Healthy Skepticism Library item: 10169

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Publication type: news

Chalmers I.
Pharmacy industry is not a bogeyman
The Canberra Times 2007 May 22
http://canberra.yourguide.com.au/detail.asp?story_id=587140

Full text:

THE FEDERAL Government is embarking on necessary reforms to the Pharmaceutical Benefits Scheme to ensure Australians continue to have access to the latest medicines. The Prime Minister, John Howard, has said that “the Government will change the PBS to provide more value for money while ensuring new and expensive medicines remain available to patients”. This has sparked a fresh wave of scare-mongering by long-time critics of the pharmaceutical industry.

The scheme is a world-class system that balances granting access for Australians to breakthrough new medicines with rigorous cost effectiveness assessments by the Pharmaceutical Benefits Advisory Committee. This ensures new medicines are supplied at a cost-effective price to government.

Claims that the proposed reforms will result in the Government paying more for new medicines and fattening the profit margins of “greedy” multinational pharmaceuticals not only defy logic. They are simply wrong.

Under proposed reforms, medicines listed in the Formulary 1 category will continue to be reference priced against other similar medicines. They will also be reviewed by the advisory committee before being listed on the scheme. This safeguards choice for the Government and consumers and ensures they won’t pay more for new medicines than they would under the current system.

The recent cervical cancer vaccine, breast cancer medicines and rotavirus vaccine are examples of the vital contribution being made by new medicines. New medicines have delivered over half of the 25 per cent increase in five-year survival rates for cancer. The industry, both here and overseas, is now working on new cures for currently incurable diseases and tumour-specific cancer medicines that have fewer toxic side-effects.

The Government’s proposed reforms ensure that Australians will have access to breakthrough medicines in the future and that the Government won’t be paying high prices for off-patent medicines. If the reforms are not introduced, taxpayers will continue to be burdened paying for overpriced, old generic medicines. As Health Minister Tony Abbott has noted, “the prices paid for generic medicines in Australia are high in comparison with other similar countries”.

While commentators have suggested that the generics industry is “under siege”, in the past few years it has won major concessions on intellectual property law to allow generic exports and is about to be the beneficiary of a $20 million taxpayer-funded generics awareness campaign. Meanwhile, it has been the innovative companies that have borne the brunt of the impact of the Government’s 12.5 per cent Pharmaceutical Benefits Scheme savings measure.

There is also a misconception that generic manufacturers are all home-spun. It should not be forgotten that most of the generics industry is itself multinational or foreign-owned. The innovative pharmaceutical companies operating, manufacturing, investing, exporting and researching in Australia are every bit as Australian as the generics sector and make a significant contribution to our economy and our health.

Suggestions also that the reform proposals are a conciliatory reaction to the Australia-US Free Trade Agreement are wrong. There is no secret agenda, no hidden plan and no bogeymen under the bed. The innovative pharmaceutical industry makes the largest single contribution to Australia’s complex manufactured exports.

Trade Department figures show that in 2006 the Australian pharmaceutical industry generated $3.1billion in export revenue, with growth of close to 6per cent, overtaking passenger vehicle exports ($2.9 billion). If Australia is to compete with emerging economies such as China and India, growth in complex manufactures such as pharmaceuticals is essential.

The industry is also the largest private provider of high skill, high wage “smart jobs”, employing more than 15,000 people, and is one of Australia’s largest employers of science graduates. Each year the industry invests $520million in Australian scientific research and development. Recent federal and state initiatives such as funding to create new facilities and changes to the beneficial ownership test for the premium 175 per cent research and development tax concession will further boost investment in Australian medical research.

Conspiracy theories regarding the ongoing design and operation of the PBS abound. Past claims that the sky was falling on the scheme have proven unfounded. Renewed squawking from “Chicken Littles” will prove the same.

Ian Chalmers is chief executive of the pharmaceutical industry lobby Medicines Australia.