Call to review pricing of generics
Australia could save hundreds of millions of dollars in PBS subsidies if generic medicines were prescribed more often and the system for pricing them was improved, according to an editorial published in the 20 February issue of the Medical Journal of Australia.
Australia pays significantly more for generics — and prescribes proportionally far fewer of them — than many other countries, wrote Professor Philip Clarke of the Centre for Health Policy, Programs and Economics at the University of Melbourne.
When a drug patent expires and a generic alternative becomes available, wholesale prices should fall dramatically — and so should the subsidies the Pharmaceutical Benefits Scheme pays to pharmacies to cover those costs.
However, this is not always the case. For instance, between May 2010 and October 2011, pharmacists paid around $70 million to buy the generic cholesterol-lowering drug simvastatin 20 mg from manufacturers — but PBS subsidies to cover this wholesale cost amounted to $150 million in the same timeframe, Professor Clarke wrote. Under the current system pharmacists do not pass on any of the discounts they receive to consumers or taxpayers.
This April, as a result of a new pricing system introduced for the PBS in 2010, the price of some medicines is due to fall — but these savings will fall far short of the mark, according to Professor Clarke. The trouble with the current approach, he wrote, is that it can take up to 18 months for supply price reductions to produce savings for the PBS.
He said the potential for savings on another cholesterol-lowering drug, atorvastatin — the patent on which is due to expire in May this year — would be even greater than for simvastatin. In Australia, the wholesale price of generic atorvastatin 40 mg will be around $50 per script compared with $5 in New Zealand — a difference of $590 million over 18 months.
He also wrote that compared with other countries, generics constitute a relatively small proportion of the drugs prescribed in major therapeutic classes in Australia. “PBS data indicate that prescriptions for off-patent simvastatin and pravastatin constituted only 22% of statins prescribed in Australia during 2011. In contrast, recent figures suggest these generic statins comprise more than 50% of prescriptions in the United States and over 75% in England.”
Given the potential for additional savings from expanded use of generic formulations, Professor Clarke wrote that “it is surprising that there is little published economic evidence on whether the much greater use of higher-cost patented statins in Australia represents a cost-effective use of PBS funds”.
The Medical Journal of Australia is a publication of the Australian Medical Association.
The statements or opinions that are expressed in the MJA reflect the views of the authors and do not represent the official policy of the AMA or the MJA unless that is so stated.
CONTACTS: Prof Philip Clarke 03 9035 7897 / 0431 636 505
