A report published in the February 20 issue of the Medical Journal of Australia, reveals that if the pricing system for generic medications was improved and they were prescribed more often, Australia could save hundreds of millions of dollars in Pharmaceutical Benefits Scheme (PBS) subsides.
The Medical Journal of Australia is a publication of the Australian Medical Association.
According to Professor Philip Clarke of the Center for Healthy Policy, Programs and Economics at the University of Melbourne, the country pays considerably more for generic medications and prescribes proportionally significantly less of them compared to several other nations.
Once a generic alternative becomes available after a drug patent expires, wholesale prices should drop significantly, as should the subsides the PBS pay to pharmacies to cover those costs.
However, Prof. Clarke explains that this is not always the situation. For example, approximately $70 million was spent by pharmacists between May 2010 and October 2011 to buy the generic cholesterol-lowering medication simvastatin 20 mg from manufacturers - however PBS subsidies to cover this wholesale cost during the same time period cost $150 million. Pharmacists are not required under the current system to pass on any of the discounts they receive to taxpayers or consumers.
According to Prof. Clarke, because of the new pricing system introduced for the PBS in 2012, the price of some drugs is due to decrease in April 2012 - however these savings will fall considerably short of the mark. He explains that the problem with the current system is that it can take up to one and a half years for supply price reductions to generate savings for the PBS.
In May 2012, the patent of another cholesterol-lowering medication, atorvastatin, is due to expire, and the potential for savings would be considerably more than for simvastatin.
The wholesale price of generic atorvastatin 40 mg will be approximately $50 per script in Australia, in comparison with $5 in New Zealand - a difference of $590 million over 18 months.
In addition, Prof. Clarke said that compared with other nations, generics constitute a fairly small proportion of the medications prescribed in major therapeutic classes in Australia.
"PBS data indicate that prescriptions for off- patent simvastatin and pravastatin constituted only 22% of statins prescribed in Australia during 2011. In contrast, recent figures suggest these generic statins comprise more than 50% of prescriptions in the United States and over 75% in England."
According to Prof. Clarke, given the potential for further savings from increased use of generic medications:
"It is surprising that there is little published economic evidence on whether the much greater use of higher-cost patented statins in Australia represent a cost-effective use of PBS funds."
Written by Grace Rattue