Proposals from a handful of generic medicines companies for the Pharmaceutical Benefits Scheme to preference generic brands of medicines over others are flawed, Medicines Australia chief executive Dr Brendan Shaw said today.

“These proposals argue that substituting originator brands of medicines for generic brands will create savings for the PBS.

“That proposition is flawed on a number of fronts.

“First, it is based on the fallacy that generic medicines are cheaper for the Government than their branded equivalents. The reality is that the Government pays exactly the same price for branded medicines and generic versions. The Government won’t save one cent by protecting one group of manufacturers over another group of manufacturers.

“Second, protectionism is poor policy and a poor way to run the PBS. It is at odds with the market-based mechanism of price disclosure that is delivering taxpayers $1.9 billion in PBS savings.

“Third, giving preference to a generic medicine over an originator brand constrains doctor freedom in prescribing as well as consumer choice.

“Fourth, good policy comes from consultation and dialogue between industry and Government, with a long-term framework in mind. Half-baked ideas that come from left field are not conducive to such an agreed framework and risk not delivering the savings they promise.

“Fifth, it assumes that it is the established generics companies which drive price reductions and that automatically giving these companies market share will provide savings. This may not be the case.

“Sixth, there is already a price signal for consumers to choose a generic medicine over a branded medicine where the branded medicine has a higher patient premium. Where there is no such premium, as far as the consumer is concerned there is no difference in price between an originator brand or a generic brand.

“We have a choice. Either we can manage the PBS through sensible, long-term agreements negotiated with industry to achieve a sustainable PBS in the future that delivers for consumers, government and industry; or we can run the PBS through a procession of ad-hoc, un-costed, ill-thought through policy and administrative thought bubbles.

“History shows that considered, negotiation of a long term policy framework is a far better means of achieving a sustainable PBS for everyone.”

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Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au

Patent terms for innovative medicines should be extended to compensate for increasing delays in regulatory approval, Medicines Australia chief executive Dr Brendan Shaw will tell Federal Government review of Australia’s patent system at a public hearing on Monday (11 February).

Pharmaceutical patents are currently granted up to five years’ extension to account for regulatory delays.

Dr Shaw said there was a strong argument to be made for increasing patent term extensions given that Therapeutic Goods Administration approval processes had lengthened significantly since 1998, when patent term extensions were introduced, and delays in listing on the Pharmaceutical Benefits Scheme had almost doubled.

“This review should certainly be looking at the option of increasing the term of patent extension,” Dr Shaw said.

“There’s compelling evidence that patent extensions are too short. The Government’s own standard for an effective patent life is 15 years, but nearly half of Australian pharmaceutical patents fall short of that.

“Extensions to the patent life for health technologies like pharmaceuticals are important because the regulatory and reimbursement processes consume years of patent life.

“Given it takes as long as three years to get a new medicine listed on the PBS, and rejection rates by the Pharmaceutical Benefits Advisory Committee are increasing, it’s timely to look at whether patent terms are long enough.

“For many years Australia has been widely regarded as having a world-class IP system that supports innovation. It will be important to ensure that Australia maintains this reputation in the future.

“A strong, stable and predictable IP system is critical to Australia’s ability to attract investment in R&D and high-tech manufacturing. It is also critical to Australian patients’ ability to receive the latest treatments as quickly as possible.

“This review is timely given the opportunities awaiting Australia’s innovative medicines and biotech companies in international markets and their need for a robust patent system that appropriately protects companies’ technological knowhow both in Australia and internationally.”

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Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au

In the face of job losses, falling sales growth, a high dollar, increased costs and a difficult business environment, the Australian medicines industry managed to achieve its best export performance on record in 2012, with exports topping $4.3 billion according to new figures published by the Australian Bureau of Statistics.

The new ABS report shows exports of pharmaceutical and medicinal products were up $578 million or 15 per cent on the previous year. The report also shows that the medicines industry is the Australian manufacturing sector’s biggest high-tech export earner.

By comparison, exports for the car industry in 2012 were $3 billion, and for the wine industry $2 billion (see chart attached).

Medicines Australia chief executive Dr Brendan Shaw said the significant growth of pharmaceutical exports showed the potential in the industry if supported by strategic Government incentives for the medicines industry.

“In many respects the medicines industry has had a very tough year, with substantial price cuts, challenging policy settings, delays in having medicines subsidised, declining competitiveness and more than 300 job losses,” Dr Shaw said.

“Against that background, for the medicines industry to achieve its strongest export result on record underscores the industry’s potential for long-term growth and sends a very clear signal that this is an industry worth backing.

“Just imagine what Australia’s medicines exports might have been if we had had in place a strategic program and predictable policy supporting the industry to grow in this country. “This kind of result highlights the industry’s potential to be a key player in the post-mining boom economy.

There is a very strong case for the Government to establish an industry-neutral strategic co-investment fund to provide new investment in new manufacturing and R&D projects that benefit the nation.

“In terms of export earnings for 2012, the medicines industry was more than $1 billion ahead of its nearest rival, the car industry.

“With the right policy incentives such as a strategic co-investment fund, Australian medicines exports to Asia could grow substantially by 2020. Given our proximity and the expanding Asian market, the opportunities are tremendous.”

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Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au

The Federal Coalition’s election commitment to restoring transparency, certainty and confidence to the process for listing medicines on the Pharmaceutical Benefits Scheme will benefit Australian patients as well as industry, Medicines Australia chief executive Dr Brendan Shaw said today.

Dr Shaw said the Coalition’s commitment, set out in its Real Solutions for all Australians document, will help ensure Australians have universal and timely access to new prescription medicines.

“The Coalition’s promise to ensure medicines are listed on the basis of advice from the independent Pharmaceutical Benefits Advisory Committee rather than on the whim of Government is great news for patients and great news for the medicines industry,” Dr Shaw said.

“The listing process has suffered a loss of some confidence, with Cabinet interference in PBAC decisions and difficulties in getting a number of new medicines listed.

“Restoring confidence and certainty to that process is critical for patients and for industry.

“The medicines industry in Australia makes a significant contribution to the health and wealth of the nation, but business certainty and stability is paramount.

“I am encouraged that the Coalition has committed to delivering that certainty in the context of the PBS listing process.

“I also congratulate the Coalition on its commitment to maintain health and medical research funding and to support the innovative manufacturing sector.

“The Australian medicines industry attracts $1 billion a year in R&D investment and exports $4 billion a year so these policy commitments will help enable the medicines industry to continue growing its contribution to the health and wealth of the nation.

“The Coalition’s commitments to a predictable PBS process, preserving medical research and encouraging an innovative economy are welcome developments and to be applauded.”

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Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au

Medicines Australia member companies will for the first time disclose aggregate payments to doctors and consumer groups under a new Code of Conduct which yesterday received the green light from the Australian Competition and Consumer Commission.

Today Medicines Australia agreed to accept the ACCC’s decision to authorise the Code for two years.

Medicines Australia members have overwhelmingly supported looking at even further transparency measures in the future. An industry/stakeholder Transparency Working Group will make recommendations on further transparency of companies’ interactions with doctors in 2013.

Medicines Australia chief executive Dr Brendan Shaw said the authorisation of the new Code and the industry’s establishment of the stakeholder Transparency Working Group heralded a new era of greater transparency and disclosure.

“Our members are firmly committed to increasing transparency so that the nature of their relationships with doctors and consumers is open to scrutiny.

“Transparency is important because it builds public trust and confidence in those relationships.

“Engagement with doctors is important and legitimate because patients want to be sure that their doctors know how to use the medicines they’re being prescribed.

“Now the nature of that engagement will be much more transparent.”

“I encourage the rest of the therapeutics sector to follow the high standard of transparency set by the Medicines Australia Code of Conduct.

“We accept the ACCC’s two year authorisation of the Code which seems reasonable. We anticipate getting our Transparency Working Group process completed within that two year timeframe.”

The new Code of Conduct, which comes into effect on 11 January 2013, will require Medicines Australia member companies to report in aggregate amounts:

• All payments made to healthcare professionals for advisory boards and consultancy arrangements
• All sponsorships of healthcare professionals to attend medical conferences and educational events
• All payments made to speakers at educational events
• All sponsorships of all individual consumer organisations for each financial year, including the value of non-monetary support.

The new Code of Conduct is available here

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Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au

Patients are no closer to gaining access to new stroke prevention medicines following the publication today of a Government review of anticoagulants, despite one medicine being reviewed and recommended by the Government’s expert committee for listing on the Pharmaceutical Benefits Scheme more than 650 days ago.

Instead, after a subsequent Cabinet review and an additional, unexpected 18 month review, the Government has referred that review’s report back to the independent expert committee which made the original recommendation for listing of Pradaxa on the PBS ….. for review.

Medicines Australia chief executive Dr Brendan Shaw said today that the process was a two-year bureaucratic merry-go-round.

“This is bureaucracy gone mad and it’s ordinary patients who are paying the price,” Dr Shaw said.

“The Government’s expert committee reviewed Pradaxa almost two years ago. The Government then ordered a review of that decision. Now it’s demanding a review of that review. This has been a two-year bureaucratic merry-go-round that has got to stop.

“Essentially we’re having a review of a review of a review. It raises serious questions about bringing new medicines on to the PBS.

“If this is a prototype for listing new medicines on the PBS, it’s a debacle. It undermines confidence in the PBS listing process.

“This medicine was recommended for PBS listing more than 650 days ago and patients still don’t have access to it. That shouldn’t be acceptable to the Australian public.

“Patients should not have to wait this long to have access to a medicine that has already been deemed cost-effective by an independent expert committee.

“Australians with atrial fibrillation are most likely to be seniors who are least able to afford the cost of new medicines without the help of the PBS.

“This medicine has been available globally for over a year, including in New Zealand where it was made available by their Government. Yet Australian patients do not have that same access.

“We shouldn’t be a country that can’t afford new medicines.

“Delays like this should never be allowed to happen again.”

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Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au

The Australian Government should adopt a new formula developed by the Congressional Budget Office in the US which shows that increased use of prescription medicines provides net savings to the health system, Medicines Australia chief executive Dr Brendan Shaw said today.

For the first time, the US agency has accepted that prescription medicines, when taken properly, generate offsetting savings in other parts of the health sector.

Having reviewed an ‘increasing body of evidence’, the Congressional Budget Office found that a 1 per cent increase in the number of prescriptions filled causes Medicare spending to drop by roughly 0.2 per cent.

“I think if the Americans are prepared to accept the positive impact of medicines on overall health expenditure, the Australian Government should be prepared to accept the same evidence,” Dr Shaw said.

“The US Congressional Budget Office has said it will build the benefit of prescription medicines it into its future costings of budget proposals.

“Innovative medicines help control health care costs by preventing the need for care at public hospitals, shortening stays in hospitals where they are required and relieving the costs of other institutional care. In short, they help offset the costs of other parts of the healthcare system.

“The US Congressional Budget Office has now accepted that ‘a body of research now demonstrates a link between changes in prescription drug use and changes in the use of and spending for medical services’.

“It is time for policymakers in Australia to think more carefully about the productivity benefits of spending on dementia medicines that keep people out of nursing homes and hospitals or reduce the care burden for families, how subsidising pain and arthritis medication help people get back to work and improve workforce participation and incomes, and the payback to society as well as the individual from all the lives saved by cardiovascular medicines.

“The Federal Government should follow the US and start accounting for the economic benefits of innovative medicines rather than focusing purely on cost.

“That the Government’s own assessment systems for health spending do not currently take broader productivity benefits into account speaks volumes for how much more work we need to do.”

Further information on the US Congressional Budget Office’s new approach can be found at: http://www.cbo.gov/publication/43741

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Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au

A new report from the Office of Health Economics in the United Kingdom shows the cost of developing a successful new medicine has increased from $199 million in the 1970s to $1.9 billion in the 2000s.

The R&D Cost of a New Medicine identified four factors contributing to increasing R&D costs: higher company out-of-pocket costs, up nearly 600 per cent over the period; lower success rates from clinical development as researchers tackle tougher therapeutic areas such as dementia and arthritis; increase in R&D time as science becomes more complex, from six years to 13.5 years; and increases in the cost of capital from 8% to 11%.

Medicines Australia chief executive Dr Brendan Shaw said: “This study confirms what we have known for some time, namely that it is taking longer and is becoming more expensive to develop new medicines.

“From time to time we hear people question whether it really costs this much money to develop new medicines for the community.

“There’s a suggestion that somehow the development of new medicines can be done on the cheap and should be priced as such.

“This new study categorically shows that it costs companies a lot of money to take a new medicine from first discovery in a laboratory, through clinical trials and ultimately make it available for patients.

“It is a costly exercise, but all this investment results in new medicines and vaccines for diseases like cancer, dementia, mental illness, arthritis, cardiovascular disease and HIV.

“This report is a timely reminder of the importance of investing well in the development process, as well as ensuring that the regulatory and business environment for the development of new medicines is as efficient and effective as possible.

“The commercial business model is undergoing change. Governments, payers and the community need to be aware of this and ultimately work with industry to get a supportive environment that encourages innovation in the future medicine.”

The report is available at http://www.ohe.org/publications/article/the-rd-cost-of-a-new-medicine-124.cfm

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Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au

Medicines Australia chairman Mark Masterson today announced a new vision for the Australian medicines industry, to double manufacturing output, exports and R&D investment over the next decade.

Speaking at the National Press Club, Mr Masterson said that with the right policy settings, the medicines industry in Australia was ideally placed to harness the dramatic rise of Asia, the expanding global medicines market, and the emergence of high-tech biological medicines.

“The vision is to double our manufacturing output from $7 billion in 2012 to $14 billion over the next decade and to establish a number of highly specialised biomanufacturing plants,” Mr Masterson said.

“Double our exports from $4bn to $8bn; double our R&D investment from $1bn to $2bn; creating many more high-skilled jobs and increasing the number of Australians accessing clinical trials to 30,000.

“This vision is about sustainable growth, and creating an environment that can attract investment; that can establish Australia as a world-class centre for medical research and drive collaboration between industry and the broader research community.

“We have a genuine, once-in-a-generation opportunity to grow the medicines industry into one of the key Australian high-tech industries that can lay the foundation for a new economy.”

Realising the vision was dependant on getting central policy settings right in four key areas, Mr Masterson said:

• establishing an industry-neutral Government-led strategic co-investment fund
• expediting clinical trial reform to improve Australia’s international competitiveness
• lowering the corporate tax rate to 25% and maintaining the R&D tax credit
• securing a stable, predictable business and policy environment in Australia.

“Whether or not we can capitalise on this opportunity depends on whether we can quickly deliver the right policy settings in these four key focus areas,” he said.

Mr Masterson’s address is available here (please follow link)

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Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au

Governments around the world must work with the medicines industry and other parties to create a policy environment that will encourage the development of new antibiotics, Medicines Australia chief executive Dr Brendan Shaw said today.

Dr Shaw said Antibiotics Awareness Week, which is underway, was a good time for the governments around the world to focus on the problem of antibiotics losing their effectiveness over time as bacteria evolve and mutate to become resistant to treatment.

“The problem of anti-microbial resistance requires a collaborative response, bringing together leaders in government, science, economics, public policy and industry,” Dr Shaw said.

“The medicines industry shares the concerns of the World Health Organisation about the global spread of anti-microbial resistance.

“Without new effective antibiotics, many complex medical interventions like chemotherapy, joint replacements and organ transplants would be very difficult or impossible.

“Governments around the world need to start working with the medicines industry and other parties to create a policy environment that will prevent and counter the emergence of highly resistant infections.

“There is a desperate need for greater incentives for research into new antibiotics.

“Governments in the US and Europe are starting to realise that there are few new antibiotics available today because it has become too difficult for companies to develop new therapies over the last 20 years due to things like restrictive regulatory systems and low prices.

“The result is while the medicines industry has invested billions of dollars in developing new medicines over the last two decades, antibiotics are one area where companies have exited the market.

“In cancer, governments have been prepared to pay for new treatments as they are developed. The result is that today the industry has over 800 new cancer medicines in development, compared with 83 antibiotics.

“It is alarming that the current generation of Australians have to make do with the same antibiotics our parents used 30 years ago. Patients deserve better than that.”

-ENDS-

Contact Person:

Jamie Nicholson
Media Communications Manager
Phone: 0419 220 293
Email: Jamie.Nicholson@medicinesaustralia.com.au