Government intends to cut funding of Pharmaceutical Benefits Scheme

Contributed by Joe Montero

The Turnbull government intends to change the prescribing software used by doctors, which will set a default on generic options and doctors will have to change this default to prescribe specific brands. This means that at the pharmacy, generics will be passed over the counter, without question. Their share under the Pharmaceuticals Benefit Scheme (PBS) will increase over time.

The problem is that this comes as part of a package that has just been agreed with the pharmaceutical industry’s peak body, Medicines Australia. A new five year agreement is going to be signed that revolves on a gradual cut to government support for the PBS and a shift to a user pays regime. The government will save $1.8 billion.

It means that short-term extension of generic brands will help cut the government bill in the short-term, but set a new platform that will lead to price rises. In the end, patients are likely to be paying more and not less, as the $6.60 price mores towards the market $38.80 per prescription. Those with chronic illnesses, the disabled and older Australians, many of whom are already living close to the line, will be hit the hardest.

If this is a taste of what the budget has in store, it certainly isn’t going to be a people friendly one.

Health Minister Greg Hunt claims that the money saved from government contributions to the PBS will be spent on bringing new drugs into the scheme. From a research perspective, this means that more drugs will be able to be developed and tested out using enteric capsules and other empty pill capsule formats. This is supposed to be achieved by way of providing funds to the pharmaceutical companies for research and development purposes. These companies do not develop drugs specifically for the Australian market. Because their headquarters are overseas, nearly all of their research and development is based there and operates on the basis of the global market. Consequently, the government contribution is likely to be exported overseas, to become part of the profit of these companies, with no tangible benefit for Australia.

With this in mind, it will be interesting to see what all these developments mean for wholesale and distribution companies that deal with pharmaceutical products such as Impact Health. With hospital groups, private clinics, retail pharmacies, and licensed wholesalers reliant on a mixture of generic and branded drugs, it is at this time uncertain what other developments the increased use of this software might involve.

Medicines Australia has long campaigned against measures that it sees as costly for its members and argues that they must go. The peak body played a big part on the PBS cuts, foreshadowed in the lead up to the 2015 budget. In the face of the public reaction, the PBS plans had to be scrapped at that time.

A new and more militant leadership has renewed the organisation’s prominent place in the government’s drug policy development. With this new agreement under its belt, Medicines Australia has certainly come out in front and has no problems with its members going without a little doing, when they are going to get much more in return. They are the clear beneficiaries.

The Australian Medical Association (AMA) has come out against the new software, because it argues that pushing doctors into prescribing more generic medicines takes away their independence to prescribe in the interests of their patients and it reduces patient choice. This is hard to understand when it is the same drug involved. The AMA knows that the quality of all drugs on the PBS, is under the authority of the Therapeutic Goods Administration. Critics have always pointed out that there is an unhealthy connection between some of the AMA’s members and the pharmaceutical industry. This has never been denied by and the AMA has persistently replied with the stock answer that it will not interfere with the independence of doctors.

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