Australian consumer advocates have welcomed the federal government's announcement that drugs costing the country less than A$10 million per year will continue not to have to be approved by the Cabinet before they can be listed on the Pharmaceutical Benefits Scheme (PBS).

The moratorium on referrals to the Cabinet before such drugs can be listed, which was introduced in February 2011, will now run until the government's current Memorandum of Understanding (MoU) with research-based industry group Medicines Australia expires in June 2014.

The government provoked fury in early 2011 when it announced that the Cabinet would defer listing on the PBS of a number of drugs which the Pharmaceutical Benefits Advisory Committee had said should be made available under the Scheme. Following a campaign by 60 national health-related organisations, the government pledged on September 30, 2011, that it would not, for the next 12 months, defer the listing of any medicine recommended by the Committee where the listing would cost less than A$10 million a year.

After the 12-month moratorium on Cabinet deferrals ended last week, the government has said that it will now be extended until June 2014.

The decision has been welcomed by Carol Bennett, chief executive of the Consumers Health Forum (CHF), who called it "a victory for common sense and a win for health consumers. All Australians will benefit from this decision to ensure listing of the majority of medications independently recommended for inclusion on the PBS," she said.

However, Medicines Australia gave the decision a more cautious welcome, describing it as "one step forward, one step back."

While the extension of the moratorium is positive, uncertainty remains for the listing of medicines costing the country A$10 million or more a year, and it was "disappointing that the government hasn't taken the opportunity to put this issue to bed," said the industry group's chief executive, Dr Brendan Shaw.

"Australia is a country that can afford medicines for sick people and should be giving timely access to medicines a very high priority. Deferrals mean patients are denied access to the medicines they need. The policy also creates uncertainty for industry and makes it harder for companies to bring new medicines to Australia, medicines that in many cases are already available and subsidised in other advanced countries," said Dr Shaw.

The Medicines Australia/government MoU will deliver A$1.9 billion in PBS savings, and while the industry is prepared to continue dialogue with government ahead of the 2013-14 federal budget, it expects the government to keep its commitment under the MoU, he went on, adding: "the industry has always been ready to talk about a sustainable plan for the PBS, but it needs to be done with a long-term perspective."

Ms Bennett also acknowledged that the rising cost of medications and the need for better access to them present a real challenge, and that the Forum "understands the need for a sustainable PBS."

Therefore, the CHF "has agreed to immediately commence further discussion with the federal government and industry stakeholders to find savings from other PBS areas. These discussions may inform changes to the 2013-14 federal budget in May next year," said Ms Bennett. The Forum has also agreed to start discussions on savings and other measures that can be put into place when the MoU expires in June 2014, she added.

- Meantime, Australia spent more than A$130 billion on health in 2010-11, up from A$122.5 billion in 2009-10, although health expenditure as a percentage of Gross Domestic Product (GDP) dropped from 9.4% to 9.3%, says a new report from the Australian Institute of Health and Welfare (AIHW).