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

Jamie Love james.love at keionline.org
Sun Feb 19 09:57:57 PST 2012

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.


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

"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.


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

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