Clarke ignores ongoing PBS savings in simplistic comparison to the UK

A study claiming to find additional prescription medicine savings appears to have again refused to properly take account of the additional ongoing savings accruing through the current price disclosure policy.

Medicines Australia Chairman Dr Martin Cross has rejected Professor Philip Clarke’s claim that the Government is overpaying $400 million for medicines.

“The current price disclosure policy is working as it is delivering significant savings to government and patients.

“Professor Clarke has fallen into the same trap as the Grattan Institute by cherry picking a few medicines to demonstrate his point.  He is not taking account that PBS price disclosure reforms are permanent, ongoing and unfinished, and that simple price comparisons of a small list of medicines ignore the overall effect across the PBS.

“Professor Clarke can only make claims like this if he completely disregards the estimated $20 billion in savings that will accrue through falling medicine prices by 2017-18, driven by the multiple reforms agreed between industry and governments since 2007.

“These massive savings are going back to taxpayers, and when the drug falls below the general co-payment rate, directly reduce out-of-pocket costs for consumers.

“The current price disclosure policy is based on market competition and means that pharmaceutical prices are dropping significantly through every cycle.

“We are now seeing savings realised every six months under Simplified Price Disclosure. Calls for these savings to be sped up even further, to every three months, are simplistic and could have harmful consequences for access to new medicines and supply of existing medicines if implemented too quickly.  What we need is sensible evolution not revolution,” Dr Cross said.

“The Department of Health recently corrected this spurious claim that Australia is paying far too much for medicines, and confirmed that many commonly-used drugs are significantly cheaper in Australia than in the United Kingdom – for example, the commonly prescribed cholesterol lowering agent, rosuvastatin.

“There are similar outcomes for several cancer treatments: docetaxel, paclitaxel, topotecan and oxaliplatin are all widely used drugs used to treat cancer that are significantly cheaper in Australia compared to other countries. For example according to Department of Health evidence to the Senate Committee, docetaxel is priced at $6.98 in Australia, compared to $252 in the United Kingdom.

“The truth is that prescription, off-patent medicines have fallen in price by up to 98% since 2010, with 17 common PBS-listed drugs dropping by over 80%, and more price drops to come every six months.

“The latest round of price cuts on 1 October has further reduced prices, with the PharmaDispatch Index of commonly prescribed medicines, including widely used treatments for reflux, blood clotting, hypertension, and osteoporosis showing a 35% fall in the combined private market prices of medicines in just the last two years. This has resulted in major cost savings for non-concession PBS patients with most off patent products now falling below the $36.90 PBS co-payment.  Of course most concession patients still only pay $6 per prescription on the PBS.

“The latest OECD benchmarking data of public expenditure on medicines shows that Australia spends 0.7% of GDP. This is well below the OECD average of 0.8% and a true indication the value for money of the PBS.  The recent PBS price disclosure reforms are working and have further driven this figure down to 0.6% of GDP.

“The real issue facing Australian patients today is ensuring the system does not show its age and continues to allow timely, universal access to new and innovative medicines for diseases such as cancer, osteoporosis and hepatitis C, to name a few,” said Dr Cross.

See chart of Percentage price drops from EAPD and SPD 


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