013/abbott-claims-victory-and-says-australia-is-open-for-business/story-fn9qr68y-1226714414009">“open for business”</a> agenda. It states:</p>
<blockquote>
<p>The Coalition will take a pragmatic approach to trade negotiations and will consult widely with industry bodies and associations to ensure that stakeholder priorities are taken into account. This includes remaining open to utilising investor-state dispute settlement (ISDS) clauses as part of Australia’s negotiating position. </p>
</blockquote>
<p>Since then, Trade Minister Andrew Robb has made some <a href="http://www.andrewrobb.com.au/Goldstein/LocalIssues/tabid/123/articleType/ArticleView/articleId/1602/INTERVIEW-WITH-LINDA-MOTTRAM--702-ABC-SYDNEY.aspx">more promising statements</a> that suggest the government’s position is that it is not prepared to compromise the PBS or other areas of health policy in the TPP negotiations. </p>
<p>But Prime Minister Tony Abbott has also made it clear that completing trade negotiations involves some <a href="http://www.abc.net.au/lateline/content/2013/s3866749.htm">“horse trading”</a>.</p>
<p>The Coalition has also recently concluded an agreement with South Korea that includes an ISDS mechanism. The government argues that there are <a href="http://www.dfat.gov.au/fta/kafta/downloads/quick-guide-key-investment-and-isds-outcomes.pdf">safeguards</a> to protect health and environmental policy, but these supposed safeguards have been <a href="http://aftinet.org.au/cms/sites/default/files/AFTINET%20submission%20ISDS%200404.pdf">widely criticised</a>.</p>
<p>Due to the secrecy of the negotiations, it is not clear yet how the Coalition will weigh health issues against economic priorities.</p>
<p>Ultimately, regardless of the Government’s stated priorities, it is a concern that health policy goals are not set independently from trade policy concerns.</p>
<p>Significant areas of health policy – including access to affordable medicines and the regulation of health-damaging products such as tobacco, alcohol and processed foods – may be undermined when these issues are weighed on the same scales with market access.</p>
<hr>
<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32575/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah Gleeson receives funding from the Australian Research Council for research on the Trans Pacific Partnership Agreement, health and nutrition. She is a member of the Public Health Association of Australia (PHAA) and represents the PHAA on matters related to trade agreements. She is active in the global People's Health Movement.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Deborah Gleeson, Lecturer in Public Health, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/261832014-05-02T04:50:44Z2014-05-02T04:50:44ZPBS savings: two sides of the coin<figure><img src="https://images.theconversation.com/files/47615/original/mjz9vhn3-1398997888.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Pharmaceutical Benefits Scheme (PBS) is the tenth largest Commonwealth Government program, now costing over $9 billion a year.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/13519089@N03/4746654588">Taki Steve/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>When it comes to pharmaceuticals expenditure, the National Commission of Audit’s proposals rate highly on any policy change scale. </p>
<p>Its two main recommendations are designed to reduce the overall cost to the government by reducing the overall price paid for pharmaceuticals and to increase the out-of-pocket expenditure for patients. If implemented, the first could make the second unnecessary.</p>
<p>The Pharmaceutical Benefits Scheme (PBS) is the tenth largest Commonwealth Government program, now costing more than A$9 billion a year. It’s an important element of the health-care system as it provides people access to drugs with a maximum co-payment of A$6.60 for concession-card holders and A$36.90 for others. </p>
<p>The scheme also has a “safety net”, which reduces, and in many cases removes, out-of-pocket costs for people with significant health problems who have reached certain expenditure thresholds. This means people holding concession cards get drugs free after they spend $360 in a calendar year. </p>
<p>Previous policy reforms, such as the introduction of <a href="http://www.pbs.gov.au/info/industry/pricing/eapd">accelerated price disclosure</a>, which sped up the rate at which the government takes advantage of falls in the market price of generic drugs, has resulted in slowing the real rate of the PBS growth over forward estimates. But the Commission of Audit predicts the scheme will cost over $15 billion in ten years.</p>
<h2>A more efficient scheme</h2>
<p>Economists like ourselves have been <a href="http://www.theaustralian.com.au/news/health-science/no-public-benefit-in-price-drop/story-e6frg8y6-1226318920200#">arguing for many years</a> that Australia pays too much for older, off-patent medications and this explicitly <a href="http://www.ncoa.gov.au/report/phase-one/part-b/7-4-the-pharmaceutical-benefits-scheme.html">recognised in the report</a>: </p>
<blockquote>
<p>For example in the case of Atorvastatin, currently the most highly prescribed and highest cost to government medicine in Australia, New Zealand pays $2.01 in comparison to the price paid in Australia of $38.69.</p>
</blockquote>
<p>The Commission’s main recommendation is to cap the budget for pharmaceuticals and have this managed by a new independent authority, known as the “PBS Entity”. This body would manage price negotiations, as well as the listing and de-listing of pharmaceutical drugs on the PBS.</p>
<p>Currently, the <a href="https://www.health.gov.au/internet/main/publishing.nsf/Content/Pharmaceutical+Benefits+Advisory+Committee-1">Pharmaceutical Benefits Advisory Committee</a> (PBAC) provides advice on the cost-effectiveness of medicines to be listed on the PBS, but it’s ultimately the health minister and the government that decides to list a drug. And there’s no routine process for actively managing the PBS budget to ensure it remains an efficient scheme.</p>
<p>This can lead to significant problems, such as the one recently highlighted about <a href="https://www.mja.com.au/journal/2014/200/9/evaluating-costs-and-benefits-using-combination-therapies">combination therapies</a>, where it costs over $30 a month extra to combine aspirin with another drug, for instance.</p>
<p>A benefit of a capped budget is that it provides incentives to end this type of wasteful expenditure; the authority would have to make savings either through price reductions or delistings in order to list new drugs. An independent authority could also depoliticise the decision-making about which pharmaceuticals get listed, as this will be largely based on their cost-effectiveness.</p>
<p>The proposal would result in a significant transfer of decision-making power from the political sphere to technocrats running the authority. This model currently operates in New Zealand where [Pharmaceutical Management Agency](http://www.pharmac.health.nz/](http://www.pharmac.health.nz) (PHARMAC) preforms this role.</p>
<p>While there are some examples of Australian politicians ceding power, such as the creation of an independent Reserve Bank board, they are relatively rare. For the authority to be successful, it would be necessary to build up its capacity for evaluating drugs and for the Australian community to explicitly accept rationing of some pharmaceuticals. </p>
<p>If the proposal were adopted, it would represent the most significant change to the PBS since its introduction in the late 1940s.</p>
<h2>Increasing out-of-pocket costs</h2>
<p>The commission’s other main recommendation is to change the level of co-payments for most medicines under the Pharmaceutical Benefits Scheme. The main change is a $5 increase in co-payment, from $36.90 to $41.90, for people who don’t have a concession card. </p>
<p>There would be no change to the co-payment of $6 for people who do have concession cards, but they’d be required to contribute $2 to the cost of their medicines when they reach the safety net. </p>
<p>These changes are less radical but more problematic. The Commission says it’s seeking to increase price signals for medicines, but a uniform increase in co-payment fails to signal differences in the real price of drugs. </p>
<p>And for people with concession cards, the $36.90 co-payment is already quite high by world standards. A <a href="http://www.publish.csiro.au/?act=view_file&file_id=AH10906.pdf">2011 international comparison</a>, for instance, showed Australia ranked fourth-highest of the 15 countries examined for such out-of-pocket costs.</p>
<p>An even bigger problem with high co-payments is that it may discourage use of beneficial medications and has the potential to increase downstream costs, for instance, through increased hospitalisations.</p>
<p>A better approach would be a co-payment that’s proportional to the actual cost of the drug up to a maximum level, as this would encourage doctors and patients to consider cheaper drugs. This is particularly important for conditions such diabetes and cardiovascular disease where there are a large number of therapy options available – and there’s long-term drug use. </p>
<p>Indeed, there’s a case for actually <a href="http://www.smh.com.au/business/leave-medicare-alone-but-reform-pricing-of-prescribed-drugs-20140116-30xmg.html">reducing the current levels of co-payment</a> for some drugs, as a way of passing on some of the savings of buying cheaper drugs to consumers.</p>
<h2>Likelihood of change</h2>
<p>What are the odds of the Commission’s recommendations on pharmaceuticals being adopted by the government? Given that previous Australian governments seem to take on only one major policy change in the health sector a decade, the chances don’t appear to be very high.</p>
<p>Nonetheless, the Commission has made a significant contribution by putting the need to tackle waste and inefficiency in our pharmaceutical expenditure on the political agenda. </p>
<p>Significant gains could still be made by simply refining the current system – by improving the price disclosure policy and closing loopholes in pricing policy and decisions.</p>
<p>We can only hope this report has its intended effect of shaking up the pharmaceutical benefits scheme to increase efficiency and to ensure that cost-effective drugs are always available at low cost for Australians. Reform would produce efficiency dividends that reduce the need for higher out-of-pocket costs.</p><img src="https://counter.theconversation.com/content/26183/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dennis Petrie has received funding from NHMRC, ESRC (UK), Cancer Australia, NIHR(UK), NHS Health Scotland, CSO (Scotland), NHS Tayside.</span></em></p><p class="fine-print"><em><span>Philip Clarke does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>When it comes to pharmaceuticals expenditure, the National Commission of Audit’s proposals rate highly on any policy change scale. Its two main recommendations are designed to reduce the overall cost to…Philip Clarke, Professor of Public Health, The University of MelbourneDennis Petrie, Senior Research Fellow in Health Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/258702014-04-27T20:30:21Z2014-04-27T20:30:21ZWant PBS savings? Fix the pricing for combined drugs<figure><img src="https://images.theconversation.com/files/46974/original/cwjcbmqb-1398317280.jpg?ixlib=rb-1.1.0&rect=0%2C99%2C1024%2C720&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Fixing the pricing of combination therapies could save around A$120 million a year.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/cayusa/2588331777">Bart/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>Last week, Treasurer Joe Hockey <a href="http://www.liberal.org.au/latest-news/2014/04/23/case-change-address-hon-joe-hockey-mp-treasurer">made a “case for change”</a> in the way government spends money. His focus was largely on macro policy settings, such as pension entitlements, including access to schemes such as the <a href="http://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> (PBS), which he noted was the tenth-largest category of government spending. </p>
<p>Australians <a href="http://www.pbs.gov.au/info/about-the-pbs">can access</a> medicines listed on the PBS for A$36.90 (or A$6 for concession card-holders) and the government picks up the tab, at <a href="http://www.pbs.gov.au/statistics/2012-2013-files/expenditure-and-prescriptions-12-months-to-30-06-2013.pdf">just under A$9 billion</a> per year. </p>
<p>If we are to spend money wisely, the federal government will also need to focus on micro reforms, such as the price it pays for combination therapies – combinations of two or more pharmaceutical drugs in a single tablet. </p>
<p>A paper we <a href="https://www.mja.com.au/journal/2014/200/9/evaluating-costs-and-benefits-using-combination-therapies">published today in the Medical Journal of Australia</a> shows that fixing the pricing of combination therapies would save around A$120 million annually – a nice windfall for any government looking for budgetary savings.</p>
<h2>Benefits</h2>
<p>Doctors are increasingly prescribing combination therapies in Australia, particularly for people with long-term chronic conditions such as diabetes and cardiovascular disease. The Pharmaceutical Benefits Scheme (PBS) spends around A$600 million per year on combination drugs to treat these two diseases.</p>
<p>Combination therapies have advantages for patients, as they are generally cheaper than purchasing the drug separately and mean patients need to swallow fewer pills. </p>
<p>Some studies have shown use of patients given combination drugs are more likely to continue to take them long-term. A <a href="http://www.ncbi.nlm.nih.gov/pubmed/20026768">recent analysis</a> of combination blood pressure-lowering agents, for example, found people were 21% more likely to comply with their prescription than those taking individual therapies.</p>
<h2>Costs</h2>
<p>The problem with the use of combinations in Australia is the cost to government. Our <a href="https://www.mja.com.au/journal/2014/200/9/evaluating-costs-and-benefits-using-combination-therapies">Medical Journal of Australia analysis</a> shows that, while combinations are initially cheaper or an equivalent price to the individual therapies, they end up costing the taxpayer much more.</p>
<p>How does this happen? </p>
<p>Initially, pharmaceutical companies seek listing of combination therapies on the PBS after they are evaluated by the <a href="https://www.health.gov.au/internet/main/publishing.nsf/Content/Pharmaceutical+Benefits+Advisory+Committee-1">Pharmaceutical Benefits Advisory Committee</a> (PBAC). Most combination drugs are generally listed on the basis of cost-minimisation, which means the combination produces the same clinical benefit to the separate components, at the same or lower price.</p>
<p>Pricing problems arise down the track, as any subsequent reductions in the price of the combination drug are not necessarily linked to equivalent reductions in the price of the component drugs. </p>
<p>This is a growing problem, as many combination drugs involve using older, off-patent medication, the prices of which have been declining over the past few years through a system known as <a href="https://theconversation.com/should-only-pharmacists-profit-from-falling-drug-prices-17352">price disclosure</a>. This is a market-based pricing mechanism for off-patent medications, which bases future drug prices on the actual cost of the drugs when supplied to pharmacies. Competition between drug manufactures drives prices lower, as the manufacturer seeks to cut the supply price in order to win market share.</p>
<p>When there is only one brand of a combination therapy, the combination’s cost is linked to its component drug therapy items. So when prices of the components fall, these price reductions flow onto the price of the combination. </p>
<p>But when there are multiple brands of the same combination (even if the brands are supplied by the same manufacturer), the rules change: the cost is subject to price disclosure but there is no link between the price of components and the price of the combination drug. </p>
<h2>Clopidogrel + aspirin</h2>
<p>The current pricing arrangements have had a significant impact on the way many combinations are priced relative to their component therapies. A prime example is the <a href="http://www.betterhealth.vic.gov.au/bhcv2/bhcmed.nsf/pages/txccloas/$File/txccloas.pdf">combination Clopidogrel with aspirin</a>, which prevents blood clots forming in hardened blood vessels and reduces the risk of heart attack, stroke and premature death. </p>
<p>The PBAC recommended listing the combination on the PBS for the treatment of heart disease and stroke on a cost-minimisation basis and it became available in late 2009.</p>
<p>On initial PBS listing, the price of the combination was set at one cent cheaper than the cost of Clopidogrel. This was maintained until a month before the PBS subsidy for Clopidogrel was due to decline by 18%, due to the price disclosure mechanism. </p>
<p>At that time (September 2011), the same manufacturer introduced a new brand of the aspirin-Clopidogrel combination and this changed its status on the PBS formulary. From that time onward, the cost of combination and the individual components were not linked and the marginal cost of adding aspirin has been as high as A$1.36 per tablet.</p>
<h2>Towards reform</h2>
<p>We need a new pricing framework to ensure these medications are a cost-effective option for government and patients. The most obvious reform is to permanently link the dispensed price of fixed-dose combination therapies to their individual components, rather than just for an initial period after its listing on the PBS.</p>
<p>There could be a case for paying more for a combination therapy if they can be shown to improve adherence in a general practice setting and thereby reduce risk factors for these chronic diseases. A fraction of the money saved could be reinvested to evaluate how effective combination therapies are in practice.</p>
<p>In the current fiscal climate, the A$120 million a year savings that could come from a new pricing framework are too good to for the Abbott government to pass up. </p><img src="https://counter.theconversation.com/content/25870/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Last week, Treasurer Joe Hockey made a “case for change” in the way government spends money. His focus was largely on macro policy settings, such as pension entitlements, including access to schemes such…Philip Clarke, Professor of Public Health, The University of MelbourneAlex Avery, Research Assistant, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/240132014-03-19T04:02:13Z2014-03-19T04:02:13ZRegulator silent on safety of Indian-made generic drugs<figure><img src="https://images.theconversation.com/files/44251/original/2y7krsqn-1395195280.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Some drug manufacturing in India is global best practice. Other production is both shoddy and dangerous.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-156614996/stock-photo-close-up-of-man-holding-a-pill-and-glass-of-water-in-bright-living-room.html?src=JkqAib_7E55KxKtnflFTTg-2-41">Shutterstock</a></span></figcaption></figure><p>Generic drugs are copies of brand-name drugs whose patent has expired, allowing consumers (and governments) to buy a <a href="http://www.gmia.com.au">replica drug</a> at a fraction of the price. But a recent US investigation has found consumers may not be getting what they bargained for in some generic imports from India. </p>
<p>India’s <a href="http://usitc.gov/publications/332/working_papers/EC200705A.pdf">pharmaceutical industry</a> supplies 40% of generic prescription drugs <a href="http://www.nytimes.com/2014/02/15/world/asia/medicines-made-in-india-set-off-safety-worries.html?_r=0">consumed</a> in the US and a substantial number of drugs to Australia. Those drugs <a href="http://www.tga.gov.au/industry/artg.htm#.Uyj601yxrwI">include</a> painkillers, antibiotics, heart and psychiatric medications. Potential <a href="http://in.reuters.com/article/2014/03/18/usa-india-genericdrugs-idINDEEA2H03120140318">quality problems</a> are thus of real concern to Australian clinicians, consumers and policymakers.</p>
<p>It’s not so long ago that the <a href="http://www.tga.gov.au">Therapeutic Goods Administration</a> (TGA), Australia’s national drugs and medical devices regulator, was <a href="https://theconversation.com/consumers-lose-out-as-tga-reform-turns-into-a-hot-potato-13383">criticised</a> for its response to problems with breast implants and <a href="https://theconversation.com/tga-slow-to-react-on-dud-hip-replacements-3802">joint implants</a>. Worryingly, there’s little sign that the TGA is heeding warnings over problems with imported generic pharmaceuticals.</p>
<p>Last month the <a href="http://www.fda.gov">US Food and Drug Administration</a> (FDA) – the US counterpart of the TGA – <a href="http://www.nytimes.com/2014/02/15/world/asia/medicines-made-in-india-set-off-safety-worries.html?_r=0">announced it was</a> “blitzing Indian drug plants”, financing those inspections with the US$300 million in annual fees from generic drug makers. </p>
<p>This follows a high-profile case last year where Ranbaxy, one of India’s biggest drug manufacturers, <a href="http://in.reuters.com/article/2013/05/13/ranbaxy-settlement-felony-usa-idINDEE94C0DA20130513">pleaded guilty</a> and paid a US$500 million penalty for distribution of adulterated medicines between 2004 and 2007. </p>
<p>The FDA reports refer to plants with “flies too numerous to count”, <a href="http://blogs.wsj.com/indiarealtime/2014/01/27/fda-ranbaxy-workers-fudged-drug-test-results/">fudged</a> test results, defective storage for sensitive equipment and samples in pools of water from melting ice. One drug company executive pleaded with the FDA to allow his products into the US so that he could more easily pay for fixes. </p>
<p>Some drug manufacturing in India and other emerging economies is global best practice. Other production is both shoddy and dangerous. The <a href="http://www.who.int/medicines/services/counterfeit/overview/en/">WHO</a>, for example, estimates that one in five drugs in the Indian market are <a href="http://in.reuters.com/article/2012/11/14/pharmaceuticals-fake-who-india-idINDEE8AC0AK20121114">fakes</a>. Figures in <a href="http://www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.0020100">African</a> markets are even more frightening.</p>
<p>India’s top drug regulator is <a href="http://www.business-standard.com/article/economy-policy/if-i-follow-us-standards-i-will-have-to-shut-almost-all-drug-facilities-g-n-singh-114013000034_1.html">reported</a> as lamenting that:</p>
<blockquote>
<p>If I have to follow US standards in inspecting facilities supplying to the Indian market we will have to shut almost all of those. </p>
</blockquote>
<p>This comment also embodies a regulator’s failure to recognise the costs to Indian consumers from inadequate regulation, manufacture and distribution. </p>
<p>The FDA is now rolling out bans on imports from <a href="http://www.fda.gov/newsevents/newsroom/pressannouncements/ucm382736.htm">Ranbaxy</a> and other overseas manufacturers, including “adulterated” generic versions of leading antibiotics and painkillers.</p>
<p>Back in Australia, we have been patiently waiting for the TGA to acknowledge the FDA investigations and increase its scrutiny of drug imports. But there is still no sign of action. No media release. No reassurance. No recognition that there might be concerns that can be readily allayed. </p>
<p>Drug testing is an expensive process; it isn’t done instantly. But while we cannot expect the TGA to test every batch or to have an inspector in every domestic and overseas plant, the FDA bans suggest that there is need for care. Silence on the part of the TGA is therefore disturbing.</p>
<h2>Protecting patents</h2>
<p>The US FDA bans on some Indian-made generics have been criticised as a ploy to reinforce the position of US drug businesses in global trade wars. Indian politicians <a href="http://www.ft.com/intl/cms/s/0/bd82cc74-a544-11e3-8988-00144feab7de.html">have argued</a> that the US is protecting its domestic industry from cheaper imports, some of which come from plants in Eastern Europe and Nigeria. </p>
<p>There is disagreement about policy drivers. In this case, US government action reflects genuine public health concerns. It also reflects the global trade wars, with the US attempting to reinforce its pharmaceutical companies by extending patents on popular drugs and reducing the availability of generics. </p>
<p>The FDA bans coincide with refusal by the Australian government to release the report of the independent <a href="http://www.ipaustralia.gov.au/about-us/ip-legislation-changes/review-pharmaceutical-patents/">Pharmaceutical Patents Review</a>, which it received last year. The report apparently recommended changes to Australian law that would shift the balance towards consumers and taxpayers and away from drug companies, which are typically overseas-owned. </p>
<p>Pharma patents matter for innovation – they allow companies to recoup the high costs involved in developing new drugs. They also matter to consumers because as an Australian you pay for protection twice: once when you buy your pharmaceuticals and again when you pay the taxes that go to subsidise prescription drugs under the <a href="http://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> (PBS).</p>
<p>According to the <a href="http://lifescientist.com.au/content/biotechnology/article/no-progress-for-pharma-patents-review-79017344">industry minister</a>, the report is not going to be released. One reason might be triumphalism: he can disavow an ALP initiative that disconcerted Big Pharma and raised inconvenient questions about the <a href="https://theconversation.com/what-you-need-to-know-about-the-trans-pacific-partnership-21168">secret</a> Trans Pacific Partnership Agreement, which appears to be very strongly biased towards US commercial interests.</p>
<p>Another reason is that release would foster informed discussion about the shape of the Australian drugs regime. We’re <a href="http://grattan.edu.au/static/files/assets/5a6efeca/Australias_Bad_Drug_Deal_FINAL.pdf">spending</a> a lot of money but are we getting quality? </p>
<p>Rather than encouraging rent-seeking by drug companies, should we be putting more money into the TGA? That agency is staffed by some bright, conscientious people. It has also been <a href="https://theconversation.com/victims-of-faulty-breast-implants-were-let-down-by-the-tga-13074">damned</a> in a succession of independent reports for inept management and lack of responsiveness. The cost to the Australian economy of its regulatory incapacity is significantly greater than the TGA’s budget, by at least ten times. </p>
<p>We therefore need to see that it’s actively engaging with questions of pharmaceutical quality control and that there is informed discussion, not a rush to the courts when things go wrong.</p><img src="https://counter.theconversation.com/content/24013/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Generic drugs are copies of brand-name drugs whose patent has expired, allowing consumers (and governments) to buy a replica drug at a fraction of the price. But a recent US investigation has found consumers…Bruce Baer Arnold, Assistant Professor, School of Law, University of CanberraDr Ruth Townsend, Lawyer and PhD Candidate, Australian National UniversityWendy Bonython, Assistant Professor, School of Law- Torts, Health and Biotechnology, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/173522013-09-23T20:42:52Z2013-09-23T20:42:52ZShould only pharmacists profit from falling drug prices?<figure><img src="https://images.theconversation.com/files/31782/original/8jn8cwnk-1379917200.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Three consumer organisations have recently joined forces to campaign for cheaper medicines.</span> <span class="attribution"><span class="source">Waleed Alzuhair</span></span></figcaption></figure><p>The Consumers Health Forum has just <a href="http://ourhealth.org.au/drugged-reality-losing-2000-a-minute-and-counting">launched a website</a> containing information about the cost of generic drugs in Australia compared to other countries. Each day, Australians pay A$3 million more for these drugs than they would if they bought them in New Zealand or the United Kingdom.</p>
<p>The information on the website shows the cumulative cost of current medicines pricing policy. Unless the policy is changed, that A$3 million will add up to A$1 billion in lost savings by this time next year.</p>
<h2>How it works now</h2>
<p>In Australia, the prices for most drugs are set by the government through the Pharmaceutical Benefits Scheme (PBS). The government pays some of the highest prices in the world for generic drugs (medicines on which the patent has expired). </p>
<p>Take the commonly prescribed cholesterol-lowering drug atorvastatin, for instance. For a typical dose (40mg), the wholesale cost of a script in Australia is A$38. </p>
<p>The comparative cost in England and New Zealand for the same drug is less than A$3. Based on last year’s usage alone, atorvastatin cost the Australian government A$548 million; if it had paid English prices, the drug would have cost A$119 million and with New Zealand prices, it would have cost A$100 million.</p>
<p>Atorvastatin’s patent expired around 18 months ago and wholesale prices have been falling since as many new suppliers enter the market. </p>
<p>But the price paid for atorvastatin by the Australian government has remained high because the pricing of all generic drugs on the PBS is governed by an agreement that’s due to end in July 2014. </p>
<p>Under this agreement, a mechanism known as price disclosure sets future prices based on past wholesale cost of medicines to pharmacists. The problem with price disclosure is the rate of adjusting generic drug prices is too slow. </p>
<p>It currently involves collecting wholesale price information from the pharmaceutical industry for a year and it then takes another six months to implement the price changes. </p>
<p>So any discounts on the wholesale price of common generic drugs such as atorvastatin that flow to pharmacies do not translate into price reductions for the government or consumers for a period of up to 18 months.</p>
<p>Under current policies, pharmacies get to keep all of these discounts and they quickly add up to very large amounts. For a drug such as atorvastatin, more than A$400 million will flow to 5,200 pharmacies from wholesale discounts from the time it came off patent to December 2013.</p>
<h2>Moving towards a better model</h2>
<p>England also uses a system of price disclosure, but the cycle over which cost reductions are made is only three months – six times faster than what happens in Australia. </p>
<p>The figure below shows the current prices for the top eight generics in terms of total government expenditure in Australia and what we would pay if costs were equivalent to those in England.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=639&fit=crop&dpr=1 600w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=639&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=639&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=803&fit=crop&dpr=1 754w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=803&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/30979/original/rpt4sdmr-1378703117.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=803&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>The speed of adjustment clearly makes a lot of difference.</p>
<p>For the 20 most expensive generic drugs, Australia pays around A$1.8 billion each year, whereas if the government could pay English prices, that would be reduced to around A$735 million, a savings of A$3 million a day.</p>
<p>How could we spend less? A first step would be to ensure that policy reform adopted by the previous government in its last <a href="http://www.budget.gov.au/2013-14/content/economic_statement/download/2013_EconomicStatement.pdf">economic statement</a> is implemented. </p>
<p>Designed to take the first step towards speeding up the time it takes to adjust prices from 18 months to one year, the measure would return A$830 million from pharmacy owners to taxpayers or consumers. </p>
<p>In response to the changes, the Pharmacy Guild <a href="http://www.professionalpharmacy.com.au/older-australians-will-suffer-from-pbs-changes-guild/">ran a political campaign</a> arguing that up to 5,000 pharmacy jobs were under threat. And it indicated it wanted compensation for the changes. </p>
<p>It’s not clear if the new government will implement the reform and do more to reduce the prices of our most commonly used generic drugs.</p>
<h2>Deja vu</h2>
<p>Still, we have been here before. Tony Abbott introduced price disclosure in the final year of the former Howard government when he was health minister. He <a href="http://www.health.gov.au/internet/ministers/publishing.nsf/Content/9FCA731CD637B7ABCA257228002BAA26/$File/abb161106.pdf">said at the time</a> that it was a way to “harvest most of [the] discounts” that were accruing to pharmacy owners for taxpayers and consumers.</p>
<p>Abbott’s reforms included several hundred million in compensation for pharmacy owners for the loss of their discounts. But the payment was meant to be a one-off, <a href="http://www.health.gov.au/internet/ministers/publishing.nsf/Content/9FCA731CD637B7ABCA257228002BAA26/$File/abb161106.pdf">as he indicated in 2006</a>:</p>
<blockquote>
<p>The reason why the savings to government become much more significant in five years’ time and beyond is because there are about 100 major drugs that are coming off patent in that time and we are compensating pharmacists, we are explicitly compensating pharmacists for the loss of discounts over the next four years; but we are not explicitly compensating them for the much greater impact of the loss of discounts in the subsequent five and more years.</p>
</blockquote>
<p>The problem with the Abbott policy was that it was voluntary to supply real wholesale price data and industry chose not to do it for most drugs. </p>
<p>In the first round price disclosure reductions in 2009, the price of only four generic drugs fell. Commenting at the time, <a href="http://beta.guild.org.au/uploadedfiles/National/Public/Fact_Sheets/PBS_price_disclosure.pdf">the Pharmacy Guild claimed</a> that this debunked “myths about the extent to which community pharmacies are given discounts on generic drugs”.</p>
<p>Changes introduced by the former Labor government in 2010 were designed to fix these limitations, but their “accelerated” price disclosure was still <a href="http://www.theaustralian.com.au/news/health-science/drug-deal-costing-billions-medicines-australia/story-e6frg8y6-1225866384337">an extremely slow process</a> to reduce generic prices.</p>
<p>The most recent changes were simply a way of passing on these discounts more quickly to consumers and taxpayers. Isn’t it time all Australians shared in the discounts and got a slice of A$1 billion extra each year we are paying for common generic drugs?</p><img src="https://counter.theconversation.com/content/17352/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philip Clarke provided the consumer organisations involved in lobbying for lower prices for medicines with information for their website. He was not paid for the information.</span></em></p>The Consumers Health Forum has just launched a website containing information about the cost of generic drugs in Australia compared to other countries. Each day, Australians pay A$3 million more for these…Philip Clarke, Professor of Public Health, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.