Australia targets reduced drug spending with new reforms

The Australian health minister has revealed a series of reforms that will aim to reduce spending on patented drugs from the pharmaceutical industry.

Sussan Ley announced the package today (May 27) after negotiations between the country’s health ministry, the Pharmacy Guild of Australia and the Generics Medicines Industry Association.

The reforms, which will make changes to the country’s Pharmaceutical Benefits Scheme (PBS), are due to take effect on July 1.

In the reforms, the government has targeted more “efficient” spending on F1 formulary medicines. F1 medicines are drugs protected by patents that are obtained by pharma companies.

The government has said it will pay 5% less on F1 medicines that have had patent protection for more than five years.

Ley said this will save the government AUD$1 billion ($770 million) overall.

The health department also aims to save another AUD$610 million by ending a subsidy granted to patents covering combination drugs—defined as when two established patented drugs are brought together to create a new patented product.

The reforms, in combination with other drug-related reforms, are intended to save the government AUD$6.6 billion.

Ley said: “Throughout the government’s negotiations with the entire pharma supply chain we have had consumers at the core of our negotiations and I think this shines through in the sensible measures we’re delivering.

“We are ensuring with this package that spending on existing medicines is as efficient as possible so we can invest in new drugs for the future as well,” she added.

George Tambassis, president of the Pharmacy Guild of Australia, described the overall package as “historic”.

He said: “At all times in negotiating this agreement, the guild’s goal has been to achieve the certainty and security that community pharmacies need to continue delivering quality healthcare for patients dispensing PBS medicines, providing professional services, and employing staff.”