Australia's PBS 'a model performer in broken health system'

Australia's Pharmaceutical Benefits (PBS) scheme is a robust policy instrument with which none of the government's many health reviews has identified a systemic problem, trade group Medicines Australia chairman Will Delaat told the country's National Press Club yesterday.

'For all the dysfunction and cost-shifting across the broader health system that has prompted the Rudd Government's health reforms, the PBS remains a model of effectiveness, efficiency, stability and sound management,' Mr Delaat said.

Mr Delaat said a Victoria University study released this week found that the major PBS reforms of 2008 are delivering the intended policy outcomes. The report (The Pharma Letter October 26) showed that PBS growth is much lower than expected, that savings to the government from last year's PBS reforms will be much higher than expected and that there is definitive evidence that the PBS is sustainable.

'According to the Victoria University report, average growth of the PBS will be in the order of 3.7% per annum to 2013-14,' Mr Delaat said. 'That is sustainable by any measure, particularly given the ageing population. The PBS will continue to account for approximately 0.7 per cent of GDP ' where it has been for the past 10 years. The fact that the impact of PBS reforms and ongoing mandatory price cuts have ensured the sustainability of the PBS in the medium-term is not open to question,' he declared.

Mr Delaat continued: 'The other good news for government is that, despite its own projections of a $3 billion saving to taxpayers from PBS reform over 10 years, the real number looks like being more than double that. PBS reform alone will deliver savings to the public purse of $6 billion - $3 billion dollars more than the government had banked on. Effectively, industry has delivered government an unexpected $3 billion windfall. The industry is alert to fiscal pressures and has tightened its belt accordingly. Prices are low. Savings are being delivered.'

Mr Delaat also told the National Press Club that the prices the Australian government pays pharmaceutical manufacturers for new medicines are lower than any other government in the OECD. Reimbursement prices to companies in Australia are 19% lower than the OECD average, he noted.