MAJOR THREAT TO DRUG SUBSIDIES
It was announced on Wednesday June 13, 2007 that reforms to the Pharmaceutical Benefits Scheme (PBS) now before the Senate show that pressure from the United States to destroy the sixty year old drug subsidy program, and could be sabotaged altogether, according to experts. The suggested alterations are designed to save the Federal Government more than $580 million over the next four years will reduce prices of some generic drugs, but will also protect many expensive branded medicines form automatic price cuts.
Drug policy experts cautioned that the little publicised Bill seems to follow US Government wishes by striking at the heart of the PBS’s use of “reference pricing,” which bases the prices the PBS pays on the cost of the cheapest equivalent drug. Separate articles published by the Medical Journal of Australia argue that while some prices may fall, the latest reforms will do nothing to reduce PBS patient co-payments of up to $30.70.
The reforms may even increase the prices the PBS pays for new medicines that are no better or even less effective than existing products. But the most damaging allegation is that the changes reflect pressure from the US, which as part of the negotiations for the US-Australia Free Trade Agreement (FTA) struck in 2004, forced the creation of a new bilateral working group to discuss medicines policy.
Critics including “Voice of the People” warned then that the deal failed to adequately shield the PBS from US attempts to dismantle it. Thomas Faunce, senior lecturer in laws and medicine at the Australian National University (ANU) argued in one the Medical Journals of Australia papers that if US “influence on Australian medicines policy continues there are likely to be adverse consequences for all Australians.” These could lead “eventually to the end of public funded medicines.” As evidence of US intent Dr. Faunce cited the 2003 Act of Congress instruction the US FTA negotiators to “achieve the elimination of Australian Government measures such as price controls and reference pricing which deny full market access for US Products.”
Under reference pricing new drugs are listed on the PBS after their maker submits evidence comparing their efficiency with that of present alternatives. The price of PBS pays for the drugs is meant to reflect the extra benefit from the new drug, if any. The measures before Parliament would limit reference pricing by splitting medicines on the PBS into two separate “formularies,” or lists with one for big brand patented medicines and the other for generics.
Drugs would only be compared with other medicines in the same list so new generics would no longer affect the branded drugs.
“No matter how much spin doctoring you put on it, breaking the PBS into a patented component and a generic component is a fundamental change to the PBS and exactly what the Americans wanted,” Dr. Faunce wrote. A second paper, co-written by David Henry, a former member of the Pharmaceutical Benefits Advisory Committee, said the bill “undermines the evidence based approach” now used by the PBS. It is well worth noting that the co-author of “How To Kill A Country” Dr. Elizabeth Thurbon was sounding similar concerns as Dr. Faunce.