Healthy Skepticism Library item: 775

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

Cresswell A.
Drug companies threaten price hikes
The Australian 2005 Jan 25

Full text:

Patients may be slugged up to $32 more for common medicines if drug companies fail to persuade the Federal Government to water-down its plan to slice 12.5 per cent off the price it pays for some drugs available on the Pharmaceutical Benefits Scheme.

A confidential briefing document drawn up by the drug industry at the request of patient groups, a copy of which has been obtained by The Australian, also warns that drug companies may withdraw some existing medicines used by small numbers of patients.

“Under the Government’s proposed new pricing laws, some new medicines will simply not be available in Australia at all, or will only be made available years after their registration in other parts of the world,” the document says.

Federal Health Minister Tony Abbott last night insisted the reforms were “about getting decent value for the Australian taxpayer, without any reduction in the availability of medicines”.

According to the industry, drugs that could be affected by surcharges – which would be paid by the patient at the pharmacy in addition to the existing PBS co-payments – include some of the most frequently prescribed medicines.

The class of drugs known as “statins” – used to lower blood cholesterol – could be hit with a surcharge of between $8 and $32 every time a patients fills out a prescription, according to the document.

The Federal Government announced the 12.5 per cent savings policy at the height of the election campaign. It was then projected to save $830 million over four years, which was earmarked for extra payments for pensioners and self-funded retirees.

Under the policy, the price the Government pays for all the drugs in a single therapeutic class – such as statins – will fall by 12.5 per cent whenever a generic version of any of the drugs in that class enters the market.

The reductions are cumulative, so that if four brand-name drugs in one class come off patent – as will happen with blood-pressure drugs in 2006-07 – all the drugs in the class will be hit with a total price cut of more than 40 per cent.

The cuts will not flow through to patients who will continue to pay the existing PBS co-payments. These were increased on January 1 to $28.60 for general consumers, and to $4.60 for concession-card holders.

Patient groups such as Diabetes Australia and Arthritis NSW have expressed concern at the policy.

John Montgomery, chairman of the Generic Medicines Industry Association, said his industry would be “badly hurt” by the plans.

A spokesman for Medicines Australia said the brand-name industry had “concern about the future of certain medications remaining available for patients in Australia”.