The prices paid by the Australian government for over 800 widely-used prescription drugs will drop 25% on August 1. The one-off price cut will affect almost half of all drugs supplied through the Pharmaceutical Benefits Scheme (PBS), with the prices of 400 products falling below A$31.30, the fee paid by general patients for PBS medicines, thus enabling pharmacists to offer further discounts. The lower prices will not however be available to pensioners, who pay only A$5 per prescription.

The 25% price cut will affect the majority of medicines included in the PBS F2T category of drugs, which includes products where price competition between brands is high. The prices of a further 427 medicines are expected to be reduced through reductions to premium charges and other contributions.

Also on August 1, the first of three annual price cuts, of 2% each, will be imposed on F2A medicines, defined as products where price competition between brands is low.

The F2A and F2T groups are subdivisions of the PBS’s F2 formulary, which covers multiple-brand medicines and any single-brand products which are interchangeable with multiple brands operating in a competitive market. There will be no price cuts for products listed on the F1 formulary, which consists of single-brand medicines which are not subject to market competition in the market, but when a new brand of an F1 medicine is PBS-listed, it will be transferred to the F2 formulary and become subject to its pricing arrangements.

Meantime, 237 million prescriptions were filled in Australia in 2006, and prescription drugs and over-the-counter (OTC) medicines together accounted for around A$3 billion, or 14% of the nation’s health spending during the year, according to Australia’s Health 2008, the latest report from the Australian Institute of Health and Welfare (AIHW).

168 million community prescriptions were issued through the PBS in 2006 – 26 million for general patients and 142 million for concessional patients - a similar figure to 2005, it says. 15 million prescriptions were also written under the Repatriation Pharmaceutical Benefits Scheme (RPBS), which covers eligible war veterans and their dependents.

The top five prescribed therapeutic classes in 2006-7 were antibiotics, simple analgesics, antihypertensives, hormonal contraceptives and proton pump inhibitors, either alone or in combination, says the AIHW.

It also reports that Australians’ life expectancy is now 81.4 years – 83 for men and 86 for women – which is the second-highest worldwide after Japan. The nation’s health spending reached A$86.9 billion in 2005-6, equal to 9% of Gross Domestic Product (GDP), which is more than the UK (8.3%), similar to Italy (8.9%) and much less than the USA (15.3%), it adds.

Legislators probe PBS’s effects on patients, industry

- In the Australian Parliament, the Senate’s Community Affairs Committee is currently investigating the impact of the PBS’s cost recovery process on: patients’ timely and affordable access to medicines; the Australian pharmaceutical industry; new products and innovation; and the independence of the Pharmaceutical Benefits Advisory Committee (PBAC). The Committee will not report its findings before August 18, says the Senate.