E-drug: Australian pharmaceutical prices: Major report
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Australia's Productivity Commission has released a report on
Australian pharmaceutical prices relative to prices in seven other
countries: the US, Canada, the UK, France, Spain, Sweden and
New Zealand. The report focuses on the prices that manufacturers
receive for 150 pharmaceuticals under Australia's Pharmaceutical
Benefits Scheme. The report, International Pharmaceutical Price
Differences, was released on 20 July 2001. It is available online (as
well as hardcopy):
http://www.pc.gov.au/research/commres/pbsprices/finalreport/pbsp
rices.pdf
The report lists the key messages as:
- The pricing of pharmaceuticals listed on the Pharmaceutical
Benefits Scheme (PBS) is an important issue for Australia. Between
1992-93 and 1999-2000, government spending on pharmaceuticals
rose from under 12 per cent of public expenditure on health to over
15 per cent. In 2000-01, the cost to the Commonwealth
Government of the PBS increased by around 20 per cent, to over
$4 billion.
- This study examines differences between manufacturer prices in
Australia and seven other countries for 150 PBS-listed
pharmaceuticals, as at 30 June 2000. These items account for over
80 per cent of total expenditure on PBS-listed pharmaceuticals.
- The bilateral comparisons show that manufacturer prices in
Australia for the top 150 pharmaceuticals are much lower than in
the United States, Canada, the United Kingdom and Sweden. Prices
in Australia are closer to those in France, and about the same as
those in Spain and New Zealand.
- The price differences vary across different categories of
pharmaceuticals. Prices for new innovative pharmaceuticals are
much closer to those in the other countries. The largest price
differences are observed for 'me-too' pharmaceuticals and they are
also significant for generic pharmaceuticals.
- It is difficult to identify robust specific explanations for the
observed bilateral price differences.
- Rather, the price differences are probably due to a combination of
factors, including differences in health systems, subsidy and
cost-containment mechanisms, market conditions and production
costs.
- There is, nevertheless, some evidence to support the view that
Australia's cost-containment arrangements, particularly reference
pricing, may have contributed to keeping prices relatively low.
The report is 225 pages long, and it contains a lot of useful
information in addition to its key findings. For example, appendix B
provides summaries of the health care system, pharmaceutical
system, and subsidy arrangements of each of the seven countries.
(The Productivity Commission is an independent Commonwealth
Government agency, and is the Government's principal review and
advisory body on microeconomic policy and regulation. It conducts
public inquiries and research into a broad range of economic and
social issues affecting the welfare of Australians.)
Melissa Raven, Lecturer
Coordinator, Drugs & Public Health (previously Addiction Studies)
Department of Public Health, Flinders University
G5 Flats, Flinders Medical Centre
BEDFORD PARK SA 5042, AUSTRALIA
Phone +61-8-8204.5714 Fax +61-8-8-8204.5693
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