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

Health Budget demonstrates commitment to medicines sector

Members of the Medicines Partnership of Australia (MPA), the nation’s pharmaceutical supply chain peak body, have welcomed key initiatives toward stability and ongoing support for the pharmaceutical sector announced as part of this year’s Federal Budget.

A five-year Strategic Agreement with Medicines Australia will deliver an estimated $1.8 billion in savings to the Pharmaceutical Benefits Scheme (PBS) that will be reinvested into the supply chain, enhance patient access to the latest innovative medicines, fund process improvements and provide significant taxpayer savings.

“In assessing the Health Budget, the MPA acknowledges that the needs of its members have been carefully considered. While there is substantial provision for more to be done, Minister Hunt has responded to pertinent issues around the stability and sustainability of the supply chain, patient access to medicines and certainty for the innovative medicines industry,” MPA Chair Donna Staunton said.

“The Australian pharmaceutical industry has been identified as one of the key sectors for our nation’s future economic success and the measures in the Budget are encouraging to the entire medicines supply chain,” she said.

Medicines Australia Chairman Wes Cook said that the Strategic Agreement with the Commonwealth provided much needed policy stability and provides a base from which to grow investment in the industry from within Australia and overseas.

“This Agreement upholds the key principles sought by Medicines Australia, such as the need for policy predictability and certainty for the industry; acknowledgment that the industry is currently delivering savings through recent reforms and that additional savings generated for taxpayers will be reinvested into new medicines on the PBS,” Mr Cook said.

“The Agreement ends a long period of uncertainty and will improve industry confidence to continue to bring innovative medicines to Australia and to invest in local research and development, such as clinical trials.”

The Generic and Biosimilar Medicines Association has welcomed initiatives to increase the use of affordable medicines, and a two-year extension to its Strategic Agreement with the Commonwealth.

“The biosimilar uptake drivers, amendments to price disclosure and enhancements to prescribing software announced in the Budget are important to ensure a sustainable PBS, increase patient access to affordable medicines, and support the viability of the industry that supplies them,” GBMA Chair Allan Tillack said.

It is anticipated that the increased prescription of generics and biosimilar will have a flow-on effect for Australia’s community pharmacies who fill a critical role in the supply chain and have suffered from years of PBS cuts.

“The Pharmacy Guild is pleased to have reached  a Budget agreement with the Turnbull Government that supports community pharmacies in return for the provision of additional services for patients and ongoing reform. This is a positive outcome for Australia’s community pharmacies, many of which are doing it tough after years of PBS savings measures,” George Tambassis, National President of the Pharmacy Guild of Australia said.

The peak national body for pharmacists, the Pharmaceutical Society of Australia (PSA) welcomed the investment by the Federal Government in Australia’s vital and established community pharmacy network. PSA National Vice President Michelle Lynch said, “While the commitment to community pharmacy programs is excellent news for pharmacists and consumers, there is a significant opportunity missed in the Budget for further maximising the role of pharmacists – the most accessible health professionals in Australia – especially in terms of innovation and delivering new, evidence-based services.”

As a consequence of medicines funding changes, Australia’s full-line CSO wholesalers will be compensated for the impact on their remuneration from cuts to the prices of medicines on the PBS.

“Our commitment is to provide Australians access to quality and affordable medicines and we welcome this funding agreement that will correct a short-term imbalance,” NPSA Chairman Mark Hooper said.

“As the Government has demonstrated it understands the issues we face, we are hopeful they will address our remuneration issues for the longer-term as set out in our submission to the Review of Pharmacy Remuneration and Regulation,” Mr Hooper said.

The Australian Self Medication Industry anticipates no Budget impacts for over-the-counter medicines.

Contact: Donna Staunton 0413 185 724

MPA welcomes predictability and certainty

The 2016-2017 Federal Budget confirms that the Pharmaceutical Benefits Scheme is stable and will continue to ensure Australian patients have access to safe, effective medicines following years of significant reforms in the sector.

The shared hard work of industry and successive governments to implement reforms to the PBS since 2007 has made a significant contribution to the fiscal challenge.

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 expertise to Australian consumers. Its members are Medicines Australia, the Australian Self Medication Industry, the National Pharmaceutical Services Association, the Pharmacy Guild of Australia, the Pharmaceutical Society of Australia (PSA) and the Generic and Biosimilar Medicines Association.

This year’s Budget contains no surprises for the sector, with government investment in the PBS over the forward estimates largely in line with previous forecasts.
A predictable business and investment environment for the medicines industry and supply chain allows us to get on with the critical business of researching, manufacturing, supplying and dispensing safe, effective medicines to Australian patients, representing strong value for money for taxpayers.

The implementation of the latest reforms through the PBS Access and Sustainability Package in 2015 have resulted in significant changes to the costs of medicines for government. These changes have ensured that the PBS will remain fiscally affordable and sustainable into the future.

While the 2016-17 Budget has not included extra cuts to the PBS, further predictability and certainty remains critical beyond 2016 not only for the sector but for all Australians who rely upon the PBS for affordable access to treatments.

The Medicines Partnership of Australia is: The Pharmacy Guild, Medicines Australia, the Generic and Biosimilar Medicines Association, the Australian Self-Medication Industry, the Pharmaceutical Society of Australia and the National Pharmaceutical Services Association.

Media inquiries

Greg Turnbull – 0412 910 261
James Boyce – 0423 239 265
Marie Kelly-Davies – 0408 256 381
Brad Watts – 0487 922 176

PBS costing less for taxpayers

Government spending on the Pharmaceutical Benefits Scheme per head of population has been in decline for almost three years, reinforcing the sustainability of the current scheme.

The Medicines Partnership of Australia has tracked the decline that started with the inception of Expanded and Accelerated Price Disclosure in April 2012. Out-of pocket costs have also declined as a result of price disclosure and more drugs being priced below the general co-payment level.

The good news on the PBS is outlined in the Medicines Partnership of Australia PBS Scorecard – which will be available at

The analysis also shows that not only is Price Disclosure delivering lower prices, but prescription volumes are also well under control.The first set of Pharmaceutical Benefits Scheme price reductions under the new, further accelerated, Simplified Price Disclosure arrangements which cut in from 1 October 2014 have contributed more than $400 million in annual savings to taxpayers. These savings also represent an equivalent reduction in revenue for pharmaceutical manufacturers, wholesalers and pharmacies

Price reductions applied to 442 forms and strengths of 82 drugs and ranged between 10 per cent and 62 per cent. The four sets of price disclosure reductions over the last 12 months (1 December 2013, 1 April 2014, 1 August 2014 and 1 October 2014) have reduced annual funding on affected drugs by approximately $1 billion. This is on top of the significant savings provided in earlier rounds.

In the period since the last MPA PBS Scorecard, the Parliamentary Budget Office’s Projections of Government spending over the medium term confirmed that the PBS not only had grown slower than GDP historically but predicted that it would represent a “negligible” share of government expenditure growth over the medium term.

It is now time that the consequences of sustained reductions in PBS prices, and the low growth outlook, are properly addressed. All components of the PBS – pharmacies, wholesalers and manufacturers – are under increasing pressure. Now is the time to provide certainty for the industry and for the patients that are so well served by the PBS.

A commitment to further timely investment in cost effective new medicines, viable
remuneration arrangements for pharmacist dispensing and professional services,
and appropriate funding for wholesaling of PBS medicines, is urgently required. To
provide an environment that encourages investment, the sector requires stability
and predictability. Further changes to price disclosure would deter investment and
more jobs would be lost.

PBS costing less for taxpayers

Media inquiries: Greg Turnbull 0412 910261
26 November 2014

PBS savings abound in Budget

This year’s Budget has again confirmed the significant savings being reaped by
taxpayers from ongoing reforms of the Pharmaceutical Benefits Scheme.
The Budget revealed that the PBS will cost $4.5 billion less from 2013-14 to 2016-
17 than was expected in last year’s Budget. $0.7 billion of that was attributed to
increases in co-payments and safety net thresholds to be introduced from January
2015. However the remaining $3.8 billion is a windfall benefit from existing reform
and lower than expected growth.

According to the Medicines Partnership of Australia PBS Scorecard, issued today,
the amount taken out of the PBS forward estimates over the next three financial
years had a larger positive impact on the Budget bottom line over that period than
any savings measure in the 2014 Budget. The PBS continues to do more than its
share of fiscal “heavy lifting”.

The 2014-15 Health Portfolio Budget Statements also showed all ongoing savings
from PBS Reforms. Next financial year the savings will be running at more than $2
billion per year. Two years later they will have increased to more than $2.5 billion
per year and cumulatively they will deliver $9.9 billion over the next four years.
Clearly, PBS Reforms are delivering massive savings. With those savings come
significant – and growing – impacts on all parts of the pharmaceutical industry –
manufacturers, the supply chain and community pharmacies.

The Budget also included a 13 per cent increase in PBS co-payments from 1
January 2015, over and above the usual CPI increase – an increase of $0.80 per
prescription for patients with a concession card and of $5.00 per prescription for
those without a concession card. Safety net thresholds will also increase well above
inflation through to 2018.

The most recent study on the impact of sharp co-payment increases concluded that
increases in patient contributions particularly impact on concessional patients’ ability
to afford medicines. This is an impact that should be of concern to policy makers.

The Medicines Partnership of Australia is: The Pharmacy Guild, Medicines Australia,
the Generic Medicines Industry Association, the Australian Self-Medication Industry,
the Pharmaceutical Society of Australia and the National Pharmaceutical Services

Media inquiries: Greg Turnbull 0412 910 261

National Commission of Audit report wrong on the PBS

The recommendations of the National Commission of Audit in relation to the
Pharmaceutical Benefits Scheme would see the dismantling of a system that is safe,
sustainable and effective for patients.

The Medicines Partnership of Australia urges the Federal Government to reject the
flawed recommendations in the report on the PBS, which reflect a disappointingly
superficial analysis of a very complex and crucial part of the health system.

The fact is that PBS expenditure is under control, has been subjected to extensive
reforms and savings for the past five years, and actually saw a reduction in
Government expenditure last financial year.

If adopted, the recommendations of the Commission would:

  • Limit access to medicines by imposing an artificial cap and seven year cycle
    on PBS spending
  • Increase the cost of medicines for consumers through increasing the PBS copayments
  • Decimate the pharmacy sector by removing pharmacy ownership and
    location rules, jeopardising the quality and accessibility of pharmacy services

During his appearance before a Senate Committee in Canberra on Friday, the Chair
of the Commission, Mr Tony Shepherd, said in relation to PBS listings and
expenditure: “”What is covered by the PBS just grows, and the cost of it grows, and
there is no sort of rational assessment of whether it is needed or not.” This flies in
the face of PBS reality, and would seem to be an example of what Mr Shepherd
described on Friday as “a layman’s look at the thing.”

The Commission’s reference to the New Zealand pharmaceuticals system ignores
the shortcomings of that country’s tendering system which include restrictions on
patient and doctor choice of medicines, and risks of medicine shortages through
reliance on single suppliers. Unhelpfully, the report uses as an example a single
medicine comparison, which includes out-of-date prices, and fails to recognise the
lack of choice.

Access to medicines for Australian health care consumers is underpinned by the
National Medicines Policy, established in 1999. The National Medicines Policy has
four central objectives:

  • timely access to the medicines that Australians need, at a cost individuals
    and the community can afford;
  • medicines meeting appropriate standards of quality, safety and efficacy;
  • quality use of medicines;
  • and maintaining a responsible and viable medicines industry.

Unfortunately, the recommendations of the National Commission of Audit fail the
test on all four of these objectives.

The Medicines Partnership of Australia is: The Pharmacy Guild, Medicines Australia,
the Generic Medicines Industry Association, the Australian Self-Medication Industry,
the Pharmaceutical Society of Australia and the National Pharmaceutical Services

Media inquiries: Greg Turnbull 0412 910 261

Medicines Partnership of Australia states that no further PBS savings measures are required or justified in the 2014 Federal Budget

With a united voice, members of The Medicines Partnership of Australia (MPA) have called on theGovernment to provide stability and certainty that is urgently required to continue the supply ofmedicines to Australian patients through the Pharmaceutical Benefits Scheme (PBS).

Given the recent passage of the Simplified Price Disclosure legislation, the MPA assumes the upcoming Federal Budget will not include further changes to price disclosure which is already reaping the Government billions of dollars a year in reduced PBS reimbursement costs.

However, it is clear from Mr Hockey’s speech last night that the Government is seriously looking at PBS co-payment and safety net levels as well as the eligibility for concessional PBS co-payments.

In its deliberations, the Government must recognise that medicines are not just a cost but a critically important investment in better health care for all Australians.

PBS medicines along with the professional advice and support of doctors and pharmacists keep people alive and out of more expensive hospital and residential aged care settings. They keep people productive in the economy, in the paid workforce and caring for family members.

The world’s largest health information company, IMS Health, has estimated that Australia would save $6 billion a year from reforms that increase the responsible use of medicines.

The Australian Commission on Safety and Quality in Health Care (ACSQHC) estimates there are 230,000 medication related admissions to hospitals annually costing an estimated $1.2 billion.

If changes to PBS co-payment levels and eligibility are not intelligently managed with a strong commitment to professionally supported medication adherence and management, there is a great risk that sick, elderly and less well-off Australians will be discouraged from taking their medicines.

This will not only be to the detriment of their own personal health, but will lead to further increased costs across the MBS, hospitals and aged care, all of which are considerably more expensive and growing much faster than the PBS.

The MPA also queried the longer term forecasts of PBS expenditures released by Treasurer Hockey.

Treasury and Finance do not have the best record in forecasting these expenditures. In the last three years, they have had to reduce their pharmaceutical expenditure forecasts by a cumulative total of $8.9 billion, including $2.7 billion in last December’s MYEFO (the largest downward forecast across the entire Federal Budget).

PBS expenditure actually fell last financial year and is forecast to rise at a rate lower than GDP growth throughout the current forward estimates, a fact confirmed in Mr Hockey’s latest figures.

How it is then suddenly forecast to start increasing by nearly $1billion a year is unexplained.

Attachment 1 provides a brief overview of PBS projections.

The National Commission of Audit’s projections for Pharmaceutical Benefits Scheme (PBS) expenditure as a percentage of Gross Domestic Product (GDP) show that the scheme is under control well into the future. PBS as a percentage of GDP will be stable at approximately 0.6% of GDP through until 2023-24. Based on recent experience, with successive downward revisions of PBS expenditure in budget after budget, this will be an overestimate.

It is also notable that the National Commission of Audit’s projections are below those  released in the most recent Intergenerational Report (IGR 2010). For example, the projection for 2019-20 was 0.7% in IGR 2010 compared with the new estimate of just 0.59%. IGR 2010 was in turn a massive reduction compared with previous Intergenerational Reports published in 2002 and 2007, as shown in the chart below.

Brief overview of PBS projections.