Healthy Skepticism Library item: 15760

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Publication type: news

Dunlevy S.
Drug system failure increases costs
The Advertising Age 2009 Jun 11
http://www.news.com.au/adelaidenow/story/0,22606,25618225-5006301,00.html

Full text:

THE nation’s $10 billion drug subsidy scheme, designed to cut the cost of drugs, has become so dysfunctional it is making medicines up to 55 per cent more expensive.

About 200 prescription medicines can be bought for up to $13 a script cheaper by asking a doctor for a private, or unsubsidised, prescription, rather than buying the drug under the Government’s medicine subsidy scheme – a key plank of the Medicare system.

Under the pharmaceutical benefits scheme (PBS), consumers pay $32.90 for a prescription of the 40mg cholesterol-beating simvastatin. But if they got a private prescription they could buy it for just $24.99.

The root of the problem is an out of date government price-setting system that has not kept up with huge price drops for generic drugs.

The winners are pharmacists, who pocket big profits. The losers are taxpayers and consumers. The Government is paying pharmacists up to 80 per cent more for generic drugs under the PBS than the pharmacists are paying for the medicines themselves.

Simvastatin is one of the top 10 selling drugs in the country (5.6 million scripts a year).

The Government is paying pharmacists $58.99 for each 80mg script of simvastatin but chemists are paying as little as $18 a pack for it. Chemists taking advantage of these discounts make a $40 profit every time they dispense a generic script for simvastatin.

In addition, the Government pays a fee of $1.50 a script for dispensing a generic drug.

Taxpayers could save $72 million a year if the Government switched to paying the private prescription price for simvastatin.

The Government is paying chemists $46.87 a script for the osteoporosis drug alendronate sodium and it costs consumers $32.90 on the drug subsidy scheme.

A general consumer who bought the drug using a private prescription would pay as little as $19.99 at a discount chemist.

Pensioners pay just $5.30 a script for medicines under the PBS but even they can get some medicines cheaper as private prescriptions.

A one-month supply of the blood pressure medicine atenolol costs pensioners $5.30 on the PBS. But if pensioners got a private script and bought six months’ supply at once it would cost them $24.99, the equivalent of $4.16 a month.

The Government last year began a reform process designed to save $3 billion off the cost of the PBS, but the process is too slow to recoup savings for taxpayers from the massive discounting going on.

A spokeswoman for Health Minister Nicola Roxon said the “Government is concerned by these reports and will look at the . . . PBS reform process and next pharmacy agreement to ensure the PBS provides value for money”.

A spokesman for the Pharmacy Guild of Australia warned those using multiple scripts might make false savings if they bought the cheaper private scripts. He said money spent on these would not count towards their safety net, which gives sick people free drugs once they have spent a certain amount.