Home' Australian Pharmacist : Australian Pharmacist August 2015 Contents Australian Pharmacist August 2015 I ©Pharmaceutical Society of Australia Ltd.
Some of the arguments in the Grattan PBS Report1 are flawed and
implementation of their recommendations could have a detrimental
impact on the Australian public.
The Grattan Report argues that
government should only pay for
the cheapest drug and that the
Government’s current policy on
low-value drugs is broken. The report
highlights that some groups of PBS
drugs are interchangeable, yet their PBS
prices are different. This is because the
Government’s price disclosure policy is
able to reduce the price of some drugs
more than others.
The Grattan Report calls for the return
of an expanded therapeutic group
premium (TGP) policy on top of the
price disclosure policy, to further
reduce government spending on
drugs. This would mean that patients
would have to pay more for their drugs
because government would only pay
for the cheapest drug in a therapeutic
group. Patients could only avoid the
premium (difference in cost between the
cheapest drug and the drug their doctor
ordered) by switching to the lowest
price drug in that therapeutic group.
Using the example of atorvastatin and
rosuvastatin described in the Grattan
Report, this could mean that patients
would pay between $5 to $10 more per
prescription if they want to take the
higher cost rosuvastatin.
Based on their observations of pricing
practices in other countries, the Grattan
Report calls for government to return
to a flawed policy and apply it to even
more groups of drugs than before.
I am opposed to broadening the
number therapeutic groups without
the Pharmaceutical Benefits Advisory
Committee (PBAC) finding that all
the drugs in each group had similar
effectiveness and that they could all be
priced on a similar cost per month basis.
The Grattan Report seems to reinterpret
history with its criticism of the previous
weighted average monthly treatment
(WAMTC) process. This indicates a lack
of insight into the statistical rigour
underpinning the WAMTC process
and the authors naively implied that
the current government prescription
database contains all the information
required to adjust therapeutic group
prices. The TGP needs the number of
doses per day per strength to calculate
the average monthly treatment costs.
This information is only available by
examining doctor prescribing records.
Do the authors seriously expect the
Department of Health to check the
dose on millions of prescriptions,
or do the authors advocate returning
to the previous TGP pricing method
found to be flawed by Ernst and
Young? (This review is cited in the
The Grattan Report tries to blame
the drug companies for the price
inconsistencies caused by poor
BY MICHAEL ORTIZ, HEALTH ECONOMIST & NSW BRANCH COMMITTEE MEMBER
» BE OUR GUEST
government policy and expects patients
to pay a high premium to save the
Government money. The report argues
that ‘getting the policy right would cut
government spending without risking
the patient’s health and in the longer
term, patients will save money too’.
These findings are misleading because
most patients would pay extra if there
was a premium on their medicine.
The report also calls for Australia
to establish an independent drug
purchasing agency, like New Zealand’s
PHARMAC, to negotiate drug prices
and administer the therapeutic
group premium policy. I am opposed
to the introduction of yet another
external ‘government funded’ body
to manage prices when pricing is
currently administered within the
Department of Health after the Minister
abolished the previous external pricing
The Government faces tough decisions
about its pharmaceutical expenditure
in order to meet the future health
care needs of an ageing population.
The authors assume that government
getting a better deal for drugs is easy
and we should simply follow down
the New Zealand path where they pay
lower prices for their drugs. What the
authors neglected to mention was
that prescribing choices were limited
and it is not uncommon for the
cheapest product to be unavailable
for unacceptable periods of time.
In addition, patient access to the
newer medicines is delayed due to
1. Duckett S, Breadon P. Premium policy? Getting better value
from the PBS. Grattan Institute, Jun 2015.
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