5 March 2017
The reliable supply of affordable and high quality PBS medicines, something all Australians take for granted every day, will be at risk if price cuts proposed within a Grattan Institute Report are adopted. This Report is solely based on a selective analysis of just 19 PBS medicines. The PBS currently funds over 650 different medicines and 2,500 brands. In October last year, almost 200 PBS medicines – around one-third of all medicines funded through the PBS – received price cuts under a government policy known as price disclosure. “The Grattan report claims $500 million in new savings could be achieved, but fails to acknowledge almost $21 billion in savings from price cuts already imposed by government on industry to the end of 2020 – through price disclosure. This includes $5.8 billion in 2020 alone,” says CEO of the Generic and Biosimilar Medicines Association (GBMA), Belinda Wood.
“This is the largest single savings contribution ever secured by government from any industry,” says Ms Wood. “To put this in context, the PBS costs around $10 billion a year – so the savings currently being generated would cover the cost of all PBS medicines for the next two years.”
Australia currently pays some of the lowest prices in the world for medicines millions of patients and their families rely on to keep them well.
“This report looks at just a handful of medicines without considering the serious and worrying consequences of maintaining patient access to medicines,” adds Ms Wood.
The report’s analysis includes 12 medicines that cost the Australian Government less than a cup of coffee – atorvastatin for cholesterol is just $1.65 (ex-manufacturer price) and metformin for diabetes is $2.50 (ex-manufacturer price).
“The only possible outcome from the proposal in this ill-considered report is that Australia hits a ‘tipping point’ where low cost undermines supply. Where there would be a very real risk prices for generic medicines become so low suppliers simply have no choice but to stop supplying them,” explains Ms Wood.
“This issue is real and already under discussion,” she adds. The challenge of supply with already low prices has been recognised by government. An agreement between the GBMA and the Australian government signed in 2015 states they will work collaboratively to identify and resolve quickly any unintended consequences of the substantial price reductions, particularly where they may impact on the reliable supply of vital, affordable medicines for Australian patients.
“Australians do not pay too much for generic medicines,” says Ms Wood. “In fact, in December last year government stepped in to increase the price of around 60 medicines – including antibiotics and cancer medicines – where ongoing supply had been identified as a real risk. “Imagine the impact on a family unable to get amoxycillin liquid to treat their child’s ear infection because, at just $1.28 per pack, the manufacturer couldn’t continue to supply it. Or, the impact on an elderly man who can no longer control his diabetes because, at 90 cents, the manufacturer of the diabetes therapy glimepiride cannot supply it,” she adds.
Australians do not pay too much for generic medicines
The following list outlines publicly available, approved ex-manufacturer prices for the 19 medicines listed in the report.
1. Atorvastatin $1.65 (cholesterol)
2. Telmisartan $2.50 (blood pressure)
3. Irbesartan $1.91 (blood pressure)
4. Perindopril $1.70 (blood pressure)
5. Candesartan $0.61 (blood pressure)
6. Metformin $2.50 (diabetes)
7. Ramipril $1.07 (blood pressure)
8. Bisoprolol $8.33 (blood pressure)
9. Simvastatin $1.17 (cholesterol)
10. Olanzapine $6.71(schizophrenia)
11. Anastrozole $25.21 (breast cancer)
12. Quetiapine $8.19 (bipolar disorder)
13. Venlafaxine $2.22 (depression)
14. Letrozole $23.80 (breast cancer)
15. Enalapril $1.95 (blood pressure)
16. Mycophenolic acid $25.63 (prevents rejection of organ transplants)
17. Glimepiride $ 0.90 (diabetes)
18. Fluconazole $1.49 (intravenous to treat fungal infections)
19. Captopril $3.59 (blood pressure)