Australia pays the lowest prices for new drugs in the developed world, but for a number of high-volume drugs, prices there are higher than in the UK, recent data shows.

Reporting this month on the impact of its 2007 reforms of the country’s universal Pharmaceutical Benefits Scheme (PBS), the government says that, over the 10 years from July 1, 2008 to June 30, 2018, the reforms will produce higher-than-expected savings, of A$3.6-A$5.8 billion for the government and A$0.6-A$0.8 billion for patients.

However, independent modelling by PricewaterhouseCoopers (PwC) also shows that these savings will be more than offset by higher growth in the Scheme’s costs, which are expected to reach A$13 billion in 2018, Minister for Health and Ageing Nicola Roxon told Parliament.

This is a significant increase on the cost of the PBS in 2008-09 of $7.7 billion, she said, and noted that growth in 2009-10 is expected to reach about 10.6%. __

Moreover, the work by PwC also reveals that Australian taxpayers still pay much more for some drugs on the PBS than is paid in other countries. For example, the cholesterol-lowerer simvastatin (40mg tablets) costs $44.45 for the PBS, but only $2.74 under the UK National Health Service (NHS), while the blood pressure drug atenolol costs $10.27 for the PBS, but only $1.82 in the UK.

“This underlines the need for the government to examine PBS prices very closely,” Ms Roxon told Parliament.

She also pointed out that the 2010 Intergenerational Report on Australia to 2050, which was launched by the Treasury on February 1, found that pharmaceuticals will be a “significant and growing” component of health expenditure into the future, with drug spending forecast to rise from A$443 real per capita in 2012-13 to A$534 real per capita in 2022-23.

However industry group Medicines Australia says the PwC findings and the Intergenerational Report provide “further evidence that the PBS is sustainable and that the reforms are working.”

“A key point of these reforms was to ensure taxpayers didn’t pay over the odds for older, off-patent medicines. Price cuts over the next couple of years will significantly lower prices for those older drugs,” said the group’s chief executive, Brendan Shaw.

But, he added, for new drugs, Australia already pays the lowest prices in the developed world. “Effectively, Australian taxpayers are getting new medicines 20% cheaper compared to the Organisation for Economic Cooperation and Development (OECD) average.”

“The PBS is not only providing Australian patients with universal access to the best medicines when they are needed, it is also offsetting other healthcare costs by keeping patients out of the hospital system,” said Dr Shaw.

In its comments, the Pharmacy Guild of Australia says one reason not mentioned in the reports as to why the PBS is now in good health and will be able to continue to deliver is that “major pharmaceutical companies, such as Pfizer, are now committed to a significant generic medicines portfolio for the Australian market.” Before the reforms, this had not been the case, it says.

The Guild also points out that much of the forecast PBS spending growth will be due to new medicines, many of which are “very expensive, specialized” products. Last year, the top 10 fastest-growing drugs (by increase in government expenditure) contributed 64% of the Scheme’s total spending growth. All 10 are single-manufacturer drugs, so have not been affected by the PBS reforms, it notes, but adds: “once these drugs come off patent and are subject to generic competition, they will be subject to price disclosure, which will ensure that the government achieves maximum savings from this competition.”