[Ip-health] Australia: savings from generic drugs skimmed by pharmacies

Ruth Lopert ruth.lopert at gmail.com
Mon Feb 20 04:46:13 PST 2012


This is very misleading. That pharmacies gain windfalls from not passing on
discounts on generics has been known for a long time and is the main reason
price disclosure introduced. Under the price disclosure arrangements
companies are required to disclose the actual transaction prices to
pharmacy and the prices are reduced to "claw back" the discounts. The
latest round of price reductions is here
http://www.pbs.gov.au/info/industry/pricing/eapd/price-reductions. And this
is not a "patents" deal - it has nothing to do with patents.

On Sun, Feb 19, 2012 at 12:57 PM, Jamie Love <james.love at keionline.org>wrote:

> This is an article that looks at the Australia system for reimbursing
> generic drugs.  The main point is that pharmacies do not pass on savings
> from generics, and are excessively reimbursed by the government.
>
>
> http://www.smh.com.au/national/health/patents-deal-pushes-up-cost-of-drugs-20120219-1thb5.html
>
> Patents deal pushes up cost of drugs
> Amy Corderoy
> February 20, 2012
>
> A patents deal between the government and the pharmaceutical industry will
> push up the price of drugs. Photo: Louie Douvis
> A DEAL between the government and the pharmaceutical industry is costing
> Australia hundreds of millions of dollars in drug subsidies, a leading
> health economist has calculated.
>
> One cholesterol drug, atorvastatin, will cost the Australian health system
> $590 million more than New Zealand will pay for a generic alternative
> because of the memorandum of understanding signed between Medicines
> Australia and the government.
>
> In that deal the government committed to an 18-month period to analyse and
> negotiate cuts to the amount it pays for drugs that come off patent.
>
> But prices reduce when patents expire, according to Philip Clarke, a
> professor of health economics at the Centre for Health Policy, Programs and
> Economics at the University of Melbourne.
>
> He said pharmacists were charged less but were not obligated to pass
> discounts on.
>
> "Major drugs that have cost governments hundreds of millions of dollars are
> going off patent and most other governments have been interested in pushing
> prices down quicker," he said.
>
> He said between May 2010 and October last year, pharmacists paid about $70
> million to buy another generic cholesterol-lowering drug, simvastatin, in
> 20 milligram doses from manufacturers, but at the same time the
> government's Pharmaceutical Benefits Scheme paid them a subsidy of $150
> million.
>
> "While the disclosure of these discounts will reduce future prices, it is a
> slow adjustment mechanism," he wrote in an editorial published in the
> Medical Journal of Australia today.
>
> A spokeswoman for the Department of Health and Ageing said Australia
> consistently pays some of the lowest prices in the world for new,
> innovative and high-cost medicines.
>
>
>
> http://www.smh.com.au/national/health/patents-deal-pushes-up-cost-of-drugs-20120219-1thb5.html
>
>
> --
> James Love.  Knowledge Ecology International
> http://www.keionline.org, +1.202.332.2670, US Mobile: +1.202.361.3040,
> Geneva Mobile: +41.76.413.6584, efax: +1.888.245.3140.  Sometimes I am
> using my MaxRoam number: +447937390810
> twitter.com/jamie_love
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