No Respite In Sight For The Pharmaceutical Industry


By Jody Fassina, Independent Political Consultant, JF Consulting 

The announcement of the Government’s new Pharmaceutical Benefits Scheme (PBS) listing deferral policy in February this year caused a lot of anguish for stakeholders, including the pharmaceutical industry.

The impact of the Government’s Deferral Policy is still to play out. Twenty eight Pharmaceutical Benefits Advisory Committee (PBAC) recommendations (including five new listings) remain in limbo, between Cabinet and Deferral, which goes against the Government’s own National Medicines Policy. What this means for PBAC independence and a growing number of medicines being held back from patients in need, where the PBAC has stated they should have access; will have long term implications.  

For the Government they face the dilemma of increasing patient costs through the denial of listing new medicines now. The fiscal reality though is that a drug denied listing today is a dollar saved tomorrow, whereas future patient costs from a drug denied listing today does not even show up as a direct cost to the budget tomorrow. So for the Government it is far easier to save a dollar today which is readily quantifiable than worry about patient costs into the future.

Even with this current situation, further developments indicate drug approvals will become even more challenging.

Minister Roxon has recently introduced for the third time legislation to means test the 30% private health insurance rebate. This is budgeted to save the Government approximately $2.8billion over the budget forward estimates.

At the same time when announcing the recent listing of 13 new medications including Erbitux and Gilenya at a cost of $200million per year to the PBS, Roxon also sent an ominous message that future listings are dependent upon the passage of savings measures like the Private Health Insurance (PHI) legislation.

Roxon specifically stated on 21 June that “…we will not be able to keep doing that (list new drugs) if the Opposition keeps opposing sensible savings measures like the private health insurance.”

While the Minister has already articulated that all new drug listings need to have offsetting savings, the Minister’s recent statement is a further development. She is now seeking to place the onus well and truly on the Opposition for any future delay in new drug listings. Her message is simple, unless the Opposition ‘plays ball’ on Government savings measures, then don’t expect any new significant drug listings.

The Minister has admitted she does not yet have the numbers in the House of Representatives to pass the PHI legislation so a $2.8billion hole in the health budget means the pharmaceutical industry could be facing a very bleak future and significant further delays in gaining Cabinet approval for PBS listings despite a positive PBAC recommendation.

The other interesting development is the ascension of the Greens to holding the balance of power in the Senate. They have finally succeeded in supplanting the Australian Democrats as Senate balance of power party.

The Greens are a party that the pharmaceutical industry needs to get to know. The Greens are naturally suspicious of big pharma even going as far as wanting to ban all political parties from receiving political donations from the tobacco, alcohol and pharmaceutical industries.

That said, the Greens did support a Senate Committee Inquiry into the Government’s Deferral Policy where they will be represented by new Victorian Greens Senator and Health Spokesman, Richard Di Natale, a GP and public health expert. This will be the first time for the industry to get a feel of what Senator Di Natale may think of the pharmaceutical industry. 

What is clear is that the impact on patients is so serious that almost 100 Consumer Health Organisations, supported by Health Care Professional Groups, have publically condemned the Government’s politicisation of access to medicines, which is set to play out in the upcoming Senate Committee Inquiry.

 For more information contact Jody Fassina at

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The 2010 Federal budget – a healthy balance?


Cube attended a post-budget discussion yesterday led by Chris Caton, Chief Economist at BT Financial Group, dissecting the 2010 Federal budget announcement. Contrary to 2009 forecasts – made during the height of the global economic crisis – the Government is aiming to drive the budget back into surplus within just three years.

As predicted, health is high on the priority list in this year’s budget. A total new investment of $7.3 billion in the National Health and Hospitals Network over five years hit the headlines yesterday, funded by major reforms and tax increases across three economic sectors.

Where have the savings been made?

The 2010 Federal budget – a healthy balance?

The 2010 Federal budget – a healthy balance?

Increases in tax revenue across three core sectors will be used to fund the pledged health reform. As pre-announced in the media two weeks ago, taxes on tobacco have increased by 25%; a $9 billion Resource Super Profit Tax on the mineral industry was announced last week; and significant reforms within healthcare through the Pharmaceutical Benefits Scheme (PBS) and a new Community Pharmacy Agreement are predicted to deliver a total $2.5 billion in net savings over five years from 2010-11.

PBS reform plans began back in 2007 and are expected to generate about $6 billion in savings. Designed to take advantage of patent expiry, cuts to the price of prescription medicines are expected to generate $2 billion savings to the Government and about $300 million to patients over four years. Economic experts at the post-budget discussion suggested that leaning against the steady growth in PBS spending seen in recent years was an appropriate measure.

Where is the money going to be spent?

Whilst tax increases are not always popular and reforms can take time, the cuts will help fund the Government’s new health commitment. These savings will provide an additional $2.2 billion to meet the needs of Australia’s healthcare system, including:

  1. $355 million for almost 450 GP ‘Super Clinics’
  2. $417 million to enhance after-hours services, making them more streamlined
  3. $523 million to provide practice nurses in all GP surgeries  
  4. $467 million to rollout the national e-Health strategy, introducing individual electronic health records

Distilling the debate down to a grassroots level, patients may receive cheaper scripts, better access to GPs and practice nurses, shorter waiting lists for elective surgery and emergency department care, and better chronic disease management.

The current Government has placed a major focus in the national health system in an election year and time will quickly show the outcome of its decisions.

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