Country Report: Australia - Pharmaceutical Executive

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Country Report: Australia
Where Value Beats Cost

Pharmaceutical Executive



Dr. Suzanne Hill, Chair, Pharmaceutical Benefits Advisory Committee
Such hard-to-meet standards across Australia's reimbursement programs could even put future investments of research-driven pharmaceutical companies at risk, thinks Hendriks. "I sincerely hope that government understands the harm it does to Australia's image as an attractive investment destination in the eyes of the global pharmaceutical industry," Hendriks said.

Already, job losses of Medicines Australia-members in 2012 number around 300 on a total of 14.000 employees, with five major companies affected: Sanofi, Pfizer, MSD Australia, Eli Lilly and GlaxoSmithKline. The redundancies are considered to be related in part to medicines coming off patent and in part to price cuts that resulted from the latest PBS reform.

"Whilst the stated aims of PBS reforms related to efficient generics pricing and transparency to ensure cost-effective pricing are well on the way to being realised, the structural reforms related to serving the future needs of patients with the introduction of new innovative medicines still leave much room for improvement," said Albert Spanos, general manager of Celgene Australia, "both from a pricing and timing perspective, which is definitely having a material impact on industry investment in Australia, illustrated by the loss of 300 industry jobs in 2012."

In a response to industry criticism, Dr. Suzanne Hill, chair of the Pharmaceutical Benefits Advisory Committee (PBAC), the statutory committee that advises the Ministry of Health and Ageing as to what drugs will be listed on the PBS, explained how the reforms are changing the demands to the industry. "It is going to be demanding of the industry, because they will have to put a lot of effort into clinical trials that actually show that their products are really better, and that difference in efficacy or effectiveness can be translated into a difference in price," Dr. Hill said, adding that "The usual drug development by industry is incremental in its gains and development, and that is going to be a real challenge."

Looking at the growth of expenditure through the PBS, about one percent in an economy growing 3.2 percent in 2011, the reforms already seem to have the intended effect. Nonetheless, the end is not in sight. "I suspect that the government is going to look for a lot more savings before it allows more expenditure," said Dr. Hill.


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Source: Pharmaceutical Executive,
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