Review of the PBS Bill 2007
Posted by Dave Bath on 2007-05-31
The National Health Amendment (Pharmaceutical Benefits Scheme) 2007 (here is the Backgrounder from Parliamentary Library) will be introduced this week into the House of Reps by Tony Abbot.
The bill itself has some merit, is mainly administrivia, with changes to discounting rules, and the process for getting drugs listed if there are generics or bioequivalents (from the same company) available.
That said, there are some criticisms that it will increase costs to patients from those who have looked between the lines of the fine print.
There are a couple of questions regarding some of the text, but the Backgrounder from Parliamentary Library demonstrates the Liberal Party’s agenda, which is to convince people that the PBS is doomed to fail, and therefore should be abolished or severely restricted, and is related to the Liberal Party’s distaste for other nationalized health initiatives such as Medicare.
PBS Sustainability
The repeated theme of the parliamentary backgrounder is that the the Liberal Party does not think it sustainable, indicating they think it financially unviable, and therefore putting forward reasons it should be scrapped.
The reasons given include rising costs of individual pharmaceuticals (but these can be constrained by tough negotiation with producers), but more emphasis is placed on the problems of an ageing population.
Actually, if you look at the waistlines of most 40-55 year olds, compared to those of 15-25 year olds, it is not the greying population that will have the chronic problems of cardiovascular disease, diabetes, et al, but with the young, because of the lack of preventative health programs. While there might be funding for campaigns, the most effective preventative health measures are those from individual GPs during consultations. Unfortunately, there is little financial benefit (indeed a disincentive) for the doctor, with the fee-for-service paradigm currently used in Australia.
Encouraging preventative action from GPs would do much to reduce not only spending on pharmaceuticals, but other costs of morbidity, including the effect on economic productivity.
Measures in the Bill
Because the panel overseeing the PBS has been stacked by the Howard government with members of the pharmaceutical industry rather than the medical fraternity (I would have added health economists rather than industry representatives), the interpretation of key terms and phrases within the bill and associated regulations by the panel will not lead to the best outcomes. The other problem are changing practices in patent administration.
- Bioequivalent
Listing under the scheme and pricing depends on whether there are other bioequivalents available, including generics.Unfortunately, the degree of bioequivalence required to push prices down will depend upon interpretation and motives of panel members.
Whereas a different formulation (perhaps a different coating that changes absorption rates), a different combination of active ingredients (rather than two different pills), or a trivial difference in action (from a minor change to the molecular structure of the active ingredient) might be considered significant by an industry-dominated panel, a panel without industry representation might decide that two different products are bioequivalent.This difference of interpretation obviously leads to different costs for the scheme. It also opens up abuse by a company introducing a newer formulation (more expensive) while withdrawing an older one to avoid availability of equivalents..
- Patent Expiry
Increasingly, patents are granted when there is little innovation involved (a minor change to an existing product), because of under-resourced patents offices that lack the technical expertise to examine patents applications properly. (See notes about patents granted to a child’s swing the wheel.)
A more general problem, also affecting marketing and prescribing patterns, is where clinical trials merely cover the efficacy of the drug over placebo, rather than the cost-benefit analysis of a new drug when compared to the efficacy of an existing drug. But that is a topic I hope to address in a future post.
See also: SMH: Patients may foot bill, Drugs About
Bakery Theif said
I’m aware that my comment is not really engaging with your post, but I just wanted to note that the PBS is an Australian policy that I am very proud of.
I am proud because it clearly states that accessible drugs are a right of citizens. Whilst I understand it is a hefty cost burden on the State, the guarantees it provides are simply priceless.
I know this sounds silly, but having discussed the PBS with a friend suffering from MS who requires injections that cost $250 a week (before subsidy), I felt proud that my country made it clear that access to this, and many other life saving drugs is simply the right thing to do in a just society.
Public Policy doesn’t often elicit such a positive emotional response, but the PBS truly is a fine and rare beast and a great example of progressive policy done well.
May we protect it from the Howard Government, so that it may live on in perpetuity.
Dave Bath said
Bakery Theif: Your comment is engaging with the post, as it covered the wider issues surrounding the bill.
I mostly agree with your statement that "accessible drugs are a right of citizens", but believe that some treatments are about as necessary as vanity surgery. Viagra, if subsidized for male sexual dysfunction (although there are other conditions where it provides a real benefit) would be what I would call a vanity prescription.
You mention MS treatment costs. My anticonvulsant medication is subsidized to the tune of about $6 a day (no generics yet) but this keeps me healthy enough to avoid the need to be an even bigger drain on the public purse through social security benefits.
I hope your friend is in the same boat, where the medication is helping to lengthen the time before it becomes completely debilitating and decrease the frequency of attacks.
This cost-effectiveness of subsidization, decreasing costs of other social welfare expenses, while increasing per-capita productivity (it would be really hard for me to contribute to the GDP without my drugs) is an issue that is rarely acknowledged by those opposed to socialized medicine.
Another factor contributing to cost-effectiveness of the PBS is the decreased need for hospitalization and more interventionist outpatient care – which would cost taxpayers a lot more than expensive medication.