Cost of Prescription Medicine

DISCUSSION: COST OF PRESCRIPTION MEDICINE

BYNER: Now, we will tomorrow reconvene a meeting, if you like, on air between you, moi and the Federal Health Minister, Tony Abbott, because a story came to light a few days ago and some people have suggested that it's got something to do with the American Free Trade Agreement. I'm told that's not so, but nevertheless the timing is just an interesting coincidence isn't it?

But the problem is that there are a lot of drugs that are coming out of patent. And when they come out of patent the Federal Government have suggested to the pharmaceutical companies, "Look, this drug that you've got that's out of patent, you can choose to drop the price by about twelve and a half percent, which will make it a little bit more affordable for the PBS scheme, which is pretty generously rewarded you during all the time the drug was in patent". All right?

And the drug companies are saying, "No, no, no, no, we don't want to put our prices down". And the Feds said, "Well, we think you should". So the drug companies have said, "Well, no, we'll-- what we'll do is, if we can't resolve this by June and get a better outcome for us, we will go to the consumer, and we could charge up to $32 more for this item if it's prescribed and the people do not decide to take the generic option".

Now, the Health Minister pointed out on this program that theoretically a generic drug is exactly the same as another one, except the name's different and the chemical reaction is all the same. But callers to this program-- many people rang us on Tuesday and said, "No, Leon, I can't take the generic brand of this drug or this drug because I get bad side effects, I get a rash, I get tummy upsets. And I went back to the other and everything's fine".

So let's, first of all, ask somebody who should know: from the Australian Medical Association, Dr Mukesh Haikerwal. Mukesh, thank you for joining us.

HAIKERWAL: You're welcome. Thank you.

BYNER: What is your reading of this dispute between the Federal Government and the pharmaceutical companies on the business of drugs coming out of patent …

HAIKERWAL: Yes.

BYNER: … and the Government saying to them, "Look, 12% less thank you very much"?

HAIKERWAL: Look, the main thing is that there is an awful lot of discussion to be had here and that discussion hasn't been had; the Government's sort of not really talked with any of the stakeholders involved in this at all. And that's the real shame because, you know, in order to get a proper solution you need to actually get the right sort of input into your decision process.

BYNER: Mm.

HAIKERWAL: I mean what's happening is that you've got drugs that were on patent, attracting top dollar from our PBS to pay for them; after the 20 years has elapsed the drug has come off patent and then there's competition. Now generally when there's competition you'd expect the prices across the board to drop.

BYNER: Yes.

HAIKERWAL: So when you take a drug, for instance, for ulcers-- and there's one brand name that, for instance, used to be there, there's now about twelve of them. But, of course, what's happening is that those-- each of those twelve attract the same subsidy, and so we, as taxpayers, are paying the same for each of them, even the ones that are copycat drugs, and the original.

BYNER: Mm.

HAIKERWAL: And the benefit of having a competent competitor, a generic drug, just isn't there, so that the PBS isn't actually benefiting from the fact that there are cheaper brands on the market.

We, as consumers, are probably shielded from that, because we are paying 30 bucks-odd if we're non-cardholders and if we're cardholders $4.50-odd.

BYNER: Mm.

HAIKERWAL: So, you know, a drug that costs 80 bucks, you know, we're never going to be paying the 80 bucks hopefully, …

BYNER: Mm.

HAIKERWAL: … so we're not going to see that. But the taxpayer, through the Government you know, should be getting a better cost for the drugs that we're buying across the board.

BYNER: Mm.

HAIKERWAL: Now, the expectation would be that there'll be some drop in price across the board as the generic prices put proper competition on. And there has to be the discussion, however, that we don't want the drug-- an imposed price by Government to actually increase the-- sorry, reduce the levels, that drug companies get so much that they just-- they don't bother to sell them here and go offshore.

BYNER: Yeah.

HAIKERWAL: So that's why there has to be a balance, that's why there has to be a discussion, and that's why it's not simply a matter of saying, "Look, we'll just carve twelve and a half percent or whatever off the cost of drugs across the board once they come off patent". There has to be some discussion around that.

BYNER: Drug—

HAIKERWAL: But there should be some savings flowing through from generics being on board.

BYNER: Drugs are patented because the people who bring them to the market spend a lot of money in research and development and so they've got to get their bang for their buck. But one would wonder why they would want the same price for a drug that's been there for 20 years and coming off patent as they wanted when it was in patent.

HAIKERWAL: Yeah. Well, the way our Pharmaceutical Benefits Scheme works is that the pricing authority negotiates the price at the time the drug is actually put on the PBS, and …

BYNER: Yeah.

HAIKERWAL: … obviously that changes with time, you know with inflation and so on. But of course, as you say, once you get the generics on and they've had their 20-year due, then there should be some availability for that price to drop.

BYNER: So you're saying the Federal Government have just done this arbitrarily and yet haven't had a discussion with anybody?

HAIKERWAL: Well, there's been no discussion. And there certainly needs to be, because we have to balance the-- on the one side actually when shall we get best bang for our buck in terms of …

BYNER: Sure.

HAIKERWAL: … the cost; but, also, you've got to make sure we don't force people off the market, you know, both the generic companies but, in particular, the brand price-- the real-- the known brands, …

BYNER: Mm.

HAIKERWAL: … because we really need those drugs and the availability of those to give the best quality care that we can to people.

BYNER: Is it the case that a generic drug and one that's just about to come off patent or still on patent are the same thing? Because the callers who've been ringing me have cited quite a number of examples where they've switched to the cheaper generic brand and they've had a side effect, which they didn't get from the brand they were originally taking.

HAIKERWAL: Yeah, look, I mean the actual chemical that you're using in the generic and in the known brand is the same; what may be different is the powder which it's mixed up in or the way in which it's formulated will …

BYNER: Yes.

HAIKERWAL: … necessarily

BYNER: It was pointed out to me the other day that on a script a doctor can tick the box that says, 'I want the patient to take this drug', …

HAIKERWAL: Yes.

BYNER: … but the chemist can override that.

HAIKERWAL: Well, they can't override it without discussing it with the doctor.

BYNER: Mm.

HAIKERWAL: If they do that, it's actually illegal.

BYNER: Mm.

HAIKERWAL: But often if it's not ticked then they have the choice. But the problem becomes that you may get, you know, one of twelve ...

BYNER: Yes.

HAIKERWAL: … the fist time you get a prescription; the second time you get dispensed number two and then number three. And some people, of course older people who are little bit, you know …

BYNER: Sure.

HAIKERWAL: … dementia and so on, may take three of the same tablet not actually realising it's the same one, 'cause they don't look the same.

BYNER: All right. So your advice to Tony Abbott is 'Consult'?

HAIKERWAL: Absolutely. Talk with us; talk with industry. You know any savings that we make on PBS for generics have got to be kept within the PBS system. And we can do it better. But just going with a swathe through this thing to try and make it look like you're being responsible is actually irresponsible, which is not like you. And we need to talk about this so we get the right answer; that we don't lose drugs off our market, but we also make sure people get the right drugs at the right price. And when we as taxpayers can get a better deal, we should get a better deal.

BYNER: Thank you indeed for joining us.

That's Dr Mukesh Haikerwal, the Vice President of the federal Australian Medical Association.

Now, tomorrow we will have back on air again Tony Abbott, the Health Minister, with the feedback not only of what the Doctor has said today but also the information that you rang in on Tuesday, because this is a really important issue as we understand.

Ends