PBS cost re­cov­ery on agenda

The Weekend Australian - Travel - - Health - Sean Par­nell

ACON­TENTIOUS pol­icy that would make the drug in­dus­try fund the ad­min­is­tra­tion of the Phar­ma­ceu­ti­cal Ben­e­fits Scheme will be re­vis­ited by the Rudd Gov­ern­ment amid warn­ings of a tight Fed­eral Bud­get.

Full cost re­cov­ery for the PBS was an­nounced by for­mer trea­surer Peter Costello in the 2005-06 Bud­get but, de­spite its im­ple­men­ta­tion date be­ing pushed back six months to 1 Jan­uary 2008, the billing method was never an­nounced — and last year’s fed­eral elec­tion left the is­sue un­re­solved.

The 2005-06 Bud­get al­lo­cated the De­part­ment of Health and Age­ing $3.7 mil­lion over four years to in­tro­duce full cost re­cov­ery by charg­ing fees to com­pa­nies mak­ing sub­mis­sions to the Phar­ma­ceu­ti­cal Ben­e­fits Ad­vi­sory Com­mit­tee’’.

The pol­icy was tipped to re­coup $22.3 mil­lion over four years.

Con­sul­tants called in by the de­part­ment sub­se­quently ex­am­ined the fees-based pro­posal and sug­gested other meth­ods be con­sid­ered.

A draft re­port by Acu­men Al­liance, ob­tained by Week­end Health un­der Free­dom of In­for­ma­tion laws, warned fees alone would cre­ate an en­vi­ron­ment where ‘‘ the spon­sors of generic medicines will re­ceive a free ride’’.

‘‘ The bur­den of fees rests solely with firms seek­ing to ei­ther list a medicine for the first time or change a list­ing, po­ten­tially sti­fling new prod­ucts and in­no­va­tion,’’ the draft re­port states.

The warn­ing came ahead of leg­is­la­tion which con­tro­ver­sially slashed the price the Gov­ern­ment paid for generic medicines and pro­vided ex­tra pro­tec­tion for patented medicines.

Acu­men Al­liance rec­om­mended the cost bur­den be shared more eq­ui­tably across the in­dus­try through the in­tro­duc­tion of a part levy or an­nual charge on drug com­pa­nies to make up 50 per cent of rev­enue.

But the de­part­ment, while will­ing to con­sider a part-levy, told the in­dus­try it should only make up 10-20 per cent of rev­enue.

The de­part­ment and Acu­men Al­liance — which ac­knowl­edged a levy would ‘‘ lead to sig­nif­i­cant cross-sub­sidi­s­a­tion be­tween firms’’ — agreed full cost re­cov­ery was ap­pro­pri­ate given the multi-bil­lion dol­lar drug in­dus­try ben­e­fited greatly from tax­payer sub­si­dies and gov­ern­ment mar­ket­ing.

A spokesman for Health Min­is­ter Ni­cola Roxon con­firmed leg­is­la­tion for full cost re­cov­ery was not in­tro­duced and the pol­icy had not been im­ple­mented. ‘‘ The Gov­ern­ment is now con­sid­er­ing whether or not to pro­ceed with cost re­cov­ery,’’ Roxon’s spokesman said.

While Trea­sury Wayne Swan has promised a con­ser­va­tive Bud­get, and Prime Min­is­ter Kevin Rudd has em­barked on a char­ac­ter­is­tic pol­icy of cost-cut­ting across gov­ern­ment, full cost re­cov­ery is not with­out con­tro­versy.

Ian Chalmers, chief ex­ec­u­tive of Medicines Aus­tralia, said the in­dus­try would urge the Rudd gov­ern­ment not to adopt the pol­icy of its pre­de­ces­sor.

‘‘ Cost re­cov­ery was im­posed on in­dus­try as a fait ac­com­pli by the pre­vi­ous Gov­ern­ment and we cer­tainly didn’t wel­come it then,’’ Chalmers said. ‘‘ It’s not a mea­sure that is ap­pro­pri­ate. The pro­cure­ment of phar­ma­ceu­ti­cals for the PBS is a gov­ern­ment func­tion and it’s un­rea­son­able for in­dus­try to be ex­pected to pay for that gov­ern­ment func­tion. This would sim­ply add an ex­tra layer of un­nec­es­sary bu­reau­cracy and ul­ti­mately in­crease the cost of medicines to the gov­ern­ment.’’

For­mer health min­is­ter Tony Ab­bott was last year warned by his ap­pointee to the PBAC, then Aus­tralian Med­i­cal As­so­ci­a­tion Vic­to­rian pres­i­dent Mark Yates, that full cost re­cov­ery would threaten the in­de­pen­dence of the PBAC.

The de­part­ment’s dis­cus­sion pa­per for full cost re­cov­ery, re­leased in April 2007, noted the in­dus­try had an ex­pec­ta­tion of im­proved PBAC per­for­mance af­ter cost re­cov­ery .

‘‘ The ef­fi­ciency and cost ef­fec­tive­ness of all pro­cessed cov­ered by cost re­cov­ery will be un­der scru­tiny,’’ the dis­cus­sion pa­per ac­knowl­edged. ‘‘ Im­prove­ments in the time­li­ness of PBS list­ing pro­cesses are an­tic­i­pated.’’

The dis­cus­sion pa­per said given the ben­e­fit for drug com­pa­nies in achiev­ing a PBS list­ing, ‘‘ there is a strong ar­gu­ment for a fee-for-ser­vice com­po­nent’’ al­though a part levy would more eq­ui­tably share the cost bur­den.

The Howard Gov­ern­ment in­tended to ex­tend full cost re­cov­ery, al­ready used by the Ther­a­peu­tic Goods Ad­min­is­tra­tion and other agen­cies, to the Na­tional Im­mu­ni­sa­tion Pro­gram.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.