Healthy Skepticism Library item: 802
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
Dodson L.
Cabinet to reassess price cut for generic drugs
The Sydney Morning Herald 2005 Feb 7
Full text:
Federal cabinet will today reconsider a controversial election funding promise requiring generic drug companies to cut prices by 12.5 per cent, after intense lobbying by the pharmaceutical industry.
The proposal was aimed at shaving $800 million from the Pharmaceutical Benefits Scheme, which subsidises the cost of prescription drugs. The savings would be used to fund the Coalition’s $1 billion election policy for older Australians.
The pharmaceutical industry met senior Government officials from the Health, Finance and Prime Minister and Cabinet departments last month, arguing that the required cut would generate savings of about $2 billion and would force some companies to reduce the number of cheaper medicines produced, eventually leading in some cases to higher prices for consumers.
The Health Minister, Tony Abbott, will report to cabinet – meeting for the first time this year – on his talks with the industry and options for finding alternative savings from the Pharmaceutical Benefits Scheme.
A spokeswoman for Mr Abbott said he remained committed to implementing the 12.5 per cent cut on generic drug makers.
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Other ministers are taking a different view. Senior Government sources said cabinet was prepared to discuss the issue and look at alternatives, but all ministers were determined to ensure savings of $800 million were made in order to pay for the election policy for senior Australians.
The Prime Minister, John Howard, promised during the election campaign that none of the measures for older Australians would put an extra strain on the budget.
The chief executive of the pharmaceutical industry body Medicines Australia, Kieran Schneeman, said the talks with Government officials had been constructive. The industry understood the need to find savings to fund the Coalition’s election policy for older Australians, he said, but an enforced price cut for generic drug makers would save far more than $800 million.
The industry “was willing to discuss how best to make the savings”, he said.
“We are concerned that the Government may be collecting more than it estimated.” If more was cut from the Pharmaceutical Benefits Scheme, there could be consequences for the industry, Mr Schneeman said.
The policy for older Australians included a $50 utilities allowance for pensioners and a $200 payment for self-funded retirees paid twice a year, as well as extra funds for carers.
Cabinet will also discuss another big budget issue – the promise of $1 billion in aid to victims of the devastating Asian tsunami made by Mr Howard on Australia’s behalf. Mr Howard will report on his visit to the tsunami-affected province of Aceh and the talks he held with the US President, George Bush, on Iraq, Iran and the impact of the tsunami.
A special cabinet meeting later this month will discuss the latest information on the economy and the Government’s priorities for the year, including prospects for industrial relations deregulation and cuts to the welfare system.
