Healthy Skepticism Library item: 932
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
Metherell M.
Exposed: drugs price scandal
The Sydney Morning Herald 2005 Mar 30
Full text:
Generic medicines are costing Australian taxpayers up to 19 times what New Zealand taxpayers pay for the same drugs – in some cases reducing the potential for patients here to make direct savings on their prescription costs.
The Federal Government has stepped up its pressure on drug costs, releasing a three-country price comparison for nine generic drugs, which reveals that Australia pays significantly more that New Zealand and Britain in most cases and could be missing out on $100 million in savings for the Pharmaceutical Benefits Scheme.
A generic drug for depression, fluoxetine, costs the PBS $33.03 per prescription, but only $1.45 in New Zealand and $4.97 in Britain.
Famotidine, a gastric ulcers medicine, costs the PBS $21.27 and the New Zealand Government $1.10, but Britain pays $60.92.
The low-end prices paid by New Zealand, if translated across the Tasman, would mean Australian consumers could, in some cases, pay far less than the standard maximum prescription fee charged to general patients.
Australian patients pay up to $28.60 ($4.80 for concession patients) for prescriptions, but that charge is reduced when the original cost of the drug enables pharmacists to charge a lower dispensed price to customers.
The price comparison was released yesterday when the Federal Health Minister, Tony Abbott, announced the Government would impose a 12.5 per cent mandatory price cut on new generic drugs covered by the PBS, without introducing legislation, as foreshadowed by the Herald three weeks ago.
Mr Abbott said the price cut would save about $800 million over four years. Generic drugs are introduced when patents for original branded drugs expire.
Under Australia’s pharmaceutical procurement policies, the Government lowers its price for all products in the same category of drugs to that applying to what it pays for a new generic line.
Mr Abbott announced the 12.5 per cent discount plan during the last federal election as a savings measure to finance handouts to the elderly.
A Government source said the higher prices of generics could be partly explained by Australia’s highly concentrated generics market, with more than 90 per cent of the generics supplied by just two firms, Alphapharm and Arrow.
Asked if the Government had investigated whether generic companies had arrangements to keep prices high, a Government source said generic manufacturers did “enter into co-marketing or licensing arrangements with innovator [original brand] companies to bring additional brands to the market”.
The source said the differing prices were partly explained by different arrangements for procurement of generic drugs.
In New Zealand extensive use is made of tendering. In some cases only one product within a particular category of drugs is covered by government subsidy.
The Generic Medicine Industry Association yesterday said that while the Government’s examples might show higher prices, there were many other generic products where prices would be lower than in comparable countries.
Mr Abbott said yesterday that under the new arrangements from Friday “the Government simply will not accept on to the PBS any new generic drug where we don’t get at least a 12.5 per cent price cut”.
It was crucial the measure was introduced soon because the first of the cholesterol-lowering statin drugs would come off patent by the middle of the year. This category of drugs, widely prescribed to reduce the risk of heart attack, costs the taxpayer almost $1 billion a year alone, he said.
