Medicines Partnership of Australia (MPA) welcomes additional PBS investment

The Medicines Partnership of Australia (MPA) warmly welcomes the Federal Government’s additional investment in the PBS in this week’s Budget.

The Budget makes a commitment to investing $2.4 billion in new medicine listings from 2017-18 to 2021-22.   This includes $1.4 billion for new and amended listings on the PBS, including medicines to treat spinal muscular atrophy, breast cancer, relapsing-remitting multiple sclerosis and a new medicine to prevent HIV.

In addition, the Budget includes $1 billion in provisioning for future PBS listings in line with the Government’s commitment to list all new medicines recommended by the independent Pharmaceutical Benefits Advisory Committee (PBAC).

Furthermore, MPA welcomes the Government’s strong leadership in enhancing the transparency of its investment in the PBS.

This will be achieved by improved administration arrangements whereby the Government will pay the negotiated price for medicines with special pricing arrangements.  This will reduce the PBS revenue received by the Government with a corresponding reduction in PBS expenses, and no change to the Government’s overall investment in the PBS.  See Chart below.

  1. Expenses include $1.0 billion that the Government has provisioned for new medicine listings.

The Net PBS Expenses graph in the Budget Overview document shows that the Government’s overall PBS net investment (i.e. net PBS expenses) – including the $1 billion that the Government has provisioned for new medicine listings – will increase from $8.7 billion in 2017-18 to $9.3 billion in 2021-22.  See Chart below.

The MPA is committed to working with the Government to ensure that all Australians derive maximum benefit from the PBS, including the $2.4 billion investment in new and amended listings announced in this week’s Budget.

Media contact: Greg Turnbull 0412 910 261

The Medicines Partnership of Australia (MPA) is an alliance of peak industry associations representing key members in the supply chain that deliver medicines and pharmacy services to Australian consumers.


2018-19 Budget Response from Medicines Partnership of Australia (MPA)

Pharmaceutical benefits and services expenditure

The 2018-19 Federal Budget confirms that PBS expenditure is fiscally constrained and is continuing to decline in real terms.

Removing the impact of the decision to change the payment arrangements for high-cost medicines and allowing for an additional $1 billion in committed spending for further new PBS listings, expenditure on pharmaceutical benefits and services is estimated to decrease by 7.3 per cent in real terms over the period 2018-19 to 2021-22.

The lack of growth in pharmaceutical benefits and services expenditure is also evident in nominal (non-inflation adjusted) terms as shown in Chart 1.

The MPA acknowledges the announced investment in the PBS through new PBS listings but stresses the importance of recognising the economic and social contribution of the medicines sector.  Future investment in the PBS must be sufficient to maintain the viability of the sector and enable it to meet patient needs.

In this Budget, unlike previous years, estimates of savings from ongoing price disclosure are not separately outlined.  The Compacts signed last year with participants in the medicines sector will deliver $1.8 billion in savings over five years.

Chart 1: Expenditure on pharmaceutical benefits, services and supply

Changes to payment arrangements for high-cost medicines

The Government’s decision to change payment arrangements for high-cost medicines to address medicine access and pharmacy cash flow issues involves a reduction in PBS revenues and expenses by a corresponding amount ($5.4 billion from 2018‑19 to 2021‑22).

The Budget makes clear that there will be no reduction in the Government’s overall investment as a result of these changes and that a payment administration trial for certain high cost medicines with special pricing arrangements will commence from 1 July 2019. The ‘net’ PBS expenditure that results is shown in Chart 2.

The MPA welcomes the fact that the Government will continue to consult closely with the medicines sector on trial design, implementation and transition arrangements.  The MPA stresses the importance of ensuring that the trial is progressed with the agreement and support of the sector with all implementation costs to be met by the Federal Government.

Chart 2: Impact of changes to the payment arrangements for high-cost medicines on PBS expenditure

  • Expenses include $1.0 billion that the Government has provisioned for new medicine listings. Source: Budget Paper No. 1, page 6-21.

New PBS listings

The Budget makes a commitment to investing $2.4 billion in new medicine listing from 2017-18 to 2021-22.  This comprises $1.4 billion in announced new listings and $1 billion in provisioning for future PBS listings.

The MPA welcomes the announced new listings which will deliver real benefits to patients as well as the $1 billion in provisioning for future PBS listings, while noting that new listings are being more than paid for by the PBS savings that are being delivered by the sector through ongoing price disclosure and the 2017 Compacts.

Media contact: Greg Turnbull 0412 910261

The Medicines Partnership of Australia (MPA) is an alliance of peak industry associations representing key members in the supply chain that deliver medicines and pharmacy services to Australian consumers.

Review options may threaten stability of medicines sector

Members of the Medicines Partnership of Australia (MPA), the nation’s pharmaceutical supply chain peak body, have raised their concerns about the future stability of the industry in formally responding to the Interim Report by the Review of Pharmacy Remuneration and Regulation.

The Interim Report proposes options for broad and far-reaching changes to the nation’s pharmaceutical industry model; changes that threaten the stability of a system that has delivered for Australian patients over a long period of time and is not in need of a major overhaul, according to MPA members.

“Many of the options put forward in the Interim Report represent drastic and unnecessary change to a community pharmacy model that is for the most part, delivering well for Australians,” MPA Chair Donna Staunton said.

“Should the Review proceed on its current trajectory, negative impacts would be felt right across the pharmaceutical supply chain, ultimately increasing prices and reducing choices for consumers, and threatening patient accessibility to critical medicines.”

The Pharmacy Guild of Australia was particularly scathing in its response to the Interim Report, describing the Review as a lost opportunity to build upon a community pharmacy model that works extremely well, enjoys widespread support and is fiscally sustainable.

“The Review has been hijacked by a combination of ideology and economic theorising leading to conclusions that would dismantle if not destroy the tried and tested, mature community pharmacy model, forcing the closure of an estimated 1,700 community pharmacies with major losses of jobs, and an irreversible corporatisation and commoditisation of medicines related care,” Pharmacy Guild of Australia President George Tambassis said.

“The Guild has come to the conclusion that the Review is so fundamentally flawed and inherently damaging that it cannot and should not be relied upon by government as a credible input on the key issues of dispensing remuneration, pharmacy Location rules, the medicines supply chain or future community pharmacy agreements.”

In its response to the Interim Report, the peak national body for pharmacists, the Pharmaceutical Society of Australia (PSA) National President Dr Shane Jackson said, “Clinical services delivered by pharmacists, especially dispensing, need to be seen through a health lens and not an economic lens.

“Dispensing is a core clinical activity performed by the majority of pharmacists across the country. We need to build on this core role, and expand on the services available for community pharmacists to help their patients,” Dr Jackson said.

Despite agreeing in-principle to several options put forward by the Review designed to increase transparency, harmonise pharmacy legislation, and deliver technological advancements to enhance patient access and outcomes, Medicines Australia Chief Executive Milton Catelin said the case for broad and radical reform lacked conviction.

“Medicines Australia is not persuaded that a case for broad-ranging or radical reform has been made. Many of the options are quite radical, and would provide major disruption to a system that has served Australia well for many years,” Mr Catelin said.

“Rather than embarking on major reforms that would overturn many successful arrangements and lead to great unpredictability, Medicines Australia believes that incremental changes should be explored to make the existing systems work more efficiently,” Mr Catelin added.

In its response, the National Pharmaceutical Services Association (NPSA) outlined several general and specific concerns with the Interim Report’s findings, which fail overall to sufficiently recognise the complex, interdependent relationships that exist across the pharmaceutical supply chain and for the wholesaling industry in particular.

The Interim Report outlines three alternative options relating to the distribution of medicines to community pharmacy. The Review Panel’s preferred alternative (6-1) suggests putting the obligation of medicine delivery directly on manufacturers through a panel of distributors, while the second (6-2) retains the Community Service Obligation (CSO). The last of the three alternatives (6-3) suggests a “separate review of the CSO to ensure current arrangements demonstrate value for money”.

“Implementing a Manufacturer Distribution Model offers no obvious benefit and has significant drawbacks, including greater regulatory burden for government; greater administrative burden for pharmacy; increased risks to medicines availability due to diminished system redundancy; greater complexity across the supply chain and the potential for market power imbalance,” NPSA Chair Mark Hooper said. “It is not supported by NPSA and we are yet to find an industry association in the entire medicines sector who does,” he added.

“We are talking about a critical medicine supply chain that underpins the Government’s own National Medicines Policy (NMP). In the interests of Australian consumers and our community pharmacy customers who are dependent on it, CSO wholesalers remain committed to finding a workable outcome for Government and sustainable remuneration for the sector.”

The Generic and Biosimilar Medicines Association similarly expressed concerns about a Manufacturer Distribution Model in its response, noting that it will threaten commercial viability for manufacturers of generic medicines.

“Placing the onus for distribution on suppliers of generic medicines will only add to the cost of doing business. It will shift the scale towards commercial unviability and therefore cessation of supply for a significant number of generic medicines that Australians rely on to keep them well. It may also hinder competition, tipping the scale heavily in favour of larger manufacturers,” GBMA CEO Belinda Wood said.

The GBMA also strongly disagrees that tendering for generic medicines would improve supply chain efficiency and reduce costs to the Australian community. Ms Wood said, “a tendering system for generic medicines poses more risks for Australian consumers than benefits. It will only reduce patient choice, cause medicine shortages and rationing, destroy investment in this country, and irreparably damage the sector that seeks to make medicines affordable.”

While not as staunchly opposed, the Australian Self Medication Industry (ASMI) called for further assessment of any option relating to the tendering for the listing of generics. ASMI also expressed concern about increased regulation around the sale of Complementary Medicines (CMs).

“ASMI supports education and improved health literacy of consumers but does not believe separating CMs within pharmacy is an effective strategy due to the multiple market channels they are available through and may lead to a misconception that they carry no medical efficacy,” ASMI Chair Lindsay Forrest said.


Contact: Donna Edman 0419850174

Review options undermine industry and risk negative outcomes for consumers

Members of the Medicines Partnership of Australia (MPA), the nation’s pharmaceutical supply chain peak body, have expressed concern that proposed options in the Review of Pharmacy Remuneration and Regulation’s Interim Report will have significant unintended consequences for the industry and a negative impact on consumers.

The Interim Report, which was released 22 June, outlines several key options for change in the pharmaceutical supply chain, including increased pharmacy regulation, changes to PBS pricing rules, abolition of the optional $1 discount of the patient co-payment, the introduction of tendering for generic medicines and several options for removing, retaining or replacing the existing Community Service Obligation (CSO) for wholesalers.

“In assessing the options put forward by the Panel, the MPA is concerned about the consequences of some of the proposed changes as they  may ultimately increase prices and reduce choices for consumers, and threaten patient accessibility to critical medicines,” MPA Chair Donna Staunton said. “It is almost as if they have started from a fixed end point and then attempted to find evidence to support that point of view,” she added.

“The Australian pharmaceutical industry has been identified as one of the key sectors for our nation’s future economic success. Last month, we took a positive step forward with the Federal Budget funding announcements, but we view this Interim Report in many ways, as a step backwards that has the potential to harm the future growth of the sector,” she said.

Medicines Australia Chief Executive Milton Catelin expressed concerns about proposed changes to the supply chain model, and choice of medicines for patients.

“These suggestions could have far reaching consequences for this industry and importantly, on patients through changes that may impact the reliability of the supply chain for medicines. This will therefore need careful scrutiny,” he said.

“Medicines Australia believes any reforms to how medicines are supplied by manufacturers to pharmacies and patients must ensure equity of access for patients wherever they reside and equity of distribution choice for manufacturing companies.”

PBS regulation changes put forward in the Interim Report also extended to generics, with the Panel suggesting the introduction of tenders for generic branded medicines, an outcome that would limit the number of options for consumers.

NPSA Chair Mark Hooper echoed a similar sentiment, describing the document as, “extremely disappointing”, lacking in rigour and failing to identify any consequences of its recommendations.

“We already have medicines shortages in Australia, so we fail to see how a proposal to effectively shift away from a hub and spoke distribution model with in-built redundancy will alleviate this or enhance access to essential medicines for consumers,” he said.

“It is also particularly disappointing that the Panel has chosen to make supply chain suggestions that appear to fundamentally ignore not only submissions provided by the CSO wholesalers but also those of the Guild, Medicines Australia and individual manufacturers.”

Under changes proposed by the Panel, pharmacies would be prohibited from offering consumers discounted prices on PBS listed items, adversely affecting around 85 per cent of the Australian population to the tune of $94 million.

Increased regulation on community pharmacy, possible reductions in dispensing remuneration and radical changes to pharmacy location rules could “put at risk one of the most trusted, sustainable and best performing parts of Australia’s health system,” said Pharmacy Guild of Australia President George Tambassis.

“Australia’s 5,600 community pharmacies, their 50,000 hard-working staff and millions of loyal patients need certainty and security about their ability to deliver and receive the highest quality healthcare.

“This Review should be enhancing rather than threatening one of the most strongly supported parts of Australia’s health system,” he said.

The peak national body for pharmacists, the Pharmaceutical Society of Australia (PSA), welcomed the Panel’s finding that, “there is significant opportunity to better utilise the skills of pharmacists to support improved access to health services and improved health outcomes for the community,” and welcomed the abolition of the $1 discount on the PBS patient co-payment.

However, PSA National President Joe Demarte said there were some concerning issues in the Interim Report.

“The implication that pharmacy could give back $1.9 billion over the next four years through a flat dispensing fee option of between $9 and $11.50 is concerning, particularly given the heavy impact of price disclosure,” Mr Demarte said.

“We are seriously concerned about the flow-on effects of this for pharmacists’ wages – the main cause of dissatisfaction in the profession.  Furthermore, while the interim report acknowledges the positive impact of a range of pharmacists’ services, it’s vague on presenting concrete options for progressing services to benefit consumers.”


Contact: Donna Staunton 0413 185 724