Healthy Skepticism Library item: 1509

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Publication type: Journal Article

Stafford A, Allen L.
Drug companies, doctors face curbs
The Financial Review 2005 May 10;

Full text:

The federal government is expected to introduce tough new measures to punish pharmaceutical manufacturers who aggressively advertise their drugs, in a bid to reduce the ballooning cost of the $6 billion a year pharmaceutical benefits scheme.

Doctors who over-prescribe medicines will also face tough new sanctions, sources have told The Australian Financial Review.

It is not clear whether the savings measures will be explicitly laid out in today’s budget or will feed into assumptions about the growth of the PBS over the next four years.

The government will also roll out new GP software programmed to automatically choose the cheapest possible medicine, Melbourne’s Herald Sun reported yesterday. [below]

Also expected in the budget are measures to improve indigenous health, extra funding for after-hours GP services, cancer treatments and preventative health programs.

Treasurer Peter Costello has repeatedly identified the PBS as a core challenge for government spending.

Last month, he flagged the clamp-down on advertising for medicines, tougher cost-effectiveness tests before a drug is approved for subsidy on the PBS and wider use of generic drugs as ways of stymieing growth in the PBS.

Per capita government spending on pharmaceuticals rose by 7.3 per cent a year between 1984 and 2003 as new expensive drugs have reached the market, according to the Productivity Commission, and this growth is expected to escalate as the population ages.

Within a decade, the cost as a share of gross domestic product is expected to double to 1.29 per cent, according to the Productivity Commission.

The health sector will be looking to see whether the government has revised its estimates for the PBS from last year’s budget, which costed the scheme at $25 billion out to 2008.

Last year’s estimate was itself based on an increase of about 18 per cent on the 2003 estimates.

The government has already announced a 12.5 per cent cut in the amount it will pay for a PBS drug once a generic version of it comes to market a measure designed to save about $800 million over four years.

KEY POINTS

• Doctors who over-prescribe medicines will face new sanctions.

• New GP software will automatically select the cheapest medicine.

• The budget is also expected to include measures to improve indigenous health.