Healthy Skepticism Library item: 15420
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: news
Lewis S, Dunlevy S.
Prescriptions to cost less thanks to Federal Budget plan
The Advertiser 2009 Apr 7
http://www.news.com.au/adelaidenow/story/0,22606,25306710-5006301,00.html
Full text:
THOUSANDS of consumers will pay less for prescription drugs because of a Federal Budget plan to slash the price paid to manufacturers for 100 commonly used medicines.
The medicines plan – considered by senior ministers in Canberra yesterday – is designed to save hundreds of millions of dollars a year. It will cut the price for some contraceptive pills and cholesterol, blood pressure and arthritismedicines.
Consumers will only benefit from the cuts when the medicines included in the plan cost less than $32.90. Pensioners will continue to pay $5.30.
While consumers will be happy, the Budget cuts will place the Federal Government on a collision course with powerful drug firms.
The price cuts are designed to claw back for taxpayers the big price discounts pharmacists receive on the price of drugs when they buy the products in bulk.
The Government reached agreements with drug companies about how much it will pay for a drug on the nation’s drug subsidy scheme but often pharmacists can obtain the drug for 10-20 per cent less.
Currently the pharmacists keep most of those savings.
The Government will claim these savings back for the taxpayer by cutting the price it pays for the drugs in the first place.
The Government is confronting a further decline in tax revenues though, forcing the razor gang to search even harder for Budgetsavings.
The price of beer, wine and pre-mixed spirits is set to rise as the Budget razor gang searches for billions of dollars in savings.
The plan to cut the price of medicines also carries a risk for Prime Minister Kevin Rudd, who continues to attract record approval ratings.
Industry sources believe the price cuts will lead to some low-profit medicines being taken off pharmacy shelves.
Drug companies could also counter the mandatory price cuts by introducing a price “premium” on the costs faced by consumers.
Two major drug companies did this last week when they raised price premiums to consumers on 12 medicines by $2 a script in response to a previous round of government price cuts.
Consumers can avoid the premiums by choosing a cheaper brand of the same drug.
With the Budget review now in full swing, senior ministers are considering several options to raise so-called “sin taxes” as part of a $3 billion Budget swoop.
Well–placed sources said one option would be to increase a range of alcohol taxes despite the threat of a backlash from angry drinkers. The Government will argue that it is removing a range of anomalies in the way alcohol products are taxed. For example, one option would see the concessional excise removed on draught beer sold in pubs.
The big spending Health Department is expected to take a decent hit in the Budget as Treasurer Wayne Swan tries to protect the Government’s ailing financial position.
The Budget is expected to record a deficit of at least $50 billion for next year – a massive turnaround from a year ago when Mr Swan announced a $22 billion surplus.
A worsening Budget outlook – caused by the global economic meltdown – has forced senior ministers to look far and wide for big Budget savings.
The Advertiser last month revealed the rich will pay more for medical costs and lose some superannuation tax breaks as the Government delivers a “Robin Hood” Budget. Pensioners will receive a weekly boost of around $30 – but this will cost the Government around $5 billion.
A range of savings measures – which were deferred last year by a cautious Prime Minister – are back on the table.
