Australia’s new federal budget, announced on Tuesday, reintroduces legislation which will require the drug industry to fund the government’s Pharmaceutical Benefits Advisory Committee (PBAC).

The announcement has been condemned by Ian Chalmers, chief executive of industry group Medicines Australia, who warned that it would put at risk access to medicines for small patient-population groups.

“It is fundamentally inappropriate for the industry to pay for government procurement decision-making,” said Mr Chalmers. “The procurement of pharmaceuticals for the Pharmaceutical Benefits Scheme (PBS) is a government function and it’s unreasonable for industry to be expected to pay for the business of government.”

In addition, he said that the decision “risks Australian patients’ access to medicines, it does not improve the expensive and lengthy process for PBS listing of new medicines and it deters innovation and investment in the Australian pharmaceutical industry.”

Other measures in the budget reduce the government’s investment in the Pharmaceutical Benefits Scheme (PBS), requiring drugmakers to cut the prices of products included in the Scheme by $175 million over five years. Mr Chalmers forces that this will “likely result in declining revenues and job losses.”

Moreover, the budget’s failure to provide budgetary support for the recommendations made earlier this year by the Pharmaceutical Industry Strategy Group (PISG) for increasing investment in pharmaceutical R&D, clinical trials and manufacturing in the country over the next decade is “extremely disappointing,” he said.

“This will be the first time for 21 years that there will be no dedicated industry support programme to promote investment in this valuable knowledge-based industry. The PISG proposals were part of the solution to the current crisis,” said Mr Chalmers.

However, he did welcome the measure introduced in the budget to replace the current R&D tax concession with a 40% R&D tax credit for companies with revenues over A$20 million. For most Medicines Australia member companies, the new credit will be equivalent to a 133% concession and, significantly, will be open to foreign-owned companies.

“The tax credit is decoupled from the corporate tax rate and therefore creates certainty in the level of assistance, “ said Mr Chalmers.

The budget also provides new 45% refundable tax credits for R&D for companies with annual turnover of under A$20million, and these were described as a “well-earned win for biotech and small innovative companies” by Anna Lavelle, chief executive of Australia’s biotechnology organisation, AusBiotech. The credits, which will be equivalent in benefit to a 150% tax concession, will be a “big boost to help those innovative companies which are at the heart of our economic recovery effort,” she said.