Week 5: Pharmaceutical Benefits Scheme
What is the Pharmaceutical Benefits Scheme Reforms? (II - What changes happened?)
- 2007: PBS medicines list divided into two separate formularies - F1: single-brand patented medications, F2 drugs where multiple brands are available - This reduced the effectiveness of reference pricing as changes to almost all generic drugs in F2 would not affect drugs in the same therapeutics class remaining F1 - Introduction of changes to formulary accompanied by regulatory accompanied by regulatory price cutting - Some generic prices reduced by 25% - New system was called 'price disclosure' for setting prices of F2 medications - This was to address the problem: Australia was paying much more for generics than many other countries (reduction in costs to benefit taxpayers)
What are the outcomes associated with New Pharmaceutical Drugs?
- Clinical effect (antibiotics may be a single prescription compared to blood pressure drugs (need to be taken over a lifetime) - Drug may need regular monitoring or additional doctor visits - Drug may reduce patient's stay in hospital so making available resources - New hospital bed available for another new patient - Negative side: dimensions called by health economists quality-adjusted life-years (QALYs) - Scale of 0 to 1 is a scale of the health state of the patient - Scale 0 = health state equivalent to death, 1 = full health
What is the Cost Effectiveness of Pharmaceutical Drugs?
- Cost-effectiveness analysis normally involves evaluations of relative therapy to a comparator drug - Often an existing drug that would have been used if the new drug had not been available - The cost-effectiveness ration is the ratio of incremental costs (drug over comparator) to incremental benefits via the formula Cost effectiveness ration = Costs of drugs - costs of comparator/outcomes of drugs - outcomes of comparator
What types of medicines does the ABS cover?
- Covers a wide range of medicines dispensed by approved pharmacists for patient use at home - Some high risk medicines - e.g. chemotherapy medicines dispensed in hospitals - About 80% of prescribed medicines are subsidised on the PBS scheme - Therapeutic Goods Administration (TGA) determines whether a medication can be sold in Australia while the PBS is the mechanism by which the Australian government subsidises drugs to make them affordable to patients
Describe the Origin of Australian Pharmaceutical Benefits Scheme (PBS)
- Established in 1940s by the Aus government - Provide free medicines to pensioners - Limited list of "life saving and disease preventing medicines" free of charge to others in community - Still sustainable and operating for 77 years through different governments and different policies - PBS is set out in National Health Act 1953 - National Health Amendment (PB) Act 2017 - Supersedes National Health Act 1953 on 28/03/2017
What is PBS expenditure?
- Fastest growing area of health expenditure - 1990s: PBS average estimated annual expenditure growth rate of 14% - 2010-2011 financial year - PBS grew by 5.7% - Predict by 2020 PBS will be 0.7% of GDP - Main reasons for large increase in PBS expenditure - Over-prescribing, aggressive marketing by the Pharmaceutical Industry - Increasing use of pharmaceuticals, ageing population - Higher prices number of new drugs being listed
What is Therapeutic Goods Administration (TGA)? (II)
- Licensing of manufacturers - Premarket assessment and post market vigilance - Being a division of Australian Government, principal responsibility rests with TGA - Mechanism to ensure access to the medicines is the Commonwealth's Pharmaceutical Benefits Scheme - TGA regulates the advertising, labelling and packaging of registered therapeutic goods
What is the Pharmaceutical Benefits Scheme Reforms? (I)
- Manner in which government sets prices for pharmaceuticals has changed markedly - New drugs: government negotiates a price with company at the time drugs is listed on PBS - Govt has a regulatory framework for changing prices of medications over time - When drug patent (up to 5 years) expires, price will decrease significantly - Up to mid 2000 - reference pricing was used to adjust price PBS listed items - PBS subsidy set at level of lowest price drug in therapeutic equivalent group - Generic drugs became available (1994) after originator drug patient expires - These were much cheaper as manufacturer needs to cover production costs - No cost of drug development
What is the assessment of new pharmaceutical drugs - PBS eligibility?
- New pharmaceutical drugs are assessed by PBAC - Use the framework of cost effectiveness analysis - Normally involved an economic evaluation of submission from the pharmaceutical company - Company attempts to quantify the incremental benefits and costs of the new drug relative to a comparator (or the medication is likely to replace) - Economists focus on the increment = additional benefit or cost being the difference between the new drug and its comparator - Need to take into account various factors
Summary
- PBS provides a wide range of pharmaceuticals to Australian Residents - Eligible visitors from countries having Australian Government's Reciprocal Health Care Agreements (RHCA) - PBS Scheme serve as a tax-financed insurance scheme - Users pay a co-payment currently up to $6.30 concessional card holders and up to $38.80 general users - The federal government covers the remainder in excess of these amounts - Range of PBS pharmaceuticals determined by PBAC - Government has markedly changed the way prices have been set over the past decade - Price disclosure has been in use to reduce price of generic (off-patent) medications - Australians still pay more than other countries for some medications - Like most types of health are, overall expenditure of PBS pharmaceuticals has been rising over time - The rise may be due to combination of ageing population, increase in demand for medications and technological changes - Government aims to control PBS expenditure through combination of changes a) level of subsidies b) quality of medications prescribed c) price paid for each medication - PBAC assess cost-effectiveness of new medications: price and benefits
What is Therapeutic Goods Administration (TGA)? (I)
- Part of Australian Government Department of Health - Principal responsibility for assuring quality, safety, and efficacy of all products that make therapeutic claims - TGA evaluation process includes: premarket assessment Evaluation for - Quality, safety and efficacy, product strength, possible side effects, potential harm through prolonged use, toxicity, its intended use for the seriousness of the medical condition
What are the Aims of the PBS?
- Part of Australian Government National Medicines Policy - Providing timely access to necessary medicines to Australian residents - 2002: PBS medicines to eligible visitors from 11 overseas countries - At a cost individuals can afford, irrespective of financial circumstances - Providing medicines that meet appropriate standards of quality, safety and efficacy - Ensuring quality use of medicines (QUM) all safe and effcacious - Maintaining a responsibility and viable medicine industry
What are the PBS Costs and Cost Containment measures?
- Quality of Medicine (QUM) - Fourth arm of National Medicines Policy - Aims to achieve more rational use of medicines and less wasteful use of medicines - Through partnership with government, health professionals, consumers, industry - National Prescribing Service (NPS): service delivery arm of QUM - Provides information and educational programs about appropriate use of medicines - Ensure the right drug is for the right patient - Sporadic educational programs - Encourage consumers to be more judicious in the use of medications - Also educate medical prescribers to reduce their prescribing - Pharmaceutical manufacturers marketing budgets are large - Tightening of restrictions of drug prescribing results in declining drug sales - Doctors may resent this as an intrusion to their clinical prescribing decisions
What is the ABS (I)
- Range of pharmaceutical drugs that are subsidised has expanded significantly over time - 1950: Australian residents had free access to 139 drugs - 2007: 1608 listed items with 2980 brands available - PBS scheme can be equated as insurance scheme - Funded through general Australian Government Taxation
What is the Pharmaceutical Benefits Advisory Committee (PBAC)?
- Review cost of pharmaceuticals expected to be subsidised by the government - Pharmaceuticals expected to cost $20 mill/year and require Cabinet approval - Government does not allocated a fixed budget to pharmaceuticals but is not obliged to implement advice of PBAC - Other countries (NZ -The PHARMAC = PBAC manages a fixed budget, so must spent less than the allocated budget - Means that some pharmaceuticals cannot be funded, so choices needed to be made - Australian Government is looking at this model
Australian PBS Drug Comparison costs with England NHS
- Simvastatin Tab 40 mg in Aus and England over 8 years - End of 2009, estimated excess cost for Simvastatin amounted more than $750 mill - Price disclosure has narrowed gap between the price Australia pays for generics and that paid by other countries
What is the PBS Patient Co-payments and Safety Net Scheme?
- When a PBS-listed medication is dispensed, the approved pharmacists is paid an amount by the Australian government - The patient (Australian resident) shares this cost through what is called a co-payment - introduced in 1960 - This co-payment is indexed 1 January each year in relation to Consumer Price Index (CPI) - General Patients ($38.80), Health Care Card/Pensioners/Veteran's Affairs patients ($6.30), Safety Net Entitled patients ($0.00) - Safety Net in place to reduce high patient expenditure in a calendar year - Cardholder's responsibility to maintain the PBS expenditure records during each calendar year especially if prescriptions are dispensed at numerous pharmacies
PBS Sustainability
- With health care overall expenditure is constantly rising over time (expenditure of pharmaceuticals in 2013-14) - More than 4 times the amount spent in the early 1990s - With rising costs - government may need to raise the rate of taxation OR - Spend less on other government programs in order to continue the sustainability of PBS pharmaceuticals - Expenditure may rise due to both listing of new medications and expansion of existing medications
What are the current Top 10 Drugs by cost to government?
1. Adalimumbab - Psoriatic arthritis ($3 mill) 2. Rosuvastatin - Hypercholesterolaemia ($2 mill) 3. Afilbercept - Macular degeneration ($192 mill) 4. Ranibizumab - Age related macular degeneration ($179 mill) 5. Fluticasone and Salmeterol - Asthma ($175 mill) 6. Esomeprazole - GORD symptomatic relief ($174 mill) 7. Etanercept - Psoriatic arthritis ($164 mill) 8. Rituximab - Non-Hodgkins Lymphoma ($156 mill) 9. Insulin Glargine - Type 1 and 2 Diabetes ($142 mill) 10. Fingolimod - Treatment of MS ($134 mill) - Harvoni Tab 28 ($22 thousand) per month for chronic Hepatitis C Infection - 6 months = $133 thousand - Patient pays maximum $229 or $37.20
Timelines of the PBS
1948: 1 July - Introduction of Australian Pharmaceutical Benefits Scheme 1950: 139 Lifesaving drugs (free of charge) 1953: Governing legislation passed (National Health Act 1953) 1960: Co-payment introduced: $0.50 (5 shillings) for general consumers 1979: Dentists granted prescribing access 1983: Introduction of concessional category (low-income beneficiaries) 1986: Safety Net introduced for general and concessional beneficiaries 1988: 'Authority only' restrictions placed on high cost drugs 1990: Brand Premium Policy introduced 1990: Pensioners pay co-payments for the first time ($2.50) 1991: Introduction of annual indexation of co-payments and safety net thresholds through CPI 1994: Generic substitution by pharmacists allowed 1998: Therapeutic Group Premium introduced 2002: Improved Entitlements Monitoring for PBS eligibility 2006: Safety Net 20 Day Rule introduced 2007: 1608 listed items, 2890 brands available 2008: Optometrists granted prescribing access 2010: Electronic prescribing by prescribers 2010: 'Closing the gap' program commenced July 1 2012: Collection of all dispensed PBS prescription benefits data for less than $35.40 general patient co-payment by Department of Human Services 2016: Safety Net 20 Day Rule redefined as Early Supply Rule, with existing medications now affected by new rule 2016: Co-payments could be discounted $6.20-->$5.20 and $38.30 to $37.30
What are the Top Listing PBS Drugs in past years - PBS Price Disclosure
1st: 2012-2014 - Atovastatin (hypercholesterolaemia) 2nd: 2012-2013 - Rosuvastatin ("") 3rd: 2014 "" - 2012-2014 Esomeprazole most popular - Impact of price disclosure - PBS costs - Atorvastatin PBS cost dropped by 69%: $652 million in 2012 to $202 million in 2014 - Same period - raw prescription counts decreased only by 29% from 10.5 million to 7.5 million prescriptions
How do we control Pharmaceutical Expenditure?
Several approaches PBS can adopt - In 2014 budget: reduce PBS subsidies by increasing patient contributions - This shifts costs from the government to consumers - Co-payment increases may have a negative impact on patient health - Australian PBS co-payments considered high by world standard - 4 out of 15 comparable OECD (The Organisation for Economic Co-operation and Development) countries - Reduce/alter types of drugs prescribed Eg. Doctors encouraged to switch from more expensive drugs to cheaper drugs of the same therapeutic class - If generic substitutions of statins matched England prior to 2009, PBS spending could have been reduced by $1 087 million - Contain the growth of PBS expenditure is to reduce drug prices, particularly generic medications - Price disclosure has resulted in price reductions: has been relatively slow compared to other countries such as England and NZ - Paying high prices for generic drugs regarded as technical insufficiency as prices can be reduced without reduction of the mix available of drugs - Solution may be a tendering process, first introduced to NZ and Netherlands
