Drug-mak­ers fight to keep prices

The Weekend Australian - Travel - - Health -

lower than any­one else’s was a preda­tory pric­ing mea­sure’’.

Al­though the in­dus­try has been ‘‘ geared up’’ to cope with the ex­pected 25 per cent cut next year, the ad­di­tional 20 per cent cut — a to­tal cut of 45 per cent — was ‘‘ be­yond what most com­pa­nies can ab­sorb’’ with­out sig­nif­i­cant changes to their cost base.

‘‘ I ex­pect there’s go­ing to be some tough de­ci­sions taken in the short term as a re­sult of this case,’’ Chalmers said. ‘‘ The bot­tom line is . . . I’m ex­pect­ing that the to­tal net loss of rev­enue to ex­ist­ing Aus­tralian com­pa­nies will be about $130 mil­lion.’’

He called on the Gov­ern­ment to al­low the Ran­baxy-prompted 20 per cent cut to be counted to­wards next year’s 25 per cent — mean­ing only a 5 per cent next year.

Week­endHealth ap­proached Ran­baxy, but the com­pany was un­able to com­ment.

The In­dian-based drug maker in­censed Aus­tralian ri­vals last year when it listed four

‘‘ highly generic drugs on the PBS from Au­gust 1 2006 — caus­ing the price the PBS paid for ri­val ver­sions to fall by 12.5 per cent — but was then un­able to sup­ply any of its new drugs un­til ear­lier this year. Chalmers says Aus­tralian com­pa­nies ended up los­ing up to $3 mil­lion to $4 mil­lion for Au­gust to De­cem­ber, for which no com­pen­sa­tion was paid.

The gener­ics in­dus­try is also con­cerned at the com­bined price cuts. Mark Hur­ley, ex­ec­u­tive di­rec­tor of generic maker Al­phapharm and chair­man of the Generic Medicines In­dus­try As­so­ci­a­tion, says the GMIA was dis­ap­pointed at Ran­baxy’s move and the 20 per cent cut was ‘‘ a par­tic­u­larly large one’’: ‘‘ They (Ran­baxy) have very lit­tle vol­ume and very lit­tle stake in this mar­ket, and yet they have been able to sig­nif­i­cantly af­fect the price ev­ery­body else gets.’’

An in­de­pen­dent in­dus­try ex­pert says in­dus­try ob­jec­tions had to be taken ‘‘ with a grain of salt’’, be­cause next year’s PBS re­forms in­cor­po­rated sig­nif­i­cant mea­sures that would in­su­late patented drugs from fur­ther price cuts trig­gered by new generic ri­vals.

‘‘ Th­ese changes (to in­su­late patented drugs) are re­ally what the branded in­dus­try has been ask­ing for,’’ said doc­tor Hans Lof­gren, se­nior lec­turer in the school of in­ter­na­tional and po­lit­i­cal stud­ies at Deakin Univer­sity. ‘‘ They would like more, but what they have been given in ex­change for the low prices on gener­ics will, over time, bring much more sig­nif­i­cant ben­e­fits for the prices of patented drugs.’’

A spokes­woman for Tony Ab­bott says the fed­eral health de­part­ment was ‘‘ sat­is­fied’’ Ran­baxy would not ex­pe­ri­ence fur­ther sup­ply prob­lems, and de­fended the Gov­ern­ment’s right to buy PBS drugs as in­ex­pen­sively as pos­si­ble: ‘‘ The Gov­ern­ment has a re­spon­si­bil­ity to tax­pay­ers that drugs listed on the PBS can be pur­chased at the low­est pos­si­ble price. At the end of the day, our chief con­cern is that Aus­tralian pa­tients have ac­cess to the drugs they need at the low­est pos­si­ble price.’’

Bloomberg

Price set­ter: When Ran­baxy un­der­cut the generic medicines mar­ket, their price be­came the bench­mark for all drug-mak­ers

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