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15 Jun 2015

Changes to pharmacist dispensing fees negotiated by the Federal Government will force the cost of the nation’s most commonly prescribed medicines up, leaving hundreds of thousands of patients out of pocket.

The Federal Government claims patients will get vital medicines more cheaply and much quicker following changes to the way pharmaceuticals are supplied under deals with industry it claims will save taxpayers $6.6 billion over the next five years.

But Health Department officials admitted at a Senate Estimates hearing earlier this month that the introduction of a new $3.49 pharmacist handling fee to replace the existing 15 per cent mark up arrangement would push up prices.

The Herald Sun said the change would add between $2 and $3 to the cost of nine of the 10 most commonly prescribed medicines, costing some patients an extra $18 a month.

The revelation tarnishes earlier claims by Health Minister Sussan Ley said patients could save more than $100 a year under agreements the Commonwealth has struck with the pharmaceutical industry, while efforts to accelerate the listing of new medicines on the Pharmaceutical Benefits Scheme were beginning to pay off.

Ms Ley has signed a five-year deal with the Generic Medicines Industry Association to slash the cost of generic pharmaceuticals, including halving the price of common medicines for cholesterol, heart conditions and depression, potentially saving taxpayers about $3 billion over five years.

According to the Government, the changes mean that from October next year the cost of the widely-used cholesterol drug Atorvastatin could drop from $14.60 to $10.68, while the heart medicine Clopidogrel would fall from $14.01 to $10.38 and the depression treatment Venlafaxine would cost $11.65 instead of $16.52.

But consumer groups have warned that the decision to pay pharmacists a flat $3.49 fee (indexed to inflation) for dispensing medications instead of receiving a percentage of the price, will push the cost of many cheap medicines up.

The Consumer Health Forum said figures in the agreement showed consumers would “directly contribute” $8.2 billion to pharmacy owner remuneration in the next five years – around 34 per cent of the $23.6 billion to be paid to pharmacies for PBS medicines.

Forum Chief Executive Leanne Wells said that under the current agreement, consumers contributed 29 per cent of total payments.

The agreement includes bigger incentives for pharmacists to offer patients the option of using cheaper generic versions of medicines, backed by a $20 million media campaign.

The Government has already obtained the pharmacy industry’s grudging acceptance of an optional $1 discount on patient co-payments, and it has also negotiated agreement on lower prices for branded drugs for which there is no generic substitute.

In a measure expected to save about $1 billion, the Government will cut the price it is prepared to pay for branded medicines by 5 per cent after they have been listed on the Pharmaceutical Benefits Scheme for five years.

The Commonwealth is also implementing changes to how it calculates the price it pays for medicines when they go off-patent. Currently, the Government determines market price using a weighted average of the price of all brands.

But under the new arrangement, expected to come into effect from October next year, the original ‘premium’ brand will be excluded from the calculation, driving the average price down.

“Removing originator brands from price calculations for everyday medicines could see the price of common generic drugs halve for some patients, whilst also saving taxpayers $2 billion over five years,” Ms Ley said.

The Government also expects to save $610 million over five years by closing loopholes around the way combination drugs – where two separate medicines are combined to create a new patented medication – are subsidised.

As previously flagged, the Commonwealth also expects to save $500 million remove several low-cost over-the-counter medicines such as everyday painkillers from the PBS.

The Minister said Government efforts to speed up the listing of new medicines were also working, pointing out that there had been 652 new and amended listings on the PBS since it was elected in September 2013, compared with 331 listings during the previous three years.

Ms Ley said the chief independent scientific adviser on medicines, the Pharmaceutical Benefits Advisory Committee took an average of just 17 weeks to recommend whether or not a drug should be listed on the PBS – a turnaround that was one of the fastest in the world.

“We understand the importance of ensuring Australians have fast access to affordable medicines when and where they need them, and we are investing heavily to deliver this,” the Minister said.

PBAC’s operations have been reinforced by the appointment of leading cardiovascular disease specialist Professor Andrew Wilson as Chair, and Ms Ley said the Government would soon introduce legislation to expand PBAC’s membership from 18 to 21 in recognition of its increasing workload and the complexity of matters being considered by it.

“Expanding the capacity of the PBAC to deal with complex medicines is another important step to ensure Australians benefit from new medicines sooner,” she said.

And the Government expects Australia patients to get improved access to leading-edge medications with the launch of a website providing a one-stop shop regarding clinical trials happening around the world.

Evidence indicates that almost half of all phase three clinical trials conducted in Australia fell short of their patient recruitment targets, and Ms Ley said the website would make it easier for patients to find out about trials and take part in ground-breaking medical research.

Adrian Rollins


Published: 15 Jun 2015