The biggest round of price cuts in the history of Australia's Pharmaceutical Benefits Scheme (PBS), coupled with historically low spending growth, means that there is no need for any further PBS cuts in next month's Federal Budget, the government has been told.

Moreover, the Memorandum of Understanding (MoU) signed between the government and the research-based industry group Medicines Australia in 2010 is expected to deliver more than the anticipated A$1.9 billion savings to the Budget bottom line, added Medicines Australia chief executive Brendan Shaw, speaking at a conference on the future of the PBS held in Sydney this week.

In terms of the Budget - due to be delivered May 8 - and how the PBS will feature in it, "our message is - you don't need to muck with the PBS," Dr Shaw told the government. 

"Whatever measure you use, there's no cause for further savings measures," he said. "Whether it's historically low growth in PBS spending, the fact that the PBS is more or less falling after adjusting for inflation, low or falling numbers of PBS prescriptions, or the level of PBS spending in Australia relative to other reimbursement schemes internationally. Whatever measure you use, it is virtually impossible to make the case that the PBS is growing too much or, in fact, growing at all."

On April 1, the biggest price cuts in the history of the PBS were introduced, when the retail prices of more than 1,000 different generic versions of 74 types of medicines dropped by between 10% and 82%, over and above a 16% price reduction which had already been applied to many off-patent drugs.  The cuts were introduced as part of the new agreements between the industry and government, including the PBS Price Disclosure Program. Previously, when medicines came off-patent, they could be sold far more cheaply under different names but were still eligible for the full reimbursement amount under the PBS. The price disclosure agreement means that the price for the product which the system is subsidising is brought into line with its market price.

"Government policy is actually working well in keeping the PBS management while, by and large, providing Australians with access to the medicines they need," Dr Shaw told the meeting.

He also urged the government to complete its review of anti-coagulant medicines as soon as possible and to ensure the new R&D tax credit remains eligible for drug companies.