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PBS Myths & Facts Ė the PBS is Not Broken!

Pattie Beerens
From a Wholesaler Perspective

Issue 49: June 2006
Page: 1 of 1 Author's Profile | Send to a Friend | Printer Version

On 17 May 2006, The Hon Tony Abbott MP, Minister for Health and Ageing announced that the Government had begun formal consultations with the pharmaceutical sector about possible further refinements to the Pharmaceutical Benefits Scheme (PBS)
“Possible measures that the Government has put on the table for discussion are:

· Preferred prescribing to ensure that patients always have access to medicines at no more than the co-payment. Preferred prescribing for bio-equivalent generic drugs would become normal practice, meaning that patients would always have access to medicines at pharmacies, at no more than co-payment price.

· A two year phase in for flow on reference pricing changes for patented drugs that would allow sponsor companies to further demonstrate their cost-effectiveness.

· Compensation to pharmacists for changes to pharmacy income flowing from the impact of policy change on the PBS.

· Disclosure by manufacturers of the actual price at which drugs are sold.

· A mandatory 5 per cent price cut for new generic medicines that are listed on the PBS (as well as the existing mandatory 12.5 per cent cut for the first new generic in any reference pricing group.”

As a participant in the consultation process there is little more that I can say regarding the measures being discussed, however the MPA (Medicines Partnership of Australia)1 thought it important for pharmacists and others operating within the pharmaceutical sector to know the facts.

The first edition fact sheet (Pharma Facts No1.) is accessed here.

The following key points are made and supported with examples and evidence:

 Myth #1 The cost of the PBS is out of Control

The PBS is in decline in terms of prescriptions dispensed.

The PBS in terms of dollar growth is growing more slowly than the economy (GDP), and is at its lowest rate for 20 years.

Myth # 2 The PBS is in need of reform.

The PBS is in reform:
· Brand Price Premium Policy (Dec 1990)
· Cost Effectiveness Policy (Jan 1993)
· Brand substitution (Jan 1995)
· Therapeutic Group Premium Policy (Feb 1998)

In last 16 months alone there has been a number of new initiatives to reign in costs and some savings measures which are yet to be implemented.
· Increased co-payment (Jan 2005)
· 12.5% Generics Pricing Reduction policy (Aug 2005)
· 20 Day Rule (Jan 2006)
· Safety net entitlement threshold changed (Jan 2006)
· Reduced wholesaler margin (Jul 2006)
· Fourth Agreement Savings (July 2006)

Myth # 3 Prices of generic medicines are too high.

Australian prices for generic medicine are amongst the lowest in the world.

Myth # 4 We pay too much for new drugs.
The cost of new drugs in Australia is amongst the lowest in the world

1.The MPA Membership consists of Medicines Australia (MA), Australian Self-Medication Industry (ASMI), Generic Medicines Industry Association (GMiA), National Pharmaceutical Services Association (NPSA), The Pharmacy Guild of Australia (PGoA) and Pharmaceutical Society of Australia (PSA).

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