Costs of paying higher prices for equivalent effects on the Pharmaceutical Benefits Scheme

Abstract

Objective. The aims of the present study were to illustrate and discuss the effects of the non-maintenance of equivalent prices when the comparators of pharmaceuticals listed on the Pharmaceutical Benefits Schedule (PBS) on a cost-minimisation basis come off-patent and are subject to statutory price reductions, as well as further potential price reductions because of the effects of price disclosure. Methods. Service use, benefits paid, and price data were analysed for a selected sample of pharmaceuticals recommended for listing on a cost-minimisation basis between 2008 and 2011, and their comparators, to estimate the cost savings to the PBS of maintaining equivalent prices. Results. Potential cost savings for 12 pharmaceuticals, including alternative compounds and combination products across nine therapeutic groups, ranged from A$570 000 to A$40 million to April 2015. Potential savings increased significantly following recent amendments to the price disclosure process. Conclusions. Potential savings from maintaining equivalent prices for all pharmaceuticals listed on the PBS on a cost- minimisation basis could be over A$500 million per year. Actions to reduce these costs can be taken within existing policy frameworks, but legislative and political barriers may need to be addressed to minimise these costs, which are incurred by the taxpayer for no additional benefit.